If you are looking for a product that illuminates the shift in manufacturing taking place in Asia as a result of the U.S.-China tariff war, Peter Sand, the chief shipping analyst for BIMCO, suggests looking at U.S. imports of Christmas tree lights.
“Cambodia is basically taking over in supplying the U.S. with Christmas tree lights,” he said. In the first 10 months of 2019, China shipped 113 million fewer sets of Christmas tree lights to the U.S. than it did the prior year — a 66.1% drop from the same 2018 period.
In the first 10 months of 2019, when compared to the same 2018 period, U.S. imports of Christmas lights from all countries were down only 4.3%, but imports from Cambodia have increased 223% and Asian countries other than China and Cambodia are up 100.7%.
“These are mind-boggling numbers,” said Sand.
The changes illustrated by Christmas lights are taking place on a much larger scale, he said in a recent article posted on the BIMCO website and during a webcasts sponsored by both BIMCO and the Journal of Commerce.
During the first nine months of 2019, while seaborne containerized imports from Asia to the U.S. were up 1%, they were down 7.3% from China but up 31.6% from Vietnam and up 32.8% from Cambodia.
“The continued, albeit modest, growth in U.S. imports from the whole of Asia reflects a reshuffling of exporting nations that has occurred in the Far East. This has manifested itself in two ways,” Sand said.
“First, the trade war and added tariffs on goods from China has speeded up the process — which had already begun — of some manufacturing moving away from China in favor of its neighbors with lower labor costs.
“Second, the trade war has led to products, still being produced in China, being transshipped through neighboring countries to change their country of origin and thereby avoid additional tariffs when they arrive in the U.S.,” Sand said.
However, the shift in manufacturing has not been a boon to the intra-Asia container trade, he said, pointing out that in the first three quarters of 2019, volumes were flat when compared to the same period in 2018. Neither have freight rates — both spot rates, as measured by the Shanghai Containerized Freight Index (CCFI), or contract rates, as measured by the China Containerized Freight Index (CCFI) — to the U.S. West or East coasts seen a positive effect.
“The boost that could have been expected from shifting manufacturing and transshipment has not come to the shipping industry, which instead is feeling the pressure from slowing overall exports from the region. This may be because transshipped volumes are primarily being transported by land from China into neighboring countries before being put on a ship,” he said.
Sand said there has not been the front-loading of shipments this year into the U.S. as there was in late 2018, which he noted led to higher freight volumes and higher freight rates.
He does not expect IMO 2020 — the agreement reached at the International Maritime Organization to require ships to use more expensive low-sulfur fuel or equip their vessels with scrubbers to remove sulfur oxides from engine exhaust — to drive changes in the container ship industry such as increased slow steaming or an increase in ship sizes.
Sand said the higher cost of cleaner fuels or scrubbers needs to be passed on by ocean carriers, but he also said their ability to do so will depend on the market conditions.
“Only in the cases of that being absolutely impossible, more slow steaming may come around,” he said.
While increasing the size of ships can lead to economies of scale by reducing the cost of moving each container, Sand noted that process has been going on more or less continuously on almost every trade around the world since 2012, when demand started to stagnate and ultra large container ships (ULCS) started to get delivered at a high pace into the Asia-Europe trade.
As ULCS got put into the Asia trade, the existing ships on that round “cascaded” onto other routes, for example from Asia to North America. In turn, ships in the Asia-U.S. trade cascaded into other routes.
Sand believes “it will be difficult to single out any effect from IMO 2020 on upscaling on various trades from what is constantly going on with the whole cascading thing.”
The problem for the container shipping industry, he noted, is that while larger ships can reduce the cost of carrying containers if a ship is full, carriers have struggled to fill up the very large ships and raise freight rates.
“I think the trend is to continue that we’re going to see bigger ships being fed into every trade, but I’m not seeing IMO 2020 pushing this further, unless we see absolutely no effect from the efforts of carriers to pass on the extra costs” related to IMO 2020.
Sand said 2020 “will bring not only the sulfur cap but also skewed exports caused by the Chinese New Year. Pushing out goods ahead of widespread factory closures may bring a boost in January before a slow, and possibly painful, February awaits carriers.”
Noble1
I’ll use part of the title in this article to make a suggestion :
“a light on shifting trade patterns”
What better to explain the effect a “Truck Driver Alliance” would have on this particular trade and more likely on the world ! It is a “light” that would shift the pattern concerning the way things are being done in its and other sectors and industries .
Granted life is pushing us to become more dependant upon one another . However, if for the time being we unwisely choose our dependencies then we’re likely to suffer due to our realities being determined by another’s unethical control .
In order to eliminate any potential ambiguity ,I’ll quote the meaning of the word “depend” right from the dictionary .
Depend
“be controlled or determined by.”
As we move forward change is inevitable .
