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Stocking up on Containers of Vapor

[NB: check the byline, thanks. / ~Rayne]

Hold this image in your mind for a few moments; I thought of it after listening to some right-wing propaganda about the tariffs and shipping. Marcy’s post this morning about the emergency-not-emergency trade deficit brought to mind again:

Port of Rotterdam Moored Vessels by Johan Jongkind, c. 1857

[Port of Rotterdam Moored Vessels by Johan Jongkind, c. 1857]

Way back in my salad days I worked in import/export. With the exception of a rather messy breakbulk import of niger seed from Ethiopia, I handled exports of agricultural commodities and manufactured goods.

It wasn’t the kind of work one learned in B-school. I learned it all on the job: which products needed phytosanitary certificates; how to handle letters of credit; what to do if customer wanted to charter a plane for a load of 20-foot pipe lengths; what the difference was between terms like EXW, FOB, and CIF. Not the textbook definitions, but the reality-smacks-you-with-a-container-overboard definition.

I also learned how to use intermodal shipping to ports overseas, to what used to be among the largest ports in the world. Felixstowe, Rotterdam, and Kaohsiung were the ports to which I shipped most often.

Trump’s tariffs and the ensuing change in ocean shipping volume triggered a lot of flashbacks over the last couple of weeks, though much has changed since I worked in exports. The current list of largest containerized shipment terminal ports is an indicator of the magnitude of change. Rotterdam no longer cracks the top ten largest ports by shipping volume, while most of the ports in the current top ten are now in China and were definitely not on the list +30 years ago.

Tracking vessels on maps in real time is something I wished I could have had back then. When our freight was loaded on a vessel we didn’t really have anything more than an estimated arrival date by which to plan our load’s arrival. For my first job in exports we didn’t even have email let alone fax to communicate about a shipment’s status.

I used one of these beasts:

Telex machine model ASR-32, via Wikipedia

It’s just a boat anchor now.

But some things haven’t changed in that period of time. Heck, they haven’t changed much since international shipping looked like the image I shared at the top of this post.

When a port is active, there are ships at the dock. Freight is unloaded. There are vehicles moving that freight about.

Here are two examples of an active port:

Moored container ships unloaded at Port of Rotterdam, 1750h 30-APR-2025 via YouTube

[Moored container ships unloaded at Port of Rotterdam, 1750h 30-APR-2025 via YouTube]

Port of Jakarta container terminal gate 0123h local time, 06-MAY-2025 via YouTube

[Port of Jakarta container terminal gate 0123h local time, 06-MAY-2025 via YouTube]

Compare the above to this very inactive port:

Port of Long Beach/Los Angeles-Wilmington, 0848h local time, 30-APR-2025 via EarthCam

[Port of Long Beach/Los Angeles-Wilmington, 0848h local time, 30-APR-2025 via EarthCam]

Screenshot of container vessel tracking 1300h ET 11-MAY-2025 via MyShipTracking

[Screenshot of container vessel tracking 1300h ET 11-MAY-2025 via MyShipTracking]

The dates on the images of the inactive port may be more than a week apart, but the level of activity has been consistently low over that time period.

Ships moored, being loaded or unloaded, moving to or from docks are all signs of an active port. While cranes hover above, tugboats and other service vessels move about between ships.

Even in low- to no-wake zones, the water shows activity.

There are people and vehicles scuttling about, moving freight once offloaded. Only in an inactive port are there expanses of pavement with no freight, no trucks, trailers, or other vehicles, no people.

Not like the activity visible in the live stream of the container port terminal at Jakarta, Indonesia shown above as an example.

This hasn’t changed in hundreds of years. Not in millennia.

When propagandists declare the drop in ocean shipments to ports in the US is a hoax, they’ve lost touch with a reality based in human history. When they say this is just a temporary hiccup they’re just as out of it.

They are unmoored, one might say.

I’m not going to link to one video in particular that uses ship schedules as an argument freight from China is still inbound to US west coast ports and at volume. It’s an ignorant argument based on a lack of knowledge about container vessels. Container lines still schedule arrivals at port because they may have a partial vessel on a long-arranged route and they don’t want to lose access to the slot in case of a brief disruption in shipping volume. The booking shows as an incoming ship on the schedule even though the container line may be scrambling to consolidate partial loads onto one vessel to reduce fuel.

