Having experience in investing in shipping companies, I can tell you that, aside from China sucking wind, part of the problem with shipping rates are zombie ships. Because of cheap, available credit, there are scores of shipping companies out there, flooding the seven seas with tonnage capacity, forcing prices lower. These fuckers will work for crackers and spam.
The Baltic Dry Index, a measure of shipping rates for everything from coal to ore to grains, fell to 504 points on Thursday, the lowest data from the London-based Baltic Exchange going back to 1985. Among the causes of shipowners’ pain is slowing economic growth in China, which is translating into weakening demand for imported iron ore that’s used to make the steel.
“The main issue is the lack of demand for iron ore from China,” Eirik Haavaldsen, a shipping analyst at Pareto Securities AS in Oslo, said by phone. “This market is looking like a disaster and the rates are a reflection of that. It is looking scary for the market and it doesn’t look like there is going to be any life in the market in the near term.”
In this one instance, Federal Reserve hikes will help clear the market of weak balance sheets and permit this industry to begin to recover. Without mass bankrupticies and liquidations, the BDI will remain depressed.
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No doubt it’s time for Amazon to enter the bulk shipping biz! Extra deflation ….
Don’t give them ideas.
I followed this sector pretty closely off and on over the last few years, and have come to the conclusion that demand has nothing to do with it. There is no government in the world that can realistically do anything to use the existing supply of dry bulk ships. There was a massive overbuild of ships, and the only thing that’s going to change that is shippers going bankrupt and a bunch of old ships being scrapped.
Oh! But it was such a boom when shipbuilding was occuring left and right! Things were humming! NO IT JUST FELT LIKE IT AND IT WAS DISLOCATED SUPPLY FROM EASY MONEY
Easy money doesn’t create undesirable side effects… No…
You just posted your 11,111 post. Maybe this is a Chinese “lurky nurmbur”