The worrying signs are increasing from the main global indicators

If there's one big bellwether for global growth it's transport. Physical goods have to get from point A to point B somehow. Today one of the major indicators hit a record low

The Baltic Dry Index fell to it's lowest ever at 504 in London. It's an index for shipping rates in commodities and it's been walking the sea bed since the crisis hit

Baltic Dry Index as of COB 18 Nov

China has been a big reason for the decline in shipping rates as it reduces imports of iron ore. things are not restricted to ore as coal is the second biggest shipped commodity and it's weakening too

The snowball effect is great as falling shipping rates means more ships are sitting idle in fleets at huge cost. New vessels were in big demand when the rates were at all time highs but the rug has been pulled right out from under both owners and builders

Coincidently, Business Insider is also out with a story covering transport, though mainly focused on the US aspect, it covers the situation around the globe. They note that;

  • China freight rates have plunged. The container freight index is down 22% since Feb and 18% since it started in 1998
  • Rates to the US have dropped the most, -33% for Shanghai to the US West Coast, and -41% Shanghai to the US East Coast
  • Air cargo volume has shrunk, -0.7% y/y in July
  • Asian air freight volumes fell with international cargos -1.8% y/y in July
  • Demand for cargo planes falls. Japan's Nippon Cargo Airlines cancelled a $1.5bn order with Boeing

Passenger planes haven't been hit as hard but further news like this may hit that often volatile part of the durable goods numbers

The gloomy outlook in shipping and transportation is a stark warning on how much trouble the global economy is in. It also shows how fragile growth is in individual countries. The resounding message we get from many economic sectors is that global weakness is hurting, and it's mainly domestic activity that is holding growth up. That only gets you so far

After something like a financial crisis the effect is often like hitting a reset button on economies. Given that we're nearly a decade away from when it started, we should have already seen signs that things are stabilising. Unfortunately it's indicators like this that not only highlight that things are still bad, but that they are getting worse

In that light, for countries like the US and UK, growth at 2.5% - 3.0% is like gold at the end of the rainbow