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An Ocean of Potential in the Blue Economy

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An Ocean of Potential in the Blue Economy

The Blue Economy

The ocean has always been an essential part of life on this blue planet. Oceans cover over 70 percent of the Earth’s surface and contain 97 percent of the world’s water. We rely on its resources to sustain and improve our lives.

The World Bank created a definition for this “blue economy” that encompasses “sustainable use of ocean resources for economic growth, improved livelihoods and jobs, and ocean ecosystem health.”

Economic activities associated with the ocean include traditional sectors such as commercial fishing, coastal tourism and maritime transport to support global commerce. Increasingly, the ocean has been tapped for energy sources and generation of off-shore renewable energies like wind and tidal energy. Marine life is explored for applications to pharmaceuticals, desalination offers an opportunity to meet demand for freshwater, and the ocean can be used for carbon sequestration to mitigate climate impacts.

World Bank Definition of Blue Economy

Vital to Livelihoods and Growth

In one form or another, trade in ocean resources contributes between $3-6 trillion to global GDP, supporting the livelihoods of over 3 billion people on the planet.

Recognizing the importance of measuring the economic impact of the ocean, the Bureau of Economic Analysis (BEA) partnered with the National Oceanic and Atmospheric Association (NOAA) in 2019 to develop prototype statistics to measure the ocean’s contribution to the U.S. economy. From aquaculture to shipbuilding, offshore mining and power generation, marine-related activities contributed some $373 billion to U.S. GDP in 2018.

Tourism and recreation generated the most, bringing in just shy of $143 billion in wages, profits, and tax revenue for coastal communities in the U.S. in 2018. The new data also showed that between 2014 and 2018, the American blue economy grew faster than the overall U.S. economy.

SOURCE: U.S. Bureau of Economic Analysis

U.S. Ocean Economy

value added by activity in 2018 (millions of dollars)

Tourism and recreation – 38%

National defense and public administration – 33%

Living marine resources – 3%

Marine transportation – 1%

Offshore minerals and utilities – 15%

Deeper Dive into the Ocean Economy

Fisheries and Aquaculture

The ocean delivers a vital and primary source of protein in the diets of over 3 billion people. Marine fisheries employ over 200 million people either directly or indirectly. Expanded global availability of refrigerated storage and transportation has extended access to all kinds of fresh fish.

Overfishing, exacerbated by heavy government subsidies, has become a key concern, putting nearly 90 percent of the world’s fish stocks are at risk. Both the UN and the WTO have made removing these subsidies a priority to help protect vulnerable coastal communities who rely on fish for their own consumption and the local economy.

One-half of all fish we eat is farmed rather than captured. Aquaculture is the fastest growing food sector in the world. China produces a huge amount of the world’s farmed fish and is the top producer by value of carp, tilapia, catfish, shrimp, oysters and many other types. Norway leads in salmon, trout and smelt with Chile a close second.

Tourism

Tourism has long been vital to many coastal economies. Overall, tourism employs 1 out of every 11 people around the world. It is fast becoming one of the world’s biggest industries, making up 10 percent of global GDP. International tourism is an invisible export. Visitors spend money on transportation, housing and entertainment using income earned in their home country.

From scuba diving and surfing to cruises and all-inclusive beach resorts, coastal tourism comes in many flavors. It is particularly important for less-developed nations, as it creates jobs, promotes economic growth, and brings in money that is spent in local businesses like restaurants, shops, and tour services.

Tourism is the economic lifeblood of many Least Developed Countries and small island developing states such as those in the Caribbean and southeast Asia that collectively host 41 million visitors visit every year. These states are focused on delivering services to bring in more tourists while preserving the natural beauty and resources that attract visitors to their islands.

Shipping

Over 80 percent of goods traded internationally such as raw materials, food, consumer goods, and energy products were transported by sea in 2015. Despite reaching a record high of 11 billion tonnes shipped that year, world maritime trade growth decelerated to 2.7 percent in 2018, below the historical average of 3.0, reflecting a range of risks that intensified at the time including global trade tensions, protectionism, and the ‘Brexit’ decision.

