supply chain, Meta Intelligence

Economy-Watching, USA: Global Supply Chain Pressure Index: April 2023 Update

[from the Federal Reserve Bank of New York]

A new reading of the Global Supply Chain Pressure Index has been posted.

Estimates for March 2023

Global supply chain pressures decreased again in March, falling from 0.28 to 1.06 standard deviations below the index’s historical average.
There were significant downward contributions by many of the factors, with the largest negative contributions from European Area delivery times, European Area backlogs, and Taiwanese purchases.
The GSCPI’s recent movements suggest that global supply chain conditions have largely normalized after experiencing temporary setbacks around the turn of the year.

The GSCPI compiles more than two dozen metrics across seven economies—data on global transportation costs and regional manufacturing conditions—to track shifts in supply chain pressures from 1997 to the present.

The GSCPI is updated regularly at 10 AM ET on the fourth business day of each month.

The GSCPI is a product of the Federal Reserve Bank of New York’s Applied Macroeconomics and Econometrics Center.

View the index.

Facing the Global South: Building a New International System by Yang Ping

“If you raise [the development of the BRI] to the strategic level, there are countries where … you will have to lose money and there are countries where you will be free to make money.”

by Thomas des Garets Geddes, Sinification

Dear Everyone,

How to respond to the growing political divide between China and the West marked by partial decoupling, security alliances, and the risk of sanctions, amongst other things, continues to be a major topic of discussion among China’s intellectual elite. As already evidenced in previous editions of this newsletter, opinions vary considerably. Those presented here so far have ranged from Da Wei (达巍) stressing the importance of preserving if not strengthening ties with the West and Shen Wei (沈伟) arguing in favor of reforming the WTO and building up a network of free trade agreements to Ye Hailin (叶海林) emphasizing the need for China to demonstrate its military might to demobilize U.S. allies and Lu Feng (路风) calling for self-reliance and greater assertiveness in the field of tech. A certain amount of overlap certainly exists among these perspectives but the differences are nonetheless striking.

Today’s edition of Sinification looks at a speech made last month by Yang Ping (杨平), head and editor-in-chief of the highly regarded Beijing Cultural Review (文化纵横, hereafter BCR). Yang is also director of the Longway Foundation (修远基金会) which publishes BCR. The foundation describes its publication as “the most influential magazine of intellectual thought and commentary in China” and sees itself as having a key role in helping shape the direction of intellectual debates in China (“议题的设置就是意识形态斗争成功的一半”). Indeed, BCR often republishes old articles at key junctures as so often highlighted by David Ownby’s wonderful Reading the China Dream.

The following are excerpts from an edited transcript of a speech by Yang made at an event hosted by Renmin University’s Chongyang Institute for Financial Studies, which was attended by China’s Vice-minister of foreign affairs Xie Feng (谢锋). In his speech, Yang advocates building a new international system led by countries in the Global South (which, of course, includes China) rather than the West. His ideas are not particularly novel but are nevertheless noteworthy in that they represent yet another viewpoint in the ongoing debate over how China should respond to the increasing tensions that characterize its relations with the U.S. and other Western countries. Next week, I will be sharing a somewhat longer piece that proposes a way of protecting China from the growing threat of Western sanctions.

Yang’s speech in a nutshell:

“Capitalist politics” are no longer in line with “capitalist economics.” The former now undermines globalization, while the latter supports it.
Sanctions, export controls, friend-shoring and alliance-building are damaging the world economy and further alienating China from the current U.S.-led international order.
China must respond to this growing trend by building a “new type of international system” with other countries in the Global South.
BRI projects should be increasingly focused on achieving this goal and thus allow more room for loss-making endeavors.

Capitalist politics ≠ Capitalist economics

“Since 2022 and the Russo-Ukrainian conflict, our main focus and topic of discussion has been China’s construction of a new type of international system.

“The most important feature of today’s world is the beginning of a separation between capitalist politics and capitalist economics. The capitalist political order and the capitalist economic order do not support each other [any longer].

“We have witnessed two typical manifestations of the separation of politics and the economy and the impact of politics on the economy:

The first is the conflict between Russia and Ukraine. The sanctions imposed on Russia by the United States and the West have reached unthinkable, abominable [令人发指] and unimaginable proportions. Under established international rules, it was understood that such sanctions could not possibly occur, but now they have. These include the fracturing of the financial system, the expropriation and seizure of Russian private assets and the freezing of Russian foreign exchange reserves. These are all abominable and unimaginable forms of confrontation. At the same time, the Russo-Ukrainian conflict has led to serious disruptions in global food and energy systems and supply chains, with massive food ‘shortages’ and soaring food prices, particularly in developing countries. Sanctions and political repression [政治打压] have severely disrupted the [world’s] economic order.

