Port Report: Drug busts on boxships rise as does European trade – FreightWaves

Container ships are setting new records, but for all the wrong reasons, as the vessels become an increasingly popular way to smuggle drugs.  

As FreightWaves’ Mike King reported, the Maersk Gibraltar, which can carry the equivalent of 5,000 common shipping containers, was the site of the U.K.’s largest drug bust as authorities found about 1.2 tonnes of heroin, valued at $148 million. 

The September bust shattered the previous U.K. record set in August of $50 million worth of heroin found in a shipping container.

That same month, Germany set its own record bust of 4.5 tonnes of cocaine found onboard an unidentified container ship at the Port of Hamburg, while another seizure of 1.5 tonnes of cocaine was made less than a week later at Hamburg.

The European Monitoring Center for Drugs and Drug Addiction said in a June 2019 report that the number of cocaine seizures and volumes coming into the continent are at an all-time high. A kilo of cocaine in Europe can fetch 25 times its wholesale price in South America, the report added.

Aside from the smugglers, innocent shippers also get caught up in seizures due to delays and the resulting investigations, said Sherhina Kamal, product director for DP DHL Group’s risk assessment unit Resilience360.

She said shipments coming from South America and other high-risk origins are likely to receive extra scrutiny, as will the carriers are unwitting accomplices in carrying drugs.

“With additional events like these taking place, there might be more checks on ocean freight coming from Latin America,” Kamal said. “The delays are minimal at this point, but given the scale and the frequency of seizures, it may change.”  

The issue of cargo delays will be more critical as trade between the Euopean Union and South America is set to expand, particularly for perishable and time sensitive cargoes such as fresh fruit and agricultural goods. 

The European Union, already the largest importer of fresh fruit in the world, will get even more such shipments from South America as part of a new free trade agreement signed in June.   

Europe is not alone in this problem as demonstrated by the U.S.’ largest cocaine seizure taking place on the MSC Gayane in the Port of Philadelphia in June, netting $1 billion worth of the drug. 

The U.S. Attorney’s Office for Eastern Pennsylvania charged its first member of the MSC’s crew, Nenad Ilic of Montenegro, with conspiracy to distribute cocaine. At least five crew members were arrested as part of the bust.  

The seizure caused MSC to be suspended from U.S. Customs and Border Protection’s C-TPAT program, which provides expedited cargo processing in return for outlining how they deal with risks such as smuggling. 

MSC has since been readmitted to C-TPAT. But the active involvement of a ship’s crew in smuggling, as opposed to drugs being unwittingly loaded onboard, also heightens the risk for shippers, Kamal said, as those carriers’ vessels then become targeted for increased inspections.

“What is more concerning for shippers is these major carriers being implicated in the process,” Kamal said. “If they have their preferential treatment taken away, that will add to time to clear cargo at the ports.”

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Shipping Industry Stares Down New Fuel Restrictions.jpg

Shipping Industry Stares Down New Fuel Restrictions

HOUSTON — Tens of thousands of cargo ships, tankers, container ships and cruise liners belch noxious sulfuric gases and fine particles that drift over cities and cover them with smog.

It is not a pretty picture, but it is one that may change in January 2020 if a decision by the United Nations International Maritime Organization to strictly limit the amount of sulfur in maritime fuel is fully carried out.

That is a big if, because shippers have been slow either to make the switch to higher-quality fuels or install expensive equipment known as scrubbers to clean exhaust from what is known in the industry as “bunker fuel.” Oil companies are also watching and waiting, as few have upgraded their refineries to adapt to new regulations.

“It comes down to who is going to blink first,” said Neil Beveridge, an oil analyst at Sanford C. Bernstein, a research firm for investors. “So far, the shipping industry looks like it is sleepwalking into a disaster. Everyone is waiting for everyone else to make the first move.”

Methods of enforcement are also still an open question.

Billions of dollars in investments are potentially at stake, since the global demand for high-sulfur fuel amounts to more than three million barrels a day out of the 100-million-barrel-a-day market, according to industry experts.

Some economists say they believe that prices could be pushed higher when refiners reduce the production of diesel and jet fuel to produce greater quantities of cleaner marine fuel. Other analysts say the market disruption will be modest, in part because initial enforcement of the new rules may be weak.

