We agree that we know what the biggest story of the year was, but whether you consider the side effects of the pandemic or not, there were notable changes that happened in supply chains that heading into 2021 will make an impact into the first quarter and beyond. Our goal is to share our thoughts and observations and hope they stimulate some thoughts from you, our readers.
2020’s Biggest Transport Story
The chicken and the egg argument could be made regarding blanked sailings and global container imbalances. Were it not for the increasing number of blanked sailings in the prolonged, COVID-impacted post Lunar New Year period, loaded and empty export containers would have been repositioned in Asia when factories in the region reopened after gaining control of their COVID outbreaks as Europe and the Americas began shutting down.
Another eligible candidate could be the impact on air freight rates and capacity when passenger airplanes shut down their global networks in March. The global press for PPE pushed rates through the roof leaving Asia and cargo airlines reaped the rewards. Passenger airlines removed seats and introduced “pfreighters” as the vaccine supply chain and airlift are now underway.
The winner, though, is a story you probably heard the least about. With countries prohibited entry of non-citizens and international passenger flights all but non-existent, the plight of seafarers trapped on their vessels unable to go home is the largest story – and tragedy – of 2020. Captains, engineers and sailors from countries like India, Sri Lanka and the Phillipines – home to many who crew container and cargo ships on the high seas, were stranded aboard ships, unable to disembark at ports of call, unable to change crews in their normal hubs like Singapore and became increasingly lonely, isolated and suicidal.
The maritime trade press covered the issue, but it wasn’t until later this year that it hit the wider media and called attention to their struggle. Things are better today, but still are nowhere near as fluid as they should be to return these brave people to their homes when their time aboard ship should be up.
2021’s Biggest Story – Our forecast
If we were one year further down the calendar – or the contract extension negotiated differently – we’d be talking about the expiration of the ILWU’s contract on the US West Coast and what type of automation and changes employers would be demanding in the wake of the horrible conditions at the pier and at anchor right now. Fortunately that contract runs through July, 2022, so watch this space twelve to fourteen months from now.
Looking ahead, the biggest story of 2021 will be what happens to bilateral and multilateral trade agreements between nations and trading blocs.
Canada, the US and Mexico moved forward with USMCA despite the pandemic conditions, so the full manufacturing and cross-border freight volumes have not yet been realized. The EU and the UK are still without agreement, and Michael Barnier and the UK are working diligently to beat the deadline, but as The Loadstar reports, Q1 in UK/EU trade relations will be challenging and supply chains will not have had adequate time to prepare.
President-Elect Biden has already said Section 301 duties with China will remain in place, so importers seeking immediate relief will need to continue to cast their eyes towards the CIT where the legitimacy of List 3 & List 4a are being challenged. With China having purchased less than their commitment’s worth of exports so far, relief, if any, will not likely be seen until late 2021.
For US importers, the potential expiration of GSP at the end of this calendar year – a program always seemingly a plaything of Congress but the lifeblood of the developing countries and the importers who support them, could add additional duty outlays at a time when Section 301 and 232 duties from China and other countries, as well as the looming spectre of additional 301 duties on Vietnam before the end of the Trump administration. Yes, every single prior year the government has refunded GSP duties retroactively when the program expired, but it still comes at a time when cash flow for their businesses is paramount.
Within all these trade deals, however, come silver linings in some cases. Will a new administration thaw relations with the WTO, leading to the removal of dueling duties on Scotch and bourbon? Not fighting trade wars to the East and West could quickly bolster American exports, get containers moving around the world and improve the trade deficit which increased in 2020.
With our strategic locations in the United States, Asia, Europe and the United Kingdom, RIM is prepared to help our global customers navigate these murky waters. For more information including how our consulting teams can help prepare supply chains for these kinds of shocks, contact us today.
