Projections of a fall in global trade could hit CH Robinson's new acquisition, Space Cargo. Credit: Jim Allen/FreightWaves
The global trade outlook has taken a downturn. The Organization of Economic Co-operation and Development (OECD) has significantly cut is global growth forecasts for 2019 and 2020 as several headwinds, including the trade dispute between China and the U.S. and the United Kingdom's withdrawal from the European Union (EU), gather pace.
Projections released by the OECD today (March 6) downgrade previous estimates for global growth from 3.5 percent in 2019 to 3.3 percent with growth in 2020 expected to reach 3.4 percent, a decrease of 0.2 percent from previous estimates.
An OECD statement said, "The Outlook identifies the Chinese and European slowdown, as well as the weakening of global trade growth, as the principal factors weighing on the world economy. It underlines that further trade restrictions and policy uncertainty could bring additional adverse effects on global growth. While policy stimulus is expected to help offset weak trade developments in China, risks remain of a sharper slowdown that would hit global growth and trade prospects."
As global trade prospects dip it could be expected that companies batten down the hatches and wait for the economic storm to blow over, but one company that is eschewing this policy is C.H. Robinson Worldwide Inc. (NASDAQ: CHRW), which is continuing to expand its global presence with the €42 million ($48 million) acquisition of Spanish forwarder Space Cargo, which was announced on 28 February.
Recording revenues of €74 million ($84 million) and with seven offices in Spain, and others in Colombia, Hong Kong and Mexico, Space Cargo will add 2,500 customers and significant market presence in Spain for C.H. Robinson, which currently has two offices in the country. Space Cargo, an ocean and air freight forwarder, also offers customs brokerage and logistics services through its 170 employees.
Mike Short, President of C.H. Robinson's Global Forwarding division, said, "Space Cargo has a proven track record of success, and we will benefit from the company's outstanding presence in Spain and Colombia. Space Cargo has a strong local reputation for world-class freight forwarding."
In Spain, the port throughput for 2018 at major ports such as Barcelona, Bilbao and Valencia increased in 2018 by around 4 percent over 2017. But in Maersk's transhipment hub at Algeciras, container volumes fell by almost 8.5 percent while roll-on/roll-off (ro-ro) cargo freight declined nearly 4 percent in the same period. The main cause of the decline in ro-ro freight was a fall in volumes to Ceuta, the Spanish enclave in North Africa, which saw volumes decline 31.77 percent year-on-year.
Trading conditions could be tough this year and next in Spain and the Eurozone countries, according to OECD Chief Economist Laurence Boone. "A sharper slowdown in any of the major regions could derail activity worldwide, especially if it spills over to financial markets," Boone explained.
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