Issues surrounding maritime transport are often intertwined with other global economic, environmental and political trends. Security conflicts occur over country ownership of key shipping routes and global discussions are active over the environmental impacts of fuel-guzzling container ships.

The world’s ports can often act as a weather vane for the economy as a whole. Dockworkers feel the effects of tariffs, disasters, and other trade policy changes before farmers, truckers, distributors and retailers do. Effects of the recent U.S.-China trade war and of the COVID-19 pandemic were experienced by dockers who saw the vast reductions in imports before the economic effects rippled throughout the economy.

As supply chains continue to shift and we watch for reshoring, the maritime transport sector may start to look different over the next few years, but will undoubtedly remain an essential part of the global economy.

Stats how we rely on the ocean

Preserving Our Oceans

Sustainability is a key aspect of the blue economy. Although there is an emphasis on environmental stewardship and protection in all parts of the, nowhere is this more apparent than when it comes to our oceans, a finite and critical resource.

Overfishing or pollution could deplete fish stocks and cause a severe food crisis. Environmental degradation caused by the tourism industry could ruin the economies of coastal communities. Waste and pollution from shipping could cause accumulated damage to our air and water.

According to Conservation International eight million metric tonnes of plastic is dumped into the ocean every year. At this rate, by 2050, plastic would outweigh fish in the ocean. Other concerns cited include the runoff of harmful nutrients from agriculture into the ocean, warming temperatures that are bleaching and destroying coral reefs, and even noise pollution from shipping that is killing creatures such as jellyfish.

International governmental cooperation and advances in technology can combat these problems. Conservation and sustainable use form one of the five pillars used by the United Nations Conference on Trade and Development (UNCTAD) as part of their Ocean’s Economy and Trade Strategy project. This effort aims to mitigate damage while maintaining the important economic benefits of the blue economy that supports billions of people.

It seems no aspect of economic life has been spared disruption from the COVID-19 pandemic, including many parts of the blue economy and related livelihoods. UNCTAD released a report to chart the waters of re-opening the blue economy to become more resilient post-pandemic. It proposes enhanced coordination and communication between fisheries and distributors to cut down on food waste, exercising restraint in sanitary protectionism, and closely monitoring shipping to prevent bottlenecks and delays. UNCTAD also suggests removing fishing subsidies to tackle wasteful overfishing; developing a “2.0 approach” to coastal tourism that showcases local sustainability efforts; and digitizing maritime trade procedures to achieve efficiencies and reduce CO2 emissions.

Untapped Potential

There is still a lot we don’t know about the world’s oceans, so embracing science and discovery will play an important role as we continue to draw on its precious resources and develop new markets. Untapped economic potential includes the capture of carbon, supporting the existence of a rich oceanic biodiversity, waste disposal, and the protection of coasts.

The blue economy is as diverse as its land-based counterpart – perhaps even more so. Sustainability will continue to be extremely important both for its own sake and for the preservation of the resources we rely on every day. With careful stewardship, the blue economy can continue to support billions of people and enrich all of our lives.

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Alice Calder received her MA in Applied Economics at GMU. Originally from the UK, where she received her BA in Philosophy and Political Economy from the University of Exeter, living and working internationally sparked her interest in trade issues as well as the intersection of economics and culture.

This article originally appeared on TradeVistas.org. Republished with permission.

U.S.-China

U.S.-China Trade War of 2019 Spills into 2020 for Ports, Shippers and Manufacturers

The Jan. 15 signing of a U.S.-China Phase One agreement did spawn a sigh of relief among those troubled by the trade tensions between the two nations. But six days later, a warning came from a couple experts closely watching the unfolding events on behalf of ports, shipping lines and manufacturers. The crux of that warning? Stay tuned.

“This is a truce,” said Phil Levy, chief economist at Flexport, a San Francisco-based freight forwarding and custom brokerage company. “This is not the end of the trade war.”

