Ghost fleet anchored just East of Singapore

**Clyrinc** · 09-17-2009, 03:12 AM

http://www.dailymail.co.uk/home/mosl...Singapore.html

"Revealed: The ghost fleet of the recession anchored just east of Singapore

By Simon Parry

Last updated at 1:18 PM on 16th September 2009

The biggest and most secretive gathering of ships in maritime history lies at anchor east of Singapore. Never before photographed, it is bigger than the U.S. and British navies combined but has no crew, no cargo and no destination - and is why your Christmas stocking may be on the light side this year

The 'ghost fleet' near Singapore. The world's ship owners and government economists would prefer you not to see this symbol of the depths of the plague still crippling the world's economies. ...
...
Container ships, bulk carriers, oil tankers - all should be steaming fully laden between China, Britain, Europe and the US, stocking camera shops, PC Worlds and Argos depots ahead of the retail pandemonium of 2009.
...
They are a powerful and tangible representation of the hurricanes that have been wrought by the global economic crisis; ...
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The world's ship owners and government economists would prefer you not to see this symbol of the depths of the plague still crippling the world's economies.
...

Two container ships tied together in southern Malaysia, waiting for the next charter
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The Aframax-class oil tanker is the camel of the world's high seas. By definition, it is smaller than 132,000 tons deadweight and with a breadth above 106ft. It is used in the basins of the Black Sea, the North Sea, the Caribbean Sea, the China Sea and the Mediterranean - or anywhere where non-OPEC exporting countries have harbours and canals too small to accommodate very large crude carriers (VLCC) or ultra-large crude carriers (ULCCs). The term is based on the Average Freight Rate Assessment (AFRA) tanker rate system and is an industry standard.

A couple of years ago these ships would be steaming back and forth. Now 12 per cent are doing nothing

...This time last year, an Aframax tanker capable of carrying 80,000 tons of cargo would cost £31,000 a day ($50,000). Now it is about £3,400 ($5,500).

This is why the chilliest financial winds anywhere in the City of London are to be found blowing through its 400-plus shipping brokers.

Between them, they manage about half of the world's chartering business. The bonuses are long gone. The last to feel the tail of the economic whiplash, they - and their insurers and lawyers - await a wave of redundancies and business failures in the next six months. Commerce is contracting, fleets rust away - yet new ship-builds ordered years ago are still coming on stream.

World shipping is tracked by satellite service Vesseltracker

Just 12 months ago these financiers and brokers were enjoying fat bonuses as they traded cargo space. But nobody wants the space any more, and those that still need to ship goods across the world are demanding vast reductions in price. ...

'This is the time of year when everyone is doing all the Christmas stuff,' he points out.
...
Aframaxes are oil bearers. But the slump is industry-wide. The cost of sending a 40ft steel container of merchandise from China to the UK has fallen from £850 plus fuel charges last year to £180 this year. The cost of chartering an entire bulk freighter suitable for carrying raw materials has plunged even further, from close to £185,000 ($300,000) last summer to an incredible £6,100 ($10,000) earlier this year.

Business for bulk carriers has picked up slightly in recent months, largely because of China's rediscovered appetite for raw materials such as iron ore, says Huxley. But this is a small part of international trade, and the prospects for the container ships remain bleak.

Some experts believe the ratio of container ships sitting idle could rise to 25 per cent within two years in an extraordinary downturn that shipping giant Maersk has called a 'crisis of historic dimensions'. Last month the company reported its first half-year loss in its 105-year history.

Martin Stopford, managing director of Clarksons, London's biggest ship broker, says container shipping has been hit particularly hard: 'In 2006 and 2007 trade was growing at 11 per cent. In 2008 it slowed down by 4.7 per cent. This year we think it might go down by as much as eight per cent. If it costs £7,000 a day to put the ship to sea and if you only get £6,000 a day, than you have got a decision to make.

