The challenges facing the ports of Seattle and Tacoma can be neatly listed: 1) The trade collapse from the Great Recession; 2) The looming opening of wider Panama and Suez canals, allowing much Asian cargo to bypass the West Coast; 3) Prince Rupert, a day’s sailing distance closer to Asia, and 4) Washington’s slowness to improve transportation infrastructure.
Now you can add a fourth, at least for the middle distance: A melting Arctic Ocean thanks to climate change. A report from the Stockholm International Peace Research Institute discusses how China is quietly preparing for the strategic and trade implications of the ocean being navigable during the summer months. It would speed transit times, especially between Asia and Europe.
Port of Seattle spokeswoman Charla Skaggs told me, “we recognize that the world and trade routes are changing, and that cargo to the U.S. West Coast is not always going to be a given in the future. We take this potential for cargo shift very seriously and are working to keep Seattle a competitive and attractive port in which to do business.” She said the Arctic route is probably more of a concern for East Coast cargo now traveling through Suez or Panama.
The Back Story: Speaking of ports and all, the Council on Foreign Relations (yes, conspiracy corner, them) has an interesting interview with Gary Hufbauer, a senior fellow at the Institute for International Economics, discussing President Obama’s export plan. Obama hopes to double exports in five years.
Realistic? “To do this will require significant policy changes. It’s not possible to do it by some talk-shop campaign where you go around and lecture firms and urge them on, an approach many countries have tried with practically zero success. We’re talking about a big change in the exchange rate relationship between the United States and China, but other Asian countries as well, including Japan.
“We would need a big ramp up in export credits. The export-import bank at one time financed about a quarter of U.S. merchandise exports; now it’s down to about 3 percent. Private banks are not going to fill that space for the next three or four years because of problems of credit-worthiness bedeviling the world economy. A big tax incentive is needed for banks to loan more to finance exports.”
A worthwhile read.
Today’s Econ Haiku:
I say wait for Dick Shelby
on final approach