Global trade exceeds pre-Covid levels in January despite Omicron and supply chain woes

International trade is now 7% above its previous peak in August 2018, Kiel Institute report finds

Despite ongoing congestions in container shipping, global trade was up in January compared to the previous month and has even surpassed its pre-crisis level, the Kiel Trade Indicator shows. EPA

Global trade in January rose 2.4 per cent on the previous month to exceed pre-pandemic levels, despite a surge in Omicron cases worldwide and major supply chain disruptions, Kiel Trade Indicator data shows.

Volumes are now 7 per cent above the previous peak in August 2018, before the Covid-19 outbreak, figures compiled by the Kiel Institute for the World Economy showed.

"Despite the Omicron wave, global trade is running more strongly than ever before," said Vincent Stamer, head of Kiel Trade Indicator. "The continuing supply bottlenecks are therefore a result of an extremely fast increase in demand that supply cannot keep up with."

The Covid-19 crisis highlighted significant challenges in the logistics sector, with many cargo customers struggling to find shipping containers and overcome labour disruptions. The acute supply chain bottlenecks have led to congestion and delays at ports, a shortage in containers and a sharp rise in the cost of shipping goods.

Trade in the West has so far been spared by the Omicron wave, according to the Kiel Trade Indicator. US exports in particular were up month-on-month in January by 3.6 per cent, but imports were expected to fall slightly by 1.6 per cent.

Looking at the EU's January trade, there was a slight increase in exports of 0.6 per cent and a slight decrease in imports of 0.1 per cent.

For Germany, the outlook was positive for both exports, up 1.2 per cent, and imports, up 0.8 per cent.

In terms of goods trading, the Omicron wave has so far primarily affected the Chinese economy, the data shows.

Compared with the previous month, the Kiel Trade Indicator for January shows a drop in China's imports of 2.8 per cent and exports of 0.2 per cent.

"However, the Chinese New Year, and especially the hosting of the Olympic Games, are a test for the Chinese economy that the pandemic, and therefore also the economic situation, does not worsen," Mr Stamer said.

Economic reopening of countries after Covid has spurred a surge in demand for goods and raw materials. Alongside that, the disruption in global supply chains has left the majority of the shipping sector with bumper earnings in recent months.

Dubai-based ports operator DP World on Monday reported a 9.4 per cent rise in 2021 container volumes, despite growth rates moderating in the fourth quarter, with all the regions it operates in reporting gains.

DP World handled 77.9 million 20-foot equivalent units last year across its global portfolio, up from 71.1 million TEUs in 2020, with Asia Pacific, India, the Americas and Australia regions recording double-digit growth.

"The strong volume performance leaves us well placed to deliver an improved set of full-year results," Sultan bin Sulayem, DP World chairman and chief executive, said.

The Covid-19 pandemic, continued supply chain disruptions, rising inflation and geopolitical uncertainty could "continue to hinder the global economic recovery," he said.