Is it the Big 3 Bail out or the UAW Bailout?
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What's wrong with the big three going under? I'll answer that, the union suffers. So where do we stop? Do we bail out Maersk?
Publication : Times Online Date : 10th December 2008 Maersk Line warns shipping industry needs a lifebelt It was the one industry geared for huge volume growth. From China alone, annual double-digit percentage increases in trade had been the norm in the shipping world. But a sudden and sharp slowdown in global trade is hurting the cashflow of container shipping companies. The situation is so critical that a senior executive of Maersk Line said that the accelerating traffic decline could push a big group over the edge next year. Maersk, the world's leading container shipping line, has slashed the rates it charges for transporting containers on its Asia-America routes and last week the Danish company said that it was laying up eight vessels amid worsening market conditions. The eight ships, each with a capacity for 6,500 containers, will remain at anchor, probably in the Far East, until next summer. They are unlikely to represent the last capacity cut for the shipping giant, Michel Deleuran, head of network and product at Maersk, said: “We are certainly seeing a dramatic slowdown. The decline we are seeing in recent weeks is faster and deeper than what most people had expected only a few months ago. If we don't see improvements, we will be laying up more.” The sudden drop in trade volumes on Far Eastern routes is causing havoc. Mr Deleuran told The Times that the failure of a big shipping group cannot be ruled out: “I think that would be realistic, looking at the cost figures and the uneconomic rates.” Maersk has cut its container freight rates from Asia to the American West Coast by nearly a quarter and on Asia to Europe routes industry rates have collapsed to a fifth of what they were a year ago. “If that does not change, one or more of the larger lines could be in financial difficulty next year. Some people could be really challenged by cashflows,” Mr Deleuran said. The sudden drop in traffic from Asian workshops to the consumer markets in Europe and North America has surprised shippers. Further evidence of the decline emerged yesterday when Neptune Orient Lines, the Singaporean company that owns APL, the seventh-biggest container transporter, signalled that volumes had dropped by 12 per cent in November compared with the same four weeks in 2007. Last month, Neptune Orient gave warning that it would cut its workforce by 9 per cent amid the worsening economic outlook. China Merchant Holdings, the country's biggest port operator, said that it would curb its expansion plan because of the weakening shipping market. Fu Yuning, China Merchant's chairman, said that he expected slower throughput at the country's biggest ports in Hong Kong and Shenzhen. The weak shipping market has put the brakes on companies that make containers, used for the avalanche of consumer products made in Chinese factories. On Monday, CIMC issued a warning in response to rumours that it had halted production: “Our company has warned of the risks as slowing demand is now a universal phenomenon due to the economic environment caused by the global financial tsunami.” According to Mr Deleuran, traffic growth in the container market had been at the rate of 10 per cent a year every year, but the growth had suddenly declined and may have reached nil or decline. According to shipping experts at Lloyd's List, the market was anticipating a capacity expansion of 50 per cent over the next three to four years. “There have been a lot of lay-ups, 135 container ships are thought to be idle at the moment,” Janet Porter, of Lloyd's List, said. Mr Deleuran said the question for the market was how much of the capacity under order had found charterers. “There are quite a number of ships under order. We are potentially seeing an over-tonnage situation in 2009.” Maersk Line has a fleet of 470 vessels and in July the company placed an order with Daewoo Shipbuilding, of Korea, for 16 container ships to be delivered between 2010 and 2012.  Or how about bailing out the entire shipping industry? Publication : Free Internet Press Date : 9th December 2008 Abandoned Shipyards Some shipping companies or shipping lenders are even forfeiting advances paid to shipyards of up to 40 percent of a ship's price, either because they are unable to raise the remaining millions or to minimize current losses. Some shipping companies are in luck, however, because they ordered ships from nonexistent shipyards. When the large Asian shipyards were overrun with orders in recent years, and delivery times grew to up to four years, many small shipyards, especially in China, were simply created out of thin air. In many cases, contracts to build new ships were signed with these so-called greenfield shipyards, which existed only on the drawing board. "These shipyards will no longer exist today, nor will the ships," says Offen. Even most of the existing greenfield shipyards will likely disappear quickly today. German shipping industry executives are already reporting on abandoned shipyards in China, where the ships are half-finished and there are no workers in sight. Nevertheless, so many new ships will enter the market next year that worldwide container capacity will grow by about 13 percent. However, container shipping will grow by only 5 percent - that is, unless a global recession forces demand down even further. An increase in load capacity coinciding with a drop in consumption will have disastrous consequences for shipping rates. The Baltic Dry Index (BDI), a standard index for ore and grain shipments, declined from 8,756 points at the beginning of the year to 733 points at the end of November. Eivind Kolding, the CEO of Maersk, the world's largest shipping line, complains that he now collects all of $600 (€480) per container between the Far East and Europe. The company is suffering enormous losses with each individual container. Neptune Orient Lines, the favored candidate to take over the Hamburg-based shipping line Hapag-Lloyd until this summer, has already announced plans to lay off almost 10 percent of its work force. The first of the smaller shipping companies are already going bankrupt. This explains why shipping companies everywhere are beginning to "lay up" ships, which means parking them for months in a bay somewhere, with skeleton crews on board, instead of continuing to operate the vessels in scheduled service at a loss. Last week the Grand Alliance, one of the largest container shipping company alliances, which includes Hamburg-based Hapag-Lloyd, decided to suspend one of its scheduled services between Asia and the United States, initially for 18 weeks. Why doesn't the government just pass out one million dollars to each person and be done with it? Look, failure is nature's way of rewarding those that are smart enough to avoid failing. Think about it, the money is going somewhere. It goes to the Government for them to give to their friends in order for their friends to donate to the Government leaders so they keep getting that packet full of money so they can give it to another politician so that politician can give another packet of money and that packet of money can be used when you're "client #9" or on whatever. NO means NO, Washington. Stop raping America. |
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