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Squalid posted:Do we have any real life examples of dumping being used to shut down rival industries and then increase prices? I’m curious how these disputes work in practice. If the result is the same as monopolistic behavior by private industry of course it should be constrained. OPEC increased oil production when gas was around $3 a gallon to kill the booming fracking industry in the US.
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Jul 11, 2018 15:48
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qkkl posted:OPEC increased oil production when gas was around $3 a gallon to kill the booming fracking industry in the US. yeah, it lead to a wave of gas company bankruptcies, but it also largely failed because it made gas cheap so everyone has ramped up converting poo poo to natural gas in northern america. it just basically meant all the investors in those companies lost their shirt, but they've kept pumping out gas.
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Jul 11, 2018 15:51
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In re: dumping, the word has a more specific meaning in the context of international trade than what has been said above by Lumpy. It mostly refers to companies that export goods at a price that is lower than the price in their country of origin. This sort of practice is the only kind that can be targeted by anti-dumping duties, according to WTO rules. This is interesting because it provides governments with extremely fine-tuned tools to counteract such practices, at the company level. Certain kinds of steel tubes, for example, are hit by a global 20,5% antidumping duty if they come from Russia, except if they are made by such-and-such company - in which case the duty is only 10,1% or 16,8%. So dumping is something that can be dealt with in accordance to WTO rules, without raising too much of a fuss, and antidumping duties are accepted across the board as a fair response to dumping. Wildly raising tariffs and flailing around like a madman though... that’s just not done, not when it’s taken decades of negotiations involving every country in the world to get them to the low level they are at right now. It’s funny to see big bumbling Trump effectively withdrawing the US from the global world order wrt trade.
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Jul 11, 2018 15:53
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luxury handset posted:i'm not sure about this - china makes a lot of low-skill goods that america can definitely still produce. it's not like injection molding or blast furnaces are some arcane secret or difficult to set up if necessary. like, cranking out a kajillion plastic cups isn't on the same level as something like shipbuilding Hey ijit. Where do you think most of the worlds shipbuilding happens?
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Jul 11, 2018 16:06
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The container lines have been in a bad way for a couple years. I'll do an effort post on this eventually. There could be big line failures and that could cause a while bunch of problems.
Bar Ran Dun fucked around with this message at 16:10 on Jul 11, 2018 |
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Jul 11, 2018 16:07
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BrandorKP posted:Hey ijit. Where do you think most of the worlds shipbuilding happens? i'm saying, the domestic shipbuilding industry in america has more of a claim to be propped up for national security reasons than the plastic bucket industry
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Jul 11, 2018 16:09
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luxury handset posted:i'm saying, the domestic shipbuilding industry in america has more of a claim to be propped up for national security reasons than the plastic bucket industry Outside of the navy, what domestic shipbuilding?
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Jul 11, 2018 16:11
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And there is already the Jones Act?
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Jul 11, 2018 16:13
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i dont know what you are trying to argue here except asserting your expertise? you are violently agreeing with me
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Jul 11, 2018 16:14
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luxury handset posted:i dont know what you are trying to argue here except asserting your expertise? you are violently agreeing with me Most shipbuilding happens in China and domestic shipbuilding is already dead except for military ships.
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Jul 11, 2018 16:14
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[quote="“qkkl”" post="“486006045”"] OPEC increased oil production when gas was around $3 a gallon to kill the booming fracking industry in the US. [/quote] Regardless of whether or not this was technically dumping, this example seems to illustrate how this kind of international behavior is different than monopolistic pricing in a single market. OPEC can temporarily crater prices at huge cost but can’t permanently kill the US fracking industry. As soon as prices rise again US fracking will ramp back up. Do we have cases where dumpers actually prevented this from happening?
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Jul 11, 2018 16:15
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Forgive my ignorance here, but what happens to the domestic price of goods that have a foreign tariff, like soybeans? All else being equal, a tariff on soybeans in China should mean fewer beans get sold, right? Wouldn't that increase the domestic supply of soybeans and drive down prices temporarily in the US? Again, I'm ignorant on the subject and looking for clarification of what happens to domestic goods prices that have a foreign tariff placed on them.
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Jul 11, 2018 16:16
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Dirk the Average posted:Forgive my ignorance here, but what happens to the domestic price of goods that have a foreign tariff, like soybeans? Yes, that's correct. Less get sold in China, so they're sitting in the US looking for a domestic buyer, increasing supply and decreasing prices.
