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Sunday, September 13, 2009

World shipping lines are in emergency mode.

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I read a recent article in Lloyds List which reported that world shipping is in emergency mode at the moment due to the GFC. Something I have eluded too in previous posts.

Governments around the world are being forced to put rescue packages together to save some of the worlds largest shipping lines as they progressively lose support from their bankers. The banks are pushing for greater loan guarantees and securities as the financial performance of many shipping lines wane. France is the latest to put a Euro 1.5 billion lifeline together for the French shipowners. The aim of this funding is to help them meet the demands of their banks. Germany(Hapag Lloyd), Chile(CSAV) and Israel(ZIM Lines) have recently taken other measures to save their carriers.

The Baltic Dry Index continues it's downward trend since June and global cargo volumes are still extremely low and falling in many tradelanes and sectors. Not surprising really. With the GFC global consumption overall is still falling so it stands to reason the need to transport goods will keep falling in line with this so talk about a recovery in the shipping industry, particularly with the container, tanker and bulk carriers is overly optimistic and premature in my view.

At least the RoRo and heavy lift operators that I primarily deal with are telling me their cargo volumes are improving in some tradelanes.

By the way...how can the stock market keep rising globally when consumption is falling too? Top line revenue growth isn't really there. And...what are the real unemployment figures if you add back the explosion in casual and part time employment in most countries? Surely the person that has been cut back to three or four days a week isn't able to spend as much and somehow this needs to be taken into account? And...why are property values climbing in some countries at same time unemployment is as well? All doesn't make sense to this humble shipping bloke and I reckon something has to give and this whole crisis is far from over.

One thing is for certain. Unless global cargo volumes start to rebound very soon we are going to start losing some of the biggest names in the shipping industry and alot of competition with them. Bad news for us all.


All for now,
Brad Skelton
The Shipping Bloke

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