[JJ]

told my boss the Baltic dry index had taken a nosedive. He said "Oh yeah? Here, put out these cherries. Just got an email saying we got a container ship full of them from Chile. Price went down a dollar (3.99 a pound). Yet again I've been proven a fool.

[Ferretlover]

told my boss the Baltic dry index had taken a nosedive. He said "Oh yeah? Here, put out these cherries. Just got an email saying we got a container ship full of them from Chile. Price went down a dollar (3.99 a pound). Yet again I've been proven a fool.

No, I don't think so. Those cherries weren't picked, packaged and shipped to appear a day later. They were already in the 'pupeline.'

[patience]

Seems to me there hasn't been a lot of interest here in the possibility of shortages, but the dearth of worldwide shipping makes that a significant possibility. The US has been blessed with plenty for a long time, so maybe that explains it.

The BDI dive tells me that manufacturers and processors expect, or are seeing orders doing a cliffdive. Somewhere I saw the BDI called a forward looking indicator. Undoubtedly, there are commodity pricing factors in this, too.

The US dollar index is also falling, so the US could very well see not only shortages of goods, but increased prices on what does make it to the shelves. That would make the present day a good one to buy what one needs.

[smallpoxgirl]

I do. Get away with statements like this:
"Not saying it's not important, but I'm not sure it's as important an indication as he seems to think it is."

Dude what are you in kindergarden? You going to beat me up now and take my lunch money?

Why is the BDI not nearly as bad as it might seem?
A: BDI does not measure container ships. It measures bulk hold ships. They carry(according to wikipedia): building materials, coal, crude oil, metallic ores, and grains. Are we surprised that transportation of building materials is down? I'm not. Are we surprised that transportation of coal and crude oil are down? No. Metal ores? not so much.

B: Shipping prices are very inelastic. There are a certain number of ships. Building more is expensive and slow. Letting them sit idle is also a no go as you have to pay to maintain them. Small incremental increases in the demand for the commodities noted above ran the BDI wildly during the commodity boom. In 2002 the BDI was 800. In 2007 it ran up to over 11,000. This undoubtedly led to building more dry bulk ships. Now small incremental drops in the demand have allowed it to fall right back down to 800. BDI isn't a direct measure of how much stuff is actually getting shipped around. It is therefore prone to chicken-little type over interpretation. The plunge in the BDI doesn't mean that shipping has stopped any more than the plunge in crude prices means that we've stopped using oil. We've cut back a little on our oil usage, and a lot on our demand for building materials. You're still going to be able to get your Chilean cherries for a while though.

[IslandCrow]

Is this a "dead ship bounce" or that start of recovery?

Dry bulk posts more gains

16 Dec 2008

Hot on the heels of the upward trend established throughout last week, the dry bulk market continued rising on Monday, breaking the 800-point ground, as the Baltic Dry Index closed at 803 points, up by 39 points. Again, leading the pack was the Capesize sector, which shot up by another 123 points or 10 percent, to end at 1454 points, while the Panamax index managed to turn to positive for the first time in more than two weeks. Panamaxes closed at 450 points, up by 10 points. In its morning note, Dahlman Rose said that the Capesize market continued to outperform smaller ships....

Of course, despite the positive trend highlighted during these past few days, dry bulk shipping companies aren’t yet in the clear. On the contrary, they keep facing serious challenges. “Rates have not achieved a level to add support to vessel values, and loan/value covenants likely remain in jeopardy” said Dahlman. BRS noted that “the China Metallurgical Mines Association last week confirmed that China’s domestically produced and imported ore reached 632m tonnes between January and September – still 64m tonnes more than the country’s steel sector required.

The big question is if the capesize sector will continue its resilience.

Hellenic Shipping News

Link (note I added highlights to the copied text)

[flapjax]

BDI drops 93%- wow

How long until the shelves are empty in the US ?

I've been following the George4Title vlog on youtube for a long while now. He is a great guy who lost his job in Cali and now seeks occational donations/sponsorship via his channel on you tube and I applaud his efforts. He is, however, not an economics expert by any measure. He is a truther like many of you here but I've got to side with SPG. George4Title vs. SPG? SPG, hands down. George4Title knows as much about economics as I do - close to squat.

