is global shipping threatened by protectionism?
TRANSCRIPT
IS GLOBAL SHIPPING THREATENED BY PROTECTIONISM?
ABOUTXENETA
At Xeneta we believe there is an untapped potential for everyone in the industry, to systematically learn from our individual and collective efforts. We hold true that "if you cannot measure it, you cannot improve it". That’s why we think actionable metrics is the key to continuously evolve for every business, and ultimately the entire industry. Rethinking global logistics is the vision of Xeneta.
With international experience from the logistics industry, we have first-hand knowledge of the challenges related to high volatility and lack of transparency in the ocean freight market. By combining logistics background and information technology expertise, we found the solution
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WHILE PROTECTIONISM IN TRADE MAY BODE WELL FOR TRADE ITSELF, DOES THIS PROTECTIONISM AFFECT OR THREATEN GLOBAL SHIPPING?
WE ASKED OUR SOCIAL MEDIA COMMUNITY “DO YOU BELIEVE
GLOBAL SHIPPING IS THREATENED BY THE RISING PROTECTIONIST
SENTIMENT?”
HERE ARE THE RESULTS AND ANALYSIS OF PROTECTIONISM.
TAKING PART IN THE SURVEY, VIRGILL RATLIFF OF EXCELSIOR WORLDWIDE FREIGHT LOGISTICS AND HARIESH
MANAADIAR OF SHIPPING AND FREIGHT RESOURCE DO NOT BELIEVE THAT
PROTECTIONISM WILL BE A THREAT TO THE GLOBAL SHIPPING INDUSTRY
INDUSTRIAL ACTIVITY CLIMBING IN THE U.S. WITH HEAVY EMPHASIS ON EXPORTS. U.S. BUSINESS COMMUNITY WILL TEMPER
PRESIDENT TRUMP'S CALL FOR IMPORT RESTRICTIONS.
Mark Montague from DAT Solutions commented via Twitter
HOW DOES PROTECTIONISM WORK?
INCREASING IMPORT TARIFFS SO THE IMPORTED GOODS WILL NATURALLY BE PRICED HIGHER THAN LOCAL GOODS
INDUSTRIAL ACTIVITY CLIMBING IN THE U.S. WITH HEAVY EMPHASIS ON EXPORTS. U.S. BUSINESS COMMUNITY WILL TEMPER
PRESIDENT TRUMP'S CALL FOR IMPORT RESTRICTIONS.
Mark Montague from DAT Solutions commented via Twitter
SUBSIDIZING LOCAL GOODS/SERVICES SO THE PRICES WILL BE CHEAPER THAN IMPORTED GOODS OR THE GOVERNMENT ENTITIES THAT RECEIVE THESE SUBSIDIES WILL STAY IN BUSINESS
SETTING QUOTAS FOR IMPORTS SO THAT ONLY A CERTAIN QUANTITY CAN BE IMPORTED
LOWERING CURRENCY VALUE SO THAT IT MAKES A RATE OF EXCHANGE FAVORABLE FOR EXPORTERS BUT UNFAVORABLE FOR IMPORTERS
THE ANALYSIS | PROTECTIONISM AND GLOBAL
SHIPPING CORRELATION
IF ONE ANALYZES THE CORRELATION BETWEEN PROTECTIONISM AND
GLOBAL SHIPPING, ONE CAN SEE THE REASON WHY THE MAJORITY VOTED TO SAY THAT PROTECTIONISM WON’T
AFFECT GLOBAL SHIPPING.
MERCHANT MARINE ACT OF 1920 OF USA COMMONLY KNOWN AS THE
JONES ACT, A FEDERAL LEGISLATION, IMPOSES FOUR PRIMARY
REQUIREMENTS ON VESSELS CARRYING GOODS BETWEEN U.S.
PORTS.
OWNED BY U.S. COMPANIES THAT ARE CONTROLLED BY U.S. CITIZENS WITH AT LEAST 75 PERCENT U.S. PERCENT OWNERSHIP;
AT LEAST 75 PERCENT CREWED BY U.S. CITIZENS;
BUILT (OR REBUILT) IN THE UNITED STATES; AND
REGISTERED IN THE UNITED STATES.
RELATEDREADING:
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EFFECTS OF PROTECTIONISM
GLOBAL TRADE FLUCTUATES DUE TO A VARIETY OF REASONS
SUCH AS OVERCAPACITY, INCONSISTENT
FREIGHT RATES AND OIL PRICES. THERE IS
NO OFFICIAL EVIDENCE WHICH SUGGESTS
THAT THE COUNTRIES WITH THE
PROTECTIONIST POLICIES HAVE LOST
THEIR SHARE OF GLOBAL SHIPPING.
IN AN UNDATED ARTICLE, WILLIAM TURLEY WRITES
THAT:
IN 2011 ALONE, DOMESTIC SHIPPING GOODS AND SERVICES CONTRIBUTED $33.6 BILLION IN VALUE-ADDED TAXES, $21.7 BILLION IN LABOR COMPENSATION, AND AN ADDITIONAL $9.9 BILLION IN TAX PAYMENTS TO STATE AND LOCAL GOVERNMENTS.
AS PER THIS REPORT, THESE COSTS ARE ULTIMATELY INCORPORATED SOMEWHERE INTO THE COST OF THE GOODS BEING SHIPPED WHICH COULD END UP HARMING SMALLER ECONOMIES.
THOSE IN FAVOR, OF COURSE, SUGGEST THE JONES ACT HAS GUARANTEED U.S. SHIPPERS A MONOPOLY IN THE TRADE SPACE, THEREBY HELPING THE DOMESTIC COMPANIES HAVE LITTLE TO NO COMPETITION.
THERE ARE SEVERAL EXAMPLES OF SUCH PROTECTIONISM WHICH, WHILE PROVIDING SOME TEMPORARY RELIEF TO THE RECIPIENTS, WILL EVENTUALLY RESULT IN ALLOWING THE OVERCAPACITY OF TONNAGE TO CONTINUE WHICH MAY KEEP RATES FROM RISING FURTHER AND THIS IS SOMETHING THAT WILL NOT END WELL FOR EVERYONE CONCERNED.