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.
Industry sources said they have never seen rates fall so low. “This is a whole new ball game,” said one trader.
The Baltic Dry Index (BDI) which measures freight rates for bulk commodities such as iron ore and grains crashed several months ago, falling 96pc. The BDI – though a useful early-warning index – is highly volatile and exaggerates apparent ups and downs in trade. However, the latest phase of the shipping crisis is different. It has spread to core trade of finished industrial goods, the lifeblood of the world economy.
Trade data from Asia’s export tigers has been disastrous over recent weeks, reflecting the collapse in US, UK and European markets…
A report by ING yesterday said shipping activity at US ports has suddenly dived. Outbound traffic from Long Beach and Los Angeles, America’s two top ports, has fallen by 18pc year-on-year, a far more serious decline than anything seen in recent recessions.
“This is no regular cycle slowdown, but a complete collapse in foreign demand,” said Lindsay Coburn, ING’s trade consultant….
The World Bank caused shockwaves with a warning last month that global trade may decline this year for the first time since the Second World War. This appears increasingly certain with each new batch of data.
Mr de Trenck predicts Asian trade to the US will fall 7pc this year. To Europe he estimates a drop of 9pc – possibly 12pc. Trade flows grow 8pc in an average year.
He said it was “illogical” for shippers to offer zero rates, but they do whatever they can to survive in a highly cyclical market.
Offering slots for free is akin to an airline giving away spare seats for nothing in the hope of making something from meals and fees.
IF 
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Offering slots for free is akin to an airline giving away spare seats for nothing in the hope of making something from meals and fees.
Or, perhaps to curry favor from customers in hopes of persistent loyalty for better times.
Besides the obviously bad effects on the exporters themselves, and the indication of the economic health of the importers, I’d advise people to remain particularly considerate of the second-order effects resulting from a drop in trade of this magnitude.
It should have particularly profound upward impacts on real interest rates as vendor financing continues its march downhill, with a concomitant increase in funding costs in importing countries. Real interest rates become very difficult to affect with policy when a zero bound in the nominal rate is hit, so those increases in interest rates are likely to stick.