Thrown for a (deep-sea) loop

Last Friday we referred to a report in the JOURNAL of COMMERCE which stated that “Idled ocean container capacity has reached 550,000 TEUs, with 210 vessels out of work as carriers continue to cut or suspend services in the face of sharply falling demand on key liner trade routes.”

In today’s JOC issue, Bruce Bernard report begins with this heading: “Idle fleet to 675K TEUs”

“Idled ocean container capacity has reached 675,000 TEUs with 255 ships at anchor as the global economic downturn forces carriers to further retrench on key east-west liner trade routes.

“The idle figure, up from 210 ships of 550,000 TEUs two weeks ago, represents a 5.5 percent of the world container shipping fleet by capacity, according to AXS-Alphaliner, a Paris-based consultant.

“This exceeds the previous 5-percent peak in 1986 when the entire fleet of US Lines was mothballed after the then-largest carrier went bankrupt. The idled fleet has more than quadrupled since Oct. 25 when 70 ships of 150,000 TEUs were lying at anchor …

“Alphaliner expects the jobless figure to grow to 750,000 TEUs in early February as the most recently announced closures of service take effect … and that deliveries of new ships will swell the world fleet by around 14 percent this year …

“‘It needs more than a vigorous market to absorb such a fleet growth. The hangover will last well into 2009, with lights of hope in spring 2010,’ the consultant said.

“It warned a prolonged period of lower bunker fuel prices also threatens to swell the idled fleet as ocean carriers may decide slow steaming is no longer cost efficient and bring their loops back to normal speeds. It says there are currently 35 deep-sea loops in slow-steaming mode.”

“… well into 2009, with lights of hope in spring 2010,” the man said. He’s dreaming. It’s not the threat of a swelled idled fleet that carriers should be concerned about. Unless Americans can be put back to work, those 35 deep-sea loops will be history in a few months … or they’ll be shipping air.

In a report originating at The New York Times, a key economic advisor to President Obama revealed that Congress and the Federal Reserve will be required to commit “several trillions of dollars” to repair the nation’s financial system and economy. “To put it starkly, we are in a serious recession with no end clearly in sight,” Paul Volcker said.

“The problem is more severe than had been thought,” said Martin Baily, senior fellow at the Brookings Institution, a Washington think tank. “And it’s getting worse because of the recession,” he added.

[And still, no one knows how to create jobs with those “several trillions of dollars”.]