Boom or bust? …
These observations about “massive new container ships” appeared in The Wall Street Journal last week.
“When the container ship Hugo pulled into Long Beach, Calif., last month after a trans-Pacific crossing, its docking was about as easy as parallel parking a Greyhound bus in a phone booth.
“Bigger than the Titanic and the original Queen Mary, the 1,095-foot-long Hugo required two harbor pilots and three tugboats to guide it through a shipping channel to the dock. Crew members had to fold down a radar mast to clear the 157-foot-high Gerald Desmond Bridge — and made it with only five feet to spare. Then the ship made a 90-degree turn, its stern narrowly avoiding a concrete structure known as the ‘can opener.’
“Big as it is, the Hugo is just one in a new generation of container ships so massive that they dwarf ships made just a decade ago. Often longer than three football fields and wider than the Panama Canal, the $ 100 million ships are jammed with Asian-made merchandise that will fill shopping lists and stores throughout the U.S. before the holiday rush. Like Santa’s supersize sleigh, the Hugo was loaded with toys, electronic goods and clothes. The ship’s maximum load of 8,200 20-foot-long cargo containers could fill a train stretching 23 miles.
“Spurred by the flood of goods from Asia, growing by about 10 percent a year, container-ship lines have put about 90 of these huge ships to work plying the high seas, estimates Paul Bingham, a principal at the global trade and practice at consulting firm Global Insight Inc. About 150 additional ships with room for at least 8,000 20-foot-long cargo containers are being built or on order through 2010, creating $ 16 billion to $ 18 billion in work for shipyards throughout the world.
“The shipbuilding spree ‘is the biggest boom ever seen in container shipping,’ says Neil Davidson, research director at Drewry Shipping Consultants Ltd. in London.
“‘We’re pushing the limits with these ships,’ says John Strong, a vice president of Jacobsen Pilot Service Inc., whose pilots have been steering ships in and out of the Long Beach port since 1922. ‘There’s no room for error.’”
Well, “error” is the farthest thing from the minds of the shipping industry, because they’re not the ones paying the freight.
• The “$ 16 billion to $ 18 billion” cost for these vessels will be paid mostly by U.S. consumers.
• The “$ 16 billion to $ 18 billion” cost of these vessels will go to foreign shipyards.
• The cost of U.S. infrastructure upgrading will also be borne by the consumer.
• The demand for “toys, electronic goods and clothes” could very well disappear overnight if the U.S. economy continues its downward slide.
[So here’s a tip for investors … put your money in mothballs.]