The shipping crisis…..

13 01 2016

It looks like “my initial reaction of turning my BS filter on full tilt” was right. I was a bit quick off the mark publishing that post about North Atlantic shipping grinding to a halt. Here’s a better analysis from Mish Shedlock, along with a retraction of sorts from me. The real story yesterday was the Royal Bank of Scotland advising clients to brace for a “cataclysmic year” and a global deflationary crisis, warning that the major stock markets could fall by a fifth and oil may reach $US16 a barrel.  The bank’s credit team said markets are flashing the same stress alerts as they did before the Lehman crisis in 2008.  “Sell everything except high quality bonds. This is about return of capital, not return on capital. In a crowded hall, exit doors are small,” it said in a client note.

Mish Shedlock

Anyhow, here is a very good analysis of how so many got taken by the shipping crisis from Mish, lifted from his website, which is always a place for good information, if you’re an investor. Because I’m no investor, or rather because My ideas of investing lie in surviving the crisis rather than trying to save my wealth, such as it is, I haven’t bothered going there for some years…….

 

 

Investigating Claims “North Atlantic Trade Ground to a Halt, No Ships Moving”; The Real Shipping Story

Commerce Ground to a Halt?

Claims have surfaced that not a single transport ship in the North Atlantic is moving.

For example, “Superstation” claims that in a Historic First, hundreds of ships are said to all be anchored along coasts, with nothing moving.

ZeroHedge picked up the story in “Nothing Is Moving,” Baltic Dry Crashes As Insiders Warn “Commerce Has Come To A Halt”.

Countless others picked up the story from ZeroHedge who “confirmed” the story.

ZeroHedge said “We checked VesselFinder.com and it appears to show no ships in transit anywhere in the world. We aren’t experts on shipping, however, so if you have a better site or source to track this apparent phenomenon, please let us know. We also checked MarineTraffic.com, and it seemed to show the same thing. Not a ship in transit…”

The Real Shipping Story

Let’s sort out reality from hype from Marine.Com.

Cargo Vessels and Tankers Anchored

image: https://damnthematrix.files.wordpress.com/2016/01/b0c52-ships2banchored.png?w=300

click on any image for sharper view

Cargo Vessels and Tankers Underway

image: https://damnthematrix.files.wordpress.com/2016/01/c7944-ships2bmoving.png?w=300

Tankers Underway

image: https://damnthematrix.files.wordpress.com/2016/01/39f83-tankers2bunderway.png?w=300

As you can easily see, the numbers vary from chart to chart. Ships are moving.

The first thing I do when I see reports like “No Ships Moving” is look for mainstream news confirmation.

If no ships were moving, this would indeed be news and some reputable news site would have the story. The “no ships moving” story failed the “sniff test” from moment one.

Confirmation of economic stories is different than confirmation of political stories. Coverups of sex attacks in Germany and Sweden, and police killings in Chicago and other US cities highlights the difference.

Other Shipping Measures

Let’s now investigate other indicators of slowing shipments Including the Baltic Dry Index and the Harper Petersen shipping Index.

Baltic Dry

image: https://damnthematrix.files.wordpress.com/2016/01/c6505-baltic2bdry2b2016-01-11.png?w=300

The above chart from Bloomberg.

The Baltic Dry index measures shipping rates for dry goods.

The problem with Baltic Dry is the index is a function of excess shipping capacity and volumes shipped. It provides little information on shipping container sizes. Rates can sink because of increased shipping capacity (new ships) or sinking demand, or both.

Week after week I receive emails telling me the Baltic Dry Index is plunging. Stop the Emails! I know.

Harper Petersen provides much more information.

Harper Petersen Shipping Index – 10 Year History

image: https://damnthematrix.files.wordpress.com/2016/01/bd92f-harper2bpetersen2b2016-01-11a.png?w=300

Harper Petersen Shipping Index – 2 Year History

image: https://damnthematrix.files.wordpress.com/2016/01/04358-harper2bpetersen2b2016-01-11b.png?w=300

Harper Petersen Vessel Size Rates – 2 Year History

image: https://damnthematrix.files.wordpress.com/2016/01/67ca4-harper2bpetersen2b2016-01-11d.png?w=300


TEU

TEU stands for twenty-foot-equivalent unit. It’s an imprecise term because lengths have a 20-foot long (6.1 meters) standard but heights vary. Heights range from 2 feet three inches to 9 foot six inches. The most common heights are 8 feet 6 inches (2.6 m) and 9 feet 6 inches (2.9 m).

image: https://damnthematrix.files.wordpress.com/2016/01/691e4-teu.png?w=300

Myth vs. Reality

Contrary to popular myth, shipping has not ground to a halt. However, shipping volumes and shipping rates have both plunged. 2015 was a disaster by any measure.

There’s no need to exaggerate. Reality is bad enough.

Mike “Mish” Shedlock

Read more at http://globaleconomicanalysis.blogspot.com/2016/01/investigating-claims-north-atlantic.html#Hy6hSZRAd1SRkk3t.99

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2 responses

14 01 2016
15 01 2016
mikestasse

Jan 13 The Baltic Exchange’s main sea freight index, tracking rates for ships carrying industrial commodities, slumped to an all-time low on Wednesday as gloom over global demand and too many ships for hire continued to batter prospects.

The overall index, which gauges the cost of shipping dry bulk cargoes including iron ore, cement, grain, coal and fertiliser, was down 8 points, or 1.99 percent, at 394 points – below 400 points for the first time – and the lowest level in records that date back to January 1985.

“Dry bulk shipping is in the throws of a generational recession,” said Ben Nolan of brokerage and investment bank Stifel. “The recovery in demand no longer appears to be a 2016 event and even 2017 is in question.

http://uk.reuters.com/article/baltic-index-idUKL8N14X2YE20160113

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