It has been two years since the United Nations agency firmly established the 2020 deadline to reduce the sulfur content of maritime fuels to 0.5 percent from 3.5 percent, and all major global ports and shipping terminals have committed to using low-sulfur fuels.

The new regulation will not have a significant impact on carbon emissions, but public health experts say a reduction of sulfur gas emissions will reduce smog and avert millions of cases of childhood asthma. One big container ship can emit as much sulfur in a year as millions of vehicles.

Shippers can switch to low-sulfur fuels, installing scrubbers that remove exhaust from high sulfur fuels or switch to cleaner liquefied natural gas. But all three options have disadvantages.

Cleaner maritime fuels can cost $250 a ton more than high-sulfur fuels, which can mean an additional annual expense of roughly $3 million for a large vessel, a significant added cost in the typically low-margin, low-profit shipping business, according to market reports.

A few shippers, particularly cruise ship companies, are building ships that can run on cleaner liquefied natural gas.

But they represent only a tiny fraction of the industry, because installation is expensive and refueling infrastructure still needs to be built in many parts of the world. That is bound to change over the next two decades, analysts say, and the new regulations could be a catalyst.

“L.N.G. is going to be the future,” said Ram Vis, chief executive of Viswa Group, a company that tests maritime fuels and manufactures scrubbers.

Dr. Vis said in recent months he had noticed a jump in scrubber orders. But he added that it would take years for an estimated 30,000 to 40,000 ships to be outfitted with scrubbers because there are only about 30 manufacturers of the equipment worldwide.

Scrubbers can cost $5 million to $10 million apiece including installation, according to the Energy Intelligence group. Dr. Vis said they could take at least 15 days to install, requiring downtime for ships. So far, a small percentage of the global fleet has converted, industry experts said. Shippers may be reluctant to switch because they are concerned that international emissions regulations may be toughened again and that their investment will be wasted.

That leaves the refiners with challenges. The pitch-black and molasses-thick bunker fuel they produce comes from the dregs of refined products. The refiners are not technically included in the new regulations, but they will need to adjust to a new market.

Refining low-sulfur fuel requires additional processing, requiring expensive plant refitting in many operations.

American refineries, which are generally the most sophisticated, are in a strong position to refine more low-sulfur fuel. Chinese and Korean refiners will also be ready. In the meantime, Russian, European and Middle Eastern refiners may need to scramble and make expensive adjustments.

Refiners will be forced to accommodate the expected new demand for cleaner maritime fuel by transferring oil that otherwise would have gone to producing diesel, jet fuel and heating oil, tightening the market for those fuels and raising prices.

“You are going to have to borrow from Peter to pay Paul,” said Tom Kloza, global head of energy analysis at the Oil Price Information Service. He said sophisticated American refiners, including Marathon Petroleum, Valero, Phillips 66 and Exxon Mobil, would profit from the market change. “It’s going to be a magical 2019 and a very profitable 2020,” he predicted.

There still remains the question of how the new regulations will be enforced, since the United Nations agency does not have enforcement powers.

That leaves the policing tasks to port states and flag countries like Panama, which registers vessels but may not be aggressive about monitoring and enforcing rules far from their borders. Shippers may have to be careful about the loss of insurance coverage, reputational damage and stiff fines if they are caught.

Analysts predict that at least 5 percent to 10 percent of shippers will cheat.

“This will have to be a broad-based undertaking for this to be a truly effective global requirement,” said Jose L. Valera, an energy lawyer in the Houston office of Mayer Brown. “If nobody picks up the mantle and makes this a requirement it’s possible it won’t be implemented.”

Shipping companies want Congress to increase shipping truck size – The Hill

The shipping industry is pushing Congress to increase the size of some shipping trucks, which could affect the nation’s highways, consumers and e-commerce.

Shipping companies like FedEx, UPS and Amazon say allowing so-called twin 33s, a configuration that allows trucks to haul two connected 33-foot trailers, would help increase shipping capacity and lower costs when online sales are booming. Current law limits the trucks to two 28-foot trailers.

But opponents worry the new regulation could be a safety hazard, and opposition from trucking unions and railroad interests have succeeded in delaying changes to existing law.

“These trucks would be at least 84 feet long, and we know that current double trailer trucks have an 11 percent higher fatal crash rate than single trailer trucks,” said Catherine Chase, president of Advocates for Highway and Auto Safety, a road safety advocacy group.