Levy shared that opinion as he joined his company’s CEO Ryan Peterson in leading a webinar on Jan. 21 that was listened in on electronically by some of their 10,000 clients in more than 200 countries. Those who rely on the company’s expertise in ocean, air, truck and rail freight, drayage & cartage, warehousing, customs brokerage, financing and insurance–all informed and powered by Flexport’s unique software platform—heard Levy say of the U.S.-China trade war: “We haven’t seen a retaliatory escalation of this magnitude in the post-World War II era. … This really was a 2019 story that worsened throughout the year.”

He pointed to a graphic that showed trade between the world’s two biggest economies fell markedly last year, and that no one overseeing trans-Pacific supply chains were immune from economic harm. Many webinar participants could relate as 64 percent of Flexport’s customers rely on the trans-Pacific trade routes, according to Peterson.

Yes, the Phase One deal was a positive first step, but Levy pointed to some examples of lasting victims from the trade war. It exposed the continued “decay,” as the economist put it, of the World Trade Organization (WTO), which is supposed to prevent the escalation of trade disputes. The “keeper of peace” amid trade tensions was largely frozen out of U.S.-China talks and, therefore, silent as events transpired.

A second heavy blow came in December 2019, when the WTO’s appellate body ceased to function, according to Levy, who noted that the formation of the “WTO system was one of core achievements since World War II.”

Peterson found equally worrisome the first-ever disappearance of peak season when it comes to shipping. As many known, imports grow during the fall and really heat up by November’s holiday shopping season. That not happening in 2019, couple with a steady decline is U.S. imports from China after years of solid growth, is a reason for concern, according to the CEO, who maintained, “global trade is down due to tariffs.”

For one thing, not having a peak season to rely on, coupled with steadily declining trade, “from our perspective makes life very hard to plan for,” Peterson said.

He did see on the horizon what many may view as a green lining: lower freight fees and consumer prices. “Lower prices do sound good,” Peterson conceded, “until someone goes bankrupt. We want stability, predictability. Things getting too cheap is unpredictable. You are playing with fire.”

Feel the burn? Peterson called our current “degree of uncertainty relatively unprecedented. We learn about things in a tweet. Was that really implemented or not?” As an example, he cited France proposing a digital tax and President Donald Trump striking back with threats of tariffs on cheese and wine. “Is that policy or not?” Peterson asked rhetorically. “Right now it’s a tweet. It makes it very hard to plan for.”

Levy warned “there is no safe play.” You can withstand the brunt of the tariffs and see what that does to your bottom line, or you can figure out a way to work around them and then have a trade deal come along with no way to return to normal operations quickly enough.

As Peterson pointed out, it’s not just the sting of the tariffs but the amount of paperwork and other adjustments one must handle while trying to remain agile. That time takes away from other things you need to be doing with your business.

Speaking of time away, Levy believes there will be no further movement in deescalating trade tensions between the U.S. and China until after America’s November presidential election. He suspects that China agreed to the Phase One conditions, which were much more weighted against that country than the U.S., “to buy a year of peace.” He added that China could be playing it coy in the weeks ahead as Beijing awaits the outcome that determines whether they will continue to deal with Trump or a new White House occupant. “If Trump loses, it’s likely the trade agreement will change anyway,” Levy said.

In the meantime … uncertainty. Peterson noted that one Flexport client had to close a manufacturing plant due to the tariffs. Levy held onto the hope that an eventual U.S.-China trade deal will be beneficial economically, pointing to markets that opened up with the U.S.-Mexico-Canada Agreement replacing the North American Free Trade Agreement. But you never know, as evidenced by USMCA having also resulted in some restricted trade, particularly in the automobile sector. “That was disappointing,” he admitted.

Don’t be surprised if the pain ultimately spreads, as Levy predicted what will happen after the U.S.-China trade war comes to a head. “There are a lot of signs the president will turn his trade policy focus away from China and toward Europe,” said Levy, who later noted Trump has also begun accusing Vietnam of cheating when it comes to trade.

So what to do about all this?

“My stance is there is nothing more important than agility, the ability to adapt,” Peterson said of dealing with tariffs, real or threatened. “It can mean restructuring a supply chain or seeking exemptions.” Companies that foster a culture with an ability to adapt can look at these challenges, Peterson says, and respond: “Bring it on, bring on the change.”

