(Roughly) Daily

Posts Tagged ‘commerce

“As people who deal with the ocean you must see the irony. We are facing a shortage on a planet whose surface is covered two-thirds with water.”*…

The Panama Canal has become a vital link in the web of global trade, especially that trade that connects Asia and the U.S. U.S. commodity export and import containers account for 73% of Panama Canal traffic, representing about $270 billion in cargo. That trade is now constrained, as water shortage has reduced the Canal’s throughput…

For months, the global shipping community has been closely watching the Panama Canal, as a severe drought has threatened water levels and forced the Panama Canal Authority to enact restrictions on the maximum weight and size of vessels that can transit its waters. The impact of the Panama Canal Authority’s restrictions has been negligible, as lower shipping demand offset any vessel weight restrictions–until now…

It takes almost 200 million gallons of water for every ship to transit the Panama Canal. And, in a drought, that’s become a problem. The Panama Canal operates with a lock system that is fed via freshwater drawn from Lake Gatun. The water flows from the lake, the high point of the canal, down through the lock system and is then discharged to sea. While the canal’s newer locks can recycle about 60% of its water, it still requires a tremendous amount of water for every ship to pass through.

At this time of year, the lake’s average water level should be around 87 feet, but the lake currently sits at 81.8 feet and is forecasted to remain at or near that level through January. To make matters worse, the lake is only receiving 70% of the intake it needs (largely from rain) to satisfy the canal’s water usage.

To combat this, about a year ago the Panama Canal Authority began limiting the draft of vessels (the distance between the waterline and the deepest point of the boat) that are using the canal. The current draft limit is 44 feet (from a normal 50 feet). A lot of factors influence the draft of a vessel but the number one factor which can be controlled most readily is the vessel’s weight. For every one foot of draft reduction, a container ship has to reduce its weight by the equivalent of 300-400 TEU (at 14 tonnes of cargo). Therefore a six-foot reduction in draft equates to 1800-2400 TEU of reduction in vessel capacity.

As the reduction in vessel draft proved to not be enough to manage Lake Gatun water levels, the Canal Authority began to limit the daily transits of vessels. The canal normally sees 34 planned transits per day. This has been reduced to 24 transits and is forecast to reduce to 18 by February 1, 2024…

“What You Need To Know About the Impact of the Panama Canal on Global Logistics”

Consequently, shipping companies are faced with a thorny choice: They can risk waiting for days, pay a big fee to jump the line (currently running at $4-4.5 million per passage), or avoid the canal entirely by taking a longer route… any of which increase the cost of transit– a cost that likely to show up in prices…

… Shipping companies are set to incur heavy losses due to the bottleneck. Maersk, which is the second-largest shipping company in the world, said it was working to ensure the backlog did not disrupt its deliveries. “We follow the guidance from the Panama Canal and adapt our intake on relevant services in advance of the departure at origin. Maersk remains committed to minimizing disruptions to our operations,” it said in a press release. The Danish company moves more than four million TEU (Twenty Foot Equivalent Unit) vessels every year. In 2021, it saw its revenues reach $62 billion. Maersk added that the low water levels in the Panama Canal were a stark reminder of the climate crisis, and its ripple effect on global supply chains.

There is still no estimate of how much the Panama Canal jam will cost shipping companies, but the situation is a reminder of the 2021 crisis in the Suez Canal in Egypt. In that case, shipping companies suffered multi-billion dollar losses when the Ever Given container ship got stuck and blocked access to the canal…

The economic impact of the Panama Canal jam: Inflation and shipping losses

Capacity is down; time-to-market is up; and costs are rising: The Panama Canal is under environmental pressure.

See also: “Drought Saps the Panama Canal, Disrupting Global Trade” (gift article).

