Prediction pitfalls

“You say you are on the cusp of recovery, but then something else happens that will knock your predictions.”

This has had its effect. “There is now, I believe, too much focus on short term numbers, you see volumes for this month compared with those for last month – which means very little, in fact. Forecasting is a much longer term game,” says Mr Davidson: this in turn, makes planning port developments more difficult.

Ben Hackett of Hackett Associates agrees that the “volatility” makes it harder, but he says that in order to make use of the numerous pieces of information flooding in, “what you have to do is find out which are useful and which don’t help.”

He adds that GDP “is fairly low on the list” of information to look at, as it’s actually behind the curve by between three and six months. However, he adds: “When things are as confused as they are now, consumer confidence indices actually give a better idea of what the future holds. The issue around this is that things like ‘confidence’ can change very quickly, so it is hard so say whether a downbeat index is going to be fairly superficial and short lived, or turn into a deepening gloom.”

Because of this, Mr Hackett is fairly short on the economic advantage of the austerity measures, saying these policies choked consumer confidence: “As you come out of recession, strangling growth is possibly not the best strategy.”

What both Mr Hackett and Mr Davidson agree on is that people now have to live with a bit more uncertainty and a wider spread of possible outcomes and unfortunately, this has happened at the moment that banks have decided they are averse to risk.

“Lenders generally don’t like this new reality, they want things 99% certain – and of course, the range of possible outcomes doesn’t usually have the collapse of the Eurozone factored in,” says Mr Davidson.

Mr Hackett adds: “The banks almost don’t exist these days for anything to do with shipping, although it’s easier to raise finance for Asian operations. In short, there’s a lot in the West which simply isn’t happening now.”

However, in some ways this ‘new reality’ has actually made it easier to get hold of some information, as Mr Hackett says there’s a growing transparency: “Ports do tend to work harder and more openly now, especially since they are stretching out further to the customer’s customers. More information is being gathered to help smooth the supply chain and put in place the important hinterland links.”