Even though the Baltic Dry Index, which measures freight rates rates for bulk transport, is well off its lows, other indicators of shipping activity are less encouraging. Containers shipment, which handles higher value added goods, is still falling and is expected to remain low in 2010.
From the Los Angeles Times (hat tip DoctoRx):
Trade at international ports is on track to drop more than 10% this year, one of the steepest declines ever…
Cargo ships will carry 27 million fewer containers by year’s end than they did in 2008 — a reduction roughly equivalent to all of the cargo containers handled by the five busiest U.S. seaports in a typical year, according to London-based Drewry Shipping Consultants’ Container Forecaster Report.
“There has never been a decline like this before. We have never seen numbers like these,” said Neil Dekker, editor of the Drewry report. “The container industry is looking at a $20-billion black hole of losses. We can expect a lot of casualties.”…
“The forecasts for 2010 call only for a very moderate recovery in trade volume. This is a long-term problem. It will take several years for us to get back to the trade levels we saw in 2006 and 2007,” Kyser said.
At the Port of Long Beach, the nation’s second-busiest container port behind Los Angeles’, trade volumes have been knocked back all the way to 2003 levels, according to spokesman Art Wong, wiping out all of the trade gains recorded during the boom years of 2004 through 2007. Similar results can be found at many of the major U.S. ports…
The continuing global recession has run so deep that it has caused Moody’s Investors Service to downgrade its outlook to negative overall for the 53 U.S. ports whose credit ratings it tracks.
But there is a bright spot for Los Angeles and Long Beach…”Los Angeles-Long Beach are the two most highly rated ports in the U.S. Two of the primary drivers are their strong financial situations and their competitive market positions,” said Baye Larsen, an analyst and assistant vice president at Moody’s. “Both are a key advantage for those ports. They will be among the first to benefit when the recovery does come.”..
There are few indications that the turnaround will begin any time soon. The trade route that had been the most resilient in the face of the global recession — between Asia and Europe — has now succumbed to the downturn as well. So far this year, the last three years of growth in trade between Asia and Europe have been erased, Dekker said….
Freight rates for transpacific trade, the amount that shipping lines can charge for a typical 40-foot container for cargo moving between Asia and the West Coast of the U.S., have plummeted to $920 from $1,400 at the beginning of the year, according to the Drewry report.
The continued slump has dashed the hopes of many in the industry, who had come to believe that the recession had bottomed out and that a recovery was beginning.
“At this moment we can’t see anything particularly positive around the corner,” Dekker said. “We don’t want to be overly negative. That is just the reality.”