Many in the international trade industry were relieved to see an upward economic turn with the start of 2011; quarter one of this year saw an immense uptick in U.S. trade activity over the past year. Indeed, there have been unexpected setbacks that have hindered the economy’s strong recovery; political instability, natural disasters, and the aftereffects of such events are among the latest setbacks. Although we expect trade to continue with an upward path, there will surely be roadblocks along the way. Below we have highlighted some forecasts to expect for quarter two of this year:

1. Oil Prices Going UP: The domino effect of the political instability in the Middle East will continue to influence the price of oil, which is likely to continue rising in quarter two. Shippers are already feeling the effects of the price increase and consumers will soon be paying ‘more for less.’ As we have seen in the past, when the price of oil increases, ripples are felt throughout the economy. With the uncertainty in the Middle East, it is difficult to predict how long these prices will continue their upward trend.

2. Japan Aftereffects: With the Japanese recovery process in full swing, U.S. manufacturers fear a shortage of supply while shippers try to steer clear of radiation. According to the New York Times, “Automakers including General Motors have slowed or stopped production at some plants…Other manufacturers like Nokia, the Finnish cell phone maker, have said they expect disruptions.” It is likely we will see shifts in international suppliers and increased prices to accommodate these shortages. Meanwhile, ships and aircraft that have stopped in Japan are being checked for radiation and importers around the globe are fearful of buying goods from Japan. The aftereffects will be felt hard around the globe in quarter two.

3. Optimism Remains: Despite many challenges ahead for shippers and manufacturers, optimism remains as we expect a better second quarter than that of last year. Ripples in the trade community will be felt worldwide and a potential slowdown may occur, however the overall economic recovery is expected to continue. Key economic factors, such as employment and consumer confidence, have shown improvements from last year. If positive numbers continue, the impact from the slowdown on overall growth will be subtle.

The earthquake and tsunami in Japan have shown the effect that one country can have on international commerce. The global shipping industry has certainly felt a significant impact due to the damages done to many of the Japanese shipping ports.

According to Zepol’s TradeIQ™ application, Japan had 325,226 shipments that entered U.S. ports in 2010, accounting for roughly 3.5% of all ocean borne shipments entering the United States for that year. The Port of Sendai, which shipped almost 16,000 TEUs to the U.S. in 2010 (over 2% of the total TEUs brought from Japan to the U.S), was just one of the ports that was greatly devastated by these natural disasters. Imports and exports from Sendai have come to a halt, and only on March 18 was the port opened for the delivery of relief supplies. It is predicted that the recovery process for many of the damaged ports will take weeks, if not months.

Because Japan is a world leader in the production and distribution of electronic components, machinery, and automobiles, the damage done to its ports will undoubtedly have a worldwide effect. To help in the recovery of the Japanese infrastructure, please consider contributing to the American Red Cross by clicking the link below: