Global trade Danish shipping company fact of the day

by on March 5, 2017 at 12:37 pm in Economics, Law, Web/Tech | Permalink

Maersk had found that a single container could require stamps and approvals from as many as 30 people, including customs, tax officials and health authorities.

While the containers themselves can be loaded on a ship in a matter of minutes, a container can be held up in port for days because a piece of paper goes missing, while the goods inside spoil. The cost of moving and keeping track of all this paperwork often equals the cost of physically moving the container around the world.

That is by Nathaniel Popper and Steve Lohr, mostly about blockchains, via Ángel Cabrera.

1 Clear evidence March 5, 2017 at 12:57 pm

So I have a question.

If Trump and Trumpístas won, say, four presidential elections (16yrs) AND had support from the legislative branch, wouldn’t this sort of thing be pared down significantly? Clearly the alternative (normal Democrat-Republican ping-pong) would just ratchet this sort of thing up – today the container needs 30 approvals, five years from now 32, and so on.

I certainly understand the concern over Trump. I get it. But… I read the Complacent Class. The aspect of our generation risking nothing resonates.

2 Islander March 5, 2017 at 2:04 pm

There are EXCELLENT reasons to have tough regulations regarding international trade. In many ways, this issue affects people deeper than a wall with Mexico ever can. I’m a trained biologist and understand well how important it is to keep not only invasive species from spreading, or pests, but even seemingly harmless things like soil. More effective, cheaper to administer regulations are always good. Less regulations for the sake of ..just less regulations, is hurtful.

Blockchains might be an excellent solution to hold traders up to a higher standard. Using a blockchain makes it possible to quickly find that one farm that keeps exporting weevils, or salmonella. More than that, it structurally discourages counterfeit products, corruption, theft etc.

Another, unexpected upside is the unique insight it would offer into the functioning of our economy. How much could our control over the economy improve if a centralized, non-partisan entity was privy to exactly what’s going on? With a computation approach similar to weather forecasting, we could model exactly what needs to be done to keep us from crashing, how to respond better to disasters etc. This is still decades in the future, but it’s a huge upside.

The downside of this tech is obviously that we’re marrying yet another thing to the digital world. Also that central players have even more control. As for the latter, it’s obvious that concentration of power into villages, towns, counties, then countries is a strong emergent trend throughout history. We’ve invented democracy, non-partisanship etc to deal with that; we can deal fairly with this too. Reliance on digital is a different fish altogether. I’m sure there’ll be some unfortunate events in the near future, but again, we can deal with that when it comes up.

3 dan1111 March 5, 2017 at 2:17 pm

There are certainly important things to regulate here, but it seems equally certain that 30 stamps implies more than the optimal level of regulation.

4 Harun March 5, 2017 at 3:00 pm

“How much could our control over the economy improve if a centralized, non-partisan entity was privy to exactly what’s going on?”

Wow, now that you put it that way.

BTW, customs already has all the data you want. We’re obliged to send them all the shipping documents, including packing lists, invoices, certificates of origin, lacey act documents, etc. before we can even ship to the USA.

Blockchain seems like it would just replace the Bill of Lading or container number.

5 Harun March 5, 2017 at 3:04 pm

I enjoy creating Lacey Act documents. We ship furniture made of MDF, and its fun to certify which species were used to make the MDF. Sure, the factory uses the cheapest materials anyways, which by definition is always the most plentiful and least rare wood, but its good to know that we aren’t using Teak or expensive exotic woods to make flat pack furniture.

Meanwhile, and actual smuggler could just, you know, lie on his document.

Its like making every driver send in a “compliance of speed” form every day for their commute rather than just having police do their job and catch the bad guys.

I will say, I do get the fumigation rules on pallets and wood. You don’t want to ship beetles around.

Its the nonsense paperwork that seems dumb to me.

6 Harun March 5, 2017 at 3:09 pm

I’d also hesitate to use Lacey Act documents for any actual biology. Do you really think woodworkers in China fill in these forms enthusiastically and dutifully?

Nope. They learn the species name of the most common one they used when they were told to do this form, and then just keep using it for all their shipments.

Because nobody is checking. If you can check MDF, which is made from compressed sawdust, good luck. (Actually, I have not see a Lacey Act document for MDF for a while…maybe they fixed this…lemmee google:

Looks like they figured out this was dumb.)

7 mulp March 5, 2017 at 2:07 pm

Under Trump, there would be no paperwork burden on imports because there would be no imports.

