Ocean Shipping Slumps as Pandemic Gains End

"LONG BEACH, Calif. -- Global shipping executives are wrestling with plunging exports, falling rates and mounting suspense over a possible price war -- a reversal of the soaring demand the industry saw during the pandemic.

Traffic from China's ports has slowed significantly, empty containers are stacked six high and trucks with no cargo dot the highway leading to the major terminals.

The world's largest box-ship operator plans to return dozens of chartered vessels to their owners.

China's exports fell nearly 10% in December from a year ago, the third straight month of declines and the biggest drop since Beijing locked down the port city of Wuhan in early 2020.

The falling volumes have pushed global ship freight rates into a downward spiral, with the cost of sending a box from China to Los Angeles dropping to $1,238 this week from $15,600 this time last year, according to the Freightos Baltic Index.

Manufacturing activity in China increased in February at the fastest pace in more than a decade and export orders increased for the first time in nearly two years.

Global shipping boomed earlier in the pandemic, when soaring demand for goods led to lines of more than 100 vessels off the Southern California coast.

Since then, rising inflation has sapped demand for many products as U.S. consumers shifted more spending to food, fuel and services, leaving retailers with a glut of goods.

"There are 16,000 registered truck drivers here but only 3,000 are now working," said Gao Chiang, a driver who had just unloaded a container filled with kitchen cabinets at Shenzhen's port, one of China's biggest export gateways. "This year will probably be one of the worst we've ever seen because the Americans stopped buying Chinese goods."

Giant liners such as A.P. Moller-Maersk A/S and Mediterranean Shipping Co., which made record profits earlier in the pandemic, have been thrust into a new reality. Over the past three months they have held back up to a third of scheduled capacity from Asia to the U.S. and 20% from Asia to Europe, canceling the sailings of dozens of ships.

The industry also has idled around 7% of global vessel capacity, according to box-ship operators. Those ships are either parked at shipyards undergoing extended maintenance or anchored in the waters outside Malaysia and other locations in Southeast Asia with only a few crew members onboard.

Idling or "laying up" vessels is a practice adopted by the industry at times of stress such as the 2008 financial crisis and in 2016, when a wave of consolidation cut the top dozen global players by half.

The shipping industry now faces the same uncertainty that surrounds its biggest customers such Amazon.com Inc., Target Corp. and Home Depot Inc.

If U.S. consumers keep spending, bloated inventories will be drawn down and demand for imports will resume.

But if the economy contracts, freight rates are expected to fall below break-even levels and kick off a new series of price wars among carriers that in the past led to multiyear losses.

"Inventory levels are still extremely high," Soren Toft, chief executive of Geneva-based MSC, said in an interview at the Trans-Pacific Maritime conference in Long Beach, an annual gathering for the shipping and logistics industries that was held in February. "I believe they will deplete a little bit in the second quarter and we'll see some growth again in the second half."

Mr. Toft said MSC, the shipping industry's biggest player with more than 700 vessels, will return up to 60 chartered ships to their owners and scrap a number of older vessels to control capacity. It has ordered around 130 new ships that will be added to its fleet over the next 3 1/2 years.

"Nobody really knows, but from what I can see we are not going into recession territory," Mr. Toft said. "We still believe that globalization is here to stay, global trade will grow with more modest figures, but that's good enough."

Others in the industry believe a turnaround will take longer.

Vincent Clerc, Maersk's chief executive, said in February that U.S. importers were ordering well below normal levels and that it would be six to eight months before demand started to grow again. He said earnings this year will belower than in 2022.

The National Retail Federation estimates that U.S. sea import volumes fell 12% in February compared with January, and were down 26% from a year ago.

Analysts said carriers will likely start undercutting each other in coming weeks on pricing to attract new customers or keep existing ones.

"They should have canceled twice as many sailings as they did," said Lars Jensen, chief executive of Denmark-based consulting firm Vespucci Maritime. "The collapse in demand we have seen over the past five months is leading to price wars, which nobody wants."

As the quest for customers intensifies, Maersk and MSC said in January that in 2025 they will end their 2M Alliance, a partnership formed in 2015 to help them reduce costs by sharing cargo on major ocean routes.

Rivals formed similar partnerships, creating the Ocean Alliance and THE Alliance. The three groups account for about 75% of global container-shipping capacity, according to data provider Alphaliner.

Big cargo owners are securing long-term ocean freight rates that are about one-third less than last year's contracts, according to people involved in the talks. The TPM conference is the main venue where long-term shipping rates are negotiated every year.

Shippers at TPM said that they are getting lower rates and no longer facing extended delivery delays. Shippers traditionally negotiate freight rates that run for a year.

