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World's Busiest Freight Route Rates Plunge To 2014 Lows

Tyler Durden's picture




 

Shipping freight rates for transporting containers from ports in Asia to Northern Europe - the world's busiest route - fell 10.2% to $738 per container in the week ended on Friday, according to Reuters. This is the 4th weekly drop in a row and is the lowest level since Oct 25th 2013. Confirming this global trade volume collapse, the Baltic Dry tumbled back below $1000, down 50% from a year ago, and is hovering once again at post-Lehman crisis lows. But apart from that, the global economy is doing great...

 

Freight rates have halved year-over-year...

 

Of course, the question is - when will stocks re-align with global fundamentals...

 

Maybe that explains this...

 

Charts: Bloomberg

 

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Fri, 10/10/2014 - 14:03 | 5315098 101 years and c...
101 years and counting's picture

spx "fair value" near 800 seems about right to me.  

Fri, 10/10/2014 - 14:13 | 5315156 DoChenRollingBearing
DoChenRollingBearing's picture

Wow, the article notes that shipping a 20' container on that route costs just $738.  We pay a lot higher (maybe $1000) for East Asia to Callao, Peru.  Finding the current BDI is easy (from stockcharts.com just type in "$BDI").

But, how do I find container shipping rates?  Better yet, LTC rates?

Fri, 10/10/2014 - 14:28 | 5315213 Ancona
Ancona's picture

DC,

You could check it out here:

http://www.dryships.com/index.htm

Fri, 10/10/2014 - 14:39 | 5315251 DoChenRollingBearing
DoChenRollingBearing's picture

 

 

Mr. Ancona, I hope all is well for you and yours!

Dryships (DRYS) would be a risky place to invest with China slowing.  But, Dryships is an owner of bulk ships (and oil drilling ships), I saw zip about container shipping rates...

Fri, 10/10/2014 - 14:54 | 5315300 SAT 800
SAT 800's picture

Use the telephone; the first person who works in the field will refer you to someone else closer to your actual need, and he'll refer you to the guy you actually need to talk to.

Fri, 10/10/2014 - 15:12 | 5315417 F-Tipp
F-Tipp's picture

We pay more than $738 for a 20' from Asia to North America as well DoChen.

Fri, 10/10/2014 - 15:28 | 5315519 11b40
11b40's picture

DCRB.....as I am sure you know, LTC rates are the highest.

China port to U.S. port rates vary considerably, depending on which coast you land on.  I deal primarily with retail accounts that have annual contract rates.  Of course, the landed cost is what everyone needs to know, so I have to include their fraight rates as a part of the quote process.  My primary China port is Qingdao, and a stanrd 40' to most of my customers in the Southeast averages around $4400 off-peak and $4600 peak.

There are some things I don't see, so impossible to know their true, net rates - only the rates they provide, but I do enough of them to have a pretty good feel for it.

Oddly enough, we have been scrambling for containers for this fall shipping season, and I have had several delivery dates pushed back dues to shortages.  Some of this is likely due to freight carriers taking ships off line, and some may be due to too many containers stacking up on this side of the pond.  We have seen no real collapse in rates yet, and have had problems with availabilty since about June.

Fri, 10/10/2014 - 16:23 | 5315922 assistedliving
assistedliving's picture

How about $2500 to Jeddah for a 20'.  Hurts but luckily

the same 20' ex Euro 'super union' land for 1/3rd the distance i pay the same or more so we're still competitive...until the USD just struck

Fri, 10/10/2014 - 14:05 | 5315109 SHEEPFUKKER
SHEEPFUKKER's picture

Can't they just manipulate the BDI? I want to feel happy this weekend. 

Fri, 10/10/2014 - 14:06 | 5315122 Alea Iactaest
Alea Iactaest's picture

I made a mental note this morning to check BDI, hadn't gotten around to it yet. Another "interesting" data point taken with commodity prices. Green shoots?

Fri, 10/10/2014 - 14:37 | 5315246 KnuckleDragger-X
KnuckleDragger-X's picture

The real world is hard to manipulate, however perceptions of the real world are a different matter.

Fri, 10/10/2014 - 14:04 | 5315110 yogibear
yogibear's picture

Keep on printing Fed. You getting a result, maybe not the one you wanted.

Fri, 10/10/2014 - 14:05 | 5315114 Leveraged Algorithm
Leveraged Algorithm's picture

 Ill get excited when the S&P falls 400 in one day.

Fri, 10/10/2014 - 14:07 | 5315117 X.inf.capt
X.inf.capt's picture

with nothing being transported... I.E. comercial trade...

how is the economy growing??

i think they might be lying to us..

