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Tuesday, April 10, 2012

More signs of Global Economic Recovery - Cargo ships being sold for scrap

Blogman's Notes:

In a  followup to my weekend report on the ongoing Economic Collapse, yesterday I added a report of Sony axing 10,000 + employees.Today this report from the UK Telegraph reveals loud and clear that the Global Shipping Industry is in terrible trouble; it is not experiencing a boom as many speculated it would at the beginning of this Century. The Shipping Industry more than any other enterprise in indicative of the health of the Global Economy. When ships sit idle, factories sit idle; when factories sit idle, workers sit idle, which is what was reported yesterday. Why else would Sony be laying off 10,000 employees if it is selling so many PlayStations and TVs? We have been following the story of the Baltic Dry Index since 2009, this is an index that keeps track of the health of the Shipping Industry; the higher the index the better the health of this industry that tells us how many goods are being shipped worldwide. After hitting an unprecedented low in 2009, the index recovered somewhat in 2010 and 2011. But guess what? The index is once again trending downwards in a big way, so where is the Recovery? Never before in history has a Recovery been so short-lived unless there was no Recovery at all but just smoke 'n' mirrors set up by political leaders and the lying mainstream media. Sadly, the majority of people will only wake up when they can no longer afford to buy their non-fat, no-foam lattes at Starbucks or buy their $150 NFL Idol worshiping jerseys. But let no one ever claim that they were not warned!

The downturn in shipping is hitting the industry so hard that some of the world's biggest vessels are now worth little more than their scrap value, new figures show.

Shipyards have been turning out new vessels at a pace designed to service global demand that has simply failed to materialise, meaning the industry is now sinking under massive overcapacity.
As owners have seen the rates charged to carry freight plunge, demand for their ships has collapsed to the point that selling them for scrap makes financial sense much earlier in a vessel's life.
In the worst hit sectors, the fall in the ships's value and the rise in the price of steel – driven by rapacious demand from China as it builds itself anew – means that the difference between the prices fetched if vessels are sold on to keep sailing and those if they are broken up for scrap is now minimal.
Cargo ships as a general rule are built to sail for 25 years, yet in the volatile VLCC or "very-large crude carrier" sector, which comprises the world's biggest oil tankers, scrap and resale prices reached parity in recent months for the average 15-year-old ship, according to prices tracked by industry information provider
A typical 15-year-old VLCC achieved an average resale price of about $78m (£49m) at the peak of the market in July 2008, its research shows. That figure has since plunged to $23m.

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