WWW.SEAPOWERMAGAZINE.ORG 72 SEAPOWER / MAY 2016
The industry’s current state also has a former maritime administrator worried. Retired Capt. William
G. Schubert, president of International Trade &
Transportation Inc., said virtually every segment of the
maritime industry — in the United States and internationally — is hurting, and that is directly the result of
global economic uncertainty.
“Commercial cargo is down globally, and it will have
a direct impact on the U.S.-flag fleet,” he said.
Officials at the Department of Transportation’s
Maritime Administration told Seapower in early April
that the agency has seen a 26 percent reduction over
the last year or more in the usage of U.S.-flag vessels
that trade internationally and are not eligible for the
Jones Act trade. A majority of the cargo they carry is
commercial. The United States has 170 flagged vessels
in Jones Act and international trade.
“All flag vessels are hurting for cargo right now,”
Schubert said. “I truly hope there is a turnaround in
the global economy and that, in turn, will help increase
the container cargoes,” he said.
David Lipton, the first deputy managing director of
the IMF, spoke at the National Association for Business
Economics in Washington on March 8. In his address,
he discussed the global economic challenges and the
impact on shipping.
“Global economic recovery continues, but we are
clearly at a delicate juncture, where risk of economic
derailment has grown,” he said.
The Chinese market and low commodities pric-
es were cited by Lipton as key reasons the shipping
industry worldwide is struggling. The IMF anticipates
China’s economy will weaken in 2016 for the sixth
In January, the Shanghai International Shipping
Institute said China’s dry-bulk shipping industry likely will see a surge in bankruptcies this year as freight
rates hit record lows and the country’s demand for
Walter H. Kemmsies, the chief economist at Moffatt
& Nichol, a global infrastructure adviser, said the
industry is cyclically and structurally depressed, and
the world economy, excluding the U.S. market, has
slowed substantially, which has slowed global trade
and therefore demand for large vessels. But there is
room for some optimism in the year ahead.
“Chinese, Japanese and Korean yards are hurting
for business. However, U.S. builders serve a protected
domestic market. The U.S. domestic economy is growing at a moderate pace, but set to gain momentum.
This should put U.S. builders in a good position since
steel prices are low,” he said.
Over the next year, Kemmsies expects China,
Europe and other countries to see their economies
slowly pick up.
“Home and car sales are holding at high levels.
The Fixing America’s Surface Transportation Act, a
new round of Transportation Investment Generating
Economic Recovery grants and other investments in
infrastructure will push up demand for construction
materials and vessels to carry that,” he said.
Despite the possible gains, it probably will not be
enough to absorb the significant excess capacity in
container and bulk carriers, he added. n
The container ship Benjamin Franklin, owned and operated by France’s CMA CGM SA, prepares for offload at the
Port of Long Beach Feb. 18 following its second voyage to the United States. Capable of carrying 18,000 twenty-foot
equivalent units, it is the largest vessel ever to call at a U.S. port.