MARKETS, IN BRIEF: INDIA, SHIPPING FREIGHT, AIR TRANSPORT, CHINA
India: American customs policy reinforces the “Make in India” program and the industrial ambitions of New Delhi, which poses as an alternative platform to China. A study by Global Sovereign Authority highlights increases in production and exports in electronics, in particular smartphones (Apple investments) as well as in the semiconductor segment (still underdeveloped but the subject of major projects). The automobile industry is experiencing a sustained recovery, driven by the gradual electrification of the fleet and significant investments from Renault, Ford and Tata. New Delhi also aims to become a major industrial player in the manufacturing of solar panels. On the other hand, despite a well-integrated value chain and sustained government support, the textile and clothing sector struggles to maintain its competitiveness.
Sea freight: Announced on May 8, the 90-day suspension of the majority of customs duties between the United States and China had the effect of increasing the cost of transcontinental sea freight. The pause led Chinese exporters to increase shipments to the United States and seek new capacity, pushing up freight rates. Thus, as of May 29, the Drewry index jumped 40% in three weeks. The cost of transporting a 40-foot container between Shanghai and Los Angeles now reaches $3,738 (USD) and that of a Shanghai-New York $5,172. To a lesser extent, the cost of transport between China and Europe has also increased, by 6% between Shanghai and Rotterdam and by 3% between Shanghai and Genoa.
Air transport: The economic crisis and the uncertainty that still hangs over future American trade policy are weighing on passenger air traffic. The International Air Transport Association (Iata) has revised its forecasts for 2025 downward, now expecting less than five billion travelers, compared to 5.22 billion previously. In North America, the increase in the number of passengers should reach 0.4% while it increased by 4.7% in 2024. The slowdown is less marked in Europe (8.8% in 2024 and 6% in 2025) and the Asia-Pacific region should once again drive global growth with an increase in traffic estimated at 9%. The Indian market (242 million passengers) is expected to double by 2030. Good news, however: a barrel of kerosene should go from $99 to $86 this year.
China: The Chinese Association of Automobile Manufacturers (CAAM) has just published a criticism of the massive price reductions practiced by national manufacturers, accused of “destabilizing the market balance”. None are mentioned, but BYD got the ball rolling with several models priced at -34% on average, soon followed by Leapmotor and Geely Auto. EU customs barriers and the new US customs policy, erratic and unsuccessful, have caused such a storage problem in this already overproduced sector that brands have launched these price reduction campaigns to free up space.
