How ‘Chaos’ In The Shipping Industry Is Choking The Economy

Whidbey Island is a lovely place about 30 miles north of Seattle on the Puget Sound. Most days the tranquil sounds of rolling waves and chirping birds provide an escape from the hustle and bustle of the city. But these days, all is not so serene. Residents are complaining about the ruckus created by humongous container ships anchored off their shore.

“We’ve never seen them this close before,” a Whidbey Islander told a local news station. “We’re hearing the throbbing noise at night. … It’s a nuisance.” The noise has been so loud that residents have been complaining to the county sheriff’s office about it.

Whidbey Islanders are getting a front row seat to the growing U.S. trade deficit, which is hitting record highs. It’s fueled by a surge in demand for imports, mostly from East Asia. There’s so much cargo being shipped to the U.S. from Asia right now that the ports of Seattle and Tacoma are chock-full of container ships.

“We are seeing a historic surge of cargo volume coming into our ports,” says Tom Bellerud, the chief operations officer of The Northwest Seaport Alliance, which manages all cargo processing at the ports of Seattle and Tacoma. “The terminals are having a difficult time keeping up with processing all the cargo off these vessels fast enough.”

On both land and at sea, the entire supply chain is struggling to keep up. In the Pacific Northwest, it’s become such a clusterfest that the U.S. Coast Guard has been redirecting boats to anchor off the coast of Whidbey Island and other places they typically don’t park. Ship crews are having to wait days, even weeks, for the chance to dock at the ports and offload their precious goods.

It’s the same story up and down the West Coast. In San Francisco Bay, the traffic jam of container ships has gotten so bad that the U.S. Coast Guard has been asking ships not to enter the bay at all. Robert Blomerth, director of the USCG’s San Francisco Vessel Traffic Service, said last week that there were 16 container ships waiting in the open ocean outside the Golden Gate to get in and unload their cargo. He says it’s “completely abnormal.”

When we spoke to Gene Seroka, the head of the Port of Los Angeles, he said his port had 19 ships waiting to dock and they’re now waiting, on average, about five days to get in. In normal times, they don’t have to wait at all.

Lars Jensen, CEO of Vespucci Maritime, has spent 20 years studying the industry and he says what’s going on is unprecedented. “The container shipping industry is in a state of chaos that I don’t think it has ever been since it was invented,” he says.

The maiden voyage of the first container ship set sail from Newark, N.J., back in 1956. It may be hard to fathom just how big a deal this innovation was. It was just a big ship that carried containers, literally metal boxes. But these metal boxes enabled ships to carry dramatically more cargo, and, by standardizing shipping practices and using new machines to handle the boxes, shippers were able to slash costs and the time it takes to load, unload and transport that cargo.

Economists credit these metal boxes with increasing the efficiency of shipping so much that it stitched the modern global economy together more than anything else — more than all free-trade agreements put together.

Now economists are concerned that the plumbing provided by these miracle boxes and the vessels that transport them is clogged. It’s making it more difficult for stores to restock their shelves, manufacturers, carmakers and builders to get the parts they need, and farmers to export their products. It’s an important reason, analysts say, that we’re seeing consumer prices surge.

How did shipping get topsy-turvy?

In the early days of the pandemic, global trade hit an iceberg and sank into the abyss. The decline of maritime shipping was so dramatic that American scientists saw a once-in-a-lifetime opportunity to study what happened to whales in the absence of a constant deluge of vessels. The noise from the ships apparently stresses them out — kind of like they’re currently stressing out the residents of Whidbey Island.

Greater tranquility for whales in the first half of 2020 was the result of shipping companies canceling their trips and docking their ships. Then the economy rebounded, and American consumers unleashed a tidal wave of demand that swept through the shipping industry when they started shifting their spending patterns. Unable to spend money on going out, many started spending their money (and their stimulus checks) on manufactured goods — stuff that largely comes from China on container ships.

