Trade’s the hot topic at Breakbulk Americas conference
The U.S. trade war was top-of-mind Wednesday as shipping companies and their suppliers gathered for the annual Breakbulk Americas conference in Houston.
“My slides are not very complicated, but I think the situation is,” Kathy Canaan, global director of trade compliance for Fluor, said during one presentation. “What we’re going through is unprecedented.”
Her audience included people from every aspect of the global breakbulk supply chain. This cargo, big business in Houston, is generally too large or bulky to be transported in shipping containers. It includes pipe, oilfield equipment and machinery.
More than 5,500 people and 325 exhibitors attended the three-day event continuing through Thursday at the George R. Brown Convention Center.
“Most everybody here in this room today is on the front line of trade,” said Alex Strogen, chief commercial officer for the Port of Vancouver USA.
As such, Breakbulk Americas had a packed audience for its session on navigating the changing trade landscape.
Canaan said the new trade policies are undermining the industry’s efforts to be better, faster and cheaper. Economic sanctions raise questions about where companies can do business, who they can partner with and what kind of activities they can undertake.
And it’s increasing the cost of modularizing in the industry. Modularizing is when a company builds a facility in separate sections and then transports those sections to the jobsite for assembly.
Some modules for large industrial projects are being fabricated overseas, Canaan said, and the number of modules affected by tariffs grows with each new tariff announcement. It’s getting more expensive to import them into the U.S.
“I don’t know that everybody understands the complexity,” she said, “of trying to understand the impact every time a new tariff rolls out.”
Steel tariffs, in particular, have a disproportionate impact on the maritime sector, said John Foster, chairman of the American Institute for International Steel.
“There are 10 times as many jobs in the maritime side of the steel supply chain than there are in the entire (U.S.) steel production industry,” he said.
Foster said the tariffs and quotas would reduce U.S. steel imports to some 18 million to 20 million tons a year, down from 30 million tons.
Since 75 percent of that comes aboard ships, the tariffs could have a significant impact on the nation’s ports and dock workers.
The American Institute for International Steel on June 27 filed a complaint in the U.S. Court of International Trade requesting an injunction against Section 232 tariffs and quotas. The association argued that it’s unconstitutional for Congress to give such broad authority to the president on critical trade matters without any clear, guiding principles or the opportunity for judicial review.
The association also filed a motion, which was granted two weeks ago, to receive a three-judge panel rather than the typical one judge. Having three judges allows the association to appeal directly to the U.S. Supreme Court rather than going through the typical appellate process, Foster said.
A hearing date has not yet been set, but he’s hoping for a hearing by the end of this year and a ruling in the first quarter of 2019.
“We’re not fooling around when it comes to our supply chain partners’ jobs,” Foster said.
Capt. Bill Schubert, president of the Pinehurst-based International Trade and Transportation company, discussed a topic that’s not been as prolific in recent headlines: the U.S. Export-Import Bank.
The Export-Import Bank provides financing to foreign companies or governments that want to purchase U.S. goods or services. If another country wants to build a nuclear power plant, for instance, they can get financing from the Export-Import Bank to buy U.S. technology for that power plant.
Schubert, who helps U.S. companies compete for projects overseas, said the bank has been handcuffed the past few years.
A Senate vote required to confirm four people to the bank’s board is currently on hold. Without at least three board members, the bank is limited to giving loans of $10 million or less.
There are some $50 billion worth of pending transactions that have gone through the loan application process but can’t be approved without the three board members, Schubert said.
If the board members aren’t approved soon, Schubert worries the loan applications will be canceled and refiled at another country’s export credit agency, which means those supply chains would move overseas.
“We need to get this bank up and operating as soon as possible, or we’re going to lose,” he said. “Everybody’s going to lose.”