Why
Is Global Shipping Slowing Down So Dramatically?
http://theeconomiccollapseblog.com
http://albertpeia.com/globalshippingslowingdramatically.htm
‘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. 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.
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....
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.
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....
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.
Glencore
chartered the vessel, operated by Global Maritime Investments Ltd., a
Cyprus-based company with offices in
So
why would anyone agree to ship goods at negative rates?
Well,
it beats the alternative.
This
was explained in a recent Fox Business
article....
“They’re
doing this because you can’t just have ships sitting. If they sit too long,
then that’s hard on the ships. They have to keep them loaded and moving from
port to port,” said Darin Newsom, senior commodities analyst at DTN.
If
the owner of a ship can get someone to at least pay for part of the fuel and
the journey will get the ship closer to its next destination, then that is
better than having the ship just sit there.
But
just a few short years ago (before the last recession) negative shipping rates
would have been unthinkable.
Asian
shipping is really slowing down as well. The following comes from a
recent article in the Telegraph....
Shanghai
shipping volumes contracted sharply in January as
Container
traffic through the
So
this is something we are seeing all over the globe.
Another
indicator that is troubling economists right now is petroleum usage. It
turns out that petroleum usage is really starting to slow down as well.
The
following is an excerpt from a recent article posted on Mish's Global Economic Trend Analysis....
As
I have been telling you recently, there is some unprecedented data coming out
in petroleum distillates, and they slap me in the face and tell me we have some
very bad economic trends going on, totally out of line with such things as the hopium market - I mean stock market.
This
past week I actually had to reformat my graphs as the drop off peak exceeded my
bottom number for reporting off peak - a drop of ALMOST 4,000,000 BARRELS PER
DAY off the peak usage in our past for this week of the year.
I
would encourage you to go check out the charts that were posted in that
article. You can find them right here. Often a picture is
worth a thousand words, and those charts are quite frightening.
Over
the past few days, I have been trying to make the point that nothing got fixed after
the financial crisis of 2008 and that an even bigger crisis is on the way.
Yes,
the stock market is flying high right now.
Yes,
even "Dr. Doom" Nouriel Roubini
is convinced that the stock market
will go even higher.
But
this rally will not last that much longer.
Wherever
you look, global economic activity is slowing down. The
Many
thought that the German economy was so strong that it would not be
significantly affected by the problems the rest of Europe is having, but that
is turning out not to be the case.
In
a new article by CBS News entitled "German
economic slowdown worse than expected?", we
are told that industrial production in
German
industrial production fell 2.9 percent in December from the month before,
according to official data released Tuesday, suggesting the country's economic
slowdown could be worse than expected.
So
don't believe all the recent hype about an "economic recovery".
Europe is heading into a recession, Asia is slowing down and the
Despite
what you hear from the mainstream media, the truth is that the
Thankfully,
those of us that are aware of what is happening can make preparations for the
economic storm that is coming.
Others
will not be so fortunate.
