HANSA 03-2017

Häfen | Ports

Häfen | Ports Calculated optimism at U.S. ports Protectionism? Trade war? Investment! Regardless of economic uncertainties, US ports are confident in their future as large investments prove. Hardly any player in the maritime industry wishes to comment on the new government. By Michael Meyer According to the American Association of Port Authorities (AAPA) seaport activity supports 23 mill. US jobs and generates 321 bn $ in federal, state and local tax revenue each year. The total value of economic activity related to America’s seaports is 4.6 tn $, representing 26% of the US economy. However, these figures apply to the time prior to the new federal government. The new US president wants to boost the exports of the US economy and even push them into new dimensions. This is good for the ports, especially those who are active in the export of oil and oil products. Further facilitations for exporters are to follow. After the first few weeks in offce, the new government’s legacy is, above all, the withdrawal from free trade as practiced so far. Trump put the US involvement in the transpacific TTIP agreement into the trash bin and challenged the North American NAFTA agreement. The transatlantic counterpart TTIP is also frozen for an indefinite period. TTP and TTIP would have allowed the US ports to profit from additional cargo volumes. According to offcial data, Donald Trump is by no means heading towards foreclosure. He is rather striving for a reorganization of global trade patterns. »We are still going to trade, but we are going to have fair trade,« Trump said after the election. However, it could become problematic if other countries react to US import tariffs with import duties on their part. A scenario which may not only involve China but, for example, also Mexico. The country is the largest single importer of US oil products. According to the US Department of Energy, 80% of all gasoline imports are to be allotted to the U.S. Between 44% and 54% of all US gasoline has been exported to Mexico for the past five years. Trump will probably not scare off this trading partner. The International Energy Agency IEA expects a rise in US shale oil production after a somewhat weaker 2017. Pipelines play a central role in trumps plans. However, if oil is transported from the north to the refineries in the south, the ports could benefit from additional export volumes. It is true that oil imports should be subject to duties, which in turn could reduce incoming volumes. However, these losses could be compensated by new export volumes, experts say, possibly even more than compensated. This should also apply to other types of goods. At this point, however, some shipping companies are concerned. The Danish shipping giant A. P. Mœller Mærsk warns of a US-Chinese trade war, for example. CEO Soren Skou fears negative effects on the Group’s business. In container shipping, Maersk operates 21 North American services, and thus the owner ships 10% of all inbound and outbound US container loads, Maersk confirmed to HANSA. As far as trade policy is concerned, Maersk Group remains vague: »We do not comment on politics, however as a shipping company we are in favour of the free movement of goods and international trade. We believe trade contributes to prosperity and development, globally and locally. While it is regrettable if broad support for unratified trade agreements cannot be mustered, this will not change the status quo for global trade.« The company added it was still too early to comment on the potential outcome of renegotiations of existing trade agreements. The shipping organization Bimco recently warned of protectionist tendencies with a view to the container industry, which ba- Long Beach describes itself as »Ground Zero« in the U.S. fort he Hanjin bankruptcy Photo: Port of Long Beach 80 HANSA International Maritime Journal – 154. Jahrgang – 2017 – Nr. 3

Häfen | Ports sically rather harm the shipping industry than promote it. »Bimco expects US-bound exports out of Asia to grow slowly, as the economic growth weakens in the US.« Special significance is also attributed to sea-side vehicle transport. The Mexican car exports to the US have risen significantly in recent years, also thanks to the NAFTA trade agreement. Many European and American manufacturers produce in Mexico due to lower production costs. Around 3.4 mill. cars were produced there in 2015, 2.3 mill. thereof were sent to the US and Canada. The value of passenger cars exported from Europe to the US totalled some 41 bn € in 2015. Vice versa it was only 7 bn €. This is also owed to the better technological quality of European manufacturers. The consequences of Trump’s trade policy are also an issue in this sector. Wallenius Wilhelmsen does not generally expect any serious consequences, despite the announcement that 35% border taxes on cars from Mexico will be levied. Roberto Zavala, Mexico’s head of the European car carrier giant, says: »We believe that trade between Mexico and North America will be positive in 2017 and beyond.« Ultimately, general figures are only of limited relevance, and conclusions for the future development can only be drawn tentatively, because in some areas it is not clear, how the Trump government will decide and how the announcements made during the elections are actually enforced. Fundamental assumptions are possible. The government and the maritime authorities have said only very little so far. Beyond mantra-like assurances to strengthen business and infrastructure extensively, there is little concrete. At the request of HANSA, they either refer to one another as the Federal Maritime Commission (FMC) under their new Chairman Michael Khouri, referring to Maritime Administration (MARAD), or they do not react at all like the powerful environmental authority EPA or the ministries for transport and trade. A press release by Trade Minister Penny Pritzker says that the ports are enormously important and that their effectiveness and productivity are of great national interest. It is noteworthy that shortly after the election the government forbade some authorities to comment to the media – the incidents were made public via substitute Twitter accounts of the EPA and other authorities. Thus, transparency is a diffcult task. One of Trump’s plans is to levy duties on imported goods from China. This is of great significance for the People’s Republic since 18% of all exports are alloted to the USA. It remains to be seen how Beijing will react to such measures – provided they will actually be implemented – and which implications for the transpacific trade and hence the port business will occur. In addition, the domestic energy industry is to be massively supported, for example, oil and coal subsidies are to be heated up in order to stimulate export. This could be a success. AAPA does not speculate And what is the situation with the relevant associations, which based on their very organizational structure would like to maintain a good relationship with the administration in order to maintain a certain degree of influence? Responding to a HANSA request whether the new administration might have a significant effect on port business, AAPA-CEO Kurt Nagle says: »We aren’t speculating on the effects the new administration will have on trade po- Exporting Cars in the U.S. is an important part for German trade and creates sugnificant volumes in the port of Emden Concerns in Germany For the German port and export industries, the U.S. has always been an important economic pillar next to Asia. At the quays between Ems and Oder great attention is drawn to the activities overseas. »The German port industry is watching the increased drive for protectionism with concern, which seems to have found its most fantastic and powerful advocate in Donald Trump,« says Daniel Hosseus, Senior Managing Director of the Association of German Seaport Operators (ZDS). However, as the shape of the future American trade policy and the reactions of the trading partners could only be guessed at, their significance for the business of the German port companies cannot be assessed, yet. »The uncertainty created by Donald Trump in the election campaign and fueled further now is in any case hardly conducive,« Hosseus says. The President of the American Chamber of Commerce in Germany, Bernard Mattes, was also very concerned in media reports after a visit to Washington. Unfortunately, the supporters of protectionism are on the advance, the congress is working on a 20% import tax, which could hit Germany’s exports hard. In the recent past, the business of German port companies with North America has developed quite variably. In the first half of 2016, the volumes received from North America rose by 5.2% compared with the previous year. It should be taken into account that incoming goods from the USA decreased by 3.7%, while those of Canada rose by almost 25%. When shipping to the USA, the volume grew by 4.2%, although the shipping to Canada rose by 11.5% and the United States by only 2.4%. While container traffc fell by 2.9% from 2014 to 2015, the first half-year saw a significant increase of 26.7% to 838,000 TEU. In 2015 the main imports from North America were coal, crude oil and natural gas, agricultural products, ores, rocks and earth metals. Main exports in 2015 were metals and metal products, followed by vehicles and chemical products. Photo: Hero Lang HANSA International Maritime Journal – 154. Jahrgang – 2017 – Nr. 3 81