AuthorTopic: Official Shipping Collapse Thread  (Read 18080 times)

Offline RE

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Is our atmospheric pollution problem only because of the Carz?
« Reply #60 on: March 13, 2017, 06:32:02 AM »
Steve often cites carz as the #1 polluter and cause of our economic problems, but they are really only a part of the problem.  A big part for sure, but there's tons of shit we depend on economically besides carz coughing up puke into the atmosphere.

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By burning heavy fuel oil, just 15 of the biggest ships emit more oxides of nitrogen and sulphur—gases much worse for global warming than carbon dioxide—than all the world’s cars put together.

RE

http://www.economist.com/news/finance-and-economics/21718519-new-ways-foot-hefty-bill-making-old-ships-less-polluting-green-finance

Light at the end of the funnelGreen finance for dirty ships

New ways to foot the hefty bill for making old ships less polluting
From the print edition | Finance and economics
Mar 9th 2017


SHIPPING may seem like a clean form of transport. Carrying more than 90% of the world’s trade, ocean-going vessels produce just 3% of its greenhouse-gas emissions. But the industry is dirtier than that makes it sound. By burning heavy fuel oil, just 15 of the biggest ships emit more oxides of nitrogen and sulphur—gases much worse for global warming than carbon dioxide—than all the world’s cars put together. So it is no surprise that shipowners are being forced to clean up their act. But in an industry awash in overcapacity and debt, few have access to the finance they need to improve their vessels. Innovative thinking is trying to change that.

A new report from the Carbon War Room (CWR), an international NGO, and UMAS, a consultancy, highlights the threat that new environmental regulations pose to the industry. The International Maritime Organisation, the UN’s regulatory agency for shipping, has agreed to cap emissions of sulphur from 2020. Last month the European Parliament voted to include shipping in the EU’s emissions-trading scheme from 2021. Without any retrofitting of ships to meet the new rules, many firms may be forced out of business. That also imperils banks across the world, which have lent $400bn secured on smoke-spewing ships.

Tens of billions of dollars are needed to pay for upgrades to meet the new rules, according to James Mitchell at CWR. But the industry can hardly pay even its existing debts. Freight rates have collapsed owing to a slowdown in world trade since the financial crisis and to enormous overcapacity. An earnings index compiled by Clarksons, a research firm, covering the main vessel types (bulk carriers, container ships, tankers and gas transporters), touched a 25-year low in 2016. Banks do not want to throw good money after bad.

Even those that are expanding their ship-lending have seen less demand than they expected for retrofit loans. ABN AMRO, a Dutch bank, and a market leader in this business, has made less than $500m in green loans over the past five years, says Gust Biesbroeck, its head of transportation finance. The problem, he adds, is one of incentives. Ship owners, who would normally borrow for such upgrades, do not benefit from lower fuel bills. It is the firms chartering the vessels that enjoy the savings. But their contracts are not long enough to make it worthwhile to invest in green upgrades. The average retrofit has a payback time of three years, whereas 80% of ship charters are for two years or less.

Hence the interest in new green-lending structures. One, called “Save as you Sail”, comes from the Sustainable Shipping Initiative, another NGO. The idea is to share the fuel savings between the shipowner and the charterer over a longer contract, giving both an incentive to make the upgrades. Such schemes used to be thwarted by the difficulty of measuring exact fuel consumption on ships. New technologies allow more accurate readings.

Finance providers are keen to get involved. Last June the European Investment Bank announced €250m ($282m) in funding for such retrofits; it hopes other banks will follow suit with billions more. In future, the idea might be extended to greening aircraft and trains. For now these businesses do not suffer a shortage of finance. But a downturn is a matter of “when not if”, says Michel Dembinski at MUFG, a bank. Green finance could rescue many other industries sailing into a storm.
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Offline RE

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Yo Ho Ho and a Bottle of Rum...The Somali Pirates are BACK!
« Reply #61 on: March 14, 2017, 06:11:15 AM »
<a href="http://www.youtube.com/v/a5V5C8mEVzY" target="_blank" class="new_win">http://www.youtube.com/v/a5V5C8mEVzY</a>

RE

http://www.bbc.com/news/world-africa-39264343

Somali pirates suspected of first ship hijacking since 2012

    1 hour ago
    From the section Africa


The Sri Lankan-flagged tanker was sailing to Mogadishu
Image copyright Mohamed Deeq - SBC

An oil tanker has been hijacked by suspected pirates off the coast of Somalia, reports say, the first such hijacking in the region in five years.

The ship sent a distress signal on Monday evening, saying it was being approached by high-speed boats.

The gunmen have told a local official they are fishermen whose equipment was destroyed by illegal fishing vessels.

Piracy was rampant off the Somali coast until increased patrols by European naval forces contained the problem.

The vessel was en route from Djibouti to the Somali capital, Mogadishu, and was then diverted towards the port of Alula in the semi-autonomous region of Puntland.

Its tracking system has reportedly been switched off.

The Sri Lankan Foreign Ministry has confirmed that eight of its nationals were on board.

    More on this and other African stories
    Somalia warns of return to piracy
    Somali piracy: A broken business model?

Ali Shire Mohamud Osman, the district commissioner in the town of Alula, near where the ship has been taken, told the BBC he was trying to find out if the gunmen really were fishermen or were organised pirates.

"The men who are holding it claim that they are fishermen who suffered from the illegal fishing in the area. However, if we confirm that they are pirates, I will ask them to leave the area immediately. Otherwise, we will see how we can save the vessel," he said.

The vessel was carrying oil and was owned by the United Arab Emirates (UAE), despite conflicting reports over the flag it was sailing under, he added.

The chairman for Puntland's anti-piracy agency, Abdirizak Mohamed Dirir told the BBC the attack could be linked to illegal fishing along Somalia's coast.

"Incidents of piracy have reduced. However, we cannot ignore the problems caused illegal fishing on our shores; regardless who is involved and where they are from, it's something we have been complaining about for so long," he said.
Image copyright European Union Naval Force
Image caption The European Union Naval Force has been running operations off Somalia since 2008 to combat piracy

The European Union Naval Force, which runs anti-piracy operations in the area, said it was too early to confirm pirate involvement.

It has sent a plane to the area to investigate.

Eight people are believed to have been on board the ship, which can carry almost 12,000 tonnes of cargo.

John Steed of the aid group Oceans Beyond Piracy, speaking to Reuters news agency, said, "The ship reported it was being followed by two skiffs yesterday afternoon. Then it disappeared."

Piracy off the coast of Somalia, usually for ransom, has reduced significantly in recent years, in part because of extensive international military patrols as well as support for local fishing communities.

At the height of the crisis in 2011, the annual cost of piracy was estimated to be up to $8bn (£7bn).

However, some smaller fishing vessels have recently been seized in the area.

