What a difference a year makes!
Here’s a screenshot from today’s (January 14, 2009) Telegraph.
Here’s a screenshot from the Telegraph from a little over a year ago (November 3, 2007)
Those were the #1 and #2 results for a Google search I did on shipping rates after reading Ambrose Evans-Pritchard’s sobering article in on the Telegraph website: Shipping rates hit zero as trade sinks.
Hard to believe how fast and hard the global economy has fallen. Here’s a few sobering quotes
Shipping journal Lloyd’s List said brokers in Singapore are now waiving fees for containers travelling from South China, charging only for the minimal “bunker” costs. Container fees from North Asia have dropped $200, taking them below operating cost.
Idle ships are now stretched in rows outside Singapore’s harbour, creating an eerie silhouette like a vast naval fleet at anchor. Shipping experts note the number of vessels moving around seem unusually high in the water, indicating low cargoes.
It became difficult for the shippers to obtain routine letters of credit at the height of financial crisis over the autumn, causing goods to pile up at ports even though there was a willing buyer at the other end. Analysts say this problem has been resolved, but the shipping industry has since been swamped by the global trade contraction.
The World Bank caused shockwaves with a warning last month that global trade may decline this year for the first time since the Second World War.
Offering slots for free is akin to an airline giving away spare seats for nothing in the hope of making something from meals and fees.
File this in the not good news category.
The financial crisis is creating some rough waters in the shipping industry.
Here’s what By CHUIN-WEI YAP and MOHAMMED HADI had to say in the Heard on the Street column (Credit Crunch Meets Global Trade, Oct. 29, 2008)
Evidence is mounting that the credit crunch is obstructing global trade.
The drumbeats began in August when two Korean ship builders canceled orders because buyers weren’t able to produce initial payments.
The beat got louder as the Baltic Dry Index of shipping rates plunged. It’s now down more than 90% from its mid-May peak.
Then the Globus Maritime shipping company said on Friday it had to sell one of its ships for 29% below an earlier agreed-upon price. Globus, which is listed on London’s AIM exchange, blamed falling shipping activity and increasing difficulties in securing trade finance.
Broadly, shipping and commodities markets are rife with talk that banks are refusing to honor letters of credit from other banks and holding back guarantees commodity buyers and sellers need to ship all manner of metals and soft commodities.
Spurring some of the chatter early this month were the widely disseminated, gloomy remarks of a Thai shipping executive at an industry conference in Singapore. His view — that credit was frozen — was echoed by Moody’s Economy.com, which last week said stocks were piling up as cargo ships got stranded at ports pending the flow of financing. A Maersk Broker report made similar points.
The near-cessation of global credit is at the root of this particular rout.
Also in today’s Wall Street Journal, MARSHALL ECKBLAD wrote an article titled Shippers Hit by Credit Crunch where in he describes the trickle down effect of tightening credit on global shippers. Continue reading Global Shipping Has That Sinking Feeling