'Yet at the same time, the supply of container ships is growing. This year, supply could be up by around 12 per cent and demand is down by eight per cent. Twenty per cent spare is a lot of spare of anything - and it's come out of nowhere.'
...
But retailers are running on very low stock levels, not only because they expect consumer spending to be down, but also because they simply do not have the same levels of credit that they had in the past and so are unable to keep big stockpiles.
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As the shipping industry teeters on the brink of collapse, the activity at boatyards like Mokpo and Ulsan in South Korea all looks like a sick joke. But the workers in these bustling shipyards, who teem around giant tankers and mega-vessels the length of several football pitches and capable of carrying 10,000 or more containers each, have no choice; they are trapped in a cruel time warp.

There have hardly been any new orders. In 2011 the shipyards will simply run out of ships to build
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Demand peaked in 2005 when, with surplus tonnage worldwide standing at just 0.7 per cent, ship owners raced to order, fearing docks and berths at major shipyards would soon be fully booked. That spell of 'panic buying' has heightened today's alarming mismatch between supply and demand.

Keith Wallis, East Asia editor of Lloyd's List, says, 'There was an ordering frenzy on all types of vessel, particularly container ships, because of the booming trade between Asia and Europe and the United States. It was fuelled in particular by consumer demand in the UK, Europe and North America, as well as the demand for raw materials from China.'
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Orders for most existing ships to be delivered within the next six to nine months would be honoured, he predicted, and the ships would go into service at the expense of older vessels in the fleet, which would be scrapped or end up anchored off places like southern Malaysia.

But, says Wallis, 'some ship owners won't be able to pay their final installments when the vessels are completed. Normally, they pay ten per cent down when they order the ship and there are three or four stages of payment. But 50 to 60 per cent is paid on delivery.'

South Korean shipyard Hanjin Heavy Industries last week said it had been forced to put up for sale three container ships ordered at a cost of £60 million ($100 million) by the Iranian state shipping line after the Iranians said they could not pay the bill.

'The prospects for shipyards are bleak, particularly for the South Koreans, where they have a high proportion of foreign orders.
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'So far the shipyards are continuing to work, but the problems will start to emerge next year and certainly in 2011, because that is when the current orders will have been delivered. There have hardly been any new orders in the past year. In 2011, the shipyards will simply run out of ships to build.'

Christopher Palsson, a senior consultant at London-based Lloyd's Register-Fairplay Research, believes the situation will worsen before it gets better.

'Some ships will be sold for demolition but the net balance will be even further pressure on the freight rates and the market itself. A lot of ship owners and operators are going to find themselves in a very difficult situation.'

The current downturn is the worst in living memory and more severe even than the slump of the early Eighties, Palsson believes.

'Back then the majority of the crash was for tankers carrying crude oil. Today we have almost every aspect of shipping affected - bulk carriers, tankers, container carriers... the lot.

'It is a much wider-spread situation that we have today. China was not a major player in the world economy at that time. Neither was India. We had the Soviet Union. We had shipbuilding in the United Kingdom and Europe.
'But then, back in those days the world was a very different place.'"

**nnuut** · 09-17-2009, 03:41 AM

Good info Clyrinc, just sitting and rusting away!! Welcome to the Message Board!!

**Clyrinc** · 09-17-2009, 08:52 AM

Thanks nnuut... To remedy the lack of demand for ships, I'm expecting to see U.S. Transportation Secretary Ray LaHood announce their new program, "Fleet Allowance Rebate Transaction System."

This new program, nick-named, "dough-for-derelicts" is available via their official, government-sponsored, web-site: www.farts.gov

In comparison, cash-for-clunkers is but a whif.

**KevinD** · 09-17-2009, 12:15 PM

**Show-me** · 09-17-2009, 12:22 PM

Amazing!

**CountryBoy** · 09-17-2009, 01:13 PM

Great info! Now if only DSX would drop below $10. Thanks for sharing the great info.

CB

**James48843** · 09-17-2009, 09:10 PM

I hear we have more than 2,000 jets and airliners that are currently idled as well worldwide. Many are now parked in the desert- this shot is from Mojave.

