(Roughly) Daily

Posts Tagged ‘freight

“The real danger is assuming that because you haven’t had a problem yet, you won’t have one soon”*…

Container ships docked at a port, surrounded by cranes and cargo containers stacked high, with a bridge in the background.

Joan Didion once observed that “survivors look back and see omens, messages they missed.” That’s certainly true in investment arena… where stock indices have been hovering near all time highs while everyone awaits the falling of the shoe(s) from Trump’s tariffs and assorted other blows to the economy. Will we look back in the not-too-distant future to signs that it couldn’t, thus wouldn’t, continue?

Omens registered in advance are “early warning signs.” A classic on the economic front is the “cardboard box index“; the output of cardboard boxes is believed to be an indicator of future production of consumer goods, since cardboard containers are so common for packaging and shipping these goods. It’s down.

Mike Schuler, the managing editor of gCaptain weighs in with another…

The U.S. container shipping industry is heading toward what could be one of the most significant volume declines in its six-decade history, according to the latest analysis from shipping expert John McCown.

August data revealed only a slight 0.1% year-over-year increase in inbound container volume at the ten largest U.S. ports, following a temporary reprieve in July when volumes rose 3.2%. Meanwhile, outbound volume in August dropped 2.6%, continuing an erratic pattern that saw a 2.0% increase in July and a 1.7% decrease in June.

The marginal growth in August inbound volumes can be attributed to an exception for goods in transit after the August 7 implementation of revised reciprocal tariffs. “The new tariffs did not apply to containers that were loaded on vessels at their last foreign port of call before August 7 provided they entered the U.S. before October 5,” McCown explains.

This exemption artificially supported August figures, as “the large majority of boxes coming into the U.S. in August being exempt from the tariffs going into effect on August 7.” McCown adds that this mechanism may have even incentivized strategic deployment adjustments where “ships were loaded by August 7 and slow-steamed to the U.S.”

A stark contrast is emerging between U.S. container volumes and global shipping trends. “When U.S. container volume data is compared to global data and data in other major areas, there is a noticeable and widening gap as the downtrends in U.S. lanes are being significantly mitigated by increased volume in other areas,” notes McCown.

Evidence of this divergence can be seen in Far East export figures, which “set a new record and were 6.3% ahead of the same month last year” in July. McCown observes that “world container supply chains have already begun to adapt and reconfigure trading patterns. The U.S. is a less relevant player in world trade today than it was prior to these various tariff initiatives and will become more so as announced plans are implemented.”

The National Retail Federation has revised its projection for 2025, now expecting total inbound volume to decrease by 3.4%. When considering that year-to-date volume through August shows a 3.1% increase, this projection translates to “the remaining four months of 2025 being down 15.7% compared to the same four months in 2024.”

September will likely mark the beginning of more pronounced declines. In a September 17 presentation, the Port of Los Angeles director stated they expected inbound volume to drop 10% compared to the same month last year. Container bookings data supports this outlook, with bookings from China to the U.S. down 26% in the first week of September compared to the same period last year.

The situation could worsen if currently paused reciprocal tariffs on Chinese imports are implemented in mid-November. “If and when those tariffs are implemented, it is highly likely that they would lead to broader declines related to inbound containers to the U.S. from China,” McCown warns.

Adding another layer of complexity is the upcoming USTR ship fee plan targeting ships built in China or operated by Chinese carriers, set to take effect in mid-October. McCown describes this as “moving container volume related to trade lanes involving the U.S. into unchartered waters.” As these lanes account for more than a quarter of global container miles, “there will be a ripple effect that will be felt globally.”

The projected decline represents an unprecedented shift for an industry that has historically grown at rates exceeding U.S. GDP. “For a tangible metric that has consistently for decades grown above U.S GDP, most often at two, three or even more multiples of GDP, the unusual nature of an actual decline in inbound container volume into the U.S. cannot be overemphasized,” McCown states.

While the immediate volume impact is becoming clearer, the inflationary effects of the tariffs will take longer to manifest fully in economic data. McCown notes that “it will not be until at least when the inflation data is released in during the fourth quarter that the inflationary impact of the tariffs can begin to be accurately assessed.”

McCown concludes that the U.S. faces a difficult trade-off: “The more inbound container volume to the U.S. declines, the more commerce and growth will be impacted but the less inflation we will get. The less inbound container volume to the U.S. declines, the more inflation we will get but the less commerce and growth will be impacted. Unfortunately, there is simply no good place to be on that spectrum.”…

For what it’s worth, your correspondent does not share McCown’s confidence that a drop in container volume– in imported goods– will not raise prices. While the goods that don’t arrive won’t be passed along with tariffs baked into their prices, their substitutes, which will, per force, be scare for some time, seem likely to have their prices “bid” up…

U.S. Container Imports Face Historic Decline as Tariff Effects Take Hold.”

