https://www.reuters.com/article/us-shipping-economy/global-shipping-rates-slump-in-latest-sign-of-economic-slowdown-idUSKCN1PJ0BQ
Many are worried where the global economy is heading with the current slowdown of trade and growth seen throughout world. The Baltic Dry Index, a shipping cost measurement tool for items such as iron ore and coal, has fallen by 47% since mid-2018. Additionally, the Harpex Shipping Index, a container rate tracker, has dropped around 30% since June of 2018.
These numbers may seem frightening, however, how do they compare to measurements for the rest of the economy? If these decreases fall in line with what we believe we should have observed, then perhaps this slump is attributed to the downward fall of a business cycle. After all, the global economy as a whole has had impressive growth over the years, perhaps it is catching up with itself.
That is not to say, however, that recent trade wars are not attributable to this fall. These conflicts certainly play a role in the performance of shipping rates. With that said, if these trade wars were not to have happened, would we still be seeing a similar decline in rates? Perhaps things are inflated slightly due to these conflicts, and once they are resolved, we may notice a sizable change.
4 comments:
Duncan, very interesting article. My own knowledge of the Shipping Index is not very in depth. Although the data you showed does seem very alarming. It would be interesting to see where those drops compare to recent recessions. The government shutdown is also no help during these times of trade between the US and China. Good article!
I think it is very interesting that shipping rates are in a decline; although given the information you provided, it is no surprise. While the trade wars have definitely played a huge role in this decline, I think that there would still be a slight decline in shipping rates even if trade wars were not a factor. Our economy, as well as a few others, are concerned about slow growth. This slow growth would still be occurring even without the trade wars and would still have a negative effect on the shipping rates as well. As Antonio mentioned, it would be interesting to see how these drops compare to previous years.
This is an interesting topic to discuss. Although I do not know the shipping index all that well, it does seem a bit alarming that the rate of shipping has declined 30% since June of 2018, it will be interesting to see how the economy works itself out to get the number to rise again. To answer one of your questions, I do not think that the numbers would have been this drastic if not for the trade wars that go on around the world. I think they numbers would be showing a lot less decline a little more growth if not for these trade wars.
Duncan, This is a very intriguing article. The data is certainly unsettling but i don't think it is that worrisome. The global economy as a whole seems to be slowing down. especially china their growth has declined quite a bit the last couple of years. The ongoing trade war also doesn't help those statistics. I believe these statistics will level out here soon and stay pretty stable.
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