Think of Trump as increasing the paperwork and overhead on imports to infinity.

8 Tor March 6, 2017 at 6:22 am

First, the trend has been towards less bureaucratic trade barriers. If you thin the west is bad, just try getting containers around Africa. Second, Trumpism is generally pro-protectionism, and pro-arbitrary trade rules, so I would expect more rather than less paperwork. Like many, you seems to project your own wishes onto Trumpism.

9 Troll me March 6, 2017 at 9:12 am

Is there any specific reason to believe that fewer approval processes would be required under Trump?

What does Trump have to do with Danish shipping?

10 Harun March 5, 2017 at 1:03 pm

I use the port of Oakland for container shipping.

They recently added a new fee called a Gate fee. $40. Which is not so much money, but it takes 2-3 days to get your gate fee processed. I’ve had a container with $30,000 of products delayed for a week-end because the gate fee had been paid, but the processor didn’t process the payment fast enough to meet a cut-off.

11 Harun March 5, 2017 at 2:27 pm

I don’t understand why they can’t just apply this fee to the normal port charges. There are also weird charges like congestion fees and pre-pull fees, some of which I feel are really the port’s problem, not mine. Sometimes you get charged these, sometimes not.

There are also the unions…who take days off by striking, or take off early for “union meetings” that just so happen to be on the afternoon of 3 day week.end.

12 Ray Lopez March 5, 2017 at 1:25 pm

Assuming the role of reader Prior Approval, I could say this is the work of the Mercatus Center. This week’s Economist has an article on rolling back US fed regulation, citing GMU. But the stat they use, the use of the word “shall” or “must” in the Federal Regulations, growing since 1970 from 403k uses to 963k uses, I compute as growing less than the GDP since that year, so arguably regulation has just ‘kept up’ with growth. Also the Mercatus center projects 0.8 %/yr additional GDP growth due to rolling back regulations, which others say seems high (but to me sounds reasonable) but in any event would not give Trump’s planned 4%/yr growth, given today’s 1.6%/yr in 2016.

13 Meets March 5, 2017 at 3:47 pm

Thank you for providing prior approvals annoying insight

14 The Centrist March 5, 2017 at 6:41 pm

Great, markets in combined posters. We can get lectures on how we are inferior to Germany from a guy who doesn’t have sex, and lectures on Greece, the Philippines and chess, from a guy who rents a gf.

15 prior_test2 March 6, 2017 at 2:56 am

Well, at least someone who doesn’t brag about it here.

16 rayward March 5, 2017 at 1:26 pm

Cowen must not have read the linked article, since it dealt with a “blockchain” approach for monitoring shipments. Security experts have long feared a nuclear blast from a device in a container that doesn’t have a blockchain. Containers today don’t have a blockchain, from the time it’s packed with goods, through storage and transport, to its final destination. Instead, we mostly rely on inspection at the destination for preventing a disaster, long after the horse has left the barn. Of course, creating a blockchain is not that difficult. The problem is with getting cooperation from those in the chain, almost all of whom are private parties who have a stake in maintaining the status quo of secrecy. Why doesn’t the government simply insist on the blockchain? Have you read the news today? It doesn’t help that Cowen posts blog entries like this one. Cowen needs to decide if he’s going to be an accomplice to the effort to destroy our institutions or part of the resistance. Right now he’s trying to have it both ways.

17 mulp March 5, 2017 at 2:14 pm

Blockchain will stop cutting a hole in the bottom of a container to insert that nuke and then rewelding the bottom so it looks like Original?

Can I get a blockchain for my house so no one can break in?

I love how economists deny the existance of reality, arguing that economic theory define reality. That leads to economists magically creating consumers with more money to spend by firing and cutting the pay of all the workers.

18 Harun March 5, 2017 at 2:33 pm

“Instead, we mostly rely on inspection at the destination for preventing a disaster, long after the horse has left the barn.”

Inspections cost the consignee around $1,000+ and delay your shipment about 1 week.

Trust me, we’d love to not pay that or have the delay.

19 Troll me March 6, 2017 at 9:14 am

I don’t see why the blockchains would apply at the container level.

20 harpersnotes March 5, 2017 at 1:29 pm

Knew an attorney in Singapore who wrote shipping contracts (in the 1990’s.) Suspect law firms generally wrangle with such matters, a lot.

21 harpersnotes March 5, 2017 at 1:34 pm

(Correction: Lawyer, not attorney.)

