India-China Shipping Lane Brings More Containers Along

Just when you thought you couldn’t possibly hear any news from India, they’ve sprouted another vein of commerce that’s pumping goods straight from the heart of Asia.

Demand is Calling

On July 24th it was reported that  Japanese Shipping Company,Kawasaki Kisen Kaisha (“K” Line), will launch a new dedicated service called CIX-2 between Asia and the Indian Sub-Continent from August 10. In business, if customers and demand are calling then there will be an answer and subsequent action taken. India is pushing boundaries with its growth along side China right now and a dedicated line was the answer.

The new service, will run with six 2500-2800 TEU vessels and offer a fixed-day weekly sailing.

The ports involved are Xingang (China), Qingdao (China), Shanghai (China), Ningbo (China), Singapore, Tanjung Pelepas (Malaysia), Port Klang (Malaysia), Nhava Sheva (India), Karachi (India), Colombo (Sri Lanka), Port Kelang, Tanjung Pelapas, Singapore, Xingang.

All of these are ports in Asia that we have reported about during the last month that are moving serious amounts of cargo/containers for their respective countries.

“K” Line presently operates another weekly service called INDFEX calling at Nhava Sheva port. The new service will double sailing frequency for Nhava Sheva and newly add Xingang and Qingdao as direct calling ports.

Asian Explosion

There’s no hiding the fact that Asia is booming. Imagine a hundred plus years ago, going back in time and handing Wyatt Earp and Doc Holiday, Apple iPhones. That’s basically what is happening in some developing countries in Asia and Africa now. India now has over 600 million mobile subscribers.

Add to the fact that new infrastructure and development costs through massively more efficient technology, increased knowledge and speed of development is knocking down barriers it took the western world decades to conquer, are coming down in a fraction of the time.

Steve Jobs for President

Apple now has more cash than the US government.

The Federal Reserve reported last year that nonfinancial companies had socked away $1.84 trillion dollars in cash and other liquid assets as of the end of March 2010. That’s up 26% from a 2009 and the largest-ever increase in records going back to 1952. Cash made up about 7% of all company assets, including factories and financial investments, the highest level since 1963.

That money is coming from cost saving that are made by exporting business overseas. That investment in overseas markets, like India, China, Vietnam ( the list is very long) is also putting record numbers of cash in the hands of these residents and driving up their buying power along with their thirst for the same material goods that many of them work on day in and day out.

At Pacific Tycoon, we’re in the business of managing containers. The same containers that ship brand name products from port to port and supply the distributors with them to sale to their customers. We help you lease containers to these very same Fortune 500 companies and pay you very well. Contact us to let us show you how you can get involved.

Image: ITGrunts

Source: CargoNewsAsia, WallStrettJournal

Stock Market

Yesterday was not a good day if you got your money in stock markets. In America, the Dow Jones Industrial Average fell over 4% and the NASDAQ fell over 5%. Today the carnage is just as deep in Asia and Europe. If American and European consumers are hit with a further unraveling of their economies, where’s a person to put their money?

Bad News Gets Worse

What started with the debt fears of Greece and Portugal have spread to other countries in the EU. Spain’s crippling unemployment rate has been a huge factor in preventing the country from getting upright and now there are concerns that the banks in both Spain and Italy are carrying too much of their country’s debt and they aren’t exactly being forthcoming about the true value of government bonds.

All of this is sending shock-waves through the financial markets in Asia, Europe, and the Americas. After a huge plunge yesterday, European and Asian markets both opened lower today and continued the path that sent them spiraling down, yesterday.

Legislatures in America had to fight vigorously the past couple of weeks to pass a solution to the debt limit and in that time, corporate and working Americans have lost a great deal of faith in the willingness of Capital Hill to do anything meaningful to help what looks like a dreaded double-dip recession.

Consumers Buoy the Economy

Eighty percent of stocks belong to the richest 10 percent of Americans. And the richest 20 percent of Americans account for about 40 percent of consumer spending, says Michael Niemira, chief economist at the International Council of Shopping Centers.

Long periods of drops in stock prices suppress consumer spending as people see their wealth shrink. And consumer spending accounts for about 70 percent of economic activity.

Luxury retailers like Tiffany & Co. and Saks Fifth Avenue have had continuing strong sales the past year. They benefited from a stock rally that started a year ago. MasterCard Advisors SpendingPulse says its index of luxury sales at restaurants, food boutiques, department stores and clothing stores, surged 12 percent last month.

But the Dow’s plunge could now threaten upscale retailers. The economy, Niemira notes, is “more dependent on spending at the high-end so (a drop in luxury sales) could have a bigger effect.

The Dow has seen a plus ten percent drop in the past week which is the signal for a market correction. Double that and you’re entering Bear Market territory. The stock market is the weather vane of any country and it’s ability the forecast what’s ahead is uncanny. If things continue to get worse in the Stock Market, it could mean that the US in indeed headed for another slowdown.

Where to Invest?

Developed countries have many things in common, but the most obvious are that they are big and they consume. Consumption needs goods and goods need the water ways, ships and containers that transport them. But what happens when that consumption dries up?

That’s the best reason we have for being in Asia. At Pacific Tycoon we are in the heart of Asia, supplying the developing world with the containers that are needed to transform these countries into the world’s next super powers.

American dominance has subsisted on the drive by its population to create, engineer, and develop things, to turn dreams into realities. As the cost of doing so keeps rising, more and more people are opting against immigration and staying in their home countries to do these things there.

