Aid to Haiti

While watching the evening news, we debated how aid would get to Haiti. Emergency workers with dogs were shown readying to leave from Virginia, but I questioned if the airport would be open, given the devastation.

Apparently the airport is open, but the port suffered damage to the cranes and piers.

From The Journal of Commerce

The first ocean-going vessel on the scene, a Coast Guard cutter from Guantanamo Bay, Cuba, reported Wednesday the port at Haiti’s capital had been badly damaged and that many workers had been killed, leaving the site all but unusable.

Regional operator Seaboard Marine said the port’s cranes and piers had been severely damaged.

Reports said the capital’s main airport still had power and lights, however, allowing emergency flights to get to the country.

Aid from around the globe will have to use the airport or transport goods to the neighboring Dominican Republic, where they will be driven across the border.

click here for link to article

YRC Worldwide averts bankruptcy

This is just too weird.

From Bloomberg

Jan. 1 (Bloomberg) -- Goldman Sachs Group Inc. helped YRC Worldwide Inc. complete a debt swap to avert bankruptcy after the Teamsters union said the bank was trying to profit from a failure of the largest U.S. trucker by sales.

A group consisting of Goldman Sachs, Deutsche Bank AG, Aristeia Capital LLC, Silverback Asset Management and a Smith Management LLC unit, “got us over the goal line by going into the market, buying bonds and tendering them,” YRC Chief Executive Officer Bill Zollars said yesterday.

For those of you who have not followed this saga, here it is in a nutshell.

YRC Worldwide is in financial difficulty. They offered a deal to the bondholders to swap bonds for stock. But, sometime during or before this offer went out (who knows the truth) Goldman Sachs started selling credit default swaps to bondholders, so if YRC Worldwide did go bankrupt, the bondholder would be covered.

So when YRC Worldwide made the swap offer to the bondholders, they couldn't get enough of the bondholders to agree for the deal to go through.

When James Hoffa (son of Jimmy Hoffa), who is president of the Teamsters Union (which represents the truck drivers of YRC Worldwide), got wind of what Goldman Sachs had done, he said some rather unkind things. I believe he also tried to get Congress to do something (good luck there).

Anyway, long story short, apparently there was sufficient pressure to persuade Goldman Sachs to have a change of heart. They bought up bonds to be tendered so the swap could go through,and YRC Worldwide averted bankruptcy.

Now, Goldman Sachs looks as if they were the good guy, but just remember, someone would have had to pay on the credit default swaps if YRC Worldwide had gone bankrupt, so they actually probably made out better in the end. Plus, no telling how much they made on commissions with all the transactions.

And, now they are friends with James Hoffa.

Humm.

Interesting story.

Maybe it will become a movie.

What's ahead - 2010

I hesitate to make any predictions for 2010, but it's kinda fun to gaze into the crystal ball.

Last year I said we would be a recession until 2011.

We are definitely changing into a world economy.

Those of us in the U.S. have not fully understood our impact on the rest of the world's economies. The saying goes "When the U.S. sneezes, ________ (fill in the country name of your choice) gets a cold".

China is very quickly emerging as the dominant economy in the world.

China has already surpassed Greece in purchases of bulk carriers, and now China will build more ships, knocking out Korea who until now was the largest shipbuilder.

Something has to happen in the containership industry, but to be honest, I don't know what. I was surprised that the German government bailed out Hapag-Lloyd, and the French government has said they will help CMA CGM stay in business.

Without this government intervention there would have been considerable consolidation.

The KG funds in Germany are under a lot of pressure. I don't really understand the financial structure of KG funds. I do know that investors get together and buy a ship and operate it (all handled by the KG of course), but it's my understanding up until now there were no funds set aside for losses. How long these ships will stay owned by KG funds, or put up for sale, is anyone's guess.

And new ships continue to come out of shipyards.

So, all in all, 2010 will still be quite difficult for ocean carriers and shipowners.

But, these lean times are good for everyone. It makes companies look at how they do business. They become more efficient and cut costs.

I just hope during this slow time, some of the international shipping companies start upgrading their computer systems.

Maybe FEDEX or UPS should buy an ocean container carrier.