Interesting Times

The turmoil in the Middle East, on the nightly news (and across all platforms) since end-February, is happily far away from ports in the US. Nevertheless, port planners should keep a weather eye on the potential shifts in vessel trading patterns resulting directly and indirectly from the conflict. Movement of oil and product carrying tankers are most obviously impacted, but liner and dry bulk businesses will also see impacts of itineraries adjusted for longer voyages, as vessel supply is stretched. Presently, the energy trades are seeing boom times out of US ports, though Jones Act waivers have seen minimal consequences. The demand side could also be further impacted, possible changes regarding OFAC sanctions could allow currently prohibited flows, and this will impact the tanker trades, seemingly divided (at present) between the good guys and the dark fleet. Depending how the conflict evolves, economists are looking at recessionary scenarios which could reduce cargo flows across all sectors. The uncertainties are enormous; no predictions are offered here, but just a reminder for port planners to be ultra-vigilant.

In the background, elements of the proposed Maritime Action Plan (MAP) are now finding their way into proposed Federal budgeting. Normally (if there is such a thing in Washington, DC), legislators will engage in considerable back and forth, nit-picking and trading off requested items. However, the present climate, think shipping in the news on a 24 x 7 basis (yes, the nightly news pales in comparison to social media at this point) could offer some brighter than normal bursts of sunshine for the port side of the business. Programs supporting port infrastructure, along with grants for both large and small shipyards, are in the works. Obviously, the military side will see immediate benefits from vessel construction initiatives, but the commercial side of the equation may benefit over time if the proposed Maritime Trust Fund (to be funded by levies on vessels with certain flags calling at US ports) evolves. Decisions on these levies, originally set to begin in late 2025, were put on hold for a year. As noted in previous Opinion articles, if flag-related assessments are implemented, look for a whole other set of “adjustments” to vessel trading patterns and port calls. Interesting times, indeed.