In 2015, Somali officials warned that piracy could return unless the international community helped create jobs and security ashore, as well as combating illegal fishing at sea.

Some Somali fishermen turned to piracy after their livelihoods were destroyed by illegal fishing from foreign trawlers, who benefited from the lack of a functioning coastguard in the country following years of conflict.
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Health risks of shipping pollution have been 'underestimated'
« Reply #62 on: December 08, 2017, 04:41:56 AM »
https://www.theguardian.com/environment/2009/apr/09/shipping-pollution

 Health risks of shipping pollution have been 'underestimated'
One giant container ship can emit almost the same amount of cancer and asthma-causing chemicals as 50m cars, study finds

• Climate change threatens 50 years of progress in global health, study says


90,000 cargo ships travel the world's oceans. Photograph: Peter Maenhoudt/AP

John Vidal, environment editor

Thursday 9 April 2009 10.50 EDT
First published on Thursday 9 April 2009 10.50 EDT


Britain and other European governments have been accused of underestimating the health risks from shipping pollution following research which shows that one giant container ship can emit almost the same amount of cancer and asthma-causing chemicals as 50m cars.

Confidential data from maritime industry insiders based on engine size and the quality of fuel typically used by ships and cars shows that just 15 of the world's biggest ships may now emit as much pollution as all the world's 760m cars. Low-grade ship bunker fuel (or fuel oil) has up to 2,000 times the sulphur content of diesel fuel used in US and European automobiles.

Pressure is mounting on the UN's International Maritime Organisation and the EU to tighten laws governing ship emissions following the decision by the US government last week to impose a strict 230-mile buffer zone along the entire US coast, a move that is expected to be followed by Canada.

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The setting up of a low emission shipping zone follows US academic research which showed that pollution from the world's 90,000 cargo ships leads to 60,000 deaths a year and costs up to $330bn per year in health costs from lung and heart diseases. The US Environmental Protection Agency estimates the buffer zone, which could be in place by next year, will save more than 8,000 lives a year with new air quality standards cutting sulphur in fuel by 98%, particulate matter by 85% and nitrogen oxide emissions by 80%.

The new study by the Danish government's environmental agency adds to this picture. It suggests that shipping emissions cost the Danish health service almost £5bn a year, mainly treating cancers and heart problems. A previous study estimated that 1,000 Danish people die prematurely each year because of shipping pollution. No comprehensive research has been carried out on the effects on UK coastal communities, but the number of deaths is expected to be much higher.

Europe, which has some of the busiest shipping lanes in the world, has dramatically cleaned up sulphur and nitrogen emissions from land-based transport in the past 20 years but has resisted imposing tight laws on the shipping industry, even though the technology exists to remove emissions. Cars driving 15,000km a year emit approximately 101 grammes of sulphur oxide gases (or SOx) in that time. The world's largest ships' diesel engines which typically operate for about 280 days a year generate roughly 5,200 tonnes of SOx.

The EU plans only two low-emission marine zones which should come into force in the English channel and Baltic sea after 2015. However, both are less stringent than the proposed US zone, and neither seeks to limit deadly particulate emissions.

Shipping emissions have escalated in the past 15 years as China has emerged as the world's manufacturing capital. A new breed of intercontinental container ship has been developed which is extremely cost-efficient. However, it uses diesel engines as powerful as land-based power stations but with the lowest quality fuel.

"Ship pollution affects the health of communities in coastal and inland regions around the world, yet pollution from ships remains one of the least regulated parts of our global transportation system," said James Corbett, professor of marine policy at the University of Delaware, one of the authors of the report which helped persuade the US government to act.

Today a spokesman for the UK government's Maritime and Coastguard Agency accepted there were major gaps in the legislation. "Issues of particulate matter remain a concern. They need to be addressed and we look forward to working with the international community," said environment policy director Jonathan Simpson.

"Europe needs a low emission zone right around its coasts, similar to the US, if we are to meet health and environmental objectives," said Crister Agrena of the Air Pollution and Climate Secretariat in Gothenburg, one of Europe's leading air quality organisations.
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"It is unacceptable that shipping remains one of the most polluting industries in the world. The UK must take a lead in cleaning up emissions," said Simon Birkett, spokesman for the Campaign for Clean Air in London. "Other countries are planning radical action to achieve massive health and other savings but the UK is strangely inactive."

The calculations of ship and car pollution are based on the world's largest 85,790KW ships' diesel engines which operate about 280 days a year generating roughly 5,200 tonnes of SOx a year, compared with diesel and petrol cars which drive 15,000km a year and emit approximately 101gm of SO2/SoX a year.
Shipping by numbers

The world's biggest container ships have 109,000 horsepower engines which weigh 2,300 tons.

Each ship expects to operate 24hrs a day for about 280 days a year

There are 90,000 ocean-going cargo ships

Shipping is responsible for 18-30% of all the world's nitrogen oxide (NOx) pollution and 9% of the global sulphur oxide (SOx) pollution.

One large ship can generate about 5,000 tonnes of sulphur oxide (SOx) pollution in a year

70% of all ship emissions are within 400km of land.

85% of all ship pollution is in the northern hemisphere.

Shipping is responsible for 3.5% to 4% of all climate change emissions

• This article was amended on 25 August 2015 to correct the number of deaths per year attributed to pollution from the world's 90,000 cargo ships.
Topics

    Travel and transport

    Greenhouse gas emissions
    Health
    Pollution
    Asthma
    Water transport
    news

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Offline RE

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🚢 “Bunker,” the Fuel for the Giant Engines in Large Cargo Ships
« Reply #63 on: June 04, 2018, 02:50:48 AM »
https://wolfstreet.com/2018/06/03/bunker-the-fuel-for-the-giant-engines-in-large-cargo-ships/

“Bunker,” the Fuel for the Giant Engines in Large Cargo Ships
by MC01 • Jun 3, 2018 • 18 Comments   
The world grapples with the emissions.
By MC01, a frequent commenter on WOLF STREET:


When pricing a container shipment, we are sometimes told rates have gone up because “bunker oil” has increased in price or that the delivery will take a few extra days because shipowners ordered their skippers to slow down to save “bunker oil.”

But what is this “bunker oil”?

The term “bunker oil” defines all types of fuel used by the shipping industry and generally speaking can be split in two categories: distillates and residuals.

Distillates are produced during fractional distillation of crude oil and generally are very close in density to diesel #2, the mainstay fuel in trucking and agriculture, but slighter denser.
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Residuals are produced from the thick sludge left over at the bottom of the refinery’s fractionating column and are only a step or two removed from bitumen, the stuff used to pave roads: the most widespread types of residual bunker available have densities ranging from 500 to 700cSt at room temperature. For comparison, the densest types of diesel fuel have a density of under 35cSt at room temperature. This means that this type of bunker has to be pre-heated before it can be pumped into the fuel system.

