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  • Writer's pictureStephen Fodor

"BEEYOND" to solves intl. shipping issues, levelling maritime shipping field, China bulkers pile up

Monday Morning Wake Up Call

August 23, 2021

BeeCruise Releases U.S. Shopify Seller-focused App "BEEYOND," Allowing Online Store Operators to Complete Overseas Delivery Simply by Sending Products to Warehouse in Los Angeles

(Yahoo Finance) BEENOS Group company BeeCruise Inc. announced on August 23, 2021, the release of BEEYOND, an app that solves problems for Shopify sellers in the U.S. related to overseas shipping. BEEYOND is a service that completes overseas delivery by simply applying a special sticker and sending the product purchased to a designated warehouse in Los Angeles.

Shopify's cross-border e-commerce sales increased by nearly 75% from 2019 to 2020, achieving more than $20 billion in sales (Note 1). However, overseas shipping faces multiple problems such as differences in shipping conditions from country to country, tariffs, and high overseas shipping charges.

BEEYOND can solve these problems. Shopify sellers need only to select a product within the BEEYOND app, print and apply a special sticker, and send the product to a designated warehouse in Los Angeles to complete overseas shipping. Furthermore, the shipping fee will be an estimated 70% cheaper than other shipping services (Note 2), and it is expected that purchases from users who were discouraged by high overseas shipping fees will increase.

BEENOS Group promotes the construction of a global platform in e-commerce in partnership with marketplaces around the world such as eBay, Shopee and Lazada. BEENOS also operates Buyee, a proxy purchasing service that allows users around the world to purchase Japanese products, with a following of loyal users who are familiar with cross-border e-commerce. BEEYOND can utilize the BEENOS group's global network. BEEYOND will achieve a year-on-year increase in total distribution of $119.6 billion in 2020, contributing to the further expansion of Shopify distribution, and assisting Shopify sellers in entering the global market.

Levelling the playing field in maritime shipping

(Hellenic Shipping) European shippers at home and abroad face increasingly unfair competition from China’s state-owned shipper, COSCO. But there are several measures the EU could use to counter this, argues Jacob Gunter.

When COSCO, China’s gigantic state-owned shipper, attempted to take shares in the Port of Hamburg recently it reignited the debate about imbalances in access to European and Chinese shipping markets. It is considerably easier for China’s shippers to access European markets than the other way around. This presents a long-term risk to European competitiveness in the industry. Europe has options at its disposal to remedy this, and the sooner it does so, the better.

The imbalance, explained

Nearly every country has cabotage laws – rules that restrict foreign-flagged vessels from engaging in domestic shipping. European countries are no different. EU cabotage laws demand that only locally-flagged vessels can participate. This includes inland bodies of water, but also shipping between ports in the same country. China’s cabotage laws go one step further. Domestic shipping can only be performed by Chinese-flagged vessels that are also owned by a Chinese company.

What the laws means in practice is that, for example, a Chinese-flagged vessel cannot ship goods between Dutch cities on the lower Rhine, just as a Dutch-flagged vessel cannot ship goods along the Yangtze. The Chinese-flagged vessel would also be barred from onloading goods in Amsterdam and offloading them in Rotterdam across the North Sea, just as the Dutch-flagged vessel could not take goods from Qingdao to Fuzhou along the East China Sea.

However, whereas COSCO could invest in a subsidiary in the Netherlands and run Dutch-flagged vessels between inland and coastal ports alike, a Dutch shipper could not invest in a subsidiary in China to run Chinese-flagged vessels.

The issue extends to a practice known as international relay – the reorganizing of goods collected from multiple ports in the same country for shipment abroad. Chinese-flagged vessels can do this between ports in a single EU-member state, as well as between different countries. Three Chinese-flagged vessels owned by COSCO could load up on beer in Hamburg, cheese in Rotterdam and chocolate in Antwerp, then all meet at one port and redistribute their cargo so that one could go to Canada, another to South Africa and the last to Singapore.

This enhances global shipping efficiency and explains why China is eager to invest in European ports like Hamburg – a good place to transship for Northern Europe – and Piraeus – a great transshipment site for southern Europe that is also just across the sea from the Suez Canal.

