A report by ING yesterday said shipping activity at US ports has suddenly dived. Outbound traffic from Long Beach and Los Angeles, America's two top ports, has fallen by 18pc year-on-year, a far more serious decline than anything seen in recent recessions.
It became difficult for the shippers to obtain routine letters of credit at the height of financial crisis over the autumn, causing goods to pile up at ports even though there was a willing buyer at the other end. Analysts say this problem has been resolved, but the shipping industry has since been swamped by the global trade contraction.
Perhaps Linda can tell us what inbound traffic is like. Would you agree with this assessment?
Letters of credit were probably the first international financial instrument, for those of you who are interested in that type of thing. Amsterdam became the world's first international financial center issuing, accepting, and trading letters of credit.
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1 comments:
The ports experienced double digit growth for almost two decades, imports far exceeding exports. (This is to be expected given the unfair trade policies the US has adopted but that's a subject for another post!) However, in 2007, exports actually outnumbered imports. That saved many shipping companies from financial disaster, but the writing was on the wall. So we were not surprised that there was a significant downturn last year. (Although the severity of the global crisis that occurred in Sept I think was not foreseen by most.) Imports are, and will contnue to be, very slow. To give an example, imported furniture is either the #1 or #2 good brought into the US. But no one is buying homes. In fact, many are losing theirs. So no one is buying furniture. When one of the very top imports is no longer attractive, well, dunnage rolls downhill! (Good luck today on the GRE!)
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