But at this year's TPM conference, they are negotiating contracts as short as two or three months, which is unprecedented, according to Peter Sand, chief analyst at shipping data provider Xeneta.

"The tide has turned completely and cargo owners now have the upper hand in contract talks," Mr. Sand said. "There will certainly be more freight rate hardship for carriers this year."" [1]

1. Ocean Shipping Slumps as Pandemic Gains End
Paris, Costas.  Wall Street Journal, Eastern edition; New York, N.Y. [New York, N.Y]. 03 Mar 2023: A.1.

The West wants to make the supply chains independent of China. But that is often window dressing.

"Hardly any paper is awaited by the German economy with such excitement as the final version of the German government's China strategy. The future handling of the Middle Kingdom not only splits the coalition, but also separates two Green-led ministries. Many managers are counting on Economics Minister Robert Habeck to take a more pragmatic approach to prevailing against value-driven Foreign Minister Annalena Baerbock. There is a lot at stake: last year, Germany and China exchanged goods worth around 300 billion euros.

The concerns in the manufacturing industry are great, as the pandemic and Beijing's rigid corona management have brutally demonstrated to the western world how much dependence on China has become. Last week, two dozen companies from the German solar industry therefore made an urgent appeal to Habeck. After all, last year 87 percent of the imported photovoltaic systems came from China. If their suppliers fail tomorrow, Germany could forget its solar turnaround. The federal government then agreed on a strategy to build up its own capacities and diversify supply chains.

Not just rare earths

But problems can no longer be solved with the stroke of a pen. It is window dressing when it is suggested that Germany, which is poor in raw materials, could quickly free itself from China's embrace by having a larger number of suppliers. 

 

In recent decades, the Middle Kingdom has put itself in a position in the processing of strategic raw materials in which it can only be substituted at an extremely high price. The industrial world is thus dependent on China's raw material drip.

 

Example of rare earths: China has not only secured enormous mining rights in Africa and Latin America over the past decades. Above all, the country has around 80 percent of global refinery capacities. This separation of the ores into individual materials, which is necessary for further processing, is a low-margin, energy-intensive and dirty process. 

 

Today, Western managers admit that they were once glad that Chinese companies took on these tasks, which could hardly be conveyed to the citizens of the industrialized countries. 

 

The Chinese Baogang Group, for example, is the world's largest player in the market, processing most of the metal neodymium. The material is required to produce so-called permanent magnets, which do not require a power supply. Such magnets are essential for the construction of many new wind turbines. As a reminder: The federal government wants to build many thousands more wind turbines in Germany by 2030.

 

Example electric cars: A lithium-ion battery consists of up to 20 percent of the particularly expensive nickel. One of the most important prospecting groups is Nornickel, one of the few Russian groups not to be found on Western sanctions lists. One of the most important processors is the Tsingshan Group from China, which cooperates with many Western corporations. A year ago, Volkswagen secured its nickel supplies with her. The Tsingshan boss gambled heavily on short selling after Russia's operation in Ukraine started. Nickel prices shot through the roof, and the LME – owned by the Hong Kong Stock Exchange – not only suspended trading, but reversed it. Beijing pulled off a bailout to save the company of paramount importance.

 

China is also the key state for the supply of copper, for the construction of electric motors and for the manufacture of cables. Other examples can be found.

 

The inconvenient truth is that the industrialized world cannot simply cut ties with unwelcome suppliers from China on its current path of development. The resource-poor continent of Europe is hit far harder than North America, which can replace some, but not everything.

 

The West has long clung to the illusion that unattractive processing steps at the beginning of the production chain are outsourced to countries where this can be done without major protests, while the high-value processing steps are carried out in-house. Of course, politicians have to repeatedly raise the issue of grievances such as human rights violations against Uighurs. But anyone who consequently demands that the economy completely cut their ropes to China must also honestly name the price.”

Vakarai nori, kad tiekimo grandinės būtų nepriklausomos nuo Kinijos. Tačiau tai dažnai yra vitrinų puošyba

"Vargu ar koks nors popierius Vokietijos ekonomikoje laukiamas su tokiu susijaudinimu kaip galutinė Vokietijos vyriausybės Kinijos strategijos versija. Būsimas Vidurio karalystės tvarkymas ne tik skaldo koaliciją, bet ir išskiria dvi žaliųjų vadovaujamas ministerijas. Daugelis vadovų tikisi, kad ekonomikos ministras Robertas Habeckas imsis pragmatiškesnio požiūrio prieš, vertybėmis besivadovaujančią, užsienio reikalų ministrę Annaleną Baerbock. Ant kortos yra daug: pernai Vokietija ir Kinija apsikeitė prekių už maždaug 300 mlrd. eurų.