The Asian boom is upon us. The talent, education, and work ethic are all here and are all driving India, China, South Korea, Ghana, Qatar and many others into the next century of consumerism, that is moving away from the west.

The New Consumers

I was speaking with a foreigner who lives in Siem Reap, Cambodia yesterday. He owns a vanilla farm there. He was amazed at the number of Chinese that are coming in and visiting. At the airport, he was telling me how he noticed all these people in the latest fashions and most high-tech gadgets. “I had no idea where they were from,” he said. “Then I saw their passports and every single one of them were from China.”

The one thing the west does the best is to focus on materialism. It’s so ingrained into their subconscious that many don’t even realize it. It’s plastered on t.v. shows and movies, all of which get seen overseas. That lifestyle, that carefree lifestyle, is envied from across the oceans. That envy is spreading and it’s bringing the necessary goods with it to the doorsteps of these developing countries that want it, that crave it, that think they need it.

For owners of shipping containers, that’s about the best sound we could hope to here. Contact Pacific Tycoon to see how this momentum can be put in your favor.

Image: StockMarketInvesting

Source: YahooFinance, YahooFinanceBreakout

Will the Latest Middle East Upheaval Disrupt the Asian Economy?

As the Middle East continues its upheaval, The world’s eyes are now focused on Israel and its relationships with The Palestinians and others in that region. Those of us in East Asia can’t help but wonder what impact it will have on us. With the exception of some inevitable growing pains that accompany a strong economy, the Pacific Rim is enjoying prosperity. We would hate to have the rest of the world’s disruptions inhibit our growth.

It would seem that unless Iranian and Israeli relations devolve into outright war, it is no more likely to have an impact on Pacific prosperity than did events in Egypt and Libya. And the Egyptian situation included a trade route as important as the Suez canal.

The Pacific region has been blessed with prosperity because the economies that make up the area were determined to do so. Less than five years ago, most of the world was plunged into a recession. We brought ourselves out of it, despite the fact that classic economic powers like the U.S. and Europe continue to lag behind.

We have withstood one of the world’s worst natural disasters happening in Japan, one of our most important but vulnerable economies. We have withstood the falling like dominoes of Arab countries in the region. It will take more than this latest controversy to slow down this powerful region.

Derivatives on Shipping Containers…Why?

For years we have been suggesting that you invest in shipping containers instead of derivatives. The reason is that the containers do work, while derivatives are essentially bets on performance. Even if you know an investment will do well, you can lose on a derivative if it doesn’t do better than an agreed result at an arbitrary point in time.

The choice remains yours. Invest in a sure winner, or gamble on a game that is hard to understand. Now you can have both, or can you? We are talking about derivatives called container swaps and carrier contracts. We won’t try to spell out how those investments work. We have touched on derivatives before, but suffice it to say that it is like two men in the grandstands at a football match, wagering on the uniform number of the next player to touch the ball.

Click here to see if you can follow the investment. It does display the complexities of derivatives. On one hand there is the certain, even insured success we offer. On the other, a wager about the exact number, price, duration, or some other aspect of what that certain success will be.

We have been asked about our opinion of derivatives on our business. We have no more interest in who is gambling on us than the football team cared about which of the two old men at the soccer match won their bet. We certainly see no reason to participate in that wager.

Rising Cost of Energy

 

To the world's economy, and the people of Libya, stability is worth the uprising.

Rising energy costs impact all of us. Everything you buy has the need for transportation. Even the iphone application you downloaded required a programmer to get to work in the morning, and that took transportation of some kind.

Those rising costs mean a rise in prices for everything. In turn, that means demand for everything goes down. There is no more money available in the economy, yet the price of everything is rising. Necessarily, less is purchased.

We are in the transportation business. We have seen these costs rise before, and know the impact it has. It is that same experience that tells us not to panic. For one thing, these price spikes typically subside once a problematic event is resolved. Middle East uprisings, especially in Libya are chiefly responsible for the recent price increases. As dramatic as those events are, they will be short-lived, even if they go on for several months. When you compare the effects of these brief events with the long term-view that economies employ, you will see that in the long run, these events are mere interruptions.

In the mean time, materials still have to move. Those materials move most efficiently via cargo ships. What may have been sent via air, rail or truck before is more likely to go via ocean cargo if that is an option. Many will sacrifice speed in favor of costs. No matter the price to ship, ocean freight still moves most efficiently. We are all anxious for those costs to come down, and for our friends in trucking, rail and air to become more competitive again. They fill a different need than we do.

President Hu Jintao Visits The United States

This week, Chinese President Hu Jintao visited several American cities. The two super powers have had a cool relationship, and this visit signals a significant warming of that relationship. If only for the mathematics of it, their improved relationship helps us all.

A couple of charts accompany this blog entry. They show the relative size the U.S. and Chinese economies. Clearly, they dominate the world’s economies. In fact, if the U.S. were a mere 1% larger, it would be as if we added a whole new economy the size of Singapore to the international marketplace.

Over the last few years, many of the largest economies on the chart have been stagnant in their growth. Even as Asian economies have enjoyed substantial growth, the lethargy of those large economies has held the world back from where it could be today.

We applaud both China and The United States for taking this step. We are anxious for the day we can report that all of the world’s economies are growing comfortably. We  hope that some day we will look upon the January 2011 visit of President Hu Jintao to America as the day the world’s economy started to grow again.