Some business stories are useful economic signals, some are not. For example, I’m not building any hopes on news that Ferrari sales are up 15 per cent thanks to buyers demanding ‘cashmere and corduroy’ interiors. Indicative of greater realism among the very rich is the statistic that superyacht sales are down by a third following a spectacular two-year boom. And far more worrying are other maritime bulletins, one from the Danish shipping giant AP Moller-Mærsk, the other from the fiefdom of the Hong Kong billionaire Li Ka-shing.
Maersk has downgraded its forecast for global container demand this year to a fall of 1 to 4 per cent, on the basis of slowdown in China and lower stock-holding by western companies. The latter are afflicted by higher borrowing costs, illustrating how raised interest rates combat inflation: reduced demand (coinciding with a freeing-up of logjammed shipping) has brought Shanghai-to-Rotterdam container rates down by 80 per cent from their post-pandemic spike. Meanwhile, CK Hutchison – the logistics-to-telecoms group created by Li Ka-shing – reported a 7 per cent first-half fall in traffic through its 50 ports around the world and downbeat prospects for the second half.
All of which spells misfortune for an industry which ordered more than 200 new vessels when container rates were sky-high, for delivery this year and next – adding huge new capacity in the teeth of what may be a looming trade recession that will drive shipping rates even lower. Bad news for banks that finance ships, which will turn cautious on lending to all kinds of businesses.
So there are gloomier global signals beyond the cheery domestic ones I’ve lately highlighted. But at least plastic toys from China should be cheaper this Christmas.
Nuclear spin
Energy Secretary Grant Shapps has launched a competition to develop small modular nuclear reactors (SMRs), in the hope that these compact power plants can be planned, built and replicated much faster and on tighter budgets than monsters such as the four-years-delayed Hinkley Point C in Somerset.
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