....with $BDI still taking a whopping.important to note for the Aussie market, scrolling down is the relationship between BDI & the CRB index, with BDI clearly leading
http://www.spiegel.de/international/business/0,1518,641513,00.htmlThe 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.
Over the course of the current crisis, investors have had their vocabularies enhanced with terms such as “credit default derivatives,” “quantitative easing,” and the “Baltic Dry Index,” terms that previously were used only by a very small cadre of cognoscenti.
The latter, which takes measure of global shipping activity, is viewed as a quick way to gauge the robustness of global economic health. Logically, as empty ships don’t wander the world like Flying Dutchmen looking for a load, they remain parked when business is bad. On the other hand, if the pistons of global commerce are pumping madly, then so will the engines of the multitude of ships on the Seven Seas.
Today, we‘re assured that the world’s business is on the mend and that all is well. Someone might want to pass that information on to Germany’s Hapag-Lloyd, a 160-year-old shipping firm considered to be one of the world’s most efficient. Unfortunately, even their acknowledged management skills are unable to protect the company from the collapse in shipping prices: it costs about $800 to ship a container from Asia to Europe, but excess capacity in the face of plummeting international commerce has driven the going rate to just $300.
Kinda hard to make up a $500 shortfall per container on volume, eh?
So dire is the situation, according to an excellent article in Spiegel Online, that the company hemorrhaged 220 million euros in the first quarter of this year alone and is headed for an inglorious end of its long and storied history if it can’t come up with $1.7 billion euros pronto.
A snippet from the Spiegel article…How will you know the crisis is really over? Well, for starters, watch shipping rates. Because as long as they remain in Mr. Jones’ proverbial locker, well below the cost of actually shipping the goods, it’s a pretty clear signal that the sailing is anything but clear.
- 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."
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."
Excellent summary aarbee.
Just a question if you can provide some idea, but are the "holding costs" (ie the cost of waiting for a ship to be scrapped) exhorbanent? If they are high, surely there is a economical way to put excess shipping to use for bulk storage, scuttled to protect vulnerable coastlines, or some other purpose?
Just keeping us informed on the BDI (weekly chart).
Interesting? Yes? No?
Baltic Dry Index Dropping 4%, Posting Longest Consecutive Loss In 6 Years, Refutes Australian Optimism
Submitted by Tyler Durden on 07/06/2010 08:43 -0500
Baltic Dry Real estate
The biggest reason for the runup in the JPYAUD and its immediate secondary carry derivative, the stock market, was the earlier announcement out of the RBA claiming all is clear, there is no bubble in China, there is no bubble in OZ real estate, and all the other usual talking points one would expect out of a central bank whose future is inextricably linked to the endless commodity stocking in China. And indeed, one glance at the far more neutral indicator of the Baltic Dry index paints a far more dire picture: the BDIY plunged 4% overnight to 2,127, posting the longest consecutive decline in 6 years at 28 days. Despite the optimism from the conflicted money printers, those whose livelihood actually depends on a ceaseless influx of goods into China and broader commodity trading in general, are not nearly quite so happy, having seen a drop in their margins by almost 50% in just over a month.
The old triple nipple formation, this is never a good sign.
Cheers
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