World Trade, U.S. Industry Keep Contracting

The CEO of the world’s biggest shipping company Maersk, Nils Smedegaard Andersen, is with the CEOs of Caterpillar, UPS, Fastenet and other globally-connected companies, in seeing a continuing industrial recession. Andersen told Bloomberg the reason why companies that are reliant on global trade, such as his, are having trouble, is: “The world’s economy is growing at a slower pace than the International Monetary Fund and other large forecasters are predicting…. Trade is currently significantly weaker than it normally would be under the growth forecasts we see.”

In fact, global trade data for October from the WTO show a volume decline in trade of more than 3% from 2014. IEA’s October forecast (usually over-optimistic) is that world demand for oil will grow just 1%, or 1.1 million bpd, in 2016.

China’s October trade data show the global trade collapse. The country’s General Administration of Customs said that in October exports fell 6.9% year-over-year in dollar terms, after a drop of 3.7% in September. Shipments to the United States dipped 0.95; to the European Union, 2.9%; and to Japan, 7.75.

Imports in October fell by a full 18.8% from a year earlier, following a 20.4% decline in September. This is in dollar terms, and expresses above all the collapse in prices of the industrial commodities that China imports for its industrial sector.

But U.S. industry is plunging: According to Reuters Nov. 6, “Freight carried by major U.S. railroads fell by 7% (in volume terms) in the second quarter of 2015 compared with the same period in 2014, confirming that large parts of the industrial economy are in recession.” It details: major Class 1 railroads carried 431 billion ton-miles of freight in the three months ending June, down from 463 billion ton-miles in 2014, according to the U.S. Surface Transportation Board.

The slowdown continued into the third quarter. Total traffic on U.S. railroads in the 42 weeks ending on Oct. 24 was down 5.3% compared with 2014, according to the Association of American Railroads (AAR). Coal shipments were down by 27 million metric tons, around 15%. Petroleum shipments fell more than 650,000 metric tons, 5%. And shipments of sand and gravel (fracking), plunged by more than 2 million metric tons, nearly 14%. Shipments of a range of other items from chemicals to fertilizers and other industrial supplies were also lower.

Trucks: Since late last year, load-to-truck ratios have been on a declining trend. Every month this year, the ratios were below the ratios in 2014. In July, August, and September, the ratios hit 1.8, the lowest in years. In September, the ratio was 42% below a year earlier.

This did not, however, stop Canadian Pacific from having two oil trains derail and burn in Wisconsin in two days this weekend.