* Clive Cussler, Blue Gold


As we deal with drought, we might recall that it was on this date in 1982 that a soil sample taken in Times Beach, Missouri, was found to contain 300 times the safe level of dioxin (c.f. Agent Orange). A byproduct of the manufacture of hexachlorophene (banned in 1972) by NEPACCO (the North Eastern Pharmaceuticals and Chemicals Company), the dioxin was meant to be stored securely onsite, but was eventually improperly disposed of in a trench in the facility, and by a local waste handler.

Times Beach– well over 2,000 residents– was completely evacuated and relocated early in 1983. The land that was once Times Beach is now Route 66 State Park. One building from the town still exists: the park’s visitor center was once a roadhouse from Times Beach’s glory days and was the EPA’s headquarters for the area.


“The best way to destroy the capitalist system is to debauch the currency”*…

… the capitalist system or for that matter, just about any economic system. So the keepers of those systems, the 169 authorities that issue money around the world, take that threat very seriously. About half of them depend on one company, De La Rue. As Samanth Subramanian explains, the pandemic has been a roller coaster ride for cash– and thus for De La Rue…

… De La Rue… is in the high-stakes business of authentication. It designs and prints national passports, as well as the silver foil labels that mark cigarette packs and alcohol bottles as genuine. Most crucially, it works with roughly half of the world’s central banks on their currency notes: designing them, developing security features to protect them from counterfeiting, and printing them. From its presses in Asia and Europe, De La Rue turns out up to 6 billion banknotes a year, making it the world’s largest commercial printer of currency.

That number is only a fraction of all the notes printed worldwide annually. The biggest central banks—such as those of the US, China, India, and Brazil—tend to have their own presses. Still, many smaller countries outsource their production of money. De La Rue prints British pounds, Fijian and Barbadian dollars, Qatari riyals, Sri Lankan rupees, and dozens more currencies…

[There follows a fascinating history of the company…]

… A major issuer like the Bank of England will place a currency order annually; smaller banks can order once every few years. But the past is not always a reliable guide. During times of inflation, for instance, the demand for notes grows. De La Rue is one of the few companies for which inflation—or, for that matter, regime change—is a good thing. The fall of Saddam Hussein warranted new notes; so did the creation of South Sudan.

Most countries are better prepared for more predictable cycles of cash use. Around the Middle East, central banks arrange to have more currency on hand before Eid al-Fitr, when it’s customary not only to spend money on festivities but also to hand out gifts of crisp new notes. The same goes for the Chinese New Year and Christmas.

The pandemic proved to be unexpectedly disruptive. A casual observer may have expected cash use to plunge in 2020, as people stayed home during lockdowns and worried about catching the virus from banknotes. In fact, disasters tend to drive people toward cash, as a physical store of safety and wealth. As a result, in most countries, the average value of notes drawn from ATMs went up by about 25-30%. Central banks also wanted new, cleaner notes, and larger stocks of notes in general, so they ordered more.

Across the US and Eurozone, total currency in circulation in September 2020 was more than 10% higher than the previous year. In the US, the number of notes circulating usually tends to rise by an annual 1-2 billion. In 2020, that figure surged to 6 billion.

De La Rue welcomed the bonanza. It had suffered a setback in 2019, when it failed to win a £490 million contract to print the new, post-Brexit British passport. (Ironically, the job went to an EU company). But after the pandemic glut of orders for new notes, demand sank to lower-than-normal levels between 2021 and 2022. The currency division’s revenues fell 2.1%, to £280.9 million. The chair of De La Rue’s board resigned in April 2023 after the company put out a profit warning—its third in a year (a new chair was appointed in May). For De La Rue, the hangover from the pandemic has been more challenging than the pandemic itself…

The world’s largest money printer made bank during the pandemic: “De La Rue: Currency printer to the world,” from @samanth_s in @qz.

* Vladimir Lenin


As we muse on money, we might recall that it was on this date in 1939 that The Wizard of Oz was first shown to the public in Dennis, MA, one of three test screenings ahead of the official release. Fearing the film would be unpopular, MGM executives opted to gauge audience reaction. The film was of course well received, and the studio proceeded with the star-studded Hollywood premier at Grauman’s Chinese Theater (on August 15).

