[eastbay]

This will lead to increased prices in whatever commodities and products are NOT being shipped. Sounds like this could lead to general shortages.

Usually this means rising prices, but this time who knows what might happen.

[Daniel_Plainview]

This is ominous, but I wonder why I don't see any effect at my local Wal-Mart, Target, or grocery stores. Everything seems normal, and there are no discernible shortages or delays.

Maybe the effects will hit in a few months.

[copious.abundance]

Hmm, let's see . . .

The Baltic Dry Index has fallen 93% in just a few months. A ship that cost $234,000 per day to rent not long ago is now renting for $6,365 per day.

The market for 2nd-hand ships has collapsed and many shipping companies are on the brink of bankruptcy.

The world's ports are filled with empty ships.

And you call this a shortage???

No my friend, this is a classic description of a glut. There is so much excess capacity that ships are idling, rental rates have plummeted, and shipping companies can barely make a profit, or even ship things at a loss just for the cash flow.

Being that the US imports practically everything

Contrary to popular belief, imports are only equal to 14.28% of the US economy. And much of that comes from Canada and Mexico, not from across the oceans.

Incidentally, the Baltic Dry Index only measures shipping rates for bulk dry goods (coal, iron ore, grain, etc.). It doesn't measure container cargo shipping rates, which is what your Christmas toys from China are shipped in.

[eastbay]

Hmm, let's see . . .
The Baltic Dry Index has fallen 93% in just a few months. A ship that cost $234,000 per day to rent not long ago is now renting for $6,365 per day.
The market for 2nd-hand ships has collapsed and many shipping companies are on the brink of bankruptcy.
The world's ports are filled with empty ships.
And you call this a shortage???
No my friend, this is a classic description of a glut. There is so much excess capacity that ships are idling, rental rates have plummeted, and shipping companies can barely make a profit, or even ship things at a loss just for the cash flow.

Being that the US imports practically everything

Contrary to popular belief, imports are only equal to 14.28% of the US economy. And much of that comes from Canada and Mexico, not from across the oceans.
Incidentally, the Baltic Dry Index only measures shipping rates for bulk dry goods (coal, iron ore, grain, etc.). It doesn't measure container cargo shipping rates, which is what your Christmas toys from China are shipped in.

I just glanced through this thread and no one said there was a shortage of anything. Please read more carefully especially if your intent is mocking others comments. Thank you.

We said this could lead to shortages. A worldwide cessation of dry goods shipping will not lead to a glut in anything other than idled ships.

HUGE difference.

[copious.abundance]

I just glanced through this thread and no one said there was a shortage of anything. Please read more carefully especially if your intent is mocking others comments. Thank you.
We said this could lead to shortages. A worldwide cessation of dry goods shipping will not lead to a glut in anything other than idled ships. HUGE difference.

Some things to consider:
1) Especially with big companies such as Wal-Mart, they probably have enough of their own cash on hand that they could lend any Asian shipping company some money to ship their goods if they have trouble finding a line of credit in their own Asian nation.

2) A 93% drop in the Baltic Dry Index, of course, does not mean there's been a 93% drop in the volume of goods shpped, it simply means the index measuring shipping costs has gone down by 93%.

3) According to this article here, written just yesterday, shipping volume on the Asia-US route to fall about 8% this year:

Container shipping lines have said they expect cargo demand on the US-Asia route to fall by as much as eight percent in 2008.

While that's a large percentage, it's hardly a doomsday scenario. With US consumption declining of late due to the recession, a drop in imports is to be expected anyway, credit crunch or not.

4) I once worked with the manager of a department store. She told me they typically keep 3-4 months of inventory on hand. Even if desired imports are curtailed for a while due to the credit crunch, by the time those 3-4 months are over the credit crisis will have eased (already happening a bit) and shippers will increasingly get able to get their lines of credit.

5) Read comment above vis-a-vis Mexico. Many, if not most, apparel and other consumer goods makers maintain production in Mexico, El Salvador, Honduras and other Central American locations in addition to production in Asia. If things got really dire with the trans-Pacific shipping situation, they can always call their factories in Guatemala and ramp up production there, then hire some truckers to get it to the US. No ships needed.

So at worse you might see a few minor shortages of things here and there for a bit, but that, too, shall pass.

