Shipping Costs Hit Global Exports, But India Hits 6-Month High
S&P Global reports a slowdown in global export growth due to rising shipping costs, though India records a six-month high in new orders.
Global goods exports continued to expand at the start of the fourth quarter of 2026, marking the longest stretch of trade growth since 2021. However, this momentum faced a significant hurdle in October as rising energy, fuel, and transportation costs began to dampen demand, particularly across Asia's technology-heavy economies. According to a report by S&P Global, while the trend remains positive, the pace of growth is moderating.
The Numbers: A Cooling Trend
The Global Manufacturing PMI New Export Orders Index, sponsored by J.P. Morgan and compiled by S&P Global, dipped to 50.9 in October, down from 51.6 in September. While the index remains above the critical 50-point threshold—which separates expansion from contraction—this reading represents the lowest point in the current growth cycle.
Despite this dip, global merchandise trade is still growing at an estimated annual rate of approximately 6 per cent. The report emphasizes that growth remains broad-based, spanning both developed and emerging economies, as well as across various manufacturing and services sectors.
India and Indonesia Defy the Slowdown
While some regions struggled, India emerged as a bright spot. Manufacturing new export orders in India climbed to a six-month high, showcasing resilience amidst global volatility. Similarly, Indonesia witnessed a record expansion in goods export orders, driven by a surge in customer confidence and the introduction of new products.
Regional Shifts: Europe Takes the Lead
In a notable shift, the eurozone surpassed Asia as the strongest-performing region in October. This surge was primarily fueled by robust orders from Germany and Austria. Germany, in particular, saw its second-fastest expansion in new export orders in over five years, bolstered by increased spending on infrastructure and defence.
Conversely, other Asian powerhouses felt the pinch of rising prices:
- Japan: Recorded its slowest growth in new export orders in seven months.
- Taiwan: Saw its slowest growth in nine months.
- South Korea: Experienced only marginal expansion.
The Shipping Cost Crisis
The primary culprit behind the moderated growth is the sharp rise in input prices, with shipping costs playing a pivotal role. Higher transportation and fuel expenses have not only increased the cost of production but have also weakened the overall demand for exports.
"Shipping costs clearly played a major role in the increase in input prices," the S&P Global report stated, linking these expenses directly to the cooling of goods export demand.
This inflationary pressure led to the strongest increase in selling prices since 2022. S&P Global warned that if shipping prices continue to climb, it could further jeopardize global manufacturing production and demand.
Sectoral Performance and Future Outlook
On a positive note, for the first time since February 2022, export orders expanded across all eight broad sectors tracked by the PMI survey. While technology-related exports saw a moderation in growth, the sector is still improving. Telecommunications services led the charge, and healthcare trade showed significant improvement, eventually overtaking technology in growth terms.
The report concludes that the recent dip in business optimism regarding output growth over the next year is more closely tied to these rising costs than to a general fear of economic decline. Consequently, the trajectory of inflationary pressures will be the key trend to watch in the coming months.