Updates from TPM26

By Gary Williams, Director of Transportation and Regulatory Affairs 

United States Identity Preserved Alliance (USIP Alliance) Director of Transportation and Regulatory Affairs Gary Williams was in California last week with the conflict in the Middle East having erupted only scant days before the start of TPM26, the largest global container shipping and supply chain conference, in Long Beach, Calif.

With turbulent global affairs affecting every aspect of the supply chain, there wasn’t a shortage of topics to explore, and robust discussions were the center point of the conference. The Strait of Hormuz was a central focus owing to the turmoil in the Middle East. During the first day of programming, ONE’s Jeremy Nixon remarked that the container line has 750 vessels tied up in the Strait of Hormuz. The region can only refine and store oil for roughly 21-25 days without access through the Strait of Hormuz before refining has to cease or dramatically decrease, causing an expected price surge for a barrel of oil. As of now, the market is already anticipating a bunker fuel price increase, which will be felt by consumers and shippers worldwide.

Another constant theme seems to be that the unpredictability related to global trade policy and geopolitical policy has become a backdrop of noise. Companies are learning to not react with sudden announcements and subsequent changes. Additionally, a drawn-out war in the Middle East will likely have winners and losers, but those outcomes can’t be fully known either. In this landscape, shippers seem fixed upon focusing capitalization investments on advanced systems for monitoring, analyzing and providing solutions for how to route, warehouse and inventory container cargo, rather than operational investments based on predictable near-term forward business. Also discussed on the second day, was the uneasiness felt regarding U.S. tariffs. While some carriers have seen a shift in trade lanes as different “dance partners” pick up slack created by tariffs, most stakeholders have adapted the mindset not to panic because whatever is in the air today is likely to change tomorrow. The scope of planning is for a more distant day in the future, more in the order of 8-10 years, when the U.S. has repositioned trade agreements, and a new normal takes place.

Throughout the conference, we heard that different supply chain participants on the export side struggle with solving the continual changes of earliest return dates and how to shift it to a “reasonable” and more stable environment. In conversations led by USIP Alliance, we’ve had a good amount of support on our (and others) push for the issue to be addressed.

Lars Jensen, CEO and partner of Sea Intelligence Consulting, wrapped up the 25th annual TPM conference. Jensen predicted consolidation among Asian carriers, gave his thought that Alliances stand a good chance of changing in the next few years, with MSC and CMA remaining on their own, and a further possibility that the canal America once considered to build across Nicaragua may still happen, but this time spearheaded by China.

All of these same themes and issues – and more – will be discussed at Transportation Go! April 8-9 in Chicago.