Even in an unsettled global economy, perishables still steady
Unsettled times. The economic landscape from Beijing to New York City, Helsinki to Adelaide, and back again is unsettled. No place is immune. On one hand, it is inflation and rising fuel costs and on the other, the geo-political uncertainties that come with the Russia-Ukraine War and the ongoing tension between China, the United States, and the West. Add in the lingering impacts of the COVID-19 pandemic – i.e., will another hard lockdown in China slam the doors shut at the Port of Shanghai? And if that isn’t enough, as the COP27 meeting in Sharm el-Sheikh, Egypt reminded the world, climate change is here.
This is the backdrop to all discussions about trade. A great deal of that international trade [including perishables] moves in ocean containers – around 849 million TEUs in port throughput in 2021. And like all things related to international trade and ocean shipping, it begins with China.
Greg Tuthill, the chief commercial officer at SeaCube, a New Jersey-based container leasing company in a recent far-ranging interview with the AJOT, when asked about the multilayered impact of China on global finances remarked, “The China challenges are so far-reaching...so pervasive, because there’s the labor issue, the de-linkage issue – we’re (U.S.) pushing further and further away from China, especially with some of the trade restrictions and intellectual property (IP) measures… So, it’s going to be interesting for world trade and the global economy. But that aspect also ties into the debt markets and capital markets. And this ties whatever happens in China back into investment decisions for corporations as they go forward.”
Although the U.S. de-linkage from China with near-shoring and friend-shoring initiatives is underway, del-linkage can work in both directions. As Tuthill points out, “China used to move a lot of pork from the US, and now China’s trying to be more self-sustaining, and that’s a whole change and shift and rotation from what it was. Pork is down from an [U.S.] export standpoint, especially to China, but I don’t know if that’s going to change the total movement of perishable trade type of volume. But it’s one area that certainly bears watching.”