News Brief: Week of November 21, 2016

There are a wave of new questions coming with a changing administration in the US, as well as regulatory changes in the industry. Below we’ve summarized some of the important news we’re reading about what’s happening in the recycling and shipping industries.

You can click here to view the holiday schedule for the Ports of Los Angeles, Long Beach, and Oakland. Ports are closed on Thanksgiving, with some limited operations on Friday.

Shipping industry in crisis: Los Angeles and Long Beach ports on uncertain ground

As a global shake up of the shipping-industry order unravels, the fate of the Los Angeles and Long Beach twin ports remains to be seen. In the wake of the Hanjin Shipping Co. bankruptcy, declining freight rates, sluggish demand, and overcrowded fleets, shipping liners are embarking on large M&A's and federally regulated alliances to streamline assets and cut costs. Alliances, such as the Ocean Alliance-a partnership between China's Cosco Group, Hong Kong's Orient Overseas Container Line, France's CMA CGM, and Taipei-based Evergreen Marine- allow shipping liners to share ships, trade routes, and charter space. Mega carriers may also emerge to increase freight capacity and reduce the number of trips needed.

The shipping-industry crisis and consolidation tactics threaten current port economic models. Port leases function as long-term investment promises and rents that pay for improvements and maintenance, operating expenses, and infrastructure projects. In light of shipping liner consolidation, it may become apparent there are more ports than actually needed. The COO of the Port of Long Beach has expressed concerns of volume distribution across terminals, questioning whether the newly formed alliances can meet pre-established cargo numbers. Ports less crucial to trade routes and those unprepared to integrate and slash costs may flounder. Click to read the full article.

Wave of environmental regulation heading for California ports

Despite hazy port horizons due to the shipping liner crisis, the port and freight transportation industry has made significant reductions in health-risk pollutants, such as diesel particulate matter, nitrogen oxide, and sulfur dioxide, receiving approval from traditionally hard-to-please environmental interest groups. California is now preparing to shift focus from reducing health-risk pollutants to reducing greenhouse gas emissions with policies incentivizing zero to near-zero emissions technologies and installing "facility caps". Industry leaders are concerned California's negligible contribution to global GHG emissions means regulations may only be effective if adopted by other states and nations, leaving California to suffer the potential economic consequences- increased transportation costs, job loss, and decreased economic activity diminishing technology and infrastructure investments. Undeterred by possible economic repercussions, port officials vow to balance private sector needs with state and local environmental regulations, calling for rational economic policies that are able to fund these environmental programs. Regulations imposed on the Los Angeles-Long Beach and Oakland ports have not resulted in lost business. Rather, port and transportation industry leaders have joined in cooperative efforts to reduce GHG emissions. Click to read the full article.

Trade, taxes, EPA regulations: What a Trump White House may mean for the U.S. pulp and paper industry 

US corporations may proceed with caution, slowing investments and general actions, until the Trump cabinet is established. Based on campaign promises, Trump is likely to ease EPA regulations, encourage fossil fuel production, and jettison the TPP trade agreement and Paris accord on climate change. Corporate tax reform is also likely with lower taxes and incentives to repatriate company cash.

Trump's scorn for trade agreements have left many in the paper and packaging industry wary, prompting 1,100 business leaders to sign a letter calling for unity after a difficult election. Their primary concerns include trade with China and the Canadian Softwood Lumber Agreement. Trump's campaign tactics may have harmed US-China trade, as he accused their leaders of currency manipulation. Any drop in shipments to China- the number one export market for US pulp, recovered paper, and logs- may result in an oversupply and lower prices at home. The American Forest and Paper Association is seeking for quick resolution of the lumber agreement, urging Congress and the Obama administration to resolve any issues before the advent of a Trump White House. Click to read the full article (subscription required).

Automakers seeking an ease of rules under Trump administration

Major automakers are gearing up for a Trump presidency as the Alliance of Automobile Manufacturers pens a request to ease industry regulations. Alliance CEO Mitch Bainwol claims Obama's 2025 fuel economy and greenhouse gas rules puts undue strain on the industry through increasing compliance costs. These costs are likely to be passed on to consumers, who are already less likely to purchase newer fuel-efficient vehicles due to low gas prices and existing technologies. The Alliance's letter to the Trump administration proposes: a comprehensive review of all regulatory actions since September 1st; the creation of a "presidential advisory committee" to coordinate the multiple federal agencies overseeing parts of the industry; and streamlining the EPA and NHTSA policies governing greenhouse gas emissions and fuel efficiency. Trump, a climate change denier, seems aligned with industry desires as he has called for a broad review of existing regulations that threaten jobs, a moratorium on all new regulations, and weaker EPA policies. While environmentalists perceive Trump as a threat, his policies may encourage an increase in car manufacturing that could impact outside industries. For instance, the recycling trade industry may see increased revenue through additions of car scrap to the market. Click to read the full article.

We're looking forward to a Thanksgiving week full of turkey, pie, and plenty of quality time with our families. From the Berg Mill Supply Co. family to your family, we wish you a happy and peaceful holiday weekend. Until next week!

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