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Jul 11, 2018 16:19
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evilweasel posted:Yes, that's correct. Less get sold in China, so they're sitting in the US looking for a domestic buyer, increasing supply and decreasing prices. Unless China buys more from untariffed countries which causes other importing counties then switch to US suppliers because their normal source is selling to China instead, but then of course.... Global economy is hard. Who knew?
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Jul 11, 2018 16:23
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Lumpy posted:Unless China buys more from untariffed countries which causes other importing counties then switch to US suppliers because their normal source is selling to China instead, but then of course.... Prices rise in those countries: Brazil's soybean prices are going up. But China's the biggest soybean market in the world. You're not gonna find new buyers quickly enough to save this year.
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Jul 11, 2018 16:24
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Lumpy posted:Unless China buys more from untariffed countries which causes other importing counties then switch to US suppliers because their normal source is selling to China instead, but then of course.... So for a perishable good, it would make sense for a single crop to be cheaper, and then to sort of return to the status quo, since farmers can't sit on the product too long or it will rot?
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Jul 11, 2018 16:25
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evilweasel posted:Most shipbuilding happens in China and domestic shipbuilding is already dead except for military ships. yeah the military ships is part of my argument which is "the domestic shipbuilding industry in america has more of a claim to be propped up for national security reasons than the plastic bucket industry". like the navy isn't mandating life jackets or boots be manufactured in the us. it takes a lot longer to spin up a new shipyard and regain that manufacturing knowledge than something like sink faucets or spoons brandor is trying to argue with me while agreeing with all of my points about some shipbuilding capacity being retained stateside for security purposes, leaving me in a state where i am confused as to which of my points he actually disagrees with Dirk the Average posted:Forgive my ignorance here, but what happens to the domestic price of goods that have a foreign tariff, like soybeans? some goods which can have output cut will have their output cut. stuff like widgets and doodads, things which can be created at any time or in this case, not created until the price of the doodad improves crops are more difficult because those crops are in the ground and they will need to be harvested regardless. this will drive down prices even more because some crop prices have been falling in recent years (like soybeans) farmers have been stockpiling from prior harvests waiting to see if prices will improve. so if exports are closed off (either due to tariff or global oversupply) then the only resolution is either some government price correction scheme (lmao) or increase in domestic consumption (try encouraging chuds to eat more soy. just try it)
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Jul 11, 2018 16:26
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evilweasel posted:Prices rise in those countries: Brazil's soybean prices are going up. But China's the biggest soybean market in the world. You're not gonna find new buyers quickly enough to save this year.  (Sorry, it wasn't a good one. Just riffing on the "So if, X, then Y, right? Well actually, maybe Z, and then..." that these discussions produce)
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Jul 11, 2018 16:26
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Dirk the Average posted:Forgive my ignorance here, but what happens to the domestic price of goods that have a foreign tariff, like soybeans? Yes. If China puts a tariff on soybeans imported from America, fewer beans are imported to China. This leaves more beans sitting around looking for a buyer in America, which causes prices to fall in America. (Conversely, prices will have risen in China.) This hurts American soybean farmers. They make less money.
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Jul 11, 2018 16:27
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Chimp_On_Stilts posted:
very specifically it hurts small and family farmers, who are perpetually a few bad years from insolvency. the giant ag firms have many more tools at their disposal to more easily endure hard times
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Jul 11, 2018 16:30
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luxury handset posted:very specifically it hurts small and family farmers, who are perpetually a few bad years from insolvency. the giant ag firms have many more tools at their disposal to more easily endure hard times Definitely, but even the big outfits will find it hard to survive long if there's a hard Chinese soy tariff for a long time; they take around 25% of the total US production. Also, there's not a huge amount of loveable small family farmers left in the US - the average size is 175ha. By comparison, the EU calls farms under 5ha 'small' and there's still a few million of those kicking around. Any US farms doing small and adorable in commodity arable (wheat, soy, cotton, maize) got run out a long time ago. However, this will hurt the Chinese too; it's not as if Brazil and Argentina can super-ramp production to fill the gap next growing season - the Chinese have an extraordinary meat production sector that's (not quite managing to) keeping up with increased demand. If the tariffs are short, it'll just mean US farmers get hosed and so do Chinese meat consumers - the people who will make money are in South America. The EU has introduced its own plan to import less soy, buy that's more of a funny joke.
