URSABLOG: Close and Messy

 

“So which way do you think it’s going to go?”, he asked me. I was talking about the US election with a friend of mine.

“I think it will be Biden, but it’s going to be close and messy,” I replied.

“Oh I don’t think so,” my friend said “It’s going to be a big Biden win. The polls won’t be wrong this time, and I can’t imagine people voting in huge numbers for Trump again.”

 

I write this as I periodically check on the New York Times website for the latest on the votes. Biden is leading in the states he needs to get the votes for the Electoral College, but his lead is razor thin, and I am in a continual state of suspense. It is too close to call. But thinking about the above conversation that took place this time last week, I have come to a few interim conclusions.

 

Firstly, I was right. It is close and it’s going to be messy, with legal actions flying around from the Supreme Court down to the local electoral offices, and it will take a long time to clear up. What happens in the meantime could indeed be history repeating itself, either as tragedy or farce.

 

Secondly, my friend was wrong, but also right. He was right to have faith in human nature, and that we learn from our mistakes, either as pollsters or voters. But resolving the problems of 2016 doesn’t mean that there will be a better result this time, it just means that there will be different problems. “Life can only be understood backwards; but it must be lived forwards” as Kierkegaard said. And the future is famously unknown, even if we could see all of the present at one time.

 

Thirdly, my friend – very understandably – was showing signs of confirmation bias in his forecasting. Because he wanted Biden to win, or Trump to lose, he was happy to seize on whatever data he could find to support his other forecasting bias, belief, where he wanted a result that aligned with his hopes and his values.

 

Finally, I got lucky. My own prediction was not based on a thorough look at all the available data, election districts and American socio-economic geography, although I have to say I now know far more about Wisconsin than I ever wanted to. My prediction was based on a world weary cynicism of accumulated disappointment that started with Brexit and has only grown in the meantime. It was also based on a feeling for the zeitgeist in American politics, where far more people vote for Mr Trump than those proud enough to admit it beforehand. Because we (and I really mean me, a Brit, in Greece) could never bring ourselves to vote for Mr Trump is slightly missing the point: we will never have the opportunity to do so, at least until we get our hands on US citizenship.

 

That is not to say that we can isolate ourselves from the United States electoral battle. The Presidency – and the make up of the House and the Senate – has profound implications for the rest of the world, including the world of trade and shipping. And so it was with some interest I read:

 

Who’s in the hot seat post the November election will have a significant impact on the role the US will play in terms of supporting shipping demand. If Trump remains in power the playbook will remain largely the same as the last four years with protectionism still front and centre on the agenda and a continued push on fossil fuels exports.

 

Thus spake Dr Adam Kent, managing director of Maritime Strategies International in Splash 24/7. And Biden?

 

One of the areas Biden and Trump differ most in their views is on climate change. Biden’s goal is for all power generation to be carbon-emission free by 2035 and to re-join the Paris Climate Alignment, this would in time be a negative development tankers and gas carriers.

 

I am a bit lost on this one to be honest. By far the vast majority of US power generation fired by gas and oil comes from US produced resources, little of which involves actual ships, especially now the US produces enough for export, which whilst significant is not enough to move the needle much on the global supply and demand tonne-mile balance all by itself.

 

Biden’s stance on protectionism is also not as strong as that of Trump, which would take out some of the demand uncertainty witnessed over the last four years.

 

If I had to point out any real difference between Biden and Trump, it would be that between consistency and inconsistency. Biden would at least be a bit more predictable, and markets would not turn as much on a Tweet from the Devil’s Workshop. Diplomacy would return to discussions between nations, rather than deal-making, or not as it has actually turned out.

 

Another interesting, article comes from VesselsValue. However their conclusions – Tankers for Trump, Bulkers and Boxships for Biden – go somewhat against the grain of actual observed fact. As we come to the end of Mr Trump’s first term, tankers are moaning and groaning, bulkers are doing a little better – but  worried – and containers are booming. I thought Trump was good for tankers and bad for consumer items, and other Chinese things in containers? It seems not. Maybe I am misrepresenting them a little bit, but not much.

 

These wise men – they sadly seem to be only men – have completely forgotten not one but two massive elephants in the room, both of which will have to be dealt with by the next US President, namely COVID-19 (and its aftermath) and China. How can anyone make any predictions about the future of shipping with considering these hugely important issues of the day? It staggers and astounds me that analysts of any stripe are so focused on the numbers and general effects of assumed policy have not taken into account what is actually happening in the world today.

 

The effect of US domestic policy on COVID-19 is a very big deal to the world of shipping as demand fluctuates and the economy stalls and starts again. And as the US diminishes or becomes great again in the eyes of the world, or the occupants of the White House, and indeed the voters, it is hoped that this accursed virus, whether through action, chance or otherwise will disappear soon. How the US acts, and copes, is very important.

 

China however is a bigger and more permanent elephant yet. Let’s be frank, the identity of the US President doesn’t really have that much influence on the world of shipping, and hasn’t for a long time, except in more general trade and economic terms. For nearly 20 years now China has had the largest influence on trade routes and therefore shipping everywhere and this can only grow. For all the huffing and puffing about trade wars and tariffs, only one political event really moved the markets significantly in the last four years, and that was short-lived: the sanctioning of COSCO and other related tankers (and their managers) in September 2019 that caused supply to quickly dry up – and rates to jump – before it all fell away again. There was a much longer boom of almost three months this year in response to the Saudi/Russian spat which caused a collapse in the oil price. The US’s role here was to act as peacemaker and suggest some production cuts (mostly to keep the price of oil up in the US) which has led to a poor and boring tanker market ever since. In the meantime China will keep on sucking in resources, and shipping will ride the waves.

 

Maybe I am being a little harsh on those willing to put their heads above the parapets in public and say a few words about the subject. Maybe I am a bit jealous that their words are known more widely than my own. But it is my strong belief that the election of the next US President has profound implications for the world in ways that cannot be measured in numbers, or trends in vessel types, because it is an election about how America wants to be, both home and away. This will affect how other countries deal with each other and also how countries deal with their own citizens, and this in turn will alter how trade is done. To offend China, as Australia has done, means that less Australian stuff will be sold to China. To block the sale of US technology to China, and to push others to block the sale of Chinese technology to others, whatever the rights and wrongs, will result in different zones of technology, and influence, being created. These, and many other matters, will all influence where ships go to load and discharge. This could well lead to profits for shipowners, as well as losses and bankruptcies. But the world of politics – domestic, international, or geo – is unpredictable and uncontrollable, at least most of the time.

 

The votes being counted now in the US are an example of one the few times when people have a choice. The results, and the aftermath of the results in the short, medium and long term have the potential to change the world in unimaginable ways. Let’s hope that after all I am wrong, and the next days will prove to be as least messy as possible. But let’s also hope that those advising our industry learn to look outside the window, beyond their spreadsheets, graphs and reports, and see that in the world outside, the world is not just black or white, right or wrong, with only winners or losers, where rates go up or down. It is a world where values, and experience, and dignity, and respect count, as does their absence. These things effect shipping too, and we should be aware of the shifting sands that our world is built upon. After all, at the end of the day, when all the votes and money are counted, we all still belong in the world, whether we like it or not.

 

Simon Ward