If any influential person reads this please do something about it.
By Richard Meade
Tuesday 30 September 2008
WHEN eleven European tourists and eight Egyptians abducted in a remote desert corner of Egypt were freed unharmed yesterday, the images were beamed across the news networks.
Even as Wall St was once again plunged into free-fall after Congress rejected the $700bn bail-out deal, the story of innocent civilians escaping a terrifying ordeal was shunted up the news schedules as an important story of international significance.
The news that Somali pirates are currently holding well over 200 seafarers hostage and the lifeblood of our apparently collapsing global economy is now under near daily attack by armed militants did not even manage to make the ‘and finally’ sections.
A case of ‘out of sight, out of mind’, according to the shipping industry associations that have laid out a desperate plea for international action.
They are right of course. If civil aircraft were being hijacked on a daily basis, the response of governments currently ignoring the surge in maritime attacks would be very different indeed.
Glib suggestions from over-stretched and hand-tied naval officials urging the industry to look after itself and hire mercenaries are dangerously off-message. To do so will only plunge the industry into more dangerous situations and risk even more lives. Arguing that owners’ apparent willingness to pay ransom demands is fuelling the crisis beg the obvious response — what else would you have us do?
That these same sentiments have been repeated day after day, week after week on these pages is a damning indictment of the respect and support that is being offered by governments to solve this dangerous situation.
We can only hope that our repetition will ultimately force action at the highest level.
amenity2
Don't read this if you are squeamish Ha! Ha! just joking
Janet Porter - Wednesday 1 October 2008
LINER shipping executives working in the Asia-Europe trades are no strangers to volatile markets, but never have they experienced anything like today’s stormy conditions.
Spot rates have plummeted to all-time lows, and are still sliding.
A year ago, lines were charging westbound ocean rates from Asia of around $1,400 per teu. They are now down to as little as $350, but even that may be on the high side in this fast-changing marketplace.
Rumours that a rate of just $250 had been agreed to move a 20 ft container from an Asia mainport to northern Europe were doing the rounds today.
“I remember when rates fell to $500, we were absolutely horrified,” said one industry executive recalling the last slump.
Others are in no doubt that these are the most awful trading circumstances ever, but fear that there is worse to come.
“We haven’t reached rockbottom yet,” predicted one trade manager caught up in the maelstrom.
The only positive sign is the fact that the speed of decline appears to be slowing, the director of trades at another line observed.
The blame game has started, with a rate war between a handful of major players who are battling for market share apparently triggering the latest downturn.
But this is taking place against a backdrop of a huge orderbook and a steady stream of ship deliveries, including a new generation of vessels with nominal capacity in excess of 10,000 teu, coupled with an abrupt halt to the high street spending boom that has sustained the container trades for the past few years.
The banking crisis has eroded consumer confidence and slowed trade growth to just a few percentage points at a time when lines were anticipating double digit growth and high load factors for their newbuildings.
In fact, utilisation levels for many lines are still quite healthy, with some reporting that their ships are around 90% full.
But in an industry that traditionally has required almost 100% utilisation in order to secure rate increases, there is also talk that some of the lines with super-sized vessels now entering service are grappling with load factors of closer to 70% and are doing whatever they can to lure cargo.
Even so, there is not much sympathy for lines’ predicament in some quarters, with critics insisting that they should be able to make money with 70% utilisation, and that it is their basic business models that are flawed.
Whatever the arguments about how container shipping is run, experienced trade directors say that, in this febrile atmosphere, these are easily the worst conditions ever.
Furthermore, the only mechanism that could have been used to restore rates will disappear in just over a fortnight’s time. Collective action will be banned once the conference system is outlawed in Europe on October 18.
Bad news continues to pile in from every quarter. The record low freight rates now available only apply to cargo moving on a spot basis, with much covered by service contracts where terms and conditions would have been set at the start of the year.
But the annual tender process is now starting for 2009, and lines could find themselves locked into unremunerative rates for the whole of next year if the spot rates are used as a benchmark. Even worse, shippers are starting to demand all-in quotes, forcing lines to wrap currency, bunker and other surcharges into their basic ocean rates.
Lines also failed to obtain the usual peak season surcharge this summer, for the simple reason that the traditional pre-Christmas cargo surge never happened.
Over-arching everything is the banking meltdown, with cargo interests starting to ask for extended payment terms from lines, and reports that insolvencies are now beginning to hit smaller shippers as their bank credit lines are withdrawn.
While slow steaming has been one of the features of the industry over the past few months, this is no longer absorbing so much additional tonnage. At one stage, lines were slowing their ships, but adding an extra vessel in order to maintain weekly calls.
Some lines with a large Asia-Europe service network are abandoning that approach, and instead sticking to loops of eight ships at reduced speeds, and dropping a week from the schedule that can, in many cases, be covered by another service.
That increases the prospect of ship lay-ups as slow steaming stops soaking up extra ships.
“We haven’t reached rockbottom yet,” is one pessimistic prediction.
amenity2
Another plea from the Shipping Industry.
From Lloyds List today.
It could happen anywhere.
By David Osler
Monday 20 October 2008
INDUSTRIAL Carriers has the unwanted privilege of being the first sizeable shipping operation to collapse as a result of the current turmoil on financial markets. It is unlikely that it will be the last.
Let it be stressed that the Ukraine-based bulk carrier outfit has acted honourably in winding up its affairs. But experience teaches that some concerns are not so scrupulous.
