Cape Cod Lobsterman Eaten (and Spit Out) By Humpback Whale
A Cape Cod lobster diver is thanking his lucky stars to be alive after he was apparently eaten, and then spit out, by a large humpback whale. The story has...
Well 2016 was quite a year for international shipping; the new ultra large locks of Panama Canal opened, the expanded Suez Canal went into high gear, one of the biggest container shipping lines in the world went bankrupt and national elections around the world delivered a distinct message (Brexit, Philippines, USA, Italy, etc.) And not to forget the great ‘Technology (21st) Century’ marches on.
‘Container shipping, which moves 95% of all manufactured goods, is estimated by industry executives to be worth $1 Trillion a year. Traditionally controlled by sovereign-wealth funds and deep-pocketed individuals, it has been a fragmented industry over the past 30 years, with dozens of operators regularly undercutting each other on price.’ ‘While the bigger ships have caused friction among cargo owners, port operators and the shipping companies in recent years, most in the industry now accept that ports must be upgraded to accommodate them. The American Association of Port Authorities says close to $155 Billion will be invested by 2020 to expand U.S. ports to handled bigger vessels.’*
*Costas Paris WSJ Logistics Report (Jan 2, 2017)
The Canal Effect
Most assumed that the expansion of the Panama Canal would have significant impacts on Pacific East-West trade, with the west coast American ports losing to the east and gulf coast ports. Although still early in the cycle, the final trade data for American ports in 2016 may belay that assumption. While not a formal survey, this writer enquired of several US ports and came to the conclusion that final trade figures for 2016 will indicate that most American ports (West, Gulf & East coast) along with the Panama and Suez canals all saw healthy increases in ‘through tonnage’ container trade. In spite of losing tonnage to east and gulf coast ports, west coast ports still saw gains in 2016, ‘all boats rise with the tide?’ The increases occurred in the face of a very turbulent year in a historically turbulent container shipping business (much of which is self-induced). Does any growth in world population and world GDP (by sheer size and scale) drive trade to ever higher through tonnages? Will container trade continue to grow as long as world GDP remains positive (in any measurable amount)?
Shipping and Finance
The Hanjin Bankruptcy was no laughing matter, one of the world’s biggest shipping line failures in recent memory. Still, it was only one company and with all the overcapacity, consolidation has been expected. Does the failure of Hanjin, however, go deeper than just the container shipping business? I would remind the reader of the Lehman Brothers failure in 2008, which went far deeper than just the financial sector. The 21st century business world is very interconnected, whether the politicians want it or not. If we see more shipping failures before the industry can recover, what will be the effect on the key international banks that have been the source of loans for the building of Ultra Large ships? Is there future risk of some kind of mini ‘Lehman Brothers’ event?
Politics and Shipping
On Jan. 3, 2017, BIMCO came out with their shipping forecast and it is for lower growth in the coming years, thanks to overcapacity and national subsidies. ‘Government support for any industry including shipping – which is feeling the heat of global competition might seem like a good thing. But direct subsidies from governments in fact have a negative impact on the global shipping industry as they affect free trade.’ In the United States, the incoming President and his team are already beating the drum regarding import tariffs and lopsided competition with China. Good news for world trade?
Technology, Trade, the Future, an Apex?
Shipping Podcast, a great new podcast out of London, had Kate D Adamson on for the 35th podcast. Ms. Adamson is a ‘Blue Futurist’ (maritime) and ‘thought-leader in the maritime space’. As a crusty old sailor skeptical of ‘thought leaders and futurists’ (forgive me) I initially flinched but Ms. Adamson got my attention by the end of the podcast. Between the possibility of rising trade sanctions around the world, the maturing of China (a more ‘Internal-trade’ based nation) and 3D and 4D technologies, could the world see a reduction of trade via ships? Ms. Adamson says yes. ‘As technology accelerates the bureaucracies that regulate (i.e. IMO) are not growing in parallel’, she refers to a future inflexion point, ‘The bureaucratic singularity’. The point at which individual nations will begin making laws regarding things like cyber security to the exclusion of international bureaucracies like the IMO. The risk, of course, being ships on the ocean trades will be forced to deal with multiple, different ‘cyber security’ requirements for entering a nation’s ports. Good for the free flow of world trade?
She goes on to say that given the major changes coming in things like 3D & 4D technologies, where products will be manufactured off CAD programs made largely of things like plastic (or something similar), there will a shift from national manufacturing outsourcing to national manufacturing insourcing. Technology will allow products to be designed and manufactured locally. Much of today’s typical container cargo will simply disappear in the fullness of time. If so, then what are the long term debt implications for ports regarding the Billions presently being spent on port infrastructure improvements world-wide?
Is it possible we are actually witnessing the apex of world trade via ships? Perhaps. Whatever the case, it may be that the wisest of international maritime shipping companies and ports will pause and take care to consider the future of international marine transportation.
Join the 70,253 members that receive our newsletter.
Have a news tip? Let us know.