By Fotini Tseroni
April 19, 2021
During our recent MarineTraffic webinar, we dived into the trade market to discuss the policy of the new president, President Joe Biden, and his Administration's agenda for trading, and how it will impact the shipping industry.
Industry experts including Lori Ann Larocco, the author of “Containerships don’t lie” and Senior Editor at CNBC, William Doyle, Executive Director of the Maryland Port Administration, Mario Cordero, Executive Director at the Port of Long Beach, and John Roehl, Senior Marine Operations Manager for CMA CGM North America, shared their unique views on the future of trade under the recently elected President Joe Biden.
The session was moderated by Adil Ashiq, Sales Executive at MarineTraffic.
Watch the full webinar on-demand:
Adil Ashiq: Hello, everybody, and welcome. We're here joined with a phenomenal group of individuals representing our nation's maritime industry, from the perspectives of the ports, from the shipping lines, and investigative journalism to report on facts. My name is Adil Ashiq, and I'm with MarineTraffic. We are hosting this webinar today.
Just a quick bit about MarineTraffic, we are a maritime intelligence and global ship tracking provider. For the audience in attendance today, thank you so much for being here. We have a lot to talk about, a lot of great topics, and my hope for today for you all is that, you know, we walk away with some newfound knowledge on what we may see in the next four years with the new administration. At the end, we'll allot 15 minutes for a Q&A session. At the bottom of your screen, you'll see a little green box for Q&A. You can post your questions in there, and we'll do our best to get to your question and give you an answer.
To the panelists here today, thank you so much for being here. Of course, you know, it's busy times in the industry. You know, we're here to talk about the policy of our new president, President Joe Biden, and his Administration's agenda for trading, ultimately, how it will impact the shipping industry. So since we're talking about policies, this obviously involves politics and, you know, a big hot topic of the months have been around the presidential agenda and the filibuster.
So to start, I wanted to just get a quick show of hands from the panelists on your personal opinion about the filibuster, because this can either make or break certain agendas. So quick show of hands if you have no comment to provide. Show of hands if you believe that, you know, it's probably a good idea to reconsider the filibuster in order to get things moving. All right. And show of hands if you believe there's no impact, doesn't really matter. All right, Lori. So appreciate that.
For the audience, I just want to let you know, one of our panelists from CMA CGM, Mr. John Roehl, he's having little technical difficulties with his camera. So right now, we can't see his feed, but we hope that it could get resolved sometime during our conversation here.
So I wanted to just move on to introductions and present our panelists today. So I'd like to start with Miss Lori Ann LaRocco. Miss Lori is senior editor of guests for CNBC business news. Miss LaRocco's specialty is in politics and, of course, shipping and trade. She is the author of two great books, the "Trade War: Containers Don't Lie" and "Dynasties of the Sea: The Untold Stories of the Postwar Shipping Pioneers." Welcome, Lori.
Lori Ann: Thanks, Adil.
Adil: Next, we have Mr. William Doyle, Executive Director of the Maryland Port Administration. Mr. Doyle oversees and manages the Helen Delich Bentley Port of Baltimore's six state-owned public marine terminals. Prior to his appointment at the MPA, Mr. Doyle served as a federal maritime commissioner from 2013 to 2018 and has also sailed for nearly a decade as a merchant marine officer. So great to have you here. Mr. Doyle.
William: Thank you.
Adil: On the other side of the country, we have Mr. Mario Cordero, Executive Director at the Port of Long Beach. Mr. Cordero served as a member, Vice President, and President of the Long Beach Harbour Commissioners for over eight years before accepting an appointment from Mr. President Obama to the FMC, the Federal Maritime Commission. He also served as Chairman of the FMC from 2013 to 2017. So nice to have you here too, Mario.
Mario: Thank you.
Adil: Last but not least, Mr. John Roehl. Mr. Roehl is a graduate from the California Maritime Academy and who, too, sailed as a merchant marine officer for nearly a decade. After his sailing career, John joined APL, where he served as Manager of Operations for their terminal in Los Angeles. Mr. Roehl currently serves as Senior Marine Operations Manager for CMA CGM North America. So thank you for being here, John.
John: Thank you, Adil.
Adil: So let's get the first order of business going. So I like to bring up a recent poll, which we conducted last week on social media, MarineTraffic, where we asked participants a question. And I'm going to bring up my screen right now. And the question that we posed was, what do you think the impact of this new trade policy will be on the shipping industry? And these were the results from our poll.
So for the panel, Lori, I'll start with you, based on these results here, it looks like higher costs was the biggest opinion made by individuals out there, and so, now, are you surprised about these results? Do you think this is something that was expected?
Lori Ann: I think it would be expected. I mean, last week, we, at CNBC, my colleague Kayla Tausche interviewed Secretary Buttigieg, and one of the first things out of his mouth was looking at putting on a mileage tax that would actually penalise folks that have to commute to work. When it comes to the government and when it comes to "improvements," things of that, it's just an automatic knee-jerk reaction to talk about pay force. How are you going to pay for this? I was on a panel last week, and I spoke with a lobbyist who is helping push through the bill. And he was in favour of a gas tax. So I think that, you know, the audience here is dead-on in terms of, well, what is it going to cost me in terms of any type of improvement?
