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China Containerized Freight Index Plunges to Multi-Year Low, Shanghai-EU Rates Totally Collapse, US Rates Morose
China Containerized Freight Index Plunges to Multi-Year Low, Shanghai-EU Rates Totally Collapse, US Rates Morose
If trade is a reflection of global demand, and if shipping rates are a reflection of the supply of ships by carriers and the demand for those ships by exporters to meet that global demand for goods – well then, we’ve got a situation on our hands.
Two weeks ago, when I wrote about the Shanghai Containerized Freight Index (SCFI), the index had fallen so far so fast that it seemed to be a statistical fluke, something that would instantly bounce back. The SCFI tracks the spot rates from Shanghai to various destinations around the world. At the time, the SCFI component for Northern Europe had plunged 14% from the prior week to $399 per twenty-foot container equivalent unit (TEU), down 67% from a year ago. An all-time low.
There was a lot of handwringing because, even with the lower bunker fuel costs, the break-even rates for these routes were $800 per TEU, according to a report by Drewry Maritime Research. Over twice the spot shipping rates!
The question was how much lower could rates drop?
A lot lower. Over the two weeks since, the SCFI for Northern Europe plunged another 14% to $343, setting a new all-time low. A terrific 68% collapse from the same week a year ago. Something big is going on in the China-Europe trade.
Carriers have tried to impose big rate increases, with UASC pushing for an increase of $1,300 per TEU, and a gaggle of others going for an increase of $1,000 per TEU, according to the Journal of Commerce. None of them were able to make them stick.
…click on the above link to read the rest of the article…
Caving In to Corporatism: Endgame for Secret “Trade” Pact Negotiations
Caving In to Corporatism: Endgame for Secret “Trade” Pact Negotiations
Two game-changing trade agreements — the Transatlantic Trade and Investment Partnership (TTIP) and its sister pact, the Trans Pacific Partnership (TPP) — are perilously close to completion. Their basic aims are three-fold: to elevate the rights of “investors,” that is of corporations, above the rights of citizens; to transfer sovereignty from the seats of national government to the corporate HQs of the world’s largest multinationals; and to cement Western domination of the global economy for the foreseeable future.
Naturally, few voters are likely to support such a radical program. Hence the acute need for secrecy, obfuscation and lies throughout the negotiation process. Eventually, even they are not enough. The lies start showing through and the flimsy facade begins to slip. In the later stages — roughly where we are now — the only way to finish the job is to incrementally, almost imperceptibly snuff out the institution of representative democracy itself. To do that, one must still keep the illusion of democracy alive, at least until the ink on its death warrant (i.e. a fully signed trade agreement) is dry.
This explains the European Commission’s constant empty promises of increased transparency, accountability and public consultation. The latest installment in this ridiculous charade came not from Brussels but from the US government, which announced that it will open up reading rooms in its embassies across the EU, so that national politicians can read secret documents related to TTIP.
…click on the above link to read the rest of the article…
The Trans-Pacific Partnership and the Death of the Republic
The Trans-Pacific Partnership and the Death of the Republic
“The United States shall guarantee to every State in this Union a Republican Form of Government.”
— Article IV, Section 4, US Constitution
A republican form of government is one in which power resides in elected officials representing the citizens, and government leaders exercise power according to the rule of law. In The Federalist Papers, James Madison defined a republic as “a government which derives all its powers directly or indirectly from the great body of the people . . . .”
On April 22, 2015, the Senate Finance Committee approved a bill to fast-track the Trans-Pacific Partnership (TPP), a massive trade agreement that would override our republican form of government and hand judicial and legislative authority to a foreign three-person panel of corporate lawyers.
The secretive TPP is an agreement with Mexico, Canada, Japan, Singapore and seven other countries that affects 40% of global markets. Fast-track authority could now go to the full Senate for a vote as early as next week. Fast-track means Congress will be prohibited from amending the trade deal, which will be put to a simple up or down majority vote. Negotiating the TPP in secret and fast-tracking it through Congress is considered necessary to secure its passage, since if the public had time to review its onerous provisions, opposition would mount and defeat it.
Abdicating the Judicial Function to Corporate Lawyers
James Madison wrote in The Federalist Papers:
The accumulation of all powers, legislative, executive, and judiciary, in the same hands, . . . may justly be pronounced the very definition of tyranny. . . . “Were the power of judging joined with the legislative, the life and liberty of the subject would be exposed to arbitrary control, for the judge would then be the legislator. . . .”