At first, it wasn’t the ships that were the problem; it was the containers. When the buying spree began, Chinese exporters struggled to get their hands on enough empty boxes, many of which were still stranded in the U.S. because of all the canceled trips at the beginning of the pandemic. More importantly, processing containers here has been taking longer because of all the disruptions and inefficiencies brought about by the pandemic. Containers have been piling up at dockyards, and trains and trucks have struggled to get them out fast enough.

“The pandemic has exacerbated longstanding problems with the nation’s supply chain, not just at the ports but in the warehouses, distribution centers, railroads, and other places that need to run smoothly in order for Longshore workers to move cargo off of the ships,” says Cameron Williams.

He’s an official at the International Longshore and Warehouse Union, which represents dock workers, primarily on the West Coast. Dock workers have been working through the pandemic to handle the increased cargo volume, he says, and at least 17 ILWU workers lost their lives to COVID-19. “We continue to work hard and break records month after month to clear the cargo as quickly as the supply chain allows,” Williams says.

It’s been all hands on deck to supply ravenous consumers and businesses with the stuff they want. The resulting traffic jams at West Coast ports means it takes longer to unload stuff, which then extends the time it takes for ships to get back across the Pacific to reload.

That congestion was already creating massive delays on both ends of the shipping supply chain, tying up large numbers of containers and ships and leading to growing backlogs and shortages. Then, in March 2021, the Ever Given, one of the largest container ships in the world, got stuck in the Suez Canal in Egypt. While the blockage didn’t directly affect the Asia-West Coast shipping corridor, it added to the global shortage of ships and containers by stranding even more of them out at sea.

As if all this weren’t enough, last month there was a COVID-19 outbreak at the Yantian International Container Terminal in China, which is normally one of the busiest ports in the world. The Chinese government implemented stringent measures to control the outbreak, and as a result, more than 40 container ships had to anchor and wait. “In terms of the amount of cargo, what’s going on in South China right now is an even larger disturbance than the Suez canal incident,” Jensen says.

The effects on the American economy

With so much shipping capacity bogged down, importers and exporters have been competing for scarce containers and vessels and bidding up the price of shipping. The cost of shipping a container from China/East Asia to the West Coast has tripled since 2019, according to the Freightos Baltic Index. Many big importers pay for shipping through annual contracts, which means they’ve been somewhat insulated from surging prices, but they are starting to feel the pain as they renegotiate contracts.

Rising shipping costs and delays are starving the economy of the stuff it needs and contributing to shortages and inflation. It’s not just consumers and retailers that are affected: American exporters are complaining that shipping companies are so desperate to get containers back to China quickly that they’re making the return trip across the Pacific without waiting to fill up containers with American-made products. That’s bad news for those exporters — and for America’s ballooning trade deficit.

As for when it’s going to get better, none of the people we spoke to believes it’ll be anytime soon. And it’s not even considered peak season for the shipping industry yet. That typically begins in August, when American stores start building their inventories for the back-to-school and holiday seasons. The residents of Whidbey Island may have to continue dealing with the nuisance of gigantic, noisy ships cluttering up the horizon for the foreseeable future.

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Source: How ‘Chaos’ In The Shipping Industry Is Choking The Economy : Planet Money : NPR

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References:

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Amazon’s New Eco-Friendly Boxes Can Be Turned Into Forts and Cat Condos

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An Amazon delivery might not be that exciting for you, but your cat is probably thrilled to be getting a new cardboard home. Amazon has made that sentiment official with new eco-friendly boxes that can be recycled into cat condos, forts and even a putt-putt golf windmill. It’s all part of the company’s “less packaging, more smiles” program aimed at reducing cardboard consumption.

Amazon noted that over the years, it has reduced packaging weight by 33 percent, eliminating the equivalent of about 1.5 billion boxes and reducing its carbon footprint. “Inventing and innovating in new types of packaging is one of the many actions we are taking as part of the climate pledge — our commitment to become net-zero carbon by 2040 — 10 years ahead of the Paris Agreement,” Amazon VP Kim Houchens told USA Today.