Adil: That's very interesting, actually, indeed, because of course, you know, I guess the bottom line, consumers don't want to foot the bill for anything that's going to impact them down the road. So that's an interesting perspective. John, what do you think about the results of our poll? John, do I have you? I think he has little technical difficulties there, but we'll circle back with you, John.
Mario, what about you? What's your opinion? What's your perspective on this?
Mario: Well, I think the poll is reflective of, again, what we've been experiencing here in the port maritime industry. It's interesting that only 13% believe it would result in infrastructure improvements, which gives you an idea of the frustration and the pessimism that we have with regard to this ongoing question about infrastructure. So hopefully, things will change, but that's very telling to me that people are just frustrated and not optimistic about infrastructure improvements.
Adil: Thank you. Yeah, we have yet to see. I believe, tomorrow, we'll definitely get more wind on the build better America agenda being released. So we'll see what happens there. Mr. Doyle, your thoughts.
William: Yeah. So I'm the quintessential optimist. So what I do is I take a look at that poll there and I combine both supply chain management and the infrastructure, and we get 41%. So 41%, I mean, you can't have supply chain management without infrastructure improvements, and I think that moving forward, with this administration, we've seen this before, in previous administrations, the Trump Administration, the Obama Administration, the Bush Administration before that, everybody talked about infrastructure improvements, but they never really pushed it forward. It seems to be an absolute priority with the Biden Administration, that we will get infrastructure. Whether that means filibuster reform, I'm all in favour of it, because our infrastructure is crumbling and where we are falling behind. And when you talk about the maritime industry, the entire infrastructure supply chain management rests on your ports, your rail, your inland infrastructure, rivers, and waterways. So you know, I'm optimistic. I think that combining those two, you know, we're going to get something with this Administration, and I'm looking forward to it.
Adil: Right. No, I'm definitely gonna talk about infrastructure, so wanna get more in-depth about that when we get to that topic. John, I don't know if we have you back here.
John: Yeah, thank you. I wholeheartedly agree with Mario and William. Twenty, thirty years ago, I can remember APL, American President Lines, was on the forefront, for example, of infrastructure, and whether it was the double-stack train, whether it was larger TEU vessels, at the time, the industry, as a whole, from the United States of America, with maritime-related, we were at the top. And I see it time and time again, we're reacting all the time. These vessels that are now of 18,000, 22,000 TEU size, you either can't bring them to most of the ports in the United States, you don't have, let's say, the proper infrastructure with the cold iron and obeying the rules and regulations with CARB, you know, a lot of the environmental laws and enforcement that we have.
The maritime industry is constantly, from our standpoint, reacting. We need new infrastructure. We need, you know, these terminals and these ports to be allowed to handle these larger vessels. We need to be, you know, on the forefront and not reacting constantly again and again. I hate to keep going back, like Mario and Mr. Doyle did to infrastructure improvement, but it's gonna be very exciting, hopefully, that we can have some of this here coming in the next, you know, two, three, four years.
Adil: Absolutely. I definitely agree. It is a very aging infrastructure that we have. So you know, high hopes that we can actually make something happen. So thank you, everyone, for your opinions there, so.
Lori Ann: Adil.
Adil: Yes.
Lori Ann: I'm sorry to interrupt, but the biggest thing that we're not discussing, though, is while you've got this $6-trillion price tag and that we all agree that we need infrastructure, the money is going to be allocated to the States and then it's the States that will dictate where the money goes. So even though that the money is going to be dedicated to whatever for infrastructure, that money may not go to the ports. It may go to roads or bridges. So in the end, that is something that, from a local level, that the ports of Long Beach, L.A, Florida, Miami, have to speak with the governor, because it's going to be the States that are dictating how that money is spent, overall. And that's one of the biggest hurdles.
Adil: Right.
William: I mean, look, I mean, Lori Ann, you know, what you bring up is a valid point, but I do remember the days, you know, we can talk about filibuster reform, we can also talk about earmarks. And earmarks existed before the days of money getting sent to the governments and then the governments distributed from there, or sent to a federal agency and then that federal agency is responsible for where the funds get sent. So there is talk in Washington, D.C. right now about bringing back earmarks, and earmarks would be both, you know, special projects and, you know, infrastructure and whatnot. And like the filibuster reform discussion, I'm totally in favour of earmarks as well. You know, we're not talking bridges to nowhere. We're talking bridges to somewhere, and that's ports and the infrastructure and the rail, so.
Adil: So since we're on the topic of infrastructure, let's just jump into that too. So that's very good to note. So, William, I guess a follow-up question for you too, then, in terms of infrastructure. Just a little background here, Biden's plan for Build Back Better. As Lori mentioned, it's gonna be in the trillions. They're estimating between $3 to $4 trillion, of which approximately about $1 trillion of that will go towards the roads, the rails, the bridges, the charging stations, and then the rest of it will go to job creations, technologies. The shipping industry is...it's multimodal. We all know that, right. And each piece relies on the other to run efficiently and not get bottlenecked or disrupted. But you know, when we look at the future, in your port, William, you know, we discussed Vision 2025, we're talking about projects that have been ongoing, whether it's the berth improvements, you know, double-stack rail, we had discussed. So you're planning for the future, of course. So you know, with the possibility of funding towards our infrastructure becoming a reality, which we all hope for, you know, where else should we focus our efforts? You know, if the money goes to the state level, I guess from your perspective, in your region, you know, what else do we need to look at so that we can start handling a higher increase of cargo volumes from a post-COVID world and help our aging infrastructure?