Chase said double trailers are more difficult for drivers to maneuver because the second trailer is more likely to swerve out of its lane and more difficult for drivers to see around with their mirrors.

Truck-related fatalities rose 9 percent in 2017, reaching their highest levels since 2007, she noted. That affects regular drivers as well; when trucks collide with passenger vehicles, nearly every fatality is among the passenger vehicles.

Chase added that many of the nation’s roads and bridges would require improvements to handle an uptick in bigger, heavier trucks.

Sen. Roger WickerRoger Frederick WickerSenate Republicans demand Google hand over memo advising it to hide data vulnerability Shipping companies want Congress to increase shipping truck size Ricin attacks will continue MORE (R-Miss.) said that he opposed twin 33s on safety grounds.

“The overwhelming majority of law enforcement officers and other independent safety advocates I have spoken to have expressed significant concerns over these trucks, which are longer than an eight-story building is tall,” Wicker, whose state includes some of the rail interests that oppose the provision, wrote in a letter to The Wall Street Journal.

Wicker cited a Department of Transportation study showing that larger trucks take longer to stop than the current trucks on the road.

Advocates of the longer trucks say that such arguments are superfluous.

“Twin 33s, without adding any weight, can do 18 percent more work with just one truck than an existing set of twin 28s,” said Randy Mullett, executive director for Americans for Modern Transportation, a coalition of shippers and carriers pushing for the new provision.

Adding more capacity to existing trucks, he argued, will lead to fewer trucks on the road, and thus fewer accidents.

Shippers say that the current truck configurations for sending parcels fill up because of bulk, well before they reach the 80,000-pound legal weight limit. The group is not looking to increase weight limits for the longer trucks, he added, meaning that even an increase in weight would fall under current limits.

Shipping groups say that the huge spike in online shopping has made it tougher to efficiently fulfill orders using the so-called less than truckload trucking options available, as opposed to the familiar longer, single-trailer full truckload trailers that tend to transport similar goods to big box stores or distribution centers.

“We’re changing the way we buy as American consumers, and it’s dramatically changed the way we ship small packages,” said Mullett, adding that freight volumes are projected to grow 40 percent in the next three decades.

“We’ve got a lot of areas in the country that are congested. In many areas they’re pretty much maxed out,” he continued.

Increased efficiency, he said, would bring down the cost for consumers while also boosting profits for shippers.

–This report was updated on Oct. 11 at 7:50 a.m.


Largest Ever Project Freight Forwarding Movement for Italian Port

Colossal Reactors Carried by Road Convoy and Heavy Lift Vessel

ITALY – The Port of Venice has handled its largest ever load, a colossal project freight forwarding job consisting of two hydrocracking reactors, each weighing 1,535 tonnes and measuring 60 metres long. Made by heavy engineering equipment manufacturer, ATB Riva Calzoni, the reactors are, according to the company, amongst the largest ever made in the petrochemical sector and bound for its destination, the first Nigerian refinery in private hands and owned by Dangote Refining.

The high-pressure units were made both at Roncadelle, in the province of Brescia, which is the headquarters of the Lombardy based company, and Marghera, in the assembly workshops owned by ATB Riva Calzoni, just a few metres from the outbound terminal. The Port of Venice consists of two terminals, Marghera and Marittima, which between them offer 30 kilometres of quayside facilities where ships can berth. Sergio Trombini, President of ATB Riva Calzoni, said:

“For us, Porto Marghera continues to be a strategic and fundamental port. It is only because of the availability of excellent harbour infrastructure that our company can continue to service its clients around the world, and ensure efficient and punctual service. The support of the operators and the people who work in the harbour system has been especially important in this case, considering the size and weight of the pressure vessels that we dispatched.”

The stage in which the reactors were transported from the facility to the quay was conducted by Fagioli spa which, to meet the load-bearing limits of the ground, used a 72-axle SPMT (Self-Propelled Modular Transporter) putting together convoys of as much as 60 metres long, 8.5 metres wide and 10 metres tall for each load.

