The Doorstep:全球供应链危机的代价有多大？

NIKOLAS GVOSDEV: Welcome, everyone, to this edition of The Doorstep podcast. I am your co-host, Nick Gvosdev, senior fellow at Carnegie Council.

TATIANA SERAFIN: And I'm Tatiana Serafin, also a senior fellow here at Carnegie Council, welcoming back today Peter Sand, who is now the chief analyst at Xeneta, so he is in a new position but same great voice on global supply chains, which I think are so important.

In a minute we will hear from him, but Nick, I want to hear about that great Bloomberg report you read earlier this week and share it with our audience.

NIKOLAS GVOSDEV: Sure. This is in Bloomberg. It's Daniel Flatley, Nick Wadhams, and Saleha Mohsin, and they are writing about the Biden administration now taking a look at the impact of sanctions on Russia for what it's doing to disrupt global supply chains and even what the doorstep impacts may or may not be in the United States. They're not saying we should necessarily stop sanctions against Russia because of its invasion of Ukraine but the realization that U.S. foreign policy—in this case reacting to Russia's invasion of Ukraine—is in turn having a doorstep domestic impact and looking at whether it can be mitigated or does the administration in essence try to convince American companies that there are areas that aren't sanctioned against Russia, particularly with food and fertilizers, to try to get more of that to market. It's also about an effort to get alternate sources of supply, which of course is one of the big motivations for why President Biden, after resisting many months from doing this, is going to travel to Saudi Arabia next month.

TATIANA SERAFIN: This is so timely for our discussion with Peter because he addresses many of the issues that you raise. I am looking forward to reading that report, but I do think there is a lot going on internally in the United States as we face rising inflation, rising gas prices, and have discussions about what are we doing in Ukraine.

Another article in The New Republic (TNR) this week—I don't know if you saw it—is titled, "There's a Big War Brewing Among Republicans Over ... Well, War" by Jordan Michael Smith, talking about how in fact many senators and congressmen are debating internally in the Republican Party whether we should continue support in Ukraine. I know this is a big area of discussion that kind of dovetails with the report that you read: What are we doing because people at home are not ready to lose more money at the pump and to pay higher prices? I think this is going to be a bigger issue as we continue on for midterms, and I am wondering what your thoughts are if you saw that article in TNR. What have you been hearing? Is there rising dissent?

NIKOLAS GVOSDEV: What this points to is something we have been doing at Carnegie Council for the last five years or so, which is these questions of narrative: Why does the United States do certain things in the world? How does it connect to the home front, so to speak, and can you convince or persuade Americans that sometimes sacrifices are necessary for these longer-term goals? The Bloomberg report touches on the sense that the Biden administration I think hoped that these massive economic sanctions on Russia could be done in a way that would produce maximum pressure on Russia but have minimal impacts on the United States and other Western countries.

Now that the invasion continues onward, Russians aren't changing their position, they are not leaving, and we are starting to see the costs of those sanctions and Russian counter-sanctions begin to pile up. To this point, Jordan's New Republic piece has this sense of, well, what exactly should the United States be doing in the world and at what cost to the domestic constituencies?

This is about, as we have always observed at Carnegie, a question of competing narratives. It is an internationalist narrative, the traditional bipartisan post-Cold War narrative, running up against a narrative of, as we did in some of our reports in 2019, restraint. These are narratives of "America needs time to rejuvenate at home before it can be more active abroad."

We are seeing that narrative play out first in the Republican Party. So far progressives in the Democratic Party have stayed the course with the Biden administration on this, but some of that skepticism—I'm thinking of people like Representative Ro Khanna in particular—about U.S. intervention overseas is there, and it may be that as this continues you may find some Democrats also beginning to question some of that willingness to continue to support the administration's approach on Ukraine.

These issues are all connected, and they are connected at a time—particularly for younger people, something we will also talk about with Peter—when a lot of the assumptions about lifestyle that we have grown accustomed to in the last 10 or 15 years of technology may no longer apply, such as just-in-time supply chains, where I tap in something on my mobile phone and receive inexpensive deliveries like Doordash, or I call an Uber, or order furniture that shows up within a few days.

TATIANA SERAFIN: Let's see what Peter has to say and how much it's going to cost us right now.

Thank you so much for joining us on The Doorstep almost a year since you were on, Peter. How are you doing? Where are you? Oh, my gosh, there's so much to talk about.