And on the subject of currency, it’s worth noting that many view Dorothy’s trek to the Emerald City to be a lightly-veiled critique of the Gold Standard


Written by (Roughly) Daily

August 11, 2023 at 1:00 am

“One bullion cube… one Concord grape… one Philly cheese-steak… and a jar of garlic pickles! No one will want to kiss me after these, eh, Smithers?”*…

Kunwar Khuldune Shahid explains how immigration patterns and global politics — plus a bit of serendipity — intertwined to make Philadelphia’s iconic sandwich a hit in a 13-million-resident Pakistani megalopolis…

… [Chef Mazhar] Hussain has worked at some of the most high-profile restaurants in Lahore — Monal, Tuscany Courtyard, Chaayé Khana and Café Aylanto, among others — covering a wide range of cuisines. His experience at Philly’s Steak Sandwich, though, has been unique. It’s a smaller restaurant than those, he says, and the guests come from all walks of life. The one thing that connects them: “The steak sandwich is extremely popular with everyone.”

Philly’s Steak Sandwich sits on a small highway apart from Johar Town’s main food centers, atop a hair salon. The shop fights for customers with a biryani restaurant across the street and buzzes all evening with motorbikes and cars jammed into the cramped parking spaces. The cheese­steak is especially popular among nearby students, who can enjoy it for PKR 579, or a little over two bucks.

Lahore, Pakistan’s second-largest city and the capital of the historic Punjab region, is considered the country’s food hub (although citizens of Karachi loudly dispute that claim). Its location at the crossroads of the many empires to have ruled over the Indian subcontinent, from the Mughals to the British, has added multicultural layers to Lahori heritage and culture. This is reflected in the city’s food, which blends Persian and Afghan flavors, a combination we now deem synonymous with the cuisine of North India — which Lahore was an integral part of before the 1947 partition created what is today called Pakistan, in the northwestern part of the Indian subcontinent.

That Indic syncretism, which Lahore has oozed with for centuries, is today introducing a new cuisine to the city’s taste buds: Philadelphian. But while Philly’s Steak Sandwich might be the first to put our city’s renowned sandwich on local billboards, Lahore’s love-in with the cheesesteak is, in fact, decades old…

More fission than fusion: “The Amazing Story of How Philly Cheesesteaks Became Huge in Lahore, Pakistan,” from @khuldune in @PhiladelphiaMag.

*  “Montgomery Burns,” in The Simpsons


As we muse on migration, we might recall that it was on this date in 1959 that the St. Lawrence Seaway opened. A system of locks, canals, and channels in Canada and the United States, it permits oceangoing vessels to travel from the Atlantic Ocean to the Great Lakes of North America– as far inland as Duluth, Minnesota, at the western end of Lake Superior.  The Seaway handles 40–50 million tons of cargo annually, about 50% of of which travels to and from international ports in Europe, the Middle East, and Africa.


Written by (Roughly) Daily

April 25, 2023 at 1:00 am

“The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood”*…

… so the quality of those thoughts matters– as does their diversity. Ha-Joon Chang surveys the monoculture of current economic thinking, explains why that’s problematic, and proposes a remedy…

… Up to the 1970s, economics was populated by a diverse range of ‘schools’ containing different visions and research methods – classical, Marxist, neoclassical, Keynesian, developmentalist, Austrian, Schumpeterian, institutionalist, and behaviouralist, to name only the most significant. These schools of economics – or different approaches to economics – had (and still have) distinct visions in the sense that they had conflicting moral values and political positions, while understanding the way the economy works in divergent ways. I explain the competing methods of economists in my book Economics: The User’s Guide (2014), in a chapter called ‘Let a Hundred Flowers Bloom – How to “Do” Economics’.