I still enjoy his channel, though. He keeps an eye on current events like you folks here on peak oil. I also enjoy his raw style.
For a stronger take on economics, vloggers I go to on youtube are
myspacesecrets, TheModernMystic, visionvictory, and manoftruth.

If you guys could recommend some other informative vloggers out there, I would love it if you could share them with me.

[IslandCrow]

I realise that the BDI is not so good for containers: Having spent an hour or more searching with Giggle, not knowing how to formulate the right search string, I now come with a question: What and where are good indexes for Container shipping? This might be a more immediate indicator of problems than the BDI.

I did find statistics for the local harbour. They publish monthly, but the latest info is for September. Here is a summary for September, no alarm bells ringing yet (but the data is old):

Total trade (tonnage based) - 2,48%
´Unitized traffic' - 5,33% of which:
Containers + 22,93%
Trucks/trailers -5,40%
Rail waggons - 39,31%

[billg]

Just did a little research to help us understand what is behind the BDI statistics.

TSA: Container cargo may drop 8% by year-end as global trade slows

By David Hannon -- Purchasing, 12/11/2008
Just how much has demand for goods shipping in containers from Asia decreased this year? According to the Transpacific Stabilization Agreement, which represents 15 ocean carriers in the Pacific, Asia to U.S. container cargos dropped 6.9% in the first half of 2008 and could end the year down as much as 8% from last year.

And officials from TSA are not predicting a rebound in cargo demand until the second half of 2009. "Clearly we're in a slowdown right now, but just as clearly, the current freezing up of the global credit system is unsustainable," said TSA chairman Ronald Widdows in a statement. "We expect to see an orderly de-leveraging of the financial markets over the next year that will begin to restore confidence with year-on-year cargo demand growth resuming in late 2009."

In a recent report, Philip Damas, director of research at Drewry's ship consultancy in London, said that the growth of container trade is at its lowest level ever from Asia to the U.S. this year, and was at a 15-year low from Asia to Europe. "As a result of the financial crisis we are seeing consumers buying less clothes and furniture and we've even got the start of bankruptcies for furniture importers," he said.

Data from HIS Global Insights says the number of shipping containers entering the U.S. through its top 10 container ports between January and September was 7.2% lower than it was during the year-earlier period.LINK

Lower demand, rates expected for container shipping in 2009

Global trade slump will slow transpacific shipments
By Dave Hannon -- Purchasing, 12/11/2008 1:55:00 PM
With China’s exports falling surprisingly 2.2% in November and overall global trade expected to remain slow for at least the short-term most experts are predicting container freight volumes—and rates—to be down in 2009. The World Bank this week said global trade is set to fall by 2.1% in 2009, marking the first decline since 1982, and much of the slump is going to be felt in the transpacific trade lanes.

According to the most recent Purchasingdata.com survey, only 9% of buyers increased sourcing from overseas suppliers in December. “Global demand for Chinese products is vanishing,” said Gene Ma, an economist at China Economic Monitor, a Beijing consultancy, in a recent Reuters report. "Secondly, the credit freeze in importing countries has made it hard for Chinese exporters to sell abroad."LINK

Maersk cuts trans-Pacific rates
December 15, 2008
Maersk Lines has slashed container freight rates from Asia to the U.S. West Coast by nearly a quarter as the American economy slows, according to reports from Hong Kong.

“Container shipping rates have come down substantially as demand is very weak and exporters are in deep water,” said Sunny Ho, executive director of Hong Kong Shippers Council.

Container freight rates for Asia to the United States have fallen to as low as $1,300 a box, he said, without naming specific shipping firms.

Maersk Line declined to comment on rate cuts, but did say earlier this month that it is “striving to keep its market share in the trans-Pacific routes.”

“To create a sustainable environment, rates must go up,” said Mary Ann Kotlarich, a spokeswoman for Maersk Line in the U.S.

Sources told Reuters that Maersk had cut freight rates to the West Coast to $1,300 per 40-foot equivalent unit, from $1,700.

Cosco Container Lines, the Hong Kong-listed arm of China’s largest shipping conglomerate, has followed with cuts, as slowing trade growth due to weak demand from the United States and Europe continues to pressure shipping rates, a source told Reuters.

He would not specify the amount of the cut.

Analysts expected other regional container line operators, many of which are operating at losses, to follow.

Credit Suisse said it did not see the prospect of another up-cycle yet, and shipping lines were cutting back on capacity to avoid further losses.