PETER SAND: Planet Earth, Northern Europe, and absolutely delighted to be back on The Doorstep with you and Nick, Tatiana. Thanks for having me. I think we have a lot of interesting things to talk about. Supply chains are all over the place right now.

TATIANA SERAFIN: Yes. I think a year ago there was a lot of optimism on your part that things would come together and that we were headed in a good direction. Life as we know it has really changed unexpectedly for so many reasons over the past year.

I do want to take us to the war in Ukraine and the impact that has had, but before we go there we are always looking at how to engage our audience globally, and shipping for certain engages every single one of us as we talked about last year, and it continues to be the case so importantly this year. This week I know you tweeted your approval of it, so I want to start off with the U.S. House of Representatives' approval on Monday of the Ocean Shipping Reform Act, which is now going to Biden for signature. It talks about increased oversight of shipping, which supporters say will help curb the big word, inflation. Will it? I don't know. It got a lot of bipartisan support, and we don't have a lot of that lately, 369-to-42 approved in the House.

Can you talk to us about what this Act really means? Will it have a huge impact? Is it necessary for us here at home and how America engages in the world?

PETER SAND: This is definitely a step in the right direction, mostly for the American exporters and for those who export agricultural goods all over the world. Several of Xeneta's customers have also engaged us in discussions about how can this go on, what is actually happening, and can it really be so that carriers can shy away from our goods favoring, say, fresher in boxes heading in another direction than our fresh produce?

Let's cross our fingers. Let's see how this will actually develop, but it is surely crunch time also for global carriers serving U.S. customers. The Federal Maritime Commission (FMC) is definitely now getting just a little bit more armor and weapons in terms of structuring how the American economy is well served by global liners, but the reason for me also to approve this is that from a shipper's perspective I think this is at least one step in the right direction.

But there is always a flip side to the coin, and I guess we might as well just jump right into it. There is a price to everything, because if carriers are to ensure that U.S. exporters will get a box for their products what is the price of that? Normally exports out of the United States are fairly cheap and imports into the United States are super-expensive, at least comparably. Obviously there may also be a U.S. importer that will then cry foul if they cannot get the boxes that they want for their imports.

So you cannot please everyone. Let's see what more needs to be done, but in essence I think it doesn't necessarily clear up all the bottlenecks that we see left, right, and center, but it is one step in the right direction for some American importers for sure.

TATIANA SERAFIN: Let's get back to your comment about bottlenecks because last year you gave a great description—our audience can go back to that podcast—about how shipping lines and global shipping works. I also refer everybody to Kathryn Schulz's New Yorker article that came out last week—Peter, if you haven't seen it, it is really great—that also talks about global shipping, containers, and what it means in volume so that people really understand at the doorstep where we get our things, why it takes so much effort, and how much it costs, to your point on price.

Last year you thought that in 12 to 18 months there might be some sort of easing of congestion. I don't think we're seeing that. What are you thinking now? Are you still optimistic?

PETER SAND: I am always optimistic. I am also pessimistic if that is required. Above all, I try to stay realistic.

What has happened in the global chains since we last spoke has basically been a bit of a whack-a-mole game. Every time we have seen obstacles to trade being cleared, some of them being eased, we have seen new ones come up. You mentioned already the war in Ukraine, Eastern Europe. We also have seen a two-month-plus lockdown of Shanghai. We might in Northern Europe and in North America see at least the worst part of the COVID-19 pandemic behind us. We are seeing a different kind of "hangover" right now perhaps from some of those massive economic stimuli that prevented everyone from going bankrupt and falling into recession at that point in time.

But I think what we have seen also is a lot of, if we focus on the United States, the major retailers coming out with their warnings weeks, days, a month ago, that they have bloated inventories for at least some goods. They have of course done what they could do on their behalf to make sure that the goods are ready on the shelves for their sales and for their customers and while doing so they have also pushed forward goods that are only for sale later in the year. So it is a little bit of a clearing sale also for some goods right now. I think we will see this quite soon for new goods that were brought in early. That is one way of building resilient supply chains, and I think you see that from many suppliers and importers around the globe.

They are really focusing on literally two aspects right now as we are also aware that similar data also shows that the spot market for container shipping freight rates have fallen by some 20 percent over the past couple of weeks or a month, so obviously some shippers are looking to save a few bucks on freight procurements right now, but the flip side of that coin is: Will they do so at the expense of the insecurity in supply chains that they also get from a closer relationship with global carriers in long-term contracts? So there is always more to it than meets the eye.

