March 18, 2010  - The recovery from the worst global recession since the Great Depression continues to be much more rapid in the developing world, especially in Asia, than in the US and EU.

 

In its latest quarterly report, the World Bank ratcheted up its year 2010 growth forecast for China from 8.7% to 9.5%. Separately, Indonesia's sovereign credit rating was raised last week by Standard & Poor's with a positive outlook, as the country's GDP is expected to continue to grow at double-digit rates.

 

However, in Europe financial markets still fear the possibility of default by Greece and other highly indebted members of the Eurozone, such as Ireland, Portugal and Spain. Despite revived European economic growth, the European Commission has sent a dozen governments, including Germany, back to sharpen their pencils, warning that they risk missing their deficit targets.

 

 

Supply Chain Asia

 

 

March 30, 2010 -  (SEOUL) South Korea's biggest port, overwhelmed with empty containers a year ago, is now dealing with shipping lines that have more cargo than they can carry.

 

Surging shipments of furniture, electronics and clothes to the United States and Europe, coupled with capacity cuts by shipping lines, has caused as much as 15 per cent of containers to be delayed in Busan this year, often by more than a week, according to Park Jong Ho, assistant general manager at Busan International Container Terminal Co.

 

'With the economy recovering, we have been seeing a lot of containers that didn't make it out on time because there wasn't enough space on ships,' he explained.

 

A capacity crunch on transpacific routes has disrupted deliveries of Asian and US exports, prompting a probe by US regulators. Container lines have cut trips and imposed higher rates on customers, or shippers, after slumping trade and an excess supply of vessels caused industrywide losses of about US$20 billion last year, according to Drewry Shipping Consultants Ltd.

 

'There is seething anger in the shipper community over the way rates have been raised,' said Bjorn Van Jensen, who manages more than 100,000 container shipments a year as logistics head at appliance-maker Electrolux AB. 'Carriers see a tight supply situation and they are looking to get rates back up.'

 

Container shipments at Busan, the world's fifth-busiest port, rose 21 per cent in the first two months, rebounding from the slump last year that forced Mr Park to lease extra space to help store more than 31,000 empty boxes. In the US, retail container traffic will likely rise 13 per cent this month and by 17 per cent in the first half as shops restock, according to the Washington-based National Retail Federation.

 

That's caused rates for ad hoc shipments on Asia-US routes to jump about 50 per cent this year to around US$2,100 per forty-foot box, according to Johnson Leung, a Hong Kong-based analyst at Tufton Oceanic Ltd, the world's largest shipping hedge-fund group. 'The volume is surprisingly high,' he said. 'Still, rates were at low levels at the beginning of this year, and shipping lines have to increase them to break even.'

 

US customers have also contributed to the disruptions and higher rates by cutting inventories to two-year lows and placing more rush orders on concerns about holding stock.

 

'The trend now is that orders are always made from Europe and the US very rapidly and at the very last minute,' said Ken Lee, a general manager in the sea-freight unit at Hong Kong-based Vinflair Shipping Ltd.

 

The US Federal Maritime Commission earlier this month began a 'fact-finding investigation' into shipping capacity because of US importers and exporters' struggles to find space.

 

Lines haven't added more vessels on transpacific routes, citing concerns about the sustainability of demand. The jobless rate in the US remains near 10 per cent. Building permits, a sign of future construction, also fell 1.6 per cent last month after a 4.7 per cent drop in January.

 

'We have seen no reason to add extra ships as the trend is temporary,' said AP Moeller-Maersk CEO Nils Smedegaard Andersen. 'With the problems this industry has had, I think we're all be very cautious before sending new ships into service.' Maersk expects a 'modest' 2010 profit following its first loss in six decades last year. Industrywide, container lines may pare loses to about US$7 billion this year, according to Drewry.

 

The surge in shipments coincides with annual contract negotiations between lines and customers. Maersk and Mediterranean Shipping Co, the world's two largest container lines, and 13 others are seeking an extra US$800 per cargo box on Asia-US west coast routes. That's about a 50 per cent increase, according to Mr Leung.

 

'If we can get an agreement for that kind of rate increase, then a lot of the shipping companies will become profitable,' said Kim Young Min, chief executive officer of Hanjin Shipping Co and chairman of the Transpacific Stabilization Agreement (TSA), whose 15 members carry almost 90 per cent of Asia-US boxes.

 

Lines in the group, which has limited US antitrust protection, are already imposing a US$400 per container 'emergency revenue charge' to pare losses on contracts agreed last year during the worst of the trade slump. Rates fell by as much as half in those deals, according to the TSA. The charge will be discontinued when the new contracts start around May.

 

Customers have to accept additional levies or lines won't carry their cargo, Stockholm-based Electrolux's Mr Jensen said. That's causing 'enormous uncertainty' as shippers don't know whether additional levies will follow, he explained.  

 

New ship deliveries may disrupt lines' efforts to raise rates this year as shipyards hand over vessels ordered before the trade slump began. Shipbuilders hold container-vessel orders with a combined capacity equal to about 33 per cent of the existing global fleet, according to data compiled by Bloomberg.

 

Bloomberg

 

March 26, 2010 -  Production from the global chemical industry rose 0.2% in February, the 11th gain in the past 12 months, the American Chemistry Council reports in its March 26 edition of Weekly Chemistry and Economic Trends.

The ACC report states that the string of increases in global chemical-industry production "continues to suggest that a sharp V-shaped recovery has engaged" at the global level. Production levels were up 10.1% compare to a year ago, based on a three-month moving average (3MMA), and stood at 127.7% of the average 2002 global chemistry industry production levels.

Comparisons to production from a year earlier show gains in every global geographic region, ACC notes, although early 2009 represents the trough of a steep downtown.

The economies of the so-called BRIC countries (Brazil, Russia, India and China) were among the leaders in their respective regions. For example, China posted a 22.9% chemical production increase over a year ago, and Russia a 30.9% increase, on a 3MMA basis.

Compared to a year ago, North America was up 7.3%, Latin America 11.2% and Western Europe 5.1%. The Asia-Pacific region increased 16.1%, while Central and Eastern Europe rose 18.8% and Africa and the Middle East was up 6.5%, according to the data compiled by ACC.

Data outlined in the March 26 ACC weekly report came from the ACC Global Production Index, which measures the production volume of the business of chemistry for 33 key nations, regions and subregions. The index is developed from government information on industrial production for chemistry, and accounts for about 97% of the total global business of chemistry.  

In the U.S. specifically, the numbers paralleled the global trend, with U.S. chemical production up 0.3% in February, according to ACC. Production rose in all seven geographic regions of the U.S. (Gulf Coast, Midwest, Ohio Valley, Mid-Atlantic, Southeast, Northeast and West Coast) for the fifth consecutive month. Based on a 3MMA measurement, current U.S. chemical production is up 7.2% from a year earlier, says the ACC report.