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Renita Jablonski: Now, that recession theme is also in effect overseas. The European Commission said today the Eurozone was in a technical recession. The credit crunch is certainly biting deeper into global trade. There’s been a big jump in financing costs for shipping international cargo. Stephen Beard reports from London.
Stephen Beard: The cost of finance for exporters and importers has more than doubled in recent weeks. And often, the finance is not available at all.
The World Trade Organization is so alarmed it’s called a meeting of major banks in Geneva next week. International trade is undoubtedly shrinking. Many of the big, dry bulk cargo ships that usually carry raw materials, like iron ore and grain, lie idle.
There’s little doubt, says shipping broker Tony Westbrook, the slump is mainly due to lack of credit:
Tony Westbrook: We are seeing factories in China needing less raw materials because demand of some of their finished goods is slowing. But that would not have had the effect on the market that the credit situation has had. It is primarily a credit crunch situation.
There is now so little demand for shipping that the biggest bulk cargo vessels are losing their owners up to $9,000 a day. Many are trying to pull their ships out of service and into mothballs.
In London, this is Stephen Beard for Marketplace.
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