Market driven changes in the global shipping industry
An article on shipping in today's Bangkok Post
provides some useful training in applied
economics. Understanding economics and how supply and demand causes changes in market prices is essential for any business person if they want to do a better job managing their business.
In an MBA programme many of the classes are just applied economics, economics made simple for making practical everyday business decisions.
(See photo on right of of panamax ship travelling along the Panama Canal)
applied - how to do
things not just ideas, practical not abstract ปรับใช้กับ
step-by-step - do gradually, achieving one goal and then working on the next, achieving this goal, ....(over and over again) ทีละขั้น ค่อยเป็นค่อยไป
panamax ships - ships of the maximum size that will still fit through the Panama Canal (See Wikipedia) เรือบรรทุกสินค้าขนาดใหญ่ที่สามารถผ่านคลองปานามาได้
Panama Canal - a man-made canal in Panama which joins the Pacific and Atlantic oceans. One of the largest and most difficult engineering projects ever undertaken, it had an enormous impact on shipping between the two oceans (See Wikipedia) คลองหรือช่องแคบปานามาที่ขุดเพื่อเป็นทางเดินเรือสินค้าผ่านมหาสมุทรแปซิฟิคไปยังแอตแลนติค เพื่่อช่วยร่นระยะเวลาเดินเรืออ้อมทวีปอเมริกาใต้ นับเป็นผลงานวิศวรกรรมที่ยิ่งใหญ่ที่สุดในโลก
step-by-step - do gradually, achieving one goal and then working on the next, achieving this goal, ....(over and over again) ทีละขั้น ค่อยเป็นค่อยไป
panamax ships - ships of the maximum size that will still fit through the Panama Canal (See Wikipedia) เรือบรรทุกสินค้าขนาดใหญ่ที่สามารถผ่านคลองปานามาได้
Panama Canal - a man-made canal in Panama which joins the Pacific and Atlantic oceans. One of the largest and most difficult engineering projects ever undertaken, it had an enormous impact on shipping between the two oceans (See Wikipedia) คลองหรือช่องแคบปานามาที่ขุดเพื่อเป็นทางเดินเรือสินค้าผ่านมหาสมุทรแปซิฟิคไปยังแอตแลนติค เพื่่อช่วยร่นระยะเวลาเดินเรืออ้อมทวีปอเมริกาใต้ นับเป็นผลงานวิศวรกรรมที่ยิ่งใหญ่ที่สุดในโลก
Here is the economics in today's shipping article step-by-step:
First shipping
rates fell with decreased demand for shipping...
The recent global economic downturn has reduced
worldwide demand for exports. Demand for shipping goods between countries has also fallen as a result.
As demand for shipping fell, there was an oversupply of ships and a sudden fall in shipping rates (freight rates, shipping costs) (See chart on right):
...the huge supply of
ships had partly
caused the collapse of the Baltic
Dry Index (BDI), the major measure of
shipping costs for commodities. The index has plummeted more than
90%
from its peak of 11,793 in May this year to about 800 at present.
shipping rates, freight rates - the
amount paid to send goods from one place to another
อัตราค่าขนส่งสินค้าทางทะเล
Baltic Dry Index (BDI) - the major measure (index) of the cost of shipping goods by ship (See Wikipedia) ดัชนีค่าสินค้าที่ส่งทางเรือ
plummeted - fall by a large amount suddenly (ราคา) ที่ร่วง หรือลดลงมากอย่างรวดเร็ว
Baltic Dry Index (BDI) - the major measure (index) of the cost of shipping goods by ship (See Wikipedia) ดัชนีค่าสินค้าที่ส่งทางเรือ
plummeted - fall by a large amount suddenly (ราคา) ที่ร่วง หรือลดลงมากอย่างรวดเร็ว
Then shipping companies responded by reducing ships in operation...
The profitability and survival of small shipping companies (small bulk carriers) depends on freight rates, the price they receive for the shipping services they sell. If freight rates continued to fall without limit, many shipping companies would simply go out of business.Facing threats to survival, businesses adjust business operations. One response is to reduce the number of ships in operation. With reduced expenses, the business can survive and make it through bad economic times.
bulk - large amounts
เป็นจำนวนมาก เป็นกุรุศ
small bulk carriers - companies that ship large amounts of goods บริษัทขนส่งสินค้าทางเรือ
go out of business - stop doing business, company ends its life ต้องปิดกิจการลง (เพราะขาดทุน)
ships in operation - ships being used to transport goods from one place to another เรือที่ใช้เดินสมุทร ใช้ขนส่งสินค้าอยู่ ณ ปัจจุบัน
make it through bad economic times - do whatever it takes so the company can once again do business when the economy improves ทำทุกวิถีทางเพื่อให้รอดพ้นจากภาวะวิกฤตเศรษฐกิจ
small bulk carriers - companies that ship large amounts of goods บริษัทขนส่งสินค้าทางเรือ
go out of business - stop doing business, company ends its life ต้องปิดกิจการลง (เพราะขาดทุน)
ships in operation - ships being used to transport goods from one place to another เรือที่ใช้เดินสมุทร ใช้ขนส่งสินค้าอยู่ ณ ปัจจุบัน
make it through bad economic times - do whatever it takes so the company can once again do business when the economy improves ทำทุกวิถีทางเพื่อให้รอดพ้นจากภาวะวิกฤตเศรษฐกิจ
If every company reduced ships in operation by selling ships, then the supply of ships in the second-hand ship market would jump up and prices would fall.
