Whether you’re looking for quick information, or want something to impress your friends at dinner, here’s our Featured 5 of the Week!
We’ve all heard of intermittent fasting, but fasting for longer periods may have better and more long-term benefits to our health. Let’s look at some of these benefits and see if fasting is worth the pain!
1. Burning Fat
Fat burning is a primary benefit of fasting. Food is fuel; we’ve all heard that saying before. The carbohydrates from food are where this fuel comes from. When we’ve finished eating, the glucose from our food is used for energy, while the fat is stored as triglycerides.
However, the liver takes those fatty acids and converts them into ketones instead when you fast. Ketones are a significant energy source for our organs and may even affect health and aging.
2. Brain Activity
Ketones also help the brain. They help create a hormone called BDNF. BDNF strengthens neural connections in the brain and promotes new nerve cells for learning and memory, which may help prevent Alzheimer’s and other neurodegenerative disorders. Fasting may also help improve verbal memory, executive function, and global cognition.
3. Prevent Disease
After fasting, our cells go through autophagy, a cleanup of waste and other damaged parts in our cells. During this time, some proteins and other cell parts are repurposed and then directed to where they’re needed. Bad cells, or cells that show the early stages of disease, are flushed out. Other than fasting, exercise also enhances autophagy.
4. Cardiovascular Health
Fasting is key to maintaining our cardiovascular health. Fasting can help lower blood pressure and our resting heart rate, taking stress off the heart. It’s also been shown to increase parasympathetic tone, which in turn helps your body relax and become more resistant to stress. All of this takes stress off the heart and lowers your chance of developing heart disease.
Did you know that fasting is good for our muscles, too? Since protein and other foods help build and maintain muscle mass, you wouldn’t think so. However, fasting helps increase insulin sensitivity and reduces insulin resistance, lowering your chance of developing type-2 diabetes. Fasting also enhances our endurance, increasing our ability to perform athletically and reducing inflammation in our muscles. So, fasting may be a great solution to improve your athletic performance and decrease the chance of injury.
Today, perhaps more than ever before, we all want two important things in our lives: accountability and transparency. Market-research firm Mintel reported this year that consumers are looking for more natural and lesser processed foods rather than those with high fats, high sugar, and high sodium. The key phrase here is “looking for.”
With so little time available for extensive research, we rely on labels — those simple, easily grasped indicators of what we’re getting in the food products offered to us by suppliers who may be more interested in moving product than the useful information we want.
With mass confusion over labeling still widespread, how do we avoid the confusion about how to decipher what these labels really mean?
“About 11 million deaths worldwide in 2017 were attributed to diseases related to unhealthy diets.
Helping consumers make healthier food choices, i.e., with lower intakes of sugars, saturated fats, salt, and energy, and higher intakes of dietary fibres and fruits and vegetables, remains an important challenge in public health.”
Developed in France in 2017, the Nutri-Score label was established based on a modified version of the United Kingdom’s Food Standards Agency nutrient profile model (FSA-NPS). The UK model has been heavily studied, as it spotlights health outcomes at the national level in cohorts of France and Spain. These studies have revealed that foods with lower FSN-NPS scores were shown to have more favorable health outcomes with respect to many ailments, including asthma, metabolic syndrome, cardiovascular disease, and cancer.
While the label is currently voluntary, many national health authorities have adopted it, including France, Belgium, Spain, Germany, Switzerland, the Netherlands, and most recently, Luxembourg.
The Nutri-Score label was designed to summarize the overall nutritional quality of a product. The algorithm (which we will dive into later) considers both the negative and positive elements of any given food to determine its “traffic light-like” rating. (Green is good, red is bad, yellow is in between.)
In developing and implementing this label, French nutritionists also considered the consumer’s ease of use and understanding. Many labels currently exist.
However, as the latest research published in September of 2020 by Food Control details, 82% of consumers smell the food or look at the food, not the label, to influence their purchase decisions. This is due to label confusion.
But will consumers use it?
