Living/Working January 13, 2023

Living/Working

January 13, 2023

Early Chinese New Year threatens further transpacific supply chain disruption

2023 Spring Festival celebrations and factory closures will extend annual manufacturing shutdowns in China

Container ships loading at Port of Vancouver container cargo terminal | Rob Kruyt

The early start to 2023’s Chinese New Year and its extended factory shutdowns could deepen the transpacific container cargo market downturn that began in 2022’s second half.

Container traffic on the China to West Coast North America route had already dropped significantly late last year as recession fears and inflation spikes hit consumer finances hard.

According to a November report from John McCown, a New York-based container shipping industry analyst, the 10 largest ports in the United States recorded a 17.5 per cent decrease in inbound container volume compared with the same month in 2021. West Coast ports led that decline with a 26 per cent drop, which McCown estimated was “the biggest decline ever for the West Coast.”

Traffic to Canada’s West Coast ports was also down.

The factors contributing to that decline range far and wide. Inflation is a top contender, but there is also ongoing uncertainty over potential supply chain labour disruptions in the United States and 2022’s inventory glut resulting from pandemic-induced supply chain dysfunction.

The timing of 2023’s Chinese New Year further complicates transpacific trade.

Coinciding with the lunar calendar and the arrival of the new moon, it falls on different dates between January 21 and February 21 each year.

This year it is January 22; last year it was February 1.

The new year’s early arrival could extend annual celebrations and factory shutdowns in China, where the Chinese Communist Party’s (CCP) rigid zero-COVID policy had already disrupted factory production and global cargo flow before the CCP’s hardline pandemic strategy was loosened late last year. An earlier start to the new year break means an earlier shutdown of factories, which typically close for between two and four weeks. A rapid rise in COVID-19 cases in China could further delay the reopening of factories and stall their return to full production.

So, how will a Lunar New Year break that will extend from Jan. 22 until Feb. 6 complicate transpacific supply chain operations?

“There are added and new complexities ahead coupled with Chinese New Year, where at one end we see China coping with the COVID infections, and on the other end we see a continued dip in demand," said Christian Roeloffs, cofounder and CEO, Container xChange, an online container logistics platform based in Germany. "We cannot see Chinese New Year in isolation but in combination with all these challenges. The biggest concern is the reduced production and port capacity due to the infections in China. Also, the rates are low, capacity management is still top priority for carriers and blank sailings are prominent. Amidst this, in the coming weeks, we do foresee prolonged factory closures and bearish market conditions.”

In a Container x-Change survey of 2,300 global supply chain professionals conducted in the leadup to the Chinese New Year, 73 per cent of respondents said they expect further shipping disruption resulting from this year's event compared with 66 per cent last year.

“There are so many question marks, so many unknowns,” said Cathy Roberson, the president and founder of Logistics Trends & Insights LLC. “It is going to be hard for a lot of businesses to gauge how to replenish their inventories post-Chinese New Year.”

Those question marks and unknowns revolve around uncertainty over North American demand, which was destabilized when the pandemic abruptly pulled the plug on global trade in 2020 and a subsequent and unexpected consumer spending spree on products overwhelmed shipping capacity in 2021.

The resulting cargo movement dysfunction has only recently begun to ease along the West Coast.

2021’s empty store shelves have been replaced with 2022’s overstocked retailer inventories.

Speaking on a Jan. 12 Container x-Change panel discussing the impact of an earlier Chinese New Year, Roberson pointed out that ocean and air freight rates traditionally have jumped significantly in the lead-up to Chinese New Year.

But this year, she said, “It’s been crickets. I mean, you haven’t seen any changes.”

Roberson added that retailers are struggling to rebalance their inventories in the face of unprecedented economic volatility.

“So, you know, like I said, it’s a lot of unknowns.”

She added that there is also uncertainty over when full-on manufacturing will return in Asia after the Chinese New Year break.

“Yeah, it will open up on February 6. For most manufacturers, however, how many people are going to be able to crank out orders? And then the other question, again, is how much inventory replenishment is really needed here in the U.S. market? And, right now, looking at government statistics, inventory levels still remain high, and we’re also seeing sales plateauing, if not dipping.”

There are fewer unknowns and less uncertainty surrounding projected growth in maritime trade.

