Maersk’s $3.7bn new ships investment underwater as global ‘demographic dividend’ ends

Economic growth


Euro GDP Sept13The red line in the above chart from the Financial Times shows how far Eurozone growth has diverged since 2008 from the previous SuperCycle trend (in blue).

Unfortunately, most companies failed to spot what might happen as a result of Europe’s ageing population.  Instead they spent $bns on new capacity in anticipation of a strong economic recovery.   Only now are they beginning to realise how expensive their mistake could prove.

Thus the CEO of major shipping line Maersk has revealed they spent $3.7bn in 2011 on 20 new  container ships for the Asia-to-Europe trade route, the world’s busiest.  But today, capacity is 10% above demand, and rates have fallen 30% to less than $1k/container.  Thus he confessed to the Wall Street Journal:

“It’s pretty clear that when we look back to early part of 2011 when these ships were ordered, ours and everybody else’s view on growth was somewhat different than what it turned out to be and therefore the market will not be as quite as big in 2015 as we thought it to be.”

It is, of course, not true that ‘everyone else’s view on growth’ was similar to his.  Sadly, like too many CEOs, he believed the hype from policymakers and the central banks.  A quick read of the first chapters of Boom, Gloom and the New Normal (which began publication in May 2011) might have provided food for thought about alternative views on the outlook for growth.

The chart also highlights how Eurozone GDP is now 15% below its trend-line growth (dotted red line).  Just as first discussed back in December 2008, we have seen an L-shaped recovery.

Sadly Western policymakers still insist their models are right, despite the evidence on the ground.  But at least China’s new leadership are being more realistic, and now accept they will now have lower growth due to the loss of the previous ‘demographic dividend’.  As a leading member of China’s Academy of Social Sciences explained recently ahead of the November plenum:

“Over the past three decades, China’s economy saw an average annual growth rate of almost 10%. There are many reasons for the rapid growth, but a major one was the country’s favorable demographic structure.”


Income and age will determine American's future housing needs


Affordability is the key factor in today’s markets.  And nowhere is this ...

Learn more

G7 births hit new record low in 2012


The G7 group of countries are almost half (47%) of global GDP*.  They also hav...

Learn more
More posts
Financial markets head for (another) train crash as coronavirus starts to impact

China’s industrial heartland of Hubei (pop 59m) and its capital Wuhan (pop 11m) have now been ...

Coronavirus disruptions make global recession almost certain

Last month, our Hong Kong-based pH Report colleague, Daniël de Blocq van Scheltinga, warned of the ...

Your A to Z Guide to the Brexit trade negotiations

A. Article 50 of the Lisbon Treaty set out the rules for leaving the European Union. As with most ne...

Contingency planning is essential in 2020 as “synchronised slowdown” continues

The IMF has now confirmed that the world economy has moved into the synchronised slowdown that I for...

Boris Johnson will have to disappoint someone in 2020 as the UK finally leaves the EU

Finally, after three and a half years, the UK has reached “the end of the beginning” wit...

ACS Chemistry & the Economy webinar on Thursday

Please join me for the next ACS Chemicals & Economy webinar on Thursday, at 2pm Eastern Standard...

What’s next for Brexit and chemicals?

The UK is about to go to the polls again to try and decide the Brexit issue.  Chemicals will be one...

Global economy hits stall speed, whilst US S&P 500 sets new records

Whisper it not to your friends in financial markets, but the global economy is moving into recession...


Market Intelligence

ICIS provides market intelligence that help businesses in the energy, petrochemical and fertilizer industries.

Learn more


Across the globe, ICIS consultants provide detailed analysis and forecasting for the petrochemical, energy and fertilizer markets.

Learn more

Specialist Services

Find out more about how our specialist consulting services, events, conferences and training courses can help your teams.

Learn more

ICIS Insight

From our news service to our thought-leadership content, ICIS experts bring you the latest news and insight, when you need it.

Learn more