Is Global Shipping Slowing Drastically?

[KGW]

http://blogs.telegraph.co.uk/ambrose...ng_drastically




Friday, July 4, 2008, 12:36 PM GMT

A little nugget from my colleagues at Le Figaro, one of Europe's finest newspapers (which is luxuriously delivered to my desk every day).
Jacques Saadé, the head of the French shipping giant CMA CMG, says the shipping cycle has turned with a vengeance.
"We're seeing ships leaving Asia that are not full. We are living through a real economic slowdown. It is a latent crisis that will take time to disappear. I don't see it getting better before the end of 2009."
"America is importing less, so is Europe. After a record year in 2007, where we had more offers than we could take on our ships, traffic between Asia and Europe has now fallen to a 94pc occpancy rate," he said.
Mr Saadé, who has just ruled out a bid for Hapag-Lloyd, said the oil spike was a scam. "This boom is artificial. Only speculation can explain the run up in price. One way or another, governments must put a stop to this."
He said fuel now made up 60pc of his shipping costs. "We're cutting the average speed of our container ships from 22 to 19 knots. It's our only possibility," he said.
Lloyds List said the shipping industry will know when the first Asian loads begin for the pre-Christmas season in a month as whether this is the start of a serious slump. The anecdotal talk is that the picture is deteriorating fast.
Note too that the Baltic Dry Index measuring freight rates for coal, corn, grains and such has dropped 23pc over the last month.
A false alarm?



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There are some interesting comments after the article as well. . .




KGW

[flintlock]

Re: Is Global Shipping Slowing Drastically?

Good find. I always like to see "real world" feedback on how things are going, as opposed to statistics and other indicators that have been put through the "spin cycle" by Wall Street or government. I would think rising fuel costs would have to have some impact on trade, in addition to other economic issues. I've always found it strange that its cheaper to ship bulk items like grain tens of thousands of miles rather than just learn how to grow the stuff.

[GRG55]

Re: Is Global Shipping Slowing Drastically?

...I've always found it strange that its cheaper to ship bulk items like grain tens of thousands of miles rather than just learn how to grow the stuff.

Do you think perhaps factors like soil, water and climate may also determine whether any particular group of people can "learn how to grow the stuff"?

[FRED]

Re: Is Global Shipping Slowing Drastically?

Do you think perhaps factors like soil, water and climate may also determine whether any particular group of people can "learn how to grow the stuff"?

[GRG55]

Re: Is Global Shipping Slowing Drastically?


OK. Guess it's time to move these folks...





...from the Kalahari to here...




so they can grow more of this...




so America can make more of this...



and thereby keep driving these...


And that's the end of my metalman impersonation... :p

[Guest]

Re: Is Global Shipping Slowing Drastically?

Do you think perhaps factors like soil, water and climate may also determine whether any particular group of people can "learn how to grow the stuff"?

Egypt fed the rest of the Roman empire with grain in days of Caesar. Zimbabwe was the breadbasket for Africa till the Mugabe takeover. They grew crops in S. Africa in great abundance in the Zulu empire.

So apparently it's not the soil, water, or climate. So yes, in an era of $145 oil it is pretty energy inefficient to grow bulk items on one continent and ship them to another. The system will modify accordingly.

I like Jasmine rice from Thailand. It's maybe 3x the cost of domestic rice I see on the shelf. Eventually it'll get high enough that I'll switch to the Texas grown rice.

This same principle applies to manufactured items also. They will no longer be assembling a flat panel TV in 3-5 different cities and shipping the partially completed product around the world to gain efficiencies, as the added transport costs will eat those savings up. Eventually if the dollar continues its slide we'll actually have to go back to working at real jobs making real stuff that we pay for with real money, not debt.

All this despite mainstream Americans conning themselves that because they were Peter-principled up the ladder during the debt-fueled fake boom, they really should be running a company from the front office instead of assembling parts in a factory. That apparently has become beneath their dignity. They'll be lucky to get those jobs in 10 years.

[GRG55]

Re: Is Global Shipping Slowing Drastically?