The second is the conflict between the U.S. and China. Since the Trump era, the U.S. has been engaged in a trade war against China, mainly by raising tariffs. Basically, this was simply about balancing trade [with China] and used mainly economic means. But under Biden, it [has become] a war that mixes politics with economics. Biden’s strategy towards China can basically be summed up in just a few words: one, friend-shoring, [i.e.] only allowing friendly countries into [parts of] its supply chains; two, alliance politics, [i.e.] continuously forging an alliance system involving NATO, the European Union, Japan, AUKUS and the four Asia-Pacific countries [I assume he is referring to South Korea, Japan, New Zealand and Australia taking part for the first time in a NATO summit last year] and constantly opposing China [不断应对中国]; three, its so-called ‘precision strikes’, [i.e.] its radical crackdown on China’s high tech [industry], especially our chip industry.”

China is being pushed out of the U.S.-led international system

“The information I have seen so far is that the number of Chinese companies included in the U.S.’s ‘entity list’ has risen from 132 under Trump to over 530 now. The scope of such point-to-point [点对点] precision strikes is constantly expanding. With such a political impact on the economy, we can feel the [world’s] economic order being disrupted across the board. The world is moving inexorably in the direction of decoupling. The phenomenon of politics affecting the economy and the capitalist political order no longer upholding the capitalist economic order are extremely striking.

“In such a context, the challenges now facing China are extremely serious and varied. We have the pressures of dealing both with containment in the Indo-Pacific and with the U.S.-led politics of alliances across the world. More importantly and fundamentally China faces the strategic task of building a new type of international system [新型国际体系] … The existing Western-dominated international system used to be one in which we tried hard to blend [so as] to become one with it. During this process, we [sought to] absorb the West’s advanced technologies and management [practices] and thus complete our mission of industriali s ation and modernization.

“But once you enter the existing international system, he [who is already inside] does not want to play with you, and even wants to drive you back out. He wants to divide both supply chains and the economic system into two parts [搞成两套] and desperately wants to contain and suppress you. This is not something that can be determined by your own subjective preferences. He has made up his mind: you have already become his ‘fated opponent’ [命定的对手]. He has to suppress you and drive you out of the existing system.”

Building a new international system with the Global South

“It is at this point that China is faced with the task of constructing a new type of international system that is not dominated by the West. In today’s so-called strategic quadrangle consisting of the U.S., Europe, Russia and China, how to construct such an international system appears particularly difficult [逼庂 literally means ‘narrow’ or ‘cramped’ rather than ‘difficult’].

“But if we look a little further south, we will find a vast number of developing countries, the Third World and the countries of the global South. They should be our strategy’s depth [我们的战略纵深]. That is to say, [we should] build a new type of international relations and a new type of international system that has strategic depth and in which China and the countries of the global South are jointly integrated. [This] is, in my view, an important strategic task for China’s international relations in the coming decades.”

BRI projects: Strategy trumps profitability

“For China today, especially for businesses and governments at all levels [within China] that are currently working hard to develop BRI trade, there is a very important point to which they should be alerted or reminded about: the development of the BRI has to go beyond mere business, beyond the general export of [China’s excess] production capacity, beyond the partial thinking of industry and the partial thinking at the regional level, or the simple economic way of thinking of business. The development of the BRI should be considered at the strategic level. That is, it should be included into China’s strategy when thinking about Africa, South America, Southeast Asia and Central Asia.

“If you raise [the development of the BRI] to the strategic level, there are countries where you won’t be able to make money and will have to lose money, and there are countries where you will be free to make money. You have to unite the two within your organic strategy.

“The strategic task of building a new type of international system is, in my view, a strategic proposition that Chinese think tanks and research institutes should pay very close attention to with regards to international relations.

“Time is limited today. I just wanted to make a start here. I hope to receive your corrections and criticisms. Thank you!”

[Subscribe to Sinification]

The recessive importance of the Global South was previously explored by Richard and his partner Larry, with input from Supratik Bose, many decades ago as shown here.