8O  <==my shocked face..

Fri, 10/10/2014 - 14:07 | 5315126 Alea Iactaest
Alea Iactaest's picture

My preferred view:

( . )( . )

Fri, 10/10/2014 - 14:56 | 5315311 SAT 800
SAT 800's picture

i would disregard all claims of "growth" as "spin"; and that's being polite. Over-installed capacity is a feature of all structural depressions and tha t's what we're in' a Global structural depression; for obvious reasons this won't be on tonights news at 11. Growth is over; done; finished; forget about it.

Fri, 10/10/2014 - 15:18 | 5315439 11b40
11b40's picture

Well, somebody may be lying.

http://www.homeworldbusiness.com/Retail/Import-Cargo-Volume-Expected-To-...

Friday October 10th, 2014 - 10:59AM


| | | | | 

Import cargo volume at the nation’s major retail container ports is expected to see a final surge and set a new monthly record in October as the holiday season approaches, according to the monthly Global Port Tracker report released Friday by the National Retail Federation (NRF) and Hackett Associates.

Import volume at U.S. ports covered by the Global Port Tracker report is expected to total 1.53 million containers this month, topping the 1.52 million monthly record set in August. Cargo volume has been well above average each month since spring as retailers have imported merchandise early in case of any disruption on the docks.

“Increasing congestion at the nation’s ports as well as the ongoing west coast labor negotiations are ongoing concerns and retailers are making one last push to make sure they’re stocked up for the holidays,” said Jonathan Gold, vp/ Supply Chain and Customs Policy for the NRF. “Retailers are working hard to make sure customers can find what they’re looking for regardless of what happens at the ports.”

The contract between the Pacific Maritime Association and the International Longshore and Warehouse Union expired on July 1, prompting concerns about potential disruptions that could affect back-to-school or holiday merchandise. Dockworkers remain on the job as negotiations continue but the lack of a contract and operational issues have led to record congestion at the ports.

The 1.52 million Twenty-Foot Equivalent Units (TEU) handled in August, the latest month for which after-the-fact numbers are available, was up 1.5 percent from July and 2.1 percent from August 2013. One TEU is one 20-foot cargo container or its equivalent.

September was estimated at 1.48 million TEU, up 2.8 percent from the same month last year, and October’s forecast of 1.53 million TEU would be up 6.4 percent from last year. November is forecast at 1.39 million TEU, up 3.7 percent, and December at 1.37 million TEU, up 3.9 percent.

Those numbers would bring 2014 to a total of 17.1 million TEU, an increase of 5.3 percent over 2013’s 16.2 million. Imports in 2012 totaled 15.8 million. The first half of 2014 totaled 8.3 million TEU, up 7 percent over last year.

Fri, 10/10/2014 - 14:59 | 5315337 SAT 800
SAT 800's picture

I was offered an opening to go to OCS; but I declined; but I don't think badly of you. If you really were an Infantry Capt. I know it was a hell of job. former E-6; RA serial #. respect and peace.

Fri, 10/10/2014 - 15:30 | 5315531 11b40
11b40's picture

But, would you volunteer again? ;-)

Fri, 10/10/2014 - 14:08 | 5315125 Ness.
Ness.'s picture

From WSJ - On his second day of testimony in federal court, Mr. Bernanke maintained that officials sought to save AIG. “The company was on the brink of default, and our intervention would spare it the discipline of the market,” Mr. Bernanke said.

 

That's all folks!!!

Fri, 10/10/2014 - 14:09 | 5315133 LawsofPhysics
LawsofPhysics's picture

Yes, all companies are created equal, it's just that some companies are "more equal" than others.

Fri, 10/10/2014 - 14:09 | 5315142 headhunt
headhunt's picture

aka - fascism.

Fri, 10/10/2014 - 14:37 | 5315248 Tinky
Tinky's picture

Excellent find. It's perversely gratifying when a high-level, elite criminal inadvertently pulls back the curtain.

Fri, 10/10/2014 - 15:25 | 5315494 SAT 800
SAT 800's picture

Tinky, if you're a reader, there's a book about AIG that explains the whole thing in detail; about the guy who actually caused the big crash, and many, many, details that are just mind boggling. sorry I can't remember the title. you can probably find it with a subject search. Some of the shit that went on in that company was absolutely amazing; and there really was a patient zero; one guy who caused the crash; and he kept his name out of the papers and he retired with many millions and he lives in an English Manor house. He was a complete crook and he knew exactly what he was doing; but he was highly intelligent; a high functioning psychopath.