The stoplight-type label, as shown below, makes interpreting the label quick and easy—which is ultimately what we all want when we are making our purchase decisions. Who has hours to spend at the grocery store inspecting labels? A study out of Switzerland in 2020, sampling over a thousand consumers, concluded that the Nutri-Score system was the most efficient front-of-package labeling and that consumers exceedingly trust it to make better, more informed dietary decisions.
As this labeling continues to spread in the EU, it begs food manufacturers to stop and think about the products they are creating. The general movement toward better labeling poses some fundamental questions for food manufacturers and consumer product companies.
How can they provide information that reflects the growing demand from consumers for accurate, trustworthy nutritional guidance? How do they help the consumer evaluate complex, incomplete and confusing information? Ultimately, should we place more focus on what’s good for our customers, not just what’s good for our bottom line?
Understanding the algorithm
How can we understand the rating and allow it to drive our decision-making without understanding how it is calculated? If you have a salad for lunch packed with spinach, lean protein, mushrooms, beets, cucumber, and tomatoes, but then proceed to eat an entire sleeve of girl scout cookies, well, you have to take into consideration both the positive (salad) elements and the negative (cookies) elements.
Whether consciously or not, we all seek a balance in life. We try to be smart in our decision-making about what we eat. But we also like to splurge and indulge from time to time.
Smart labels can help us make deliberate decisions that help bring about common-sense balance in our food choices.
Based on a points system, foods are scored by their positive and negative attributes. These points are then aggregated to determine an overall Nutri-Score. The algorithm gives positive points and negative points for various elements of nutrition. In the example below, you can see the categories of negative attributes — energy (or more commonly referred to as calories in the US), sugars, saturated fatty acids, and sodium — versus the positive attributes of fruits, vegetables, fibers, and proteins.
For instance, the veggie bowl being scored below received seven negative points and ten positive points, for an overall score of -3 (think of adding points as adding “bad” elements), giving the veggie bowl an A rating.
The development of the points system is based on a series of scientific research by the French High Council for Public Health. The calculations are rooted in complex-peer reviewed science-based nutritional calculations.
In fact, there is so much trust in this research and labeling systems calculations that retail giants Nestle, PepsiCo, Kellogg, and Danone, to name a few, have adopted it in various locations in the EU. They have recognized that science-based, peer-reviewed nutritional information can have a meaningful role to play in modern food retailing and more importantly, help the consumer make healthy choices.
Retail giants take transparency to a new level
In mid-2019, Nestle announced its support for the Nutri-Score label in recognition of its accuracy and easy-to-understand nutritional information at a glance and its commitment to transparency. Since then, Nestle has implemented this labeling scheme in Spain, Portugal, Austria, Belgium, France, Germany, Luxembourg, and Switzerland.
Nestle CEO for Zone Europe stated that he was proud to extend the implementation of Nutri-Score, now located on over 7,500 products. Since 2017, the sugar in these Nestle products has almost been cut in half, driven in part by the desire to achieve a higher Nutri-Score on their packages and for general health reasons.
While Nestle, in addition to Fleury Michon, Albert Hejin, Carrefour Belgium, and other European retail majors, support the labeling scheme, the European Commission is not yet convinced. Their latest “farm-to-fork” strategy, which details the future of food in Europe, stated that they would propose a “harmonized mandatory front-of-packaging label” by the fourth quarter of this year.
“Along with other public health nutrition measures, the Nutri-Score interpretive nutrition label aims to influence consumers at the point of purchase to choose food products with a better nutritional profile and to incentivize food manufacturers to improve the nutritional quality of products, thereby contributing to a healthier food environment.”
Could EU rulings impact U.S.-governed food labels?
Pressure to make healthier products, especially in a post-Covid world, has challenged U.S. food manufacturers to reduce sugars, fat, and sodium. The EU’s Nutri-Score initiative is a great start, but there’s a lot more needed to achieve meaningful results across a global food system. Non-EU nations — including the U.S. — continue to be in an evaluative mode.
History suggests the United States and other countries prefer to build on what others may have done and fine-tune the approach to reflect our own thinking and situation. The success of the EU efforts will help maintain the political (consumer) pressure needed to move that process along.