All this said, prediction on the basis of indicators (and omens and signs and early warning signals and the like) is a tricky business. See, for example: “List of dates predicted for apocalyptic events.”

* G. Scott Graham, Early Warning Signals

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As we batten down, we might recall that it was on this date in 2008 that U.S. stock markets, already on edge after the near failure of Wachovia Bank the day before, fell over the edge after the House rejected a bailout plan touted to help ease the ongoing financial crisis. Markets began their decline as soon as it became apparent the bill would fail. The Dow had its worst single day point decline in history, falling 777.68 points… the day that “The Crash of 2008” became real.

Front page of The Wall Street Journal from September 29, 2008, reporting on the rejection of a bailout plan and the subsequent market plunge, featuring a graph showing a significant decline in the Dow Jones Industrial Average.

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“Freight mobility and movement, while not a sexy policy issue, is a highly important one”*…

… and a hugely profitable one. Shipping rates, which have contributed to inflation, are coming down– but remain high– and massively profitable for carriers…

The results are in. The container shipping industry earned profits of $58.9 billion in the third quarter, breaking a streak of seven straight record quarters for the sector and further confirmation that the industry’s earnings peak is now firmly in the rear-view, according to industry veteran John McCown.

While the $58.9 billion profit is 22.4% higher than the $48.1 billion profit from last year’s third quarter, it is 6.6% lower than the “mind-altering” $63.7 billion earned in this year’s second quarter, making for a slight sequential earnings downturn that is expected to continue in the months and quarters ahead as aggregate overall pricing in the sector continues to ease, McCown said in his latest container shipping quarterly report

Throughout the pandemic, container shipping has benefitted from significant price increases across most lanes as strong consumer demand combined with widespread port congestion drove freight rates to records.

“The sharp upturn in the quarterly bottom line performance of the container shipping industry over the last two years is one of the most pronounced performance changes ever by an overall industry,” McCown writes. “It comes on the heels of results in the more than ten years following the financial crisis and preceding the pandemic that results in a negative overall bottom line. The container shipping industry has literally gone from being at the bottom related to overall industry performance to being at the top related to overall industry performance.”

McCown attempts to put the container shipping’s recent performance into perspective by comparing the industry’s profits to FANG, an acronym he uses for Facebook, Amazon, Netflix and Google.

“Container shipping industry profits were 14% higher than total FANG profits in 4Q21, 103% higher than FANG profits in 1Q22 and 145% higher than FANG profits in 2Q22. For 3Q22, that gap has expanded even more as container shipping industry profits have swelled to being 158% above total FANG profits.”…

The invisible behemoth– container shipping, from @MikeSchuler.

Bill Lipinski

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As we contemplate containers, we might recall that it was on this date in 1860 that the slave ship Erie was sold at government auction at Red Hook, Brooklyn:

The ship was sold, after being captured and impounded by the US Government, for enslaving and importing Africans, a business banned by the federal government under the Piracy Law of 1820, which followed The Slave Trade Act of 1794, two steps in the USA’s long, slow process of devolving and banning the slave trade (the shipping of captured people) and slavery. Slavery was finally banned in 1865.  The case of the ERIE was chosen by a US Attorney, a judge, and by President Lincoln himself to signal a major change in policy on slavery and their commitment to end it.

The owner and captain of the Erie, Nathaniel Gordon of Maine, did not get off free as was usually the case. He was tried and found guilty of running a slave ship – and the Piracy Law of 1820 said the punishment was execution. Gordon’s supporters, including members of Congress and even friends of President Lincoln, sought a presidential pardon; but Abraham Lincoln refused due to his conviction that a point about slavery needed to be made with the ERIE and Captain Gordon.

Captain Gordon was distressed, in jail, and attempted suicide. He was resuscitated and was hanged at the Tombs in Manhattan and became the first – and only – importer of slaves to be executed for the crime in the USA. Soon after Gordon’s execution, Abraham Lincoln presented his first draft of the Emancipation Proclamation. Several months later, the Proclamation was finalized, followed by the 13th Amendment which abolished slavery.

Slaver Captain Arrested – Ship Sold at Auction in Red Hook – 1860

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Written by (Roughly) Daily

December 5, 2022 at 1:00 am

“Nearly all the grandest discoveries of science have been but the rewards of accurate measurement”*…

… and, as Christie Aschwanden explains in her consideration of James Vincent‘s new book, Beyond Measure, that progress has been hard won– and has had cultural consequence…

… [Swiss meteorologist Jean-André de Luc] set out to find the true boiling point of water, but instead of finding a single answer to the question, de Luc instead found “only a multitude of phenomena forced into homogeneity by this single, restrictive term,” Vincent writes. (Scientists eventually turned to the steam produced by boiling water as a more reliable measure of temperature.)