It has and will continue to slow down.

In its 2022 Review of Maritime Transport, the United Nations Conference on Trade and Development (UNCTAD) projected growth to slow to 1.4 per cent in 2022 and to increase 2.1 per cent annually between 2023 and 2027. That is much slower than the previous three-decade average of 3.3 per cent.

UNCTAD noted that growth in containerized cargo, which for years has been maritime trade’s fastest growing segment, “is projected to be a tepid 1.2 per cent [in 2022] before marginally picking up to 1.9 per cent in 2023.”

The combination of lower demand coupled with increased capacity from reduced supply chain congestion and a huge increase in fleet expansion has driven down container shipping costs dramatically.

Container x-Change noted that the spot rate for a 40-foot container on the China to West Coast North America trade route had dropped 20 per cent to US$2,361 in October. A year ago, that rate was US$20,000.

An estimated 2.3 million 20-foot-equivalent units (TEUs) of new shipping capacity are expected to be added to the global market’s 24.6 million TEUs in 2023.

Drewry, a U.K.-based shipping consultancy, noted that while capacity reductions instituted by ocean carrier companies will keep overall fleet growth to a manageable 1.9 per cent “the easing of supply chain congestion will increase effective capacity at a much greater rate [19 per cent] – returning the market to an oversupplied position.”

Meanwhile, the early Chinese New Year has taken its toll on global air cargo demand, according to WorldACD Market Data.
The Netherlands-based company noted in a Jan. 26 report that worldwide air cargo tonnages were down three per cent compared with the previous week. The same week in 2022 showed global air cargo tonnages up three per cent.
Overall, the global air cargo market was down 22 per cent in the second and third weeks of January compared with the same period in 2022, according to WorldACD numbers.

trenshaw@biv.com

@timothyrenshaw

 
Leading

No access gained from tepid Information Act review

If it is true that you can’t teach an old dog a new trick, I have regrettably discovered you can at least trick an old dog.

Here I find myself, hoaxed by a government I mistakenly thought was serious about its stated intention to improve upon a law crucial to the public interest – in this case, the federal Access to Information Act.

Instead, the two-and-a-half-year Treasury Board review of the law is the sort of walk-by one of the bored royal family members would conduct of a stiff-bodied military regiment in the colonies. It is decorous, ceremonial, uneventful and principally for show.

The review released shortly before Christmas could have been written years in advance – a milquetoast word-salad of “conclusions” about the law’s attributes in the guise of an examination that ultimately keeps safe the culture of denial by federal governments of all stripes since the law’s inception four decades ago.

Not a cage is rattled, not a practice critiqued.

My folly was in participating belatedly in a parallel review as a witness in November before a House of Commons access-to-information committee on the assumption that the Justin Trudeau government – Treasury Board included – was intent on further repairing the shambles of the law governing our right to know. It’s two hours I can’t get back and beyond me how a committee led by an opposition Conservative MP can eventually influence a government that produced such a tepid review while it was conducting its work.

I feel pranked, as I expect other committee witnesses might feel, as the committee itself should rightly feel.

The act is the lone instrument for the public to employ its right to seek information our federal government would wish not to release. The inherent conflict of interest, the inherent charade of the situation, is that the same self-interested government determines the boundaries of the law that might occasionally discomfort it. As you might expect, it has created quite the small sandbox in which we play.

Bill C-58 in 2019 made a modest effort to mitigate the law’s steady decline since its 1983 inception – it was helpful in reducing user fees. But the amended law’s first required review didn’t lay a glove on the undisputed legislative champion of concealment.

There is not one recommendation, not one commitment, not one directive.

The closest phrasing to any nudge into action in the 49-page report is that there should be “consideration” to better training and guidance for the public service on the value of open data. The closest phrasing to any criticism is that the government’s management of data “is the single greatest pain point” for the law.

The law suffers several staggering flaws, most of them fixable if the right culture were in place. There are hundreds of categories of records exempted from disclosure. There are many reasons the government can give to deny access. There are serious delays in processing requests for records. There are elements of the public service, including political aides, who are not subject to it. The law is best defined by what it doesn’t do.

