Socio-Economics History Blog

Socio-Economics & History Commentary

Why Is Global Shipping Slowing Down So Dramatically?

  • Is the world heading towards an economic depression or a recovery? Decide for yourself.
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    Why Is Global Shipping Slowing Down So Dramatically? 
    by http://theeconomiccollapseblog.com/ 
    If the global economy is not heading for a recession, then why is global shipping slowing down so dramatically? Many economists believe that measures of global shipping such as the Baltic Dry Index are leading economic indicators. In other words, they change before the overall economic picture changes. For example, back in early 2008 the Baltic Dry Index began falling dramatically. There were those that warned that such a rapid decline in the Baltic Dry Index meant that a significant recession was coming, and it turned out that they were right.
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    Well, the Baltic Dry Index is falling very rapidly once again. In fact, on February 3rd the Baltic Dry Index reached a low that had not been seen since August 1986. Some economists say that there are unique reasons for this (there are too many ships, etc.), but when you add this to all of the other indicators that Europe is heading into a recession, a very frightening picture emerges. We appear to be staring a global economic slowdown right in the face, and we all need to start getting prepared for that.

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    If you don’t read about economics much, you might not know what the Baltic Dry Index actually is. Investopedia defines the Baltic Dry Index this way….
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    A shipping and trade index created by the London-based Baltic Exchange that measures changes in the cost to transport raw materials such as metals, grains and fossil fuels by sea.
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    When the global economy is booming, the demand for shipping tends to go up. When the global economy is slowing down, the demand for shipping tends to decline. And right now, global shipping is slowing way, way down. In fact, recently there have been reports of negative shipping rates. According to a recent Bloomberg article, one company recently booked a ship at the ridiculous rate of negative $2,000 a day….

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    Glencore International Plc paid nothing to hire a dry-bulk ship with the vessel’s operator paying $2,000 a day of the trader’s fuel costs after freight rates plunged to all-time lows.
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    Glencore chartered the vessel, operated by Global Maritime Investments Ltd., a Cyprus-based company with offices in London, Steve Rodley, GMI’s U.K. managing director, said by phone today. The daily payments last the first 60 days of the charter, Rodley said. The vessel will haul a cargo of grains to Europe, putting the carrier in a better position for its next shipment, he said.
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    … for more click here!

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February 9, 2012 - Posted by | Economics | ,

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