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KAREN THUERMER -EDITOR karen.thuermer@fjna.com CONTRIBUTING EDITORS: PETER BUXBAUM JOHN JETER ALEXANDRA WALSH MARK CALDWELL MANIK MEHTA


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Issue 6 2021 - FBJNA From the Editor


CONTACTS 2021 SALES


Is Shipping in Turmoil?


By Karen E. Thuermer


Global shipping remains challenged and problems on the open seas are not helping. On July 8, the MV MOL Charism, operated by Ocean Network Express (ONE), ran aground aſter leaving Vung Tau, Vietnam. The ship is part of ONE’s EC5 service that runs from Vietnam, Singapore, and the US East Coast. The incident is causing disruptions to its EC5 service.


T h e


situation recalls other incidents: the Evergreen Ever Given vessels blockage in the Suez Canal and ONE Apusin the Pacific that occurred on December 31. That 14,052 TEU containership hit severe weather conditions while enroute from Yantian, China to Long Beach. Such mishaps put undue constraints of US seaports that are already facing


unprecedented levels of inbound traffic and pressure on steamship lines running full speed to meet demands. Industry experts estimate that some 9 billion tons of waterbound cargo will be transported on the oceans in 2021. Shippers already are facing exorbitant surcharges and steep rates into contracts


with steamship lines. (By the way, the problem is also felt within the air cargo segment.) Over the last few months, the cost of ocean freight has quadrupled. Driving the hike is soaring demand, labor shortages, port congestions, equipment shortages, and the host of incidents.Observers do not expect to see rate reductions until possibly Q1 2022. Meanwhile, President Biden is taking a hard look at shipping and rail in his


“Promoting Competition in the American Economy” Executive Order. The provision for shipping appears modest, says Panjiva Research, and calls on the Federal Maritime Commission to “ensure vigorous enforcement against shippers charging American exporters exorbitant charges.” “The FMC is already carrying out such a review and may expedite it aſter agreeing to


work more closely with the Department of Justice,” Panjiva says. Container lines now operate under three big alliances to coordinate route


management. Panjiva reports that Ocean Alliance holds a 32.5% share of US seaborne imports aſter growth of 27.3% year over year in the three months to June 30. The fastest growing alliance has been the 2M Alliance of Maersk and MSC with affiliate ZIM Shipping which climbed 32.0% year over year. Although steamship lines have limited their investment in new container ships


over the last three years, orders are now surging as indicated by orders placed in China in the first five months of 2021. These orders encompass more than the total placed last in 2020 and 2019, Panjiva reports. Some of the new vessels are not expected to be deployed until 2023. The CMA CGM Group has placed an order for 22 new container vessels from China


State Shipbuilding Corporation Group that are expected to join its fleet between 2023 and 2024. All of the vessels will be powered by liquefied natural gas (LNG) or exceptionally low sulphur fuel oil (VLSFO). Six LNG-powered vessels will have a capacity of 15,000 TEU and six other LNG-powered ships will have a capacity of 12,000 TEU. The remaining ten containerships will be powered by VLSFO with a capacity of 5,500 TEU. In other news, the WTO reports that world merchandise trade volume is expected


to increase by8.0%in 2021 aſter falling 5.3% in 2020, a smaller decline than previously estimated. Trade growth will likely slow to 4.0% in 2022, with the total volume of global trade remaining below the pre-pandemic trend. Panjiva analysts indicate that global trade is recovering rapidly with growth in exports from 27 countries in May 2021 versus May 2019 of 19.6% while US seaborne imports climbed by 18.7% in June 2021 versus June 2019. “The impact of international trade policy on global supply chains in the second half of 2021 will depend on the implementation of vaccine provision regulations and the resolution, or otherwise, of long-standing trade rivalries,” it says. Mexico increased its importation of vaccines by 118.7% in March, April and May. India


will most likely continue its vaccine export band. Meanwhile, US exports of pharma ingredients are increasingly slowing. The largest unresolved foreign policy issue for the Biden Administration is relations


with China and a review of the first phase of the China-US trade agreement, which was signed under the Trump Administration on January 15, 2020. China sees the deal as beneficial, but President Biden is taking a slow methodical approach to its review. The pact, which expires at the end of 2021, called for China to


///NEWS


Freight Business Journal North America - FBJNA reaches out to the decision makers and influencers involved in international freight transport and logistics. FBJNA boasts the most informative and authoritative source of information with unrivalled in depth knowledge of the rapidly changing freight business environment. Our complimentary website www.fbjna.com provides the most up to date news and analysis from within the international shipping industry.


If you have any stories or letters which should be of interest or any feedback on FBJNA, please contact our editor Karen Thuermer - karen.thuermer@fbjna.com


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Our next issue includes a Peak Season Review, Bi-Annual Breakbulk, Florida Ports - Current Projects and Future Plans and our regular IT section. Plus the 2nd edition of Air Cargo Vision.


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boost purchases of US exports by $200 billion over two years - a target that Beijing is far behind in meeting. China also pledged to make regulatory changes on intellectual property protections, agriculture biotechnology and financial services access for US firms.


On July 14, the US placed restrictions on imports from China’s Xinjiang region.


Reports state that the Communist Party is holding more than 1 million members of mostly Muslim ethnic groups in detention camps in the region. The move was the result of bipartisan legislation passed by the Senate. On July 13,


the US State Department and five other federal agencies issued an updated advisory warning that businesses with supply chains and investments in Xinjiang run a “high risk” of violating US laws on forced labor. Other Biden Administration policies linked to health, climate policy and national


security with also impact global trade. On June 8, the Administration released its comprehensive Executive Order (E.O.) 14017 “America’s Supply Chains.” the voluminous 250-page document is the result of a 100-day effort by more than a dozen Federal Departments and Agencies and hundreds of stakeholders who were asked to consider how to make US supply chains more secure and resilient for national security, economic security, and technological leadership. While some industry groups are challenging the study, groups like the Center for


Strategic International Studies (CSIS) see great value in these efforts. “The Covid-19 pandemic has accelerated a reexamination of US supply chain


resiliency that began earlier, driven by China’s dominant position in critical sectors like rare earth minerals and its demonstrated willingness to use trade policy as a means of responding to criticism or furthering its foreign policy goals,” comments William Alan Reinsch, CSIS Senior Adviser and Scholl Chair in International Business. He notes that the 23 recommendations in the report represent “a return to what


used to be called industrial policy and might now best be described as innovation policy—a greater role for the government in promoting research in essential areas and, if necessary, promoting either onshore production or the development of secure supply chains based on relationships with trusted partners.”


Correction: Our sincere apologies to Gregory W. Tuthill who was misidentified in the sidebar article “Reefer containers’ red-hot technology add a cool factor to the cold chain” Page 18 of Issue 5 2021 FBJNA as CEO of SeaCube Containers. He, in fact, works as the COO of SeaCube Containers.


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