Photo: DHL
DHL's Global Trade Barometer uses freight movement data from seven countries across a number of sectors to forecast trade -- and ultimately economic -- growth in the quarter to come.

World trade slows but still grows in first quarter, DHL predicts

Jan. 19, 2018
DHL announced its Global Trade Barometer economic index, which factors in a host of the company's data on trade by way of freight movement.

There will be a mild slowdown in worldwide trade growth, but growth nonetheless over the next three months. Trade in the United States, meanwhile, is stable and should hold at about the same rate as it closed out the year, according to DHL's new Global Trade Barometer (GTB).

The logistics and package delivery giant announced the creation of this new tool yesterday. GTB swirls together a host of DHL's data on trade by way of freight movement, gauging what eventually turns into economic indicators. The arrival of larger amounts of raw materials or car bumpers or mobile device touchscreens, for instance, tips the system off that industry will be busy making more stuff.

"Global trade fuels the world economy," the company noted in a statement.

DHL called this new index a "barometer" very deliberately, since it's meant to be an indicator of what's coming. GTB will be published every quarter and gives a trade/economic outlook over the next three months overall and broken down by the particular countries involved. The index pools data from seven countries that represent 75% of global trade: the U.S., China, Japan, the U.K., Germany, India and South Korea.

Closer look

Beneath a balanced-out overall view, the U.S. will see a "mutually offsetting" dip in air trade and a surge in ocean trade, according to GTB. The index was developed in partnership with Accenture and centers itself on a trade value of 50; higher than 50 means trade growth, less than 50 means trade is declining.

The United States got a trade index overall of 64, which is unchanged from GTB's index for December. However, U.S. air trade dropped from an index of 69 last month to 65 now, while U.S. ocean trade rose from an index of 60 to 64.

Even with a lower index for air trade, "air export of industrial raw materials and air imports of machinery parts together remain important drivers for the positive US air trade outlook," GTB's findings showed.

Meanwhile, "the outlook for ocean import growth is positive across all major USA import industries," the analysis noted, and basic raw materials transit is behind that growth and will also be driving exports in particular.

Globally, things aren't quite as stable. GTB gave the world an overall trade index of 64, down from 66 in December. Air trade dipped from 73 to 71, while ocean trade tapered down from 61 to 60 at the end of the year.

The more tepid global index is a mix of lower trade barometers for China (-4), Japan (-2) and Germany (-1) together with positive barometers for India (+2), South Korea (+2) and the U.K. (+2). The U.S. folded in its unchanged index.

GTB also breaks down info by sector including "chemicals and products," "high technology," "land vehicles and parts" and others. Among all those sectors, "worldwide trade in basic raw materials is expected to grow strongest," GTB's analysis stated, while trade in machinery parts and components as well as industrial raw materials also are expected to gain.


As far as what the new trade index might be used for, DHL said it will be using GTB itself "to fine-tune its own resource planning for international logistics operations."

But applying the new tool with historical data back to 2012, DHL found "a high correlation" between GTB's indices and actual trade that followed. So the company thinks the tool could be useful for a number of others; banks and economic research institutes could use it in their analytics, DHL suggested.

"By breaking down international supply chains, we can take a deep dive into regions and countries, sectors and industries, and macroeconomic factors," Tim Scharwath, CEO of DHL Global Freight Forwarding's freight division, wrote in a blog on GTB. "Which countries and regions are driving international trade dynamics? Which sectors are currently outperforming, and which are in decline?

"The GTB can answer these questions and more," he noted.

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