One can argue until the cows come home about whether Keynesian or Austrian economics are best; whether government statistics are to be believed or distrusted; and whether the US and world economies are in good shape, or bad. Ultimately, hard numbers tell the tale . . . and the hard numbers about who's shipping what goods to which markets tell a very grim tale indeed.
Earlier this month, Zero Hedge put together figures from a number of different fields of transport. Here's an excerpt from their article.
Back in March, we reported that "Global Trade Volume Tumbles Most Since 2011; Biggest Value Plunge Since Lehman." ... Fast forward to the latest update from the China Containerized Freight Index which as of October 30 has fallen about as far as it ever has in history: at 744.44 it was the lowest on record which suggests that beyond the headline propaganda of some nascent recovery, global trade has literally fallen of a cliff.
. . .
According to Reuters, "freight carried by major U.S. railroads fell by 7 percent in the second quarter of 2015 compared with the same period in 2014, confirming that large parts of the industrial economy are in recession." ... In its third quarter earnings presentation on Oct. 22, Union Pacific, the largest publicly owned railroad, acknowledged freight had shrink in five of six categories during the quarter compared with 2014.
Union Pacific carried lower volumes of farm products (3 percent), chemicals (3 percent), containers (4 percent), industrial products (12 percent) and coal (15 percent). The only sector to increase was automotive (5 percent).
Other publicly owned railroads all reported falling volumes during the third quarter compared with 2014.
There's more at the link.
A week earlier, Zero Hedge pointed out that the US trucking market was suddenly slowing down.
Trucking had been booming. 2014 had been a banner year. Capacity was squeezed, and rates were rising, so trucking companies went on a buying binge, ordering everything in the book in preparation for red-hot demand in 2015 and more banner years down the road. But then came 2015.
Among businesses, over-ordering and tepid sales caused inventories to rise and the inventory-to-sales ratio to spike to Financial Crisis proportions. And now businesses are trying to bring them down by trimming orders because they’re having trouble selling more to the middle class, the over-indebted modern proletariat whose stagnant incomes are being eaten up by skyrocketing costs of housing, healthcare, college, and the like – and they simply can’t spend that much on shippable items.
And now this is ricocheting through the industry.
. . .
In this scenario of overcapacity and slack demand, the critical load-to-truck ratio has collapsed to the lowest level in years.
Again, more at the link.
Yesterday, the Telegraph analyzed the impact of slowing demand for transport on the world shipping industry, and found its future bleak.
The shipping industry is battening down the hatches for a global economic storm that could last years.
The slowdown in China, Europe’s anaemic recovery and the failure of other emerging markets to live up to growth expectations is having a devastating effect on the global maritime industry, which carries 65pc of the world’s trade.
One of the hardest-hit parts of the industry is container shipping ... The strength of the headwinds faced was underlined recently when Maersk, the world’s biggest shipping line, reported a shocking set of financial results. Profits last quarter crashed 61pc to $264m (£174m) and revenue dropped 15pc to $6bn.
. . .
“It’s as bad as it’s been since the financial crash,” said Jonathan Roach, container market analyst at shipbroker Braemar.
More at the link.
Folks, shipping and transportation are the bellwethers for every kind of economic activity. To produce goods, manufacturers must order and transport raw materials, then ship their finished products to their customers. Wholesalers and retailers must move products from major transport hubs such as harbors and airports, to national and regional warehouses and distribution centers, to local facilities that supply stores, supermarkets, etc. If all these companies are collectively ordering less and less transportation capacity, it can have only one meaning: they are transporting fewer and fewer goods to markets. In other words, the demand from consumers for those goods just isn't there.
The numbers tell the inescapable tale. Neither the US nor the world economy are in good shape at all. Anyone telling you they are is living in cloud cuckoo land.