And in that process, it may help the entire labeling issue to take important next steps, such as applying the same scientific rigor and objective assessment of nutritional issues for popular, often ‘indulgent’ products, such as chocolate, sugary confections, and carbonated soft drinks. That said, it is no surprise that Nutri-Scores are harder to find in these less healthy categories. Check out how your favorite food rates using this link.
Adoption of this system throughout Europe demonstrates manufacturers’ increased commitment to prioritize consumer health by standing behind their formulations. While it is unlikely this decision in their farm-to-fork strategy will translate to the U.S., the key here is that we can see retail giants and industry leaders allowing consumers to lead the way to change. The Nestle’s of the world can be an invaluable force in driving this type of transparency and commitment to consumer health.
The key here is food-industry-led voluntary adoption as a result of demand for better labeling by the consumer. This change will come from widespread and continued consumer pressure.
Skeptics of the Nutri-Score
With the decision by the EU pending a mandatory labeling scheme in their end-of-year farm-to-fork strategy, it is rumored that the Nutri-Score label is a leading contender. But skeptics claim that the label only supports Big Food, stating that it is founded in self-interest by France, neglecting the “artisan” producers. However, rebuttals say that the research behind the score was by independent researchers and was designed to protect consumers’ health, not brands.
Furthermore, all products — including cheese, sweets, salty, and fatty foods — are all scored the same way. The beauty of an algorithm is that it is the same across the board, from the “big food” producers to the small artisan businesses.
Academics weighing in stress that the labeling scheme is protected at a European level, not just by France, and that it is a public health tool based on rigorous scientific research and developed in the interest of consumers.
The effects of inflation and turbulent energy prices have shocked many of us – and our wallets – to the point of exhaustion. The U.S. government wants to ease this cycle, but when crop supplies are tight and inflation is running high, we must find the delicate balance with America’s agricultural abundance for food and fuel.
Where does ethanol come from?
Ethanol is a byproduct that comes mostly from fermentable carbohydrates in corn, but can also be derived from sorghum, wheat, and other starchy crops. What makes corn so attractive is that most of the kernel goes to use in the production of ethanol.
Corn is a cornerstone commodity of the modern food system. Along with high-value meals from soybeans, it is a critical and abundant protein source for maintaining flocks and herds around the world. As the world’s leading producer of corn, the United States is at the virtual center of the animal-protein system.
Last year’s U.S. crop totaled 15.1 billion bushels.
That’s enough to give every person on Earth two bushels of corn.
What is behind high food prices?
The causes of current food price inflation are many and varied, with higher energy costs as the most prominent factor.
Consider this: the world uses about 100 million barrels of oil a day. During Covid, demand dropped to around 92 million. That excess capacity maxed out global oil storage, and with nowhere to store the oil, prices dropped to below $0 at one point, essentially paying companies to buy their oil. As a result, drilling and capital investment in new wells stopped.
Then, the world came back to life. And with that, energy demand picked back up to previous levels.
So now we have high demand again due to economic growth. And when we put a war on top of that, it creates the perfect conditions for a high inflationary environment. But it all started before the Russia-Ukraine conflict. And even Covid, for that matter.
Inflation’s global grasp
Our current environment is the result of compounding events. For instance, do you remember when China lost most of its pigs to African Swine Fever back in 2018? Their hog population has recovered which only increased their demand for animal feed – coming from corn and soybeans. Yet supplies for animal feed were tight. Droughts in North and South America – where China imports its crops – decreased supply and of course increased crop prices.
Next up: volatility and uncertainty with Russia’s invasion of Ukraine. The invasion alone has devastated local economies and rocked supply chains, but with China, Russia, Canada, and Belarus as major exporters of fertilizer needed for crops around the world, our global food system is pushed further into price uncertainty.
Because of these factors, farmers now have even more pressure than ever before to plant more crops using less fertilizer while consuming less energy. Many farmers are already maximizing their yield with technology improvements such as precision farming and regenerative agriculture. In fact, corn yields last year were 177 bushels an acre, a robust 4 percent increase from 2020.
What’s behind the move to expand ethanol use?
