The “Weather App” for Trade

DHL delivers 1.4 trillion packages every year. They collect a lot of data on what’s moving by air and ocean freight all around the world, and have combined this logistics data with artificial intelligence to forecast trade three months in advance, published as the DHL Global Trade Barometer.

According to DHL, the barometer uses data on how much seven countries import and export by air and by sea of selected intermediate and early-cycle commodities that serve as the basis for further industrial production, such as brand labels for clothes, bumpers for cars or touch screens for mobile devices. The seven countries – China, Japan, Germany, India, South Korea, the UK, and the United States – account for more than 75 percent of world trade.

DHL compresses the data using artificial intelligence (and statistical methods I wouldn’t begin to understand) to form index values indicating whether we can expect world trade to grow or decline. To test the barometer’s accuracy, DHL can look back at real containerized trade and compare the outcome with its forecast, finding a high correlation and reliability for its forecasts.

What’s on the Horizon?

According to the most recent forecast, the seven bell-weather countries are still likely to experience growth despite rising trade policy tensions, but the absolute index number is expected to decline somewhat, indicating slowing growth. India growing at the fastest rate, and the UK is stable amidst difficult Brexit negotiations.

DHL created the barometer to assist its supply chain customers optimize their business processes and support its own logistics operations, but you can also explore their data to get beyond the political atmospherics and see what the markets are really doing. Access data from the Global Trade Barometer here.