October was a month of surprises.
In the waning twilight of the last fiscal year, Speaker of the House Kevin McCarthy reached a deal with Democrats for a temporary spending measure to just barely avert a government shutdown. Three days later he was voted out of the job for that effort — a first in U.S. history.
Then on October 7th armed Hamas fighters fired thousands of rockets at Israel and invaded by air, sea and land in an unprecedented surprise attack. The region is now engulfed in the horrors of war -- thousands dead on both sides and fears the conflict and suffering will expand.
Prime Minister Benjamin Netanyahu warned Israelis to expect a long, difficult fight.
Three weeks and multiple failed candidates later the United States again has a Speaker of the House. Representative Mike Johnson of Louisiana says avoiding a government shutdown on November 17th is a priority. His first actions seem to foretell that conservative fiscal priorities would have to be addressed in that process. Fasten your seatbelts.
Almost as quickly as they started, the strikes and lockouts at automobile plants around the country have settled in just the last week. The United Auto Workers struck deals first with Ford, then Stellantis and finally GM. With a deep victory in their pockets, the UAW is looking to expand its reach to unorganized (read: FTZ) auto plants across the U.S.
Between two wars, a country-wide automotive strike, and a southern border awash in migrants, your Nation’s Capital did not have available bandwidth for major trade policy moves. At least there weren’t any surprises.
The U.S. economy does not seem to be getting the message that the Federal Reserve is trying to send: please slow this train down.
The economy grew at an annual pace of 4.9% from July to September, its fastest pace in nearly two years. That means the Fed may need to consider near term interest rate hikes that will make major purchases like cars and homes more expensive.
Overall inflation remained steady at 3.4%, not an improvement but certainly down from its peak of 7%. That was enough to engage that staple of U.S. growth, the American consumer. Not to mention Beyoncé and Taylor Swift, whose 2023 tours each had economic impacts measuring in the billions.
The economy's strength has been a surprise. At the beginning of the year, many economists predicted that the economy would slide into recession as a result of the Federal Reserve's multiple interest rate hikes.
"It's a good, strong number, and it shows an economy that's doing very well," Treasury Secretary Janet Yellen told Bloomberg TV.
The data released by the Commerce Department showed spending on goods rose by a healthy 0.7% during September, while spending on services — things like eating out, travel, and concert tickets — rose slightly faster.
"Consumers are resilient," said Matthew Shay, CEO of the National Retail Federation. "They're still powering the economy."
Personal spending is being propped up by a very strong job market, with an unemployment rate below 4% for 20 months in a row.
"The economy is just incredibly resilient, navigating through lots of different headwinds and posting a really boomy-like quarter," said Chief Economist Mark Zandi of Moody's Analytics.
"You don't really see any sign of a recession here," Secretary Yellen told Bloomberg. "What we have looks like a soft landing with very good outcomes for the U.S. economy, so I think there's a lot to be pleased about."
Other forecasters still think a mild recession is on the horizon, once consumer spending falters. The Commerce data showed that spending grew more than incomes in September, a trend that can't continue indefinitely.
Be sure to join us tomorrow afternoon for a webinar exploring The Impact of Trade Agreements and Remedies on Economic Development and FTZ Marketing
Our Own Sean Lydon will be presenting with Jessica Rosen of UPS at the event hosted by the National Association of Foreign-Trade Zones (NAFTZ) Thursday, November 2, 2023 at 2 pm (EDT).
Special thanks to our sponsor, the Greater Metropolitan Area Foreign Trade Zone Commission, Grantee of FTZ #119 in Minnesota. Sean and Jessica will take a deep dive into how to leverage recent trade policy changes to market and take advantage of the U.S. Foreign-Trade Zones Program:
• The New TAs vs. The Traditional FTAs vs. FTZs
• Impact of MTB and GSP on FTZ Savings
• Determine Which Trade Agreements Enhance or Detract from Your Zone
• How Should I Adjust My Marketing Activities?
Then Sean and Jessica will take your questions LIVE at the end of the session, and you can earn 1 CCS/CES credit for being there. Ready to register? Do so right here.
See you tomorrow!
Sluggish growth in global container volume, paired with the delivery of new mega-ships ordered years ago will combine to extend the current supply/demand imbalance into 2024 and beyond, according to a recent study.