Maersk, the world's top container ship operator, said it was taking eight 6,500-TEU ships out of service until May or June 2009 due to poor market conditions.

Container shipping rates from Asia to Europe have also fallen by about two-thirds to more than $200 per TEU, Ho said.

“We have some cases where shipping firms are willing to move goods for a zero freight rate and exporters are only responsible for bunker (fuel) and terminal handling charges,” he said.

Hong Kong exporters reported a 30 percent year-on-year drop on orders for the peak season next year, Ho said. LINK

[MonteQuest]

I do. Get away with statements like this:"Not saying it's not important, but I'm not sure it's as important an indication as he seems to think it is."

Dude what are you in kindergarden? You going to beat me up now and take my lunch money?

*sigh*

My comment, "it is the best economic indicator you've never heard of" was not aimed at you nor meant to poke your sensibilities. It was a general observation for readers and a "quote" from my post.

In these times, the BDI is probably the most important economic indicator there is.

Relax, SPG, I wasn't beating up on you.

[IslandCrow]

Cross link to MrBill's posting on tanker prices

Included are some graphes of spot prices for different oil tanker sizes.

[dohboi]

"To create a sustainable environment, rates must go up" (from billg's third link above, my emphasis)

I found this snippet particularly hilarious/depressing. Of course, this is referring to economic environment for shipping, but I do wonder if the irony of such language ever occurs to those who utter it--a sustainable environment of course depends on nearly all container-ships remaining idle forever. Global consumption necessarily means consumption of the globe.

In my earlier post about BDI, I did not intend to imply that the world is not coming to an end or that BDI itself isn't an important indicator. But if a headline that states "BDI falls to 2002 levels" doesn't strike a doomer like me as particularly ominous, I doubt it will strike fear into the hearts of those who don't spend most of their idle time staring into the abyss.

[manu]

Expect rioting in almost every city in the U.S. and Euro by March.
Remember you can't eat nuts and bolts or computor chips.

By March of what year?

March 2009.

[yesplease]

March 2009.

Ya willing to bet on that?

[billg]

Shipping rates hit zero as trade sinks

By Ambrose Evans-Pritchard, International Business Editor
Last Updated: 3:39PM GMT 14 Jan 2009

Freight rates for containers shipped from Asia to Europe have fallen to zero for the first time since records began, underscoring the dramatic collapse in trade since the world economy buckled in October.

The cost of shipping goods from Asia to Europe has tumbled. "They have already hit zero," said Charles de Trenck, a broker at Transport Trackers in Hong Kong. "We have seen trade activity fall off a cliff. Asia-Europe is an unmit igated disaster."

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.

Industry sources said they have never seen rates fall so low. "This is a whole new ball game," said one trader. The Baltic Dry Index (BDI) which measures freight rates for bulk commodities such as iron ore and grains crashed several months ago, falling 96pc. The BDI – though a useful early-warning index – is highly volatile and exaggerates apparent ups and downs in trade. However, the latest phase of the shipping crisis is different. It has spread to core trade of finished industrial goods, the lifeblood of the world economy.

Trade data from Asia's export tigers has been disastrous over recent weeks, reflecting the collapse in US, UK and European markets. Korea's exports fell 30pc in January compared to a year earlier. Exports have slumped 42pc in Taiwan and 27pc in Japan, according to the most recent monthly data. Even China has now started to see an outright contraction in shipments, led by steel, electronics and textiles. A report by ING yesterday said shipping activity at US ports has suddenly dived. Outbound traffic from Long Beach and Los Angeles, America's two top ports, has fallen by 18pc year-on-year, a far more serious decline than anything seen in recent recessions.

"This is no regular cycle slowdown, but a complete collapse in foreign demand," said Lindsay Coburn, ING's trade consultant. 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. This appears increasingly certain with each new batch of data.

Mr de Trenck predicts Asian trade to the US will fall 7pc this year. To Europe he estimates a drop of 9pc – possibly 12pc. Trade flows grow 8pc in an average year. He said it was "illogical" for shippers to offer zero rates, but they do whatever they can to survive in a highly cyclical market. 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.
LINK

[IslandCrow]

Idling ships clog up Singapore shores
Singapore claims to be the busiest port in the world. About 130,000 ships arrive there each year. But these days, the problem is many of those vessels are not putting back out to sea. The usual stay for a cargo carrier is just ten days. That is enough time to offload one set of cargo and take on another load, re-fuel and re-stock supplies.