Egypt fed the rest of the Roman empire with grain in days of Caesar. Zimbabwe was the breadbasket for Africa till the Mugabe takeover. They grew crops in S. Africa in great abundance in the Zulu empire.

So apparently it's not the soil, water, or climate. So yes, in an era of $145 oil it is pretty energy inefficient to grow bulk items on one continent and ship them to another. The system will modify accordingly...

I actually find it offensive that some here think that all that's required for some peoples to feed themselves is merely to "learn how to grow the stuff".

It most certainly IS the soil, water and climate. You'll note how fast yields fall even in prime grain growing areas at the onset of water shortages/drought, late winters that delay or eliminate the planting window, excessively wet weather during harvest, or in soils that have gone saline due to decades of irrigation.

Other than a thin strip along the Nile, you can't grow grain in much of Egypt no matter how much you might wish their people would learn how (most of the Middle East outside the Levant was nomadic for that reason). Egypt is a net exporter of certain foods it grows in surplus and a net importer of other foods it is unable to grow in sufficient quantity, if at all. Why would that stop completely?

Yes, "the system" will modify. But the system has never been static and is constantly modifying. What is happening now is nothing new, just compressed due to an energy pricing dislocation.

Higher shipping costs will change trade and production patterns, but I see nothing inconsistent with that eventuality and what David Ricardo taught us about comparative advantage. Lot's and lots of bulk items will continue to be traded globally in the years and decades to come, including foodstuffs of all sorts.

[World Traveler]

My week in Sahel, Africa (northeast Kenya)

Fred,

You make a good point...I'm gald you posted the video. In 2005 I went with a non-profit and spent a week in very northern Kenya. It's part of Sahel, bordering Somali and Ethiopia, and so dry that the people there are herders - they herd cows, goats, camels. To farm would be like trying to farm in Nevada.

The rains are less reliable than in the past and these people suffer in many ways. Death of herds when rains don't come, and on-going violent conflict, primarily cattle raids. Access to AK-47's is easy and if you don't have and your neighbor does, a quick raid on a neighboring tribe might fix the problem.

For me, the saddest part was when he talked about the film crew giving a sandwich to the poor African kid.

We drove on an unpaved nearly empty road for 7 hours, mainly just saw a little wild life, baboons and a few ostriches. But every once in a while, we saw a herd of domestic camels and the boys who hearded them Water is so precious and scarce that these boys were sent out from village to herd the animals and were not given any water to take with them during day.

Whenever we saw a boy, we gave or tossed them from truck a bottle of water (not part of our plan, spontaneous action). I hoped it helped, but I sure wished I could have changed a system that created those conditions.

I thought comedian made a good pint at beginning of video, but I didn't like how it ended. If the tribal people I saw could farm, they would. They do not deserve ridicule, but appropriate support from the rest of the world.

[Verrocchio]

Re: My week in Sahel, Africa (northeast Kenya)

For me, the saddest part was when he talked about the film crew giving a sandwich to the poor African kid.

We drove on an unpaved nearly empty road for 7 hours, mainly just saw a little wild life, baboons and a few ostriches. But every once in a while, we saw a herd of domestic camels and the boys who hearded them Water is so precious and scarce that these boys were sent out from village to herd the animals and were not given any water to take with them during day.

Whenever we saw a boy, we gave or tossed them from truck a bottle of water (not part of our plan, spontaneous action). I hoped it helped, but I sure wished I could have changed a system that created those conditions.

I thought comedian made a good pint at beginning of video, but I didn't like how it ended. If the tribal people I saw could farm, they would. They do not deserve ridicule, but appropriate support from the rest of the world.

WT, it appears that the video was made of the comic on an early David Letterman show. I saw him in a live performance at the Comedy Club in LA during the mid-80s when it was one of only two or three comedy clubs in the US. He was a jerk whose signature delivery was intended to offend, even jolt, your sensibilities. Perhaps because he and others became popular, many standup comedy routines today consist of little else.

Viewing the video and then reading your comment reminded me of the vast human suffering that is likely to ensue if the current world economic system even falters, not to mention the dire consequences of collapse. With world agricultural GDP projected to decline by 16% due to global warming, the additional decline caused by shortages of petroleum inputs suggests that enormous problems lie ahead.