Drop in Shipping Could Mean Weak Holiday Season for Retail

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from 24/7WallStreet:




Drop in Shipping Could Mean Weak Holiday Season for Retail
Posted: September 2, 2011 at 9:01 am


One indicator of a profitable holiday season for US retailers is the flow of goods into US ports. The shipping season for holiday goods generally starts in July and August and runs through October. So far this year indications are not rosy. Container ship traffic into the Port of Long Beach was down in July and is expected to be lower still for August.

Container shipping companies, unlike the dry bulk shippers DryShips Inc. (NASDAQ: DRYS), Genco Shipping & Trading Ltd. (NYSE: GNK), Excel Maritime Carriers, Ltd. (NYSE: EXM), and others, are mostly privately held or traded only lightly over-the-counter in the US. The world’s largest container shipper is Denmark’s AP Moeller-Maersk, which is expected to see profits fall by -25% this year as container rates have collapsed. Two publicly traded container shippers are Hong Kong-based Seaspan Corp. (NYSE: SSW) and Greece-based Danaos Corp. (NYSE: DAC).

For the shippers, part of the problem is an over-supply of ships. The container fleet has grown 17% since 2007 and new orders equal nearly 28% of existing supply. Dry bulk shippers have placed orders that would increase capacity by 36%, so the container shippers are a bit more cautious than the bulkers.

The main reason for the slowdown in container shipping is wariness on the part of retailers for the 2011 holiday season. Retail profits in the second quarter gained an average of 11%, the smallest increase in two years. That was due primarily to steeper discounts on goods as retailers cleared out inventories in the quarter to make room for the back-to-school season. ........(more)

The complete piece is at: http://247wallst.com/2011/09/02/drop-in-shipping-could-mean-weak-holiday-season-for-retail-drys-gnk-exm-ssw-dac-tgt-m-wmt/#ixzz1WoA1pqtB