There are also several blends of distillates and residuals, or of various residuals, whose density ranges from 300 to 400 cSt, which are sold to provide a cheap alternative to straight diesel fuel while at the same time helping to meet environmental legislation.

Pollution by maritime vessels is regulated worldwide by the International Convention for the Prevention of Pollution from Ships (MARPOL), first ratified in 1973, and regularly amended over the years, the last time in 2013.

The MARPOL protocol legislates all aspects of ship-related pollution, from emission levels to how waste from the ship latrines should be processed and disposed of (not a joke when modern cruise ships are involved).

Emissions in particular have long focused on sulfur oxides. As with all fossil fuels, the trend has long been towards lower and lower sulfur content. But instead of focusing on emissions themselves, the MARPOL protocol legislates the limit of sulfur in bunker oil, and in such bizarre fashion it deserves a mention.

While there exists an ISO standard for bunker oil (ISO:8217, last revised in 2017), it’s not considered binding by MARPOL, which instead relies on the International Maritime Organization (IMO) to sample bunker oil sold in several locations worldwide and coming up with a “worldwide average” which is just that. Presently the limit for this “worldwide average” is 4.5% sulfur content.

This helps explain why worldwide consumption of residual fuels (as defined by the US Department of Energy) has been steadily declining after peaking in 1991. Latest data put daily worldwide consumption at 8,320 barrel per day, down 4,000 barrels per day from the 1991 peak.

When the MARPOL protocol relating to sulfur content was being discussed, several countries expressed concerns about its standards not being strict enough. To appease them, the concept of Environmental Control Areas (ECA’s) was introduced. ECA’s are areas coinciding with the territorial waters of EU member countries, Norway, Iceland and the United States (plus US dependencies in the Caribbean) where ships must use low-sulfur fuel, meaning bunker oil with less than 1% sulfur content.

In addition, the Chinese government has unilaterally created three ECA’s: One around Hong Kong and the Pearl River Delta, one around the estuary of the Yangtze River, and one largely coinciding with the Bohai Gulf. These three ECA’s include seven of the ten busiest ports worldwide.

Starting in 2000, ships sailing through these ECA’s have to comply with another set of emission rules collectively known as Regulation 13, which limit air polluting nitrogen oxides (NOx) emissions.

Regulation 13 is divided in three Tiers: Tier I, for ships built starting January 1, 2000, Tier II for ships built starting January 1, 2011, and Tier III for ships built starting January 1, 2016.

Each Tier is further divided in categories according to engine rotation speed. Low speed engines, the kind used in the large commercial vessels, have deceptively high limits: for example Tier III defines the NOx limit for engines up to 129 rpm as 3.4g/kWh while engines in the 130-1,999 rpm class have an emission limit of 2.4g/kWh.

However these low speed engines tend to run on much “dirtier” (meaning with a high organic nitrogen content) fuels than high speed ones for economic considerations, meaning they require even more work from engine manufacturers to provide engines the shipping industry can use worldwide.

Stricter environmental legislation around the world is only part of the increasingly more challenging environment these engine manufacturers have to deal with. There are only three that make the giant low-speed two-stroke diesel engines used in the largest container ships, bulk carriers, and tankers: MAN SE of Germany, Mitsubishi Heavy Industries of Japan, and Wärtsilä of Finland. Read…  The Engines of the Largest Container Ships in the World, and Challenges their Manufacturers Face
 
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Offline azozeo

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World’s Largest Shipping Company Collapses As Trade War Reality Strikes
« Reply #64 on: July 16, 2018, 09:57:16 AM »
While US equity markets (well a few mega-cap tech stocks anyway) have remained resilient in the context of rising protectionist fears, the world’s largest shipping company is seeing its stock eviscerated as investor anxiety over trade wars finds an outlet that makes rational sense.

A.P. Moeller-Maersk A/S may struggle to make a profit this year after the U.S. and China descended into a trade war that is already showing stress in sentiment surveys.

As Bloomberg reports, Maersk, which is based in Copenhagen, has already lost almost a third of its market value this year as investors gird for more bad news, and it is losing value in line with the collapse in the US Treasury yield curve.

Trade protectionism means less demand, and history suggests the shipping industry will struggle to make the necessary supply cuts. What’s more, Maersk is now more exposed to shipping as the former conglomerate divests its energy business.


https://www.zerohedge.com/news/2018-07-13/worlds-largest-shipping-company-collapses-trade-war-reality-strikes
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Offline Surly1

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While US equity markets (well a few mega-cap tech stocks anyway) have remained resilient in the context of rising protectionist fears, the world’s largest shipping company is seeing its stock eviscerated as investor anxiety over trade wars finds an outlet that makes rational sense.

A.P. Moeller-Maersk A/S may struggle to make a profit this year after the U.S. and China descended into a trade war that is already showing stress in sentiment surveys.

As Bloomberg reports, Maersk, which is based in Copenhagen, has already lost almost a third of its market value this year as investors gird for more bad news, and it is losing value in line with the collapse in the US Treasury yield curve.

Trade protectionism means less demand, and history suggests the shipping industry will struggle to make the necessary supply cuts. What’s more, Maersk is now more exposed to shipping as the former conglomerate divests its energy business.


https://www.zerohedge.com/news/2018-07-13/worlds-largest-shipping-company-collapses-trade-war-reality-strikes

Hanjin and Dalian had already declared bankruptcy. This causes increasing consternation where I live because I could walk to the Port of Virginia from where I live, if I could still walk (much). Long trains of containers are standing on sidings, and they are being added to regularly. This complicates what are becoming very long traffic jams caused by trains entering the port slowly. I suspect the Port is rapidly running out of container storage space. A lot of goods are now stranded on sidings.

Then throw this item on the pile:

China-U.S. ocean freight rates have fallen for the 32nd straight week

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China-U.S. ocean freight rates have fallen for the 32nd straight week: Freightos Report

 (Photo: Pexels)

(PHOTO: PEXELS)

Data gathered from aFreightos reportshows that the China-U.S. ocean rates have been hitting noticeable lows from the start of this year. The fall in prices is even more relevant when compared with the prices that held up last year - year-on-year rates have been falling for the 32nd straight week. The current rate of the China-U.S. West Coast is 26% lower compared to 2017, and the China-U.S. East Coast has recorded a 19% lower rate against last year.

Though the gap between the prices reduced during this February, the Chinese New Year had its toll on the freight pricing sinking it by $600 per FEU in the China-U.S. West Coast. A week before the Chinese New Year, the rates were at a $1412 per FEU precipice, falling dramatically to $812 per FEU in a month.

