Tuesday, March 23, 2010
The last time I featured this chart was Aug. '09. It's a relatively obscure measure of shipping costs, but it focuses on the North Atlantic, and it compares current shipping rates to the total operating cost of running a ship, including return on equity. Complete info can be found here. For the past year it has contradicted the Baltic shipping index, which has soared. Last August I thought that it had bottomed. As this chart shows (if you have a magnifying glass), I was a little early on my call, but now it does indeed look like it bottomed late last December.
Optimists will view this chart as one more (belated) confirmation that global economic activity is turning up. Pessimists will say that shipping rates are still extremely depressed. I don't know enough about this to take a strong stand, but I take heart from the evidence of positive change on the margin, especially since that fits well with a lot of other indicators of expanding global economic activity (e.g., rising commodity and energy prices, rising equity valuations, declining credit spreads).
Posted by Scott Grannis at 7:28 PM