Plus: Court case of the day
IN TODAY’S EDITION
1️⃣ US ports break records |
2️⃣ Fancy a vacation in North Korea? |
3️⃣ Court case of the day |
Hi Intriguer. I loooove stories of tourists inadvertently stumbling into geopolitics. Like how folks on China’s Pingtan Island had their sunbathing interrupted by mass missile tests nearby, when Beijing objected to Nancy Pelosi’s high-stakes visit to Taiwan back in 2022.
Or there’s those who think, you know what? Singapore sounds great, I’ve got time in early June, and the Shangri La looks just lovely. But when they emerge from their room in bathers and flip-flops, they have to weave through camera crews and soldiers at the world’s top defence summit to find the pool.
Well, we’re set for another classic of the genre this week, as tourists hoping to see a grizzly in Wyoming will first have to push past the central bankers, economists, and journalists pouring over the Fed chair’s every word at the Jackson Hole Economy Symposium, which kicks off on Thursday.
One of the many bits of data on their mind will be the new records just set by the top two ports in the United States: Los Angeles and Long Beach (our lead briefing for today).
Blinken lands in Israel amid ceasefire push.
Days after postponing his trip, the US Secretary of State is now in Israel and says this might be the last chance to secure a ceasefire and hostage deal. While US negotiators sound optimistic, Israel and Hamas continue to trade blame for delays and have voiced scepticism about the US-backed draft. Meanwhile, UN bodies are calling for a humanitarian pause in Gaza to allow for a vaccination drive in response to the first confirmed polio case there in over 25 years.
UN issues safety warning for Zaporizhzhia nuclear plant.
A drone strike on Ukraine’s Russian-occupied Zaporizhzhia nuclear power plant has prompted the UN nuclear watchdog to urge maximum restraint. Russia and Ukraine have periodically blamed each other for similar attacks – the latest hit near the plant’s last power line. Meanwhile, Ukrainian President Zelensky has said his country’s incursion into the Russian region of Kursk is aimed at creating a “buffer zone“ (a line Putin has used to justify his invasion of Ukraine).
China and the Philippines clash, again.
China and the Philippines are each blaming the other after their vessels collided early this morning (Monday) near a contested shoal in the South China Sea. The Spratlys, also claimed by Brunei, Malaysia, Taiwan and Vietnam, lie 1,300km (800 miles) from mainland China.
Musk suspends X/Twitter operations in Brazil.
His decision to shut down the local office comes amid a censorship row with a Brazilian supreme court judge, who allegedly threatened to arrest X’s local representative if the platform didn’t remove certain content. Brazilians are still able to use the platform.
Democratic convention kicks off.
Thousands have descended on the Chicago area to attend the Democratic National Convention, with Kamala Harris due to formally accept her party’s nomination on Thursday. Btw – our very own John and Kristen will be there looking at what the US election means for the world (and vice versa) – don’t miss their weekly Election Intrigue briefing!
TOP STORY
Why did top US ports just smash records?
For many of us, Covid was the first time we really thought about ports: how dare Amazon hit me with a 36-hour delay for the Kevin Bacon pillowcase I ordered.
Around 90% of our world's cargo is moved via waterways, which makes ports intriguing: first, as an indicator for what's happening in the economy, but second, as a way for governments to shape what's happening: ports control access to the world's top consumers (🇺🇸), producers (🇨🇳), chokepoints (🇸🇬), and resources (🌍).
So that's why some recent data out of San Pedro Bay has caught our eye: it's home to the ports of LA and Long Beach, the two largest in the US, together ranking as the world's ninth-busiest port complex. That makes them a legit stethoscope for the US economy and the world at large.
And the interesting thing here is that LA and Long Beach just saw their busiest-ever July in their century-plus histories. Why?
Here are five reasons:
i) Volumes are up everywhere, with cargo hitting a new global record in May as major ports in Asia (Shanghai and Singapore), Europe (Rotterdam and Antwerp) and the Middle East (Jebel Ali in Dubai) all saw varying degrees of growth – it paints a picture of a world getting on with life, despite it all.
Still, the really big container spikes (53% through Long Beach) are happening in…
ii) The US: data last week shows US consumers continue to defy forecasts and hoover up whatever the world can make, but there are indications of a shift in the way folks spend – on cheaper generic brands, or relying more on credit, for instance – and that could hint at a cooling ahead (if it’s not underway already).
But these new records out of San Pedro Bay seem bigger, which leads us to…
iii) Seasonal stockpiling: US firms always stock up ahead of the holidays, but Houthi strikes, a Panama drought, and port congestion in Asia have all required more ships, on longer routes, and with more transhipment stops. So US importers seem to have brought forward their orders to pre-empt delays.
But on top of that, US importers have also been stocking up ahead of…
iv) More US tariffs on China: the latest tariff round on China-made goods entered force this month, with more hitting from 2025 and 2026. Plus Donald Trump vows to go further, including beyond China. And that’s all on top of…
v) US dockworker talks: contracts for ~45,000 US dockworkers, mostly on the east and Gulf coasts, expire on September 30. And against a backdrop of high profits and automation, pay talks have stalled. So the unions and the shipping sector are now warning of the first coastwide strike in the US since 1977.
Each stoppage day could take five more to unblock, as east coast shipments reroute to the west via the Panama Canal, which is only just emerging from drought. So again, US importers are probably trying to get ahead of the curve.
Combine all that, and you've got more shipping demand plus continued supply constraints, and it's not only driving new records out of LA, but also some serious spikes in spot cargo and container rates around the world.