Eytan Buchman, the VP of Marketing at Freightos, explained that this trend is heavily dependant on seasonality. As is visible from the range, the prices went up for a month before the new year, with companies rushing to flush out their inventories and reach retailers before the new year’s onset. As this led to a massive supply and inadequate capacity situation, the rates kept climbing till the new year, after which it fell back to a rate which is comparable to the rates of the previous month.

But the steady decline in ocean freight rates for over six months year-on-year is a problem. “The problem with the ocean freight trend is still about going back to the underlying industry issue, which is over capacity. There is too much ocean freight capacity and a lot less shipments being pushed out,” said Buchman. “If you look at air freight, prices have been very strong. While with air freight, there is a certain amount of support from the e-commerce boom, ocean freight’s underlying supply and demand trends just point that overcapacity is something that continues to impact the market.”

China-U.S. air freight rates have been steadily increasing all year, starting at $1.15/kg at the end of January to $1.65/kg in March and now at $1.85/kg in April. The higher rates are attributed to limited capacity on Europe-U.S. flights and also to the Euro relatively weakening out against the USD, when considering its meteoric rise a few months back.

But as Buchman agreed, the impact that e-commerce has in determining air freight prices cannot be discounted. “Supply chains are more complex today with more specifics and volatile sourcing, which makes air freight a necessity. It is not that ocean freight can’t provide that, it is just that in order to get that, we need accuracy with ocean freight and companies need to plan better and in advance on where and when you need inventories,” he said.

This trend helps larger and more sophisticated companies to leverage ocean freight and cut transport costs by intricately handling their supply chains. “These companies split their cargo and send some of it by air freight and send the remaining by ocean freight in order to balance their inventory,” said Buchman.

Alphaliner, a shipping data analytics firm predicts that the ocean freight rates would fall as we go further along as it sees an 8% increase in capacity by July. The reason for ocean freight rates decline rests squarely on the shoulders of large shipping companies, which are relentlessly working towards increasing capacity while demand continues to scratch the surface. New services have been announced by South Korea’s SM Line and APL, while the Ocean Alliance is anticipated to scale up capacity by around 10% this year.

Though volumes do increase year-on-year, the capacity growth is hardly proportional which might help the cause of shippers who are now in the position to dictate rates. Though prices have not hit rock-bottom, it still is low enough to be of concern to carriers and predicting the future accurately seems to be an improbable task.

“It is always difficult to project with any accuracy, but based on previous trends I can’t imagine freight prices climbing too high. We can anticipate stable ocean rates for now,” said Buchman. “The kind of situation we are in, is similar to the time before Hanjin declared bankruptcy in September 2016. You are looking at a situation where there is too much supply and not enough demand to go with driving profitable unit economics for carriers.”

Nonetheless, the General Rate Increase (GRI) seems to be holding up, as the ocean freight rates have not seen landslide declines this week, as rates dropped by 2% in the East Coast and by 5% in the West Coast compared to last week. This could be a saving grace for carriers heading into contract negotiations - for instance, Maersk has gone ahead and announced a contract increase for customers with service contract rates expiring on April 14. Other carriers are following suit and have announced GRIs for both April 15 and May 1.

Stay up-to-date with the latest commentary and insights on FreightTech and the impact to the markets by subscribing.

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Offline azozeo

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Re: Official Shipping Collapse Thread
« Reply #66 on: July 16, 2018, 10:20:03 AM »
Union Pacific & BNSF have side spurs all over this desert with loco's & miles of flat cars with empty sea containers.

I believe I know why the push is on out here to expand the rail lines. Yucca, Az. is due to boom because BNSF & W/M both
want additional warehouse space & more side spurs.
I know exactly what you mean. Let me tell you why you’re here. You’re here because you know something. What you know you can’t explain, but you feel it. You’ve felt it your entire life, that there’s something wrong with the world.
You don’t know what it is but its there, like a splinter in your mind

Offline RE

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🚛 The Trucking Boom Ends
« Reply #67 on: December 16, 2018, 12:39:54 AM »
https://wolfstreet.com/2018/12/15/trucking-boom-ends-class-8-orders-freight-shipment-volume/


The Trucking Boom Ends


The Trucking Boom Ends

But no letup in freight rates yet.

In November, according to transportation data provider FTR, orders for new Class-8 trucks — the heavy trucks that haul the products of the goods-based economy across the US — plunged nearly 50% from July and August, 35% from October, and 15% from November 2017, to 27,500 orders, the lowest all year.

This chart shows the percent change of Class-8 truck orders for each month compared to the same month a year earlier, which eliminates the effects of seasonality:

Red-hot demand for transportation services this year and late last year, especially by truck, caused shortages, spiking freight rates, shipping delays, and more gray hair among shippers, while truckers were scrambling to order new trucks to meet the demand, and truck makers, swamped with orders saw their backlog balloon to 11 months, and records were broken on a monthly basis. But suddenly the hot air is hissing out of the market.

The chart above shows just how cyclical this business is:

  1. The effects of the “transportation recession” on Class-8 truck orders in 2015 and 2016 when orders collapsed to the lowest level since 2009, triggering layoffs at truck and engine makers;
  2. The blistering boom in orders leading to record backlog for truck makers, amid component shortages and supply-chain bottlenecks;
  3. And now the beginning of the next phase in the cycle.

Truck makers aren’t going to hurt just yet. Over the past 12 months, Class-8 truck orders have reached nearly 500,000 according to FTR data. Truck makers are running at capacity, building trucks at an annual rate of about 320,000 units. Some cancellations have started to come in, but the backlog extends way into next year. The chart below shows that orders in November plunged from the super high levels that had peaked in July and August at 52,000, but were still above the levels of the transportation recession:

“27,500 is not that bad of a number,” said Don Ake, FTR vice president of commercial vehicles.

Truckers were motivated to put in these record orders earlier this year because freight demand had been enormous, and there wasn’t enough equipment to move it, and they were able to raise rates and make more money. Now they see demand backing off, and overcapacity, created during boom times is precisely why this industry is so cyclical.

And growth of demand for transportation is now stalling. Freight shipment volume across all modes of transportation – truck, rail, air, and barge – was essentially flat in November compared to November 2017, and about flat with November 2014 (the other recent banner year), according to the Cass Freight Index. This year-over-year no-growth is down from growth in the double-digits earlier this year. The index covers merchandise for the consumer and industrial economy but does not include bulk commodities, such as grains or chemicals:

The chart above shows just how powerful the boom in late 2017 and in the first three quarters of 2018 had been. Note the seasonal drops starting in October every year – except in 2017 (red line). This was the beginning of the boom that has now run its course, with shipments still strong, but flat with November 2017 and November 2014.

Demand for transportation from the industrial sector is reflected in demand for flatbed trailers that haul equipment and supplies for manufacturing, oil-and-gas drilling, construction, etc. Demand for flatbed trailers too surged late last year, but capacity suddenly tightened in January 2018 in part due to the newly required use of Electronic Logging Devices (ELDs).