Fri, 10/10/2014 - 16:30 | 5315962 Omen IV
Omen IV's picture

Cassano plus Goldman Sachs is the epi center of Fraud on AIG shareholders  - not a chance it was a mistake - going long  the risk for CDS on CDO's which were able to be completely dissected and were not  - to the tume of $160 Billion without offset for the risk wasnt insane - it was a Control Fraud - Cassano had no underwriting committe to report to once they eliminated Greenberg in 2005 - AIG was primed as the stuffie

Fri, 10/10/2014 - 15:19 | 5315451 SAT 800
SAT 800's picture

Wow, he really said that ? that's amazing. His wig must be slipping. Wow. That really is amazing. the would spare it the discipline of the market. thereby, and therefore, destroying the mechanism by which capital business operates. Boy; what we need are moar Princeton Professors, I can see that right now; these guys are really on top of it.

Fri, 10/10/2014 - 15:22 | 5315471 SAT 800
SAT 800's picture

Wow; Ness; you really posted something important there. I wonder if that quote will be on the evening news.

Fri, 10/10/2014 - 17:56 | 5316344 HalinCA
HalinCA's picture

Where's Dexter when you need him?

Fri, 10/10/2014 - 14:13 | 5315140 Super Hans
Super Hans's picture

I love logistics!

It's all about logistics!

Walmart mastered logistics and won.

Great armies win battles, but great armies that understand logistics wins wars!

It's all about logistics!  Nothing else matters,

SH 

 

Fri, 10/10/2014 - 14:26 | 5315206 Alea Iactaest
Alea Iactaest's picture

WMT has logistics dialed-in, for sure!

Walmart's Out Of Stock Problem: Only Half The Story?
http://www.forbes.com/sites/paularosenblum/2014/04/15/walmarts-out-of-st...

Fri, 10/10/2014 - 14:13 | 5315154 franzpick
franzpick's picture

Not good for America's biggest export: Empty cargo container ships.

 

Fri, 10/10/2014 - 14:16 | 5315167 FieldingMellish
FieldingMellish's picture

I thought America's biggest export was dollars.

Fri, 10/10/2014 - 14:25 | 5315200 Bell's 2 hearted
Bell&#039;s 2 hearted's picture

not tomahawk missiles?

Fri, 10/10/2014 - 15:02 | 5315355 SAT 800
SAT 800's picture

You're right; he's just being a bit silly; they aren't our ships.

Fri, 10/10/2014 - 17:18 | 5316205 Sages wife
Sages wife's picture

Maybe FILL the cargo containers with dollars.

Fri, 10/10/2014 - 14:15 | 5315168 Bell's 2 hearted
Bell&#039;s 2 hearted's picture

shipping glut + slow demand = ____

Fri, 10/10/2014 - 15:03 | 5315364 SAT 800
SAT 800's picture

=zero. that was an easy one. don't you have any hard questions?

Fri, 10/10/2014 - 14:16 | 5315171 gatorengineer
gatorengineer's picture

The interesting thing about this is what it means is US retail failed to order inventory for this years Xmas in the spring of this year.  that ripple has played through Chinas numbers, and the Baltic Dry now.  It hasnt priced into the Stock market yet.....

Fri, 10/10/2014 - 14:19 | 5315178 Bell's 2 hearted
Bell&#039;s 2 hearted's picture

au contraire -

 

WASHINGTON, October 10, 2014 – Import cargo volume at the nation’s major retail container ports is expected to see a final surge and set a new monthly record in October as the holiday season approaches, according to the monthly Global Port Tracker report released today by the National Retail Federation and Hackett Associates.

 

https://nrf.com/media/press-releases/retail-imports-set-new-record-final...

Fri, 10/10/2014 - 14:28 | 5315211 Alea Iactaest
Alea Iactaest's picture

I love "anticipated" and "adjusted" numbers. MOAR, please.

Buy the rumor, sell the news. Same as always.

Fri, 10/10/2014 - 14:30 | 5315220 Frank N. Beans
Frank N. Beans's picture

There's a chance, just a chance mind you, that this NRF report is biased towards showing growth.   It's like asking the NARealtors about their forecasts.

Fri, 10/10/2014 - 15:05 | 5315375 SAT 800
SAT 800's picture

National Derailed and hacker associates; gotta write that down, sounds important.

Fri, 10/10/2014 - 14:21 | 5315190 Winston Churchill
Winston Churchill's picture

Time to short the fuck out of it.