President Biden wants to reduce gas prices by adding more ethanol into the gas pumps to make sure gas prices don’t float over $5 a gallon for the summer.
Raising the current standard of allowing a 10-percent blend of ethanol (“E10”) into the gas used in our cars to 15 percent (“E15”) seems like a good idea, with prices at the pump now averaging just over $4 per gallon.
At such levels, the ethanol component of a gas mix seems to be less costly than the gasoline it displaces. And with a simmering voter revolt against the highest inflation rate in 40 years or more, the idea obviously has its political allure. Wrapping the decision in the guise of evolving energy policy and economic aid to consumers makes it an easy, flag-waving exercise. Especially before the mid-term elections.
This move may also help farmers. Purdue University studied renewable fuels and found that biofuel income has also shown to increase annual farm income by $10.6 billion between 2004 and 2016 since the Renewable Fuel Act was introduced.
But would this really work?
The story is much more complex than an academic study – and full of additional realities that also need to be considered. Expanding ethanol use for energy may not ease farmer production pressure. In fact, it may have adverse effects as it could maintain the upward price pressures that currently are sweeping through commodity markets – especially for corn and other cornerstone commodities.
Administration officials and media reports say an increase to a 15-percent ethanol mix will reduce prices at the pump by about 10 cents per gallon. At a national average per-gallon gas cost of $4.03, that equates to a 2.4 percent drop, at best.
Though we can hope for a quick nationwide expansion of E15 stations, it will take time, as these stations require compliance with additional regulations, unless the Administration releases a temporary waiver. And then we have taxpayer dollars to consider for these improvements.
Whatever minimal gains that come at the gas pump could be offset by the losses at the supermarket generated by food price inflation and additional taxes.
Perhaps cognizant of the practical problems created by having so few facilities available to deliver in the expanded ethanol formulation, Administration officials and many economists said President Biden’s decision will have no significant effect on corn prices. They also probably said that because E15 has already been sold through the fall, winter, and spring from 2019 to 2021, making E15’s availability in the summer months the only meaningful addition.
Ethanol’s ‘byproduct’ effects
Even so, the announcement will have an important psychological effect in the marketplace. Any steps to expand demand must have some effect on price if basic laws of supply and demand still apply. Even if the ethanol action had a completely neutral influence on the market, it does nothing to reduce the upward pressures driving food price inflation, especially in the animal protein industries.
An increase in the price of corn increases the price of the steak or chicken at your table.
President Biden’s announcement only helped maintain the currently strong corn price, which now stands at around $8 per bushel.
Most market analysis also cites the importance of China as a growing market for U.S. corn and other commodities – and with ethanol, a major factor in the historically high commodity prices seen this year by farmers and consumers alike. Corn prices have risen by more than one-third since the beginning of this year, adding more than $2 per bushel in less than four months.
The simple truth is that demand for corn for domestic use, for exports and for current ethanol production remains robust, with real and immediate bullish effects on the price of a cornerstone commodity in our modern food system.
Will farmers see an upside?
Some large farmers already warn they simply don’t have the production elasticity needed to increase corn production to offset growing demand, including higher ethanol mandates and targets. These forward-looking producers say they already are coping with increases in input costs, rising land values and other practical day-to-day issues that make large boosts in crop production difficult – if not impossible for many. And, let’s not forget about the weather. Spring is slow to come to the Midwest this year, with planting season already delayed.
In such an environment, don’t expect inflationary pressures on commodity prices and food costs to go away. If anything, the latest ethanol action only adds to worries from consumers and farmers alike about the future price picture for all sorts of food.
This is a double-edged sword: Higher demand for corn – and the support for corn prices it provides – is good for farmers and their bottom line amid dramatically rising production costs. But anyone who goes to the grocery store will see the inflationary prices eating into their wallet.
What would really help gas prices would be to have a solid energy plan that realizes the world is not ready for all renewable energy at this point.
Green energy sounds good but it is not ready for prime time in 2022. We are all very dependent on fossil fuels. Let oil companies drill responsibly, increase the natural gas pipelines, expand nuclear, and keep technology improving for renewable energy. There is not just one answer for energy – it is multi-faceted.