William: I think the infrastructure, when you take a look at the maritime community as a whole, especially on the East Coast, I mean, because the East Coast, you know, where population stops. So when you're, you know, the population overall from the United States of America, you know, as far as the crow flies, it's that mid-Atlantic to the Northeast and the South Atlantic, out to the Great Lakes, okay. The way that the supply chain is set up is you're on trucks. So you have a truck back and forth and then you have rail. I think that when you look at the infrastructure on the East Coast, and I'll even throw on the Gulf Coast, a lot of it's gonna rely on dredging. They're gonna have a lot of dredging and maintenance dredging that will continue into the future because of the Panama Canal expansion and perhaps maybe a fourth expansion. So you have that.
Then, you have your roads, the East Coast, I-95 corridor, and all of the east-west roads, you know, need to be continually rebuilt. And then you talked about Howard Street Tunnel for the Port of Baltimore, a lot of people in the world don't understand this, I'm gonna try and explain it as quickly as possible here, is that the I-95 corridor, the eastern seaboard of the United States of America, can't double-stack containers through that entire corridor. It never could. So what I mean by double-stack is the container comes off the ship, it goes on the rail. There's one level. You put a container on top of it, that's double stack. You can't do it because of a tunnel in Baltimore. That tunnel in Baltimore is called the Howard Street Tunnel. That tunnel was built in the 1890s. So we, right now, in the Port of Baltimore in the state of Maryland, we are 14 days away from the comment period ending and get our finding of no significant impact. Our public-private partnership between the state of Maryland, CSX railway, and the federal government will break ground in September for double-stack. What I mean by double-stack again is it's not just that tunnel, but it's the 22 bridges between Baltimore and Philadelphia, going through Delaware. That opens up the entire East Coast to CSX and also allows double stacking all the way through the Ohio Valley into Chicago.
So those are the infrastructure. I mean, I think that, you know, and Lori Ann brings up a good point about taxpayer dollars, I find the best value or I see the best value when you have state-federal in a private sector entity that are completely 100% engaged for that infrastructure on that public-private partnership, and everybody has skin in the game, because then you don't lose. And that's how I do it, I mean. And I think that the Biden Administration is gonna be very good moving forward on these kinds of concepts.
Adil: That's a really good perspective too. And you know, on a similar component for you, Mario, you know, when we were talking, we just completed a bridge here locally in Long Beach, right, and this bridge is going to challenge the test of times, you know, with larger ships means more trucks on the road with containers, which is more wear and tear. So at the same question for you, which William helped answer, so what other infrastructure improvements should be prioritised here on the West Coast? We have a lot of trade with Asia, so you know, we're a direct connector between that. So, what can help aid us in our recovery and prepare for the future?
Mario: Well, first of all, Adil, as you know, our bridge goes to everywhere. There's not a congressional district in the mainland United States that can't say they received the container or has sent a container that goes over this bridge. But I think the two areas that I think when we talk about infrastructure that's key for the port is rail. You know, Bill mentioned on his end the double-stack project. On the West Coast, rail is essential. I mean, the good news is we have a very good rail infrastructure. However, again, the continuing need to put containers on dock, that is, as opposed to trucking them out in terms of long distance is, for us, a priority here. So I think rail is the number one infrastructure kind of priority in terms of funding.
Second would be the funding for software, hardware, basically, technology. I think, again, technology is the future here in terms of what we need to do, as I reference, you know, the Amazon state of mind, which is, again, predictability, reliability, you know, time is of the essence. So to move towards an efficient model by use of technology, I think, it's also a priority at the top of the list.
Adil: So since you brought up the Amazon mindset, we also discussed 24/7 operations. And if you could talk a little bit more about that for our audience, too, of what you meant by that, please.
Mario: Well, I think we all agree that trade is a global operation, and we all agree that the epicenter of manufacturing, the global epicenter, is in fact China, and Asia. Nothing's gonna change in the short term or long term as it relates to Asia. So when you look at that region of the world, that part of the world, they operate 168 hours. You know, it's a 24/7 week in terms of how they operate, 24/7 manufacturing, 24/7 marine terminal operations, and 24/7 international carrier movements.
So what happens when they come to the United States, particularly at the nation's largest container gateway here in the St. Peter Bay complex? We're not 24/7. So it was interesting that the annual TPM conference that we hosted here virtually in Long Beach, the CEO of the ONE, Jeremy Nixon, in fact, referenced that and basically implied and, in fact, stated that the answer to some of the bottlenecks and congestion has to be, in part, a new mindset, a 24/7 operation. And for those who doubt that, I could just say the game-changer in one word, Amazon. You know, Amazon has been a game-changer, including how they operate.
Adil: Oh, yeah. Yeah, absolutely, yeah. I mean, in terms of, you know, on-demand, I'm sure the expectation...yeah.
