The Port of Singapore
A while back, we blogged about how the plunging Baltic Dry Index (BDI) reflects the dramatic slowdown in international shipping. Today's bleak number is zero — the cost to ship containers in Asia and Europe. Yes, you're reading this right, you can send your containerized products (such as the BBC's Box) for absolutely nothing on certain key routes.
Keep in mind that the numbers aren't exactly the same: the BDI measures the cost of shipping bulk commodities, such as cotton or oil, whereas the recently reported figures reflect the price of shipping containers, which are used to store pretty much everything else — computers, cars, toys, etc. While both numbers are affected by the realities of modern ocean travel (including, believe it or not, pirates), certain countries pay far closer attention to one number than the other. For example, almost 90 percent of South Korea's exports are manufactured products, the vast majority of which will be sent to their destinations in shipping containers.
Although the BDI has rebounded a bit, industry analysts use such terms as "unmitigated disaster" to describe the container shipping situation. With the IMF predicting the first simultaneous contraction since World War II of advanced economies, many analysts expect that demand for container ships — and the goods they convey — will not recover in 2009. Because you and I have suddenly stopped buying computers, cars and toys, the major exporters of these manufactured goods, especially China, will be hit very hard.
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