Susirūpinimas gamybos pramonėje yra didelis, nes pandemija ir griežtas Pekino koronaviruso valdymas Vakarų pasauliui žiauriai parodė, kokia priklausomybė nuo Kinijos tapo. Todėl praėjusią savaitę dvi dešimtys Vokietijos saulės energijos pramonės įmonių skubiai kreipėsi į Habecką. Mat pernai 87 procentai importuotų fotovoltinių sistemų atkeliavo iš Kinijos. Jei jų tiekėjai rytoj žlugs, Vokietija gali pamiršti savo saulės energijos apyvartą. Tada federalinė vyriausybė susitarė dėl strategijos, kaip stiprinti savo pajėgumus ir diversifikuoti tiekimo grandines.

Ne tik retųjų žemių

Tačiau problemos jau nebegali būti išspręstos rašiklio brūkštelėjimu. Tai vitrinų puošyba, kai manoma, kad žaliavų skurstanti Vokietija, turėdama didesnį tiekėjų skaičių, galėtų greitai išsivaduoti iš Kinijos glėbio. Pastaraisiais dešimtmečiais Vidurio karalystė strateginių žaliavų perdirbimo srityje atsidūrė tokioje padėtyje, kurioje jas galima pakeisti tik už itin didelę kainą. Taigi pramonės pasaulis yra priklausomas nuo Kinijos žaliavų lašėjimo.

Retųjų žemių elementų pavyzdys: Kinija per pastaruosius dešimtmečius ne tik užsitikrino milžiniškas kasybos teises Afrikoje ir Lotynų Amerikoje. Visų pirma, šalis turi apie 80 procentų pasaulinių perdirbimo gamyklų pajėgumų. 

Toks rūdų atskyrimas į atskiras medžiagas, būtinas tolesniam perdirbimui, yra mažos maržos, daug energijos reikalaujantis ir nešvarus procesas. 

Šiandien Vakarų vadovai prisipažįsta, kad kažkada džiaugėsi, kad Kinijos įmonės ėmėsi šių užduočių, kurias vargiai pavyko perteikti išsivysčiusių šalių piliečiams. 

Pavyzdžiui, Kinijos „Baogang Group“ yra didžiausias rinkos dalyvis pasaulyje, perdirbantis didžiąją dalį metalo neodimio. Medžiaga reikalinga vadinamiesiems nuolatiniams magnetams, kuriems nereikia maitinimo šaltinio, gaminti. Tokie magnetai būtini daugelio naujų vėjo jėgainių statybai. Primename: federalinė vyriausybė iki 2030 metų Vokietijoje nori pastatyti dar tūkstančius vėjo turbinų.

Elektromobilių pavyzdžiai: ličio jonų akumuliatorių sudaro iki 20 procentų ypač brangaus nikelio. Viena iš svarbiausių žvalgybos grupių yra „Nornickel“ – viena iš nedaugelio Rusijos grupių, kurių nėra Vakarų sankcijų sąrašuose. Vienas iš svarbiausių procesorių – „Tsingshan Group“ iš Kinijos, bendradarbiaujanti su daugeliu Vakarų korporacijų. Prieš metus „Volkswagen“ su ja užsitikrino nikelio atsargas. Tsingšano bosas po Rusijos operacijos Ukrainoje pradžios daug lošė iš skolintų vertybinių popierių pardavimo. Nikelio kainos šovė per stogą, o Honkongo vertybinių popierių biržai priklausanti LME ne tik sustabdė prekybą, bet ir ją atšaukė. Pekinas ėmėsi traukti iš bėdos, kad išgelbėtų itin svarbią įmonę.

Kinija taip pat yra pagrindinė vario tiekimo, elektros variklių statybos ir kabelių gamybos valstybė. Galima rasti ir kitų pavyzdžių.

Nepatogi tiesa ta, kad pramoninis pasaulis negali tiesiog nutraukti ryšių su nepageidaujamais tiekėjais iš Kinijos, eidamas dabartinį vystymosi kelią. 

Išteklių stokojantis Europos žemynas nukentėjo kur kas stipriau, nei Šiaurės Amerika, kuri gali pakeisti kai kuriuos, bet ne viską.

Vakarai jau seniai laikosi iliuzijų, kad nepatrauklūs apdorojimo etapai gamybos grandinės pradžioje perkeliami į šalis, kuriose tai galima padaryti be didesnių protestų, o didelės vertės apdorojimo etapai atliekami įmonės viduje. Žinoma, politikai turi ne kartą kelti skundų, tokių, kaip žmogaus teisių pažeidimai prieš uigūrus, problemą. Bet kiekvienas, kuris dėl to reikalauja, kad ekonomika visiškai nukirstų savo troškimus, taip pat turi sąžiningai įvardyti kainą."