[copious.abundance]

They still haven't banned you yet? Product shortages, not ship shortages. All those dry bulk goods are eventually turned into products that are shipped to the US and elsewhere using container cargo ships. No shipped dry bulk goods means no imported products months down the road. I thought even you would understand this. I guess not.
Maybe you should stick to looking for oil, because you have no clue what you are talking about. Back on the troll list you go.

Read reply to eastbay above.

[copious.abundance]

Contrary to popular belief, imports are only equal to 14.28% of the US economy. And much of that comes from Canada and Mexico, not from across the oceans.

Are you serious? Get your facts straight. 72% of the US economy is consumer spending. What do you think spend most of that money on? That's right. Imported goods. And a majority of those goods are produced and shipped from overseas.

You think I would cite a fact like that without being able to prove it?

You are gravely mistaken. Click here
US GDP in 2007: $13.78 trillion
US imports in 2007: $1.968 trillion

Do the math, and you come up with 14.28%. So I repeat: Imports are only equal to 14.28% of the US economy.

Heck, at 19.8% of the economy, industrial production last year amounted to $2.78 trillion, which is still considerably larger than the dollar value of imports.

I rest my case.

[eastbay]

Some things to consider:
1) Especially with big companies such as Wal-Mart, they probably have enough of their own cash on hand that they could lend any Asian shipping company some money to ship their goods if they have trouble finding a line of credit in their own Asian nation.
2) A 93% drop in the Baltic Dry Index, of course, does not mean there's been a 93% drop in the volume of goods shpped, it simply means the index measuring shipping costs has gone down by 93%.
3) According to this article here, written just yesterday, shipping volume on the Asia-US route to fall about 8% this year:

Container shipping lines have said they expect cargo demand on the US-Asia route to fall by as much as eight percent in 2008.

While that's a large percentage, it's hardly a doomsday scenario. With US consumption declining of late due to the recession, a drop in imports is to be expected anyway, credit crunch or not.
4) I once worked with the manager of a department store. She told me they typically keep 3-4 months of inventory on hand. Even if desired imports are curtailed for a while due to the credit crunch, by the time those 3-4 months are over the credit crisis will have eased (already happening a bit) and shippers will increasingly get able to get their lines of credit.
5) Read comment above vis-a-vis Mexico. Many, if not most, apparel and other consumer goods makers maintain production in Mexico, El Salvador, Honduras and other Central American locations in addition to production in Asia. If things got really dire with the trans-Pacific shipping situation, they can always call their factories in Guatemala and ramp up production there, then hire some truckers to get it to the US. No ships needed.
So at worse you might see a few minor shortages of things here and there for a bit, but that, too, shall pass.

Good optimistic analysis. Thanks. Let's hope this comes to a happy end, as you're suggesting.

But I suspect commodity shipping will dry up in the coming weeks and months as shipping rates force a stoppage in ocean transport.

I suspect this will lead to shortages, but in this weird economy who knows what will occur.

It's not just clothing from Latin America. We're talking about tv's, computers, motorcycles, cars and the entire range of goods shipped out of Japan, the PRC, and the rest of Asia. You can't call your local maquilladora and expect new cars and computers to flow north in anything close to current trans-oceanic volume.

[frankthetank]

Whatever the case me be, it doesn't look good.

This looks like my bank account:

[Snowrunner]

This is ominous, but I wonder why I don't see any effect at my local Wal-Mart, Target, or grocery stores. Everything seems normal, and there are no discernible shortages or delays. Maybe the effects will hit in a few months.

There is around a six months lead between an item being ordered and it being on the store shelves.

As such I guess you'll see this in the new year.

I already noticed Best Buy and Futureshop "rearranging" shelf space, essentially lowering their stock and other places seem to do that too now.

Should be interesting to see how long before they just leave empty shelf space.

[Daniel_Plainview]

This is ominous, but I wonder why I don't see any effect at my local Wal-Mart, Target, or grocery stores. Everything seems normal, and there are no discernible shortages or delays. Maybe the effects will hit in a few months.

There is around a six months lead between an item being ordered and it being on the store shelves.
As such I guess you'll see this in the new year.
I already noticed Best Buy and Futureshop "rearranging" shelf space, essentially lowering their stock and other places seem to do that too now.
Should be interesting to see how long before they just leave empty shelf space.

Thanks. Very helpful.

My initial question should have been: "what is the time lag between a collapse in the shipping industry and the resultant shortages on the retail shelves?"

[mos6507]

Whatever happens, there will probably be emptier shelves and less selection in stores in the coming months.

It will be interesting to see what the Xmas shopping season shapes up to be.