Thursday, May 14, 2009

Ghost Fleet, Storm Warning. . .

The first page of yesterday’s New York Times business section has a story by Keith Bradsher on a vast ghost fleet of cargo vessels, which are now congregating in the Straits of Malacca, by Singapore and Malaysia, across from Indonesia.

The Times article, citing a research department of Lloyds, reports some 735 vessels now sitting idle there. Truly an immense fleet: some of these vessels displace almost 300,000 tons. For comparison purposes, a Nimitz class aircraft carrier displaces approximately 100,000 tons at full load. “To go out in a small boat along Singapore’s coast now is to feel like a mouse tiptoeing through an endless heard of slumbering elephants,” Mr. Bradsher writes. No doubt the Ghost Fleet is truly awesome to look at, but it is also terrifying, as it is a visible symptom of the utter collapse of world trade.

The normal business of this cargo fleet is the carriage of raw materials from all over the world to the factories of Asia (particularly China). The ships then turn right round, and then move the produce of all these factories to the markets of Europe and North America.

But the ships – each with crews, maintenance expenses, berthing contracts, fueling and victualling contracts, insurance policies and miles of ledgers and lists of other associated expenses – are all just sitting. America and Europe are not buying right now. There is no need for raw materials at the factories, no cargo moving to the docks. Chinese exports, reports the Times, fell 22.8 percent in April from the same period in 2008. Philippine exports fell 30.9 percent in March from the same period a year ago.

Think on those idle ships, their crews, the factories and business they serve, and all affected by the collapse of that trade. Contracts are going unfulfilled, wages are being stretched and unpaid, millions of people have lost, or are losing, their livelihoods – maybe (eventually) including us both, dear reader. That’s not the worst of it, either: the ramifications of those idle ships and shops haven’t even begun to work through the world nervous system.

The Malacca Ghost Fleet is more than economic disaster for millions of people – it’s going to be a political nightmare of the first order, as the destituted demand that their leaders produce quick solutions and easy answers – neither of which will be forthcoming. The tide of fear and populist rage that’s building is going to be terrible, likely sweeping away governments and bringing chaos all over the globe. The Ghost Fleet is warning us that a tsunami is coming.


Andrewdb said...

At dinner tonight a friend said he had just returned from China and Vietnam - the big concern in Hong Kong is where to put all the empty shipping containers that are not being used to ship out product. They are running out of space and they can only be piled so high before they tip over on people.

hank_F_M said...

El Jefe

Your right this is a symptom of much worse to come.

And a security headache. If the owners can't afford to operate the ships, were they able to afford a proper shutdown, can they afford guards, or to take frequent inventories.

It would be easy to cut one loose. Then what?

The Traveling Salesman said...

International shipping, or in this case the lack of - certainly is telling of the future! I'm worried about 2010 after inflation kicks up a few more points.