Webinar: Creating Differentiation in an Increasingly Competitive Logistics Market

[from FreightWaves]

You can’t control what you can’t see. The market is feverishly growing as more 3PLs see visibility as a strategic advantage. Given the communications and compliance blind spots in a supply chain where double loading and double brokering have become more common and 3PLs are turning to unfamiliar carriers in a search for capacity, 3PLs with superior technology can separate themselves from the pack.

Join FreightWaves as they partner with Overhaul for a live webinar on Thursday, August 4 at 11 AM ET (45 minutes), where they will discuss how you can win in the current market not just by being reliable—but by being transparent and proving the integrity and security of the products you’ve been trusted to move.

Featured speakers will include:
• Frankie Mossman, Chief Customer Officer, Overhaul
• Sara Lieser, Senior Vice President of Partnerships, Overhaul

The Early Universe and the Future of Humanity/Xi Risks Losing the Middle Class

[from The Institute of Art and Ideas]

The Life and Philosophy of Martin Rees

An Interview with Martin Rees

Astronomer Royal and best-selling science author, Martin Rees pioneering early work led to evidence to contradict the Steady State theory of the universe and confirm the Big Bang. His influence then spread to the wider public—knighted in 1992, elevated to Baron in 2005, then giving the Reith Lectures in 2010. Most recently his attention has turned from the early universe to the future of humanity. In this interview, Lord Rees discusses the ideas and experiences which led to such an illustrious career.

Xi Risks Losing the Middle Class

The zero-COVID strategy has run its course

Kerry Brown | Professor of Chinese Studies and Director of Lau China Institute, King’s College London. He is the co-editor of the Journal of Current Chinese Affairs, and author of Xi: A Study in Power.

China is continuing with its tough zero-COVID policy. But the cracks in the economy and a discontent middle class mean that Xi’s Imperial-like governing style is under challenge, writes Kerry Brown.

China’s zero-COVID strategy operates in Chinese domestic politics a bit like Brexit does in the UK. Despite complaints from business networks and broader society about the negative impact on economic growth and citizens’ freedoms, it’s a policy commitment the government is sticking to no matter what.

Of course, no one voted for the draconian lockdowns implemented across China. And, unlike Brexit, the lockdowns are very much in line with expert advice in the country, rather than running against it. The Chinese Centre for Disease Control and Prevention (CCDC), the main governmental body advising the government over crisis response in this area, said in a weekly update last November that without comprehensive restraints on people’s movement and quarantines on anyone testing positive for the virus, the national health system would soon be overwhelmed with cases, and find itself in the same bind as those in the US or Europe did.

That the words of the experts have been taken so much in earnest is striking for a regime that previously hasn’t been shy to dismiss them. The Xi leadership may be confident in the way it speaks to the outside world, but it seems that it has the same profound wariness in the robustness of the country’s public health as everywhere else. Things have not been helped by clinical trials showing the Chinese vaccines – the only ones accepted in China – are not as effective as foreign ones where the length of protection is in question). On top of this, vaccine take-up by the elderly, the most vulnerable group, has been poor. It is easy to see therefore why the central government might be very cautious. What is harder to understand, however, is why the cautiousness has bordered on obsessiveness.

The Xi way of governing is increasingly almost imperial in style, with broad, high-level policy announcements made in Beijing, sometimes of almost Delphic succinctness.

One scenario is simply about the structures of decision-making in China. This was an issue right from the moment the variant started to appear in late 2019, and local officials in Wuhan stood accused of trying to hush the issue up, delaying reporting to the central authorities till things had already gone on too long. As a result of this, in February 2020 key officials in the city were sacked. But this is unlikely to change the fact that provincial officials are very risk averse under Xi, and that any central direction to manage the pandemic will be interpreted in the purest terms and executed to the letter.

This explains the completeness of the Xian government’s virtual incarceration of its 8 million population after just a few COVID cases at the end of 2021, the first of the more recent lockdowns. It also explains why the traditionally more free-thinking municipal authority of Shanghai and its similarly liberal approach was fiercely knocked back by Beijing last February, to make an example for any other provinces thinking of going their own way. The absolute prohibition on people moving from their homes there, in one of the most dynamic and lively cities of modern China, was perfect proof that if the government could bring about this situation there, it could do it anywhere.

