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Baltic Dry Index

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Looks like the banks are gonna have to hide another $100Billion or so off their books somewhere?

HONG KONG (MarketWatch) ”” The warning signs being flashed by the collapsing Baltic Dry Index (BDI), a leading global economic indicator, may reflect the folly of misguided expectations during the prior global economic boom, according to Hong Kong-based shipping analysts.
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Macquarie analyst said Thursday the slump in the broader dry-bulk index represents “too much capacity in the face of more modest growth of trade volumes.”
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However, there could be knock-on effects if the supply glut results in a financial storm throughout the shipping industry.
Business Insider quoted Basil Karatzas, the chief executive of Karatzas Marine Advisors, as saying European banks could face nearly $100 billion in losses to restructure the $500 billion in shipping loans on their books.



Contagion....
 
Uncle Festivus said:
Looks like the banks are gonna have to hide another $100Billion or so off their books somewhere?

HONG KONG (MarketWatch) ”” The warning signs being flashed by the collapsing Baltic Dry Index (BDI), a leading global economic indicator, may reflect the folly of misguided expectations during the prior global economic boom, according to Hong Kong-based shipping analysts.
---
Macquarie analyst said Thursday the slump in the broader dry-bulk index represents “too much capacity in the face of more modest growth of trade volumes.”
---
However, there could be knock-on effects if the supply glut results in a financial storm throughout the shipping industry.
Business Insider quoted Basil Karatzas, the chief executive of Karatzas Marine Advisors, as saying European banks could face nearly $100 billion in losses to restructure the $500 billion in shipping loans on their books.

Contagion....
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While I thought the claim of BDI being a "leading" indicator had been debunked, I agree that there could be a knock-on effect if the loans were still tied up in those inefficient old vessels. If that were indeed the case, and the new Vale-size super carriers had to accept unprofitable rates themselves, the whole house of cards would indeed fall down.
Can't feel sorry for the banks though - as usual, they probably have done as much DD as for those no-doc loans for buildings "safe as houses."

On the T/A side: While the Baltic Dry is still falling, the momentum appears to be slowing to the point where MACD "speed" has bottomed out and crossed above signal. No guarantee for anything, however when that happens, it's often a "leading" indicator suggesting the Low should be in sight.

BADI 26-01-12.gif
 
Is that a chart showing the direction sinking ship's take to collect the insurance?
 
Glen48 said:
Is that a chart showing the direction sinking ship's take to collect the insurance?
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LOL Glen,
you're getting confused, methinks.
You're thinking about Italian luxury cruise liners.
The Baltic Dry is far sturdier :D ... and far cheaper :2twocents
 
Here's something to chew on regarding the condition of shipping at the moment. It is worse than what it was after the GFC hit. The main cause of this depressed market is excessive tonnage on the water.

A Greek panamax bulk carrier has been relet by its previous charterer to Swissmarine for just US$500 a day, the lowest daily rate reported publicly since the credit crunch.

Yesterday, the Baltic Exchange reported in its daily fixture list – representative of a portion of chartering market activity – that the 2011-built, 81,600 dwt kamsarmax Krousson had been relet by Baumarine for a trip from Dunkirk via the Baltic Sea with redelivery back in the Skaw-Gibraltar area.
Sentiment surrounding the deal is representative of just how weak the market is.

“Regardless of the details, the fact that someone agreed to such a low number is significant,” one broker told Lloyd’s List.

The fixture comes as the Baltic Exchange’s panamax transatlantic time charter rate assessment fell to a record low of US$1544 per day, well below the US$3205 reached in December 2008.

Back then the financial crisis led to the charter market grinding to a halt.

In contrast to four years ago, the fall in rates is not due to access to trade credit being frozen but to the size of the dry bulk fleet.

In the last two years alone, the size of the dry bulk fleet – that is, vessels larger than 10,000 dwt – has grown from 7469 vessels of 500m dwt in September 2010 to 9227 ships totalling almost 669m dwt this month, according to Lloyd’s List Intelligence.

As I posted earlier, the BDI numbers are not a faithful reflection of the world economy though there would be some correlation between the two. First and foremost, BDI reflects the supply and demand for ships. In the last few years this has been skewed by the very large numbers of ships that have been built and continue to be built though at a reducing rate.

Cheers
 
Yes, interesting..
Economic equalibiums coming in to effect perhaps..

Following that thought pattern..

More ships, chasing less work..having to be manned by crews that will work for less..i.e philipinos..

I can only see more stress come on to this transport market as I am seeing some solid gearing up of engineering here in China able to push ever more tonnage of ships out into the shipping channels..

Actually I can also see airfrieght rates dropping over the next 5 years as the amount of planes...Airbus, Boeing and large Chinese cargo planes come online..

sent from yet another MikG HTC Evo
 
spoke to two sales reps from two diff wholesalers today, both share same story,
"it's like a sharemarket with competing prices"
one experience was that an agreement to ship stock from China at 2200 container but by the time the ship had left the cost had gone to 6k

inflation, what inflation ?
 
Baltic Dry was at about 3300 when the last posts were made, it's now about about 5500. Heard an example where daily vessel charges that were about 8k per day earlier in the year are now about 30K

Images below are for YTD & 5 Year

bdiytd.png


bdi5yr.png
 
One of the more trajic consequences f the turmoil in shipping transport is the ever increasing number of marooned seafarers as a result of vessel owners and lessees simply abandoning old ships cos they are too costly to repair.
From WSJ
"Abandonment cases are counted when shipowners fail to pay crews two or more months in wages or don’t cover the cost to send crew members home, according to the International Maritime Organization, a United Nations agency."
The UN agency recorded a doubling in the number of abandonment cases for 2020, with the number expected to grow once again for 2021 particularly after a noticeable surge in cases now getting media attention.
Some governments require sailors to remain aboard as guarantors until shipowners pay port authorities for berth fees and other charges. More often, sailors refuse to disembark, convinced they will never recoup months or years of lost wages if they leave. Seafarers stuck on board generally borrow money from friends and family to feed themselves and crewmates.