I am as optimistic as I can get around those 15 to 18 months that I am afraid we still have ahead of us because as long as we get an equal and serious amount of obstacles in front of us compared to those that are cleared we are moving sideways and not really into, but it may be the one silver lining to at least the headwind that we see now from inflation and from rising interest rates that some of the steam of global consumerism is coming off, and that gives time for supply chains also to normalize.

NIKOLAS GVOSDEV: There is some talk and some cautious optimism in Turkey over this past week that there might be an ability to arrange safe corridors in the Black Sea because the Russian invasion of Ukraine obviously has stranded a good deal of Ukrainian exports that can't go through the Black Sea to their markets. This is creating upward pressure on food prices that we see around the world.

From your perspective what kind of guarantees would shippers be looking for? When Turkey says, "We have made an arrangement with Russia to open Ukrainian ports," what would be the kinds of things that shippers would be looking at before they would want to send cargo ships into Odessa to start loading up on grain? Is this in fact going to be a feasible way forward? Can we actually develop these humanitarian corridors to allow grain and food exports from Ukraine to pass unmolested?

PETER SAND: It's a brilliant question. I have for some months now been discussing exactly this: Could we make a humanitarian corridor to ease at least some of the inflation on grain prices? Also, especially those underdeveloped countries that more clearly find themselves on the brink of hunger in many cases, should they not bring all this grain from Ukraine? We are talking some 50 million tons potentially on an annual basis that is short now in the global markets.

To cut to the chase, I would not expect that the Russian president will accept something like this. I know that the international community also at the United Nations is putting on more heat and definitely also putting names and shames to this whole situation. It is not necessarily easing the pathway to a humanitarian corridor and bringing grain out, even with Turkey's offer to assist.

For every shipper here safe passage, for every ship owner that is likely to make a ship available also to this, the warships right now blocking the coastline of Ukraine need to ensure that those ships are getting a safe and free entry and exit, and right now it is a war zone. We know that from more risk insurance premiums being paid for ships transiting that area. I will say it like this: I definitely hope it will happen, but I highly doubt it, I'm afraid.

TATIANA SERAFIN: Let's stay on this topic of insurance premiums and what people are willing to do or not do because I just read this interesting article in Bloomberg about the United States encouraging agricultural and shipping companies to buy and carry more Russian fertilizer, so moving on from grain to fertilizer, which is really a complex issue because we are accusing Russia of using food as a weapon by preventing Ukraine from exporting, but here we are on the flip side asking shipping companies to try to ship more fertilizer out because Moscow is a key global supplier.

What are you hearing on that front? Are shipping companies saying no? Are people willing to deal with Russia? We are supposed to have sanctions here, but fertilizer is one of the exemptions.

PETER SAND: Actually that is the key thing because nobody in the shipping industry as a trader in fertilizers or grain would like to get caught up in breach of sanctions, so you really need to tread carefully when doing this.

But you are absolutely right. It is a funny thing that all of a sudden American importers are requested and even encouraged to bring in more fertilizers from Russia, but it also proves the fact that we all need one another. We are part of a global ecosystem, all of us, so we had better trade with one another. I am afraid that we also can conclude trade did not do the whole trick this time around with Russia, so sorry for taking that one, but indeed I think the global shipping industry is ready also to serve those customers who can legally trade in fertilizers out of Russia right now.

We must also admit that 1) many, especially in container shipping, global carriers of European origin that no longer call at Russian ports have even sold big terminal assets also since the outbreak of the war; and 2) it is a global shipping world, and people from all over the world may not necessarily see the unrest in Ukraine in the same way that you and I do, and it may not be in breach of local sanctions.

It may be that they can still do trading. That is always the one thing that you need to be aware of when looking at global shipping systems. I am absolutely sure that there are shippers standing ready, but it also comes with a premium. These trades, in whichever form they may take, will definitely also be done with special safety premiums on top of this, not only for just the seafarers but certainly also for the shipowners and operators that will carry the fertilizers in the end.

TATIANA SERAFIN: How much are all these premiums adding to inflation? Can we blame everything on shipping?

PETER SAND: In short, no, absolutely not, depending on the commodity that you look at and what kind of country you are living in. I know that the United Nations Conference on Trade and Development, soon will shed more light on this exact topic in terms of grains and shipping and the impact on inflation, so watch out for that.

But in terms of how much we can blame shipping and container shipping freight rates, my key focus, we surely have seen elevated prices for more than two years now. It would be a no-brainer to say that it is causing inflation, but I have to disappoint someone. It is not the whole truth and nothing but the truth.