As a result, the DAT Flatbed Monthly Barometer, which tracks demand-capacity imbalances, spiked to historic highs. But the indicator, cited by Cass in its report, has now plunged back closer to earth. The horizontal blue line (=50) indicates that supply and demand for flatbed trailers are in balance. So for now there is still slightly more demand for flatbed trailers than supply, with the indicator being above 50, but a far cry from the historic spike earlier this year (click to enlarge):

But freight rates and fuel surcharges have shown no signs of backing off just yet, as price pressures continue.

The average price of diesel at the pump, according to EIA data, has been edging back down ever so reluctantly from the cycle peak in October ($3.40 a gallon), despite the 30% plunge in the price of crude oil since then. At $3.16 a gallon, the average retail price of diesel is still up 8.6% from a year ago:

And freight rates are still hot. The total amount companies spent on shipping their merchandise via all modes of transportation – by truck, rail, air, and barge – rose 8.4% in November compared to a year ago. This is a result of flat shipment volumes but at higher prices that continue to squeeze the margins of shippers. But that 8.4% increase was a far cry from the year-over-year growth of freight expenditures between 12% and 19% in the prior 12 months:

The chart above also shows just how massive the boom has been and how sharp the wind-down now is. At the moment – if the wind-down doesn’t go much further – it means a return to something perhaps considered “normal,” a reversion to the mean, if you will. But the industry is known for its wild cyclicality.

It now faces a mind-boggling build-up of businesses inventories around the country that in part has powered the transportation boom over the past year-and-a-half. But business, as they invariably do, will sooner or later deal with these inventories to trim them back down, which will entail less demand for transportation services. And a classic overshoot on the way down for demand in the transportation sector, as we have seen during the last transportation recession, would then be on the schedule for sometime next year.

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🛢️ Oil Industry Faces $1 Trillion Challenge
« Reply #68 on: December 18, 2018, 03:58:24 AM »
https://oilprice.com/Energy/Energy-General/Oil-Industry-Faces-1-Trillion-Challenge.html

Oil Industry Faces $1 Trillion Challenge
By Irina Slav - Dec 17, 2018, 4:00 PM CST


When the International Maritime Organization announced it would introduce a new, lower, sulfur emission ceiling for bunkering fuel, many in the energy industry worried that demand for high-sulfur fuel oil would suffer a blow from which it would not be able to recover. But then scrubbers—equipment that strips sulfur from bunkering fuel—were floated as a relatively easy to deploy alternative to switching to low-sulfur fuel. Now, however, scrubbers’ future is questionable.

S&P Global Platts reported recently that at a maritime industry event, the MARE Forum in Houston, scrubbers had garnered significant attention, and this attention had not been particularly positive.

A little over 1,500 vessels have been fitted with sulfur scrubbers as of October this year, according to the senior vice president of engineering and technology at the American Bureau of Shipping. By January 2020, when the new emission rules come into effect, the number of scrubbers both installed and ordered would reach 2,278, S&P Global Platts has calculated. And all these vessels will be producing sulfur acid-rich wastewater from the scrubbers and will need high-sulfur fuel.

One port, Singapore, has already banned the discharge of wastewater from vessels fitted with sulfur scrubbers. Chances are it won’t remain the only one. But there’s more. Singapore’s Port Authority also introduced a requirement that all vessels calling at the port should use 0.5-percent sulfur fuel. Again, Singapore is by far not the only port setting new fuel requirements for vessels in compliance with the IMO rules.

So, these 1,500 (and counting) vessels that already sport scrubbers or are to get one in the next year, will not just have to find a way to dispose of their wastewater without violating port regulations, but they will also need that high-sulfur fuel that the scrubbers scrub, and that will be less available after the 2020 rules kick in as most ports are preparing to offer the new, compliant fuel. In other words, scrubber-fitted vessels are facing a complex situation: not enough high-sulfur fuel and unfriendly port authorities banning the discharge of wastewater from these scrubbers.
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But they could just load on low-sulfur fuel, right? They sure could, but that would kind of make the investment in a scrubber meaningless. According to the chief executive of the Chamber of Shipping of America, Cathy Metcalf, the payoff period for a scrubber ranges between half a year and three and a half years. But if the vessel owners are forced to pay for costlier low-sulfur bunkering, then this period would likely extend.

As if that’s not enough problems already, some of the delegates at the MARE Forum warned that the scrubbers did not, in fact, reduce a vessel’s overall emissions because of the additional energy needed to scrub the sulfur from the fuel. When stricter environmental rules are enforced in the near future, this will also affect the benefits of opting for scrubbers instead of low-sulfur fuel.

The head of S&P Global Platts Analytics, Chris Midgley, said in September that the new rules will have an impact worth US$1 trillion on the energy industry over a period of five years as well as reverberations across many other industries. Vessel owners might want to think well before opting for scrubbers lest they end up costing them more, rather than less than switching to a more expensive fuel.

By Irina Slav for Oilprice.com
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🚛 Phenomenal Trucking Boom Ends, Trucking Bust Starts
« Reply #69 on: February 08, 2019, 02:56:54 AM »
Wonder how LD's trucking company is doing?

RE

https://wolfstreet.com/2019/02/06/trucking-boom-turns-to-trucking-bust/

Phenomenal Trucking Boom Ends, Trucking Bust Starts
by Wolf Richter • Feb 6, 2019 • 44 Comments   
So that U-turn was fast, even for the legendarily cyclical trucking business.

In January, orders for Class-8 trucks — the heavy trucks that haul trailers with goods of all kinds across the US — plunged by 58% from a year ago, to just 15,642 orders. It was the lowest number or orders since October 2016, toward the end of the “transportation recession” when Class-8 truck orders had plunged to the lowest levels since 2009, and truck and engine manufacturers responded with layoffs.

The chart below shows the percent change of Class-8 truck orders for each month compared to the same month a year earlier, which eliminates the effects of seasonality. The year-over-year plunges in December and January are on par with happened during the last transportation recession (data via transportation data provider FTR):


In the chart above, also note the blistering boom in orders in 2017 and 2018, when demand for transportation services soared, and trucking companies that found themselves short on equipment went on an ordering binge, trying to be the first to get their orders into the system. This historic explosion in orders led to a record backlog for truck makers and their suppliers.

Then, in this viciously cyclical industry, the cycle progressed to the next phase, with demand for transportation services returning to normal-ish levels, even as capacity was rising, and truckers slashed their orders for new equipment.

The chart below of the number of orders for Class-8 trucks every month shows how far these orders have dropped, from over 50,000 each in July and August to 15,642 in January:


It was, however, a predictable U-Turn. Following the August 2018 data, I asked at the time, When will the biggest-ever boom end? And I cautioned that this boom could not go on like this. A month later, with the September data, I provided the answer: Signs that the Trucking Boom Has Peaked. And I added in the subtitle, “This is why the trucking business is so cyclical – and you can see it coming.”
So what does this mean?