**CountryBoy** · 09-17-2009, 09:33 PM

Originally Posted by James48843

I hear we have more than 2,000 jets and airliners that are currently idled as well worldwide. Many are now parked in the desert- this shot is from Mojave.

The US Southwest is littered with airplane graveyards that have been there since around the early 60's. It's a museum all by itself. The desert air reduces the rate of corrosion. I'm sure it has increased greatly in the past couple of years. A lot of B-52 parts are cannibalized from these sites.

Just one of the plethera of links.

http://www.desertusa.com/mag06/apr/airplane.html

CB

**Clyrinc** · 09-18-2009, 02:31 AM

There's a surplus of idle rail cars as well...

Wallowa, Oregon, 15 June 2009...
http://www.freerepublic.com/focus/f-news/2272650/posts

San Gabriel Valley, California, 20 April 2009...
http://www.thefreelibrary.com/Idle+r.....-a0199794471

Craig, Montana, 30 March 2009...
http://www.seattlepi.com/business/35...economy31.html

New Castle, Indiana, 24 February 2009...
http://www.bloggingstocks.com/2009/0...cars-are-idle/

**Clyrinc** · 09-18-2009, 03:30 AM

...and then there's the decrease in trucking freight tonnage...

...Trucking serves as a barometer of the U.S. economy, representing nearly 69 percent of tonnage carried by all modes of domestic freight transportation...

It'll be interesting to see what the American Trucking Association's (ATA) 27 September 2009 release of seasonally adjusted (SA) for-hire truck tonnage data for August 2009 will reveal...

ATA SA tonnage for July 2009 reported 27 August 2009:
"Truck tonnage increased 2.1% in July, according to the American Trucking Associations' (ATA) most recent figures.

Compared to July 2008, tonnage fell 10.4%. ATA Chief Economist Bob Costello believes truck tonnage will be "choppy" in the months ahead.

He remains hopeful that tonnage levels have hit bottom, but "I just don't see anything on the economic horizon that suggests freight tonnage is about to rise significantly or consistently."
http://www.moderntiredealer.com/Chan...1-in-July.aspx

ATA SA tonnage for June 2009, reported 28 July 2009:
"Freight volumes may finally be hitting bottom, according to recent tonnage data collected by the American Trucking Assns. (ATA), but indications are that freight levels may stay depressed for some time to come. ... for-hire tonnage was off 13.6% in June compared with the same month last year, surpassing May’s 11% year-over-year drop. June’s numbers also represented the largest year-over-year contraction to date in the current cycle, exceeding the 13.2% drop in April, ATA noted."
http://fleetowner.com/management/new...ata-data-0728/

ATA SA tonnage for May 2009, reported 26 June 2009:
"The American Trucking Associations’ advance seasonally adjusted (SA) For-Hire Truck Tonnage Index rose for the first time since February 2009, gaining 3.2% in May 2009. May’s increase, which raised the SA index to 102.3, wasn’t large enough to offset the March through April cumulative reduction of 6.7%. ...

Compared with May 2008, tonnage contracted 11%, which was the best year-over-year result in three months. Despite the improvement from April’s 13.2% plunge, May’s decrease is still historically large."
http://www.redorbit.com/news/busines...ercent_in_may/

ATA SA tonnage for April 2009 reported 27 May 2009:
"Compared with April 2008, tonnage contracted 13.2%, which was the worst year-over-year decrease of the current cycle and the largest drop in thirteen years, said Bob Costello, ATA chief economist."
http://fleetowner.com/management/tru...-tonnage-0527/

ATA SA tonnage for March 2009 reported 28 April 2009:
"A 4.5% decrease this March in the for-hire truck index compiled by the American Trucking Assns. (ATA) isn't much of a surprise to major carriers-- merely a reflection of their own data that freight volumes remain extremely sluggish through the first three months of this year.

"Weak freight demand, excess tractor and trailer capacity in the truckload industry, and significant rate pressure from customers and freight brokers led to an approximately 8.2% reduction in our average freight revenue per tractor per week," said David Parker, chairman, president & CEO of Covenant Transportation in its first-quarter earnings report. "Also, the economy in the southeastern U.S. continues to be even more depressed than the overall U.S. economy."