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Jul 11, 2018 16:45
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luxury handset posted:brandor is trying to argue with me while agreeing with all of my points about some shipbuilding capacity being retained stateside for security purposes, leaving me in a state where i am confused as to which of my points he actually disagrees with Your dumb claim: "like, cranking out a kajillion plastic cups isn't on the same level as something like shipbuilding"
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Jul 11, 2018 16:45
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BrandorKP posted:Your dumb claim: yes. i do not think you read it properly. read it again, with the interpretation that it is easier to make plastic cups than a ship, and not harder to make plastic cups than a ship
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Jul 11, 2018 16:51
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I mean the racist idea that the Chinese cannot manufacture the complicated things and can only make the plastic widgets really shouldn't be part of a serious discussion.
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Jul 11, 2018 16:51
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BrandorKP posted:I mean the racist idea that the Chinese cannot manufacture the complicated things and can only make the plastic widgets really shouldn't be part of a serious discussion. Now you're just building racist strawmen.
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Jul 11, 2018 16:52
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BrandorKP posted:I mean the racist idea that the Chinese cannot manufacture the complicated things and can only make the plastic widgets really shouldn't be part of a serious discussion. Except nobody said that? "The US ensure some shipping (military or otherwise) remains in the US because it is is a high-skill and knowledge endeavor (unlike making plastic cups) and there are security reasons for not losing that ability." Does not say that China can't manufacture complicated things. The fact that they are a HUGE shipbuilder would clearly indicate that. This: Junior G-man posted:Now you're just building racist strawmen.
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Jul 11, 2018 16:55
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BrandorKP posted:I mean the racist idea that the Chinese cannot manufacture the complicated things and can only make the plastic widgets really shouldn't be part of a serious discussion. please dont call me a racist because you are inexplicably unable to read my post properly. i am not in any way saying that the chinese cannot manufacture ships. i have no idea where you are getting this idea from and i'm just going to ignore you now until you cool off Junior G-man posted:Also, there's not a huge amount of loveable small family farmers left in the US - the average size is 175ha. By comparison, the EU calls farms under 5ha 'small' and there's still a few million of those kicking around. Any US farms doing small and adorable in commodity arable (wheat, soy, cotton, maize) got run out a long time ago. american farms are generally much larger than european farms as a matter of historical happenstance. farmland was often handed out in 160 acre quarter sections, equivalent to a bit less than 65ha, which would be considered a 'small' farm, and is normal for a family owned farm. a quarter quarter section is 40 acres and that's sort of the colloquial cutoff for being considered a real farmer and not just a hobbyist. so there's a big mismatch between what is considered a 'small' farm in europe and the us. small here is just shorthand for independent, and not part of some large conglomerate you're right that there are fewer and fewer family farms as time goes on, because of market pressure and also just because farming sucks and nobody wants to do it as a full time vocation. but they still exist, and the big problem for trump is that they have outsized media visibility - americans love hearing about the vanishing family farm and whatever problems they may have Mr. Fall Down Terror fucked around with this message at 17:00 on Jul 11, 2018 |
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Jul 11, 2018 16:57
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Anyway, Trump's strategy versus China probably is too little too late in the sense that China simply isn't as depended on American trade as it was during the 1990s/2000s for growth. As for Europe, the EU has a more difficult time fighting a war (on multiple fronts) due to lack of political consensus, of course, the EU is also supposed to be made mostly of American allies. As for the service industry, on one had their are going to be facing higher prices, on the other hand, most jobs are completely dead-end and wages in first-tier Chinese cities are starting to creep up on them.
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Jul 11, 2018 17:08
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Junior G-man posted:However, this will hurt the Chinese too; it's not as if Brazil and Argentina can super-ramp production to fill the gap next growing season - the Chinese have an extraordinary meat production sector that's (not quite managing to) keeping up with increased demand. If the tariffs are short, it'll just mean US farmers get hosed and so do Chinese meat consumers - the people who will make money are in South America. This just means that more of the Amazon is eventually going to get razed to make more room for soy production there, right?
