A TPDEARR Article
Trans-Pacific Dynamic Equity Allocation Research Report
The Pacific Ocean is the world’s most significant transportation market for supplying the global marketplace. It is estimated1 that upwards of 80% of all global trade is transported on ships, and that more than half of that passes around the Pacific Ocean. Sixteen of the top twenty most-trafficked ports are in Asia, with the Port of Shanghai being the single busiest, and 10 are within greater China alone (which includes one each in Hong Kong and Taiwan). The share of global merchandise exported and imported around the world continues to rise in Asia (and Mexico!) as it keeps dropping in the US and Europe2. Excluding internal EU trade, the six economies that export and import the most intermediate goods (indicating manufacturing centrality) are the PRC, the US, Korea, Japan, Taiwan, and Singapore, all trans-Pacific economies. Slowdowns in the PRC post-pandemic recovery should not be construed as a shrinking or diminishing of the total volume and value of trans-Pacific trade across all relevant economies.
We focus on the markets and environment of the trans-Pacific in the TPDEARR because it spreads across the world’s largest and most-used ocean. The Pacific covers about a third of the Earth, holds about half of the world’s seawater, hosts the world’s two most significant economies (the two “poles” of the US and the PRC, as well as 53 other nations), has the largest number of coral reefs, provides more than 70% of the world’s total fish catch, and “connects” the global marketplace to an extent unparalleled worldwide. Notwithstanding these (and other similarly astounding) statistics, the Pacific Ocean is still not fully appreciated in the modern psyche. Because it usually hangs off the edges of the map (usually mercator projections), for many people it also hangs off the edges of their focus, even though it is arguably our planet’s most significant single feature.
Walls cannot be built in the Pacific, nor its flows and meteorological effects contained. It is intrinsically a connecting body, giving sprawling access to 5 of the world’s continents. As the global population continues to grow, its use will not diminish, nor will its importance to our food supply, our health, and the interconnected livelihoods of planetary flora and fauna.
Containerization has fully set in to the world economy, so we are all more-or-less locked in to the use of shipping containers for our goods transportation. Furthermore, the largest players in the shipbuilding space are China, Korea and Japan, all of which are trans-Pacific economies. Even if their populations all declined markedly from now over the next decade, the quality and value of goods produced in their countries is likely to keep rising, keeping them in the upper tiers of the global wealth scale, and keeping them in the height of competition for global trade flows with other rich economies. Containers will continue to pass through their ports for the foreseeable future. As such, we feel [SEP.23 Squad Asset #4] is in a fantastic position to capitalize off of our containerized future.
The significance of the Pacific Ocean cannot be understated, and I hope the TPDEARR can, if nothing more, serve as an ode to our greatest body of water both now and in perpetuity.
- https://unctad.org/press-material/unctads-review-maritime-transport-2020-highlights-and-figures-asia-and-pacific ↩︎
- https://www.wto.org/english/res_e/booksp_e/wtsr_2023_e.pdf#:~:text=This%20report%20reviews%20world%20trade%20patterns%20in%202022%2C,reflecting%20the%20effect%20of%20high%20global%20commodity%20prices ↩︎
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