Mario: Speed to market.
Adil: Speed to market, exactly. So you know, with that type of mentality from a consumer standpoint, too, you know, we're just so used to it. We would like to see it in our every day. Even for businesses, I'm sure we wanna get things as fast as possible, no inventory shortages. So question for you, John. You know, we'll talk more on the Suez Canal, of course, towards the end, but you know, what just recently occurred, the whole world was watching, and you know, there are uncertainties still of what that domino effect, that ripple effect, will be because of those vessels which were sitting stagnant for some time. But from a shipping line perspective, what area should or do you believe the administration, maybe together with the shipping line, maybe that public-private partnership, explore in order to have a contingency plan to mitigate the risks if something like this occurs again with another trade route? What are your thoughts on that?
John: Well, I can tell you, this is a conundrum. I've enlisted a lot of colleagues' opinions. You know, what do you do should this happen again? We saw the bottleneck of vessels collect and nowhere to go, right. We can look after the fact and say, "Would have been cheap insurance should that Evergreen vessel had one tug as an escort throughout the Suez Canal." Most of the shipping companies are employing an escort tug should wind, you know, come up and that situation happens.
However, what do you do? Do you go the long way around, right? I mean, most shipping companies reacted to stop sending things that way as much as they could with diversions, but at the same time, you had a tremendous amount of vessels plugged up. I'm hearing numbers in the form of $9 billion a day. So, is it conceivable to have a rail system in that part of the world, with linking to Port Said? I don't know. But I would like to see the shipping companies more adept to be involved with projects.
When we talk to infrastructure right in Mario's backyard, at the Port of Long Beach is Long Beach Container Terminal. I've never seen something, a shipping terminal, be completely rebuilt using automation, being able to put as much as 7, 8, 9 gantry cranes on a 16,000, 15,000 TEU vessel work in record pace, still work within the confines of having things safe for the union labour and at the same time employing everything that needed to be done with environmental regulations.
I would love to see more shipping terminals, more shipping companies. I'd love to see more of that synergy going on into the future with infrastructure. That certainly is going to help, especially when we just got done or we're going through the perfect storm. We had a pandemic. We've had situations here in the United States. I've never seen whether...I'm not sure if it just wasn't reported as much as now, but I mean, look at what happened to the UP and BNSF railroads, with everything that happened in the Heartland, with Houston, with Texas. So again, all of these situations are opportunities.
I think we're getting much, much better. Going back to the earlier point, I'm even seeing companies like Amazon pushing the paradigm where they're asking for things of the shipping companies and the carriers that it's tough, but we're stowing vessels in a certain way for customers like Amazon. We're then working with the shipping terminals and synergy is happening. So sorry, I kind of went into a long-winded depth.
Adil: No, no, not at all. There's a lot of great information there. Any comments from Mario, Bill, Lori on what John mentioned?
Lori Ann: My only thing is that when we're talking about rail, which is great, you know, at present time, the rail industry doesn't have enough rail cars to meet the surge in demand. I actually just did a piece for CNBC, and you know, you have the haves and the have-nots. And you know, on the East Coast, they're doing very well in terms of the proximity to Chicago from the west. You know, from the East Coast to Chicago, it's a lot closer than Chicago to the West Coast. And you know, you're looking at L.A., Long Beach on NWSA, their rail delay is eight and a half days. So the other question is and what I'm curious is, I've spoken with the railroads about the need for new rail cars. They're not gonna make new ones because they know that this is going to be temporary, although I have intermodal contacts telling me, they're seeing this log jam until the first quarter of 2022. So you know, you need to have...it really just shows you the puzzle pieces that everything is interconnected. I'm just curious to hear from Mario or Bill too about this rail car shortage. I mean, there's only so much you can do. There's not enough to move the tremendous demand that we have.
Mario: That's a great point, Lori Ann, because again, I have spoken to both class one railroads here recently and here in Long Beach, of course, or St. Peter Bay, that's BNSF and UP. So I've addressed those issues with the respective railroads, and of course, the key here is as much as has been written about in terms of some of this congestion and bottlenecks, I think what you just brought up is an excellent point, because the intermodal aspect is problematic. Now, of course, they will say that the weather was, in part, a factor, and the other big factors occur through repositioning of the empties. But I will say, things have improved in the last week and a half, but nevertheless, that doesn't negate the fact that the equipment issue is a big component, whether it's chassis or rail cars. So that's a great observation on your part, and I agree.
Adil: So in terms of the Administration's agenda, there was a lot of language around improving and promoting long-term U.S. supply chain resiliency. Of course, rail is a big component about that too, but I want to focus a little bit more on the shipping aspect of it. And, Lori, and back to you, you were following and you have been following the U.S.-China trade war for some time now, and we've seen the consequences of, you know, these tit-for-tat tariff slaps on each other. So far, Biden hasn't really stepped away from, you know, removing some of those tariffs, but of course, he, as we know, prefers more diplomatic solutions to kind of rectify these concerns.
So you know, broadly speaking, for shipping, because now we're gonna get trade coming back to the U.S. with increased manufacturing, COVID and vaccination is starting to really roll-out, so what do you believe we'll see in the coming months or years in terms of our relationship with China for exports coming inbound to the U.S.?
