The Pig with lipstick wins
Global trade routes change
Economy is down and there to stay
Main driver: protectionism
Title; The higher the top the steeper the drop Alternative title; The pig with lipstick wins Alternative title II; The Tantalus Economy
For years people thought that increased globalisation would continue to drive the global economic growth far into the 21st century. However with the collapse of Lehman Brothers in 2008 the growth bubble burst. The resulting financial crisis was the start of what would be a major shift in the way people would regard globalisation and economic growth.
For the first time in history, the global maritime trade saw a dip in 2009 as a result of the economic crisis. Because of the bullish outlook on global trade before the collapse and the continuous shortage in fleet capacity, many new ships would be ready to take into service in the 2008 to 2011 timeframe. The drop in volume and the increase in shipping capacity, created a strong pressure on shipping prices. Still people were confident that the strong decline would be temporary and followed by a renewed growth of the economy.
In 2009 the first positive signals started to surface. Just as people started to regain confidence in the economy, Citibank run unexpectedly into major financial problems. Although the Obama administration responded swiftly to save the bank from having to file for chapter 11, this renewed blow to the credibility of financial institutions tipped the Global economy into a renewed recession.
This had a major impact on Global trade and the shipping industry. Where possible, ships already commissioned were cancelled and no new ships were commissioned to be built. Shipping companies incurred heavy losses. Currency fluctuations, and failing inflation measures caused distrust between countries, further limiting trade. Shipping companies had to rationalise their fleet and trade routes. A process of consolidation and bankruptcy began.
Both the left wing anti globalist movement and the right wing nationalistic movements gained power. The trend towards nationalism and protectionism, which was already slowly taking place in 2009, got even stronger. In the years to follow many European countries saw more conservative and nationalistic parties gaining power within governments. The US deficits together with the bleak outlook for recovery resulted in a sharp drop of the dollar and resulted in a renewed drop in house prices and unprecedented unemployment figures. The sharp decline of the US dollar also caused the world’s economic engine China, to take a major hit and join the global recession. All BRIC countries were now struggling as exports diminished and home markets were not yet strong enough to drive economic growth from the inside.
Sarah Palin won the 2012 US president elections with a landslide victory, with the promise to the American people to rebuild the America, which had been destroyed by the wrong choices made by the former president Obama. ‘Our country, founded on conservative principles and the fight for freedom, must confront the challenges of the 21st century with integrity, innovation, and determination.’
The global trend became more conservative and protectionism lost its negative connotation, with the financial institutions becoming nationalised. Although the oil price had dropped under 20 USD per barrel many countries aimed to become as energy self sufficient and thus independent as possible. Sustainable energy sources were in the centre of attention to decrease the dependability on oil. Local goods and produce were preferred to stimulate the local economies. The public having suffered in the years of recession and having witnessed what globalisation and an increased individualistic and materialistic view could cause, had a diminished need for gathering wealth. The focus returned to the importance of family, friends and the local community.
Despite the efforts of the WTO to keep markets open, by 2015 many major countries such as the US, Germany and France limited their imports and further focussed efforts on becoming as self sustainable as possible with activities towards ‘cradle to cradle’, increased recycling etc. Trade volumes dropped sharply due to the economic decline and protectionist efforts, favouring local production. This also had its effect on global corporations. As people started to favour local companies and brands; Proctor and Gamble was one of the first global companies to sell local branches where possible and retract from external markets, refocusing on their home market in the USA as their customers demanded.
The European Council meeting which was hosted by the Dutch Prime Minister Wilders on June 14, 2016 became an historic event. In what became known as the Noordwijk treaty; the EU ministers denounced the old Schengen treaty exactly 30 years after it was first established. Border controls were quickly re-established.
This heralded the end of the maritime hub and spoke system; where previously major ports took in the ever larger sized ships after which the goods would be transported by smaller boats to neighbouring ports, increased cross border taxes and lower volumes made it more economical to send smaller sized container vessels directly to the port within the country of destination. Many redundant ships were run unto the shores of countries such as Ethiopia for demolishing. With the global export market shrunk and the trend towards local manufacturing, the BRIC countries lost their driver for growth. In China this resulted in an instable political situation eventually leading to a renewed strictly communistic and closed regime. In India and Latin America civil wars erupted. Dubai which ones was an economic hot spot was now largely deserted. Large ports such as Singapore and Shanghai remained largely empty.
The main trade routes towards the end of the second decade of the twenty first century were between The US and the European countries, with oil coming still from the Middle East, be it in much lower quantities due to diminished growth. The goods mainly shipped were specialty high value products which a certain country could not produce themselves and food as many countries lacked the agricultural resources to become independent.
By 2020 trade routes stabilised and for the first time in years a small growth was seen in Global trade.