22 mulp March 5, 2017 at 1:39 pm

The scary “complacent class” are the US born people who have $100 million or more in wealth who claim they can’t build a factory and make stuff to sell in the US because immigrants who must complete thousands of pages of paperwork just to get into the US are too good at paperwork for US born to compete, and the Asian poor are so hardworking they overcome the constant burden of paperwork on their goods being sent into the US.

Compared to the 50s and 60s millionaire class, the number of hundred millionaires is higher today, tax rates are much lower today than in that time, and regulations impacts everyone equally then and now, with labor law regulations a much greater burden in the past with the huge power of unions and government support for unions, so, clearly the rich today are too complacent to be innovative in anything risky.

Amazon is Sears a century later. Sears sold homes mail order for a time. And a century ago, property developers developed vacant land far outside cities by building trolley lines from the cities where jobs were to their tracts of land where they were building houses. The layout of LA is defined by the long gone trolley lines that opened up the land for housing development.

If the obstacles to trade suggested by the above were worse than in the 60s, there would be far less trade and more things would be produced in the US.

Note that the “30 people” are customers to all businesses in the economy.

Businesses seem to want no workers to be required in doing business, just 100% of high income customers with lots of cash in their pockets placed there by tax cuts, or lower prices from every industry except their business where they deserve high prices to generate really high monopoly profits.

The complacency class are the business people who want everything handed to them at no cost by the government.

It’s ironic to me that Elon Musk is building factories in the US having had to overcome the obstacles of immigration several times, selling products that involve extremely high government regulation and approvals, and lots of government regulations and obstacles to building factories and facilities, yet Trump focuses on companies where he gets them to close US factories slower.

All the posts and articles and editorials on the costs of having well paid customers are excuses by the complacent class for them doing nothing innovative, doing nothing to address any of thousands of problems.

The above is just one of thousands of justifications for being complacent.

Government is just not handing zero risk, high profit opportunities on a silver platter to the complacent rich 1%. Instead, government still places obstacles in the way, just like it always has. Businesses must put money in consumer pockets. Businesses must pay workers. Businesses must pay for the things they need like transportation, power, water, educated workers. And unwilling to do the hard work like people in the past, the complacent class just rests on the fruits of hard labor of past generations.

23 TMC March 5, 2017 at 3:04 pm

“Note that the “30 people” are customers to all businesses in the economy.”

Broken windows fallacy is alive and well.

24 efim polenov March 5, 2017 at 8:44 pm

Shout out to Maersk employees: Just guesstimating on this: I would know if it were easily available on the internet (it is not): exactly how many man-hours did it take to build the Golden Gate Bridge? “Such a beautiful thing” , she said when she saw it from the passenger seat of the Plymouth I was driving (that is a quote, from a date – a good date with a very nice young lady – in 1986. Indeed she was right; she will be a grandmother before next Christmas, by the way). I know the hours it took to build the Verezzano (that figure, unlike the hours for the Golden Gate, is easy to find) and I extrapolated form that to the Golden Gate (deepness of water — sturdiness of the supporting mud and – quite a different question – sturdiness of the below-mud non-mud — length of span — drama of the transition from land to sea (Long Island is not big on drama – young Halsey (Lt Commander at the time) reversing the motors was a big deal on Long Island off the (then not visible) Fire Island Lighthouse, in the naval annals of things that happened to those to whom much more important things later happened) — weather and unruly water.) When I extrapolated I forgot the paperwork. Hence this appreciative comment. Spoiler alert:before the paperwork, the Golden Gate workers were paid enough, at the going hourly wage, to pay for every single house, at the going price from back in the day,in either Livermore, Pleasanton, or Dublin, cash on the barrel. Not every house in their day: every house.

25 efim polenov March 5, 2017 at 9:50 pm

Scott Adams reminds me of John Madden – am I the first person to notice that?

26 Pearl Y March 6, 2017 at 6:15 am

I’m a scientist working with global colleagues, and we often need to send samples around the world. It is an absolute nightmare of paperwork. The rule-of-thumb is that it takes 100 emails / phone calls to import or export anything (besides documents).

27 Mr. Econotarian March 6, 2017 at 7:11 pm
28 Jackson Layers March 8, 2017 at 4:47 pm

I don’t think things are going to change too much, it is likely that we will see burden on imports, but not too much to worry. I always prefer to put everything in simple way instead of worrying too much. I trade under OctaFX and with them, I can do it all in proper way thanks to their low spreads, quick execution, bonuses and my favorite way is their daily market updates, it’s all pretty cool and helps out in working.

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