Lori Ann: I think that the beginning of the tea leaves that we saw was the first meeting that we saw in Alaska between the two governments. I have spoken with the White House as it relates to the 232s versus, you know, all the tariffs that have accrued over the trade war, and they're reviewing all of them. Based on my discussions and also the recent actions with the USTR where they're looking to...they've opened up comments as it relates to the digitising, the digital act over in the UK with the tariffs. They're going hard no’s. I do not see them backing down or being soft or rolling anything back. In fact, they've doubled down. Yesterday, the USTR doubled down on Trump's possible tariffs on Europe as it relates to digitalisation.
When it comes to trade coming back here, we saw more trade diversion go to Vietnam. Vietnam was a huge winner in the trade war last year based on containers. NDS Global tracked everything. Based on the global trade, Vietnam beat out China in terms of the amount of exports that they put out. And you saw that diversion because all-American manufacturers, they didn't come back here. They went to Vietnam. It's also very costly here. I mean, that's why we don't make containers in the United States. There's a reason why companies move elsewhere. So I don't see anything changing anytime soon.
Adil: So kind of going back, I believe it was February 24th, Biden signed an executive order, and within that executive order, he definitely backed up support for the Jones Act. He mentioned it inside the language there. So the Jones Act, for those that are unaware, stipulates that cargo moving from a U.S. port to a U.S. port should be moved on a U.S. ship crewed by U.S. merchant mariners. So you know, the Jones Act has been in debate for shipping for quite some time, and now that it's back on the scene and you have the support of the president. So what is, Mario, William, whoever wants to take it, John as well, I guess for everybody, what is your opinion about that?
How do you think that that's going to affect shipping here domestically?
William: I would start with that. You know, I'm a product of the Jones Act, Massachusetts Maritime Academy graduate, and sailed on vessels both in the Jones Act trade and the international trade. The one thing that I can say and I think that the ocean carriers, the international ocean carriers that are on this call, is that, again, the Jones Act does not affect the Port of Baltimore or any other port. You work together in these ports. And the Jones Act is not just, you know, it's not exclusively to containers. It's the tugboats. It's these small businesses that work in and around the ports. It's your barges. It's your bunker barges. There's a lot of things that are associated with the Jones Act. Now, people would say, "Well, you know, Biden supports the Jones Act." Of course, he supports the Jones Act. He did. He's always supported the Jones Act. He supported it when he was a senator.
And under the Trump Administration, let's just talk about the Trump Administration for a second, the Jones Act was never on the table or a discussion in the White House. So it's probably Richard Nixon when he built [inaudible 00:35:44] tankers, but there were high-level meetings within the White House, with Saudis, with President Trump, on the Jones Act. And the Jones Act wasn't waived. Now, as far as the Jones Act is concerned, because I know that it comes up, the Dutch bring it up, the Belgians bring it up. It comes up from a lot of the Europeans. It's not going to change. It may even get strengthened when we talk about wind energy. But what I would say is this, okay, outside of the Jones Act, and it's been in the international carriers, myself, I'm a big supporter of the alliances. The alliances that the ocean carriers are involved in I am supportive of. No one shipping company can service the entire world. So we need these alliances.
But what I would also say to the international carriers is that we do have a new administration. This administration is going to focus on exports. And we've got to figure out the agricultural exports from the United States into the Pacific Rim. And whether it's a container shortage or not, the first thing you'll probably ask walking through the door of the Department of Transportation or in the White House is, "Where are my farming exports? Can they get on that ship and get into the international market?". And I would say that I think the ocean carriers, you know, will step up and the ports will step up, and if it takes a working group to do it, then we should sit down and do it, because you don't want something like this legislated. We've got to figure it out and come up with a commercial solution.
Mario: You know, I would agree with Bill's assessment, and I think the interesting question regarding what we're just discussing here is the absence of a national freight policy. We still do not have a national trade policy. If you look to the north, Canada has a national trade policy. If you look to the south, Mexico has a national freight policy. And those are two countries that compete very much for the goods movement component.
Now, as far as California, you know, California is the largest ag producer in the nation, an exporter. Twenty-six per cent of what California produces in the ag industry is exported. So it seems to me that, again, aside from the Jones Act in terms of...I agree with what Bill just said, I think this really goes down to the bottom line is we need a national freight policy to put all these priorities together.
And the last thing I'll say on that component is if nothing proved beneficial for us or should be beneficial for us from the health pandemic experience, COVID-19, is we now know that we cannot be totally dependent on the outsourcing question, particularly with certain products and commodities. So it's going to be an interesting question as we go forward, and I have faith in the Biden Administration that they're putting everything on the table with regard to this, including the trade tariff issue, which I believe, I think that...my thought is that as they go further down the line, they'll use the trade tariff issue as leverage to address other aspects.
So I don't think that this will be a permanent dynamic in this Administration about the trade tariff issue, but I don't think it's going to end short term here.
Adil: So sorry, I believe John might be having some internet issues, but I think we're okay here. If you're back, John, just definitely speak up. Thanks for that, Mario. So I want to move on a little bit more towards the environment, in the Administration's agenda, and on the subject of the environment, some facts that I was able to gather here.
