• What does this Global Shipping Indicator say about Market Strength?

    by  • March 13, 2013 6:00 am • Breaking News, Broad Market Analysis, Quick Hits • 0 Comments

    In this week’s column I’d like to discuss a Global Shipping Indicator that suggests the underlying strength of the market remains intact despite the persistent disbelief that has accompanied this rally.

    The Container Throughput Index of the Rheinisch-Westfälisches Institut für Wirtschaftsforschung (RWI) and the Institute of Shipping Economics and Logistics (ISL) continued to climb with its latest report.

    The Container index is based on data for 73 ports handling approximately 60% of global container throughput.

    These ports are continuously monitored by the ISL as part of their market analysis. Because large parts of international merchandise trade are transported by ship, the development of port handling is a good indicator for world trade.

    As many ports release information about their activities only two weeks after the end of the respective month, the RWI/ISL Container Throughput Index is a reliable early indicator for the development of international merchandise trade and hence for the activity of the global economy.

    In the graphic below, provided by RWI / ISL, the shipping index as well as the seasonally adjusted values are plotted together since the beginning of 2007.

    As you can see, the RWI/ISL Container Throughput Index shows a close correlation with world trade. The RWI / ISL index has an increasing as well as high correlation with the Standard & Poors 500 Index as well.

    In the next graphic, I plot the Container Throughput Index with the SPX over the same time period, since 2007:

    The index provides valuable input into business cycles analyses, since it is available 3 to 4 months in advance of data on world trade published by international organizations, and one month in advance of the first estimates of world trade volumes.

    Based upon this index, it appears the collective easing, or “loose” monetary policy of global central banks from China and Japan, to the ECB and the Fed have kept global shipping and our economies moving forward.


    Chris Prybal is a Quantitative Analyst who contributes fundamental, technical, and sentiment research as well as analysis to SchaeffersResearch.com. Chris holds a Bachelor’s degree in Finance from the University of Cincinnati and his research has been quoted on Bloomberg TV, CNBC, Barron’s and Forbes Magazine. Chris has analyzed and traded derivatives for over 15 years in addition to his research prowess. Chris can be followed on Twitter @ChrisPrybal


    Leave a Reply