No idea – however none of them will be routes down these ways methinks.

“then to the extent that the same overcapacity is present in shippers that service our neck of the woods, we should see lower costs for imports and possibly higher demand for our exports”

I think the important thing to remember is that a large part of shipping services is internationally flexible – so if demand for carriers falls overseas the ships can come here if the price is right. In the past, many ships haven’t bothered to come here because the price was so good overseas – and we have struggled to ship our forestry products, even when a buyer existed.

With this constraint loosening it could help these guys out.

“However, I believe that refrigeration generally means refrigerated containers and this type of shipping would not be covered by the BDI.”

Indeed, our primary exports are not even covered by the BDI, and the ships are sufficiently different that the BDI gives very little indication of what is going on for the shipping costs we face.

Looking at the index was always more of interest for people in the forestry industry rather than milk or meat exporters – and rightly so.

I have always been sceptical of the appropriateness of the BDI as an indicator for lil’ ol’ NZ – and you have nicely articulated reasons why it is appropriate to be so.

We do not need to look at the BDI to know that demand in developed countries is likely to to fall because of the credit crisis. And as you say, if it’s a result of improving capacity (yes – shipbuilding has been picking up in recent years and these are typically the result of orders placed several years in advance) then to the extent that the same overcapacity is present in shippers that service our neck of the woods, we should see lower costs for imports and possibly higher demand for our exports.

BTW the dry term refers to the fact that these ships are not liquid – e.g. oil, chemicals. A ship that carries logs would be a dry bulk carrier. However, I believe that refrigeration generally means refrigerated containers and this type of shipping would not be covered by the BDI.

Or, that future expectations of capacity are such that prices have dropped in anticipation (presuming that shipping is procured on some sort of forward contract, rather than cash on the day of loading).

Any visibility of what sort of contracts these are on, and whether it perhaps represents shipping companies locking in contracts quickly in case the bottom really drops out of the market (and they have to operate below cost)?

Good question, but is the comment meant to be on the productivity post?

http://tvhe.wordpress.com/2008/11/18/do-we-want-productivity-growth/#more-1932

Note in the comment on that post I was not saying that we do have increasing returns to scale – just that it is a possibility.

Increasing returns to scale is an interesting issue. It stems from a situation where individual inputs increase the productivity of other inputs sufficiently so that a doubling of inputs leads to a more than doubling of outputs.

http://en.wikipedia.org/wiki/Increasing_returns_to_scale

Whether this is the case in the industries you have described I do not know – but I’ll have a look into it if you like, as it is interesting.