In some cases ships will approach a port and skip it if they have freight for a different port – let’s say a container vessel from a Chinese port normally scheduled to make sequential drops at Vancouver BC, Long Beach, and Manzanillo MX moors at Vancouver then skips Long Beach and heads for Manzanillo.

It’s clumsily explained as “blank sailing” as CNN’s Erin Burnett explained clumsily on April 25:

That’s why container ship volume crossing the Pacific may continue to look busy on short-term schedules, but containers may not arrive at US west coast ports. Eventually the container line reorganizes and consolidates freight so that it can altogether drop some sailings. Just as in trucking, container lines don’t want the equivalent of deadhead hauls.

And yes, there are some container ships in the screenshot of a vessel tracking site shared widely last week. There are few container ships in that snap of Port of Seattle.

Compare the activity in Port of Kaohsiung, Taiwan, which is no longer in the top ten largest ports based on shipping volume, smaller than Port of Long Beach. It’s crowded with container vessels:

Screenshot of container vessel tracking at Port of Kaohsiung, Taiwan 1300h ET 11-MAY-2025 via MyShipTracking

[Screenshot of container vessel tracking at Port of Kaohsiung, Taiwan 1300h ET 11-MAY-2025 via MyShipTracking]

Let me point out that Port of Long Beach-Los Angeles is the 9th busiest container port; Rotterdam is 13th and Kaohsiung is 17th. Jakarta doesn’t even crack the top 50 busiest container ports.

The freight is not coming. It’s not sailing between China and the US west coast, it’s not in the west coast ports. We can literally see this from space, by way of GPS tracking. There are no container vessels waiting off west coast ports for a berth. There will not suddenly be ships off the west coast before the end of the month.

Why the right-wing insists on lying about this rather than bracing themselves and preparing the country for the reality check to come in mere days is beyond me. They can’t spew enough believable denials to hide the shelves as they empty in the days and weeks ahead. They can’t cover up the damage already done to the US economy, the worst of which has yet to arrive.

Conditions won’t change much based on the so-called 90-day pause and temporary tariff reduction announced overnight. It’s still going to take time for factories in China to ramp back up, rejigger containerized shipping – and all of this is at risk of being changed again in 90 days. The loss of faith by consumers and business purchasers here in the states may not be restored as quickly.

The reduction of tariffs on Chinese goods from 145% to 30% will not be enough to prevent some businesses from failing. Those operating on margins of less than 10% are at extreme risk during the next several months.

Or maybe less if Trump vacillates again.

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MMT on International Trade

Posts in this series
The Deficit Myth By Stephanie Kelton: Introduction And Index
Debunking The Deficit Myth
MMT On Inflation
Reflections On The Deficit Myth
The National Debt Is Soooooo Big
The Wonkish Myth Of Crowding Out

Chapter 5 of Stephanie Kelton’s The Deficit Myth takes up international trade. Trump thinks the US is losing at trade simply because we import a lot more than we export. He promised to bring manufacturing jobs back to the US. This won him votes in many states where corporations closed US operations and moved production offshore. But it’s a lot more complicated than just the dollars. I’m only going to address a few of the points Kelton raises.

1. Trade has good and bad results

It’s true that for a number of years the US has run a trade deficit with the rest of the world. We import more than we export. This means we send other people dollars and they send us stuff we want, like oil, computers, cars and cars with computers in them that run on oil. That seems like a good trade.

Many poorer countries do not produce enough food, drugs and advanced equipment to meet their needs. [1] Their currencies are weak, so they need dollars to pay for those shortfalls. Giving them dollars for their goods is a partial fix. Also, it means their workers have jobs and can hope for better lives.

It’s a fact that we have lost a lot of good jobs, those with benefits and middle-class pay, and replaced them with poor jobs. Supposedly we get lower prices as a result, though people buying iPhones might wonder. However, most of the benefits from trade go to the richest among us, corporations and their top executives and the lawyers, accountants, and consultants hired to minimize their costs, taxes, personnel, and unions. [2]

Maybe someday foreign holders of US dollars will want stuff themselves, instead of dollars. They might buy stuff from us. If that means increasing our exports of goods and services, then it seems good. If they buy up our land, buildings and equipment, that might not be so good. If they buy our oil and export it to their countries, we might not like that. Its complicated.

