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Issue 1 2019 - FBJNA


///OUTLOOK 2019


Holt Logistics is the first northeast independent port


operator to pilot a blockchain-based global trade solution developed by Maersk and IBM. (Holt Logistics photo)


FBJNA’s Outlook for 2019 By Peter Buxbaum


The unprecedented period of robust global economic growth could not have lasted forever, and the fallout from the trade policies of the world’s largest economy is not helping matters. Reports are now surfacing that show how the Trump administration’s trade policies—which include broad tariffs slapped on many products from a variety of


trading partners, but


especially China—are starting to make themselves felt in the form of a deceleration in


global economic growth. That’s not to say that US


trade policies are the only culprit. China’s phenomenal economic expansion over the last two decades was inevitably going to slow, as that country


seeks to transform


its economy from a purveyor of cheap exports and towards developing high technology and


catering to domestic


consumers. Some European economies are teetering on the brink of recession and, in the United Kingdom, uncertainty


“The external environment has become increasingly uncertain


in terms of the global political and economic picture.” Junichiro Ikeda, MOL


“A lot of importers are going back to Compliance 101.” -- Ben Bidwell, CH Robinson


looms as the country prepares to leave the European Union, perhaps without an exit plan. All


of which should


provide a cautionary tale for exporters, importers, intermediaries, and carriers for 2019. A slowing global economy holds the potential for lower volumes of trade, and a more complex customs picture is adding to the costs of


transferring goods across


borders. Carriers have been consolidating,


reshuffling


alliances structures, and deploying larger vessels in recent years to regain some


level of profitability.


But the emergence of mega- alliances and the deployment of mega-vessels, has meant less


flexibility for shippers


and exacerbated port congestion. At the end of the day, the carriers’ efforts seem to have failed to enhance their profitability, and the situation will only get worse if trade slows. The increasing availability of digital technologies provides


Mukhisa Kituyi, secretary general of the UN Council on Trade and Development, when he released the report, “will potentially disrupt the global trading system which underpins demand for maritime transport.” Maritime executives are


wary of uncertainty, but that is exactly what the current global economic situation provides them. “The external environment has become increasingly uncertain in terms of the global political and economic picture,” said Junichiro Ikeda, president and CEO of the Japanese carrier MOL, “mainly due to strained


one bright spot in these trying times, offering the potential to drive efficiencies and lower costs. According to a new report A.T.


by Kearney’s Global


Business Policy Council, global economic growth will slow to 2.9% in 2019, and will further decelerate through 2023. The US will face even slower growth, according to the report, as its trade policies have isolated it and have created


global tensions. A


United Nations report came to similar conclusions when it examined seaborne trade. “Escalating protectionism and tit-for-tat tariff battles,” said


US-China relations and the possibility of a hard Brexit.” “Reciprocal trade sanctions,


primarily by China, are already hurting US exports, such as agricultural products,” noted Kurt Nagle, CEO of the American Association of Port Authorities. “Farmers are being impacted by reduced demand, lower prices, and uncertainty in global markets.” Last year began with


the Trump administration introducing Section 201 safeguard tariffs on a limited number of commodities, followed by Section 232 national security tariffs on steel and aluminum.


“Reciprocal trade sanctions,


primarily by China, are already hurting US exports, such as agricultural products.” -- Kurt Nagle, AAPA


US traders started to take notice in July, according to Ben Bidwell, director of US customs at CH Robinson, when the administration slapped Section 301 unfair trade practice tariffs on billions worth of Chinese goods. That was followed by a series of back-and-forth moves by both sides, igniting a trade war between the world’s


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