Continental Drift

Back on June 5th, Lloyd’s List printed a report issued by Global Port Tracker warning of a deeper European recession. Here’s how Lloyd’s reported the warning:

“Europe is in danger of ‘slipping into deeper recession’, based on analysis of a first-quarter 2012 dip in containerized imports over the like period in 2011,” the story began. “The warning came from independent research house Global Port Tracker, whose regional trade outlook found that north European imports were ‘virtually unchanged’ in the first quarter compared with the last three months of 2011, but had fallen 2% on the same period last year.

“Containerized exports were up nearly 6% year on year, but fell 1% on the previous quarter. ‘If this trend continues, trade will be even worse than was expected,’ warns co-author Ben Hackett of Hackett Associates. In the latest report, Mr. Hackett states: ‘Trade volume indications suggest that the slowdown has started and we may be slipping into a deeper recession than anticipated. Any thoughts of a peak season are beginning to evaporate …

“In an admittedly pessimistic note, Mr. Hackett adds: ‘The partial collapse of the euro will lead to a recession that will take years to come out of, unless new economic policies can be introduced that will generate trade, something that is extremely hard to do in an environment of high sovereign debt and an unstable banking system …’-”

This August 27th story in The Journal of Commerce gives credence to Mr. Hackett’s earlier projections:

“Container volume through North European ports will remain sluggish this year as the continent’s economy struggles, Hackett Associates and the Bremen-based Institute of Shipping Economics said in their Port Tracker report …

“‘The European economic data makes for depressing reading. A no-growth GDP in Q2 in Germany is interpreted as a major achievement. Austerity remains the policy,’ said economist Ben Hackett, founder and principal of Hackett Associates. He said virtually any economic gauge points to an economic downturn that will cause the eurozone to follow the U.K., Spain, Portugal and others into recession. Hackett and Michael Testo of ISL, the report’s co-author, said weak cargo volumes would affect terminals and pressure carriers to reduce rates. Hackett noted that carriers already are dropping voyages during what normally is the peak season, and Testo said carriers have stretched their capacity by slowing vessel speeds and putting 11 ships on weekly Asia-Europe services. He said, though, that carriers cannot expect to squeeze more out of slow-steaming.” –

And Hutchison, the world’s largest terminal operator, put an exclamation mark on developments by shutting down their new Amsterdam container terminal, blaming “lack of demand”.

[Maybe it’s time for American shipyard workers to pull Europe’s chestnuts out of the fire … again.]