Brexit anxiety bypasses container shipping industry

Boeing’s 787 Dreamliner is likely to play a prominent role at this year’s at the Farnborough International Airshow in England, just as it did when it was being rolled out in 2010.

Brexit might have shaken up world financial markets and the United Kingdom’s former European Union compatriots, but to the container shipping industry it’s nothing but a big snooze.

“The United Kingdom’s decision to exit the European Union is expected to have little direct impact on the containership sector,” industry publication Alphaliner stated last week. Alphaliner points out that the U.K.’s container volumes have been declining for years — its global market share has dropped from 3 percent to 1.4 percent — and the country no longer is a global trade powerhouse.

“The country’s decline as a maritime center for the container shipping sector had started long before the ’Brexit’ decision,” according to Alphaliner.

Likewise, there doesn’t seem to be much concern on Concord Street at the State Ports Authority, where trade with the United Kingdom accounts for about 3.1 percent of container traffic at the Port of Charleston.

“We’re monitoring the issue, but don’t expect a material impact to our port,” spokeswoman Erin Dhand said.

The equivalent of 30,293 20-foot-long cargo containers — or TEUs — were shipped from Charleston to the U.K. in 2015. Top exports included paper and paperboard, veneers and plywood and miscellaneous wood products. About 19,032 TEUs were imported from the United Kingdom last year, with vehicle tires, auto parts and general cargo making up the bulk of shipments.

The United Kingdom remains a major import destination for BMW vehicles shipped from the SPA’s Columbus Street Terminal. The German automaker’s plant in Greer exported more than 250,000 vehicles globally through the Port of Charleston last year. While the carmaker won’t say how many of those vehicles go to each country, the Port of Southampton in the U.K. is the second-biggest destination behind Bremerhaven, Germany.

Depreciation of the British pound might slow those and other imports to the U.K. over the short term. However, if Brexit fever spreads to other parts of the Continent, the fallout for the container industry could grow worse.

“The risk of an economic slowdown in Europe could have a bigger impact on the containership sector, and a corresponding fall in global container trade volumes would only worsen the current supply-demand gap further,” Alphaliner reported. The publication is forecasting a 1.3 percent growth in global container volumes this year. The Port of Charleston, by contrast, is expecting a 6 percent growth rate this fiscal year, which started Friday.

Brexit’s impact on this area’s other major export — Boeing Co.’s commercial airplanes — is still being digested by analysts.

“Commercial aircraft demand is largely a function of global growth and so the key Brexit risk is that financial contagion from the vote slows growth in the real economy,” JP Morgan Chase said in a report last week. “We are not experts on this topic but clearly, there is now more reason for concern.”

Boeing typically uses the Farnborough International Airshow, held every two years in England, as a global stage for big commercial airplane announcements. And the 787 Dreamliner figures to play a prominent role in this year’s show, which starts next week.

Uresh Sheth, author of the All Things 787 website that tracks Dreamliner production, said an order for 15 787s by China Eastern Airlines likely will be announced at the show.

Also, Qatar Airways is expected to take delivery of its 30th and final 787-8 on July 13, which is during the air show.

“I think the delivery was deliberately pushed to time with a possible air show announcement with Boeing,” Sheth reported. “My guess is that Qatar will announce the exercise of the 30 787 options at that time to coincide with the delivery...” Boeing will celebrate its 100th anniversary at next week’s air show, with a 787-9 Dreamliner scheduled to participate in a flying display before it is delivered to ANA, Japan’s largest airline.

The company’s newest commercial plane, the 737 MAX, also will make its air show debut. Boeing expects to deliver the first 737 MAX 8 in the first half of 2017, ahead of schedule.

Boeing makes its wide-body Dreamliners at its campus in North Charleston and in Everett, Wash.

The State Ports Authority last week was awarded a $303,750 grant under the federal Port Security Grant Program, according to the U.S. Department of Homeland Security.

The funding program “supports critical transportation infrastructure security activities at ports,” according to SPA spokeswoman Erin Dhand, who adds that the maritime agency “will utilize the grant to enhance cyber security protection, detection and response capabilities for the Charleston port community.”

Nationally, the grant program provides $100 million to ports and other government agencies.

Reach David Wren at 843-937-5550 or on Twitter at @David_Wren_