Just when you though things might–might–be staggering back to a point somewhat close to a vastly degraded normality, horrible news comes in on the trade front. This could be a huge problem in tandem with an expected slow Christmas and year-end accumulation of cash at the banks. And it’s occurring as letters of credit, virtually a kind of currency among shippers and their banks, are not being honored. Again, Yves Smith:
Sunday, November 2, 2008
More Grim News on the Trade Front
Reader Michael appeared to be on a mission on Saturday and sent quite a few links on trade/shipping related matters. They were remarkably consistent in pointing to simply dreadful conditions and no expectation of near-term improvement. Indeed, further deterioration seems entirely possible.
From Lloyd’s List:
Freight rates in the Asia-Europe trades have crashed to record lows as consumer demand continues to crumble, with the crisis compounded by the first signs of customer insolvencies….
A 20 ft container could now be shipped from Hong Kong to Hamburg for as little as $350, excluding surcharges, compared with around $1,400 per teu last summer.
“In all my years in the business, I do not ever remember such difficult trade conditions,” said the trade director of a big Asian line….
“Has it been as bad as this before? No, not in my 20 years,” the trade manager at another global carrier concurred.
Yves here. By definition, that includes the Asian crisis of 1997-1998.