Global credit crisis slows food and energy shipments, may lead to shortages

The growing financial crisis is constraining world trade with a jumbled mess of frozen credit that could mean shortages of food and energy supplies for some countries. Shippers of dry-bulk goods such as grain and coal worry that importers won't be able to pay for the goods they receive. Rates to ship goods have plummeted to 10-year lows. Some ship owners are laying up their ships rather than operate at such low rates.

Jefferies & Co. analyst Douglas Mavrinac said while credit markets in general have stabilized somewhat in recent weeks, credit across the shipping industry remains extremely tight. Companies including power plants, steel producers and foodmakers, are not able to secure letters of credit to facilitate shipments of coal, iron ore and grain they need. Mavrinac said food and energy shortages could be a problem in 2009 if lending does not ramp up and shipping activity continues to stagnate. Commodity shipments have slowed as freight rates for dry-bulk ships continue to plunge. Shipments of corn, grain and wheat have stalled as receivers of US commodities still don't trust letters of credit from many banks, if they can be secured at all. If the credit markets do not right themselves soon, grain exports could dwindle to Europe and Asia.

- This is it. There are multiple sites which discuss this stuff, and I'm probably not going to turn this into a survivalism blog any time soon, but I am considering upgrading my doomerosity level by another notch (it is already at 8 out of 10 and I used to be a moderate peakoiler for years).

It is time to get prepared for the worst. The community is getting more doomerish and I believe they are right. Collectively the community has had a pretty good track record so far. Stock up on essentials and supplies. The global credit crisis is rapidly turning into a global economic collapse.

(2008-11-29 12:30:25 SGT) [Biz] Permalink

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