Yet for journalists and others there is often no other choice but to resort to a request for records when government refuses to disclose. Newsrooms I’ve managed have filed more than 10,000 such requests – I’ve signed off on more than 3,000 of my own – but the insights they’ve yielded wouldn’t fill a thin book, so advantaged is government in the chase.

And this is not a Trudeau government issue. Conservatives and Liberals alike have treated the law as little more than a nuisance to thwart.

And this is not a federal government issue. The provincial Liberal and NDP governments have never made a serious pledge to it. The Canadian Association of Journalists even proclaimed the BC NDP government under John Horgan recipients of the 2021 Code of Silence award following amendments that created application fees for requests and exempted Horgan’s office from its reach. New premier David Eby hasn’t moved to walk back the damage.

In a discussion with Glacier Media journalists last week, BC Liberal leader Kevin Falcon reiterated he would fix the law, in particular to eliminate fees associated with it in his first 90 days as premier. Falcon asserted that he actually wants journalists to hold government accountable, to uncover mistakes in order to improve the standards of public office. He said it with a straight face, and if we get a chance after the next election, we will hold him to it.

As for the federal law, the Treasury Board report to Parliament clearly shows there are no imminent improvements to expect – no broadening of the law’s scope, no hastening of institutional response to requests, no changing of the culture that has made a mockery of its original ambitions.

Someone asked me the other day why governments get away with this. It’s because of us, I answered – us meaning journalists in part and the public in large measure. There are no public demonstrations of support for the right to know, no placard-waving pickets of government offices, no serious court challenges of the legislation’s exaggerated claims of access.

Freedom of information lacks the glamour of a pipeline protest or the heft of a trucking convoy; it is a nerdy, wonkish realm that has failed to mobilize the public into a lather about what it doesn’t get to know.

For its part, government has done well to neutralize public qualms by creating a mirage of partisan expression posing as important information. It stages the release of just enough policies and pronouncements to occupy our occupation’s time so as to impede us from investigation. The result is that we cover too much and uncover too little, which is exactly what every government of all persuasions prefers. Shame on them, shame on us.

Kirk LaPointe is publisher and executive editor of Business in Vancouver and vice-president, editorial, of Glacier Media.

 
Exploring

Neil Godbout: Want to sleep better? Tape your mouth shut

Illustration of a woman sleeping with tape on her mouth for nasal breathing. I prefer the tape sideways, rather than vertically, but it comes down to personal preference and comfort. | Getty Images

In his book Breath, James Nestor writes about how many people have forgotten how to breathe properly, to the detriment of their physical and mental health.

Long, deep breaths in and out through the nose, not short, quick gasps through the mouth is the ticket, he explains. Military sharpshooters, high-performance athletes and students of meditation are all taught various nasal breathing exercises.

For regular folks, using one of the many apps on the market for breathing exercises reduces stress, boosts energy, increases mindfulness and improves sleep.

When we sleep, however, our breathing gets sloppy, especially as we get older. The mouth flops open and first thing you know you’re waking up with a dry mouth, a sore throat, a headache and a partner complaining about your snoring.

In one line in Nestor’s book, he mentioned taping his mouth shut at nighttime.

So I thought I’d try it.

It’s been a year-and-a-half now and a game changer. Sinus issues in my younger days did not hold me back. Regular fierce sinus headaches were reduced to infrequent dull annoyances.

Got a cold? Take an oral decongestant, use a spray decongestant only at bedtime and no more than a few nights in a row, as per directions on the bottle, and tape up.

Quieter, deeper sleep is good for me at night and the happy wife, happy life benefit from no snoring is good for me, too.

The worst side effect? It’s a little harder to pull the tape off of a freshly-shaved face with short fingernails.

Just Google “sleep mouth tape” to find the various products on the market but there’s no need to get fancy, Nestor says and I agree. Just get some paper medical tape at the pharmacy, rip off a short moustache strip each night and tape those lips together.

My wife was dubious but said if anyone could do it, she said I could, pointing to my big nostrils that she lovingly refers to as “the two-door garage on your face.”

Now she’s a believer and borrowing my tape.

It’s not as restrictive as you might think. Forced nose breathing demands calmness, the exact state you want to be in after the lights go out and your head hits the pillow.

There have been the occasional mentions in my household about daytime mouth tape.

That’s my cue for a nice, long walk.

