The world's largest container ships, Emma, Estelle and Edith Maersk (this is Estelle) belong to Maerssk line. the are around a quarter of a mile long and a cargo capacity of 11,000 loaded 14 ton containers
While governments and mainstream media news continue to peddle a rosy picture of economic prospects, achieved by statistical jiggery pokery, money printing and they good old fashioned political ploy of telling blatant lies, the real economic indicators tell us this economic view is an illusion. Every month governments tell us the unemployment figure is down but do not tell us how many people have been eliminated from the figure because they have been jobless so long they are no longer classed as being in the labour market.
And every quarter we are told the economy has grown but are not told this growth is achieved by governments printing money, handing it out in grants and benefits and then counting it as growth when the recipients spend it.
Real economic indicators tell a different story however.
Earlier this week we highlighted the abysmal results reported by marine transport giant Maersk, a company that moves more containerised freight that its major rivals put together.
To the extent that it is the largest player in The Baltic Dry Index, probably the most reliable measure of economic activity, the conglomerate is a bellwether for global growth and trade and the economic health of developed nations, thus things are looking pretty grim. Maersk Line - the company's golden goose and the world's largest container operator, racked up losses of $182 million in the last quarter of 2015 and the outlook for 2016 isn't pretty either. The company now sees demand for seaborne container transportation rising a meager 1-2% for the year.
“The demand for transportation of goods was significantly lower than expected, especially in the emerging markets as well as the Group’s key Europe trades, where the impact was further accelerated by de-stocking of the high inventory levels,” the company said, in its annual report.
Just how bad have things become in this time of contracting global trade, you might well ask?
Worse than 2008 according to Maersk CEO Nils Andersen who warned back in November 2015 that “the world’s economy is growing at a slower pace than the International Monetary Fund and other large forecasters are predicting.” Here’s what Andersen told the Financial Times:
“It is worse than in 2008. The oil price is as low as its lowest point in 2008-09 and has stayed there for a long time and doesn’t look like going up soon. Freight rates are lower. The external conditions are much worse but we are better prepared.”
As the FT goes on to note, "capacity in the container shipping industry increased 8 per cent in 2015 despite the fact that Maersk only sees global trade and therefore demand growing at between 1% and 3% in 2016".
Imports to Brazil, Europe, Russia, and Africa are all falling, Andersen warned. The company's business, Andersen says, is suffering from a "massive deterioration." That, you can bet, will likely lead to a "massive deterioration" in Maersk's shares, which took a substantial hit on Wednesday in the wake of the quarterly and annual results.
Through it all, Andersen is attempting to strike an upbeat tone: "We are very strongly placed not only to get through this period but benefit from it. We are quite enthusiastic about it," he said.
Check back in six months to see how "enthusiastic" Andersen is once he realizes the slump in global growth and trade is no longer cyclical but has in fact become structural and endemic.
READ MORE ON: Europe >> Media >> Trade >> economy >> Business
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