This case study also reveals some important things about the Xi way of governing. It is increasingly almost imperial in style, with broad, high-level policy announcements made in Beijing, sometimes of almost Delphic succinctness, which are then handed down to various levels of government to do as they will. Exactly how and when the discussion amongst Xi and his Politburo colleagues on the best response to COVID happened is unclear. In a world where almost every political system seems to leak incessantly, the Chinese one is unique in maintaining its opacity and secretiveness – no mean achievement in the social media era.

The Communist Party is very aware of how relatively small incidents can mount up and then generate overwhelming force. It itself coined the Chinese phrase ‘a single spark can start a prairie fire.’

Rumors of clashes between Xi and his premier Li Keqiang on the effectiveness of the current response remain just that – rumors, with precious little hard evidence to back them up. Who in the current imperial system might dare to speak from the ranks and say that policy must change is unclear. Scientists should deal in hard facts – but we all know that science is susceptible to politicization. Experts in China have to offer their expertise in a highly political context. A declaration that the current approach is not fit for purpose can easily be reinterpreted as an attempt to launch an indirect attack on the core leader. With an important Congress coming up later this year, at which Xi is expected to be appointed for another five years in power, sensitivities are even more intense than normal. It is little wonder that the COVID strategy status quo settled on last year has not shifted.

Things, however, may well change, and change quickly. China is moving into tricky economic territory. The impact of the pandemic on global supply chains, along with the various stresses domestically on the housing market, and productivity, have shrunk expectations for growth. A predicted 6% in the earlier part of the year now looks overly ambitious. There is a real possibility China might experience a recession. At a moment like this, the government, which after all operates as a constant crisis and risk management entity, might do what it does best and prompt rapid, and dramatic, changes.

The handling of COVID-19 might look like further proof that Chinese politics under Xi is repressive and zero-sum. But even in an autocratic state like the current People’s Republic, the pandemic will not leave politics unchanged.

This doesn’t mean that China’s COVID-19 bind gets any easier. Like the country’s serious demographic challenges, with a rapidly aging population, the only thing the government will be picking an argument with is reality as it proceeds into the future. As with Europe and the US, being more liberal about facing COVID-19 will involve accepting some of the harsh consequences – rising fatalities, particularly for the elderly and vulnerable, and health systems put under enormous stress. In such a huge, complex country, and of enormous geopolitically importance, a misstep could easily lead to huge and unwanted consequences, generating discontent and triggering mass protests in a way reminiscent of 1989. The Communist Party is very aware of how relatively small incidents can mount up and then generate overwhelming force. It itself coined the Chinese phrase ‘a single spark can start a prairie fire.’ One such spark – the introduction of Marxism into China in the 1910s – led to its gaining of power three decades later.

The handling of COVID-19 might look like further proof that Chinese politics under Xi is repressive and zero-sum. But I suspect that even in an autocratic state like the current People’s Republic, the pandemic will not leave politics unchanged. In particular, the middle classes in cities like Shanghai have had their patience tested in recent months. This is the key group for Xi, the heart of his new innovative, more self-dependent, higher-quality service sector workers in an urbanized economy. Their support remains crucial if Xi is able to steer China towards the moment when it hopes it will become the world’s largest economy. Policies to try to placate them by addressing imbalances, critical environmental issues and improving public health are likely to only increase. Delivery however will be key.

Faced with a potentially life-threatening infectious disease, the Party can throw out injunctions and claim it has been the victim of bad luck. But an ailing economy and no clear signs of the government knowing how to manage this will prove a toxic mixture for it. Xi and his third term in office will be all about delivery. The question is whether, even with the formidable suite of powers he has, he can do this. Governing China has always been the ultimate political challenge. COVID-19 has made that even harder.

Global Supply Chain Pressure Index: July 2022 Update

[from the Federal Reserve Bank of New York, Applied Macroeconomics and Econometrics Center]

A new reading of the Global Supply Chain Pressure Index has been posted.

The GSCPI is updated regularly at 10:00am ET on the fourth business day of each month.

Estimates for June 2022

Global supply chain pressures declined in June, continuing the decrease we observed for May.
The June decline was mostly due to a large decrease in Chinese supply delivery times.
The moves in the GSCPI over the past three months suggest that although global supply chain pressures have been decreasing, they remain at historically high levels.

The GSCPI is a product of the Federal Reserve Bank of New York’s Applied Macroeconomics and Econometrics Center.

View the Index.