And so it has gone with many types of measurements, Vincent observes. “The quest for precision — the desire to burrow ever more closely into the weft of reality — unveils only irregularity on a far greater scale.” The same might be said of science writ large, and Vincent’s recounting of the development of some science’s most well-used measures are classic tales in the history of scientific discovery. The meter, for instance, was originally intended as a unit of distance based on the Earth’s meridian until careful surveys showed that these meridians weren’t as perfect and unchanging as previously believed.

“Beyond Measure”offers engrossing accounts of the role that measurement has played in scientific progress, including its roles in medicine, math, and quantum mechanics, but the book is about much more than science. Vincent also presents a deep history of measurement’s role in society. “Measurement is not an intrinsic feature of the world, but a practice invented and imposed by humanity,” he writes.

Throughout human history, measurement has often provided a means for exerting power. For instance, the Roman Empire created a method for measuring land called the centuriatio that divided territory into grids. The system “not only simplified property rights and tax collection,” but also provided a way to portion out farmland to veterans and make roads amenable for marching troops, Vincent writes: “The survey, in other words, helped fund, direct, and reward Rome’s imperial war machine.”…

How the quest to quantify has shaped scientific progress and human society: “The Surpisingly Imprecise History of Measurement“- @cragcrest on @jjvincent in @undarkmag.

[Image above: source]

* Lord Kelvin

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As we contemplate quantification, we might send carefully-measured birthday greetings to Malcolm Purcell McLean; he was born on this date in 1914. A transportation entrepreneur, he parlayed his experience as a trucker into the development of the modern shipping container— which revolutionized transport and international trade in the second half of the twentieth century. Containerization led to a significant reduction in the cost of freight transportation by eliminating the need for repeated handling of individual pieces of cargo, and also improved reliability, reduced cargo theft, and cut inventory costs (thus, working capital needs) by shortening transit time.

When McLean died in 1987, then Secretary of Transportation Norm Minetta said:

Malcom revolutionized the maritime industry in the 20th century. His idea for modernizing the loading and unloading of ships, which was previously conducted in much the same way the ancient Phoenicians did 3,000 years ago, has resulted in much safer and less-expensive transport of goods, faster delivery, and better service. We owe so much to a man of vision, “the father of containerization,” Malcolm P. McLean.

In an editorial shortly after his death, the Baltimore Sun wrote that “he ranks next to Robert Fulton as the greatest revolutionary in the history of maritime trade,” and Forbes Magazine called McLean “one of the few men who changed the world.” On the morning of McLean’s funeral, container ships around the world blew their whistles in his honor.

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Written by (Roughly) Daily

November 14, 2022 at 1:00 am

“Pam, this is from corporate. How many times have I told you that there is a special filing cabinet for things from corporate? Called the waste paper basket!”*…

The subject of this essay emerged by chance. I was researching the history of the U.S. passport, and had spent weeks at the National Archives, struggling through thousands of reels of unindexed microfilm records of 19th-century diplomatic correspondence; then I arrived at the records for 1906. That year, the State Department adopted a numerical filing system. Suddenly, every American diplomatic office began using the same number for passport correspondence, with decimal numbers subdividing issues and cases. Rather than scrolling through microfilm images of bound pages organized chronologically, I could go straight to passport-relevant information that had been gathered in one place.

I soon discovered that I had Elihu Root to thank for making my research easier. A lawyer whose clients included Andrew Carnegie, Root became secretary of state in 1905. But not long after he arrived, the prominent corporate lawyer described himself as “a man trying to conduct the business of a large metropolitan law-firm in the office of a village squire.” The department’s record-keeping practices contributed to his frustration. As was then common in American offices, clerks used press books or copybooks to store incoming and outgoing correspondence in chronologically ordered bound volumes with limited indexing. For Root, the breaking point came when a request for a handful of letters resulted in several bulky volumes appearing on his desk. His response was swift: he demanded that a vertical filing system be adopted; soon the department was using a numerical subject-based filing system housed in filing cabinets.