And that, from what we now know of the TPP’s secret provisions, will be its dire effect.
…click on the above link to read the rest of the article…
Potemkin on the Pacific—–Abenomics Is Still Failing
Potemkin on the Pacific—–Abenomics Is Still Failing
For the first time since June 2012 Japan has attained a trade surplus. It is, however, premature to interpret that as an end to the impoverishment the island has undertaken these past three years, the last two under QQE. There are various reasons for the end of the negative trade imbalance, but the most significant surround the Chinese New Year.
China’s annual holiday plays havoc with any number of economic accounts of its own, but it should not be surprising to see its closest trade partners under the same difficulties in measurement. Unfortunately for Japan, as QQE was intended to foster trade in the other direction, China remains the most visible and deepest supplier for Japanese industry. As such, the level of activity from China is the largest single source in variability – with crude oil imports now a distant second, contrary to expectations.
The overall March surplus for Japan was just under ¥230 billion, but imports from China fell 19.4% in March. That was undoubtedly an adjustment for activity in February, as imports from China surged almost 40% that month. This exchange in monthly trade balance with China more than accounts for the Japanese surplus: February’s deficit with China was ¥769 billion on that surge in imports, while March’s deficit came in at only ¥174 billion. Thus without the China’s variability there would still be a serious trade deficit in March for Japan overall.
…click on the above link to read the rest of the article…
Shanghai Containerized Freight Index Collapses: China-US Rates Hit Hard, China-Europe Rates Plunge to All-Time Low
Shanghai Containerized Freight Index Collapses: China-US Rates Hit Hard, China-Europe Rates Plunge to All-Time Low
First was the Baltic Dry Index, which tracks rates for transporting the major raw materials in bulk by sea. Reflecting the totally battered global commodities market, it crashed to an all-time low in February, though it has since edged up a tiny bit.
Now, containerized shipping rates are taking a majestic drubbing, and those from China to Europe have collapsed to all-time lows.
The Shanghai Containerized Freight Index (SCFI) that tracks shipping rates from Shanghai to Northern European ports plunged 14% from last week to $399 per twenty-foot container equivalent unit (TEU), down a vertigo-inducing 67% from the glory days just a year ago. It was the 11th week in a row of declines, and it set a new all-time low.
The index is now half of the key rate of $800 per TEU that a report by Drewry Maritime Research, released on April 19, considers the break-even rate for these routes even at the currently lower fuel costs. This leaves carriers deeply in the red.
The Asia-Mediterranean routes have experienced a similar collapse in shipping rates. The SCFI for these routes plunged 11% from a week ago to $540 per TEU, down 60% year over year, also setting a new all-time low.
The link between the global economy, external trade, and the shipping industry is clearly felt in the freight market, explained Peter Sand, chief shipping analyst at the Baltic and International Maritime Council (BIMCO), the world’s largest international shipping association.
He blamed an oversupply of ships, including “the continued inflow of new ultra-large container ships on the Far East to Europe trades,” and the deteriorating exports from China so far this year.
…click on the above link to read the rest of the article…
‘Greater Public Scrutiny’ Needed of Secret US-EU Trade Negotiations, MPs Warn
‘Greater Public Scrutiny’ Needed of Secret US-EU Trade Negotiations, MPs Warn
The debate over the controversial Transatlantic Trade and Investment Partnership (TTIP) continues to suffer from a lack of transparency, warns a reportby the UK Business, Innovation and Skills (BIS) Committee.
The secretive nature of the negotiations between the European Union and the United States on this major free trade deal has resulted in an “oversimplification and misrepresentation of arguments on both sides” the Committee concludes.
Adrian Bailey, Chair of the BIS Committee said: “More detail needs to be made available to allow greater public scrutiny of this extensive trade agreement.”
The report argues that “Everyone involved in the debate on TTIP—campaigners, lobbyists, theUK Government and the European Commission—must ensure that an evidence-based approach is at the heart of any TTIP debate.”
“Unfortunately, in the absence of that detail or undertakings that negotiating texts will be made public, the debate on the trade agreement has become polarised.”
Environmental Risks
The high degree of secrecy means it is impossible to monitor or evaluate what issues are being taken into account the report explains. This echoes concerns previously raised by MPsabout whether or not environmental risks are being taken into consideration.
