9 January 2009

Idle US ports signal two 'bleak' years ahead in world trade

The following was reported on in the 8 January 2009 edition of “Canadian Transportation & Logistics”.

Port traffic is slowing around the world – everywhere from North America to Asia – as a recession erodes consumer demand and the credit crisis chokes off loans to export-dependent companies, according to a report by Bloomberg News.

International trade is set to fall by more than 2% next year, the most since the World Bank began measuring it in 1971, according to the report.

California’s Long Beach port saw September imports fell 15.8% from a year earlier, October's dropped 9.5%, and November's slid 13.6%.

The Coalition for Employment through Exports, which represents companies such as Boeing Co., Caterpillar, and UPS, says the issue is mainly an inability to secure financing – even with creditworthy customers.

The Baltic Dry Index, a measure of shipping costs for commodities, is down 93% from a record in May, a sign that traders expect export volumes to stay depressed, says the Bloomberg report.

However, governments and international lenders are stepping in to fill the gap. China and the US have pledged $20 billion to aid their exporters. The World Bank has tripled funding to $3 billion, for banks that help emerging-market companies to sell abroad. South Korea has pledged $16 billion for its exporters after banks there couldn't secure international credit lines for them.