Ancient DNA Reveals History of Hunter-Gatherers in Europe

"Looking at DNA gleaned from ancient remains, researchers identified at least eight previously unknown populations of early Europeans.

In the 1800s, archaeologists began reconstructing the deep history of Europe from the bones of ancient hunter-gatherers and the iconic art they left behind, like cave paintings, fertility figurines and “lion-man” statues.

Over the past decade, geneticists have added a new dimension to that history by extracting DNA from teeth and bones.

And now, in a pair of studies published on Wednesday, researchers have produced the most robust analysis yet of the genetic record of prehistoric Europe.

Looking at DNA gleaned from the remains of 357 ancient Europeans, researchers discovered that several waves of hunter-gatherers migrated into Europe. The studies identified at least eight populations, some more genetically distinct from each other than modern-day Europeans and Asians. They coexisted in Europe for thousands of years, apparently trading tools and sharing cultures. Some groups survived the Ice Age, while others vanished, perhaps wiped out by other groups.

“We are finally understanding the dynamics of European hunter-gatherers,” said Vanessa Villalba-Mouco, a paleogeneticist at the Max Planck Institute for Evolutionary Anthropology in Leipzig, Germany, and an author of both studies.

The new genetic analysis suggests that when farmers arrived in Europe about 8,000 years ago, they encountered the descendants of this long history, with light-skinned, dark-eyed people to the east, and possibly dark-skinned and blue-eyed people to the west.

Dr. Villalba-Mouco and her colleagues have given these peoples a list of new names that can be as hard to memorize as the kingdoms of Westeros: the Fournol, the Vestonice, the GoyetQ2, the Villabruna, the Obserkassel and the Sidelkino, among others.

But the scientists are only just beginning to understand how so many different groups emerged 45,000 to 5,000 years ago.

“I didn’t expect these amounts of replacements and changes in ancestry,” said Carles Lalueza-Fox, the director of the Natural Sciences Museum in Barcelona and an author of one of the new papers. “We lack still an understanding of why these movements were triggered. What happened here, why it happened — it’s strange.”

Modern humans arose in Africa and expanded to other continents about 60,000 years ago. Last year, archaeologists reported what might be the oldest evidence of those humans reaching Europe: a set of 54,000-year-old teeth in a French cave.

When these groups arrived in Europe, Neanderthals had already been living across the continent for more than 100,000 years. The Neanderthals disappeared about 40,000 years ago, perhaps because modern humans outcompeted them with superior tools.

But the oldest DNA of modern humans in Europe, dating back 45,000 years, undermines such a simple story. It comes from people who belonged to a lost branch of the human family tree. Their ancestors were part of the expansion out of Africa, but they split off on their own before the ancestors of living Europeans and Asians split apart.

These early Europeans have almost no genetic link to younger remains of hunter-gatherers. It appears that the first modern humans in Europe may have disappeared along with the Neanderthals, said Cosimo Posth, a paleogeneticist at the University of Tübingen in Germany and an author on the two papers published Wednesday.

“It’s actually quite interesting that the very first modern humans also had a very hard time to actually survive,” Dr. Posth said.

Before the advent of ancient DNA analysis, archaeologists would give names to cultures based on the styles of the things they made. The oldest modern human culture in Europe is known as the Aurignacians, named for the continent’s oldest figurative cave paintings and sculptures.

About 33,000 years ago, as the climate turned cold, a new culture called the Gravettian arose across Europe. Gravettian hunters made spears to kill woolly mammoths and other big game. They also made so-called Venus figurines that might have represented fertility.

Dr. Posth and his colleagues found DNA in Gravettian remains scattered across Europe. The scientists had expected all of the individuals to have come from the same genetic population, but instead found two distinct groups: one in France and Spain, and another in Italy, the Czech Republic and Germany.

“They were very distinct, and this was a very big surprise to us because they practiced the same archaeological culture,” Dr. Posth said.

Dr. Posth and his colleagues named the western population the Fournol people, and found a genetic link between this group and 35,000-year-old Aurignacian remains in Belgium.

They called the eastern group Vestonice, and discovered that they share an ancestry with 34,000-year-old hunter-gatherers who lived in Russia.

That genetic gulf led Dr. Posth and his colleagues to argue that the Fournol and Vestonice belonged to two waves that migrated into Europe separately. After they arrived, they lived for several thousand years sharing the Gravettian culture but remaining genetically distinct.

