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  • Writer's pictureStephen Fodor

Record ships at anchor, Biden calls for push back against China, and the cost of cutting off China

Monday Morning Wake Up Call

February 22, 2021

Patience tested: 62 ships at anchor in San Pedro Bay, there are usually none

(American Shipper) Sixty-two vessels, including 20 container ships destined for the Port of Los Angeles, were at anchor in San Pedro Bay early Wednesday afternoon.

“If we do nothing, we will still have vessels at anchor come midsummer,” Port of LA Executive Director Gene Seroka said during a press conference Wednesday.

“Under normal conditions, we usually don’t have any container ships at anchor. Before the import surge, we would see 10 to 12 container vessels at berth on a typical day here at the Port of LA. Today we are averaging north of 15 container ships being worked every day,” Seroka said. “About 15% of vessels that currently are on their way to Los Angeles are going direct to berth. Of the 85% of ships going to anchor, the average wait time has been climbing. When ships first started backing up in November, anchorage time was about two and a half days. In February thus far, anchorage time is now tracking at eight days.”

The container terminals, trucking companies, rail and warehouses all are “stretched thin,” he said.

“Container dwell time on terminals remains at about five days — or double what it was before the import surge started last summer. Street dwell time — waiting for warehouse space — is now at 7.6 days for a traditional 40-foot container,” Seroka said. “We need to get back to about three and a half days of on-street dwell time, where it was holding pre-import surge.”

A number of factors have contributed to the San Pedro Bay congestion, he said.

“It’s a pandemic-driven buying surge unlike one that we’ve ever seen from the American consumer. Most of us are not spending money on services. We’re not going to movies, taking airplane flights or going to ballgames. We’re spending money on tangible goods. And that’s what’s really driving this unprecedented surge in imports.

“Because of COVID-19, not all of our workers are on deck every day. That too has an impact,” he continued.

COVID-19 has had a big impact at the port, with a major outbreak in the San Pedro Bay complex reported last month. Currently, the Port of LA has “about 800 dockworkers off the job out of 15,000 due to COVID-related illness or otherwise being quarantined at this juncture. We need to get vaccines to these folks,” Seroka said.

“We are pleased that the vaccines are slowly starting to get into the arms of longshore workers,” he said, advocating for widespread vaccinations throughout the port community. “There are 15,000 longshore men and women on the job and another 80,000 to 85,000 in the truck industry, electricians, retail warehousing and so many others, including our marine terminal operators, who work on our docks every day, and we need to get vaccines for all of them. The Port of Los Angeles is ready to assist with a mass vaccination site at our cruise terminal as supplies of the vaccine and inventories become available.”

Meanwhile, something’s got to give.

“If we stopped all shipments right now, we’d still have about a month’s worth of work with those ships at anchor to get through the system. So three things need to happen immediately. No. 1, we have got to get our workers vaccinated so we can have maximum capacity out on the job and the docks, the warehouses and our truck and rail community. Second, we’ve got to implore our importers to do their very best at emptying these containers once they arrive, picking them up quickly and returning them back to the port area so we get that round-trip cycle going. And again, not very popular, but we’ve already been in discussion with industry folks to see if we can meter cargo to help us dig out of this backlog. There have been several services that have been switched so far — temporarily — that will come back to us at Los Angeles, but we really need to catch our breath and go after this backlog of anchored ships with renewed enthusiasm.”

Biden says U.S. and Europe must push back against China’s economic ‘abuses and coercion’

(CNBC) President Joe Biden said Friday that the U.S. and its international partners must hold China to account for its economic practices.

“We have to push back against the Chinese government’s abuses and coercion that undercut the foundations of the international economic system,” Biden said in a speech to the Munich Security Conference, delivered virtually from the White House.

“Everyone must play by the same rules,” he said at the annual international policy gathering.

Biden’s appearance, his debut before an international audience since becoming president, came as his administration seeks to maintain a tough stance on China while moving away from former President Donald Trump’s pugilistic relationship with Beijing.

Cutting China off from the U.S. would cost America hundreds of billions of dollars, report says

(CNBC) BEIJING — The U.S. economy could lose more than $1 trillion worth of production and long-term global competitiveness if the White House pursues a sharp separation with China, according to a report released Wednesday by the U.S. Chamber of Commerce and Rhodium Group.

As U.S. President Joe Biden looks set to retain his predecessor’s tough stance on China, the authors of the report laid out estimates for the enormous costs of sweeping — rather than targeted — policies to protect U.S. national security from Beijing’s growing economic and technological clout.

These projected losses include:

  • By 2025, $190 billion a year in in U.S. output by expanding 25% tariffs to all trade with China. In the coming decade, full implementation of such tariffs would cause the U.S. to fall $1 trillion short of potential growth.

  • Up to $500 billion in one-time GDP losses if the U.S. sells half of its direct investment in China. American investors would also lose $25 billion a year in capital gains.

  • $15 billion to $30 billion a year in exported services trade if Chinese tourism and education spending falls to half of what it was prior to the coronavirus pandemic.

Research for the 92-page report began in 2019, before the coronavirus pandemic hammered the global economy.

Tensions between the U.S. and China escalated in the last three years under former President Donald Trump. His administration sought to use tariffs, sanctions and greater scrutiny of cross-border financial flows to address longstanding complaints about China’s lack of intellectual property protections, forced technology transfers and significant role of the state in business operations.

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