The fallout from last week’s historic bankruptcy of one of the world’s biggest shipping lines, Hanjin Shipping, continued with little resolution with as much as $14 billion worth of cargo stranded at sea according to the WSJ, sending cargo owners scurrying to try to recover their goods and get them to customers. Since Hanjin’s bankruptcy protection filing, dozens of ships carrying more than half a million cargo containers have been denied access to ports around the world because of uncertainty about who would pay docking fees, container-storage and unloading bills. Some of those ships have been seized by the company’s creditors.
As Bloomberg adds, 85 Hanjin ships that have been effectively marooned offshore as ports in the U.S., Asia and Europe have turned the company’s ships away. The worry is that Hanjin ships won’t be able to pay port fees or their contents might be seized by creditors, which would disrupt port operations. The global shipping disruption comes just as companies are shipping merchandise to fill shelves and warehouses for the end-of-year holiday season.
Everything is analogous. Lots of investors try to judge the economy by shipping metrics. I see shipping companies as a population within an ecosystem. The companies are individuals, the food is money, and the r/K status of the ecosystem is company survival.
When things are r, then even badly run, weak, unfit companies can stay afloat, because money is everywhere. As things turn K, those companies will begin to die off, and they will probably do it before you begin to see the industry as a whole change radically. Some of their business will shift to other companies, so shipping as a whole may not change much, but the death of those companies is a measure of the fact that slightly less resources are present, and that is beginning to kill off the weak.
I suspect if shipping is a reliable indicator of what is to come in the broader economy, the r/K status of shipping companies may be a reliable indicator of what is to come in shipping, since a small K-shift with negligible impact on overall shipping metrics will always precede the real K-selection that will mark a decrease in shipping metrics.
If that is correct, then all we need are a few more companies like this, and we will know our Apocalypse is fast approaching.
[…] Shipping Begins To See Victims Of K-selection […]
Total shipping volume, both marine and rail, has been declining for a while, and that likely drove Hanjin’s bankruptcy. Yesterday, some sort of conditional bailout was announced. Apparently, K is here.