Financial crisis may lead to rise in regional shipping

LONG haul shipping may become an increasing rarity, with some industry insiders speculating that the current financial crisis will provoke a greater focus on regional trades.

One thing you may see as a result of the financial downturn, plus environmental concerns, rising energy and transportation costs, is that companies may turn more to local suppliers or sources closer to home, rather than buy from China, one industry observer said in a recent interview.

This, he says, may not purely be driven by economics, but also consumer behavior. One fear among industry observers and economists is that today’s financial environment may signal a retreat by many countries back into isolationism.

When you have a large crisis, there is a tendency to go back to your own, back to more protectionist policies, which of course will have an impact on foreign trade, our source said.

Evidence of this trend is now beginning to emerge in the US, as Congress pushes to ban foreign suppliers winning concessions on projects associated with new the economic stimulus package, according to The Australian.

Oil refinery and power plant workers in the UK have walked off the job recently in protest against the use of foreign workers, while the Spanish government is now offering money to foreigners to return home.

In the developing world, India has reportedly increased tariffs on steel imports, while Argentina and Russia have implemented measures to protect their shoe and car industries.

However, history has shown that protectionism has rarely provided any long term benefits, and the prevailing view, at least within the industry is that globalisation is already far too entrenched to be displaced now.

But this does not preclude the possibility of a rise in regionalism.

Source: CRIEnglish