So there was an EPA study that named transportation as the single most, one of the largest contributors to greenhouse gas emissions, but when they speak about maritime, maritime itself actually represents a small percentage of those emissions compared with trucks and cars that are on the road.
If we look back at the start of 2020, in January, the IMO 2020 went into effect, and that put a limit on the amount of sulfur that is used in marine bunker fuels, and with the goal of reducing shipping emissions by 50% by 2050. Biden's own plan, from an executive order that was signed too, was to trust science, protect our environment, and reduce greenhouse gas emissions, and achieve net-zero global emissions by 2050 or before. Yesterday, secretary of transportation, Pete Buttigieg, you know, there was chatter about the bill that we'll find out more about tomorrow too, and he also mentioned, at some point, that transportation is going to be a huge component of this.
But since we're talking about shipping, we're talking about a greener, more renewable future, obviously, that's going to involve investments, right. And yes, we can think that investments, some funding will come from the federal government. How it will be allocated, as Lori Ann mentioned, it'll come down to the States. You know, we'll have to see how that plays.
And so, Lori Ann, question for you, from your "Dynasties of the Sea" book, you know, it discussed about how men and women, that's a very select few, in a post-World War, helped build a very thriving maritime industry, and they embraced technology, they embraced looking forward, helped create jobs. So you know, I feel like we're at that turning point again. You know, the environment is back on the table. We want to have something that children will benefit from, too. So, with new ship designs, with new engine technology, alternative fuels, it's going to require heavier investments.
So, do you think that we're in a good spot where we might see history repeat itself from that post-World War era, or do you think that the costs are just too high and, you know, maybe these ambitions are a little bit too far out of reach?
Lori Ann: You know, it's great that you bring it up. I actually spoke with Peter Sand, who's the Chief Shipping Analyst for BIMCO about this, because the fleet contracting activity that we're seeing in terms of investment, it's down.
And I was asking him because we were talking about this at CNBC. Because of the plethora of alternative energy, there's so much opportunity out there. Because there's so much opportunity out there, owners based on this energy efficiency index, right now, it currently only has new builds in there, but now, they're going to see if existing ships are going to be folded in. And that's why, now, you have seen a pullback in terms of the investment of newer ships. Because if you can keep your ship, you're not gonna reinvest. You're not going to reinvest into a new vessel. So because of this high degree of uncertainty and the regulation in all of this, you do have a hesitation in terms of where folks are going to put their money, because remember, a ship takes years to make.
So when you look at the cyclicality of shipping where we've had the overbuilding in the years and then the pullback, it's great from when I duck the lines from my first "Dynasties of the Sea" book told me, the same mistakes are made in a cycle but by different people, because the newer person in that generation thinks that they were smarter than the last that made that mistake. So I think, as of right now, because of all this uncertainty coupled with all of these great different technologies, we're seeing a pullback, because we're trying to figure out what we can get away with before we start sinking in the money.
Adil: That is very interesting. Thank you for sharing that. And we'll start with you, Mr. Doyle, here, for a port perspective and a cleaner, greener tomorrow. You know, greenhouse gas emissions from trucks, cars, etc., you name it, it's going to, again, require investments to modernise. But when we're talking about modernisation and the ultimate new machinery, new technologies, you know, that itself will create jobs when it comes to maintenance. There will need to be a workforce that's retrained to operate these pieces of machinery. So from your perspective, at a port level, how would a port benefit most from a reduced carbon world in terms of the technologies and, you know, what would that do for operations overall?
William: Yeah. Well, we're already changing at this point, and you know, I can take it from the ship side right into the port side, is that, you know, the Port of Baltimore itself, we are the number one auto importer and exporter for vehicles in the country, and as such, we have CM carriers that comes into the port. And CM carriers, they run their ships 100% on liquefied natural gas, LNG. Now, that technology itself, from a carbon emission standpoint, is significantly less than what you get from diesel. So we do have LNG ships, and I see it more in RoRo, but when you see new ships being built today, those ships are LNG ready.
Most of your engines are dual-fuel that are coming off the shipyards. They're dual fuel so they can run on that liquefied natural gas as their main fuel. On the port side, we're seeing more and more cranes. You know, for the container side, on the Port of Baltimore, our marine terminal walker, it was Ports America Chesapeake. Everybody's heard of Ports America, and they are, you know, 100 miles an hour, full speed ahead, for that environmental side of electrification instead of diesel on your cranes. They are doing densification, storm water management, and all of that is what you need to focus on.
You know, what comes down on the port goes into the bay, and you know, managing that is a big point. And you know, less people, you know, Wallenius Wilhelmsen, WWL, a major carrier that comes into the Port of Baltimore, they have announced that they're going to come out with a sail RoRo, a RoRo that operates by sail power. Now, it's not a fabric sail. It's a metal sail, and it can retract up and down when you come to bridges. But you know, nothing is off the horizon, nothing is off the table. I mean, if there's a way you can, in the economics, work out, and it can help environmentally and with jobs, I think the private sector, the carriers, will figure it out, and so will the ports, the port operators, and private sector.