The real inflation is coming from the economic stimuli provided to consumers around the globe and especially in the United States, but naturally when you have high prices on transports it eventually becomes an integrated part of the costs and not just something that importers may take on their own shoulders without passing it on if that was a temporary case, but we have had it for two years now and we may have it for at least another year. So some of that is likely to prove sticky when container shipping freight rates go down again.

Also, fertilizer freight rates will drive up freight rates for that matter. This is also contributing to some extent; it is not the lion's share of the inflation part of it, but it is definitely also playing a part.

NIKOLAS GVOSDEV: How does this then connect to average lived experience? There was a fascinating piece earlier this week in The Atlantic magazine by Derek Thompson about the end of what he calls the "Millennial consumer subsidy"—the idea that you can tap away on your phone and everything from food to furniture shows up in an instant—and saying prices are going up and it's not as cheap to do this anymore because there are supply chain disruptions.

What do you see as the impact from the shipping side of all of this—as Tatiana asked with the higher premiums and choke points—on standards of living, on what people have grown accustomed to over the last number of years? The pandemic accelerated this with people staying at home and ordering in for delivery of all sorts of goods and services. Does this mean we are going to see a bit of ratcheting back on standards of living particularly in the industrialized countries?

PETER SAND: The cost of living for everyone is definitely going up rapidly right now, but in terms of the comfort of ordering everything and getting it at your doorstep in only a few days there is no going back on that. But I think what this supply chain crisis and also the recent inflation is also telling people is that things are not necessarily always that cheap.

I think if we are going to put a little more perspective on this and put in perhaps a little bit of climate change and that same massive challenge that is around us, if consumers are serious about having carbon footprint labels on each product, then they also need to act and "walk the talk" when they do so. All this ease of consumerism that has been everywhere over the past two years comes with a cost.

You will never go back to that. Once you see how things have moved on it will become more complex going forward. It will become more hybrid. I guess that—to bring this back to the world of global liner shipping—global liners also make windfall profits to the extent of several hundred billion dollars, and they need to spend this money wisely.

A way that they do this is not only to bring up higher standards and higher services for what they deliver to global shippers, but they are also investing in door-to-door logistics right now, more so than they ever have done before because they just spent one decade losing money and focusing on port-to-port. Now they want to do things differently. They want to fly more stuff around. They want to bring it from the production site to your doorstep. We are seeing not a bullet train in that regard, but we are definitely seeing changes that will not unwind or rewind due to the obstacles that we tend to see right now. That is how I see it at least.

TATIANA SERAFIN: I have been reading a lot about the changes in the supply chain of the shipping industry itself, to your point door-to-door and also getting into other areas. I have been reading a lot about real estate because a lot of the ports cannot contain all of these container ships. They are still backlogged, so people are buying up real estate around port areas and changing the landscape of what these areas look like, which I find fascinating. So they are going from just owning containers to owning real estate. That entails a whole host of dealing with other government regulatory agencies, rules, etc.

What other changes on this kind of macro-industry scale have you seen since we spoke over the last 12 months? I think these changes are going to impact us at home too, everything from jobs to real estate prices. What have you seen?

PETER SAND: What we have seen is definitely a global interest in investing and in real estate. That also comes in the form of terminal logistics facilities in Africa. We have seen the European carrier, the world's largest if you measure it right now, the Mediterranean Shipping Company, just buying Bollore's African logistics facilities. They are buying real estate. They are also buying assets in the form of cargo carriers and freighters.

We are also seeing the French CMA CGM supporting some political initiatives, buying a huge stake in Air France and now getting all the way up to I think 9.7 percent. So do not underestimate the power of national politics as well as geopolitics in this whole sense because Maersk Line also, one of the bigger carriers of course, has also made investments in the United States.

They have made investments also in the Far East for logistics companies trying to be this integrator of supply chains, and without doubt one of the things that we at Xeneta definitely expect will come out of this supply chain crunch now is even more complex supply chains going forward when people set up what we could term "China Plus One," just-in-time supply chain, adding a "just-in-case" supply chain, which may be also set up somewhere in the Far East. That is the dominant strategy in my eyes, but if they can set up a fully automated facility in the heart of Europe or in the heart of the United States for that matter that may also be the case because labor costs at the end of the day for a project like this are essential.

So the name of the game is supply chain resilience, and global carriers are definitely trying to sell peace of mind to whomever is ready to buy that at just the right price going forward to also make sure that they are the essential service provider going forward and in the end to the benefit of all of us global consumers wherever we may find ourselves.

