Since the latest economic upheaval has hit the world, companies in different industries report a dismal financial picture, with many going bankrupt. Mostly, but not always, it is smaller companies that are facing bankruptcies, as they lack customers to buy their products, leaving in its wake a broken industry with mass layoffs.
During the first two months of 2012, the U.S. Bureau of Labor Statistics (BLS) reported 1,476 mass layoffs, resulting in 508,381 workers losing their livelihood.
Mass layoffs were reported in the transportation and warehousing industry, with the BLS reporting 205 mass layoffs during the first six months of 2012, putting 32,877 people out of work.
One industry, which has been in an economic depression for a while is the shipping industry, an industry that not only had to deal with Somali pirates that attacked ships and demanded millions of dollars for their return, but also the economic downturn, resulting in fewer shipments.
The shipping industry is reeling under economic pressure. “The worldwide shipping industry has struggled in recent years with decreased rates and an inability to refinance debt,” said an article on the AM Law Daily website.
The U.S. shipping industry’s economic woes continue, with the latest being the drought in the Midwest. Water levels have sunk so low that shipping barges have to reduce their loads and make more trips at their own expense, according to the Midwest Shippers Association.
“It’s no wonder, then, that ocean carriers are looking with trepidation at the severe drought conditions gripping the eastern half of the country. The U.S. Department of Agriculture is calling the drought the worst since 1956 and the third worst in recent history,” said a July 30 article on the Midwest Shippers Association website.
Shipping Industry Neglected by Wall Street
“US maritime companies are suffering under the weight of the recession, and bankruptcies on US soil – something of a new phenomenon – are proof of an industry struggling to cope in a financial climate where investors continue to distance themselves from maritime players,” according to a 2012 report published on the website of the law firm Blank Rome LLP.
Before 2008, and the Lehman Brothers failure, Wall Street players were becoming quite interested in investing in the maritime industries. More and more shipment companies went public, with investors going after the first public offerings.
After the economic meltdown, investment interest in shipping companies “has now almost completely dried up,” according to the Blank Rome report.
