Thursday, 30 October 2008

Slowdown in global trade shipments on the way

The collapse in the price of dry containers is a direct result of (1) the ability of frontier and emerging trade partners to get letters of credit and (2) the sharpe reduction in consumer confidence and resulting squeeze on inventories.

It is easy to understand why a banker will not extend a letter of credit for a shipment of natural rubber from the ivory coast when they find it difficult to get credit themselves. Unfortunatley, this is extremely bad news for frontier economies.

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