Monday, July 13, 2009

Expeditors sees lower earnings (EXPD), Singapore sees idled ships

AlphaNinja - Some of the "pundits" are calling for a bottom in the economy in the next few months, thanks to "slowing" job cuts, etc. But the bottom (and then the recovery) will not occur until "nuts and bolts" companies see better things ahead...

Expeditors International (EXPD) is one of those companies that can give us a good "read" on what's going on out there. They provide logistics for freight forwarding - air, ocean, land.

Friday afternoon they announced that earnings for its second quarter will come in below the street consensus estimates:

“It goes without saying that 2009 has been an unusual year. While we did observe some quarter-end strength during the month of June, volumes were still below what we experienced in June 2008. Preliminary figures indicate that our 2009 second quarter results will not fall within the range of analysts’ published estimates,” said Peter J. Rose, Chairman and Chief Executive Officer. “We hasten to add that analysts’ estimates are not the same as our own internal expectations. It is these internal expectations that form the foundation of our long-term strategy. We feel very confident about how we are currently positioned. We have strong cash flow and a great cash position which allows us to maintain our investments in our core assets, our people and our customers. We continue to enhance operational efficiency while focusing on increasing market share. From experience, we know that market contractions will eventually turn. When it turns, we intend to be ready to meet our customers’ expectations, with our people and our culture intact,” Rose concluded.

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The global recovery will come, but not while shipping companies can't even sell their ships for scrap metal.... Huge amount of ships are idled off of Singapore, with nothing to do.

The sharp downturn in world trade is behind this enforced idleness.
And, in the absence of global economic recovery, all firms can do is minimise their costs.
A ship owner can save up to 80% of his or her running costs just by laying anchor 45 minutes south of Singapore, off the Indonesia islands of Batam-Rempang-Galang.


"That tanker will probably be sold for scrap… as soon as scrap metal prices recover."


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