The Non-GMO Project, a nonprofit based in Bellingham, Washington, was created in 2007 and is responsible for the “non-GMO” butterfly label that we see on many of our foods. The premise is that consumers should know how their food was grown. However, in many cases, the non-GMO label has been used to influence the consumer’s thinking that GMOs are unhealthy and non-GMO is better for them.
Fear is a great motivator and in this case, people were scared of harming their health by eating GMOs. This is similar to how many consumers associate organic as the only food choice for long-term health and sustainability.
The non-GMO label may look official, but the FDA or other government organizations do not regulate it. Furthermore, the label was placed on products where no GMO counterpart existed, creating more confusion among consumers. There is no such thing as GMO salt, yet we still see the non-GMO label suggesting that there is, and we’re being charged more for the one with the “non-GMO” label. We have even seen non-GMO water!
Let’s also not forget that there are only ten genetically-modified crops currently approved in the United States.
How the new bioengineered label works
All U.S. food manufacturers, including those exporting food to the U.S., must label GMO products, or any products that contain GMO ingredients, as “bioengineered” or “derived from bioengineering.” This guideline was first announced by the USDA in 2018, but companies had until 2022 to add the labels to their packaging. This law aims to keep consumers better educated on their food. Also, some states required the labels and some did not, which caused even more confusion.
So what’s considered ”bioengineered” under this law? There is a threshold for how much genetically-modified materials need to be present in order to use the label. The USDA states that foods with 5% or more of their product derived from GMOs must have the new label. This is different from the threshold in the European Union, where it’s only 0.9%. Furthermore, the non-GMO Project also uses the threshold of 0.9%.
But why 5% if everyone else seems to use 0.9%? This is because trace amounts of genetic modifications, or parts of GMOs, can be found on equipment for processing those products. Genetic modifications can even be carried on pollen. With 5%, it leaves room for any trace amounts of “GMO residue” found on food products. There’s also less opportunity for food brands to capitalize on the label as a marketing tactic.
Producers can use this label in three ways. They can label their product using simple text, apply one of two graphics that the USDA has already approved, or use a QR code. Consumers can scan the code on the packaging to learn more about that product.
One loophole is if meat, poultry, or eggs are listed as the first ingredient on a food product, the label is not required. Even if one of these ingredients is listed second after water, stock, or broth, the label is not required. So, some prepared food items that may contain GMOs still won’t have this disclosed.
There are other concerns, as well. Could this lead people to consume more processed foods if they find that their favorite fruits and veggies are now ”bioengineered”? As with organic, they may believe that processed foods without the label are the healthier and safer option. For instance, a non-GMO pizza with all the toppings versus a GMO arctic apple?
Lastly, some manufacturers may face economic loss due to these new standards. Although most GMO crops are used for animal feed, ingredients like corn, canola, soybeans, and sugar beets all have GMO counterparts used in routine products made for humans.
D2D did an Instagram poll in which followers were asked: “Are you more or less likely to purchase a product labeled ‘bioengineered’?”
100% stated they were less likely. Companies that use GMO products and the new corresponding label may see a decline in sales and/or customer loyalty.
Is there a potential upside to the change in labeling?
Despite the confusion, there are a couple of positives here. Consumers are already demanding transparency in their food system, a trend we see growing in 2022. People want to know nuts to bolts: where their food came from, how it was grown or raised, down to the farmer’s name. Using this new USDA-vetted label, we’re increasing more scientifically rigorous transparency in the food system.
The other positive effect this label could have is increased education among consumers. The QR code alone has the power to help educate others on GMOs – the truth. This code can help change the narrative that’s been present for way too long and finally help consumers understand why we need GMOs in our food system – for our planet’s health, food security, and much more.
We see this as an opportunity for the USDA and food manufacturers alike to take advantage of this label or QR code to educate consumers on the safety and benefits of GMOs rather than use it as a scare tactic.
And, if you’re still confused about what a GMO is or the benefits that it has for humans and the environment, check out these related articles:
Economists like to remind us that trade makes the world go ‘round. If that’s true, the world must be spinning very fast indeed.