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Jul 11, 2018 17:24
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Pluskut Tukker posted:This just means that more of the Amazon is eventually going to get razed to make more room for soy production there, right? Yeah pretty much. But Trump doesn't believe that that's a bad thing anyway so everyone wins!
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Jul 11, 2018 17:31
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Junior G-man posted:Definitely, but even the big outfits will find it hard to survive long if there's a hard Chinese soy tariff for a long time; they take around 25% of the total US production. Also, there's not a huge amount of loveable small family farmers left in the US - the average size is 175ha. By comparison, the EU calls farms under 5ha 'small' and there's still a few million of those kicking around. Any US farms doing small and adorable in commodity arable (wheat, soy, cotton, maize) got run out a long time ago. The Chinese uses the soy bean to feed pigs because they eat more meat recently. So I think a soy bean tariff will make meat price go back up and make most Chinese eat less meat. I particularly like this front of the trade war because it pits 1 billion Chinese (or at least half of them who have been eating more meat) against the MAGA farmers.
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Jul 11, 2018 18:42
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tino posted:The Chinese uses the soy bean to feed pigs because they eat more meat recently. So I think a soy bean tariff will make meat price go back up and make most Chinese eat less meat. Chinese will be about as happy as American consumers to pay more for hamburgers. Also, the farmers and the Chinese consumers want the same thing; it'll be interesting to see whether the US team is more MAGA or more farmer. It'll play like poo poo in November though; any half-dumb Democrat in the heartland will run 'sad farmer' ads on a continuous loop.
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Jul 11, 2018 18:48
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Junior G-man posted:Now you're just building racist strawmen. luxury handset posted:i'm not sure about this - china makes a lot of low-skill goods that america can definitely still produce. it's not like injection molding or blast furnaces are some arcane secret or difficult to set up if necessary. like, cranking out a kajillion plastic cups isn't on the same level as something like shipbuilding This is implying it. He is implying the Chinese are good at "Cranking out kajillion plastic cups" and not good at something more complicated like shipbuilding which they demonstrably do way more of than we do. Additionally it is easy to relocate most very complicated manufacturing. They put the factory in cases and they ship it elsewhere. Both automotive and semiconductor factories get shipped around the world as examples. It's almost routine to ship factories for complicated and heavy industries industries around. There are goons in this forum who work at factories I've watched come off ships, shipped from other countries as relative costs change.
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Jul 11, 2018 18:56
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Junior G-man posted:Chinese will be about as happy as American consumers to pay more for hamburgers. definitely more MAGA, if trump was good at anything he would be pairing these tariffs with a strong farm bill and farm protections. instead of telling the small farmer to eat poo poo for america
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Jul 11, 2018 18:56
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Pluskut Tukker posted:This just means that more of the Amazon is eventually going to get razed to make more room for soy production there, right? In the short term not nessisarily. Most countries have some amount grain from several of the last years in storage. Because it's an agricultural commodity the weather can affect a given years harvest. Sometimes a given year the weather makes a bunch of lovely beans or corn nobody wants to buy. These get blended or graded in with better stuff when the demand goes up. Now my understanding anecdotally that more of Brazil's storage is not as good as the US's. I hear stories about open ground piles. But they'll have storage to make up for the demand spike, atleast for a while. One would have to model it to determine how long that would last.
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Jul 11, 2018 19:14
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BrandorKP posted:This is implying it. He is implying the Chinese are good at "Cranking out kajillion plastic cups" and not good at something more complicated like shipbuilding which they demonstrably do way more of than we do. now that i reread it i think he's saying the opposite: that we can rebuild the manufacturing base to make cheap crap easily enough but we can't rebuild a shipbuilding industry overnight
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Jul 11, 2018 19:17
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luxury handset posted:i have no idea where you are getting this idea from and i'm just going to ignore you now until you cool off I am misreading you. I was also spitting mad about what I thought you were implying. I have knock down that particular view (what i thought you were saying) way more than I'd like to.
