Asia-Europe Shipping Rates Drop to Zero

I know I sometimes go for hyperbole in headlines, but the statement above is accurate. Your humble blogger had expected China (and presumably the rest of Asian) trade to fall in January and February from already depressed levels. While the drop in Chinese exports for December was less than experts expected (imports fell more sharply than anticipated, however), the trajectory down appears to be steepening, as we had feared.

From the Telegraph (hat tip reader John O):

"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 unmit igated 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.

Read on...

Peacenik has been talking about the Baltic Dry Index for a while. The BDI and shipping rates are the arcane canaries in mineshafts that can't be ignored. The old global economy depended on growth. Growth is finished. Can the world adapt to a no growth future? Is Ron Wilson a bad coach? Peacenik doesn't know the answer to either question. But no shipping will mean no groceries on the shelves; no shipping will mean no brand new $300 made-in-China carbon hockey sticks each time some NHLer breaks one and misses an open net in overtime in an untelevised game in front of an empty arena. Oh well, Cliff Fletcher is a great Canadian.

Two signs that something is seriously wrong

by gjohnsit

Wed Nov 12, 2008 at 12:50:56 PM PST

Every once in a while in the world of economics an economic indicator will suddenly go crazy. One day the charts all look normal and easy to understand. The next day it suddenly launches into an entirely different world.

What a massive swing in the index means is always open to interpretation (a whole industry exists to analyze these movements), and no one is certain if they are correct until years afterward. Sometimes what it means is more obvious than the why, but the 'why' is ultimately more important.

The Baltic Dry Index dates back to 1744. To put it roughly, it is the price of moving raw materials by sea.

Readon...

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Peacenik suspects that people sitting around the campfire in new Hoovervilles will be talking about the Baltic Dry Index as one of the earliest harbingers of economic doom. And today the Globe and Mail reports that Canadian banks are getting an increase in the same type of government support that the U.S. banks are getting. This is the same Canadian banking system that we were recently told was one of the strongest in the world. Gjohnsit says the second harbinger of economic doom he sees predicts hyperinflation. But the price of gold is not going through the roof...yet. Peacenik is paralyzed as Peacenik continues to contemplate inflation/deflation scenarios.