Credit Crisis Hits Global Shipping-Moody's Economy

[Dow Jones] STOCK CALL: Asia's export-oriented economies facing "double-whammy" from falling consumer demand and crisis of confidence in funding, with reports of banks refusing to honor letters of credit, "the lifeblood of international trade flows," says Moody's Economy.com's Matt Robinson. Says letters of credit, essentially an I.O.U. between importer and exporter, allow exporters to load cargo for shipment with assurance of being paid; at the other end they demonstrate security of supply, enabling importers to negotiate distribution, promotion with retailers. "In short, the whole global trade production line relies on letters of credit. No letters of credit, no transactions - and no transactions mean no international trade." Robinson reckons price distortions will follow if demand, albeit slowed, outstrips supply as vessels remain stuck in home ports. Adds, consumers could also face shortages, "as shipments of foodstuffs and grain lay stranded overseas."