China ‘stability’ buoys global trade as Maersk defies Trump tariff fears – Financial Times

Report on Global Trade Resilience and Sustainable Development Goals

Executive Summary

• A report based on statements from AP Møller-Maersk’s Chief Executive, Vincent Clerc, indicates that global trade has demonstrated significant resilience, largely driven by China’s economic stability and consumer demand.
• This resilience has positive implications for several Sustainable Development Goals (SDGs), particularly those related to economic growth and industry, but faces challenges regarding climate action and global partnerships.
• The report highlights the entrenched nature of global supply chains and the slow pace of their potential realignment, alongside the uncertainty impacting the shipping industry’s green transition.

Analysis in Relation to Sustainable Development Goals

SDG 8: Decent Work and Economic Growth & SDG 9: Industry, Innovation, and Infrastructure

• Economic Stability: China is identified as the primary “engine of stability and demand,” underpinning the resilience of global trade. This stability is crucial for sustaining global economic growth (Target 8.1) and promoting resilient infrastructure and industrialization.
• Trade as a Growth Driver: Despite the imposition of significant US tariffs, global container demand forecasts have been upgraded. Maersk, a bellwether for global trade, has revised its 2023 forecast for container demand growth to approximately 4%, a significant increase from an earlier projection of a potential 1% contraction.
• Resilient Infrastructure and Supply Chains: The report underscores the complexity and deeply entrenched nature of global supply chains, which are central to SDG 9. It is noted that any substantial redrawing of these networks would be a multi-decade process, highlighting the robustness of existing industrial and trade infrastructure.
• Innovation: China’s role is attributed not just to production volume but also to “the level of innovation and the products that they’re bringing to market,” which fuels global consumer demand and supports industrial development (Target 9.5).

SDG 13: Climate Action

• Challenges to Green Transition: The shipping industry’s transition to sustainable practices faces significant headwinds. US opposition has reportedly delayed the adoption of new international climate rules by at least a year, creating uncertainty that complicates progress toward climate goals (Target 13.2).
• Industry Response and Adaptation: In response to this uncertainty, companies like Maersk are adopting adaptive strategies. The company’s investment in vessels capable of running on both traditional and greener fuels demonstrates a proactive approach to mitigating risks associated with the delayed regulatory framework.
• Market Development for Green Fuels: The report notes that policy uncertainty risks delaying investment decisions and complicates the creation of a viable market for alternative, sustainable fuels, which is essential for the long-term decarbonization of the shipping sector.

SDG 17: Partnerships for the Goals

• Impact of Unilateral Trade Policies: The implementation of US tariffs represents a challenge to the multilateral trading system that underpins SDG 17. However, the continued strength of global trade suggests that existing global partnerships and economic interdependencies have largely absorbed the initial shock.
• Geopolitical Influence on Trade Routes: The potential reopening of the Red Sea for Asia-Europe trade, contingent on geopolitical stability, illustrates the direct link between peace (related to SDG 16) and the efficiency of global trade partnerships. The current diversion around Africa increases costs and transit times, affecting global supply chain efficiency.

Financial Performance and Outlook

1. Upgraded Financial Guidance: AP Møller-Maersk has raised its full-year underlying operating profit forecast to a range of $3 billion to $3.5 billion.
2. Third-Quarter Results: The company reported a third-quarter operating profit of $1.3 billion, exceeding the average analyst forecast of $1 billion, although this represented a 61% decrease from the previous year.
3. Fourth-Quarter Outlook: A “more subdued” freight rate is anticipated for the fourth quarter due to the introduction of new shipping capacity by competitors, which may impact future profitability.

Analysis of Sustainable Development Goals in the Article

1. Which SDGs are addressed or connected to the issues highlighted in the article?

The article discusses several issues that connect to the following Sustainable Development Goals (SDGs):

• SDG 8: Decent Work and Economic Growth: The core of the article revolves around global trade, economic stability, consumer demand, and the impact of tariffs on economic growth. It highlights the resilience of global trade and China’s role as an “engine of stability and demand,” which are central themes of economic growth.
• SDG 9: Industry, Innovation, and Infrastructure: The article focuses on the container shipping industry, a critical component of global infrastructure. It discusses the complexity of supply chains and innovations within the industry, such as Maersk’s ships being able to “run on both traditional and greener fuels.”
• SDG 13: Climate Action: The “green transition in the shipping industry” is explicitly mentioned, along with the challenges posed by “strong US opposition” causing a “delay… in adoption of new climate rules.” This directly relates to taking action to combat climate change and its impacts.
• SDG 16: Peace, Justice, and Strong Institutions: The article touches upon the connection between peace and economic activity by mentioning the “Trump-brokered peace deal between Israel and Hamas” and its potential to reopen the Red Sea for trade, which would positively impact global commerce.
• SDG 17: Partnerships for the Goals: The entire discussion of international trade dynamics, including US tariffs, China’s economic role, and the international negotiations on climate rules for shipping, falls under the scope of global partnerships, trade policies, and international cooperation.

2. What specific targets under those SDGs can be identified based on the article’s content?

Based on the article’s content, the following specific SDG targets can be identified:

1. Target 8.1: Sustain per capita economic growth in accordance with national circumstances and, in particular, at least 7 per cent gross domestic product growth per annum in the least developed countries. The article’s concern about a “slowdown in trade and economic growth” and its forecast for “global container demand to be about 4 per cent this year” directly relate to monitoring and sustaining economic growth.
2. Target 9.4: By 2030, upgrade infrastructure and retrofit industries to make them sustainable, with increased resource-use efficiency and greater adoption of clean and environmentally sound technologies and industrial processes. The mention of the “green transition in the shipping industry” and Maersk’s investment in ships that can use “greener fuels” aligns with this target.
3. Target 13.2: Integrate climate change measures into national policies, strategies and planning. The article highlights a setback to this target by mentioning the “delay of at least a year in adoption of new climate rules” due to international political dynamics.
4. Target 16.1: Significantly reduce all forms of violence and related death rates everywhere. The reference to a “peace deal between Israel and Hamas” is directly relevant to efforts to reduce conflict and violence.
5. Target 17.10: Promote a universal, rules-based, open, non-discriminatory and equitable multilateral trading system under the World Trade Organization. The article’s central theme of US tariffs reaching their “highest level in almost a century” and the subsequent impact on global trade directly engages with the principles of this target.

3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

Yes, the article mentions or implies several indicators that can be used to measure progress:

• Indicator for SDG 8: The forecast that “container demand to be about 4 per cent this year” serves as a quantitative indicator of global trade volume and economic activity. Maersk’s financial results, such as its “underlying operating profit,” also act as a proxy for the economic health of a key global industry.
• Indicator for SDG 9: The statement that “all of its [Maersk’s] ships can run on both traditional and greener fuels” is a qualitative indicator of the adoption of cleaner technologies within the shipping industry, measuring progress towards sustainable infrastructure.
• Indicator for SDG 13: The “delay of at least a year in adoption of new climate rules” is a specific, though negative, indicator of the progress (or lack thereof) in implementing international climate policies and regulations for a major industry.
• Indicator for SDG 16: The existence of a “peace deal,” although described as “very fragile,” is a qualitative indicator of progress towards conflict resolution and peace.
• Indicator for SDG 17: The article states that “US tariffs [are at] their highest level in almost a century.” This is a direct indicator of trade policy and the prevalence of trade-restrictive measures, which can be used to measure progress towards an open multilateral trading system.

4. Summary Table of SDGs, Targets, and Indicators

Source: ft.com