Not only did the different methods coexist but they interacted with each other. Sometimes, the competing schools of economics clashed in a ‘death match’ – the Austrians vs the Marxists in the 1920s and ’30s, or the Keynesians vs the neoclassicals in the 1960s and ’70s. At other times, the interactions were more benign. Through debates and policy experiments tried by different governments around the world, each school was forced to hone its arguments. Different schools borrowed ideas from each other (often without proper acknowledgement). Some economists even tried the fusion of different theories – for example, some economists fused the Keynesian and the Marxist theories and created ‘post-Keynesian’ economics.

Economics until the 1970s was, then, rather like the British food scene today: many different cuisines, each with different strengths and weaknesses, competing for attention; all of them proud of their traditions but obliged to learn from each other; with lots of deliberate and unintentional fusion happening.

Since the 1980s, however, economics has become the British food scene before the 1990s. One tradition – neoclassical economics – is the only item on the menu. Like all other schools, it has its strengths; it also has serious limitations… neoclassical economics is today so dominant in most countries (Japan and Brazil, and, to a lesser extent, Italy and Turkey are exceptions) that the term ‘economics’ has – for many – become synonymous with ‘neoclassical economics’. This intellectual ‘monocropping’ has narrowed the intellectual gene pool of the subject. Few neoclassical economists (that is, the vast majority of economists today) even acknowledge the existence, never mind the intellectual merits, of other schools. Those who do, assert the other varieties to be inferior. Some ideas, like those of the Marxist school, they will argue, are ‘not even economics’. It’s claimed that the few useful insights these other schools once possessed – say, for instance, the Schumpeterian school’s idea of innovation, or the idea of limited human rationality from the behaviouralist school – have already been incorporated into the ‘mainstream’ of economics, that is, neoclassical economics. They fail to see that these incorporations are mere ‘bolt-ons’, like the baked potato beside a Pizzaland pizza, rather than genuine fusions – like Peruvian cuisine, with Inca, Spanish, Chinese and Japanese influences, or the dishes by the Korean American chef David Chang (no relation), with American, Korean, Japanese, Chinese and Mexican influences…

The problem… is the almost total dominance of one school, which has limited the scope of economics and created theoretical biases and blindspots. In the same way in which the country’s refusal to accept diverse culinary traditions made Britain before the 1990s a place with a boring and unhealthy diet, the dominance of economics by one school has made economics limited in its coverage and narrow in its ethical foundation…

Economics… influences who we are by affecting the way the economy develops and thus the way we live and work, which in turn shapes us… economics influences the kind of society we have. First, by shaping individuals differently, varying economic theories make societies of contrasting types. Thus, an economic theory that encourages industrialisation will lead to a society with more forces pushing for more egalitarian policies, as explained above. For another example, an economic theory that believes humans to be (almost) exclusively driven by self-interest will create a society where cooperation is more difficult. Second, different economic theories have different views on where the boundary of the ‘economic sphere’ should lie. So, if an economic theory recommends privatisation of what many consider to be essential services – healthcare, education, water, public transport, electricity and housing, for example – it is recommending that the market logic of ‘one-dollar-one-vote’ should be expanded against the democratic logic of ‘one-person-one-vote.’ Finally, economic theories represent contrasting impacts on economic variables, such as inequality (of income or wealth) or economic rights (labour vs capital, consumer vs producer). Differences in these variables, in turn, influence how much conflict exists in society: greater income inequality or fewer labour rights generate not just more clashes between the powerful and those under them but also more conflicts among the less privileged, as they fight over the dwindling piece of pie available to them.

Understood like this, economics affects us in many more fundamental ways than when it is narrowly defined – income, jobs and pensions. That is why it is vital that every citizen needs to learn at least some economics. If we are to reform the economy for the benefit of the majority, make our democracy more effective, and make the world a better place to live for us and for the coming generations, we must ensure some basic economic literacy…

Economics is the language of power and affects us all. What can we do to improve its impoverished menu of ideas? The case for economic literacy: “The Empty Basket,” in @aeonmag. Eminently worth reading in full.

