World Shipping Crisis?
Why read: Because shipping activity arguably is a particularly good predictor of things to come in the near-term.
Commentary: Apparently German shipping experts believe two-thirds of Germany's marine fleet is in financial distress - this in circumstances where it is said that German shipping companies control 40% of the world's container business. At the same time, there are reports that;
the ClarkSea Index, an index of maritime freight rates, has halved since mid-2010, and has fallen by 80% since 2008;
the Baltic Dry Bulk Freight Index has fallen by 90% to what is referred to as 'post-Lehman depths'; and,
that a large number of shipping businesses are going to be threatened with insolvency going forward.
While I am sure there is a lot more underlying information and data on the current and prospective state of the world's shipping industry than I am portraying above, I suggest that in addition to reading the referenced article you consider:
that Chinese manufacturing is slowing at a time when shipping rates apparently are very low (see article on Chinese container traffic referenced later in this Newsletter); and,
this can be argued to imply that European and U.S. consumers are paying prices at retail that are lower than they would be in more buoyant markets - yet when viewed from 20,000 feet those prices seem not to be enticing retail consumers to buy. This, of course, assumes that the Walmarts of the world pass shipping cost savings on to customers - which may be an aggressive assumption.
Topical Reference: World shipping crisis threatens German dominance as Greeks win long game, from The Telegraph, August 13, 2012 - reading time 2 minutes.