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Friday, December 05, 2008

Shipping crisis as global economy slows down

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Friday, 05 December 2008
Collapsing consumer confidence means that manufacturing industry across the world is slowing down and this has meant a slump in demand for raw materials. As a result there has been a collapse in the Baltic Dry Index, which tracks the cost of chartering ships to shift raw materials such as iron ore, coal and grains. Since June the index has fallen by more than 90 per cent. A firm wanting to charter the largest vessel bigger than 80,000 tonnes, known as a Capesize, would have paid $234,000 (£159,433) a day on June 5. The latest quoted rate is $8,300 (£5,677), reflecting how the shortage of customers has driven the price down.
The rate for chartering container ships, which transport manufactured goods, has fallen by 30 per cent in the last few weeks.
But for the run up to Christmas, this fall would have been even steeper.
The extent of the crisis which has hit the shipping industry has led to a sharp rise in the number of vessels being laid up.
Demand for berths has been brisk, according to Capt Andy Brigden, harbour master at Truro, who is responsible for running the River Fal in Cornwall.
"I have been here for 21 years and I have never had so many inquiries in such a short space of time from ship owners who want to berth their vessels.
"It has come from right across the board, including car carriers, bulk carriers, gas tankers and small coastal cargo vessels.
"Some companies are looking to lay up ship for at least a year.
"The River Fal lay up berths have always been known as the barometer of the world's economy.
"When there are no ships then the economy is doing well, when it is full then it is doing badly.
"Ships are also being berthed in Southampton and on the Norwegian Fjords £159,433 as well as Piraeus in Greece."
The Chamber of Shipping was also alarmed by the latest trends.
"Shipping is what carries the majority of world trade and it will inevitably reflect the decline which we are seeing at the moment," a spokesman said.
"It shows that manufacturing has been slowing down, especially in the East."
"This is an industry which sees peaks and troughs, but the slump in the movement of raw materials like iron ore is a worrying indication of the state of the global economy.
As adapted from Telegraph