Globe Tracker

Globe Tracker & SeaCube for One Network Express IoT Gensets

One Network Express (ONE) confirmed an IoT-focused partnership with SeaCube Containers and Globe Tracker to develop a genset solution through utilizing Global Tracker’s layered technology capabilities. This along with other market solutions continue the reported increase in maritime logistics IoT demand overall.

“The growing demand for greater tracking, transparency, security, diagnostics and asset fleet management using smart technology will continue to be a key driver for leased solutions. By partnering with Globe Tracker, we will continue to enhance our leading-edge technology solutions and expand our commitment to the intermodal industry by providing smart asset technology leased products,” said Greg Tuthill, Chief Commercial Officer at SeaCube.
At the center of the development of the solution remains increasing visibility with smarter tracking abilities, specifically impacting reefer fleets. The anticipated kickoff of full operations is currently scheduled for mid-September through the end of 2019.
“We are extremely pleased to be working with SeaCube in providing this best-in-class genset solution to ONE. In genset telematics, we are the only provider integrated into the micro-controller of 2 out of the 3 leading brands in North America. This provides ONE with the most robust amount of data and assists in setting maintenance intervals, reducing maintenance costs, extending asset life, monitoring fuel consumption and having full operational visibility of their genset assets,” notes John Harnett, Senior Director Marine and Intermodal at Globe Tracker.

Kuehne + Nagel’s Sea Explorer Platform Extension Streamlines Operations

Kuehne + Nagel, a global leader in supply chain solutions, announced the expansion of its ocean freight platform Sea Explorer, a digitally rooted service network that bridges the gap between more than 1,200 international ports using its advanced algorithm. Expansion efforts will come in the form of adding capabilities with service connections and transshipments. It was reported that more than 63,000 port pairs and key inland locations across the globe are connected to weekly services or transshipment options.

“This extension takes Sea Explorer to the next level and complements Kuehne and Nagel’s intelligent sea freight offering; it is the smart platform for all liner services in container shipping,” says Otto Schacht, member of the Managing Board of Kuehne + Nagel International AG. “With powerful features, like comparing realistic lead times for direct services and an intuitive navigation, customers will be able to unlock new opportunities for their day-to-day operations.”

This marks the first time a platform provides full visibility on CO2 emissions across carrier and individual services, according to Schacht. “Also, in the light of the upcoming IMO 2020 regulations, this will enable shippers to contribute toward a green economy and sustainable global maritime transportation,” he adds. “Kuehne and Nagel leverages big data technology capabilities and information from the operational system to grant unique insights to sea transport options.”

Kuehne + Nagel’s innovative platform is a prime example of taking proactive measures to understanding market demands while tuning in to competitor strategies. These measures are critical to maintaining the competitive advantage while providing expert solutions.

Utilizing digitization–effectively and wisely–can determine how satisfied your customer base will be at the end of the day. Longevity serves as another benefit to digitization. No company wants to lose customers due to antiquated methods that create additional roadblocks. Digital solutions come with a priceless advantage: time savings.

Automation Changing the Pace for Shipping Operations

Recently, Avantida announced Maersk’s implementation offering Container Triangulation for the Canadian and U.S. platforms, enabling communication between dispatchers and planners almost instantly. The process of automation will take place on Avantida’s platform, providing an opportunity for the company to penetrate the market regions.

“Both shipping lines and transporters continue to look for agile, cost-saving tools that can optimize their planning, and our platform has a proven track record of improving efficiency,” said Luc De Clerck, CEO, Avantida. “The platform has changed the way shipping lines in Europe are doing business, and after our launch in Mexico, it was a natural next step to introduce Avantida to the United States and Canada.”

Another example of how digitization is changing the pace of the market expansion is seen in the recent announcement from the digital freight forwarder, Twill. The company confirmed efforts to expand its 19-country network to the Nordic regions through operations in Denmark and Sweden, where they are being welcomed with open arms primarily because of the digital solutions platform providing customers increased visibility into each step of the process. More importantly, Twill’s online platform is applauded for the ability to co-create with its customer base. This unique feature is what sets the company apart, creating a hefty competitive advantage.