The convoys were moved to the multiservice terminal quays through the Via Sali access, which was created especially for transporting loads with such extraordinary dimensions, where the two reactors were loaded bound for Nigeria on the Happy Star, a BigLift ship, which is equipped with two cranes each capable of carrying 1,100 tonnes. President of the North Adriatic Sea Port Authority, Pino Musolino, said:

“The only place where operations like this can currently be carried out in Italy is the Port of Venice. We have production areas that are close to the quays, the best service operators, and excellent companies like ATB Riva Calzoni, who choose our port because of its production business, and which are continuing to invest. These are all assets that improve our performance, confirming our unique position in Europe.”


Italian Govt suggests tax cuts for sustainable ship owners

Ship emission cuts at center of Shipping and the Law forum

17 OCTOBER, 15:11

(ANSAmed) – NAPLES, OCTOBER 17 – The vice minister for infrastructure and transport, Edoardo Rixi, has suggested easing taxes for companies implementing effective sustainable measures given the delicate objective of preserving the environment, during a speech on new rules regarding shipping emissions to become effective in 2020.

The environment was at the center of the ninth edition of Shipping and the Law, the annual congress of ship owners held in Naples and organized by attorney Francesco Saverio Lauro, who is specialized in maritime law.

During the two-day event, Italian ship owners confirmed their intention to work in this direction, as stressed by Emanuele Grimaldi, vice president of the International Chamber of Shipping (ICS): ”We are strongly engaged – he said – in cutting ship emissions, contributing to the decarbonization of the sector. With the UN International Maritime Organization (IMO), we have worked to reduce by 50% emissions from now until 2050.

But in this period, maritime traffic is expected to double, which means emissions will have to be only 25% of current ones.

In order to do this, we work on research and development, putting all new solutions on ships”.

Grimaldi noted that ”our sector does not represent a problem but an opportunity: ships travelling today on highways of the sea have Co2 emissions that are one-fifth of those of road vehicles and half of rail transport”. Leading representatives of the international and Italian maritime industry gathered in Naples, including the president of the European Community Shipowners’ Association (ECSA), Panos Laskaridis, the emeritus president of ECS and Greek ship owners, John C. Lyras, the president of Confitarma, Mario Mattioli, as well as experts like Leo Drollas, chief economist of the think tank of former Saudi oil minister, sheikh Yamani.

Lower House Speaker Roberto Fico opened the conference. ”The blue economy – he said – is fundamental, there are huge challenges that must be confronted on the recycling of ships, employment and salary dumping. It is important to talk about this in Naples, a key city for international shipping. This sector must be at the center of the economic life of the South, given that the European Union is also giving it growing attention: maritime companies have grown over the past five years by some 8% compared to a 1% drop in the total number of companies. Ten companies of the blue economy out of 100 are led by managers under 35 years of age, 20 in 100 by women and six in 100 by foreigners – data above the national average”.



Q&A | Why the Reshoring of U.S. Manufacturing Hasn’t Taken Off

Higher labor costs in China and political pressures were supposed to drive U.S. manufacturers to bring production home. We’re still waiting for that to happen.

There’s been plenty of coverage in recent months about U.S. manufacturers vowing to relocate offshore production back to this country. The rising cost of factory labor in China is one major factor. So are efforts to convince American companies that domestic production is a patriotic requirement. According to the latest Reshoring Index from A.T. Kearney, however, we haven’t seen a significant surge of reshoring from Asia. In this conversation, excerpted from an episode of The SupplyChainBrain Podcast, A.T. Kearney partner Patrick Van den Bossche offers some insights into why the reshoring trend has yet to materialize in any major way. And he discusses what must happen for that shift to become more than a collection of anecdotes.

Q: According to the latest A.T. Kearney Reshoring Index, there were record volumes of imports from traditional offshoring countries in 2017. Did that come as a surprise to you?

Van den Bossche: It was a little bit of a surprise. With all the talk of “Made in America” and bringing jobs back, we thought that this time around we would see a bit of a reversal. We had seen a glimmer of hope when we did the Index in 2016 — it was just slightly starting to tilt to positive. So we were hopeful, but unfortunately what we saw this time around is that imports of manufactured goods from the 14 countries that you would typically associate with offshoring actually grew by 8 percent in 2017. They rose by an all-time high of about $55bn. That’s the largest one-year increase that we’ve seen since the economic recovery of 2011. By comparison, U.S. domestic manufacturing output grew only 5.6 percent. We can feel it growing — there’s a good economy, manufacturing jobs are up — but imports are growing faster.

