From Sea News (8/15/2014) “Increasing signs of flagging trade puts global growth at greater risk”
“There are growing signs that global growth may be headed for a slowdown, and one indicator, the Baltic Dry Index, is down 65 per cent so far this year, notes Reuters news agency.
“The fall in the Baltic Dry Index is partly driven by new shipping capacity coming on line, but there are other indicators that show momentum is slowing and could be taking global growth with it.
“Global trade volume fell in May, the most recent month measured, according to data from the Netherlands Bureau of Economic Policy Analysis, and global trade momentum has been in negative territory for much of 2014.
“The IMF last week cut its global growth to 3.4 per cent, from 3.7 per cent in April. The US economy shrank in the first quarter and the IMF has downgraded US growth expectations to 1.7 per cent for the full year …
“There are other signs that growth is less healthy year on year, notably the OECD leading indicator is now only a bit more than half it was last November.
“Public debt markets are so hot, said Reuters, that regulators are tamping down investor enthusiasm for risky loans and bonds. But markets depending on bank financing are having a hard time …” —
Sounds as though things are going south, right? Time to play it close to the vest, right? The last thing a sensible CEO would do in such trying times is blow money on unnecessary and costly purchases. Even Drewry knows that. Here’s a recent headline:
“Drewry: Carrier alliances necessary to cut costs and improve service”
It’s agreed then. Cutting costs means not blowing money on unnecessary and costly purchases, and in these trying times when cutting costs and improving service are so important, buying more and more larger and larger mega ships is the very thing a sensible CEO would absolutely not do. A sensible CEO has enough problems without having to worry about “downgraded growth expectations” (decreasing demand) leaving him with half-full mega ships. Who needs ‘em?
But the CEOs of almost every carrier insist upon ordering more and more larger and larger mega ships. In order to “improve service” – which, translated, means getting the reduced amount of cargo to end users in a reasonable amount of time – these CEOs must now turn to rival carriers for help. Vessel-sharing arrangements are now in vogue. Bitter rivals have become the best of friends.
And “slow steaming”? It’s the ideal way to “improve service.” And larger and larger mega ships? “Watch me fan my feathers,” says the CEO. And costs? “We’ll just bill the consumer,” says he.