Recognizing a water-borne world economy
International commerce continues to grow – despite the conflict, pandemics, climate change and other challenges that make our global economic growth rates gyrate. The global Covid pandemic created a sharp but short-lived drop in commerce. But robust demand for all types of goods and aggressive exports by select Asian countries helped boost overall trade in 2021, to more than $28 trillion, according to estimates from the United Nations.
The cornerstone of commerce is transportation – the ability to move goods from where they are produced to where they are consumed, from where they are available to where they are needed. And when it comes to international commerce, no mode of transportation is more important than ocean shipping.
Estimates from the U.N. Conference on Trade and Development (UNCTAD) show as much as 80 percent of the volume of global trade (and 70 percent by value) moves via ocean shipping.
Satisfying that demand is a big job – and not without its challenges and controversies.
The most immediate challenge is simply keeping up the supply of ships with the growth in commerce. Today’s ocean-going merchant fleet numbers about 55,000 vessels, from smaller, specialized carriers carrying as little as 10,000 deadweight tons (DWT) to the giant multipurpose vessels capable of transporting 200,000 DWT or more.
The largest container ships can carry almost 24,000 TEUs (twenty-foot equivalent) containers – and the top 10 container vessels alone could accommodate an amazing 220,000 TEUs. The Japanese vessel Ever Given, which memorably blocked the Suez Canal last year, is among that class of vessel, with a container carrying capacity of over 20,000 TEUs.
Perhaps the greatest public attention to ocean shipping has come from extensive video images of these large container ships awaiting unloading at various ports during the pandemic. While these vessels are a critical component of the global trade in goods, they are by no means the only component, or even the most numerous. They carry a wide range of high-value components and finished consumer products. But they are significantly outnumbered by the smaller general cargo vessels and dry/wet bulk cargo carriers.
Transporting dry bulk
Dry bulk carriers make up the backbone of global commerce in the grains, oilseeds, coal, minerals and other high-volume commodities that form the foundation of our modern, interconnected global food, energy and manufacturing systems.
This portion of the fleet provides the steady flow of commodities from the American heartland to customers around the world.
Grain and oilseeds flow down the Mississippi River and to other critical exports points on the East and West Coasts. The Great Lakes corridor also provides the physical connection to China and other Asian markets, Europe and destinations literally spanning the globe.
The dry bulk fleet is made up of over 12,300 vessels of more than a dozen different classes, based on capacity. These workhorse carriers can transport 912 million tons, according to estimates from the U.S. Department of Agriculture.
One historically important class of dry bulk carriers is the Panamax vessel, which was designed specifically to traverse the original small locks of the Panama Canal, speeding delivery from the U.S. Gulf and East Coast to the rapidly expanding markets in the Asia-Pacific region. Expansion of the locks has increased the size of vessels that can use the Canal today for the same purpose.
The supply of all categories of vessels changes, as boats age and are retired from service, and as the demand for larger, more efficient, more environmentally friendly ships emerges.
Estimates of the construction costs for ocean vessels vary widely, due to the myriad potential specifications for the multiple classes of vessels. But a 2015 shipping industry study put the average cost of a container ship at $64 million, with a general if predictable observation that the larger the vessel, the larger the cost. Apart from the significant costs involved, the time required to construct these mammoth vessels can be three years from time of order to delivery. Even so, as many as 700 vessels are on order at the beginning of 2022, which seems to reflect a broad faith in the continuing demand for ocean freight.
How does climate change come into the picture?
The critical role played by ocean shipping in maintaining international commerce and a vibrant global economy isn’t up for debate. But that doesn’t mean the industry is immune from other, bigger concerns – including the contentious debate over how to deal with greenhouse gases and climate change.
Compared with other transportation modes – air, rail, truck and others – ocean shipping offers the lowest cost per ton of freight moved.
It also creates the smallest environmental footprint.