* John Maynard Keynes


As we go to school, we might spare a thought for a candidate for study, David Ricardo; he died on this date in 1823.  A political economist, he developed a labor theory of value in his seminal Principles of Political Economy and Taxation, published in 1817; he was instrumental in the development of theories of rent, wages, and profits; and at a time of mercantilist sentiment, he introduced the theory of competitive advance and advocated free trade.  Indeed, most economists rank Ricardo as the second most influential economic thinker working before the 20th century, after Adam Smith.



“You are where you are today because you stand on somebody’s shoulders”*…

Leon Prieto and Simone Phipps, two management professors who are husband and wife and and the co-authors of African American Management History, have been working to fill in the gaps in business history left by the omission of Black business stories. The pair argue that the ideas supported by African American managers during the first few decades of the 20th century, a relative golden age for Black business, hold lessons that are relevant in this century– perhaps especially the example of Charles Clinton Spaulding, who led North Carolina Mutual Life Insurance Company, the largest African American life insurance company of the times, for 50 years until his death in 1952…

Several years ago, reading a book about Black business history, and then checking the bibliography for original sources, Prieto discovered a kind of manifesto Spaulding had written in 1927 for the Pittsburgh Courier, the largest Black newspaper of the era, reaching hundreds of thousands of readers. Under the headline “The Administration of Big Business,” Spaulding shared his views on running a major firm. To his mind, the eight fundamentals of operations that demanded a leader’s attention were: cooperating and teamwork; authority and responsibility; division of labor; adequate manpower; adequate capital; feasibility analysis; advertising budget; and conflict resolution.

His article, the scholars note, was published 20 years before similar theories about the functions of management by Henri Fayol, a French theorist and textbook mainstay, were translated for American readers. Despite the overlap in the two men’s thinking, only Fayol has been awarded institutional recognition. (The podcast Talking About Organizations, which invited Prieto and Phipps to be guests on the show last year, has transcribed Spaulding’s article in full, here.)

In the writings and speeches in Spaulding’s archives, housed at Duke University, Phipps and Prieto discovered an unrelenting call for cooperation and consensus-building within organizations, and an emphasis on the symbiotic relationship between a company and the world outside its doors.

Spaulding’s devotion to a collective style of working and to corporate social responsibility was not an isolated case of the era. Nor did it materialize strictly as a response to the times, the pair assert. Rather, they hypothesize that the cooperative model that was popular among Black businesses then—and which infused the way free-market enterprises operated in the Black Wall Streets of Durham and other American cities like Tulsa, Oklahoma—grew out of a much older African philosophy called Ubuntu, a Nguni Bantu word meaning humanity, derived from an idiom that’s sometimes translated as “I am because we are” or “a person is a person through other persons.” Ubuntu as a world view that stresses our interconnectedness was popularized globally in the 1960s, primarily by Desmond Tutu, the South African archbishop emeritus and Nobel Peace Prize-winning human rights activist.

The sense that ubuntu defines our human experience is common in several African cultures, Prieto says, and manifests in a range of cooperative financial models that flourish across the African diaspora. (For example, he had grown up contributing to sou sou, or a savings club, he tells his students in lectures, and it was a sou sou that allowed him to purchase the plane ticket that brought him the US.) It may not have been called ubuntu, but that moral code survived as a shared value among Africans enslaved in the US, Prieto and Phipps say…

Stories from which we can learn: “The history of Black management reveals an overlooked form of capitalism,” from @qz.

* “You are where you are today because you stand on somebody’s shoulders. And wherever you are heading, you cannot get there by yourself. If you stand on the shoulders of others, you have a reciprocal responsibility to live your life so that others may stand on your shoulders. It’s the quid pro quo of life. We exist temporarily through what we take, but we live forever through what we give.” – Vernon Jordan


As we rethink the rules, we might recall that it was on this date in 1950 that Dr. Carter G. Woodson, a noted, historian, journalist, author and the founder of the Association for the Study of African American Life and History, began “Negro History Week”– the forerunner to Black History Month.