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How to Get Rich Investing in Stocks by Riding the Electron Wave

Recession Ghost Fleets With No Crew, No Cargo and No Destination

Economics / Recession 2008 - 2010 Sep 14, 2009 - 08:04 PM GMT

By: Mike_Shedlock

Economics

Best Financial Markets Analysis ArticleThe Mail Online has some stunning images of The ghost fleet of the recession.


The biggest and most secretive gathering of ships in maritime history lies at anchor east of Singapore. Never before photographed, it is bigger than the U.S. and British navies combined but has no crew, no cargo and no destination - and is why your Christmas stocking may be on the light side this year.


Above: The 'ghost fleet' near Singapore. The world's ship owners and government economists would prefer you not to see this symbol of the depths of the plague still crippling the world's economies

Just 12 months ago these financiers and brokers were enjoying fat bonuses as they traded cargo space. But nobody wants the space any more, and those that still need to ship goods across the world are demanding vast reductions in price.

Do not tell these men and women about green shoots of recovery. As Briton Tim Huxley, one of Asia's leading ship brokers, says, if the world is really pulling itself out of recession, then all these idle ships should be back on the move.
This is the time of year when everyone is doing all the Christmas stuff,' he points out.

'A couple of years ago those ships would have been steaming back and forth, going at full speed. But now you've got something like 12 per cent of the world's container ships doing nothing.'

As the shipping industry teeters on the brink of collapse, the activity at boatyards like Mokpo and Ulsan in South Korea all looks like a sick joke. But the workers in these bustling shipyards, who teem around giant tankers and mega-vessels the length of several football pitches and capable of carrying 10,000 or more containers each, have no choice; they are trapped in a cruel time warp.

There have hardly been any new orders. In 2011 the shipyards will simply run out of ships to build


Above: 750ft-long merchant vessel is standing absurdly high in the water. The low waves don't even bother the lowest mark on its Plimsoll line. It's the same with all the ships parked here, and there are a lot of them. Close to 500. An armada of freighters with no cargo, no crew, and without a destination between them.

If ever you had an irrational desire to charter one, now would be the time. This time last year, an Aframax tanker capable of carrying 80,000 tons of cargo would cost £31,000 a day ($50,000). Now it is about £3,400 ($5,500).

This is why the chilliest financial winds anywhere in the City of London are to be found blowing through its 400-plus shipping brokers.

Between them, they manage about half of the world's chartering business. The bonuses are long gone. The last to feel the tail of the economic whiplash, they - and their insurers and lawyers - await a wave of redundancies and business failures in the next six months. Commerce is contracting, fleets rust away - yet new ship-builds ordered years ago are still coming on stream.

There are many more images in the story as well as tales of the local fisherman, such as Ah Wat who says:

"'We don't understand why they are here. There are so many ships but no one seems to be on board. When we sail past them in our fishing boats we never see anyone. They are like real ghost ships and some people are scared of them. They believe they may bring a curse with them and that there may be bad spirits on the ships."

The ghost fleet is not exactly "secret" given the availability of satellite images. Nonetheless, there has not been widespread reporting of this phenomenon by mainstream media.

Baltic Dry Index Shows Collapse In Shipping Demand


Given the buildup of ships sitting empty on the ocean, the collapse in the Baltic Dry Index is readily explainable.


Please see Investment Tools for more charts and information on Baltic Exchange Dry Index (BDI) & Freight Rates.

Protectionism Will Make Matters Worse

Growing protectionism will exacerbate the problems facing the global economy.

In the 1930's Smoot Hawley completely ruined the agricultural sector in one fell swoop. Now, Obama Risks Global Trade War With Misguided Tariffs over steel and tires.

China has retaliated by "investigating" automotive and chicken exports from the US.

Note that rising protectionism is a symptom of global trade problems and issues. Unfortunately, rising protectionism does nothing but make matters worse.

By Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

Click Here To Scroll Thru My Recent Post List

Mike Shedlock / Mish is a registered investment advisor representative for SitkaPacific Capital Management . Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction.

Visit Sitka Pacific's Account Management Page to learn more about wealth management and capital preservation strategies of Sitka Pacific.

I do weekly podcasts every Thursday on HoweStreet and a brief 7 minute segment on Saturday on CKNW AM 980 in Vancouver.

When not writing about stocks or the economy I spends a great deal of time on photography and in the garden. I have over 80 magazine and book cover credits. Some of my Wisconsin and gardening images can be seen at MichaelShedlock.com .

© 2009 Mike Shedlock, All Rights Reserved

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© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

Jerry
15 Sep 09, 19:50
Trade

Since the American Worker has moved from manufacturing to the service industry because of all this "Fair Trade", please write an article how the American worker has benefited and how he can compete even making $10 per hour while workers in China, India, and the third world countries are being paid $5 per week/month....


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