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Januar y 2, 2023 | Journal of Commerce 59 www.joc.com EXECUTIVE COMMENTARY 2023 ANNUAL REVIEW & OUTLOOK Maritime wellness is the introduction of uni- versal internet access to all seafarers while at sea and in port. Shey-Harding Executive Search Susan Shey Dvonch Managing Partner shey-harding.com With US unemploy- ment hovering at about 3.5 percent, find- ing qualified talent is one of the biggest challenges currently disruption places additional strain on seafarers — longer or extended contracts, challenging timetables, lengthy port delays, and reduced or denied shore leave increase the strain on seafarer mental health and well-being and can result in a demoralized workforce with veteran seafarers seeking new career oppor - tunities ashore. The recent International Labor Organization meeting to consider updates to the Maritime Labor Convention, 2006, adopted sev- eral new amendments that can be traced directly to the impact of the pandemic on seafarer safety and mental health. One innovation and change that we at SCI believe to be most impactful to overall mariner continued to explore and innovate on alternative fuel sources and to work to reduce its carbon footprint. Yet what hasn't changed is that innovation, new techniques, new ships, and new technology still require seafarers to operate, manage, and oversee these vessels. Whether it is gaining new expertise, increas - ing safety, or crisis management, seafarers need to be trained in all facets of any new technique or tech- nology. While the pace of change and innovation can be exciting, advancement and efficiency should never come at the expense of the men and women who crew these vessels for months at a time. The past two and a half years have shown us that supply chain SeaCube Container Leasing Robert Sappio CEO seacubecontainers.com The long-awaited correction in US sup- ply chain fluidity is finally beginning to emerge, and despite the declarations of politicians, port officials, and pundits, their intervention had absolutely nothing to do with the improvements we will see in the coming months. Any correc - tion can be attributed to lower demand and corresponding volumes. Nothing has fundamentally changed regarding automation, hours of operation, labor, infrastructure, or better collaboration amongst and between stakeholders. We only hit the wave tops and failed to address the tougher issues. The Ocean Shipping Reform Act of 2022 (OSRA-22) also fails to accomplish much, other than shining a light on the need to move US exports. The Federal Maritime Commission (FMC) already had the power to do most of what is only restated in the new act, thanks to heavy lifting by others in OSRA-1984 and 1998. Shippers wanted contract carriage, and they got it with OSRA the first time. Did the industry really use OSRA as it was intended, or take the easy path to simple rate and volume agreements? The last time the United States government truly legislated the coun - try's maritime policy was 86 years ago in the Merchant Marine Act of 1936. It was said to be necessary for the national defense and our foreign and domestic commerce. None of those principles has changed, but we still have a lot of work to do to get back on course. We are a maritime nation, and our goals of having competitive, world-class US ports and a vibrant US flag merchant marine should be unwavering. These goals should be underscored by continued support for the Jones Act, the Maritime Security Program, our cargo preference laws, and embracing technology and automation. The US is the biggest international trader in the world, importing and exporting the greatest volume of goods of any nation. Yet our maritime nation has little or no direct control over the transportation used to move its goods. We ignore these facts at our own national peril. During the height of the pandemic-driven demand, container short - ages made headlines. Ocean carriers and leasing companies acted as the shipping public wanted them to and invested billions of dollars in new con- tainers. In an average year, the industry builds about 2.8 million new TEU; in 2021, the industry built near 7.0 million TEU. The global pool of contain- ers increased to over 50 million TEU, also aided by fewer retiring units. In 2022 we saw a more normal year, with an additional increase of 3.5 million new TEU added, again with very few retirements and investment above the industry average. Looking ahead to 2023, we will see limited investments in new dry containers given current fleet levels. The fact that all, or almost all, of these containers are manufactured in China should be the subject of another essay. Every industry aims to have a diversified supplier base, and shipping containers should be no different. The challenge the industry now faces is having too many shipping containers in the global network. An oversupply of shipping containers may be manageable — after all, the orderbook for new vessels is at record levels. Furthermore, decarbonization goals will drive slower steaming and increase the need for more containers. As such, many of these containers are expected to be absorbed into the global network. However, too big a global container fleet will be expensive and inefficient. New container prices have already dropped more than 50 percent from their 2021 elevated levels, and resale prices of older containers are also falling quickly. Depots around the world are congested and will get worse, and worldwide network fluidity will suffer. The one bright spot continues to be refrigerated equipment. Refrig - erated container production increased, but never to the outsized levels that dry containers did. Demand for refrigerated containers continues to prove to be far less volatile through the cycles — people have to eat. The global network proved to be resilient last year; however, ocean car- riers, container leasing companies, and all stakeholders face a challenging 2023. Dramatically falling freight rates, rising operational costs, increasing environmental and regulatory costs, and port and depot efficiency chal- lenges will still be with us. Our industry is certainly cyclical, but most definitely not anti-competitive, as some have posited. "The global network proved to be resilient last year; however, ocean carriers, container leasing companies, and all stakeholders face a challenging 2023." ◀ "While the pace of change and innovation can be exciting, advancement and efficiency should never come at the expense of the men and women who crew these vessels for months at a time." Rev. Mark S. Nestlehutt