Bloomberg’s Mark Gilbert explains it well why we should be very afraid.
Bloomberg: In the third quarter of 2007, Volvo AB booked 41,970 European orders for new trucks. Guess how many prospective purchases Volvo, the world’s second-biggest maker of heavy rigs, received in the third quarter of this year?
Here’s a clue. Picture a highway gridlocked by 41,815 abandoned trucks — because Volvo’s order book got destroyed to the tune of 99.63 per cent, with customers signing up for just 155 vehicles in the three-month period, the Gothenburg, Sweden-based company said last week.
The pathogen that has fatally infected swathes of the banking industry is now contaminating non-financial companies. “We’re heading toward the sharpest downturn I’ve ever seen in Europe,” said Chief Executive Officer Leif Johansson.
Volvo has company. Daimler AG, the world’s biggest truckmaker, said earlier this month that its U.S. deliveries slumped by a third in the first half of the year.
If nobody is buying your trucks, you don’t need to rent a vessel to carry that shiny new 18-wheeler to its new owner. Hence the Baltic Dry Index, which tracks the cost of shipping goods and commodities, fell below 1,000 this week for the first time in six years.
Put another way, it is now almost 90 per cent cheaper to ship goods over the oceans than it was at the beginning of the year. And because the huge vessels known as capesize ships can’t currently charge much more than their daily operating cost of about $6,000 per day, their captains have slowed down to economize on fuel and save money, to about 8.68 knots from 10.33 knots in July, according to data compiled by Bloomberg.
It isn’t just the oceans that are emptying. Air freight traffic dropped 7.7 per cent in September, according to the latest figures from the International Air Transport Association. That’s the steepest decline since the trade group began compiling the data in January 2003.
Um, on the positive side maybe this bodes well for the buy local movement? (That is, if you can find anyone to buy…)
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