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Jul 11, 2018 19:26
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All right, so, I'm at home now and I've got some time ahead of me, so there you go: International trade and tariffs, how do they work? International trade is, in a nutshell and excluding a huge bunch of exceptions, the exchange of goods for money across international borders. A seller sells goods to a buyer who is abroad (or more precisely, in a different customs territory), and the goods are exported out of their country of origin (most of the time) and imported into their country of destination. For various political and economic reasons, states have decided that imports should be monitored, controlled, subject to regulation, and most importantly, taxed through the use of customs duties. As such, the customs declaration was invented and made pretty much mandatory for all importations of goods by professionals. As time went on, the level of precision and detail surrounding these customs duties has increased, but the three main things you've got to declare when you import stuff into another country are: what your goods are, where they come from, and what their value is. With the development of international trade in the later part of the 20th century, it became necessary to devise a framework within which importers could answer these questions. Thus the Harmonized Commodity Description and Coding System was born, which assigns to each category of goods a 6-digit code. Every country in the world abides by this Harmonized System, although interpretations of what the categories mean can vary from country to country. Some customs territories, like the United States or the EU, have devised a more complex system that uses the HS as a basis, and then adds a few digits to make it more precise. In the US, it is called the Harmonized Tariff Schedule, and in Europe, it is called the Combined Nomenclature. Anyway. On the basis of these codes, a general tariff rate is decided by the authority in charge of setting the tariff rates - in Europe for instance, it is the European Commission. This rate applies to all goods that come from countries with which there is no trade agreement to reduce the tariff rate. Like, if I were to import to Europe from China (we don't have a trade agreement with China), I dunno, non-electrical cooking appliances containing an oven, that use gas fuel, and made of steel (that's heading 7321 11 10 in the Combined Nomenclature), I'd have to pay the base rate of duty, that is 2,7%. Since we don't have a trade agreement with the US either, that's what I'd pay if my cooking appliances came from the US as well. The EU has agreements with a bunch of countries in the world, mind you, and we unilaterally grant preferential rates of duties for most other (third-world and poor) countries, meaning that in many cases these rates are even lower than the base rate. Off the top of my head, the main countries we don't have agreements with are: Japan, the US, Russia, and, uh, that's basically it. Until Trump scuttled TAFTA, an EU-USA trade agreement to lower tariff rates was planned, but, well... What's the deal with aluminum and steel? It turns out that due to my line of work (my job is to help people find out what the customs nomenclature of their goods is), I'm pretty familiar with chapters 72 (iron and steel), 73 (articles of iron and steel) and 76 (aluminum and articles thereof). And looking at both the HTS and the CN, I find that they're pretty well balanced. In the EU, goods included in chapter 72 are mostly exempt from customs duties except for raw iron steel and alloys, chapter 73 rates are generally low, somewhere between 0% (a lot stuff) and 3,7% (pipe fittings and screws), with some stuff at 2,7% (many "other" manufactured goods). Aluminum is more expensive: aside from scrap, the rates hover around 6% (manufactured goods) and 7,5% (sheets, pipes, rods, wire, foil). In the US, it's a bit more complicated because I might be missing special economic measures that are appended to the HTS all the way in chapter 99, but in general, goods of chapter 72 are mostly exempt. Goods of chapter 73 seem to be mostly exempt except for pipe fittings, screws (whoa, 12,5% for certain kinds of screws, Chinese competition must be harsh), some kitchenware, and "other" manufactured goods of iron and steel (3,9% for the latter. "Other" categories are fairly large in scope, mind you). Aluminum is hard to assess, but the rates seem to be quite consistently lower than ours in general by 2 or 3 points, except when it comes to the "other" manufactured aluminum items category (6%). So what did Trump do? On March 8th, Trump signed a couple of proclamations adjusting the imports of steel and aluminum into the United States. What these do is a bit more subtle than just impose a 25% tariff on all of chapters 72 and 73, and a 10% tariff on chapter 76. Take paragraph (1) of the proclamation on steel tariffs. It mentions: quote:For the purposes of this proclamation, “steel articles” are defined at the Harmonized Tariff Schedule (HTS) 6‑digit level as: 7206.10 through 7216.50, 7216.99 through 7301.10, 7302.10, 7302.40 through 7302.90, and 7304.10 through 7306.90, including any subsequent revisions to these HTS classifications. Okay, what does that