2. What about the money?

This seems to bother Trump a lot. He seems to think sending dollars abroad is bad, even if we get useful stuff in exchange, which sounds stupid when you write it down. One real problem is that money spent abroad doesn’t circulate in the US. Your spending is someone else’s income. If American Airlines buys jets from AirBus, that’s money not spent in the US, and less money for Boeing employees to spend here. The result is lowered economic activity here. Kelton has an answer for this.

Let’s start with the two-bucket accounting system from the previous post. Deficit spending by the Federal Government creates a surplus in the hands of Everybody Else. So, if the FG spends $100 and taxes back $90, then FG has a negative balance of $10. EE has a surplus of $10, which is available to increase demand for goods and services.

Let’s now split the EE bucket into two pieces: US and Other Countries. Now suppose people in the US spend $5 on goat cheese from France, part of OC, and French people spend $3 on US movies. The US surplus drops by $5, and increases by $3, for a loss of $2, leaving $8. Those 2 dollars won’t be available to buy stuff in the US, reducing economic activity.

Trump’s solution to this problem is tariffs on imports from OC. Tariffs are taxes. They put money in the FG bucket, and remove it from the funds available to support domestic demand. Suppose the FG imposes $1 in tariffs on imports. The US bucket drops by $1, to $7. If the problem was reduction of demand, that’s perverse.

The real solution is more deficit spending by the FG on US goods. If the FG spends another $2 buying US goods, those two dollars add to the US surplus, returning it to $10. Problem solved, especially for people who like Crottin de Chavignol. [3]

3. It’s the jobs, not the dollars.

The real problem is not the dollars, but the good jobs that disappeared. Kelton doesn’t say so, but in fact sending jobs overseas is the result of corporate decisions, made solely in search of profits. The federal government does not explicitly support this corporate decision, but its policies do not discourage shipping jobs overseas, and in many ways support offshoring of jobs. For example, modern trade treaties contain provisions designed to protect US businesses in foreign countries, and the government is often willing to use force to protect US assets abroad which can cost the lives of our military people to protect the interests of the rich.

Mainstream economists have always praised trade deals as benefiting Americans, despite the fact that the benefits of trade for the most part flow to the rich while the burdens fall mostly on the poor and the middle class. The middle class is shrinking. Part of that is due to the loss of well-paying jobs. The response of Congress has been worthlesss, mostly job retraining and minimal recompense. [2]

Kelton once again offers the job guarantee as a solution. The proposals for legislation contemplate that all jobs will pay at least $15 per hour with benefits, which will keep people reasonably safe. But these are not an adequate replacement for good middle-class jobs. We need more effort put into solving that problem.

I’ll offer one idea. The pharmaceutical business model is to raise the price of their drugs at least annually, so as to increase profits, and thus the price of the stock. As part of the jobs guarantee, the federal government could build plants to manufacture drugs and compete directly. There would be no problem doing this with generic drugs, but the government could also do it with other drugs bearing extortionate prices, like insulin and coronavirus treatments like Remdesivir. Also see this.

The expertise is out there, and the government can buy it. People can be trained to operate these plants, and make an enormous contribution to their fellow citizens. I see this an an illustration of one of Kelton’s normative policy assumptions: the point of the economy is to make our lives better. This is a political choice. It’s not a choice we should abandon to the rich and powerful.

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[Graphic via Grand Rapids Community Media Center under Creative Commons license-Attribution, No Derivatives]

[1]Kelton knows this is a problem. In short, it’s the result of a number of factors, including weak or corrupt governance. The Washington Consensus perpetuates this problem. With better governance and careful attention to some of the ideas in this book, that problem might be slowly corrected. See p.141 et seq.

[2] This entire problem was the result of a consensus among economists on the benefits of trade, a consensus that supported the desires of capitalists and giant corporations. Both liberal and conservative economists and politicians joined the chorus of assent. I discuss the impact of this disaster in four posts you can find here, beginning with The Problem Of The Liberal Elites. TL;dr: liberal elites squandered their influence pushing a bad economic theory. We have no reason to trust their judgment after the damage their advice created.

[3] Alternatively we could try to reduce the trade deficit. Kelton discusses this, but it raises several complicated issues, and I’ll just refer interested readers to pp. 135-6.

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