Luckily, there are other more natural ways that the global supply of ships decreases in bad economic times. First, there are a lot of old ships that are near the end of their useful life. Retiring these ships now is an easy way for shipping companies to reduce the number of ships in operation:
About 60% of the global fleet is old with an
average age
over 25 years. Ageing ships tend to be demolished when
market
conditions are tough.In October alone, 38
vessels with a combined capacity of 1.3 million deadweight tonnes (DWT)
were demolished, bringing the total to 368 ships taken out of the
market this year to date...
Second, the global credit crunch has made financing new ships difficult. Only half the new ships being built have received financing, so only half the number of ships planned will actually be built. If banks won't lend money to build new ships, new ships will not be built.
second-hand - good
has already been used (being offered for sale again for a second time)
สินค้ามือสอง
demolished - destroy completely ทำลายให้สิ้นซาก
deadweight tonnes (DWT) - a measure of how much a ship can carry (ship's carrying capacity), expressed in metric tons (1,000 kg) or long tons (2,240 pounds, about 1,016 kg). น้ำหนักที่เรือสินค้าสามารถบรรทุกสินค้าได้
credit crunch - a period of time when it is difficult to get loans, when there is little credit (loans) ภาวะขาดสภาพคล่อง หรือเิงินหมุนเวียนไม่ได้
demolished - destroy completely ทำลายให้สิ้นซาก
deadweight tonnes (DWT) - a measure of how much a ship can carry (ship's carrying capacity), expressed in metric tons (1,000 kg) or long tons (2,240 pounds, about 1,016 kg). น้ำหนักที่เรือสินค้าสามารถบรรทุกสินค้าได้
credit crunch - a period of time when it is difficult to get loans, when there is little credit (loans) ภาวะขาดสภาพคล่อง หรือเิงินหมุนเวียนไม่ได้
Shipping rates then rise with a decreased supply of ships and shipping...
As the worldwide supply of ships falls, the supply of shipping services in international shipping markets also falls.As the supply of shipping services falls, freight rates rebound and begin to rise again.
Freight rates for shipping by sea are expected to rise in the next three to six months as the supply of ships decreases. There are signs that this is happening already:
...the index [Baltic Dry
Index (BDI)] on Monday rose for a fourth straight session in London to
856
points, driven by handysize
vessels for loads of less than 40,000
tonnes, and supramax
and panamax ships.
Thailand's exports to Japan dropped significantly about a month ago when Japan was slipping into a recession. Many are optimistic that exports will soon pick up again because Thai exports to Japan are mostly essential food commodities such rice, starch, and sugar that people need to buy whether there is a recession or not (low income elasticity of demand).
rebound - start
increasing again, after decreasing (ค่าขนส่ง)
เพิ่มขึ้นอีกครั้ง หลังจากมีการปรับลดราคาไป
signs of X - something that shows that event X is happening (even though you can't actually see event X happening) ส่งสัญญาณ
vessels - ships เรือขนาดใหญ่
supramax ships, handymax ships - a ship between 35,000 and 60,000 metric tonnes of deadweight (DWT) (See Wikipedia) เรือที่มีระวาง 35,000 ถึง 60,000 ตัน
handysize vessels - a ship with a deadweight of 15,000–35,000 tons, there is no well-defined or widely accepted size sector below 15,000 tons.เรือขนาดย่อม ที่ระวาง 15,000 ถึง 30,000 ตัน
panamax ships - ships of the maximum size that will still fit through the Panama Canal (See Wikipedia)
optimistic - feel that the future will be good มีทัศนคติที่ดี มองเหตุการณ์อย่างมีหวัง
pick up - activity starts increasing จะปรับดีขึ้น
low income elasticity of demand - amount of good that people buy changes very little with price changes (See Wikipedia) สินค้าที่ผู้บริโภคต้องซื้อหา มีการปรับราคาขึ้นลงเล็กน้อย
signs of X - something that shows that event X is happening (even though you can't actually see event X happening) ส่งสัญญาณ
vessels - ships เรือขนาดใหญ่
supramax ships, handymax ships - a ship between 35,000 and 60,000 metric tonnes of deadweight (DWT) (See Wikipedia) เรือที่มีระวาง 35,000 ถึง 60,000 ตัน
handysize vessels - a ship with a deadweight of 15,000–35,000 tons, there is no well-defined or widely accepted size sector below 15,000 tons.เรือขนาดย่อม ที่ระวาง 15,000 ถึง 30,000 ตัน
panamax ships - ships of the maximum size that will still fit through the Panama Canal (See Wikipedia)
optimistic - feel that the future will be good มีทัศนคติที่ดี มองเหตุการณ์อย่างมีหวัง
pick up - activity starts increasing จะปรับดีขึ้น
low income elasticity of demand - amount of good that people buy changes very little with price changes (See Wikipedia) สินค้าที่ผู้บริโภคต้องซื้อหา มีการปรับราคาขึ้นลงเล็กน้อย
(Source: Bangkok Post, business, 19-11-08, Jutha: Small bulk carriers reviving as fleets shrink, NAREERAT WIRIYAPONG, link)