…click on the above link to read the rest of the article…
Global Trade Grinds To A Crawl
Global Trade Grinds To A Crawl
At the start of this month, those who contend that depression-level readings on the Baltic Dry are no longer very meaningful because at this juncture, the index simply shows the extent to which the industry is oversupplied got a rude awakening when the CEO of the company (Maersk) that handles nearly a fifth of global seaborne freight decided to ruin everyone’s day by daring to suggest that in fact, global growth is rather abysmal and will likely continue to depress demand the world over. Worse, Skou went as far as saying that the days of 10% container growth for his industry are probably gone forever and yet despite it all, he’s buying more ships in what FT says is an effort to “help the company maintain its market leadership position,” which is of course just a nice way of saying that now many be a good time to eliminate the competition. As an aside, Skou also didn’t seem to share Richard Fisher’s assessment of the US as an “epicenter” of growth, saying America was “good but not great,” suggesting that as Rick Santelli told Fisher, it’s easy to score at the upper end of the range on a scale of 1-10 when a “1” basically equates to a deflationary death spiral and “10” just means something akin to not-collapsing.
…click on the above link to read the rest of the article…
Food democracy South and North: from food sovereignty to transition initiatives
Food democracy South and North: from food sovereignty to transition initiatives
When the idea of food sovereignty emerged twenty years ago, from the mobilisation of campesinos in Costa Rica and from the protest marches of small farmers in the Indian state of Karnataka, it had one important lesson to teach us: policies in the areas of food and agriculture should not be taken hostage to the exigencies of international trade. This idea was central to the establishment in 1993 of the Via Campesina, which was soon to grow into the largest transnational social movement in existence, now spanning 164 local and national organizations in more than 70 countries across Asia, Africa, Europe, and the Americas, and representing an estimated 200 million farmers.
As an antidote to the globalization of food markets, food sovereignty was very much a product of its times. The Uruguay round of trade negotiations launched in 1986 was nearing its conclusion, and at the request of major developing countries, agriculture had been placed at the centre of the table of the big bargain to be struck: food, it was becoming clear, was set to become the next frontier of the great mill of commodification, and farmers from the world over were asked to compete against one another — and let the least competitive disappear.
Food sovereignty was, first and foremost, a story of solidarity against adversity, of cooperation against competition. The trade negotiators wanted their farmers to compete: instead, rallying behind the new slogan, they decided to unite. A strange ballet of words occurred: those talking about trade « liberalization » were condemning farmers to new forms of pressure and coercion from the global marketplace and from the large agrifood companies that dominate it, while those speaking of food « sovereignty » meant in fact the opposite of food wars — they meant alliances across national borders.
…click on the above link to read the rest of the article…
The Monetary Illusion Again in Trade
The Monetary Illusion Again in Trade
Just as a follow-up to further highlight and emphasize the “monetary illusion” of currency devaluation in this closed environment, the yen’s returned devaluation against the “dollar” more recently has renewed confusion (or intentional misdirection) about what Abenomics is supposedly accomplishing. Taken solely from the perspective of the Japanese internally, exports to the US are once more growing, and doing so rather sharply. December’s year-over-year gain, in yen, was almost 24% while January came in at an equally robust 16.5%.
Taken by themselves without context, it would seem great fortune and monetary capability to gain in exports at such huge growth rates. But, as I have shown time and again, what goes out of Japan is matched by what comes in to the US. For all that buzz over huge export growth, nothing much shows up on this end.
Both months were positive in “dollars” but barely and thus no actual growth took place. Economists and central bankers even concede the disparity, but don’t much care about it. They simply assume that Japanese exporters now flush with more yen will hire more workers and pay the ones they have even more, igniting that virtuous circle of “aggregate demand.” In reality, why would they do that?
…click on the above link to read the rest of the article…
The Threat to the Dollar as the World’s Primary Reserve Currency
The Threat to the Dollar as the World’s Premier Reserve Currency
…but does it really matter?
By Patrick Barron
My answer is that, “Yes”, it really matters. And that is why we need to take action today to protect all of our interests. The source of the threat may surprise you.