The shift from bound volumes to filing systems is a milestone in the history of classification; the contemporaneous shift to vertical filing cabinets is a milestone in the history of storage…

It is easy to dismiss the object: a rectilinear stack of four drawers, usually made of metal. With suitable understatement, one design historian has noted that “manufacturers did not address the subject of style with regard to filing units.” The lack of style figures into the filing cabinet’s seeming banality. It is not considered inventive or original; it is simply there, especially in 20th-century office spaces; and this ubiquity, along with the absence of style, perhaps paradoxically contributes to the easy acceptance of its presence, which rarely causes comment…

But if it appears to be banal and pervasive, it cannot be so easily ignored. The filing cabinet does not just store paper; it stores information; and because the modern world depends upon and is indeed defined by information, the filing cabinet must be recognized as critical to the expansion of modernity. In recent years scholars and critics have paid increasing attention to the filing systems used to store and retrieve information critical to government and capitalism, particularly information about people — case dossiers, identification photographs, credit reports, et al. But the focus on filing systems ignores the places where files are stored. Could capitalism, surveillance, and governance have developed in the 20th century without filing cabinets? Of course, but only if there had been another way to store and circulate paper efficiently. The filing cabinet was critical to the infrastructure of 20th-century nation states and financial systems; and, like most infrastructure, it is often overlooked or forgotten, and the labor associated with it minimized or ignored.

The vertical filing cabinet was invented in the United States in the 1890s, and quickly became a fixture throughout North America and around the world. It spread globally because it provided a way to store large amounts of paper so that individual sheets could be retrieved easily. The technique of using drawers for storing a sheet of paper on its long edge was significant because loose papers cannot stand upright on their own. Put another way, the filing cabinet technology enabled loose paper to stand on edge so that more sheets could be stored in less space but still be accessed with minimal difficulty. It allowed loose papers to do the work of paperwork…

The filing cabinet had at least two inventors — and likely several others who remain lost to the historical record. The current accepted version attributes the invention to the Library Bureau, the Boston-based company founded in 1876 by Melvil Dewey, inventor of the eponymous decimal system of library classification. Although the Library Bureau would proudly claim the invention, critical developments happened elsewhere. It was the secretary of a charity organization based in Buffalo, New York, a man identified as Dr. Nathaniel Rosenau, who provided the initial impetus for construction of a vertical filing cabinet. Inspired by the use of cabinets to store index cards on their edges, Rosenau sought a bigger container for papers.

In 1892, he took his idea to the Library Bureau’s Chicago office, which built a prototype. But no matter the inventor, the turn of the 20th century saw the filing cabinet develop as a part of the rapid growth of an office equipment industry in which dozens of companies manufactured practically identical products with little respect for the hundreds of patents issued for products and parts. To underscore their uniqueness and modernity, this industry explicitly labeled its products “equipment,” “appliances,” and “machines” — not furniture. And it made these products indispensable to offices, and thus helped to constitute the office as a “modern” workspace. The office with a vertical filing cabinet was decidedly not a 19th-century office…

The filing cabinet was critical to the information infrastructure of the 20th-century; like most infrastructure, it was usually overlooked– an oversight that Craig Robertson (@craig2robertson) rectifies: “The Filing Cabinet.”

* “Michael Scott,” The Office (Pilot episode)

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As we savor storage, we might spare a thought for Malcolm Purcell McLean; he died on this date in 2001. A transportation entrepreneur, he parlayed his experience as a trucker into the development of the modern shipping container— which revolutionized transport and international trade in the second half of the twentieth century. Containerization led to a significant reduction in the cost of freight transportation by eliminating the need for repeated handling of individual pieces of cargo, and also improved reliability, reduced cargo theft, and cut inventory costs (thus, working capital needs) by shortening transit time.

When McLean died in 1987, then Secretary of Transportation Norm Minetta said:

Malcom revolutionized the maritime industry in the 20th century. His idea for modernizing the loading and unloading of ships, which was previously conducted in much the same way the ancient Phoenicians did 3,000 years ago, has resulted in much safer and less-expensive transport of goods, faster delivery, and better service. We owe so much to a man of vision, “the father of containerization,” Malcolm P. McLean.

In an editorial shortly after his death, the Baltimore Sun wrote that “he ranks next to Robert Fulton as the greatest revolutionary in the history of maritime trade,” and Forbes Magazine called McLean “one of the few men who changed the world.” On the morning of McLean’s funeral, container ships around the world blew their whistles in his honor.

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Carry that load…

From Photographer Alain Delorme, an extraordinary slideshow featuring things on the move in China.

(Thanks, Dan Sturges)

As we rebalance our loads, we might recall that it was on this date in 1998, five days after the company was formed by $37 billion merger, that DaimlerChrysler first traded in the New York Stock Exchange; at that moment, DaimlerChrysler was the fifth-largest auto manufacturer in the world (after General Motors, Ford, Toyota and Volkswagen).  The plan was for further growth, via the creation of a single powerhouse car company that could compete in all markets, all over the world… But in the event, Chrysler lost so much money– $1.5 billion in 2006 alone– that in 2007, Daimler paid a private equity firm to take the company off its hands.  Two years later, in 2009, Chrysler filed for bankruptcy (again); in order to stay afloat, it merged with Italian automaker Fiat.

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