mean? It skips over primary forms of iron and steel (pig iron, ferroalloys, lumps, pellets, scrap, granules and powders). However, it includes iron, steel and stainless steel ingots, flat-rolled products, bars and rods, angles, shapes and sections (except for a couple subtypes), and wire. That's a huge hit for American manufacturers who depended on these goods that were previously not subject to any customs duties at all. That's chapter 72. In chapter 73, it includes only rails for railways, and tubes and pipes of iron and steel (including stainless steel). All the rest of manufactured items is unaffected. For some reason, the chapter 76 (aluminum) tariffs also include on top of the ingots, bars and sheets certain manufactured items, but only thos made of cast or forged aluminum. But that's it. These tariffs hit most of the world in late March, and then in June they were extended to Canada, Mexico, and the EU. The EU's retaliatory tariffs The EU was aghast at this gross disrespect of WTO practices and complained to the WTO, saying they'd impose retaliatory tariffs in order to gently caress up the sectors of the US economy that weren't already hosed up by Trump's own idiocy. The WTO shrugged, which basically was a greenlight. Since the European Commission is a bit more subtle than a bull in a China shop, they decided to target extremely specific CN codes for 10 and 25% additional tariffs. The whole list can be found in Commission Implementing Regulation (EU) 2018/886 (as an aside, I much rather prefer the terse language of EU Regulation to the flowery bullshit in Trump's proclamation, but that's the difference between being ruled by a bunch of faceless grey technocrats and being ruled by an orange nationalist piss baby king). These numbers won't mean poo poo by themselves, so basically all of the following goods were hit by a 25% additional rate: Sweet corn and beans, corn, rice, corn flakes and similar products, preserved corn, peanut butter, orange and cranberry juice, whisky, tobacco products, eye makeup, manicure preparations and other makeup powders, T-shirts (they already were at 12%!), denim jeans and jorts (also at 12%) and other kinds of trousers, cotton bedlinen, certain kinds of footwear for men with soles over 24 cm (that's specific lol), large sheets of iron, steel or stainless steel, iron bars and rods and wire, some iron/steel pipes and pipe fittings, structures and parts of structurs in steel and iron (that's huge), a bunch of manufactured stuff in iron, steel and aluminum, motorcycles, certain kinds of ships (yachts, boats for pleasure or sports), and playing cards (only up to 10%, I guess Juncker likes playing M:tG). And if that's not enough, there'll be a new round of tariffs in 2021, far harsher, and targeting much more stuff, including laundry machines and other similar appliances. So that's the technical side of a trade war. It's gritty, but so far limited in scale. We shall see what happens in the next few months, but I wouldn't be surprised if we found that Trump's tariffs hurt American businesses the most, and EU tariffs also hurt American businesses far more than European businesses. That's also the difference between being ruled by a bunch of faceless grey technocrats and being ruled by an orange nationalist piss baby king.
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Jul 11, 2018 19:57
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Great post. Thanks for shedding light on how this all works.
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Jul 12, 2018 00:16
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Found it, I wrote this a couple of years back as part of a larger paper (some of the lovely jargon is from collaborators): "In recent years there has been a restructuring of the competitive field among container lines. There has been an unprecedented amount of mergers, alliances, failures, and acquisitions of common carrier container lines. These events are the context that any discussion of container liner mergers should occur in. This serves especially to establish the scope of what is occurring in the industry. We have hypothesized that this current trend of competitive consolidation between shipping lines is occurring because of stresses caused by overcapacity and low freight rates. A short summary of the most important recent events follows below will follow below to help explain how we have reached the current state the industry finds itself in. Recent Events Affecting the Competitive Arena The G6 Alliance: In April of 2012 two major shipping vessel sharing alliances, the “Grand Alliance” and the “New World Alliance” joined together to form the G6. The lines involved were Hapag Lloyd, OOCL, NYK, APL (later bought by CMA CGM), HMM (later to become bank owned) and MOL (World Cargo News, 2011). The OCEAN Alliance: In April of 2017 CMA CGM, China Cosco, Evergreen, and OOCL will begin operating as a competing alliance, initially for a period of five years. (CMA-CGM Group, 2017). This can be seen as a move to compete with the efficiencies the G6 Alliance container lines are seeing from their cooperation. Hapag Lloyd and CSAV: In April of 2015 Hapag-Lloyd and CSAV signed a merger agreement. (Hapag-Lloyd AG, 2014). Leading up to the merger, CSAV was in severe financial distress and had been