Unfortunately, the same rules in China governing domestic shipping hold true for international relay – it is not enough to be Chinese-flagged, a company must also be indigenous to the market. So, three Dutch-flagged vessels owned by a Dutch shipper could not onload fruit from Qingdao, rice wine from Ningbo and tea from Quanzhou, then all shuffle cargo in a port in Mainland China. Instead, they would need to go to a nearby country like South Korea or Japan to redistribute goods to send off to various destinations.

European shippers are clearly at a disadvantage to Chinese ones. This is especially pronounced due to the amount of goods that are exported out of Mainland China, which boasts nine of the world’s twenty busiest ports across a vast coastline. In comparison, the Chinese vessels going between Hamburg, Rotterdam and Antwerp all have a trip shorter than the one between Tianjin and Qingdao.

The implications of inaction

This imbalance is troublesome for European shippers both now and in the long-term. Europe currently boasts four of the five largest shipping companies in the world as measured by freight (COSCO is the third largest). For now, European shippers have scale on their side. However, with a protected domestic market, COSCO and other Chinese shipping companies are building up massive scale that can then be exerted into other markets.

Yet, the challenges presented by COSCO go beyond just this imbalance. COSCO is directly controlled by SASAC (State-owned Assets Supervision and Administration Commission of the State Council), which governs China’s biggest State-owned enterprises (SOEs), including most of the upstream value chain that feeds into COSCO.

As the European Union Chamber of Commerce in China put it in their 2020 report on European involvement in the Belt and Road Initiative:

“Chinese shippers use ports built and run by SOEs using steel and cement provided by SOEs; they use vessels built by [China’s state-owned ship-building monopoly] using steel made by SOEs, which is produced using iron and coal from SOEs; all of which is financed by SOE banks.”

China’s SOEs benefit not only from subsidies, they also enjoy privileged access to factors of production like free land and dirt-cheap capital. This support can become hidden in the upstream value chain that feeds into the end user – COSCO. Additionally, anywhere along this value chain, cheaper prices and favorable deals at one or more stages can ultimately benefit shippers. When combined with the unbalanced playing field and the protected domestic market, the long-term implications for European shippers could be bleak.

A blueprint for reciprocity, positive or otherwise

While Europe discusses the fate of the Port of Hamburg, it should also consider the broader situation. If sufficient political will can be mustered, a few simple measures could be introduced within the EU.

A common market cabotage law could be developed that allows member states to maintain their current rules domestically while also preventing Chinese shipping companies from exploiting the close proximity of European ports that lie across national borders.

A reciprocity review mechanism that is similar to the proposed International Procurement Instrument could be legislated. This would allow the EU to measure the level of openness of foreign markets to European shippers, and then impose reciprocal restrictions on companies and vessels from that market.

Ideally, these measures would yield swift negotiations with Beijing that leave its shipping markets as open as those of the EU. If Beijing refuses to budge, then this toolkit would at least protect Europe’s shipping market from China’s distortions.

It would not necessarily be easy to build consensus between all member states, but if achieved, it could be a good test for the EU to build out a toolkit that advances reciprocity. Compared to other efforts at showing Beijing that Brussels can play hardball, this would be low-hanging fruit, and could do much as a confidence-building exercise in the broader competition with China in the economic arena.

To Read More:

China bulker pileup dwarfs California container-ship gridlock

(American Shipper) Container ships stuck at anchor off Los Angeles/Long Beach are grabbing the headlines — with the all-time record high matched on Friday. But there’s another massive shipping traffic jam out there, one that’s holding up even more cargo.

This other, less-publicized tale of seaborne gridlock is set in China and it’s not about container ships, it’s about dry bulk carriers.

Bulker congestion has now risen to historic highs as China enforces stricter COVID rules for arriving vessels. And what happens in China will be felt in America. Every bulker stuck at anchor in China is one less ship that’s available to load U.S. soybeans, corn, wheat and coal — pushing spot freight rates for U.S. bulk exports higher.

“It is staggering how much congestion there is [in China],” said Martyn Wade, CEO of Grindrod Shipping (NASDAQ: GRIN), on a conference call with analysts on Thursday.