"Although [this period] is traditionally the slowest from a seasonal perspective, January and February 2009 financial results were heavily impacted by major declines in freight volumes between the U.S. and Mexico and Canada," noted Steve Russell, chairman & CEO of Celadon Group in the carrier's earnings report for its third fiscal quarter.

"U.S. government surface transportation statistics indicate a decline of 27% for the month of January 2009 vs. January 2008," he added. "A decline in U.S. imports, relating to the weakness of the U.S. economy, we believe was a principal factor."
Bob Costello, chief economist for the ATA, said he also wasn't too surprised at March's reading, nor that freight levels remain at historic lows.

"Many fleets were telling us during March that freight was getting a little better. The problem is that freight should be significantly better in March, which is why the seasonally adjusted index fell," he said. "While the industry is desperate for some positive news, it is unfortunate that March's data suggests the industry has not hit bottom just yet."

ATA's advanced seasonally adjusted for-hire truck tonnage index fell 4.5 percent in March marked the first month-to-month decrease of 2009 and wiped out the 4.5% gain in freight compiled over January and February.

Compared with March 2008, tonnage contracted 12.2%, which was the second-worst year-over-year decrease of the current cycle, noted Costello – the worst being December 2008, when tonnage dropped 12.5% from the same month one year earlier."
http://fleetowner.com/management/ata...and-down-0428/

**Clyrinc** · 09-18-2009, 01:31 PM

If freight tonnage is a leading economic indicator of both recession and recovery, and the U.S economy continues to be almost exclusively driven by consumer spending, then this could be a sign of a deflationary trend... at least until current inventory becomes depleted.

"...truckers saw freight plummet in the first quarter of 2000 — a year before the recession began in March 2001, according to the American Trucking Associations. And eight months before it was declared over in November 2001, freight began to pick up."

So, when freight does begin to pick up, there will likely be several quarters before we see enough improvement for the recession to be considered over.

From March to November of 2001 we were in a recession... while trucking remained flat for eight months... *after* freight tonnage plummeted in the first quarter of 2000... the year *before* the recesion...

...and December 2007 was the *beginning* of this last recession... and they *think* we *may* have bottomed out, and expect freight tonnage to remain flat for some time to come... However, if plummeting freight tonnage is an indicator of poor times to come, then January 2010 should be interesting...

"... Many new product orders could be filled with current inventories, not new production, suppressing truck tonnage..."

"...all inventory, including high-dollar items “that simply aren't moving at any price.”

“Shippers aren't wanting to pay very much; there's not enough freight to haul. The pay they're getting offered for loads is anywhere from pitiful to laughable.”

Signs of deflation...?

http://www.omaha.com/article/2009090...late=mobileart

"Longer haul to better times - Published 09/07/2009
BY ERIN GRACE - WORLD-HERALD STAFF WRITER

America's economic comebacks in the past have rolled in on 18 wheels.

Semitrailer trucks ferrying lumber, steel, food and all the goods for building or buying have been the historical signal that the American economy was again firing on all cylinders.

Just as the sight of more trucks carrying more stuff has been a sign of health in an economy based primarily on consumption, the current situation — parked, empty and fewer trucks — has mirrored economic weakness. ..."

**Clyrinc** · 09-18-2009, 02:43 PM

"Singapore Aug container traffic up 3 pct from July - Fri Sep 18, 2009 6:14am EDT

SINGAPORE, Sept 18 (Reuters) - Singapore port terminals handled 3 percent more containers in August than in July, but traffic was 14 percent lower than a year earlier, ...

Most containers passing through Singapore's port are transshipments between East and West, and so are a barometer of world trade. ...

Singapore relies on exports for about 60 percent of its economy. ...

...container volumes ... fell 17.2 percent in the year to August, versus the same period a year ago. ..."

http://www.reuters.com/article/rbssIndustryMaterialsUtilitiesNews/idUSSP39768320090918