Many say they will stay put until the ship is sold for scrap, which can take years, rather than go home empty-handed.
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Abandoned seafarers have described the ships as turning into a "prison" and a "slave ship". One ongoing saga off Romania in the Black Sea involves four crewmembers awaiting the resolution of a high level Romanian court case to determine who is responsible for payment of debts involving the ship's owner. Legally they simply aren't allowed off the vessel. In some instances the WSJ documented stories of unpaid workers contemplating suicide. Some of them literally face starvation, and in these instances sometimes attract the help of local charities.
Moored ships hit by storms with crew aboard - yet not able to disembark - is another example of some of the more dramatic and immediate threats to safety these workers face. And then there's this instance noted in the WSJ report: "Off the coast of Yemen, one of the world’s largest oil supertankers, laden with 1.1 million barrels of crude, sits decaying in a war zone. An errant rocket or the ship’s corroding steel hull could trigger an explosion and massive spill."
Currently, there are efforts underway among a handful of large nations - namely China, Indonesia and the Philippines - whose ships make up the bulk of international sea freight traffic, to establish an 'abandonment fund' to help with emergency assistance for stranded crew. However, it could encourage companies to continue shrugging off responsibility, as is still continually happening according to the report.
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As they say in the classics, good luck with that.
Can't see any of the nations mentioned above as the main nations involved in sea freight contributing anything to an abandonment fund.
Mick
 
According to The Capitalist ,the big US retailers are chartering their own ships rather than relying third party logistics companies to ship their christmas goods.

With the shipping crisis now in full bloom, retailers like Walmart and Home Depot are taking matters into their own hands. Retail companies are now chartering cargo vessels themselves. The move aims to get imports moving faster and get them to store shelves.
With the shipping crisis now in full bloom, retailers like Walmart and Home Depot are taking matters into their own hands. Retail companies are now chartering cargo vessels themselves. The move aims to get imports moving faster and get them to store shelves.

“Chartering vessels is just one example of investments we’ve made to move products as quickly as possible,” said Joe Metzger, U.S. executive vice president of supply-chain operations at Walmart, which has hired a number of vessels this year.
Walmart recently hired a dry bulk cargo ship to help with the retail chain’s supply chain woes. The company began chartering cargo vessels as it tries to get its orders to the US as soon as possible. Disruptions in the delivery of goods are currently threatening supplies for the upcoming holiday season.
By getting their own vessels, retailers hope to bypass cargo terminal ports. This will also help them get precious cargo space needed for their many imported products.
The current shipping crisis is dealing with many problems simultaneously. This includes COVID outbreaks, US-China trade skirmishes, container shortages, and extreme weather.
As a result of the above, global shipping is crawling to a halt in overbooked terminal ports. In fact, more than 60 container ships lie anchored near the Los Angeles and Long Beach terminals.
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It does not explain how hiring your own ship will allow them to get past the biggest bottleneck, namely the conga line of ships waiting to be unloaded at LA and Long Beach terminals. Indeed they may just add to the conga line.
Mick
 
Joules MM1 said:
spoke to two sales reps from two diff wholesalers today, both share same story,
"it's like a sharemarket with competing prices"
one experience was that an agreement to ship stock from China at 2200 container but by the time the ship had left the cost had gone to 6k

inflation, what inflation ?
Click to expand...
So that inflated price is passed on to the end buyer and not absorbed/written off?
 
ramble:

mums n dads bare the brunt of a free market gone slightly troppo, it booms while it can, input any excuse, a pandemic is a good one,

we arent hearing about it because its the quiet bull overshadowed by crypto, traders make the market in shipping in the same way traders make a market in oil, governments have little control over crude prices

we can have a finely focused market that makes up part of the goods n services yet to have a real impact on the CCPI (core cpi)
automation is playing a big role in keeping prices in other sectors down

the dichotomy is clear in the CRB index, gold in USD$ is sagging, we're in a mania for sure across multiple markets, so strange things are
occurring that are at odds with what historically have usually transpired, not that the markets are different, what is different is where the capital is being focused, in the digital age

shipping is an aggressive pricing game but a quiet bull in the same cheap capital debt rise ....and rise...and rise, shipping is old school entrepreneurship and is a very confident picture for a continuing bull cycle

as far as inflation can influence the prices CB's take notice of,
its a series of decisions so i suspect when inflation finally shows up it is going to be extremely aggressive as
major players want to get their protection before the following contraction comes

i think we have a ways to go before the punch in the face comes, if you turn on social media and the news it's easy to think the world is
going to hell in a handbasket but in reality we have not reached the new plateau sentiment,

we're just travelling thru the very odd age of negative interest rates, the credit debt has to be applied somewhere

statista is a top trader resource
www.statista.com

Global container shipping rates 2024 | Statista

Container freight rates oscillated dramatically between January 2023 and October 2024.
www.statista.com www.statista.com

in this chart we start 2019, prices make a nice bull cycle lift well before the (fill in the blank) reasoning,
there is a clean correlation of credit debt issuing and applied causality, those allow prices to rise, but who can prove
a mechanical extent versus what traders say ....i would like to see that analysis!

excerpt: "The values are an average of the five business days of the last full week in each month."
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