Highest congestion on record

According to Nick Ristic, lead dry cargo analyst at Braemar ACM Shipbroking, there were 1,692 bulkers worldwide with aggregate capacity of 142 million deadweight tons (DWT) waiting in queues in mid-August. That was “the highest level we have on record and about 15% higher year on year,” he said. Since then, the numbers have come down only slightly, to 1,652 ships totaling 129 million DWT.

In comparison, U.K.-based data provider VesselsValue reported that there are 409 container ships stuck in congestion with an aggregate capacity of 2.7 million twenty-foot equivalent units. Not only are there far more bulkers tied up than box ships, but a typical bulk vessel carries much more cargo (measured by weight) than the average container ship.

China is driving global dry bulk congestion, comprising more than a third of the total, said Ristic. Bulker congestion in China hit 52.7 million DWT in mid-August, representing 6% of global capacity, up 28% from mid-July and 23% year on year. Bulker congestion was also high outside of China, but in line with seasonal norms.

The flashpoint in China is the Yangtze River region. It accounts for “about 18% of total bulker congestion in China and it has become a particularly bad bottleneck for geared vessels [bunkers with onboard cranes],” said Ristic. He noted that the Yangtze region accounted for almost a third of all Chinese congestion involving Handysizes (bulkers with capacity of 10,000-40,000 DWT) and Supramaxes (40,000-70,000 DWT, geared only).

“Basically, 7% of the world’s Handies [Handysizes] are tied up in congestion in China,” said Wade. “That’s very positive [for rates].”

COVID rules keep bulkers at bay

Congestion in container shipping is primarily caused by COVID-era changes in consumer spending, whereas congestion in dry bulk shipping is primarily caused by COVID precautions at ports.

COVID rules have caused bulker delays throughout the year, but this month’s delta variant outbreak in China brought restrictions to a whole new level.

“We’ve heard reports that on the Yangtze, they’re talking about all river pilots having to do compulsory quarantine,” said Wade.

According to Ristic, “Regardless of how long vessels have been at sea since their last port call, their risk level is reportedly being assessed by authorities based on factors such as crew nationality and boarding time, navigation route, and cargo on board. On top of this, quarantine measures have greatly reduced the number of pilots operating on the river, which has been slashed up to 50% versus normal levels.

“At other ports, we are hearing reports of mandatory quarantine periods, cargo operations not being allowed to proceed until negative PCR test results are obtained and other protocols,” added Ristic.

According to Argus Media, “Many Chinese coastal ports require a 14-day quarantine for imported cargoes after they depart from ports in other countries — including Indonesia, India and Laos — before they can berth. Some other Chinese ports, including Nanjing and Changshu along the Yangtze River, require a 21-day quarantine. The Liuheng terminal at east China’s Zhoushan port requires a quarantine as long as 28 days. All crew members must take COVID-19 test before vessels are allowed to discharge their cargoes.”

Bulker rates and stocks

As in container shipping, dry bulk is seeing higher rates due to a combination of strong demand and congestion-restricted vessel supply. Congestion is “a key factor behind strong freight markets,” said Maritime Strategies International (MSI) in its latest dry bulk outlook.

“With Chinese port congestion rising, Panamax [65,000-90,000 DWT] coal shipments to China nearing multi-year seasonal highs and the U.S. soybean season starting next month, MSI is bullish in the near term for Panamax earnings,” said the U.K.-based forecasting and advisory company.

Spot rates for most bulker sizes are already at 10-year highs. According to Clarksons Platou Securities, spot rates for Capesizes (bulkers with capacity of around 180,000 DWT) averaged $49,700 per day on Friday, Panamaxes $33,800, Supramaxes $35,600 and Handysizes $33,700.

Despite congestion-induced rate support, most U.S.-listed dry bulk shares have flatlined or declined since late June. “The stock market is pricing in slower economic growth going forward,” noted Clarksons.

Asked whether China’s attempt to contain the delta variant could extend the dry bulk rate rally, Ristic told American Shipper, “We were expecting [congestion] to clear up a bit quicker but with what’s happening in China now, I think the COVID factor will remain significant for the remainder of the year.

“Ultimately though, if there is a significant slowdown in import growth or disruptions to cargo supply, congestion alone won’t be able to save the market,” he warned.

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