Trendwatch: US washout on Indo-Pacific trade deal opens the door to China; Global shipping’s $3.6 billion carbon bill is six weeks away; Chronic congestion building along the east coast of South Africa

US washout on Indo-Pacific trade deal opens the door to China

The economic core of the Biden administration’s much-touted Indo-Pacific strategy to counter China is fraying, frustrating allies even as the White House hails its progress.

President Joe Biden and leaders of 13 other countries involved in the Indo-Pacific Economic Framework on Thursday signed an agreement to communicate and cooperate more on issues related to supply chains. They also mostly completed work on two other “pillars” related to the environment and governance issues like tax evasion and corruption.

The event, coming a day after Biden sat down for a meeting with China’s Xi Jinping, was designed to project US strength in the region.

Global shipping’s $3.6 billion carbon bill is six weeks away

Ships sailing to European ports face a combined carbon emissions bill of $3.6 billion next year, the start of a levy that’s almost certainly going to rise as the continent steps up efforts to combat climate change.

The figure is an estimate of the total price of complying with the European Union’s Emissions Trading System from Drewry Shipping Consultants Ltd.

Under the regulation, which takes effect Jan. 1, vessels going into and out of EU ports must pay for their carbon pollution, affecting deliveries of everything from container loads of finished goods to the liquefied natural gas needed to keep homes warm in winter.

Chronic congestion building along the east coast of South Africa

Massive ship queues are forming off the east coast of South Africa where dire handling capabilities at the ports of Durban and Richards Bay are causing consternation.

At Durban, which ranks among the poorest boxports productivity-wise in the world, there are 63 ships backed up with Transnet, the country’s port operator, warning it could take up to February to clear the backlog.

Liners have instituted congestion surcharges as well as announcing some dropped calls to South Africa in the wake of the growing queues which sees more than 70,000 containers stranded off Durban.

“The problem of port congestion is a complex one and it is something that was due to happen at some point, as a result of many years of underinvestment in equipment and its maintenance,” said Transnet chairperson, Andile Sangqu. “We need to caution that this is going to take some time as the lead times for some of the equipment is anything from 12 to 18 months.”

EU to add sewage, garbage, and scrubber water discharge to pollution rules

The European Union is moving toward stricter measures designed to decrease pollution by increasing the number of materials that would be banned as discharges from ships in European waters. The Transport and Tourism Committee put forward a series of proposed steps expanding the limits on illegal discharges from ships as part of an overall review launched in June 2023 designed to modernize and reinforce EU maritime rules on safety and pollution prevention.

Among the steps adopted in a draft mandate by the committee on Thursday, November 16, was the proposal to extend current EU rules on discharges to include sewage, garbage, and residues from scrubbers. This would expand on the current rules preventing the discharge of oil and other liquid substances that are judged to be noxious or pollutants. According to the committee, the draft that was adopted is designed to ensure that all international standards on preventing illegal discharges from ships, developed by the International Maritime Organization, become part of the EU.

South Korea’s early exports data point to continued recovery

South Korea’s early trade data show exports are likely to maintain their growth momentum this month, continuing their rebound from a year-long slump and helping brighten the outlook for global commerce.

Exports increased 2.2% on average in the first 20 days of November compared with a year earlier, the customs office said Tuesday. Imports fell 6.2%, resulting in a trade shortfall of $1.4 billion.

Korea is a key global exporter, supplying a wide range of goods and components from semiconductors and smartphones to ships and cars to markets around the world. As a result, the country’s exports serve as a useful indicator of the health of the global economy.

UK follows EU in moving to end exemption from antitrust rules for carriers

UK regulators reversed their earlier decision regarding the oversight of the container shipping segment releasing a provisional decision not to recommend replacement of the current Liner Shipping Consortia Block Exemption regulation. At the beginning of 2023, the UK’s Competition and Markets Authority (CMA) said it was seeking input after reporting it was considering recommending an extension. The UK would be following the European Union which also proposes to end the exemption governing the application of competition regulations.

The UK is currently working on a transition of the existing regulation that was inherited from the UK’s time as a member of the EU. After Brexit, the UK set a transition period and now it is facing the April 2024 expiration of the exemption and must decide its course of action. In January, the CMA asked for comments from the industry and related organizations on its decision to recommend an extension to the then Secretary of State for Business, Energy, and Industrial Strategy.