Russia-Watching: Economic Dysfunctionalities

[from the Russian Analytical Digest]

This issue deals with dysfunctionalities in the Russian economy. The first three contributions look at the direct impact of sanctions. Ilya Matveev provides an overview, while Andrei Yakovlev compares the government’s anti-sanctions measures to its reaction to the economic impact of the COVID-19 pandemic. Janis Kluge offers a more detailed picture of the short- and long-term effects of the unfolding sanction regime. Michael Rochlitz then goes on to explain the lack of strategic planning in the country’s economic policy. Finally, Olga Masyutina and Ekaterina Paustyan provide a case study of inefficient governance mechanisms looking at waste management.

Read the full issue [archived PDF].

Analyses

Sanctions against Russia: No Blitzkrieg, but a Devastating Effect Nonetheless

by Ilya Matveev

In response to the Russian invasion of Ukraine, over 40 countries have introduced sanctions against Russia. The new restrictions concern finance, trade, logistics, and personal sanctions against businessmen and officials. In addition, more than 1,000 companies have ceased or limited their activities in Russia. In this article, Ilya Matveev argues that the sanctions, despite their unprecedented scale, have not led to the collapse of the Russian economy, yet their effect is dramatic, multi-faceted, and will increase over time.

Read the full issue [archived PDF].

Fighting the Pandemic and Fighting Sanctions: Can the Russian Economy Now Benefit from Its Experience with Anti-Crisis Measures?

by Andrei Yakovlev

Faced with tough international sanctions in reaction to its war against Ukraine, the Russian government has resorted to measures developed during the COVID-19 pandemic in order to stabilize the economy. This short analysis discusses the rationale behind this approach and demonstrates its limits.

Read the full issue [archived PDF].

Russia’s Economy under Sanctions: Early Impact and Long-Term Outlook

by Janis Kluge

Four months after a coalition of Western states imposed unprecedented sanctions on Russia, the Russian economy seems to be holding up better than expected. The Central Bank has managed to stabilize the country’s financial system and Russian officials are trying to project optimism about the future. However, this optimism is likely to be short-lived. The sanctions’ effects are only just beginning to unfold: supply-chain problems are intensifying and demand is falling quickly. In the longer run, Russia’s economy will become more primitive as it partially decouples from international trade. To avoid social tensions, the government will intervene to support Russian businesses, leading to more protectionism and a larger state footprint in the economy.

Read the full issue [archived PDF].

Why Russia Is Lacking an Economic Strategy for the Future

by Michael Rochlitz

Even before the economic crisis caused by Russia’s full-scale attack against Ukraine and the ensuing sanctions, the Russian economy was plagued by a number of growing problems. As a result, Russia’s economy has hardly grown for almost a decade, with an average annual growth rate of just 0.5% between 2013 and 2021. However, the Russian government does not have a strategy for addressing the fundamental economic challenges that are looming just over the horizon. There also seem to be no public debates about these challenges, whether in the policy circles around the government or among the wider public.

Read the full issue [archived PDF].

The Political Economy of Waste Management in Russia

by Olga Masyutina and Ekaterina Paustyan

The problem of household waste is one of the numerous environmental challenges facing Russia today. The 2019 nation-wide waste management reform was designed to tackle this problem by promoting recycling. However, the reform is stalling, due in large part to the nature of state-business relations in Russia. The lack of transparency in the public procurement process and the importance of personal connections between businesses and the federal and regional authorities undermine the implementation of the reform and produce suboptimal outcomes in the fight against waste.

Read the full issue [archived PDF].

WANG Huiyao: To Save Global Trade, Start Small

[from the Center for China and Globalization]

by WANG Huiyao (王辉耀), Founder of the Center for China and Globalization

The global economy is being rocked by war, sanctions and spiraling commodity prices—not to mention the ongoing strain of the pandemic, geopolitical tensions and climate change. These compounding risks present a serious challenge to the system of open trade that the World Trade Organization was designed to uphold. But it also offers a chance for the beleaguered organization, which is holding its first ministerial conference since 2017, to prove its continuing relevance.

The WTO has traditionally focused on combating protectionism—measures designed to insulate producers from international competition. Now, though, the biggest threats to free trade come from policies meant to safeguard national security and protect citizens from risks, such as those related to health, the environment or digital spaces.