NIKOLAS GVOSDEV: Interesting your point about the "just-in-case" supply chain and diversification even within Asia because that is something that another Doorstep guest, Parag Khanna—not so much in the context of the Doorstep but in some of his other writings—has also been looking at— those questions of alternate supply lines in Asia that can bypass China and do not always depend on China sourcing. So it is interesting to see how that is taking shape.

PETER SAND: If I may comment a little bit on the impact also to intra-Asia from the lockdown in China. It was not only goods that were readily produced and goods ready to go into the North American continent or North Europe. It was definitely also raw materials and semi-finished goods that were caught up when the most important port of them all, Shanghai, was locking down. It was in the immediate aftermath of lockdowns down in Shenzhen. We also saw Tianjin up north all but close down, so it is a constant moving target up and down the coastline right now in China with the Ningbo also being at the center of attention.

One thing that we may not have touched on up until now in global supply chains is a shortage of truckers. That seems to be the one thing that is labeling also the most critical part of global logistics right now. In China they are prohibited from going from one part of a town to another without several stops and testings carried out, so that is putting plenty of roadblocks up. We are seeing this European mobility package also putting somewhat of a spanner in the works of road haulage, where trucks need to go back to their home every eight weeks. That is definitely also dragging capacity down. In North America it has been the case also for a long time, especially when we have seen terminals most predominantly during the pandemic on the U.S. West Coast really being clogged up with truckers not being capable of doing their job to the best possible extent.

TATIANA SERAFIN: I am so glad you mentioned that, and I will bring it to the doorstep. I waited three months for a tiny lamp that I ordered because it was stuck on a truck, and the truck had no driver. That is on a small scale, but for our audience it shows how a global issue touches every one of us, and we really need to look at this. That is why we are so glad you were able to come back and speak with us today.

We touched a little bit on what you think might happen in the next 12 months in various aspects. The last time there was a lot of: "We're a globalized society. We need to recognize that." Russia has thrown a rift into that sentiment, as you mentioned.

What is the general feeling in Europe? I know here in the United States the war has left the headlines a little bit. You are closer. Can the hole that Russia has left in the global system be repaired? What is your sentiment on that front?

PETER SAND: Without doubt it is still an everyday headline in Europe, but of course that is also because it is in our backyard and impacts us to a larger extent, especially from an energy perspective with gas and oil also bringing the price up at the pump to new highs in Europe as it has done also in the United States. But definitely it does leave a significant hole in global supply chains.

Fortunately you can say that in many aspects at least of container shipping Russia was not a massive player. It was a significant player but not a massive one. The real critical hole to plug for global supply chains is definitely for fossil fuels—gas and oil—and that will be the [key] to all of this, that it is all about bringing this war to an end, getting those sanctions to work, and tightening the grip. But in terms of bridging the gap there is a lot of politics that needs to work and there is also a future that you need to prepare for because there is no returning point.

Russia is excluding itself from mostly Western European society. They still have friends around the globe. As I said, these are complex matters in global geopolitics, but still they are excluding themselves from a massive market and from a lot of investment also from the Western part of the world.

It is very much still on the agenda here in Europe as it drags on. I am not really sure that I can call the end of the war anytime soon. I would love to, but it certainly looks like some sort of endgame going on right now. Whether that endgame will be in a month or quarters it is way too early to say, but fingers crossed that we will soon make use of shipping for rebuilding a nation more than trying to avoid doing business with another nation.

I think that will be perhaps the silver lining from what is really an obstacle around container terminals across Europe. Mostly Hamburg and Wilhelmshaven in the Northern part of Germany are having problems still with containers bound for Russia now being stuck. We have seen special container yards being set up also in Denmark, where Maersk Line is basically making a whole new part of the port with just boxes going nowhere. That is also adding to a lack of boxes and equipment elsewhere. So there is still a lot of unwinding to do before we can really move on from the current crisis.

TATIANA SERAFIN: You make a really important point. I like that visual of "boxes going nowhere." I think that's a song or something.

Thank you so much for your time today. I look forward to having you back to talk more about these behemoths that are going to emerge in global logistics because I think that is the next phase. People always talk about Elon Musk. My god, if there is another Elon Musk headline—and I just said his name again—but he is not in this. We need to talk about the people who are in logistics, and I would like to keep our focus on that, and Nick and I will continue to look at it and will welcome you back next year to see where we are in this space.

PETER SAND: It will be my pleasure. Thanks for having me today.