So there's a lot of good things, I think, with the environment. You know, we call ourselves an eco-port, marine eco-port. So we're always open to new ideas, and we'll put it into practice.
Adil: Thank you. Anything to add, Mario, on that?
Mario: I think you mentioned...we previously discussed the Long Beach Container Terminal, and you know, we're gonna finish the last phase of that here in a couple of months. And that's evidence of the fact that what that does is it has created further efficiencies. And I think, with regard to the whole issue of transportation, you know, it's upwards of 40% that the transportation sector accounts for greenhouse gases.
So here, at the Port of Long Beach, as you may know, together with the Port of L.A., we have the Clean Air Action Plan of 2017. We've set a goal to be zero-emission as it relates to cargo handling equipment by 2030, and Long Beach is already 15% of our cargo handling equipment's already zero-emission, 15%, and of course, our goal and objectives to be zero-emission as it relates to truck drainage by 2035, which I believe we'll get there a lot earlier.
So I think, again, from a port perspective, I think here at the port of Long Beach, as the GreenPort, we have proven, beginning with our 2006 Clean Air Action Plan, that the environmental question in terms of reducing emissions is on par with economic and business growth. So I think we will continue with that mindset, and as a matter of fact, I would say it's a global mindset. I mean, ports all over the world are talking about climate change and what they're going to contribute towards this in terms of being a factor here in a positive way.
Adil: Thank you. Thank you for that. I appreciate it. That's a really great insight. So we have about 10 minutes remaining, and so I figured, well, it's a good time for us to jump to Q&A sessions here. So a lot of great questions have been coming in, and I see a lot about the Suez Canal. A lot of individuals are definitely interested. And I'm gonna share a screen, because I hope that this answers the majority of those questions and just to get everybody's thoughts here, too. So, can you see my screen? All right.
So MarineTraffic, our Data Team did an excellent job of gathering some data from vessels which were sitting stagnant and what their intended destinations were. So based off of this, we see the heat map here. We see where these vessels were headed towards beforehand, and you know, we see a lot that are headed towards Singapore, for example, others that have had an ambition to get to one of the Mid East ports, so maybe we're talking about a petrochemical trade.
Mr. Doyle, for your side of the U.S., we see two hot marks as well. So you know, a lot of questions have been coming in around whether expected port congestions may occur. So what are your thoughts? I'll start with you, Mario.
Mario: Well, I mean, the good news for us, on the West Coast United States, you know, we're not a hot spot, but on a more serious conversation, I think this basically tells you, this whole issue of when we talk about trade, it's a global conversation. Because at any point in the supply chain, in the global supply chain, you could have an event like what we've had at the Suez Canal.
So I think the lessons learned here, again, is how important the aspects in terms of how we move containers, and I think, to a certain extent, there is a component here of technology. Because clearly, whether or not, once we start implementing state-of-the-art technology in terms of weather conditions and how these vessels move, whether it's the Suez Canal, whether it's the Panama Canal, or even in the trans-Pacific trade route, I think lessons learned is in terms of how we need to kind of better forecast weather conditions in a way that we can anticipate, perhaps, how we move vessels through a certain trade lane or, in this particular case, you know, a canal.
So I think, certainly, the whole global community is going to be talking about, again, another example of a crisis that impedes the global trade movement of goods.
Adil: William, what about you? What are your thoughts here?
William: Well, I mean, you know, the first thing I'd like to say is that, you know, I really wanna hand it to and give credit to the Suez Canal Authority. They did a really good job, you know, managing this situation. Six days, the canal was blocked, and you had cargo coming from Asia and the Indian subcontinent that were rankling in the Red Sea trying to get into the Canal.
Ourselves, you know, right here in Baltimore, we had three ships inside the Canal that were bound for the Port of Baltimore. We had five or six on the Mediterranean side coming into the Canal that were delayed. But you know, short term I think is an upset right now. You have a short-term lag. The Suez Canal Authority expanded that Canal in 2014. It was widened in several places.
And if we take a look at the daily average over the past couple of years, it's about 51 ships per day going through the Suez Canal. But it was built in 2014 to have as much as 101 ships per day going through the Canal. Well, the demand hasn't had that yet, but we're gonna see in the next few days, with 300 and something vessels, you know, that are delayed, whether or not they can do the 101, you know, ships per day going through the Canal.
And you know, just a little piece of history here is that, you know, the six days war between Israel and Egypt, you know, it was called the six days war, but that Canal was shut for eight years. From 1967 to 1975, 15 ships were caught in between that Canal. So you know, look, we got a resilient, you know, supply system. We'll make it work one way or the other. The economics will make it work. And you know, I think it's short term, and you know, I gotta hand it to everybody that was involved. It was a tough situation. And again, from the dredging industry, thank you dredgers. The dredgers, when they got on site, it only took three days to get that ship dislodged. So congratulations to the dredgers that went into the Suez Canal. Thank you.
Adil: Absolutely. It is a major, major trade route to cut transit times for many shipping lines. In this other screen here, so our data team at MarineTraffic, we also were able to capture the movement of vessels during the blockage, which we now know the Ever Given is freed, who decided to deviate from their intended course, take the long route south of Africa. So you know, decisions were made. It's gonna be longer transit times, possible delays in deliveries, higher fuel costs, etc., piracy concerns. There are a lot of issues that were going through everyone's heads.