Example : The internet has provided us with a tool , a means , that has drawn us closer . Social media allows us to communicate more rapidly among us and share information like lightening like speed . Email has greatly improved the time we can communicate with each other compared to snail mail .
These are tools within a tool that have greatly rendered us dependant up it and them . That dependency can be interpreted as a positive or a negative . Those tools can be used to improve the quality of one’s and another’s life and lives and it can also be used negatively and abusively to render one’s and or another’s life and lives miserable .
The point is this tool has rendered us dependant upon it and in doing so is drawing us closer to one another . Our dependency in this example is controlled . It’s determined by search engines , the reliability of network(s) ,websites , and internet provider(s) etc .
Our safety , our quality of life , our well being , and our freedom etc is greatly determined by what we “chose” to rely and depend upon . However, dependency comes at a great price : TRUST .
When we position ourselves in dependant positions we need to assure that we can “trust” the one and or one’s which we depend upon and those we have chosen to have some sort of control over us . Our well being is determined by those we choose to depend upon and trust .
Experience has taught us not to trust blindly or we may set ourselves up to be deceived .
Now if we use “business” and or “businesses ” upon which we depend upon and give them some sort of control over us which determines our well being , we must remind ourselves what their main goal is . A business’s main goal is to generate a profit and to survive . Clearly the “business” is putting its interests before anything and or anyone else .
That business can choose to remain private or go public . By going public and listing on an exchange is gives the business access to capital . They sell a portion of shares to the public and obtain capital in return . They also need to abide by certain regulations determined by the regulations of the exchange they are listed upon . Most will oblige businesses to open their books to the public . The public has access to their financial books via financial reports etc. .
By listing on an exchange a business also has access to “financings” which are suppose to be used for corporate needs and fund their projects . Shares can be created through thin air(like fiat currency) and distributed among the public for capital in return .
Most in some shape or form “depend” on markets and businesses within the financial game to provide them with a capital gain . The stock market has been created to give corporations access to capital , not enrich the general public . It’s a means to transfer wealth from one pocket to another . We as a society have come to “depend” on such a mechanism . We entrust/depend on businesses to look after our best interest by managing their and our affairs well . But there’s a huge conflict of interest there . A business’s first goal is to look after their best interest , not yours . No matter what they say such as : The client’s interest is our main goal . Shareholder best interest is our main goal , Consumer satisfaction is our main goal etc . Their main goal is to have consumers consume and increase their bottom lines , period .
Consumer health is not their main objective . Consumer consumption is . Gaining market share is . Lowering their costs and increasing their profits is .
Marketing is a form of trickery . Corporations “depend” on marketing to increase their sales . They need to cater to the consumer’s senses and render their product(s) desirable . Not useful , “desirable” .
We consumers largely depend on businesses to cater to our needs , our best interest .Ie; FOOD ! But how do they treat and what do they really put in that so called “food” ?
Besides what makes it taste good , smell good , look good , feel good, and the way they market it to us which “sounds” good , is the food we generally tend to consume good for our health ? The sugar content , the chemical content , the sodium content , the fat content etc. , is it partly responsible for aging us and weakening us ? We need to watch over whom we depend upon very carefully . And especially to be extra cautious upon who we choose to trust when it comes to information , and educating ourselves
Depending on someone or something doesn’t render them or it automatically “dependable” .
We need to ensure that the one’s we depend upon share common goals . A business’s goals are normally in common with its owner’s goal . Hence , Me, Myself , and I .
Therefore , to ensure that a “Business’s” goals and actions are in common with yours from an ethical perspective , would you not have to own it ? And then again , for your “business” to prosper would it not have to depend on “others” being ethical as well, at least to a certain point ? They need to pay you for your services and or products . And by depending on their good faith are we assured that they will do good on their word ?
We need to protect ourselves in this game of dependency until the energy that is drawing us closer together makes us realize that we have no choice but to become ethical among one another . That’s what becoming ” 1 ” is all about .
Due to the technological revolution the world is becoming smaller . Technology has surpassed our current behaviour . Our behavior among each other hasn’t evolved . We’re being pushed to change and evolve . Technology with great ease has been showing us for the last 20 years what is wrong with us . We’re either unethical or a victim of it ! History has been a fabulous teacher . And technology provides you with an ease to access it .
I’m certainly not suggesting that truck drivers can change the world ,at least not on their own , but they are extremely well positioned to have an enormous influence on its direction . And in doing so they would be improving the quality of their lives and the quality of the lives of many others .
This may come across as being a little philosophical . It’s simply a tiny window in my philosophy . For decades people have been taking a stand for fair , reasonable, and ethical treatment . Perhaps we now possess the tools to get us to that point much quicker than ever before .
Use the tools you have been provided with wisely . Currently in the trucking industry among many others there is a great imbalance . There’s too much Yin and not enough Yang . Now the trucking industry is getting slapped with an abundance of Yang .
In my humble opinion …………..