We have already seen that freight shipment volume across all modes of transportation – truck, rail, air, and barge – in December had declined a tad from a year earlier, according to the Cass Freight Index. The index covers shipments of merchandise for the consumer and industrial economy but does not include bulk commodities, such as grains or chemicals. It was the first year-over-year decline since the transportation recession of 2015 and 2016 — and trucking companies have seen this coming for months:


Over the past 12 months through January 2019, truckers ordered about 450,000 Class-8 trucks, while US truck makers have an annual capacity of about 320,000 trucks, which averages out to about 26,500 per month. So the phenomenal spike in orders in early and mid-2018 led to a historic backlog that truck makers are still working through. There have been some cancellations, and the backlog is shrinking, but it still extends well into this year.

The trucking business is a barometer of, and dependent on, the goods-based economy. In late 2017 through the summer of 2018, demand for transportation services, such as shipping by truck, surged under the simultaneous impact of a strong goods-based economy led by red-hot e-commerce; a buildup of inventories; pandemic front-running of potential tariffs, a resurgence of drilling activity in the oil patch that required equipment and supplies to be trucked in, etc. Freight rates spiked. Squeezed shippers wheezed in their earnings reports about these spiking transportation costs, while truckers were on Cloud-9 and ordered new trucks to meet the demand, and truck manufacturers were swamped with orders.

These shippers that had struggled with a “capacity crisis” in mid-2018 are now seeing signs of relief. This is reflected in the FTR Shippers Conditions Index, which combines four major conditions in the full-load market — freight demand, freight rates, fleet capacity, and fuel price — into an index. “A positive score represents good, optimistic conditions. A negative score represents bad, pessimistic conditions,” FTR explains. The most recent update, released January 24, is for shipments in November. The index was deeply negative as surging costs hit home. But in November, the index turned positive just a tad, the highest reading since August 2016:


“Conditions have improved noticeably for shippers in the last few months,” said Todd Tranausky, FTR VP of rail and intermodal. “The prospect of sustained lower fuel prices, increasing capacity in the truck and rail sectors, and the first signs of a turn in rail service raise the prospect of a much better 2019 than shippers expected during much of 2018.”

Because there are always two sides to everything: The historic boom for the trucking industry was a nightmare for shippers; and a transportation recession, dogged by excess capacity, always feels like Cloud-9 for shippers.

Shipment falls but freight rates remain red hot. Read... Boom Fizzles: Shipments Fall for 1st Time Since Transportation Recession 

 
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Another day I am glad my trucking days ae over.  Hope LD survives this one OK.

RE


What Trucking & Freight Just Said About the Goods-Based Economy in the US


What Trucking & Freight Just Said About the Goods-Based Economy in the US

Something has to give.

Starting to be a fascinating phenomenon: Rates charged by trucking companies and other transportation providers continue to surge on a year-over-year basis even as the volume of shipments has dropped below where it had been a year ago, while the “capacity squeeze” of 2018 has disappeared, and as the price of fuel is down year-over-year.

Freight shipment volume across all modes of transportation – truck, rail, air, and barge – in January ticked down (-0.3%) from January last year, according to the Cass Freight Index, the second year-over-year decline in a row. Those two declines are the first since the transportation recession of 2015 and 2016. The extraordinary plunge since the extraordinary peak in shipments last summer indicates that the transportation boom with its double-digit year-over-year increases has fizzled. This chart shows how freight volume changed from the same month a year earlier:

The Cass Freight Index covers shipments of merchandise for the consumer and industrial economy via all modes of transportation, but it does not include bulk commodities, such as grains or chemicals.

 

The year-over-year comparison in the chart above – for example, comparing January 2019 to January 2018 – eliminates the noise caused by the hefty seasonal fluctuations of the transportation business that occur every year.

But the chart also delineates the notorious cyclicality of the transportation business, where some big up-years are followed by down-years, such as the drop in shipments during the “transportation recession” of 2015 and 2016, when the goods-based sector of the economy itself went into a recession, and only the strength of the service economy kept GDP growth positive (at a miserably low 1.6% in 2016). The transportation recession was followed by a historic surge in shipments from late 2017 through the first half of 2018, causing a capacity squeeze that triggered a lot of hand-wringing among shippers, such as retailers and industrial companies. That boom and capacity squeeze have now been unwound.

This capacity squeeze in the trucking industry, and the subsequent resolution of it, shows up in the DAT Load-to-Truck ratio which tracks the demand-capacity balance. This ratio for “vans” – the trailers that Class-8 trucks haul across the US – surged twice in 2018: First, the spike in January 2018, when use of Electronic Logging Devices (ELDs) became the law, which caused a temporary squeeze as truckers had to rejigger their operations; and then, the flood of demand in the summer blew the ratio out again. But the demand-capacity balance is now reverting to the mean:

A good portion of the equipment and supplies for the industrial sector – manufacturing, oil & gas drilling, construction, mining, etc. – is transported by flatbed trailers. Demand for flatbed trailers skyrocketed in early 2018 as capacity suddenly tightened under the pressure that ELDs put on the industry, while demand was strong. DAT’s Load-to-Truck ratio experienced a historic spike from January through April 2018, then reverted to the mean and overshot the mean on the way down:

Rising capacity and declining shipments, no problem: Freight rates continue to surge. In January, the Cass Truckload Linehaul Index, which tracks per-mile full-truckload pricing and does not include fuel or fuel surcharges, rose 6.4% compared to January 2018. But that year-over-year increase in truckload pricing is backing off from the double-digit spikes last summer:

The average diesel price at the pump in January was slightly down from a year earlier, according to EIA data.

Yet the Cass Intermodal Price Index, which includes diesel prices and fuel surcharges, still rose 6.8% in January, compared to a year ago — but a far cry from the six double-digit year-over-year increases in a row last year.

Intermodal freight in the US is a combination of truck and rail, such as containers hauled by truck and then transferred to rail, or semi-truck trailers that piggyback on special rail cars. The chart below shows the blistering price increases in 2018 and continuing through January 2019, even as fuel prices are faltering:

In terms of overall expenditures for freight: For all modes of transportation combined – truck, rail, air, and barge – shippers spent 7.8% more in January to get their goods delivered than they’d spent a year ago, despite the decline in shipments, according to the Cass Freight Index for Expenditures. This increase in freight spending was caused by the continued though somewhat slower price inflation in transportation services.

In the stacked chart below, where each line represents one year, January 2019 is way above all prior Januaries. Note the seasonality: January usually marks the low point of the year! The year 2018 (black line, on top) was an outlier in the bunch. And January 2019 is an even further outlier:

The above chart shows what inflation in “transportation services” looks like: even as shipments decline, shippers such as retailers and industrial companies, are having to pay a lot more to get their goods to the destination. But this too has started to back off just a tad from the red-hot pricing environment last year.