So what do you think that the Administration, at least, or maybe our industry, what are we going to learn from this? And as you mentioned, Will, you know, the spin industry will figure itself out, but what are the lessons learned here? I guess I'll open it to you, Lori Ann.
Lori Ann: I think we have to wait to see what happens with the proverbial black box to see exactly what went down. I had the opportunity to speak with the head of the Panama Canal yesterday as this news was breaking, that the Ever Given was freed. And we were talking about the give or take, and kind of going back to what John said earlier about tugboats, right, leading the vessels through. You know, the Panama Canal, the biggest difference is, and he hit home on it, that the part of the canal that the Ever Given was stuck in is the narrowest part of the Suez, and it's very similar to the Gaillard Cut in the Panama Canal. And the Panama Canal takes control of the vessel when they go into the locks, and you've got tugboats that navigate through the narrow portions to make sure that something like this does not happen. So you'll have to actually see, I think, as we figure out, if it was overcompensation, did you have sand, you know, that went into the engine, all these factors, I think, then, they'll have a better chance to figure out exactly what went wrong and what to do.
But when I spoke with the head of the Panama Canal, he would not be surprised if they have to go back in there and widen that cut at the Suez. So I think that's something that they're already looking at and maybe also, as John pointed out, is this something where the Suez has to start using tugboats more. There's a lot of different factors that are still, you know, floating out there.
Adil: Thank you. So I know we're almost done with our time, but I want to ask one more question from everyone here, whoever wants to take this question. So it's from our audience, and so I might be a minute over our allotted window.
So the question was, how do all the panelists see the critical seafarer crisis that we are experiencing at sea impacting global trade? We know with COVID there's been a lot of restrictions and gangway up where seafarers just can't get off their vessels. They can't do their crew changes. So it's been a very complicated area. So what are your thoughts on how this is going to get cleared up eventually, you know, when will they get vaccinated? And will we see something detrimental happen if we can't get our seafarers off their vessels on time? Go ahead.
William: I can say from, you know, I sailed at sea, as an engineer, you know, I know what it's like to be out there. And the fatigue after 120 days under normal circumstances, 4 months out there, it gets pretty stressful. When I look at the seafarer, right now, what we're looking at is basically the cruise industry is going to start from scratch, especially here in the United States.
So when you have the cruise industry where you have ships that are not manned right now, not staffed, you know, we'll see how that's gonna work out. Because you know, a lot of your officers are from Europe, a lot of your crew members are from the Philippines. So we gotta staff up those vessels around the world to get that industry up and running again, and that's gonna require vaccinations. It's gonna require the confidence of the Port State Control that those ships can sail and interact with your consumers and passengers. It's a long road ahead, but I think we have an opportunity right now, you know, to get a hold of, you know, something that nobody's really talking about is how do you prove somebody's been vaccinated. Is there a database? Do you carry it with your passport? Do you carry it with your shipping papers as a crew member? That's something that, you know, is right in front of us right now, and it's probably something that can be counterfeited too until we get control of some kind of digital chip that the public and governments can be comfortable with on that COVID vaccination for both passengers in the cruise ship industry and crew members on any type of vessel. That's what I think, you know, with what we're faced with right now during this COVID pandemic.
Lori Ann: You know, Adil, quickly, you've got 900,000 seafarers, where they hail from developing nations that will not have a vaccine until 2024. You know, I know for a fact that the International Chamber of Shipping is speaking with the Federal Maritime Commission to see if ports like the Port of Los Angeles...Gene Seroka told me that they're going to start inoculating seafarers once, you know, their time is up. So you need to have these hubs be able to put shots in arms, preferably J&J because it's one shot, because the vaccination passport and what China is doing right now, not allowing crew members off for crew changes because they don't have the Chinese vaccine, it's wrong. And these men and women need to get home, and they need for a mental standpoint be able to have access to this vaccine.
Adil: Final thoughts, Mario?
Mario: No, I agree. I think the bottom line is, you know, it's an essential workforce. So here, in Long Beach, we were successful in the high advocacy of the need to vaccinate the men and women on the waterfront for the same reason. You jeopardise that workforce, you jeopardise the movement of cargo. And the same could be said of seafarers. I think, again, they are essential to this operation in goods movement in our global community, and the priority there should be focused with the vaccination there with that workforce.
Adil: Absolutely. I really do hope that, you know, we can assist those maritime professionals all over the world in these times. So you know, I know we ran over time, so I really appreciate it. So I just want to wrap here and thank each and every one of you, Mario, Will, Lori Ann, and John, for being here today to discuss our topics around the Administration, what we can expect the next few years, and your thoughts around the short term and long term. So thank you so much for your time. I hope, for the audience, that this was insightful, fruitful, and also assist you in your own day-to-day life with some newfound knowledge. So with that, I like to close out and say thank you once again. Stay safe out there. If you ever are curious about MarineTraffic or any of the participants here, you can always find us on a quick Google search or search us on LinkedIn. So take care, everybody. Thank you all once again, and we'll chat again soon.