Related: Jeff Bezos Is Now Personally Worth More Than Nike, McDonald’s, Costco and Almost 50 Percent of the Dow

Despite the efforts, Amazon still shipped about 5 billion packages in 2018 out of 165 billion shipped in total in the US. Even though 92 percent of cardboard boxes are recycled, that’s still a lot of waste and forest destruction.

Related: Want to Rank Higher in Google and Amazon Search? This $29 Course Can Help.

Only certain orders will be delivered in the more environmentally friendly boxes, starting this week. If you get one, you can create your own Chateau Fluffy by scanning a QR code or heading to Amazon.com/ThisBox for detailed instructions.

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Marine: Innovation Abounds In Shipping

Not many industries can trace their roots to ancient Egypt, but history tells us it was the Pharaohs who oversaw the creation of some of the world’s first ships. Since then, the ocean-related shipping industry has grown into a massive multi-trillion-dollar global market, responsible for moving 90% of world trade. According to the American Association of Port Authorities, the shipping industry contributed $5.4 trillion to the U.S. economy in 2018.

While ships may still have the same function as they did back in 3000 BCE – bringing people and goods from one place to another over sea – they’ve undergone a massive evolution, says Tom Molenda, director of marine coatings at PPG. “It is an industry that’s been around for a long time,” he says. “But ships are getting larger and larger and more efficient.”

Molenda, who says he was drawn to the shipping industry because of its global reach, has been directly involved in a myriad of marine-related innovations over the years, including making ships more environmentally friendly and more fuel-efficient. With the need for environmental protection becoming more prevalent as well as other threats, such as cyber security potentially impacting the delivery of goods, the industry will only evolve further from here, he says.

State-of-the-art coatings 

Most people may not realize the role that paint has to play in the modernization of the shipping industry, but without the kinds of specialized coatings that PPG provides, the sector wouldn’t be nearly as efficient as it is today.

For instance, one constant frustration for shipping companies is the build up of barnacles – little crustaceans that live in the water – on a boat’s hull. These sea creatures not only slow ships down, but they also induce corrosion and can cause extensive damage to a ship’s exterior hull. A 2007 report found that barnacles cost the U.S. Navy $1 billion a year in damages and lost productivity.

Knowing the destructive power of barnacles, PPG developed what it calls ‘surface regeneration technology,’ which prevents them from sticking to the ship. PPG SIGMAGLIDE, a silicone-based product, is applied to the ship’s hull, which causes these organisms to slide off. “There are many application areas within a vessel and each has unique needs” says Molenda.

Marine Coatings play a role in the wider environment. The more efficiently a ship moves through the water, the less fuel it consumes, helping to reduce carbon emissions. PPG has developed a range of coatings under the PPG SIGMA SAILADVANCE brand that can help companies increase sailing speeds, while saving energy and reducing the ship’s environmental impact.

Investing in innovation 

Coming up with these types of coatings takes an enormous amount of scientific work, adds Molenda, but it also requires close collaboration with our customers. “Innovation starts with a deep understanding of your customers’ problems,” he says. “I can’t emphasize that strongly enough.”

While PPG closely watches developing regulation and global trends, it’s also working with customers to identify issues that they need solved. The company’s research and development team, which spends about $1 billion on new technology every two years, creates various coatings that eventually get tested and then implemented on its customers’ ships.

With everything from oil to clothing to other industrial and consumer items needing to be moved from point A to point B, the shipping industry is only going to grow further from here. PPG is already testing out new coatings and innovations to ensure its customers can continue moving their items quickly, efficiently and safely.

“There’s a very deep bench of technology and a lot of smart people we draw into this,” Molenda says. “We develop products to meet very specific customer needs.”

By: PPGView

Source: Marine: Innovation Abounds In Shipping

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