Why did the EU decide to extend shipping alliances’ rights? This article in the Loadstar points to a short piece on Linked in calling attention to a study by Olaf Merk (and others) critiquing alliances and what they have done to the ocean shipping and port industries.
The study points out alliances were useful in the distant past, but today they are serving to consolidate ocean shipping, reduce offers and most every service, and they also put great pressure on ports to engage in competition on facilities, a costly endeavor that results in over-allocation of capital for the use of few lines.
I’ve attached the Merk etal. article below. He’s an eminent port and maritime economist, and what he writes should be taken seriously.
By Alex Lennane 22/11/2019
via Study on shipping alliances makes EC exemption decision ‘puzzling’ – The Loadstar
The Impact of Alliances on Container Shipping
November 23, 2019 in Logistics, Managerial Econ, Shipping, Strategy, Supply Chains
Tagged alliances, container shipping, infrastructure, ocean shipping, port management, trade
The hard but accurate way to figure out the effect of tariffs on your product line draws a page from ABC accounting. Examine each and every SKU. Apparently Home Depot has done this. The results should be a finer-grained snapshot of tariffs’ effect.
It should also supply information for decisions as the tariff situation changes in the short term, as it most certainly will. The article states that at a similar company, Lowe’s, tariffs cost it 40 basis points of gross margin. That’s a lot in a business where markups are not that large.
by Emma Cosgrove
via Home Depot assesses tariff impact SKU-by-SKU | Supply Chain Dive
John McCown, a former shipping company CEO and transport hedge fund executive, debunks the faulty calculations in the Cato Institute’s analysis of the Jones Act as it applies to Puerto Rico.
Most container traffic from the US flows from Jacksonville FL to Puerto Rico. Containers headed to Puerto Rico must be carried in US-flagged hulls, due to the cabotage restrictions of the Jones Act.
It appears Cato Institute researchers’ figures are patently wrong, their methodology is flawed, and they have excluded several factors that would affect the Puerto Rico – US container trade link. Cato researchers came up with an 88% decline in the cost of shipping a container by their flawed technique. But Mr McCown’s spreadsheet says it is more like 10-12%, an amount that is hardly worth junking the Jones Act.
The purpose of the Jones Act is to maintain a capable US maritime segment. It embraces, for instance, container shipping between US ports, US shipbuilding, and US seamen and training, along with the stricter requirements for seamen’s well-being that a US flag puts into effect.
The Cato Institute seems to have aligned itself with some radical allies of the sitting US President. We don’t see why they would be so eager to cook the books on this issue. And we don’t understand why they insist on repeating their false conclusions even when they have been called into question by a serious critic, on fairly easily ascertainable facts.
It seems as though Cato is falling prey to the fake news fad, and won’t shut their collective mug when they are found out. It’s a good way to lose everyone’s respect.
via Commentary: Cato’s Jones Act numbers wrong