Thursday, September 6, 2012
Or, as the kids say "wasup?". Meaning, what is new and different?
In the shipping industry, it's not so much what is new, as everything is staying the same.
Carriers keep saying, "OK, it's going to get better", and it does a little, and then falls back.
I don't know how long they can hold on, but I have been surprised many carriers haven't been forced
to sell out or close down by now. I think there are still a lot of investors with money, and with
no other options for a good return, are willing to wait it out with shipping.
And shipping does have very, very, long business cycles. This is the reason only the ones
with "deep pockets" really last through the decades.
I guess the biggest news recently is the ILA (International Longshoremen Association),
which is the union which controls the docks on the East Coast of the U.S., has a new
contract coming up for renewal. They are now negotiating, and talks recently broke down.
It will be really interesting to see if the carriers have the guts to hold the line. In the past they
never did, as they didn't really have any other options to move their cargo. The ILA has a lot
of power, and even blocked ports in Canada from handling ships which tried to divert..
But now everyone is hurting for money, and the U.S. ports are the most expensive in the world.
That's because the union has not allowed new efficiencies, which would allow reduction in staff.
I don't know if it's still true, but it wasn't that long ago that there was still a union position for "water boy"...
someone who took water to the working longshoremen. Crazy, huh?
The other item of interest is the price of oil. It topped $100 the first of the year when everyone thought
the economies were improving (and hedge funds were trading in oil), but then it dropped, and
then came back up. It's in the 90's now. It should really be lower, but there is too much manipulation
in the market.
So, that's wassup.
Hope ya'll (that is U.S. Southern talk for "you all") are doing well.