U.S.-China Tariff Fight Keeps Some Cargo Ships Circling Destinations
STEVE INSKEEP, HOST:
At any given time, there are thousands of cargo ships sailing the world's oceans. Once in a while, a ship's crew can be told to wait - and wait - outside of a port.
MARK SZAKONYI: It can be very lonely. I mean, yes, there is entertainment and social media and DVDs, but there's not a whole lot to do.
INSKEEP: Mark Szakonyi came by to talk about a ship called the Peak Pegasus which circled for weeks off the coast of China before being cleared to enter. Two other ships are still circling out there, all of them carrying soybeans, a product that is now facing tariffs after President Trump provoked a trade fight with China. Mark Szakonyi keeps track of the shipping news as editor of The Journal of Commerce because that news points to bigger economic trends, and that includes that soybean ship that was stuck.
SZAKONYI: It looks like any other ship. On the container side, you know, it's either in 20-foot or 40-foot containers, you know...
INSKEEP: Stacked up on deck the way you can see it.
SZAKONYI: Stacked up. You know, a container of soybeans is going to look just like a container of electronics.
INSKEEP: And this is probably an enormous ship, hundreds of feet. It's multiple football fields.
SZAKONYI: Yeah. I mean, you're talking thousands of containers.
INSKEEP: So these three ships are circling just off the Chinese coast.
INSKEEP: They've been trying to get there as quickly as possible. As best you can determine, why would a ship not go on into port and pay the tariff or not pay the tariff? Why would they circle and circle off the coast of China?
SZAKONYI: It's a reflection of negotiations.
SZAKONYI: Meaning that they thought they could come in before the deadline, looks like they didn't. Or by the time maybe the cargo got processed, it wouldn't meet the deadline. So there's some kind of negotiation, whether that means in price or maybe they're guaranteeing more volume.
INSKEEP: The seller of the soybeans is calling somebody in China and saying, now I got this tariff, can you give me a better price or something?
SZAKONYI: Yeah. And then, of course, you most likely got several sellers of soybeans on one vessel. So they're probably working in concert in determining whether it's worth making the delivery or trying to find another market in Asia or coming back.
INSKEEP: OK. Now, one of the ships has got in, the Pegasus, so we can guess - we don't know for sure, but we can guess - they made a deal there that was acceptable to everybody, and the soybeans have gone.
SZAKONYI: Cargo doesn't get unloaded unless all parties are somewhat happy.
INSKEEP: Is this normal that a product would be out on the ocean and they haven't made up the final terms of the deal?
SZAKONYI: Oh, no. Yeah. It's abnormal. And it's really just kind of a snapshot of how ships on the water can get stuck in these kind of situations because deadlines do come down, and all of a sudden, something that didn't have a tariff - it does now.
INSKEEP: What should we look for in the shipping news, so to speak, in order to see where this tariff battle might be going?
SZAKONYI: Well, I think it's going to be really interesting. We've seen a jump in containerized import growth. But at the same time, we have new statistics that are showing that even though there has been a surge of imports, it actually pales in comparison to last year. So even though we're seeing an intensity in the last month or two of very high volume - for instance, 8.7 percent more volume in July than a year prior - it's suggesting that it's more of U.S. importers moving those - that cargo faster ahead of tariffs rather than broader economic growth.
INSKEEP: Well, there's the next question. Is this one of those numbers that economists would look at when they're trying to forecast where the broader economy is going?
SZAKONYI: Absolutely. I mean, I think U.S. imports are a great reflection of where major retailers are thinking consumer confidence is heading. So if we see steady imports through the rest of the peak season, that would suggest to me that retailers are expecting consumer confidence to stay pretty strong through the holiday season.
INSKEEP: Mark Szakonyi of The Journal of Commerce. Thanks so much.
SZAKONYI: Thanks for having me.
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