Ultimately, something has to give: in an environment of weaker shipments and more capacity, freight rates cannot continue to surge.

And given the rising capacity, and the declining shipments, trucking companies have backed off their historic binge of ordering Class-8 trucks. In January, orders for these trucks plunged by 58% from a year ago, to the lowest level since October 2016, toward the end of the “transportation recession” when Class-8 truck orders had plunged to the lowest levels since 2009, and truck and engine manufacturers responded with layoffs. So that U-turn was fast, even for the legendarily cyclical trucking business. Read… Phenomenal Trucking Boom Ends, Trucking Bust Starts 

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🚚 Inventory Pileup Sounds Alarm for Goods-Based Economy
« Reply #71 on: February 27, 2019, 12:33:15 AM »
Where have all the Shoppers gone?

RE

https://wolfstreet.com/2019/02/25/inventory-pileup-sounds-alarm-for-goods-based-economy/

Inventory Pileup Sounds Alarm for Goods-Based Economy

Inventory Pileup Sounds Alarm for Goods-Based Economy

“In 30 years, I’ve never seen anything like this”: CEO of warehouse operator Pacific Mountain Logistics.

Sales at merchant wholesalers (except manufacturers’ sales branches and offices) fell 1% in December 2018, compared to November, to $497.2 billion on a seasonally adjusted basis, and inched up only 1% compared to December 2017, according to the Census Bureau estimates this morning.

But inventories at these wholesalers rose 1.1% from November and jumped 7.3% from December 2017, to $661.8 billion. Over the two-year period through December, inventories have risen 11%. This includes inventories of durable and non-durable goods (we’ll look at them separately in a moment):

This surge of inventories on soft sales caused the inventory-to-sales ratio to spike to 1.33, up from 1.30 in November and up from 1.25 a year earlier.

This is a familiar pattern. As inventories are piling up, and as inventory carrying-costs rise, companies eventually react: They whittle down their inventories by cutting orders. As we have seen in 2015 and 2016, this hammers the goods-based sectors of the economy. In 2016, it dragged GDP growth down to just 1.6%, the worst growth rate since the Great Recession. The overall economy was barely kept out of a recession by the service sector.

The transportation sector tracked this perfectly as it fell into a steep recession in 2015 and 2016. Now a similar pattern is starting to form: A surging inventory-to-sales ratio as inventories are piling up, while shipment volume of goods, as tracked by the Cass Freight Index, have started to decline on a year-over-year basis.

The Cass Freight Index covers consumer and industrial goods shipped by all modes of transportation — truck, rail, barge, and air — but does not cover commodities such as grains.

I overlaid the two data sets: The Cass Freight Index for Shipments, expressed as percent change from the same month a year earlier (columns, left scale), and the inventory-to-sales ratio (green line, right scale):

Non-durable goods not helpful.

Sales of non-durable goods  — food, gasoline, apparel, agricultural products, etc. – at wholesalers fell 1.4% year-over-year in December, even as inventories ticked up 2.2% to $251.2 billion.

The standout here is the category of petroleum and petroleum-products inventories. Inventories and sales are valued in dollars, and the sharp drop in crude oil prices since August caused the dollar amount of petroleum and petroleum-products inventories to drop 12% year-over-year in December. Between September and December, inventories plunged 21% in dollar terms to $20.4 billion.

The problem is in Durable Goods Inventories

Sales of durable goods by wholesalers ticked up 3.5% year-over-year in December to $245.6 billion. But inventories of durable goods at wholesalers surged 10.6%, to $410 billion – the steepest increase since 2012, the period of inventory restocking coming out of the Great Recession:

Here are some standout categories, in terms of percent change in December 2018, compared to December 2017. Note the three categories with double-digit jumps, two of them relating to the construction sector:

  • Furniture & Home Furnishings: +8.9%
  • Motor Vehicle & Motor Vehicle Parts & Supplies: 7.3%
  • Machinery, Equipment, & Supplies: 12.7%
  • Hardware, Plumbing & Heating Equipment & Supplies: 12.1%
  • Lumber & Other Construction Materials: 14.9%
  • Household Appliances & Electrical and Electronic Goods: 6.5%.

The chart below compares the year-over-year percent change in durable goods inventories at wholesalers to the year-over-year percent change in the Cass Shipments Index. Note the turning point in shipments late last year. Inventories follow with a lag.

This situation of ballooning inventories on soft sales is showing up in the warehousing industry – and it’s getting blamed on companies trying to front-run trade tariffs. The surge of imports ahead of the potential tariffs – coming on top of the usual increase of inventories ahead of the Chinese Lunar New Year – has left warehouses and shipping terminals in Southern California “overstuffed and distribution networks jammed,” the Wall Street Journal reported.

“That stacked-up inventory is straining logistics capacity around the neighboring ports of Los Angeles and Long Beach, which together comprise the biggest U.S. trans-Pacific gateway,” the WSJ. It quoted BJ Patterson, CEO of warehouse operator Pacific Mountain Logistics in San Bernardino: “In 30 years, I’ve never seen anything like this,” he said.

Increasing inventories is counted as a business investment and is added to GDP growth; This is what has been happening much of last year. But conversely, the inevitable decline in inventories will be subtracted from GDP growth.

Apocalypse not now

The goods-based sectors comprise the smaller part of the economy. The services sectors dominate. The biggest of them are healthcare, finance, and housing (rents are services). In the US, you cannot get an overall recession with just the goods-based sector slowing down, as we have seen in 2016. It will pull down overall growth in the economy but won’t push the US into a recession. For a recession to happen in the US, the services sectors need to approach the zero-growth line, while the goods sectors are in decline – and that is not yet in sight.

Something has to give. Read…  What Trucking & Freight Just Said About the Goods-Based Economy in the US

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🚢 Inventory Pileup Sounds Alarm for Goods-Based Economy
« Reply #72 on: May 23, 2019, 01:19:35 AM »
Nice Stateroom!  I could live in one of those no problem!

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<a href="http://www.youtube.com/v/NlrIc-cWlM4" target="_blank" class="new_win">http://www.youtube.com/v/NlrIc-cWlM4</a>
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https://www.cnbc.com/2019/05/24/maersk-earnings-profit-in-line-but-trade-tensions-a-concern.html

The world’s largest shipping firm warns of ‘considerable uncertainties’ as trade tensions rise
Published Fri, May 24 2019 3:21 AM EDTUpdated Fri, May 24 2019 5:38 AM EDT
Matt Clinch
@mattclinch81
   
   
Key Points

    Earnings before interest, tax, depreciation and amortization (EBITDA) totaled $1.24 billion for the quarter, compared with $1.25 billion forecast by analysts in a Reuters poll.
    Maersk, the world’s largest container shipping company, said it still expects 2019 EBITDA of about $5 billion.

watch now
VIDEO01:57
Maersk CEO: Don’t see trade tensions going away anytime soon

Danish shipping firm Moller-Maersk posted first-quarter profit close to expectations on Friday, warning that trade tensions and slowing economic growth constitute “considerable uncertainties.”

