Credit Crunch May Put an End to Shipping

One of the markets which has collapsed in the last couple of weeks is the shipping market. This is a very bad thing. Just as the honeybee is vital to food production, shipping lies at the basis of world trade in goods. The term shipping market refers to the purchase price of a voyage rather than what it costs to buy a physical ship. In the last month the price to hire a container ship for a day has fallen from $235,000 to $5611.

Shipping has always had low profit margins, so, when the value of a day at sea falls to 2% of what it was the ships stay tied to the wharf. Really, I guess they’ll be anchored up somewhere because there isn’t enough moorage to contain any large part of the world’s shipping. Either way, if those ships stop moving the world grinds to a halt.

This is the downside of outsourcing and the global economy in general. It certainly demonstrates that the whole idea of countries as independent entities is a fiction. North America doesn’t produce much these days besides computer chips and BS. Everything else is imported.

Here’s another thing: everybody is all happy because the price of oil has fallen. How long do you think the oil will continue to flow if the owners of the tankers lose vast amounts of money every time the ships leave port? This illustrates once again that natural resources have no value until they can be sold to a market. Oil in the ground in Saudi Arabia is nothing but sludge without an unbroken chain of ships shuttling back and forth between here and the middle east.

Maybe it isn’t all bad, though. This could be the end of food adulterated with melamine, vitamins contaminated with heavy metals and toxic Christmas toys. And India won’t be sending us a car that sells for $2000 any time soon.

Posted by: swampy | 11-13-2008 | 05:11 PM
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