However, what happens if they close the markets, and never re-open them ?

Fri, 10/10/2014 - 14:41 | 5315261 KnuckleDragger-X
KnuckleDragger-X's picture

Personally, I'd like to find out....

Fri, 10/10/2014 - 15:07 | 5315387 SAT 800
SAT 800's picture

NO. no. repeat 1,000 times;l you short highs. you buy lows. you never trend follow. think about it.

Fri, 10/10/2014 - 15:09 | 5315401 SAT 800
SAT 800's picture

you never; never, never, make trading decisions based on news articles. Never. you watch the price chart; for months, if necessary; like a tiger at a water hole, and when you see the price that is too high; you short it. don't even read news if you want to make a lot of money. the price charts tell you what you want to know. the news tells you what you don't want to know.

Fri, 10/10/2014 - 14:18 | 5315176 Hal n back
Hal n back's picture

what we need is the US Census Dept or BLS to calculate the BDI so it agrees with the economy.

Fri, 10/10/2014 - 14:20 | 5315184 limacon
limacon's picture

Of course trade is down .

See https://www.academia.edu/8713304/Ebola_and_Insurance

 

Notice the recent little spurt in the Baltic Dry . 

Last minute rushes before ebola shutdown .

 

Similar effect to cronies getting the wink in Cyprus and other areas just before capital controls were implemented .

Fri, 10/10/2014 - 14:21 | 5315187 Bell's 2 hearted
Bell&#039;s 2 hearted's picture

more from that NRF link -

 

"The import numbers come as NRF is forecasting 4.1 percent holiday season sales growthand 3.6 percent growth for 2014 overall. Cargo volume does not correlate directly with sales but is a barometer of retailers’ expectations."

 

i'll take the under on holiday sales

Fri, 10/10/2014 - 16:02 | 5315752 11b40
11b40's picture

Me too regarding hoiday sales, but that does not change the fact that this shipping season is strong.  As I noted in a post above, booking containers through some China ports has been more difficult than normal.  There are factors that may be driving this, such as retailers & importers booking early trying to avoid U.S. dock strikes, which are still looming out there, shipping lines cutting back on vessels, and a lack of containers on the China side.....but no collapse in container rates that I see.

Fri, 10/10/2014 - 14:26 | 5315205 Soph
Soph's picture

"Of course, the question is - when will stocks re-align with global fundamentals..."

 

When the money printing stops?

 

Er, well, it can't stop, at least not under the fractional reserve system we're tied into. But dialed back from a full on deluge to a moderate torrent perhaps?

Fri, 10/10/2014 - 15:14 | 5315427 SAT 800
SAT 800's picture

I don't care. I don't find this question interesting; why do you ? why do you care ? Surely you're not invested in t he stock market. So, who cares ?

Fri, 10/10/2014 - 14:51 | 5315276 devo
devo's picture

Do not fret. Printing money, or Mighty Mouse, will save the day.

Fri, 10/10/2014 - 15:22 | 5315479 ekm1
ekm1's picture

As I predicted in May 2013

World trade will shrink due to Digital Weimar under way

Fri, 10/10/2014 - 15:48 | 5315645 fiboman
Fri, 10/10/2014 - 16:56 | 5316078 Limbs Akimbo
Limbs Akimbo's picture

 

 

Uh...just thought I'd point out in the headlines that 'rates haven't been this low since this time last year.' (paraphrased).

 

Ya know...some stuff IS cyclical. I don't really think that the rates being the SAME as this time last year is much of a call for alarm.

 

Just sayin'

Sat, 10/11/2014 - 10:21 | 5318107 AdvancingTime
AdvancingTime's picture

Recently released minutes from the last Federal Reserve meeting confirmed growing concern about the pressure a stronger dollar is putting on other currencies around the world. Bottom-line is other currencies are under assault because both economies are weak and countries are buried in debt they can never repay at real market interest rates. When investors become unwilling to buy the bonds of heavily indebted nations causing the bond bubble to burst the values of currencies in those countries will tumble.

While there are not many Bond Vigilantes there are a slew of  Currency Vigilantes and they are ready to make their presence known. Recent weakness in the value of the Yen, Pound, and Euro must not go unnoticed. The Currency Vigilantes are acutely aware of when a currency is overvalued or ready to be re-pegged and pounce on the weak currency to tear it apart. The article below questions just how stable the currency market really are. This folds back into questioning the global economy.

 http://brucewilds.blogspot.com/2014/10/fed-concerned-that-stong-dollar.h...

Do NOT follow this link or you will be banned from the site!