Asia's growing middle class bodes well for exports to the East

THERE IS some light at the end of the tunnel for the
current hugely unbalanced trade with the East.
“Asia is becoming more sophisticated,” says
Safmarine’s Singapore-based regional executive Peter
Ehrenreich. “There’s a growing middle class in the
coastal regions of Mainland China of 350 million
people with as much buying power as the entire USA.
Over the next decade we will see a strong political
push for wealth distribution into the remaining 1
billion Chinese in the inland provinces. We are already
seeing imports picking up, which is good as the
imbalance of containers, export versus import, is a
costly challenge.”
But rates are always too low in Ehrenreich’s view.
“Shipping lines are struggling. We all know how the
oil and steel price has gone up, which means building
containers and ships is incredibly capital intensive
– and the oil price is killing us.
“Shipping lines have also had to get used to no
longer having the conference systems where prices
would be agreed. We embrace the free competition
in Safmarine but the shippers do realise shipping lines
are really squeezed right now.”
Rates have firmed slightly on the Asia – Europe
trade, but Ehrenreich describes the Transpacific (Asia
to USA) as ‘very difficult’, with Africa also becoming
highly competitive.
It’s clearly a question of higher volumes with
slimmer margins, and for Safmarine the volumes are
there and growing.
“In the first seven months of this year we
have doubled volumes compared to the same
period in 2006 and most of the growth is from
Mainland China.”
But the African market remains an important one
for the home-grown line with brand loyalty, built
over decades, continuing to play a key role in this
growth. “South Africa was our turf, it is our turf and
it will remain our turf,” says Ehrenreich – and, having
been based here for several years, with a sad smile he
admits he misses South Africa every day!