Q: Did import growth from those 14 countries occur across a broad base of industries?

Van den Bossche: Yes. We looked at manufactured products only, but it’s across industries. Let me take time here to explain what our Reshoring Index is, and how it’s calculated. When we first launched the Index, we saw a lot of publicized evidence for reshoring that was largely anecdotal. It seemed like there was a lot of wishful thinking and political agendas at work. Rather than base our conclusions on surveys of executives, we wanted to separate the hype from the reality. So we came up with a way of putting a numerical value on reshoring. What we do is look at imports of manufactured goods from 14 Asian countries — China, Taiwan, Malaysia, India, Vietnam, Thailand, Indonesia, Singapore, Philippines, Bangladesh, Pakistan, Hong Kong, Sri Lanka and Cambodia. We compare that with U.S. domestic gross output of manufactured goods. We make it dimensionless, so that we factor out the effect of the overall strength of the economy. We look at what we call the manufacturing import ratio — the ratio of imports from offshoring countries to U.S. domestic gross output. Then we look at the year-over-year change, and that gives us an indication of whether we’re making more stuff here, versus continuing to import more from offshoring countries.

Q: What was the first year you created the Index?

Van den Bossche: The first time was 2014 — that’s when we started putting it in the press. We had been tracking some things anecdotally since 2011.

Q: In each of those subsequent years, have you seen a steady increase in the amount of offshore manufacturing?

Van den Bossche: Yes. We even back-calculated it a few years. Between 2011 and now, there have only been two years when it slightly dipped into the positive. In all the other years, we’ve seen faster growth in imports than in domestic gross output. So that reshoring wave that was supposed to start back in 2011 really never took off. In fact we continue to see more and more product coming from those offshoring countries.

Q: Why is this the case? What were the factors that have led to this result?

Van den Bossche: It’s a demand-and-supply story. We’ve seen a pretty decent economy. Consumers have been in a spending mood. Things like the Economic Optimism Index have been on a tear. At the same time, wages haven’t been moving up that much. So people are still looking for a bargain. Unfortunately, that means you’re buying products that are cheaper because they’ve been made offshore.

On the supply side, even U.S. companies that have reshored over the past few years have been reluctant to invest too much. When we looked at this in 2015, we noticed that about 70 percent of the companies that did some reshoring actually brought it back to existing facilities. They preferred to de-mothball equipment, versus investing in new capital equipment. We’ve seen a small increase since the second half of last year in capital goods investment. But that didn’t come on line quickly enough to make a difference in the 2017 numbers. And there’s a supply shortage as well.

Q: So why aren’t companies making more here?

Van den Bossche: The labor cost gap is still significant. Even after several years of 10-20 percent annual labor-cost increases in China, other Asian countries have stepped up — Vietnam, Cambodia, Philippines — and we’ve seen imports from those locations increase quite a bit. Their labor costs are more comparable to what they were several years ago in China. Which means that any product with labor-intensive manufacturing processes is still more economical to produce in low-cost countries. You can ship it back at a reasonable price, because ocean freight costs have remained manageable. The only way you can start to make up for that cost differential is if you’re doing significant automation. But that requires hefty capital investment, and we’ve not really seen that yet.

Q: We were told a few years ago that a major shift of production to Southeast Asia wasn’t likely to happen, because there’s no way those smaller countries could scale up manufacturing operations anywhere near to the level of China. That doesn’t seem to have been an issue.

Van den Bossche: There’s an industry component to that. In some industries, such as electronics, the ecosystem of suppliers is critical. That’s difficult to replicate in Southeast Asia, but a lot of stuff that requires more manual production, such as textiles and apparel, has moved over there without much of a problem.

Q: For production that is coming back to the U.S., is it utilizing people or machines? Some believe the biggest culprit in lost American manufacturing jobs hasn’t been offshoring, it’s been automation.

Van den Bossche: We see a mixed bag there. Like I said, when we looked at this in 2015, companies that reshored weren’t investing a lot in new equipment. They were just bringing old equipment back online. In some cases, they had to pull people out of retirement because nobody was available to operate the equipment anymore. In the last two years, there’s been a little more of an appetite for investment, in the form of automation. I think we’re going to see that trend continue, but it’s going to require skilled labor. That’s probably the biggest challenge right now. There aren’t enough people to do the kind of work that’s required.