We refer to the dollar as a “reserve currency” when referring to its use by other countries when settling their international trade accounts. For example, if Canada buys goods from China, China may prefer to be paid in US dollars rather than Canadian dollars. The US dollar is the more “marketable” money internationally, meaning that most countries will accept it in payment, so China can use its dollars to buy goods from other countries, not solely the US. Such might not be the case with the Canadian dollar, and China would have to hold its Canadian dollars until it found something to buy from Canada. Multiply this scenario by all the countries of the world who print their own money and one can see that without a currency accepted widely in the world, international trade would slow down and become more expensive. Its effect would be similar to that of erecting trade barriers, such as the infamous Smoot-Hawley Tariff of 1930 that contributed to the Great Depression. There are many who draw a link between the collapse of international trade and war. The great French economist Frederic Bastiat said that “when goods do not cross borders, soldiers will.” No nation can achieve a decent standard of living with a completely autarkic economy, meaning completely self-sufficient in all things. If it cannot trade for the goods that it needs, it feels forced to invade its neighbors to steal them. Thus, a near universally accepted currency is as vital to world peace as it is to world prosperity.
…click on the above link to read the rest of the article…
Dismal January Rolls On For Now Total Global Trade
Dismal January Rolls On For Now Total Global Trade
More bad news for the rest of the world, or at least the world’s economists, that has been anticipating the US economy as a means by which to expel negative economic forces. The idea of decoupling is not just something that suggests the US economy is moving contrary to all the rest, but also the sole source of hope for anything but a dramatic decline once again. Outside of the Establishment Survey and the unemployment rate, there has been nothing to suggest that any such divergence has existed. The most pertinent data, especially trade data, has been unambiguous in actually pegging the world’s declining fortunes to the lack of actual growth of the US economy.
While that was “good” enough to describe the rut that had befallen in 2012, most recent months, especially the dismal nature of January’s updates across a broad cross-section, increasingly suggest an end to even that nearly three-year furrow – but not in the direction that payrolls anticipate.
The latest trade data from the Census Bureau surpasses the ugliness we have come to expect of the elongated cycle. Both imports and exports fell year-over-year in January, as weakness, contraction even, is now universal in terms of US demand for foreign goods and foreign demand for US goods. Trade has ground to a startling halt.
…click on the above link to read the rest of the article…
Crunch Time for the Global Corporatocracy
Crunch Time for the Global Corporatocracy
As Sir Winston Churchill is alleged to have said, democracy is the worst form of government, except all the others that have been tried. However, in this age of increasingly globalized governance the future of democracy is very much in question.
Already many key economic decisions affecting our lives are being taken and implemented in complete secrecy behind hermetically closed doors. In the negotiations for the Trans Pacific Partnership (TPP), a trade agreement between 12 nations including the U.S., Mexico, Canada, Australia, Japan, Singapore and New Zealand, an army of over 600 corporate advisers have been allowed access to the accompanying text while the public and even members of Congress have largely been kept in the dark.
Indeed, the only way for the uninitiated to learn about some – but far from all – of the potential repercussions of today’s trade agreements is through leaked documents. The current negotiations for a US-EU trade deal (TTIP) are so clandestine that the few Members of the European Parliament that are granted access can only view the plans in their original documentation, in a secure location, with the threat of espionage charges hanging over them if they are caught making copies or sharing the details with the public.
…click on the above link to read the rest of the article…
World’s Largest Container-Shipper Warns Global Trade Is Slowing Down
World’s Largest Container-Shipper Warns Global Trade Is Slowing Down
While it will hardly come as a surprise to many, especially those who have followed the historic collapse of the Baltic Dry index to levels which, all else equal, signify a global depression of epic proportions…
… and which led South Korea’s Hyundai Heavy Industries, the world’s largest shipbuilder, to report a $3 billion loss in 2014, the recent comments of the CEO of the world’s largest container-shipping group, Maersk Line, should put things into perspective, especially for those who say that the Baltic Dry is no longer indicative of anything but massively dry-bulk ship overbuilding and excess supply (some 8 years after the past cyclical peak).
Unfortunately, as Søren Skou, Maerk’s CEO, admitted when he warned that global trade growth could slow this year from recent 4% growth ratnes, as Chinese, Brazilian and Russian economies disappoint, the Baltic Dry is still not only relevant and accurate but telling the real story of global growth, or lack thereof.
As the FT reports, container demand rose by about 4% in both 2013 and 2014 and Maersk Line, the Danish group that ships about 15% of the world’s seaborne freight, expects it to increase 3 to 5% this year. Actually make it 3%. Or lower.
…click on the above link to read the rest of the article…
