At The Prow

An ASM publication Editorial Director:

Sam Chambers sam@asiashippingmedia.com

Associate Editor:

Adis Adjin adis@asiashippingmedia.com

Correspondents:

Athens: Ionnis Nikolaou Bogota: Richard McColl Cairo: Camelia Ewiss Cape Town: Joe Cunliffe Dubai: Yousra Shaikh Genoa: Nicola Capuzzo Hong Kong: Alfred Romann London: Paul Collins New York: Suzanne Smith Oslo: Hans Thaulow San Francisco: Donal Scully Shanghai: Colin Quek Singapore: Grant Rowles Sydney: Ross White-Chinnery Taipei: David Green Tokyo: Masanori Kikuchi

Contributors: Nick Berriff, Andrew CraigBennett, Paul French, Chris Garman, Lars Jensen, Jeffrey Landsberg, Dagfinn Lunde, Mike Meade, Peter Sand, Neville Smith, Eytan Uliel

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Shipping and the mainstream press

It was not all that long ago that many newspapers in the Western press had dedicated shipping journalists. Now, aside from major hubs and business-orientated titles, such areas of shipping expertise are all too rare in the mainstream media. More’s the pity as the industry is a fascinating one to report on, and so vital to our everyday lives.

The loss of frontline shipping journos at the newsstand has coincided with a natural uptick in ignorant reporting on the topic. We’ve all, no doubt, seen any grounded ship spewing oil being referred to as a tanker on bombastic rolling news channels, despite the clear presence of, say, containers on deck.

Then, there’s the more nuanced stories, the ones that us in the trade press might have been covering for weeks or months, but which go global late on in the news cycle and, more often than not, come with all manner of sensationalist, off kilter headlines.

In terms of recent evidence of this media trend, witness the frenzied scaremongering among many tabloids and broadsheets who should know better about families risking missing out on their Christmas shopping this year with all sorts of suggestions that we’re heading for a gloomy empty-shelved December thanks to congested supply chains. It is poppycock, of course, but it sells newspapers. The Christmas-at-risk headlines seem to get earlier every year. Who wins from this fearmongering? The retailers, of course, and the shipping lines.

Where our peers in the mainstream do get it right however is coming in from an outsider’s perspective rather than always reporting from inside the shipping bubble. Moreover, those reporters who file stories for mainstream titles are less likely to be swayed by potentially annoying an advertiser, but perhaps that’s a column for another time. ●

“The Christmas-at-risk headlines seem to get earlier every year”

Sam Chambers Editor Maritime ceo

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The Covid economy

Officials hope the recently passed infrastructure bill will move the country ahead

In many ways despite the hard punch the American economy has taken with Covid-19 it has also appeared surprisingly resilient. However, recovery appears to be a little stop/start with July job growth not being repeated as robustly in August, perhaps due to the emergence of the more transmissible Delta variant. Leisure and hospitality are obviously flat due largely to the pandemic and consumer spending is not overly exciting either for many of the same reasons. In manufacturing supply chain issues remain a drag on manufacturing growth (one aspect being the seemingly widespread issue of truck driver shortages affecting the UK and EU, as well as the US). There is also some inflationary economy, though the Federal Reserve expects this to be only temporary. So, it seems a strong recovery in 2021 is unlikely and all hopes will be pinned on 2022. Looking at this situation Justin Wolfers, an economics professor at the University of Michigan, noted that, in America, “the virus is the economy”.

Still, on the bright(er) side wages have grown which will hopefully translate into improved consumer sentiment and spending, and interest rates remain low (due in large part to the Fed buying $120bn in government-backed bonds every month!). It actually seems that inflation, rather than Covid concerns by consumers, is the main drag on consumer spending in the States right now – spending was up just 0.3% in July over the previous month, a negligible gain. Some key spending sectors struggled that had an impact on manufacturing and imports - a decline in motor vehicle purchases for instance (partly due to the global shortage of semiconductors right now). And with consumer spending accounting for more than two-thirds of US economic activity spending slumps are particularly bad news in the country.