Earnings before interest, tax, depreciation and amortization (EBITDA) totaled $1.24 billion for the quarter, compared with $1.25 billion forecast by analysts in a Reuters poll.

Maersk, the world’s largest container shipping company, said it still expects 2019 EBITDA of about $5 billion.

“We are still facing considerable uncertainties,” CEO Søren Skou said in a press release, mentioning “the risk from trade tensions.”

In the first quarter, “volumes on trans-Pacific trade between Asia and North America have shown signs of decline and new tariffs can potentially reduce expected growth in global container volumes by up to 1 percentage point.” he added.
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VIDEO02:11
Maersk CEO: We had a good start to the year

President Donald Trump unexpectedly accused China of reneging on a deal earlier this month and announced that tariffs on $200 billion worth of Chinese goods would increase to 25% from 10% on May 10.

Beijing retaliated, raising levies on $60 billion worth of U.S. products. In the last two weeks, the Trump administration also put Chinese telecom giant Huawei on a blacklist that prevents it from buying from American companies without U.S. government permission.

Speaking to CNBC Friday, Skou highlighted that the U.S. also has an outstanding discussion with the European Union.

“If the Chinese-U.S. conflict is resolved then our expectations would be that it would immediately lead to a discussion between the EU and the U.S. So I don’t believe that we will be done with tensions anytime soon, ” he told CNBC’s “Street Signs” Friday.

—Reuters and CNBC’s Evelyn Cheng contributed to this article.
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https://www.foxnews.com/weather/midwest-farmers-in-limbo-as-flooding-halts-traffic-along-mississippi-river

Midwest farmers in limbo as flooding halts shipping along Mississippi River

By Mitti Hicks | Fox News


Another blow to farmers as Mississippi River flooding impacts production

Farmers uncertain about future following record breaking rainfall

ROCK ISLAND, Ill. -- The Mississippi River is one of the backbones of the U.S. economy. During the spring season, barges carrying millions of tons of the nation’s most important resources can be seen crisscrossing the river.

“The river is called the ‘Mighty Mississippi’ for good reason,” said Deb Calhoun, senior vice president for the Waterways Council, Inc. “It is the key shipping artery for agriculture, inputs to manufacturing, chemicals, energy products, construction and building materials that are used domestically and for export to the world market through the Gulf of Mexico.”

But there’s not much water traffic this spring season due to historic flooding from snowmelt and rain in America’s heartland.  Record-breaking rainfall has caused flooding along the Mississippi River and as a result, the river is basically closed for business.

OKLAHOMA FLOODING VICTIM SAYS NEIGHBORS ARE FERRYING SUPPLIES

“In a normal spring season, after we open the river back up for maintenance, we would be seeing a slew of barges coming through with products to get to farmers,” said Tom Heinfold, chief of operations for the U.S. Army Corps of Engineers.“But due to flooding, we’ve had to close our locks and none of those products are coming up this way.”
Lock and Dam 15 is a located between Rock Island, Illinois and Davenport, Iowa on the Mississippi River is one of the few along the entire system that is functioning properly as major flooding overwhelms the Mississippi River.

Lock and Dam 15 is a located between Rock Island, Illinois and Davenport, Iowa on the Mississippi River is one of the few along the entire system that is functioning properly as major flooding overwhelms the Mississippi River.

The Mississippi River originates from Lake Itasca in northern Minnesota and runs approximately 2,350 miles south to the Gulf of Mexico. The river is joined by hundreds of tributaries, including the Illinois, Missouri, and Ohio Rivers.

There are a total of 29 locks and dams on the Upper Mississippi River from St. Paul, Minn. to St. Louis, Mo. that are operated by the U.S. Army Corps of Engineers. They help maintain a nine-foot channel along the river to help the barges move through bodies of water that are at different heights.

HISTORIC FLOODS IN THE MIDWEST HAVE FARMERS WORRIED ABOUT THEIR FUTURE

The flooding, however, has caused too much water for the lock and dam systems to work properly, so ships are unable to get through the locks safely.
This graphic shows how a properly functioning lock and dam works. The system helps maintain a nine-foot channel along the river to help the barges move through bodies of water that are at different heights similar to an elevator.

This graphic shows how a properly functioning lock and dam works. The system helps maintain a nine-foot channel along the river to help the barges move through bodies of water that are at different heights similar to an elevator.

“We have never had the river closed for this long in a single year," Heinfold said. "It’s devastating for the economy.”

About 25 million tons of product travels through this part of the Mississippi River in a typical year, according to Heinfold. The impact from flooding is preventing products like fertilizer from getting to farmers in the region.

“By this time of the year, all of the farmers across Illinois and Iowa should have their crops planted right now and have the fertilizer on the field. It’s been so wet that farmers haven’t been able to get on their fields to plant and they wouldn’t anyway unless they knew that the fertilizer was right behind. The fertilizer has to get on the fields before the grains can sprout obviously but that can’t happen right now,” Heinfold said.

Already facing financial strains due to trade disputes with China and Mexico, the weather has caused a delay for farmers like Paul Jeschke, who has a soybean and corn farm in Mozan, Ill.

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“Normally, we’re hoping to have our planting wrapped up to about the first week in May,” said Jeschke.  “As of now, the very end of May, after Memorial Day now, we only have about 10 percent of our corn planted in one field and 4 percent of our soybeans planted.”
Illinois farmer Paul Jeschke looks out on his corn crop. The wet season has prevented him from planting 90 percent of his corn crop.

Illinois farmer Paul Jeschke looks out on his corn crop. The wet season has prevented him from planting 90 percent of his corn crop.

About 98 percent of everything that is sold on the international market from the U.S. goes through a navigation system maintained by the U.S. Army Corps of Engineers, according to Heinfold.

“Rivers are the most efficient means to transport American goods,” he said. "We can take nearly 1,000 tractor trailers off the road with every single 15-barge tow that comes through the river.”

The U.S. Army Corps of Engineers said it will take at least three weeks without any rain in the forecast before the water goes down low enough within the Rock Island, Ill. district before they can open the locks up again. So they are hoping it reopens towards the end of June -- if the rain holds off.

“When the water does go down,  there’s a lot of work to do to restore the locks to an operational status,” Heinfold said. “There’s a lot of rift that piles up on the walls, there’s logs and trees that come down in pieces on the docks. Right now, that work is at least two or three weeks off."
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