Environmentalists by and large acknowledge the point. Airplanes generate the largest carbon footprint, with an estimated 500 grams of carbon dioxide per metric ton of freight. For example, according to Freight That Just Works, 2 tonnes shipped for 5,000 kilometers by ocean freight will lead to 150 kg of CO2 emissions, compared to 6,605 kg of CO2 emissions by air freight. Trucks produce about 50-150 grams, trains 30-60 grams per ton of freight. Ships emit only 10 to 40 grams. (That translates into at the worst one pound of carbon for every 11 tons of ocean-borne cargo, and one pound of carbon per 45 tons at the worst.) In other words, the worst-performing transportation sector contributes at least 20-30 times the carbon dioxide of the ocean shipping industry.
The World Economic Forum recently estimated that ocean freight contributes roughly 3 percent of the carbon dioxide at the center of the global climate debate. It sounds like a very small – almost secondary, if not insignificant – point in the climate action plan. But far from it.
The 2021 Glasgow Climate Summit saw 19 nations endorse an aggressive plan to tax the ocean freight industry as a means of encouraging still more efforts by the industry to curtail its contributions to global warming.
The additional costs would be imposed on traffic moving in the most popular sea lanes known as “green corridors,” especially those where traffic is expected to continue growing significantly.
Using the wind to propel large vessels is enthusiastically embraced by some charter companies to help offset engine power. The objective is to spur construction of carbon-neutral vessels and spur a 40 percent per-vessel reduction in carbon dioxide emissions by 2040. The ocean freight industry has responded positively to the idea of being an active participant in the global climate initiative.
The International Chamber of Shipping (ICS), which actively participated in the Glasgow meeting, has announced plans for a special summit of industry figures, shipowners, infrastructure and other leaders to produce “a tangible path to decarbonize the sector.”
A sea of controversy
Despite the largely upbeat tone of the post-Glasgow discussions, the ocean freight sector nonetheless faces another contentious issue – the enormous escalation in shipping costs.
Freight rates for all forms of water-borne transportation have been on a roller-coaster for some time. But the supply-chain disruptions created by the global pandemic exacerbated upward prices pressures – and with the higher rates, loud and aggressive charges of unfair pricing if not outright price gouging.
Freight rates have indeed been under upward pressure, even before the emergence of Covid. Economists point to the mid-2000s as a critical point in the pricing dynamic, as China began to expand its global economic reach through a steady increase in import demand. The Beijing Olympics were one important driving force in the overall price increase, as was the rising trade focus across the Asia Pacific region.
The pandemic piled on this growing challenge to the global supply chain, with immediate and highly visible increases in shipping costs. Rates for a bulk grain shipment from the U.S. Gulf to Japan in February 2016 stood at $22.56 per ton. By May 2020, as the pandemic began to gain steam, the same rates had increased to $34.31. By October of last year, as the U.S. harvest gained momentum, the rate had climbed to $87.38 – roughly four times the rate less than six years before. Rates for shipment from ports in the Pacific Northwest showed similar increases.
Behind the rising demand for ocean freight
The challenges to international commerce have been offset in substantial ways by the emergence of China and other Asia Pacific nations as major players in international trade, as both exporters and importers of all sorts of commodities, components and finished consumer products.
Global trade volume via ocean exceeds 80 percent, and 60 percent of that passes through Asia. The South China Sea alone carries as much as one-third of global shipping. An estimated $5.3 trillion worth of goods travel the South China Sea each year – as much as $1.2 trillion of that amount being trade with the United States.
Source: China Power.
China, Taiwan, Japan, South Korea and other Asian nations often have shown more rapid economic growth and better trade balances than the United States and most other western nations.
Legislation to reform federal shipping regulations has passed in both houses of Congress. The bill’s consumer-oriented proponents emphasize the need to invest more money in clearing up port bottlenecks. The largest bottlenecks are off the coast of California where 40% percent of U.S. imports arrive. Long Beach and Los Angeles ports are listed as the worst of all global ports, at less than 8 percent.
Agriculture interests agree with the need to improve port performance, with American Farm Bureau Federation President Zippy Duval citing shipment delays affecting more than one-fifth of all agricultural foreign sales, costing U.S. farmers as much as $4 billion. A conference between the two houses is needed before a final bill can go to the White House for signature.