Former WTO Director-General Pascal Lamy has called this growing use of export controls, cybersecurity laws, investment blacklists, reshoring incentives and the like “precautionism.” It’s been on the rise since the start of the pandemic, when many countries moved to restrict exports of medical supplies and other essentials. COVID-19 has also raised concerns about the vulnerability of supply chains, particularly those dependent on geopolitical rivals.

The world’s two biggest trading nations, the United States and China, have both engaged in precautionism. The U.S. is actively pursuing a policy of “friend-shoring”—shifting trade flows from potentially hostile countries to friendlier ones. China’s “dual circulation” strategy aims in part to reduce dependence on foreign imports, especially technology, while its government has long imposed limits on data flows in and out of the country.

With Russia’s invasion of Ukraine, the momentum toward friend-shoring has grown. Meanwhile, food shortages and surging prices have triggered another round of precautionary measures: Since the war began, 63 countries have imposed a more than 100 export restrictions on fertilizer and foodstuffs.

While the impulse driving such policies is understandable, the trend could cause great harm if allowed to run unchecked. It will increase inflation and depress global growth, especially if it involves costly redeployment of supply chains away from efficient producers such as China. A recent WTO study estimated that decoupling the global economy into “Western” and “Eastern” blocs would wipe out nearly 5% in output, the equivalent of $4 trillion.

As a recent study by the International Monetary Fund points out, the way to make global value chains more resilient is to diversify, not dismantle them. Turning away from open trade will only make states more vulnerable to economic shocks such as war, disease or crop failures.

The WTO is an obvious vehicle to rally collective action on these issues. However, like other global institutions, it has been weakened by years of deadlock. At this week’s meeting, countries should start to build positive momentum with some small but symbolically significant breakthroughs to show the WTO can still mobilize joint action.

Given current threats to food security, at the very least members should agree not to restrict exports of foodstuffs purchased for the World Food Programme. A step further would be a joint statement calling on members to keep trade in food and agricultural products open and avoid imposing unjustified export restrictions. There should also be closer coordination to smooth supply chains and clogged logistics channels.

Another low-hanging fruit is finally securing a waiver covering intellectual property rights for COVID-19-related products. This proposal has languished for over 18 months but has now been redrafted to address concerns from the U.S. and European Union. Signing it would go some way to expanding global access to vaccines, which are still sorely needed in many parts of the world.

Beyond this week, the WTO secretariat and members need to develop a work program to reform the organization. This should include developing a framework to ensure that if states do take precautionary measures, they do so in a transparent, rules-based manner that does not slide into more harmful forms of protectionism.

Reviving the WTO’s defunct dispute settlement mechanism is a clear priority. Twenty-five members have agreed to an interim arrangement that would function in a similar way. More members should join this agreement, ideally including the U.S., and start negotiating the full restoration of a binding mechanism. They should also set clear criteria for carveouts for legitimate precautionary measures related to national security, healthcare and environmental issues.

No one should expect big breakthroughs in Geneva. But practical agreements on immediate priorities such food security and vaccines would at least help to reassert the WTO’s relevance and show that the world’s trading partners are not simply going to give up on multilateralism. At this dangerous moment, even small victories are welcome.

Shipping and the World

[from Seatrade Maritime News]

Asyad Dry Dock Expanding Capacity As Demand Grows

Oman shipyard Asyad Dry Dock is expanding its capacity by 20% with a new floating dock as its current facilities are fully utilized.

by Marcus Hand

The shipyard, formerly Oman Drydock Company, is now part of the Asyad Group, the logistics arm of the Oman government. Management of the yard has been combined with shipowner Oman Shipping Company, and overseen by Dr. Irbahim Al Nadhairi, Chief Executive Officer, Shipping & Drydock.

“We have integrated the shipping and drydocking as the shipping service. The companies are still two legal separate entities but then we share the same executive team to be more efficient,” Dr. Ibrahim told Seatrade Maritime News in an interview at Posidonia 2022.

On the shipping side of the business the group owns a fleet of 65 ships with plans to increase the fleet to over 100 vessels over the next five years. He explains that with such a size of fleet the shipowner needed a quality shipyard so it made sense to work together.

Asyad maintains most, if not all its fleet at the shipyard in Oman, accounting for around 15% of its business. While part of the same group Dr. Ibrahim says it does not send its ships to the yard “by default,” and they have to make sure it is competitive as it needs to be for their third-party customers.