Exports showed some recovery in the last quarter, according to the US Commerce Department the trade gap fell 4.3% while imports slipped marginally at just a 0.2% monthon-month decline as exports picked up by 1.3%. Global trade arguments benefitted US farmers who have picked up some of the slack from China’s bans on Australian beef and super-high tariffs on Aussie wine, but neither of these may be long term gains if Beijing and Canberra ever make up and play nice again (of which there is not much hope in the immediate to short term).

And just because Trump is no longer in the White House does not mean there are not still a raft of outstanding disagreements on trade between Beijing and Washington DC. The US is still detaining imported solar panels from China it believes may have been produced wholly or in part by forced labour in Xinjiang. However, one hopeful development of the second half of 2021 between America and China should be the resumption of more calm trade talks. China has been rather on the Biden backburner since his rise to office, but US trade representative Katherine Tai said recently that the Biden administration is conducting a comprehensive review of US-China trade policy. ●

US Auto Sales by Alternative Fuel Type, 2020 Fuel Type % of Alternative sales

Diesel 45.4

Hybrid Electric battery (BEV) Plug-in Fuel Cell

Total

Source: US Commerce Department 31.5

18.1

4.9

0.1

100.0

Headwinds prevailing

There’s still plenty to worry about aside from omicron across the continent

Headwinds appear to be prevailing still in the European Union as the bloc recovers slowly from Covid-19 only to be hit by the omicron variant.

The recovery had been slightly faster than the bulk of analysts, or the bloc itself, believed through to the moment omicron was discovered. According to the EU’s own economists and statisticians the bloc’s economy is projected to keep expanding over the forecast horizon, achieving a growth rate of 5%, 4.3% and 2.5% in 2021, 2022 and 2023 respectively.

Across the bloc domestic demand appears to be the major driver of this expansion. Improvements in labour markets, job creation and a projected decline in personal savings should contribute to a sustained pace of consumer spending (though the alternative theory is that now many consumers are earning again they will save rather than spend to regroup their financial security). The implementation of the Recovery and Resilience Facility (RRF) does appear to be boosting private and public investment in most EU economies.

The major problem (aside from omicron) for the narrative of continued growth in the EU is sharply rising energy prices, particularly for natural gas, which are all now well above pre-pandemic levels. This problem is accentuated by logistics problems, especially a shortage of HGV drivers. Steep rises in fuel costs will inevitably weigh on consumption and investment while high winter fuel bills for consumers will also dampen consumer spending.

The traditionally bad jobs news in the EU looks slightly better - in the second quarter of 2021, the EU economy created approximately 1.5m new jobs, many workers exited job retention schemes and the unemployment rate decreased. However, total headcount employment in the EU was still 1% shy of its pre-pandemic level and we should beware of getting too excited about job creation if many are simply re-hires. Still, at 6.8%, the EU unemployment rate in August 2021 stood just above the rate recorded at the end of 2019.

The jobs growth data seems to indicate that the EU is keen to boost exports post-pandemic – the major centre of jobs growth in 2021 is in small- and medium-sized companies engaged primarily in exporting. The one slightly worrying element is the slower than expected recovery of German exporting. Given the importance within the bloc of Germany’s export economy this may prove to be a lag on the bloc’s overall exports recovery if it persists.

The global supply chain crisis and rising input prices means that, after several years of low inflation, there is now a pick-up in bloc-wide inflation that has exceeded analyst predictions. Annual inflation in the euro area rose from a negative -0.3% in the last quarter of 2020, to 2.8% in the third quarter of 2021. The October inflation rate was 4.1%, the highest since records began across the bloc in 1997. ●

Major Areas of New Job Starts, EU, Q2 2021

Sector % of over all employment Hotel & catering 10.5 Arts & entertainment 6.2

Admin & support services 6.1 Agriculture, forestry & fishing 5.7

Construction 5.7

Transport & logistics

Retail

Other 4.4

4.3

57.1

Total

Source: Eurostat 100