Shipping Industry Should be ‘Concerned, Not Panicked’ with Trump, says Adami
Ship owner Captain Eugen Henning Adami said that while the global shipping industry entered uncharted waters following the election of US president Donald Trump and the Brexit referendum, panic is not warranted.
“We should be concerned and we should watch very carefully what is happening in the US and with Brexit, but we should not panic too much,” said Adami, former chairman of the Cyprus Shipping Chamber (CSC).
Besides, it would be “dangerous” to react to Trump, who promised US voters to ‘make America great again’ by forcing trading partners to eliminate their trade surpluses, by resorting to “populistic approaches and make apocalyptic assessments of a situation we can really not assess at the moment”.
The US president and his administration have already threatened Mexico with punitive duties on imported goods to pay for the construction of a wall on their common border, and other major trading partners of the US, including China, the world’s second largest economy, and Germany, the European Union’s largest.
Days after getting into the White House, Trump, who got elected on a protectionist agenda, withdrew the US from the Trans Pacific Partnership (TPP) that the Obama administration negotiated with a dozen other countries in the Pacific, including Japan, Canada, Mexico, Malaysia and Vietnam.
The EU’s trade with the UK, which voted last June in favour of leaving the European Union may also be disrupted. Premier Theresa May, who pledged to trigger divorce negotiations by the end of next month, said that the UK will strive for a ‘hard Brexit’ which includes abandoning the EU’s single market.
The controversial US president, who more than two weeks ago, signed an executive order barring persons from seven predominantly Moslem countries from entering the US, subsequently suspended by US courts, threatened to impose new sanctions on Iran, affected by the travel ban. That would come just a year after the international community agreed to lift sanctions against Tehran, in response to the implementation of an agreement on its nuclear programme.
As the shipping industry is plagued by declining freight prices, caused by a combination of overcapacity created by the construction of an excessive number of ships over the past years and a slowdown of the economies of the Far East, trade wars, embargoes and sanctions could further reduce global trade volume. The Baltic dry index which reflects the development of cargo prices worldwide, lost more than a quarter of its value since the beginning of the year, according to a Bank of Cyprus document seen by the Cyprus Business Mail.
Freedom of navigation is threatened via sanctions and embargos, Adami continued. “We should not go back to sanctions against Iran and Cuba. These things are really not necessary at this moment”.
As Cyprus’s economy, which is expected to expand 2.8 per cent this year, relies by more than 5 per cent on shipping, a slowdown in global trade could hurt economic recovery.
“For as long as everything is uncertain, every businessman and every statesman or government, has to be careful,” Adami, owner of the Limassol-based Mastermind Group and member of the CSC board said. “We should take a wait-and-see position”.
Still, while every EU country should give Trump “the benefit of the doubt,” it is also well advised “to establish red lines,” he added.
The German-born ship owner did not rule out a positive impact on shipping business as a result of Trump’s promises, at least in the short term. The US president pledged on Thursday to deliver a “phenomenal” plan on the country’s tax and aviation industry.
Following communication with associates in the US, whom he asked if there was a need to withdraw ships deployed in the Americas, he decided against that, Adami said.
“The feeling I got from our guys in America was (that) the ships are perfectly situated in trading in the Americas for the time being because whatever the decision will be, it will take time and there is a possibility that things may go to the good side, temporarily, once the heavy tax cuts Trump is trying to implement really kick in,” he said.
Did you subscribe for our daily newsletter?
It’s Free! Click here to Subscribe!
Source: Cyprus Business Mail
