Uh oh!-Shipping rates hit zero as trade sinks

[Timber7]

http://www.telegraph.co.uk/finance/4229198/Shipping-rates-hit-zero-as-trade-sinks.html

It's getting scary-er.

"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.

What domino effect will this start and how long will it take before we see the effects in the stores?

[oscar615]

maybe we would have shortages in some items, prices would then climb.  That with inflation could cause big problems.  I am not sure but that seems logical to me.  Then when no one can get what they want or need, chaos in the streets, martial law, teotwawki?  Worst case I suppose.

[Atash Hagmahani]

Remain calm, and prepare. We don't know exactly what is going to happen.

Both demand and supplies are falling together. Just expect everyone is a bit poor this year. Watch out for banking and currency crises, though; either one will be scary to deal with. 

[Timber7]

I wonder if anyone can post what products or kinds of products would be effected by this. Maybe there is a site...  What are we not going to be able to get? I know anything imported but what are those products? Unfortunately I am not aware of all the different products we import. I often find myself shocked when I hear what isn't made in America.

Both demand and supplies are falling together

This is what I am hearing about this subject.

[nwdespot]

well walk through walmart now and then again in 6 months

[Timber7]

well walk through walmart now and then again in 6 months

Yeah, I just want a heads up, if possible before that time. 
I guess we all would.

Around here, if the news calls for snow all the basic food items disappear. I am within 20 minutes of 20 different grocery stores. If snow is called the shelves in every store will be sparse. If it is reported that we may get anything over 5 inches, people panic. You can bet that it will be very hard to find meat, produce (potatos are always first to go),  bread, eggs, sugar, and flour.
Canned goods, snacks, toiletries, drinks will have very slim pickings. A few hours after the new report will be too late to go to the store and get what you may need to get through it comfortably.
And that is just when a small snow is called, that everyone knows we will not get it.
 I would hate to see what the shelves in the stores would be like if people started realizing that they are having a hard time getting imported items.

In six years I have not had to go to the store to fill my cabinets for a winter storm. There has always been food in there. That's just what we did when I was growing up. You didn't stop at the store every two or three days on the way home from work and pick up somethings for dinner. But when a winter storm warning is announced I love going to the store and watching people. I end up feeling sorry for the majority of them. Most seem so clueless about what they really need to have. IMO, I see lots of poor choices and listening to peoples conversations, they're not very rational in their thoughts on their choices. It worries me to live around so many people who expect the store to provide them with everything all the time.

[Atash Hagmahani]

Just remember that you only need some basic necessities to survive. Store dry goods and maybe some canned food. I would say a year's worth.

One thing I am worried about are tools. We manufacture almost nothing anymore.

[nwdespot]

i just realized something.  every year the union i am a member of put out a made in America guide and has it out before the Christmas shopping season.  i didn't get one this year and i think i didn't get one last year either.  i also got a new pair of Georgia romeos for Christmas and just noticed they are now made in china.  same with my Danner boots. 

[nwdespot]

so is my new carhartt rain jacket.  is anything beside debt made in the USA.  just looked at one of my new dewalt cordless drills, at least they are made in north america, mexico.

[Timber7]

One thing I am worried about are tools. We manufacture almost nothing anymore.

This is what I am talking about. What we are not going to be able to get.
I have thought of tools. It worries me also.
There are many other things though that I know I am not even getting warm on thinking about.
There are always those things though.

nwdespot, sounds like you had one of those moments like I had one day. I couldn't believe all the products in my house made in another country. Made me start paying more attention to what I was buying. I am willing to pay more if it is a product of the USA.
 

[nwdespot]

thats the thing whatchaknow, the price didn't come down.  i paid $190 at the danner store for my boots.  my mom got me the romeos and i told her to make sure they were made by Georgia boots.  i also had her by them at a local owned store even though they were $5 cheaper at Joe's outdoors.  also the reason i buy dewalt power tools is that they used to be made in the USA even though there are other brands of the same quality at a cheaper price.  none of the prices came down, just profits up for the corporations.  i also called my BA and asked about the USA list and he said that its discontinued bc the list is to short.  he also told me that its getting harder for them to find t-shirts that are made in the USA that are of any good quality to print our union logos on.

i am kinda scared to look at my caterpillar tractor outside.  i still think they are made in the USA.  

anyway i am trying to get a hold of my uncle, hes a longshoreman in san pedro CA and get his take on the situation.  the last time i talked with him, he told me that things are slowing down and the only thing they seem to load anymore is scrape metal.  same here at the port of longview, it is just logs.  there seems to be no finished goods being shipped out anymore, just raw materials.

[nwdespot]

at yard sales look for broken craftsman tools.  you can get them real cheap and then drive to sears and trade them in.  i wonder if craftsman tools are still made in the USA

[MountainMeg]

I'm currently stocking warm clothes in 2 sizes for the kiddos.  (Target is clearing out boys and men'd hoodies for under $3@)  Gluten free pasta (usually manufactured in Canada or Japan).  Both hubby and I drive '02 Toyotas so I'm considering picking up extra air filters, oil filters and brake pads for each.

[Dame]

I can still find made in USA at LeeValley Tools and the better beekeeping equipment available other than custom is made in the USA.  It takes some digging to find it though.

The higher quality American grown cotton is best found at the used clothing stores, if I can find large enough sizes I can sew it into current items.  The used quality is better than some of the pricier new Egyption cottons.  I keep a stash of garage/yard/estate sale old sheets, what a difference in texture and easy to get clean.

With new cottons the best bet on American cottons here is Canadian made.  Seems the textile industry in Eastern Canada still does decent cottons.

What I notice hard to get is good brass valves, and decent axe and tool handles are getting harder to find; the quality of the wood is way down.

I find that having an ongoing house account with the local hardware and letting them know what my shopping list looks like; repeatedly, and giving them widespread and positive word of mouth when they are able to source what I want ups the liklihood of actually getting a call if and when the buyers find a supplier.  A small group doing the same thing together and perhaps having a designated person doing the shopping would probably increase the odds.

[Timber7]

thats the thing whatchaknow, the price didn't come down.

I don't think the price will come down because we were paying for it before they went over seas.
The companies are just going to make more profit.

you can get them real cheap and then drive to sears and trade them in.

  My husband and I have done that before.

I went to Sears not too long ago and the young boy behind they counter said that it was rumored that they were going to stop that policy. Hopefully that kid didn't know what he was talking about.

I'm considering picking up extra air filters, oil filters and brake pads for each.

Smart. I have a small section dedicated to car repairs. I have a few boxes of oil and filters, few jugs of anti-freeze, brakes and brake fluid, windsheild wipers, lights, fuses, blets, and an alternator. I need to get a extra battery, tires, air filters, .... Okay I am starting to think of more stuff. The list gets longer still...

I'm currently stocking warm clothes in 2 sizes for the kiddos.

Also smart. My step son is in an 8 right now. I am overstocked up to a size 14. He has at least two coats and two jackets for every size up to 14.

I went to Target monday to catch a sale and got 4 size 16 (which I can wear too-woo hoo!) hoodies, 8 size 16 T-shirts, and 3 size 16 cargo pants for $18.00. I juggled coupons and in store rebates and saved $10.00. Even though, $28. is still a good price for 15 clothing items. I refuse to pay full price for clothes.