According to a popular, though probably erroneous, reading of an ancient Mayan calendar, the end of the world is scheduled for December 21, 2012. A look at the Baltic Dry Index (BDI), which reflects commodity shipping rates, might suggest the Mayan doomsday is indeed at hand. The measure of bulk shipping costs plunged in 2008, warning of the 2009 global recession. It closed below its 2008 low on February 3.
But, it probably isn’t the end, at least not for global trade. The Dutch Centraal Planbureau keeps an eye on global trade volumes. During
April 2008 and May 2009, Its world trade index plunged 20 per cent. In November 2011, however, the world trade volume was up 28.3 per cent from May 2009 and was 2.6 per cent higher than the pre-crisis peaks in 2008. These figures don’t bear out the Baltic or Mayan gloom.
But, the minimal growth in trade from 2008 to 2011 explains the plunging BDI. The 2008-2009 stalling in global trade took shippers by surprise. They expected — and were ordering capacity to keep up with — the 60 per cent annual increase in trade from 2000 to 2008.
The result is what a November 2011 report by PwC called a “distorted” world shipping market. The world’s fleet of 1,200 Capesize ships, the largest, is set to grow by a further 450 in the next three years. The BDI is responding to the over-supply of ships in an environment of positive, though not spectacular trade growth. The likely result is cheaper freight costs, good for commodity sellers, but not for shipping firms – nor for the banks which have lent to them.
Worries about global trade should not be dismissed, however. Growth has been relatively weak since mid-2011. The euro zone crisis is, no doubt, a negative factor. Chinese demand may also be a little softer, though not soft enough to prevent Australia enjoying a record year for exports in 2011. It’s not yet time, thankfully, to see the Balts as modern messengers from the Mayans.