“This result is, in my opinion, groundbreaking,” said Anaïs Luiza Vignoles, an archaeologist at the University of Paris who was not involved in the study.

Dr. Vingoles said that archaeologists could now investigate the kind of cultural contacts these two populations had. It’s clear from the new study that they were not isolated entirely from each other. In Belgium, the scientists found 30,000-year-old remains with a mix of Fournol and Vestonice ancestry.

Jüergen Richter, an archaeologist at the University of Cologne who was not involved in the new studies, suggested that in these sporadic contacts between the two peoples, they might have shared cultural ideas and artifacts like fertility figuring. “I’m absolutely not surprised,” he said of the new findings.

About 26,000 years ago, the two groups faced a new threat to their survival: an advancing wall of glaciers. During the Ice Age, from 26,000 to 19,000 years ago, European hunter-gatherers were shut out of much of the continent, surviving only in southern refuges.

Dr. Villalba-Mouco and her colleagues shed light on the refuge of the Iberian Peninsula, the region now occupied by Spain and Portugal, by studying DNA in the teeth of a 23,000-year-old man found in a cave in southern Spain. His DNA revealed that he belonged to the Fournol people who lived in Iberia before the Ice Age. The researchers also found genetic markers linking him to a 45,000-year-old skeleton discovered in Bulgaria.

When the glaciers retreated, some descendants of the Fournol continued living in Iberia. But others expanded north as a new population, which Dr. Posth and his colleagues called GoyetQ2. “It really seems like a peopling of Europe after the last glacial maximum,” he said.

The Vestonice, by contrast, did not survive the Ice Age. When the glaciers were at their most expansive, the Vestonice may have endured for a time in Italy. But Dr. Posth and his colleagues found no Vestonice ancestry in Europeans after the Ice Age. Instead, they discovered a population of hunter-gatherers that appeared to have expanded from the Balkans, known as the Villabruna. They moved into Italy and replaced the Vestonice.

For several thousand years, the Villabruna were limited to southern Europe. Then, 14,000 years ago, they crossed the Alps and encountered the GoyetQ2 people to the north. A new population emerged, its ancestry three parts Villabruna to one part GoyetQ2.

This new people, which Dr. Posth and his colleagues called Oberkassel, expanded across much of Europe, replacing the old GoyetQ2 population.

Dr. Posth speculated that another climate shift could explain this new wave. About 14,000 years ago, a pulse of strong warming produced forests across much of Europe. The Oberkassel people may have been better at hunting in forests, whereas the GoyetQ2 retreated with the shrinking steppes.

To the east, the Oberkassel ran into a new group of hunter-gatherers, who probably arrived from Russia. The scientists named this group’s descendants, who lived in Ukraine and surrounding regions, the Sidelkino.

But in Iberia, there were no great sweeps of newcomers replacing older peoples. The Iberians after the Ice Age still carried a great deal of ancestry from the Fournol people who had arrived there thousands of years before the glaciers advanced. The Villabruna people moved into northern Spain, but added their DNA to the mix rather than replacing those who were there before.

When the first farmers arrived in Europe from Turkey about 8,000 years ago, three large groups of hunter-gatherers thrived across Europe: the Iberians, the Oberkassel and the Sidelkino. Living Europeans carry some of their genes, which allowed Dr. Posth and his colleagues to make some educated guesses about the physical appearances of the ancient populations.

The Sidelkino people in the east had genes associated with dark eyes and light skin. The Oberkassel in the west, in contrast, probably had blue eyes and may have had dark skin, although it’s harder to be sure of their appearance than the Sidelkino.

These three groups of hunter-gatherers remained isolated from each other for about 6,000 years, until the farmers from Turkey arrived. After this advent of agriculture, the three groups began mixing, the scientists found. It’s possible that the spread of farmland forced them to move to the margins of Europe to survive. But over time, they were absorbed into the agricultural communities that surrounded them.

Ludovic Orlando, a molecular archaeologist at Paul Sabatier University in France who was not involved in the new research, said that it was a milestone in the study of early humans. “I was really blown away,” he said.

Dr. Orlando said that every continent will likely have its own history of hunter-gatherer migrations. Researchers were able to plumb Europe’s history in such great detail because they could take advantage of 150 years’ worth of remains that have been stored in museums there.

But he predicted that scientists won’t have to dig up a lot of new skeletons on other continents to reconstruct their genetic histories. That’s because it is now possible to extract human DNA from cave sediments rather than searching for bones and teeth.

“We cannot develop a Eurocentric vision of the past,” Dr. Orlando said."