“The world is already becoming more and more digital around us, and with Twill we are challenging the fundamentals and changing perceptions in the freight forwarding industry,” says Ricco Poulsen, chief operating officer for Nordics and Eastern Europe at Damco said. “We want to be the market leader in digital solutions and our investment in this area will bring significant benefits to our small and medium customers, old and new. There are a number of ways in which Twill will continue to develop and support customers over the coming months, and we look forward to playing our part in that.”

Before understanding the impact that digitization solutions bring to the market, company leaders must first understand the core of digitization is rooted in customer demands. Without fully understanding what the customer’s needs and demands are, it can be a challenge selecting which tech solution will meet both customer and company needs, all while creating a competitive advantage and staying ahead of compliance.

Ocean Logistics 2019: Digitization Continues to Lead Trends

Ocean logistics in 2019 are demanding advanced, comprehensive and reliable information to cohesively support logistics needs, especially in an era when technology solutions are becoming the standard to successful operations. The continuation of digitization is a trend that industry players are not only prepared for this year but eagerly anticipating and implementing with each new solution that presents itself. Digitization continues to make its mark in the logistics and supply chain management sectors as a whole, but when it comes to ocean logistics specifically, the stakes are higher, and the solutions require careful consideration before a hasty implementation occurs.

Recently, Avantida announced Maersk’s implementation offering Container Triangulation for the Canadian and U.S. platforms, enabling communication between dispatchers and planners almost instantly. The automated process will take place on Avantida’s platform, providing an opportunity for the company to penetrate the market regions.

“Both shipping lines and transporters continue to look for agile, cost-saving tools that can optimize their planning, and our platform has a proven track record of improving efficiency,” said Luc De Clerck, CEO, Avantida. “The platform has changed the way shipping lines in Europe are doing business, and after our launch in Mexico, it was a natural next step to introduce Avantida to the United States and Canada.”

Leading companies, such as global shipping lines leader Maersk, continue to make strides to eliminate manual processes and replace them with seamless management systems that remove time-consuming and error-prone tasks, specifically with administration. Consider implementing strategies that support refreshed approaches to operations.

Global Ports and Proactivity

Beyond proactivity and preparation, global ports focus on redefining infrastructure while evaluating opportunities for significant increases in cargo intake. But what about the ports that aren’t seeing the results they want? Let’s take a look at the European Ports and the challenges and proposed solutions featured in an article from Port Strategy. Of all the solutions presented and discussed, the first was the need of infrastructure evaluation.

“The challenge ports everywhere face now, is to implement projects which often are financially unattractive to the port authority and even less attractive to external investors, but which are essential for wider societal and economic reasons. Some ports are financially strong enough to finance such projects and accept the low financial returns. Other ports are challenged to implement projects which are essential but are entirely beyond their means,” details a report shared by the ESPO.

Another challenge is the demand for increased cargo but a limit in capacity, as many ports claim they are close to reaching max capacity, but want to avoid providing an opportunity for competitors to swoop up what they can’t make room for. Gauging these issues requires a carefully thought out and strategic approach to ensure shippers evaluate next steps for 2019. In the theme of modernization, Port of Oakland shared insight into their 2018-2022 strategic plan, which is inclusive of growing net revenue, modernizing and maintaining infrastructure, care for the environment and improving customer service.

The use of technology to streamline operations was one of the highlighted objectives and strategies (impacting almost every area of the business) the report emphasized on. In the age of information technology, automation and technology solutions, this goal would provide more than just a seamless flow of information, but supply owners, customers and employees improved efficiencies and reduced room for error. There seems to be a trend among these ports.

“Each of our businesses has specific modernization and maintenance objectives to meet, notably development of long-term asset management plans. Moreover, those objectives require careful attention to environmental, social responsibility and human resources issues,” the report says.

The key to implementing strong logistics solution can be found in an all-in-one approach that is inclusive of your company goals and vision, the well being and safety of your employees, customer satisfaction, competitive advantage as well as cost-effectiveness and proactivity. The common denominator is found in digitization through advanced technology solutions, fully integrated within the service platforms, touching on all bases of the operations and supply chain.