When culture goes woke, does shipping go broke? What happens when feelings no longer care about the facts?
 Disruption of supply chains has been the scourge of shipping for two years or more. Mainly, it has been caused by government's fearful reaction to a flu scare, combined with a political lunacy that leaves high court judges unable to tell a man from a woman if pressed to do so at US Supreme Court nomination hearings.
Then there is Russia's invasion of Ukraine and US President Joe Biden's demand for regime change. A demand made without regard to a pattern of Russian governance of authoritarian autocracy that has dominated for centuries. Short-lived moments of democracy were mere experimental blips in an unbroken run of dictatorship for 600 years. So it seems unreasonable to think that Russia will be ruled any other way in the short term - or for very long.
Thus, if we opt for regime change, it is necessary to have an idea of what the change will be and whether for the better or worse for all concerned.
Then there is President Biden's attempt to blame world's shipping admittedly soaring shipping costs on "alliances", which unbeknownst to him, profoundly differ from "conferences" of old that were justifiably condemned and abolished for price fixing. Alliances, which replaced them, were created under close regulatory supervision and are restricted to operational service agreements involving ship scheduling in which freight rate setting plays no part.
Granted, it can be argued that prices offered by one salesman differ little from another because they both face the same the costs and operational realities, but that would be true in any system one could devise. Yet there is still enough competitive wiggle room to give a break to favoured shipper and oblige newbie to pay more.
The cause of President Biden's concerns have been more his fault - or the fault of governments everywhere. While the supply chain disruption can be rooted to the Covid crisis, it was not the flu bug, but the panicked reaction to it that caused freight rates to skyrocket.
First, let us examine the way things were. Most every year, in shipping, there is a natural build up in traffic starting in May for back-to-school August sales, then comes a brief pause before the big build-up in October before Christmas.
This brings about another pause before a brief flare-up for Golden Week, Chinese New Year, which occasions massive factory output in China in late January or early February. After which begins the annual slack season till May or June.
For two years, this historic pattern has been disrupted by Covid. First, shippers panicked, fearing health authorities would close down seaports. This resulted in a mad rush to get everything through before expected lockdowns. While few if any materialised, they were constantly threatened, which prompted shippers to ship even more goods.
This unseasonal and rising demand for shipping propelled freight rates to stratospheric heights. Not only did a Christmas rush come early, its impact seemed never-ending.
As a secondary effect, inland municipal and state-wide lockdowns and curfews prevented the usual massive spending at bars and restaurants. This prompted a redirection of consumer spending from services to goods purchased through ecommerce portals. This, of course, encouraged more goods to clog already clogged supply chains, causing logjams at major ports with scores of ships at anchor awaiting berths.
Desperate shippers (those are customers of shipping as a opposed to providers of ships with whom they are often confused), who were contractually obliged to make deliveries on time, turned to costly air freight. But because passenger aircraft handle 50 per cent of air freight in their bellyholds, and passenger traffic was massively curtailed because of the scare, this sent air cargo rates soaring too.
Even the highly Beijing-subsidised China-Europe rail freight network looked like it was making money for the first time since it started in 2012 as shippers used any means to get their goods to market.
Wedded to these traditional shipping seasons and their expected volumes, the ports were incapable of coping with the increasing and what looked like permanently increased loads. This had already been a problem pre-Covid. But the Covid rush made the problem intolerable. Seventy ships, each averaging at 10,000 TEU, piled up at anchorages outside Los Angeles-Long Beach waiting for berths. Soon east coast ports with fewer handling facilities were suffering the same congestion.
We now add Russia and the Ukraine to the mix of worries, which will hopefully end in settlement. Britain, France and Turkey went to war against Russia in the 1850s when the Tsar would not give them assurances that he would not attack Turkey and set up naval bases in the Mediterranean, thus threatening the trade through the embryonic Suez Canal, the route to India. This was the time of the Great Game when Russia sought to supplant British India with a Russian Raj of their own.
To avoid the expense of having the Royal Navy treble its size in the Med, the Crimean War was fought to dissuade the Tsar from attacking Turkey, then known as the "sick man of Europe". The Crimea was part of Ukraine, a Russian duchy, which it had been since the 1780s. Because the Soviet Union saw fit to accord it that status of the Crimea was transferred Russian socialist republic to that of the Ukrainian socialist republic, with ultimate control of both remaining in Moscow where it had been before.
There doesn't seem to be much in the way of rational arguments to suggest that anything short of authoritarian autocracy is going to rule Russian any time soon. Nor does it seem possible that a new dictator will replace the devil we know and be better than the one we must deal with today.
Largely forgotten in the Ukrainian distraction, is the West's concurrent contretemps with China, and what role Russia might play as that drama continues to unfold.
All these factors impact on world shipping directly and should be the focus of the industry's most serious and considered assessment. |
