Tuesday, February 24, 2009
Shipping rates have bounced solidly off their lows. As markets collapsed and fears of a global banking crisis soared, consumers sharply curtailed discretionary spending and banks all but shut down the issuance of the letters of credit that are essential to global trade. Global trade virtually ground to a halt, with shipping rates, as shown in this chart, falling to levels that most likely marked the point at which shippers would rather leave their ships at the dock rather than sail them for a loss. Shipping activity is now making a comeback, with shipping rates up dramatically from the early December lows. Doom and gloomers fret that rates will plunge again, as new ships are scheduled to come on line. But that doesn't negate the fact that activity must be up, even if it is only due to China ramping up its stimulus package. Where there's smoke, there's fire.
Posted by Scott Grannis at 1:04 PM