“Cash burn” …
“The U.S. economy is expected to begin growing in the second half of this year …”
“The Federal Reserve expects the economy will start to grow again later this year …”
“Public forecasts of a decline in GNP are unduly pessimistic. A big increase in global trade is expected in the second half of 2009 …”
“There are signs that the real estate market is recovering …”
“Nearly 80% of the panelists believe that total housing starts are at or near bottom …”
“The economy is showing some signs of inching toward health …”
“One sign appeared on Tuesday when consumer confidence rose to the highest level in two years …”
“The economic downturn is expected to ease in the second quarter of this year …”
“The worst of the recession is over. The forecast for 2010 is brighter …”
“ … but the IMF forecasts that the world economy would turn the corner by year’s end.”
“The past month provided fresh evidence the decline in business activity is starting to moderate …”
“Noticeable changes in consumer spending will take some time as the economy continues to rebuild itself through the rest of the year …”
“A modest increase in container volume is projected for 2010 …”
“The U.S. economy is still in recession, but trade could start to recover early in 2010 …”
“Since January, trade has shrunk by 29 % in volume due to the global economic downturn. He hopes that the situation would improve in the second half of the current financial year …”
“Hopefully, by the time the project gets going, the economy will have turned around …”
“There won’t be positive growth until the second half of the year, probably …”
It’s all hogwash. We’re like a beaten and battered fighter whose handlers are telling him between rounds that he’s ahead on points, when in fact, they know he’s finished. They’re lying to him but their half-dazed and subservient gladiator believes every word they say. He’s nothing more than a sacrificial lamb. And we’re nothing more than sacrificial sheep.
Recovery predictions, such as those listed above, are being directed our way through the local media. It’s deliberate falsehood. None of it is true, and those who disseminate these deliberately misleading forecasts and projections will eventually be held accountable.
The worldwide economic depression has already begun and not a one of those uttering the above observations and analyses are able to provide any justification for their “encouraging” words.
Giving the lie to those snake oil salesmen, Lloyd’s List, a non-local, and reliable, source of information provided this report on Thursday, May 21st:
“Half of all listed shipping companies may go bust” —
“More than half of the shipping companies with stock exchange listings could slide into bankruptcy or administration proceedings in the next year as their cash drains away, a senior industry figure has warned.
“The grim assessment was issued by Paul Slater, chairman and chief executive of First International, who forecast that the next 12 months would be ‘really painful’ for the three main shipping sectors of containerships, dry bulk and tankers …
“In some cases, such as the medium range product tanker market and the container shipping industry, they’re not even getting close to covering operating costs. At which stage you have a ‘cash burn’, that is a net outflow of cash.
“Without doubt,” Mr. Slater said, “the container shipping industry had already suffered the most pain and still had the most to endure.”
And the pain is getting more and more intense. Two weeks ago we were told by industry spokesman that 506 vessels were laid up as a result of the worldwide reduction in trade. A more accurate number was given in a New York Times report of May 13th. Just in the Port of Singapore, the report stated, there were 735 laid up vessels. Another 150, or so, were laid up in and around the straits of Gibralter and an estimated 300 more are idled at Rotterdam.
And in today’s Singapore Business Times it was reported that outside port limits anchorages – stretches of water just outside port limits, and commonly referred to as OPL – are receiving hundreds of demands for lay-up services. But OPL anchorages are growing not just in the waters around Singapore, according to maritime consultants.
“In the Middle East,” the report states, “a lay-up anchorage is starting to emerge around Fujairah as ships trading in the Middle East and Europe start to find refuge there … but with so many ships being mothballed, both anchorage space and the capacity of the ship managers is being stretched.”
We no longer have a disaster waiting to happen. It’s already happened. Those thousands of laid up “bigger is better” ships will never see service again. Count on it. Each and every one of those behemoths will be scrapped in short order. That’s the only way carriers can deal with “cash burn”.