operating at a significant loss for multiple consecutive quarters. According to gCaptain, it was one of the least profitable container lines in operation (Wackett, 2014). Anecdotal personal sources at Hapag-Lloyd suggested that the line was seeking to become larger to achieve synergies in its operations, particularly in its reefer trade (Personal Communication, February 2017). COSCO and CSCL: The Chinese state owned lines CSCL and Cosco officially merged in 2016 (Turkey Sea News, 2016). While it was officially a merger on paper, CSCL was essentially being subsumed into COSCO. The carrier has operated mostly consistent with Cosco’s model with similar management, leadership, and staff. The Fall of Hanjin: The failure of Hanjin was a large shock to the industry. Prior to Hanjin’s failure the assumption was that it would be bailed out by South Korea, its creditors, or that a deal may be negotiated to the effect of a merger or sale to another line [JD1] (Lloyd’s List Maritime Intelligence, 2016). The failure of Hanjin proved to those in the international shipping community that believing in the notion of “too big to fail” is flawed. It proved that it is possible for a top ten container line to enter receivership with an abrupt total failure. Hapag Lloyd and UASC: Currently Hapag and UASC are in the process of merging to become the fifth largest carrier. This merger however was recently delayed until May 31, 2017. Following the merger the new Hapag Lloyd will continue to be the largest carrier in “THE Alliance” (Maritime Executive, 2017). CMA-CGM acquires NOL: In June of 2016 CMA CGM acquired NOL (a Singaporean line) that had previously acquired the APL brand (CMA-CGM Group, 2016). Hyundai Merchant Marine (HMM) becomes bank and creditor owned: In April of 2016 ownership of HMM and its fleet (including individual ship owners) was largely transferred to Korea Development Bank (KDB) and the other creditors of the line (World Maritime News, 2016). In contrast to the outright failure of Hanjin this is an example of financialization of a failing line. J-3 merger, NYK, MOSK, and K Lines: In July of 2017, the three Japanese owned container lines will be merging to form “J-3”. The new line will have a slightly smaller fleet than the combined Hapag-Lloyd / UASC, but will have the potential to grow larger as its orderbook is fulfilled by shipyards (Knowler, 2016). Maersk buys Hamburg Süd: In December of 2016 Maersk reached an agreement with Oetker Group to acquire Hamburg Süd. This is to be finalized in the second quarter of 2017. Maersk has openly stated its intentions to expand through acquisitions. The combined fleet will be the world’s largest at 714 vessels (Maersk Group, 2016). Zim Lines: Zim lines has been looking for a buyer for its international container shipping operations for several years. Zim Lines intends to shrink down to a local Mediterranean carrier (Paris, 2016). Zim has not yet been successful in finding a buyer. Industry stakeholders have observed that Zim Lines seems to be pulling out of West Coast markets and downsizing offices.[JD2] Under more normal market circumstances, the amount of carrier consolidating events and carrier failures would be part of a balancing loop that would eventually decrease the container ship overcapacity by lay-up and scraping leading to higher freight rates. This would in turn eventually lead to stronger carrier balance sheets. A casual loop model of these relationships was constructed. However, recent events have created political risks and a uncertain future. Exogenous factors that may strongly affect, in a unpredictable way, world trade and thus demand for container liner services could change the normal pattern. Possible futures from the National Intelligence Council, Global Trend 2030 Alternate Worlds models will be described and then used to analyze how these possible futures will affect future carrier consolidation as described by the casual loop model we have constructed." Since the above the trends have continued. Another new alliance formed THEA, "THE Alliance" and three further lines (K-Lines, NYK, and MOL, the Japanese lines) have had to merge to survive (if you see bright pink containers that's ONE). The TLDR point. poo poo ain't healthy. These types of acquisitions, alliances, mergers, failures, etc happen when balance sheets for the lines are hosed. Now a lot of these lines you can't get the actual financial information for. It's often just unavailable or obfuscated in a way to be useless or only usefull with other unavailable information. Most of the ships operated by the containers lines visibly look loaded to the layperson (with the exception of the line I think is trying to gently caress over the others) a lot of that is . But... can't hide your drafts from me, I mean they're painted right there on the side. Over capacity hasn't gotten better. Now think about what these ships carry. Inventory. "Just in Time" "Kanban" smart businesses these days try to hold as little inventory as possible (and doing so makes them more money, demonstrably.) So what inventory there is, is mostly in-transit. On these containerships, operated by lines many of which are in trouble...
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Jul 12, 2018 05:03
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