This is something that is not covered in the major media but there is one interesting metric that shows that the world economy is slowing down... A lot...
Shipping.
The less stuff people buy, the less call there is for shipping a container from point A to point B. One measure of shipping activity is the Baltic Dry Index formed, like most maritime endeavors, in a London Coffeehouse - the Virginia and Baltick (Maritime insurance company Lloyds of London was formed at Edward Lloyds' Coffeehouse). Here is a chart of the Baltic Dry Index from Bloomberg:
Next, we have these cheery words from Tyler Durdin at Zero Hedge:
Global Trade In Freefall: China Container Freight At Record Low; Rail Traffic Tumbles, Trucking Slows Down
Over the past year we have regularly contended that a far greater threat to the global economy than either corporate earnings, currency devaluations, rate cuts (or hikes), reserve outflow, or even the stock market, is the sudden, global trade crunch which has been deteriorating rapidly since late 2014 and has seen an even more dramatic drop off as 2015 is winding down. Actually, that is incorrect: global trade is merely a manifestation of the true state of the above listed items.
First, there was ships
Back in March, we reported that "Global Trade Volume Tumbles Most Since 2011; Biggest Value Plunge Since Lehman."
Then in August when we first pointed out a dramatic slowdown in the Baltic Dry index which had peaked just a few weeks earlier and we said that "should the dead cat bounce in shipping rates indeed be over, and if the accelerate slide continues at the current pace, not only will shippers mothball key transit lanes, but the biggest concern for global economy, the unprecedented slowdown in world trade volumes, which we flagged a week ago, will be not only confirmed but is likely to unleash yet another global recession."
Three weeks later, we got confirmation that the BDIY has indeed become a lagging indicator to actual demand, when Reuters reported in its latest weekly update using data from the Shanghai Containerized Freight Index, that key shipping freight rates for transporting containers from ports in Asia to Northern Europe fell by 26.7 percent to $469 per 20-foot container (TEU) in the week ended on Friday.The collapse in rates is nothing short of a bloodbath: "it was the third consecutive week of falling freight rates on the world’s busiest route and rates are now nearly 60 percent lower than three weeks ago.
Fast forward to the latest update from the China Containerized Freight Index which as of October 30 has fallen about as far as it ever has in history: at 744.44 it was the lowest on record which suggests that beyond the headline propaganda of some nascent recovery, global trade has literally fallen of a cliff.
Much more at the site with link to the data. Finally, this news item from gCaptain:
Maersk Decision to Lay-Up a Triple-E is ‘A Wake-Up Call’, Says Drewry
Maersk Line’s decision last week to lay-up one of its 18,000 teu flagships is “good news for the industry”, Drewry Maritime Advisors said earlier this week.
TEU is a TLA for twenty-foot equivalent unit - a standard 20 foot long by 8 foot square shipping container
Other ocean carriers are likely to follow the market leader and mothball more surplus ships.
The move to idle the Triple-E vessel followed a profit warning from the Maersk group which lowered its full-year profit forecast for the container division by $600m to “around $1.6bn. It blamed freight rates which “significantly deteriorated”, especially on its main Asia-Europe route in the latter part of September and into October.
The dramatic turnaround from the Danish carrier was confirmation that, despite its ability in recent years to outperform it peers in terms of operating margins, it is not immune to the toxic mix of too much capacity chasing dwindling cargo demand.
Maersk is also laying off 4,000 employees as noted at The Loadstar
Fun times ahead - time to invest locally and develop marketable 'real' skills - brewing, carpentry, plumbing, farming, machining, etc... Brushing up on STEAM (not STEM) skills will not hurt either.
