TEU to GDP Multiplier, 1985-2021

TEU to GDP Multiplier 1985 2021

Source: World Bank for GDP growth. Drewry Shipping Consultants and own elaboration for container volume growth.

The relationship (ratio) between container growth in terms of total volumes handled by ports and GDP growth is reflective of the fluctuations between a growth that is more internally driven (lower ratio) and a growth that is leaning more on trade (higher ratio). Recessions have no discernible impacts on the multiplier as GDP growth slows down (or becomes negative on a few rare occasions) with container volumes. Four phases can be identified.

  • Prior to 1990. Although containerized trade began to pick up in the 1960s, the multiplier was in the range of 2 to 2.5 (for each percentage of GDP growth, there was an equivalent of 2% to 2.5% of container volume growth). Globalization and trade liberalization were ongoing, but at a comparatively slow pace regarding their impacts on container flows.
  • 1990 to 1999. This marked a period of fast containerization, with the multiplier surging above 4, particularly with the beginning of offshoring to East Asia. The global container shipping network expanded rapidly with new services and port investments.
  • 2000 to 2008. The multiplier declined in the range of 3, corresponding to peak growth. This period marked the most substantial growth of Chinese container port volumes, but also the majority of ports around the world.
  • 2009-2014. The financial crisis of 2009 marked an inflection point, with the multiplier declining in the range of 2.8.
  • 2015-. From 2015, the multiplier fell to around 1, underlining that at this point, GDP growth has much fewer multiplying effects on container shipping growth. Even the Covid-19 pandemic did little to influence this fundamental relationship.

The TEU to GPD multiplier is an important ratio since it is often used in port traffic forecasting, which tends to be associated with national economic growth prospects. The current trend illustrates that GDP growth has less impact, which can lead to exaggerations in future anticipated volumes. The ratio also considers the movement of empty containers and transshipment, which are the outcome of trade imbalances and the decision by shipping lines about organizing their service networks. Changes in trade imbalances and transshipment volumes can have an impact on the ratio.