China’s PMI Feb Figures Predict Nothing, Global Freight Trends Do.

Thursday, March 5, 2009 2:01
Posted in category China Logistics

Earlier this week, there were many who saw China’s PMI of 49 as a sign of hope that things were turning around, but I did not…. and I just received this email from a good friend who is on the front lines of the cargo industry:

To be honest scary dead… it’s an absolute horror scenario going on the moment… no cargo in the market….

Heard this morning in the news around 300 cargo vessels are parked around Philippines due to no cargo in the market…

Quite scary….

For me, this pretty much says it all.

That while things were “rebounding” in February, we are in for a rough March to April as vessel bookings have dropped off the charts and boats are being parked.

Update: As a follow up to this email, I asked my friend “If no cargo in the market now, when do you see orders coming back online?”, to which he replied:

Well I don’t see things picking up before Q3 for 2009… it’s quite scary…..

Update 2: Bloomberg’s article Empty Ships Flock to Subic Bay as Lines Battle Plunging Rates provides some more context on my friend’s comments:

Subic Bay in the Philippines is the busiest it’s been since the U.S. Navy moved out 16 years ago. The traffic surge is coming from ships all carrying the same cargo –nothing.

Last week, 19 vessels were anchored in the mountain-lined bay awaiting charters near an empty container terminal.

Both comments and pings are currently closed.

2 Responses to “China’s PMI Feb Figures Predict Nothing, Global Freight Trends Do.”

  1. Dr.Frank Loo says:

    March 5th, 2009 at 4:47 am

    The Baltic Dry Goods Index seems to have bottomed out in January and it is moving up. How do you read this?

  2. Rich says:

    March 5th, 2009 at 4:58 am

    Dr. Loo.

    For me, the question comes down to why this move is occuring.

    If you take a look at Wikipedia on the topic of Baltic Dry Goods, particularly in the area where it explains why economists follow the number, there is this passage:

    So marginal increases in demand can push the index higher quickly, and marginal demand decreases can cause the index to fall rapidly. e.g. “if you have 100 ships competing for 99 cargoes, rates go down, whereas if you’ve 99 ships competing for 100 cargoes, rates go up. in other words, small fleet changes and logistical matters can crash rates..

    Perhaps like the PMI, it is coming up a bit, but does that mean recovery?

    I don’t think so. It is a short term blip, and were I a manager looking at Jan/ Feb, I would be happy with any gains, but looking to understand where/ why the gains existed…. and whether or not it was a 1 time event, or something more sustainable

    R