A paper by Sea-Intelligence found that the earliest that demand will catch up with capacity is 2028. That is good news for foreign-trade zones that saw container prices skyrocket during the pandemic.
The study was prepared before the invasion of Israel, and it is too soon to tell if that conflict will play a wider role in global logistics than it has so far.
Sea-Intelligence estimated that year-over-year container volume will increase 3.8% annually beginning next year, mirroring the average growth of the post-financial crisis and pre-pandemic period of 2011-2019. (more)
They estimated supply growth of only 1.3% for the decade that begins in 2026. So without a global event such as another pandemic reducing capacity, or another conflict idling a major portion of the worldwide fleet, Sea-Intelligence expects a pre-pandemic supply/demand balance to return in 2028.
Sea‑Intelligence provides Research & Analysis, Data Services, and Advisory Services to the global supply chain industry.
Recent reports of undersea cable and pipeline damage in Europe raised fears that the continent might be in for a new round of sabotage spawned by the Ukraine conflict.
It appears now that an old culprit was to blame: the six ton anchor of a Chinese vessel.
Finland and Estonia reported last month that the undersea Balticconnector gas pipeline running between the two countries across the Baltic Sea had been temporarily taken out of service due to a suspected leak.
The National Bureau of Investigation, a branch of the Finnish police, said they believed an anchor of the Hong Kong-flagged container ship Newnew Polar Bear was the culprit in damaging the pipeline running across the Gulf of Finland.
Now they need to figure out why.
Detective Superintendent Risto Lohi, NBI’s head of the investigation, said in a news conference on Tuesday that a 1.5 to 4-meter-wide dragging trail on the seabed is seen to lead to the point of damage in the gas pipeline.
That trail is believed to have been caused by a heavy 6-ton anchor which the Finnish Navy retrieved late Monday.
“There are traces in the (anchor) which indicate that it has been in contact with the gas pipeline,” Lohi said, citing data from expert analysis.
Recent photos published on social media of the Chinese vessel, which called at the port of St. Petersburg in Russia during its Baltic Sea voyage, show the vessel is missing one of its anchors.
Whether the pipeline damage was intentional, unintentional or caused by “bad seafaring” is subject of the next phase in the probe, officials said.
At least one person has died after two freighters – the British Verity and the Bahamian Polesie – crashed in the North Sea.
The vessels smashed into one another off the German coastline.
The 300-foot British-flagged Verity was en route from Bremen when the collision took place. The Bahamas-flagged Polesie, almost twice the size of the Verity, had been sailing from Hamburg to La Coruña in Spain.
At the time of the crash, the ships were said to be sailing through ‘winds of six Beaufort’, or about 12mph, which created 10-foot seas.
Search and rescue efforts are underway to locate the remaining unaccounted crew members. Several ships have been deployed to assist with recovery.
Reports have said the 22 people who were on board the Polesie are uninjured.
The Federal Maritime Commission (FMC) has dismissed the latest Charge Complaint against the world’s largest container line, Mediterranean Shipping Co (MSC) and discontinued its Order to Show Cause (OSC) proceeding.
Many FTZs are hoping that the FMC will find that ocean carriers improperly charged demurrage and detention charges during the pandemic. That investigation is still ongoing.
The decision by the FMC likely sinks the efforts of the import industry to try and recover historic surcharges paid during the pandemic. (more)
The Commission was considering a specific complaint from SOFi Paper Products, which had been assessed a congestion surcharge of $1000 by MSC. MSC has held that the surcharge was assessed in accordance with its published tariff rule.
SOFi claimed that MSC’s failure to show the reasonableness or provide a justification of the surcharge demonstrates unreasonable practice, in breach of 46 U.S.C. §§ 41102(c) and 41104(a)(14).
MSC, however, argued that “there is no issue of clarity here – the charge applies on all cargo subject to the tariff in question, and there is nothing ambiguous or unclear in the application of the charge.”
MSC further emphasized that “the commission lacks the legal authority to challenge the amount of the charge.
“MSC is under no legal obligation to justify the congestion surcharge any more that it is required to justify other surcharges, such as fuel surcharges, bill of lading surcharges, hazardous goods charges, overweight cargo surcharges, or other charges.”
The FMC commissioners voted four to one in favor of MSC in the case.