Business has been growing for the shipyard and it experienced a spike in the first half of this year as Chinese capacity has been taken out of the market by COVID restrictions pushing work to yards in other parts of the world. “So, we could see there was a big hike in the number of ships, not only for Asyad Dry Dock, but the entire region as well,” Dr. Ibrahim said.

“The next 12 months I believe the ship repair industry will still continue to flourish on our side.”

The shipyard’s two 600,000 DWT drydocks are already operating at full capacity and this year sees it adding a floating dock with the capacity to handle vessels up to Panamax size.

“We’ve recently acquired a floating dock which is of Panamax size and we reckon that about 40% of the business in ship repair is within that Panamax size. The floating dock gives us around 20% extra capacity,” he said. It will increase the number of ships the yard can repair from 200 to around 240.

The floating dock is expected to arrive in Oman in the next six weeks, and following some dredging works be operational by the start of Q4 this year.

Greek owners are major clients of the shipyard and account for around 40% of business, and Dr. Ibrahim said they added two more Greek clients last week. “It seems we have a good reputation in the Greek market and between now and end of Q3 we have 27 ships in orderbook from the Greek market.”

Globally its customer base includes MSC, AP Møller-Mærsk, CMA CGM S.A., Hapag-Lloyd, and Mitsui OSK Lines (株式会社商船三井). Maersk currently has currently two vessels in the yard.

Being able to deliver services efficiently and on time is of critical importance in the financially booming container sector.

“Today when you talk about bringing a container ship into a shipyard time really is money,” Dr. Ibrahim said. If a container ship owner says a ship will be in the yard for 15 days the owner will expect work to be completed in 12 days.

‘Further Action Is Needed’ As MEPC 78 Gets Underway

IMO Secretary General Kitack Lim hailed the 78th session of the Marine Environment Protection Committee as an opportunity to be brave and lead by example on decarbonization.

by Gary Howard

MEPC 78 has a packed agenda with the opportunity to consider and progress IMO’s work on cutting greenhouse gas emissions from ships.

At the last MEPC meeting, a revision process was agreed to strengthen the IMO’s initial GHG strategy which was adopted in 2018. A strengthened version of that initial strategy is due in mid-2023 at MEPC 80.

Speaking to Seatrade Maritime News in May, Stamatis Fradelos, Vice President, Regulatory Affairs at ABS said that important influencers in the IMO like the United States, EU, Canada, Japan, Australia and New Zealand are calling for net zero emissions from shipping by 2050 and introducing a level of ambition for 2040.

“Whilst progress has been made on many of the measures set out in the Initial Strategy, I am sure that we can all agree that further action is needed. Your discussions this week will chart the way forward for the decarbonization of international shipping,” said Lim.

“It is therefore of utmost importance that IMO continues to deliver concrete progress in transitioning international shipping from fossil fuels to low and zero-carbon alternatives.”

Member states at MEPC 78 will also consider adoption of guidelines to support short-term measures on GHG emissions, including correction factors for carbon intensity, EEXI calculation methodology and revised SEEMP.

Calculations on the GHG impact of fuels will be discussed, as ISWG-GHG 11 reports progress on developing lifecycle GHG assessment guidelines. Well-to-wake and tank-to-wake calculations are in scope, with the aim of giving fuel users a full picture of the impact of the production and use of the fuels they choose.

“Your constructive discussions on these topics will enhance the Committee’s evidence-based decision making when further considering proposals for mid-term GHG reduction measures,” Lim told Member States.

“I would like to take this opportunity to express my deepest appreciation to all Member States, and observer delegations, and especially the Chair of the Working Group on reduction of GHG emissions from ships, Mr. Oftedal of Norway, for the extraordinary effort and dedication in ensuring the successful outcome of both intersessional meetings.”

Houston Begins $1.1Bn Ship Channel Widening

The Port of Houston kicked off its the long-awaited billion dollar dredging scheme, the Houston Ship Channel Widening and Improvement Project 11 last week.

by Michele Labrut

The $1.1bn expansion of the Houston Ship Channel, which has been in planning for more than a decade is finally underway.

After more than a decade of planning, Project 11 will allow the ship channel to accommodate an additional 1,400 vessels per year and could generate up to $134bn more annually in economic impact once completed. The channel currently accommodates about 8,200 vessels and 215,000 barges each year, hauling more than 247m tons of cargo.

“This project will enable Port of Houston to continue to grow and respond effectively to whatever the future demand in the supply chain has to offer,” Port of Houston Executive Director Roger Guenther said in a statement.

