Crisis Hits World Shipping
Oct. 20, 2008 (EIRNS)World shipping of key commodities is grinding to a halt as shippers cannot get banks to give them the credits they need to finance operations, according to numerous reports today. The Australian reported that the "Baltic Dry Index" has plunged 80% this year. This index is a measure of commodities-shipping costs, which reflects demand and prices for bulk carriers, which is at the lowest point since November 2002, when demand for metals was low. Australia is one of the world's biggest iron ore producers. The Baltic Dry Index was at 1,506, down from 11,893 points in May this year.
The U.S. market is contracting: In September, inbound container numbers at the Port of Long Beach in California were down 15.8% from a year earlier.
China is expecting a severe downturn in shipping. China Shipping Container Lines, China's second-largest container line, expects a 10% volume shrinkage this year. Bloomberg quoted Zhang Denghui, assistant president, saying that "Traffic will drop at least 10% for the full year. An even much larger drop is possible, as the full impact of the global economic turmoil is yet to come."
Also, the Pacific Basin Shipping Ltd., Hong Kong's biggest dry-bulk carrier, and Precious Shipping Pcl. said demand for moving coal, iron ore and other commodities will fall because banks are guaranteeing fewer loads, Taiwan's Central News agency reported today. "Letters of credit and the credit lines for trade currently are frozen," Khalid Hashim, managing director of Precious Shipping, Thailand's second-largest shipping company, said in Singapore yesterday. "Nothing is moving because the trader doesn't want to take the risk of putting cargo on the boat and finding that nobody can pay."