Britannia Radio

If all the ships are anchored or half empty then global trade is over 
- for now.  And if you want to know a real 'green shoot" when you see 
one go down to Falmouth and up the River Fal.  When the estuary is 
not full of laid up ships things will soon be getting better.

Falmouth is a lovely place anyway so you'll enjoy looking. But don't 
rush  - there's no hurry!
xxxxxxxxxx cs
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TELEGRAPH   14.1.09
Shipping rates hit zero as trade sinks
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.

By Ambrose Evans-Pritchard, International Business Editor

"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 unmitigated 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.
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EUREFERENDUM Blog   14.1.09
No port in a storm

Forget anything the politicians tell you about the duration of this 
recession. The same goes for the financial pundits. Look at the 
evidence.

A piece by the gifted Ambrose "Armageddon" Evans-Pritchard in The 
Daily Telegraph is a good place to start. He has a romp round the 
shipping scene, telling us that "freight rates for containers shipped 
from Asia to Europe have fallen to zero for the first time since 
records began." This, he writes, underscores "the dramatic collapse 
in trade since the world economy buckled in October."   [The next 
section is already in A.E-P:'s piece above so I reduce its emphasis -cs]

Ambrose cites the shipping journal Lloyd's List, which says that 
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. An "industry source" says they have never seen rates 
fall so low. "This is a whole new ball game," adds one trader.

We also get a reminder of trade data from Asia's "export tigers", 
which is dire, reflecting the collapse in US, UK and European 
markets. Korea's exports fell 30 percent in January compared with a 
year earlier. Exports have slumped 42 percent in Taiwan and 27 
percent 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.

Lindsay Coburn, an ING trade consultant, says: "This is no regular 
cycle slowdown, but a complete collapse in foreign demand." 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.

Ambrose thus tells a great deal, but there is even more to the 
picture. The online trade magazine Purchasing.com points to the 
"dramatic decline in ocean container shipments from Asia", but it 
also notes that year-over-year cargo volume in major UK container 
ports fell 7.1 percent in 2008. By December last, it had seen 17 
straight months of decline.

That confirms what many already knew - that this recession has been 
going on a lot longer than the headlines (and the pols) would have 
it. "Longer" and "deeper" are now the watchwords, and very much 
slower to recover.

Denmark's AP Moller-Maersk, the world's largest container line, is of 
like mind. According to Reuters, Maersk chief executive Nils S 
Andersen (speaking in Singapore rather than here) thinks the shipping 
industry is unlikely to recover before the end of next year. The 
outlook for the industry is "very tough". Shipping lines have cut 
staff and mothballed ships to cope with over-capacity and falling 
trade volumes as more economies fall into recession, depressing 
demand for goods.

 From the sublime to the . local. The Grimsby Telegraph is telling is 
that the Immingham "shipping giant" DFDS could be poised to shed 10 
percent of its 700-strong workforce. A total of 71 jobs are at risk 
in Grimsby, "following a rapid fall-off in cargoes, particularly in 
the automotive, steel and construction materials sector."

That is a sign of the times. Added to the rest - considering that so-
called "globalisation" has been driving the global economy for more 
than a decade - and the situation looks more than a little bit 
unhappy. Worse still, taking the cue from the trader whom Ambrose 
cites, we seem to be in unerforschtes gebiet  [say 'uncharted 
territory']
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Posted by Richard North