Q: There’s the notion of the sunk cost theory — companies putting so much time and investment into offshore manufacturing, surrounded by large supplier ecosystems, that it would take a lot to make a major move to the U.S. Is that also an issue?

Van den Bossche: Definitely an issue. As I said, electronics is an industry where ecosystems are critical. Back in 2015, we saw a small increase in U.S. domestic manufacturing of electronics, relative to imports. As a result, when we looked at the Reshoring Index in 2016 for that industry, imports from China had declined by more than $7bn. But in 2017 there was a reversal of that trend. I think that what happened is that there wasn’t a big enough ecosystem in place in the U.S. to support increased volumes. Mind you, this was very holistically dismantled back when everything was moved to China 10-15 years ago.

Tightening global capacity is another element at work in the electronics industry. We’re seeing substantial growth in component demand for mobile, industrial, automotive and, increasingly, the internet of things, which is driven by Industry 4.0 and digital manufacturing. That has consumed excess capacity at major original component manufacturers. At the same time, they’ve been cautious about expansion. They’ve had fairly slim margins, and there could always be a downturn in demand around the corner. It’s an industry that requires quite a lot of investment and capital. So producers have been going into allocation mode, whereby they move large strategic customers to the front of the waiting line for constrained components. If you’re at the back of the line, you’re out of luck. Electronics manufacturers are wary of completely rewiring their supply chains. They would have to change their suppliers, and they may find themselves at the back of the line.

Q: Another argument we heard a few years back as to why we were about to see a surge of reshoring to the U.S. was the notion that companies were, for the first time, viewing their operations from the standpoint of total landed cost. As such, they were suddenly aware of all the expenses that come with extensive offshoring and long lead times. They were finding it tough to respond quickly to changes in the market. That, too, doesn’t seem to have been a big factor.

Van den Bossche: It’s a factor in some industries more than in others. Strangely, apparel was one of the industries where we saw some product being reshored. Companies were seeing that if they had to order the next batch of clothing six to eight months ahead, and it was on the ocean for a number of weeks, by the time it got here the fashion wave would be over, and they’d be stuck with a whole bunch of inventory. Industries like that, having started to look at total supply-chain costs, have made some changes.

At the end of the day, reshoring still results in a higher cost for the product. We’ve seen it happen with some of the more fashionable, higher-priced apparel. We’ve not seen it happen with bland white T-shirts.

Q: One of the reasons behind imposition of extensive tariffs by the Trump Administration was that it was supposed to spark growth in U.S. manufacturing. Will those tariffs have an impact on reshoring decisions or not?

Van den Bossche: It’s too early to tell. Manufacturing decisions about where you put steel in the ground are typically three to five years out at a very minimum. Most are even longer than that. It will very much depend on how long people think these import tariffs are going to stay in effect. In today’s world, that’s very difficult to predict. Negotiations with China have reopened, and for NAFTA there’s has been a move toward a U.S.-Mexico deal separate from Canada. There are a lot of moving pieces in play. Also, not every product is being targeted.

Based on what’s going on now, and hearing what my clients are thinking about, I think it will, if anything, attract more foreign direct investment. That’s not reshoring — I’ve seen a lot of reports that confuse FDI, which is non-U.S. companies seeing a market opportunity to sell their products here and wanting to put a footprint down, versus reshoring, which is American companies that believe it’s better to put production back here from a total cost perspective. Those are two very different economic dynamics. But I do think this could attract more FDI. It’s already at a record high — in 2017, the total FDI position in the U.S. was above $4tr. It went up by $260bn from 2016. And manufacturing makes up nearly 40 percent of that increase.

Long-term, I don’t think the reshoring picture is going to change by a tremendous amount. Positive economic results from 2017 and the first half of 2018 are providing some optimism for U.S. manufacturing, but it’s not from reshoring. It’s from FDI and a bunch of other factors.

Q: What else needs to happen, in order for there to be significant reshoring by U.S. manufacturers?