Port of Houston is a 40-2 km-long complex of nearly 200 private and public industrial terminals along the 583.6 km-long manmade Houston Ship Channel, which connects the port to the Gulf of Mexico.

Project 11 will widen the Houston Ship Channel by 51.8 m along its 41.8 km Galveston Bay reach, to 213.3 m wide. It will also deepen upstream segments from a current depth of 13.7 m to a depth of 14.7 m. Dredging began last week. The Houston Ship Channel winds from the Gulf of Mexico through shallow Galveston Bay and up through the port.

“This project is important on many levels, including improving the efficiency of our nation’s supply chains, promoting navigational safety, and creating environmental benefits through the innovative use of dredged material,” Michael Conner, Assistant Secretary of the Army (Civil Works), said in a statement.

Port of Houston and the Army Corps of Engineers signed an agreement in August giving the port permits to start dredging the federal waterway. Great Lakes Dredge and Dock Co. was awarded a $95m contract in October, which also includes oyster mitigation and construction of a bird island. The channel widening and deepening project is scheduled to be completed in 2025.

EU Transport Commissioner Focuses on ‘Solidarity Lanes’ and Sanctions

As the global food crisis deepens and millions of tons of Ukraine’s grain remain blocked in the Black Sea, EU Transport Commissioner Adina-Ioana Vălean has declared that all transport modes will be considered in setting up new Solidarity Lanes that bypass the Black Sea.

by Paul Bartlett

Her comments come as disrupted grain movements risk a global food crisis.

Speaking to journalists immediately prior to yesterday’s opening ceremony at Posidonia, she said that trucks, tracks, trains, transshipment and storage facilities will all contribute to new supply chains to ensure that exports from one of the world’s largest grain exporters can resume, at least in part, as soon as possible.

She said that the setting up of Solidarity Lanes would have important commercial implications for shipping and could even lead to changes in the sector’s business models.

Vălean also rejected criticism from prominent Greek shipowners who had claimed earlier in the day that sanctions imposed on Russia in the wake of its invasion on Ukraine won’t work. At a Maritime Leaders Summit staged by Capital Link on Monday, George Prokopiou and Evangelos Marinakis had both said that sanctions against Iran and Venezuela had been shown not to work and similar moves against Russia would not be effective either.

However, other sources pointed to the scale of the sanctions package that has severely impacted the Russian economy by disrupting key revenue generating sectors. Energy exports are the most obvious example and although Russian oil is still easily sold in India and China, for example, it is at deep discounts to global prices.

Meanwhile, LNG exports have also been hit and development of Arctic LNG supply chains have also been severely affected. Within the next few months, Vălean said that Russian oil exports would be further disrupted by the withdrawal of insurance cover on shipping and transport arrangements.

World-Watching: Shipping Problems Webinar

Solving SMB Shipping Problems with Technology — June 14_^th @ 2 PM EDT

[from FreightWaves]

The supply chain challenges we hear about today likely bear little resemblance to those we envisioned at the beginning of 2020. Ongoing disruption to the global supply chain has accelerated and heightened the need to focus on risk mitigation — or face even more critical concerns.

To uncover ways small and midsized (SMB) organizations can overcome tech adoption challenges and continue to grow, FreightWaves has partnered with MyCarrier for a one-hour webinar at 2 PM EDT on Tuesday, June 14.

In this webinar, learn how SMB organizations can alleviate the pressure of industry volatility by utilizing technology to:

Reduce shipping costs
Maintain customer demands
Source reliable capacity
Ensure timely pick ups
Manage inventory

Speakers

Bobby Russell, VP of Sales, MyCarrier
Marc Brown, VP of Marketing, MyCarrier

Economy-Watching: Supply Chain Pressures

[from the Federal Reserve Bank of New York’s Applied Macroeconomics and Econometrics Center]

Global Supply Chain Pressure Index: June 2022 Update

A new reading of the Global Supply Chain Pressure Index has been posted.

The GSCPI will be updated regularly at 10 AM ET on the fourth business day of each month. The index was first introduced through a Liberty Street Economics post in early January 2022 [archived PDF], with subsequent blog posts in late January 2022 [archived PDF] and March 2022 [archived PDF].

The GSCPI is a product of the Federal Reserve Bank of New York’s Applied Macroeconomics and Econometrics Center.

View the Index.