UPS says intra-Asian trade offsets slower U.S. demand
United Parcel Service Inc said on Tuesday that its business within Asia was more than offsetting slower trade to the United States, but it added that Asian companies were cautious about the outlook.
UPS said that it expects business within Asia to drive growth in its global freight forwarding business this year to “quite a bit higher” than forecasts for 8 percent growth in the freight forwarding industry worldwide.
“We’re seeing very strong growth intra-Asia. It’s the China effect,” Derek Woodward, Asia-Pacific president of the world’s biggest package delivery firm, told a news briefing.
A UPS survey of small and medium-sized Asian companies, released on Tuesday, showed that more than half were optimistic about their prospects this year given strength in intra-regional trade and growth in business in Europe and the Middle East.
But they sounded a note of caution, saying U.S. economic woes were creating uncertainty, particularly for Japanese companies.
For the first time since the survey’s launch four years ago, more than half of Asian SMEs, or 51 percent, said they would freeze or cut staff this year. Some 62 percent felt less competitive than last year, partly due to rising labour costs.
The survey, conducted in December and January across 12 Asia-Pacific markets, polled more than 1,200 well-established SMEs.
United Parcel Service Inc said on Tuesday that its business within Asia was more than offsetting slower trade to the United States, but it added that Asian companies were cautious about the outlook.
UPS said that it expects business within Asia to drive growth in its global freight forwarding business this year to “quite a bit higher” than forecasts for 8 percent growth in the freight forwarding industry worldwide.
“We’re seeing very strong growth intra-Asia. It’s the China effect,” Derek Woodward, Asia-Pacific president of the world’s biggest package delivery firm, told a news briefing.
A UPS survey of small and medium-sized Asian companies, released on Tuesday, showed that more than half were optimistic about their prospects this year given strength in intra-regional trade and growth in business in Europe and the Middle East.
But they sounded a note of caution, saying U.S. economic woes were creating uncertainty, particularly for Japanese companies.
For the first time since the survey’s launch four years ago, more than half of Asian SMEs, or 51 percent, said they would freeze or cut staff this year. Some 62 percent felt less competitive than last year, partly due to rising labour costs.
The survey, conducted in December and January across 12 Asia-Pacific markets, polled more than 1,200 well-established SMEs.
DOLLAR BOOST
Robust trade within Asia is helping the region maintain solid economic growth, which economists forecast at 7 percent this year for Asia ex-Japan, driven by China’s rapid economic development.
Underlining the trend, China replaced the United States as Japan’s biggest export destination in 2007.
Hong Kong, a regional re-export centre, racked up surprisingly strong annual export growth of 14.5 percent in April. (For a related graph please click here)
Shipments from Hong Kong to the rest of Asia jumped 17 percent from a year earlier by value. Those to India nearly doubled, while shipments to Germany surged 26 percent, offsetting a 1.8 percent decline in exports to the United States.
Economists, however, said trade was likely to slow sharply in the second half as weakening U.S. demand was felt globally.
“I’m not that optimistic about exports in the second half of the year because the world economy is facing stronger headwinds from a U.S. downturn, global financial market turbulence and soaring oil prices,” said Joe Lo, senior economist at Citigroup.
China is still on course to expand by around 10 percent this year, though SMEs see it as both a boost and a threat to business in their own countries, according to the survey.
UPS said the U.S. slowdown — some economists believe the world’s biggest economy is already in recession — was prompting some of its customers to look at ways to cut costs and forego express freight services for slightly longer shipment times.
“Some companies are looking at an additional day in transit,” said Joseph Guerrisi, Asia-Pacific vice-president of marketing.