 
Spending

Beloved Kits coffee shop re-launches as all-day cafe restaurant

You'll now find an all-day brunch menu available at Their There, the West 4th Avenue coffee shop that's a sibling to the award-winning AnnaLena | Photo courtesy Their There

Great news for fans of Kitsilano coffee and treat spot Their There, as the sibling to the Michelin-starred AnnaLena, has revealed it has relaunched as an all-day restaurant concept.

The West 4th Avenue cafe has been a neighbourhood staple known for its coffee program and crave-worthy pastries for some time now. The venue also used to double as the home base for Hundy, the popular burger concept also run by AnnaLena chef-owner Michael Robbins. Last year, Robbins shifted Hundy to its own space in Yaletown as part of an ongoing relationship with Freehouse (formerly Donnelly Group).

Now Their There is stepping things up with an all-day menu crafted by Robbins, who once upon a time headed up the much-loved brunch program at the late Oakwood Canadian Bistro (the West 4th spot closed in 2019 after an eight-year run), along with another Oakwood and AnnaLena alum, Catherine Wong.

On the menu are dishes like Bennies, cereal milk panna cotta, bacon and eggs, and beef brisket hash (familiar to Oakwood fans), alongside signature Their There items like mochi doughnuts, cruffins and fried chicken sandwiches. They're also putting their crispy-juicy fried chicken to work in a chicken and waffles dish.

An all-day drinks program is in development, according to the restaurant.

Their There (2042 W 4th Ave)  is now open Tuesday through Sunday, with the full breakfast and lunch menu from 9 a.m. to 3 p.m. and a Happy hour service from 3 to 5 p.m. featuring the full line up of fried chicken sandwiches and a few other snacks and drink features.
 

 
Exploring

For old-timer's sake: The Polygon's new program puts seniors first

The Polygon's new Meet Me At The Gallery series is a program dedicated to enriching the lives of seniors. | Mina Kerr-Lazenby / North Shore News

They say age is just a number, yet all too often it is age that determines whether a social calendar is bursting at the seams or crying out for a rendezvous. Usually it is not for lack of trying or desire, instead more so because there are few cultural outings available for the golden-agers beyond bland craft classes and stale book clubs.

Enter: The Polygon’s latest offering, Meet Me At The Gallery.

Dedicated to enriching the lives of adults and seniors in the community, the daytime art program is part workshop, part social mixer – a monthly get-together inspired by the gallery’s current exhibition. The program will run on the first Wednesday of each month, every month for the rest of the year.

“I feel as though we have got so much programming to serve many members of the community, but we don’t have a lot for seniors,” said Joelle Johnston, the gallery’s Indigenous liaison and community outreach, and curator of the event.

“They deserve so much more.”

Johnston is a Sḵwx̱wú7mesh Úxwumixw (Squamish Nation) member who says in her culture, elders are “first and foremost.” So the concept of them being so often disregarded in other communities is baffling, she said.

Becoming older shouldn’t be synonymous with throwing away the diary and nestling in an armchair until time comes to shuffle off this mortal coil. With so much free time, it should be an era filled with new experiences and fun social ventures — without any restrictions or limitations.

“With this program I wanted to keep it open for everybody, because I know it can be intimidating coming into the gallery and not knowing anything about art. This is a welcoming space where anyone can join. I want it to be open, and fun, and a place for people to engage.”

On Wednesday morning, over 30 people in various stages of senior citizenship milled around the gallery’s two floors, socializing, discussing the artworks and listening intently as Johnston gently described each artwork. The first in the series had been a tour of the gallery for them alone, allowing them to pore over photography and peruse the pieces from The Lind Prize collection at their own pace.

Afterwards, the group were invited onto The Polygon’s balcony, abnormally sun-drenched for a January morning, to discuss the artwork and their experience over coffee and croissants.

“I like going to galleries and I like coming down here, so I figured why not,” said 82-year-old Elaine Hunter, as she tucked into her pastry alongside husband Bruce Watt, 81.

“I thought maybe we could meet some new people here.”

Hunter has a shock of dyed blue hair and is quick to point out she is “not old” but a senior – the two aren’t interchangeable. She said it is the social aspect that is the biggest draw to programs like this. The promise of new experience, tied in with the potential of making new friends, is too appealing an offer to pass on. In the end, she said, “it turned out to be a beautiful day.”

