Shipping rates hit zero as trade sinks

[dalek]

Shipping rates hit zero as trade sinks
Freight rates for containers shipped from Asia to Europe have fallen to zero for the first time since records began, underscoring the dramatic collapse in trade since the world economy buckled in October

http://www.telegraph.co.uk/finance/4229198/Shipping-rates-hit-zero-as-trade-sinks.html

[mbratrud]

One of the positive thing out of this whole crisis is that it will bring freight costs and other costs back in line. Although I can't imagine Zero is sustainable.. When are CN and CP going to anounce big freight reductions... I dont think I will hold my breath. But fuel was the argument for increasing, last I checked fuel has dropped significantly.

[classicalliberal]

As long as the elevators keep shipping their unit and shuttle trains, the railway will have no reason to lower their rates.

[Fransisco]

I don't view shipping rates at zero as a positive thing. It means that demand has dried up. If demand has dried up our prices are going lower.

[mbratrud]

I hear you Francisco, but unfortunatly that has to happen for things to straighten out. Commodities got to expensive and as a result all costs have gone up! Everyone wants their slice of the pie.
The worst thing that could have happened for producers long term is prices soften demand stays steady and as result our costs such as Freight, Inputs and Iron all remain at a higher level. This will just expediate the process of getting everyone back on the same page. Of course we dont want to see prolonged pain in any part of the sector that could do long term damage, but hopefully just a little jolt to get things back in line.
You know as well as I do the demand stopped before the rates dropped, the rates dropping as well as a set back in price will help refuel demand. So lets talk in 3 months if rates remain at 0 then we have a serious problem.

[liberty]

It seems that hopes for a rally in ag commodity prices by spring are fading fast, if shipping rates are any indication. That's going to really hurt producers who have large inventories of crop.

My neighbour has 2 years worth of oats in storage, which he was holding onto because he was convinced he could get a better price by waiting.

I can't imagine what this will do to a producer's ability to finance a new crop when spring planting season rolls around. Having lower prices for inputs this year does nothing to improve your margins on last year's crop.

[mbratrud]

Liberty, Anyone who has not sold some $15 Canola and $4 Oats will be hard pressed to get sympathy from me. Sounds like your Neighbor has more money than brains if he is sitting on 2 years of Oats after some of the pricing we have seen.

I would be happy to see Canola settle out at $9 to $10 and Oats at $3 and Barley at $3.50, I can make money at those prices and they have a more realistic chance of being more sustainable prices for the long term.