There will be those who use bankruptcy legislation to get out of paying what they owe to others. Indeed, numerous shipowners currently trading have got previous form in this matter.
So be careful who you deal with, and remember that in times like these, even the biggest and best-established businesses can simply disappear overnight. Just ask anybody you know who used to work for Lehman Brothers.
On top of that, the betting has to be that the weeks ahead will see perhaps dozens of crews stranded in ports all over the world, thousands of miles away from their loved ones, and without the wherewithal to buy a plane ticket home.
Surely it is reprehensible to treat human beings in this way, and such misbehaviour would not be considered acceptable in any other business sector. At least repatriation expenses should take priority over bunker bills.
Step forward the International Transport Workers’ Federation, which will have its work cut out making sure that these people can return to where they live. Now, the ITF may have plenty of detractors. But the valuable work it does in these instances more than justifies its existence.
amenity2
The Baltic Exchange,
22 October 2008
Sep - Nov 2008
Asia’s shipping lanes hit hard
The ports and shipping lanes of Asia, the arteries of world trade through which goods and commodities surged in the boom times, are starting to seize up as the financial crisis strangles demand, AFP reported.
The Baltic Dry Index, a signpost of economic trends which tracks the cost of moving goods across the oceans, has set off alarm bells by plummeting 85 percent from its peak in May to a six-year low.
Share prices of some major shipping companies, which haul bulk freight such as iron ore, coal and grains destined to be turned into manufactured goods, have fallen between 50 and 70 percent in the past few months.
Standard and Poor's also said this week that the Asian shipping market has suffered double-digit declines on the US-Asia route in June and July, as well as being hit with higher operating costs.
The industry had been expecting an upturn after the Beijing Olympic Games ended and factories chugged back to life, after an enforced holiday to help improve air quality. But instead disaster struck on global markets.
Container shipping was hit first earlier this year as demand for Asian-made goods in the US and Europe dropped off, a casualty of the sub-prime mortgage crisis and poor consumer confidence.
In a chain reaction, the countless Asian factories churning out electronics and consumer items for the US and European markets began lowering output, and the need for raw materials declined.
Container shippers, bulk operators and port authorities across the region are reporting slowdowns.
The Baltic Dry Index, which hit 11,793 in May, is now under around 1,300, approaching rates not seen since the Asian financial crisis in 1997-1998, and tipped to slip below 1,000 as commodity prices fall.
The index's decline has alarmed observers as an indication of the damage the credit crisis has already wreaked on the world economy, even if action to revive financial markets is successful.
Container shipping lines have said they expect cargo demand on the US-Asia route to fall by as much as eight percent in 2008.
amenity2
Another snippet from Lloyds List.
FROM boom to bust in 21 weeks: capesize vessels that could have commanded nearly $300,000 per day in late May now settle for as little as $7,000.
amenity2
Another sad pointer of whats to come, from Lloyds List today.
By Marcus Hand
Wednesday 29 October 2008
RUMOURS of shipowners and operators in financial trouble are swirling in the market, as the global financial crisis continues to bite.
The shipping bubble, which saw dry bulk freight rates and asset prices hit record levels just months ago, has well and truly burst.
Ukraine’s Industrial Carriers may have been the first to go down, but as the true fallout of the collapse in the dry bulk market becomes apparent, more are almost certain to follow.
Britannia Bulk has publicly added itself to the list of potential casualities, while a slew of names in Asia are being talked about in the market as facing major financial difficulties.
Warnings centre particularly on the settlement of FFA contracts, with some companies understood to have huge levels of exposure. Also, as Daebo Shipping chairman and chief executive Kim Chang-jung warned last week, extended charter party trains, with multiple sublets of a single vessel, make serial defaults a major possibility.
All this comes at a time when the friendly neighbourhood banker, who not so long ago just could not wait to lend to shipping companies, is most likely to have become rather less friendly than he was 12 months ago.
Anyone hoping for leniency over meeting payments or breaching loan convenants is likely to be disappointed; just ask any shipowner who went through the same situation in the Asian financial crisis a decade ago.
Unlike the Asian crisis, however, this time the impact is truly global and the scale of the fallout on the shipping industry will mirror this fact.
amenity2
When the conservative Lloyds List reports like this you can guesse something is up.
By Janet Porter
Thursday 27 November 2008
Tomorrow is Black Friday. A day when Americans, having stuffed themselves with turkey and pumpkin pie today, should indulge in their other favourite pastime and head to the shopping malls.
The day after Thanksgiving Day is traditionally the busiest 24 hours of the year for US stores, the day when their bottom lines turn from red to black.
Whatever happens today will have little immediate impact on the shipping industry. The goods that may or may not be bought would have arrived in the country weeks ago and have been clogging up warehouses and depots across the country as retail sales slowed.
And that’s the point. Stocks are already high, and if consumer spending remains flat in the run-up to Christmas, inventory levels may not be dented very much.
If wholesalers and retailers are left with plenty of unsold merchandise on their hands, as they probably will, then that does not bode well for shipping prospects next year. That will come as little surprise to container lines that are already making huge cuts to their service networks as they try to bring some balance to tonnage supply and demand.
If Americans decide a bit of retail therapy is not for them tomorrow, that will have consequences far beyond US shores. Businesses across Asia will be hit by falling orders and, unlike last year, will not be able to compensate by turning to Europe.
So for once, Black Friday may well live up to its alternative connotation.