At just 60 years old, Anil Mayar was on the younger end of the spectrum of the guests in attendance. Despite being only recently retired, he said he is already struggling to find ways to fill his time — he plays squash and tennis at least three times a week, but has been craving something that is new, and perhaps a little out of his comfort zone.

“I’m a real newbie when it comes to art,” he said, “but I like the idea of still being able to expand my mind to new things.

Mayar, describing himself as being at the “front end of the older generation” said he understands how comforting it must be for seniors to revel in familiar experiences rather than risk trying something new and not enjoying it, but there is so much that can be gained by stepping into the unknown.

“I’ve always said to myself I don’t want to slow down, I don’t want to get in a situation where I’m comfortable,” he said. “Others would do well to take the same approach, I think.”

If Johnston’s plans for future programs are anything to go by, the risk of seniors getting comfortable is an unlikely one. In the summer, she said, a show is planned that will involve video installations of people dancing on screen. As a pairing activity, she is toying with the idea of bringing in a hip-hop teacher.

Mina Kerr-Lazenby is the North Shore News’ Indigenous and civic affairs reporter. This reporting beat is made possible by the Local Journalism Initiative.

MKerrLazenby@nsnews.com
twitter.com/MinaKerrLazenby

 
Spending

Tesla cuts vehicle prices in bid to boost flagging demand

Tesla has added two huge factories in Austin, Texas, and Berlin that are running at only a fraction of their output capacities. | Rob Kruyt

DETROIT (AP) — With its sales slowing and its stock price tumbling, Tesla Inc. slashed prices dramatically Friday on several versions of its electric vehicles, making some of its models eligible for a new federal tax credit that could help spur buyer interest.

The company dropped prices nearly 20% in the United States on some versions of the Model Y SUV, its top seller. That cut will make more versions of the Model Y eligible for a $7,500 electric-vehicle tax credit that will be available through March. Tesla also reduced the base price of the Model 3, its least expensive model, by about 6%.

Far from pleasing investors, the sharp price cuts sent Tesla shares down nearly 3% in midday trading Friday. Since the start of last year, the stock has plummeted more than 65%. Many investors fear that Tesla's sales slowdown will persist and have grown concerned about the erratic behavior of CEO Elon Musk and the distractions caused by his $44 billion purchase of Twitter.

“I think the real driver for all of this is falling demand for Teslas,” said Guidehouse Research e-Mobility analyst Sam Abuelsamid.

Itay Michaeli, an industry analyst at Citi, wrote in a note to investors that Tesla appears to be prioritizing sales volume over price — a strategy that could squeeze its profit margins, at least in the near term.

Messages were left Friday seeking a comment from Tesla.

In the meantime, Tesla faces the threat of intensifying competition from other automakers in the United States and globally for years to come. Last year in the United States, total EV sales soared nearly 65% from 2021. Automakers sold 47 electric vehicle models; only four were Teslas. S&P Global Mobility expects the number of EV models to surge to 159 by 2025.

And as overall EV sales are rising, Tesla's U.S. market share is falling. From 2018 through 2020, Tesla represented about 80% of the EV market. By 2021, that figure had sunk to 71%, and it's continued to decline, according to registration data gathered by S&P.

Still, Tesla's U.S. sales rose 40% last year, and S&P expects them to continue to rise as overall electric vehicle sales steadily increase.

Even with U.S. tax credits, EVs remain pricey compared with gas-powered vehicles, largely because of the high cost of batteries. In addition, higher loan rates and more expensive raw materials are keeping costs high for buyers and could limit EV sales, for Tesla as well as its competitors.

With Tesla's price cuts Friday, its Model Y Performance model, formerly priced at nearly $70,000, now starts at just under $57,000. The starting price of the Model 3, Tesla’s lowest-priced vehicle, was cut to just under $44,000 from $47,000.

The company's decision to drop the base price of the Model 3, which had already been eligible for the federal tax credit, is a clear sign that demand had weakened, Abuelsamid noted.

Tesla has added two huge factories in Austin, Texas, and Berlin that are running at only a fraction of their output capacities, “which is undoubtedly costing them dearly,” Abuelsamid said.

Tom Krisher, The Associated Press