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45 Percent of Travelling Ships Are Empty

  • APICS staff
November/December

A report from the National Bureau of Economic Research shows a massive global trade imbalance is causing nearly half of all dry-bulk ships to travel empty, reports Quartz

The trade asymmetry is the result of a global import-export balance in which some countries — such as Australia, Brazil and the U.S. — are net exporters of commodities, while others — notably, China and India — are net importers. Thus, when a dry bulk ship is moving commodities from Australia to China, for example, that same ship will struggle to find goods to export from China (a country that predominantly exports manufactured goods via container vessels). That ship then must travel to a neighboring country to find cargo, driving up fuel and labor costs. It therefore ends up costing 33 percent more on average to ship from Australia to China, as opposed to the opposite direction.

Experts say imbalanced trade flow is a blind spot in enacting trade policy, which uses standard economic models that assume fixed shipping costs that are solely reliant on the distance between two countries. 

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