INTRIGUE’S TAKE
There are so many lessons you could take from all this. Here are just four:
First, our shipping industry is much more resilient than we admit – somehow, it still gets that Kevin Bacon pillowcase to our doorstep, and pretty quickly.
But second, it really should see disruption as normal by now; the question is less whether it's coming, but from where (war, tariffs, drought…) – and yet, the constant whiplash around cargo pricing suggests it's still learning that lesson.
Third, LA also recorded a 54% jump in the number of empty containers it's now handling – there are several factors at play, but one is that it's handling four times as many imports as exports, which reflects a broader, longer-term imbalance between China and the rest of the world.
And fourth, there are growing signs that China's key trading partners – including but not limited to the US and the EU – are becoming less willing to absorb China's huge industrial capacity at the heart of that imbalance, given its impact on local jobs.
So our sense is that, while cyclical factors will continue to drive the headlines, we've never seen such a massive structural trade imbalance before, nor have we ever seen what happens when (or if) something that big unwinds. Whatever it looks like, future port data might offer us the first preview.
Also worth noting:
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The latest data suggested an easing in spot cargo and container rates, meaning they might now have peaked for the year.
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China’s Shanghai is the world’s busiest port, handling 47.6 million twenty-foot equivalent units (TEUs) last year; LA and Long Beach together handled ~17 million TEUs.
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Singapore is the world’s busiest transhipment port, handling about 20% of all shipping containers.
MEANWHILE, ELSEWHERE…
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🇰🇵 North Korea: Pyongyang will open up its borders to tourists from December, according to tour agencies operating there. North Korea has remained off-limits for most adventurers since 2020, though a few Russian tourists were allowed in earlier this year – economic woes are likely encouraging this revived passion for the hospitality industry.
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🇨🇭 Switzerland: The Swiss department of defence is offering a cool $58k to anyone who can come up with the best idea to fish nearly 8,000 tonnes of munitions from its lakes. The Swiss military has used the lakes for storage and bombing practice as recently as 2021.
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🇮🇳 India: Indian-administered Kashmir will hold its first elections in 10 years to elect a local government next month, though Delhi will continue to make key decisions regarding the Muslim-majority territory. Nuclear-armed rivals India and Pakistan each administer part of broader Kashmir, but both claim the entire territory.
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🇻🇪 Venezuela: Both the Maduro regime and the opposition have rejected a proposal by Brazil and Colombia to re-run last month’s presidential election with greater oversight. Maduro still refuses to release the official results, bolstering the opposition’s claim that it won.
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🇳🇬 Nigeria: A China-based company involved in a legal dispute with the Nigerian government has released a seized presidential jet as a “gesture of goodwill”. A French court first seized Nigeria’s jet after the China-based firm accused Nigeria of unlawfully ending a contract to develop a free trade zone.
EXTRA INTRIGUE
🤣 Your weekly roundup of the world’s lighter news
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High-tech driverless cars apparently keep honking at one another while idling in a designated parking spot in San Francisco.
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A quarter of Britons apparently think they could qualify for the 2028 Summer Olympics.
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Eight iconic Baobab trees transplanted from Kenya to Georgia by a billionaire political mastermind have apparently died – he surveyed vast swathes of Kenya with drones to find his preferred specimens.
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A New Zealand foodbank has unwittingly distributed candies laced with meth, after a member of the public inadvertently donated what turned out to be a drug shipment disguised as tasty treats.
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And a Spanish man has established a new world record after collecting 3,615 unique mobile phones – he’s gonna need that ‘do not disturb’ mode.
COURT CASE OF THE DAY
A sample from Li Rui’s personal diaries. Credits: Stanford’s Hoover Institute.
We don’t usually report on heirs getting into arguments, but we do when they involve the future of the personal diary of a senior figure from the Chinese Communist Party (the CCP).
After joining the CCP, Li Rui rose through the ranks to become Chairman Mao’s personal secretary, going on to witness some of the most consequential moments in China’s modern history, like the Tiananmen massacre. And he not only witnessed it, but also recorded it in a closely guarded personal diary.
After his death in 2019, Li’s daughter donated his diaries to Stanford University, but his widow is now claiming she’s their rightful owner.
The case is already complex (Li died without a will), but is made more so by Stanford’s claims that Beijing is behind the widow’s appeal. The trial begins in California today (Monday).
DAILY POLL
South Korea’s education minister recently announced the country’s school system will have AI-powered digital textbooks from the next school year.
Do you think schools should start including AI capabilities in their syllabus? |
Last Thursday’s poll: What do you think about these strikes by Argentine and Brazilian diplomats?
🟩🟩🟩🟩🟩🟩 ✊ Good – we need to value diplomacy more (78%)
🟨⬜️⬜️⬜️⬜️⬜️ 👎 Times are tough – everyone needs to make sacrifices (17%)
⬜️⬜️⬜️⬜️⬜️⬜️ ✍️ Other (write in!) (5%)
Your two cents:
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✊ Q.B.D: “As a (now-retired) Canadian diplomat working overseas during a major strike in the early 2010s that ended relatively successfully, I would say: 1) Diplomats have a lot more leverage to resolve a labor dispute when immigration and visa services are heavily affected. 2) One of the major risks in limiting diplomats' remuneration is that you can't attract and retain a talented and innovative workforce.”
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👎 D.D: “In many countries, diplomatic assignments are plum jobs handed out as favors by politicians. Everyone wants to get sent to DC or NYC.”
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✍️ F.M.L: “Jet-setter and cocktail sipper or no (on public funds), 35K is below the poverty line for major capitals these days and would certainly pose a national security risk.”
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