Title : The weird zigzags of a ship trying to navigate the U.S.-China trade war
link : The weird zigzags of a ship trying to navigate the U.S.-China trade war
The weird zigzags of a ship trying to navigate the U.S.-China trade war
It's rare that a perfect illustration of a trade war comes along. But a ship full of an obscure crop called sorghum has become a token of what can happen.
The ship has been zigging and zagging through the ocean for weeks, trying to navigate an ever-changing trade landscape as the U.S. and China exchange tit-for-tat tariffs.
As Beijing and Washington heat up their rhetoric and actions against each other, the circuitous path of an 80,000-tonne dry bulk carrier demonstrates some of the things that go wrong when countries throw themselves into the path of shipments that make up global trade.
On March 18, bulk carrier RB Eden left the port of Corpus Christi, Texas, loaded with 70,223 tonnes of sorghum, bound for Shanghai where the load was destined to become animal feed.
But the swirling winds of a global trade war were about to throw the vessel wildly off course.
In March, U.S. President Donald Trump announced steep tariffs on steel and aluminum, which he said targeted Chinese firms that had flooded the market with cheap, inferior alternatives.
He later stepped up his assault with $60 billion in tariffs on other Chinese goods. It didn't take long for the Chinese to respond with tariffs of their own, and on April 18 Beijing slapped punitive tariffs on a suite of American crops — including sorghum.
The Eden was rounding the Cape of South Africa, headed for the Indian Ocean, when news broke that its entire shipment would be subject to a tariff of up to 178 per cent.
That's when the ship's owners apparently changed their minds. They headed the vessel for friendlier waters, reversing direction and plotting a course for Cartagena in southern Spain. As the 230-metre ship meandered back north, the U.S. and China lobbed new tit-for-tat tariffs at each other. First whisky. Then cars. Then soybeans.
By May, the Eden had made it to the Mediterranean. And that's just about when cooler heads began to prevail.
The first sign of a potential thaw came when Beijing announced it would drop its sorghum tariff. The next day, U.S Commerce Secretary Steven Mnuchin was meeting with officials in China, and announced the trade war was "on hold."
Soon after, Trump visited his favourite port of call — Twitter — to weigh in on the spat.
China has agreed to buy massive amounts of ADDITIONAL Farm/Agricultural Products - would be one of the best things to happen to our farmers in many years!
—@realDonaldTrump
He later added that American farmers could soon look forward to a bumper crop of business coming from the Chinese agricultural market he was opening up.
Under our potential deal with China, they will purchase from our Great American Farmers practically as much as our Farmers can produce.
—@realDonaldTrump
With the trade winds now blowing in the other direction, the crew of the Eden set upon another new course, this time, for Singapore. With luck, its days of U-turns and course changes are over.
There are cliches about how hard it is to turn a ship like that around. It's not easy, and every extra second the ship and its crew spend in the water costs money.
But the Eden's meandering run to Asia is just one example of how these threats and counter-threats have a real-world impact. Bloomberg reported this week there are as many as 10 other ships loaded with sorghum headed for China.
Shipping analysts say the U-turn would have cost as much as $1.6 million. It also meant the ship wasn't competing for other contracts. That, in theory, at least would have been a positive for the shipping market, because one less ship was out there bidding for cargo, said Basil Karatzas, CEO of Karatzas Marine Advisors & Co.
He said it's not common, but at times of high uncertainty you can see ships make multi million dollar U-turns in the middle of the ocean. Just think back to oil prices approaching $150 a barrel a decade ago.
"[Back then] a shipment of oil was sold several times while in transit," he said. "Tankers were making zig-zagging moves in the oceans as every buyer gave different sailing instructions to the captain of the tanker."
The strange tale of the RB Eden makes up just a tiny fraction of the tens of billions of dollars Americans ship to China every year. So it's a safe bet the circuitous path of the Eden has been replayed in similar ways over countless industries and shipping lanes as American businesses shoulder the brunt of the uncertainty caused by trade wars.
At publication time, the Eden was rounding the western coast of Africa, chugging along at just over 12 knots, a pace that would get it to Singapore at the end of June.
But as with anything else in this unfolding trade war, it's anyone's guess what tempests may blow it off course before then.
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