Van den Bossche: There are a couple of things that are positive. We’re still expecting a pickup in second-quarter economic growth, mostly driven by consumer purchases and the tax cut that the Trump Administration signed into law at the end of 2017. That means more demand, and maybe makes sense for companies to start making more products closer to home. At the same time, we’re seeing business spending go up a little bit. It’s projected to get a further boost from lower corporate taxes and other tax law changes, such as allowing U.S. multinationals to bring back billions of dollars that they moved offshore if they pay a one-time tax over an eight-year period. That should give them cash in the pocket to build U.S. factories, instead of continuing to supply from abroad, and create new jobs.

I can’t tell you that we’ve seen that happen in a big way so far. There’s definitely some activity around new factories, but it’s as much about foreign-based companies as it is U.S. manufacturers. And there are other elements to consider. Supply chains can be fickle. Ocean freight costs could go up. Oil prices are gradually starting to creep upward again. We could see an increase that makes it less economical to bring stuff back from the Orient. There are all sorts of other [potential] disruptions: weather, social unrest, labor issues. These things could make people nervous about having product made far away from a growing domestic market. The cost of capital could go up, pushing companies to work with less inventory. On the other hand, the labor-scarcity issue won’t go away anytime soon. We’re in an over-stimulated economy, with a jobless rate that’s at its lowest point in more than a decade. I don’t think that spells a great amount of success.


Exclusive: Italian freight forwarders consider lawsuit after bridge collapse

The government has blamed an Atlantia unit, which operated the viaduct that collapsed killing 43 people on Aug. 14, for the disaster. The company is under judicial investigation, along with the transport ministry, for culpable homicide.

The unit, Autostrade per l’Italia, has denied wrongdoing, saying regular, state-supervised inspections had indicated the ageing bridge was safe. A spokesman for Atlantia declined to comment.

The freight forwarders are also looking into lawsuits against the government if the transport ministry is held responsible. The government denies responsibility.

Spediporto, which represents about 330 freight forwarders in Genoa, says trucks are forced to take lengthy detours to and from the port since the collapse of the viaduct, which formed part of a motorway linking the city and its port with southern France.

It fears shippers may choose alternative routes because this means an average shipping delay of more than an hour.

“We have already contacted our legal advisers over the possibility of a collective lawsuit and we will take a final decision in the coming months when we have collected more data over the financial impact of the disaster,” Spediporto director general Giampaolo Botta told Reuters.

The Genoa Chamber of Commerce estimates more than 14,500 businesses were impacted when a 200-meter (660-ft) section of the viaduct collapsed, including the container port which generates around 1.5 percent of Italy’s gross domestic product.

It has started asking firms across the city to estimate the impact of higher transport costs arising from road detours and port delays. So far, it has spoken to 1,400 firms, said spokeswoman Anna Galleano.

The survey is aimed at helping firms claim relief from state disaster-aid funds but the data could be used in future law s. She said the chamber had not sought legal advice “for now”.


Civil lawsuits could take months to emerge but would pose an extra financial threat for Atlantia. Rome has already moved to revoke its national toll-road concession, worth 3.9 billion euros ($4.5 billion) a year, and threatened it with heavy fines.

Autostrade has set aside 500 million euros to offer initial support to families and small businesses and also to rebuild the bridge, but the chamber said early evidence suggested the total damage could be much higher.

“You can easily expect that the 500 million euros will be multiplied by four, reaching 2 billion euros,” Chamber General Secretary Maurizio Caviglia told Reuters.

Any civil suit would have to wait until prosecutors wrapped up their investigation and could also be aimed at the transport ministry, if it was found to be culpable in its role as supervisor of safety on toll roads, said lawyer Lucio Galino.

Under the Italian law, if prosecutors took Atlantia or the transport ministry to trial, businesses could file for damages with the same court. The trial judge could at the time of sentencing award provisional damages to those businesses.

The government could also take legal steps. At a recent meeting in Genoa, state lawyers asked government representatives and local officials to keep records of extra emergency work and be ready in case it tries to claim damages against Atlantia, two sources familiar with the matter said.

(This version of the story was corrected throughout to explain Spediporto is the association of freight forwarders and not ship agents)


How outsourcing your logistic needs to us can prove to be cost-effective for you?

It is a known fact that having an in-house logistic department can enhance a company’s overall operational cost by a great margin, and this also affects the net profit and the benefits that the company wants to pass on to their clients. A smooth logistic operation is essential to the success of the company and the customer satisfaction it provides to its customers.

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