Tag Archives: trade

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Commentary: Cato’s Jones Act numbers wrong

John McCown, a former shipping company CEO and transport hedge fund executive, debunks the faulty calculations in the Cato Institute’s analysis of the Jones Act as it applies to Puerto Rico.

Most container traffic from the US flows from Jacksonville FL to Puerto Rico. Containers headed to Puerto Rico must be carried in US-flagged hulls, due to the cabotage restrictions of the Jones Act.

It appears Cato Institute researchers’ figures are patently wrong, their methodology is flawed, and they have excluded several factors that would affect the Puerto Rico – US container trade link.  Cato researchers came up with an 88% decline in the cost of shipping a container by their flawed technique. But Mr McCown’s spreadsheet says it is more like 10-12%, an amount that is hardly worth junking the Jones Act.

The purpose of the Jones Act is to maintain a capable US maritime segment. It embraces, for instance, container shipping between US ports, US shipbuilding, and US seamen and training, along with the stricter requirements for seamen’s well-being that a US flag puts into effect.

The Cato Institute seems to have aligned itself with some radical allies of the sitting US President. We don’t see why they would be so eager to cook the books on this issue.  And we don’t understand why they insist on repeating their false conclusions even when they have been called into question by a serious critic, on fairly easily ascertainable facts.

It seems as though Cato is falling prey to the fake news fad, and won’t shut their collective mug when they are found out.  It’s a good way to lose everyone’s respect.

 

   via Commentary: Cato’s Jones Act numbers wrong

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Flexport – moving beyond freight forwarding?

This article looking at Flexport now appeared recently under Cathy Morrow Roberson’s byline in The Loadstar.  We enjoy hearing about what Flexport is doing now.  But the idea that they are changing direction to become more like a 4PL is not the point. That’s where they were always going!!  The press and financial folks may have perceived them as a technology play.  But all along Ryan Petersen has intended to create a firm that actually helps customers manage their supply chains, by giving them visibility, a certain amount of in-depth analysis, and good service assistance in dealing among supply chain partners, temporary or permanent.  I don’t think the vision has changed; just the world’s view of it.

  via The Morrow-Roberson road test: Flexport – moving beyond freight forwarding  – The Loadstar

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BIMCO launches new cybersecurity clause

BIMCO is one of the leading standardization forces in the world of shipping. Here is an example related to cybersecurity.

How do you write a contract that binds participants to provide an appropriate level of cybersecurity?  As the article makes clear, cybersecurity has been an issue in several recent shipping incidents.  Cyber attack is very real, and shipboard systems are great targets; they have low-speed interfaces to the network, there are relatively few kinds of content transmitted, and they operate in international waters where there is no specific enforcement.  And cybersecurity can be expensive, though it is low-cost compared to the damage that could result from just one incident.

Standards are needed.  BIMCO springs to the task.  The drafting team consisted of a law firm, shipowners, P&I clubs, and Klaveness, a maritime investment firm.  There’s a two-fold notification process; immediate notification of an incident, and then a detailed notification once an incident has been investigated.

The parties are required to share the information throughout. This last point is important, because cyber events often require joint resolutions for mitigation and future prevention.

The contract element also requires any third parties employed by the participants to have adequate cybersecurity, and makes the primary firms responsible for seeing to it.

Now we will have to see whether the clause catches on in the contracts we see written.  There is always a risk with a top-down driven standard; it may miss the issues the market needs to address.

Research has shown (albeit in other contexts, such as health care) that top-down standard initiation often does not produce the penetration of results that flexible evolution of a standard does.  However, someone has to start the ball rolling, and here we have a credible effort.

Let’s now see more innovation in this area of contracting, and let’s see the results in the open, so the best combination of terms emerges and gets global acceptance.

screenshot-Digital Ship 2019-05-24  via BIMCO launches new cybersecurity clause – Digital Ship – The world leader in maritime IT news