But, of the 220 container ships arriving in Singapore this year, - excluding the tugs, yachts and bunkering vessels which are permanent port residents - more than half have stayed longer than that. Another 44 cargo ships have been in port for more than six months

link

I realise that not running ships will not directly save much energy, but I wonder what the total effect, all down the chain of supply to the shop to the home, on energy consumption all these idle ships represent.

[Serial_Worrier]

Idling ships clog up Singapore shores
Singapore claims to be the busiest port in the world. About 130,000 ships arrive there each year. But these days, the problem is many of those vessels are not putting back out to sea.

The usual stay for a cargo carrier is just ten days. That is enough time to offload one set of cargo and take on another load, re-fuel and re-stock supplies. But, of the 220 container ships arriving in Singapore this year, - excluding the tugs, yachts and bunkering vessels which are permanent port residents - more than half have stayed longer than that.

Another 44 cargo ships have been in port for more than six months

http://news.bbc.co.uk/2/hi/business/8142838.stmI realise that not running ships will not directly save much energy, but I wonder what the total effect, all down the chain of supply to the shop to the home, on energy consumption all these idle ships represent.

Let them eat ships!

[eXpat]

Shipping Industry Fights for Survival

The global economic crisis is wreaking havoc on shipping: Demand and prices have collapsed and ports are filling up with fleets of empty freighters. The crisis has fueled cut-throat competition and not all companies will survive. Germany's Hapag-Lloyd alone needs 1.75 billion euros to stay afloat.

The Andromeda towers almost 40 meters (131 feet) above Hamburg's Burchard wharf, as countless feeder ships and container stacking vehicles bustle around it like insects around a bored elephant. Shipyard CMA CGN's new flagship container ship, one of the world's largest, boasts a 100,000 horsepower engine, can carry 11,400 containers, is 363 meters long and was delivered from South Korea only a few months ago -- at a price of $160 million (€111 million).

The Andromeda was built for an economic boom that never seemed to end, at a time when more and more containers, bigger ships and ever-growing port facilities were needed.
...
But now the global financial and economic crisis has stifled the boom in container shipping, and it has happened almost overnight. For the first time in its history, the industry has stopped growing and, in fact, is shrinking. In the first six months of this year alone, the shipping industry declined by close to 16 percent.
The new giant ships are now much too big for the cargos they transport by sea, and often they sail half-empty -- if at all. Billions are being spent to expand ports to handle a boom that no longer exists. Leading shipping line operators are on the verge of bankruptcy, as are shipping banks and charter shipping companies. The industry, once one of the biggest beneficiaries of globalization, now threatens to turn into one of its chief casualties.

"There has never been a crisis like this before," says Reinhard Lange, the CEO of Kühne + Nagel, the world's largest sea-freight forwarder. Shipping line operators alone are expected to suffer combined losses of $20 billion in 2009.

Drewry Shipping Consultants, the world's top consultant to the industry, warns: "The industry is looking at the edge of a deep abyss." And industry publication Lloyds List writes: "Container shipping was thrown into a full-scale panic."

http://www.spiegel.de/international/business/0,1518,641513,00.html

[Pops]

Dude what are you in kindergarden? You going to beat me up now and take my lunch money?

! Man I spit coffee all over my keybooooooooooooo

---
What else is funny is that I remember the debates here a couple years ago where some thought shipping would sink after fuel prices rose and some thought the cost per item was too small to make an impact.
I don't remember the scenario being put forth where the reason shipping sank was Americans voluntarily quit buying - or sort of voluntarily.

[Ferretlover]

I realise that not running ships will not directly save much energy, but I wonder what the total effect, all down the chain of supply to the shop to the home, on energy consumption all these idle ships represent.

An excellent question, but, alas, one that *I* cannot answer. We really need to have some serious threads on demand destruction!
How much fuel does it take for one round trip for a ship--fully loaded and no load (do they ever travel with no load? ( a ballast question).
How many fully loaded with oil trips does a ship generally make in one year?
What is the time line from when a ship is fully loaded to when it unloads its cargo at the entrance to a refinery?

And, Pops: Clean up that keyboard! Susan has enough to do now!