Commercial Ships Could Soon Have a Way into Port of Baltimore

Employment | Food prices | HPAI | OPEC+ | China economy | Crop progress | EPA electric truck mandate

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March 31, 2024 09:38 PM

Washington Focus

Focus this week will be on progress in clearing the massive debris of the Baltimore bridge collapse, Monday’s return of USDA’s weekly Crop Progress report, Wednesday’s OPEC+ JMMC meeting, and on Friday, a UN update on food prices, and the important Employment report.

— Criticism over EPA’s new electric truck mandate. The Environmental Protection Agency (EPA) quietly on Good Friday announced new emissions standards for heavy-duty trucks, particularly focusing on the mandate for electric truck adoption. The timing of the announcement was intentional to minimize public attention. The Biden administration’s EPA claims it is pushing these regulations in the name of climate change without considering the associated costs and practical challenges. But some analysts note concerns about its feasibility, economic impact, and effectiveness in addressing climate change.

Keys:

Mandate details: EPA’s mandate requires electric semi-trucks to make up a significant portion of manufacturer sales by 2032. Analysts see this as costly and impractical, especially given the current low adoption rate of electric trucks in the U.S., which is primarily limited to California due to heavy subsidies and mandates there.
Practical challenges with electric trucks: These include limited range, heavier batteries necessitating lighter loads, increased vehicle congestion, and higher electricity demand for charging infrastructure.
Electricity demand: The transition to electric trucks would require a substantial increase in power generation and transmission infrastructure, posing challenges for grid capacity and reliability.
Cost Implications: The transition to electric trucks is estimated to cost the industry billions of dollars annually, which would likely be passed on to consumers through higher prices.
Subsidies and handouts: Some criticize the reliance on gov’t subsidies to justify the mandate, arguing that it creates a cycle where companies lobby for more subsidies to offset the costs imposed by regulations.
Emissions reduction: Despite EPA’s claims of significant CO2 emission reductions, some doubt the effectiveness of the mandate in actually reducing global temperatures.
Political priorities: Some, like the Wall Street Journal, criticize the Biden administration for prioritizing the interests of left-wing groups over American businesses and consumers, suggesting that the regulation is more about political appeasement than effective policymaking.

— Presidential primary season continues Tuesday with voters in Connecticut, New York, Rhode Island and Wisconsin heading to the polls.

— On Tuesday, the nomination period closes for the selection of the next managing director of the IMF. Incumbent Kristalina Georgieva, whose current tenure ends in September, has said she is interested in another five-year term.

— Update on Baltimore bridge collapse:

Commercial ships may soon have a way into the Port of Baltimore. There are plans to create a temporary alternate channel near the collapsed Francis Scott Key Bridge that will allow commercial vessels to access the port. “By opening this alternate route, we will support the flow of marine traffic into Baltimore,” said Capt. David O’Connell, the coordinator for the federal response to the bridge collapse, in a statement. Federal officials did not immediately respond to a question about when the alternate channel is expected to open.
In a news release, officials said the temporary channel will have a controlling depth of 11 feet, vertical clearance of 96 feet and a 264-foot horizontal clearance. By comparison, the Dali, the cargo ship that crashed into the Francis Scott Key Bridge, is about 158 feet wide and 984 feet long.
Federal officials are operating a 2,000-yard safety zone around the Francis Scott Key Bridge. Vessels must continue to receive permission to enter the zone.
Demolition crews were cutting into portions of the Francis Scott Key Bridge’s collapsed truss Sunday and an enormous container ship remained trapped underneath the rubble. This is seen as the starting point in a complicated and extensive cleanup process. Reopening the Port of Baltimore could take weeks, officials said.
Maryland Gov. Wes Moore did not specify a timeline for cleanup, but wanted it “done quickly, and done right… We are not going to stop working,” he said. There is no set timeline to clear a shipping lane, Moore said, but it is a round-the-clock operation.
Transportation Secretary Pete Buttigieg said Sunday that the Army Corps of Engineers doesn’t want to speculate on a timeline for repairs until damage to the underwater infrastructure can be fully assessed. After that a clearer picture of the supply chain issues will emerge, he said. “What we do know is that we need to get this port back open as soon as possible, deal with the supply-chain applications in the meantime and get that bridge back up as soon as possible and deal with the traffic implications,” Buttigieg said.
Army engineers are using cranes to slice up the north sections of the collapsed bridge so the large pieces can be removed. “This will allow us to open a temporary and restricted channel to get traffic around the collapse,” Moore said Saturday.
Temporary channel could expedite cleanup, shipping. Moore said Saturday that a section of the bridge’s steel superstructure north of the crash site would be cut up and lifted by crane onto a barge and removed. A temporary channel can then be opened to allow some ships to access the area and “accelerate our recovery.” He did not provide a timeline but warned that “it’s not going to take hours, it’s not going to take days.” A section of the bridge’s superstructure remains across the bow of the Dali that lost power before hitting the bridge. It was not clear when the ship would be moved, he said, adding that it was damaged but that its hull remained intact.
Clearing out the piece will allow for an auxiliary channel to enable more salvage apparatus to enter the port and could eventually open a small amount of port traffic. Of note: Coast Guard officials stressed that work would occur simultaneously with efforts to reopen the deep channel, a conduit for much of the nation’s vehicles, farm equipment and other consumer goods.
Conditions remain unsafe for divers, Moore said. “It’s not just weather and wind. We’re talking about debris, wreckage and pieces of the bridge in the water,” he said. The challenging cleanup includes one floating crane that can lift up to 1,000 tons. An additional seven cranes, 10 tugboats and nine barges are involved, according to the Unified Command that is handling operations.
Authorities plan to remove debris and pieces of the bridge, refloat the ship, and then continue to remove the wreckage. Of note: “Once we are able to get a channel re-opened, it can potentially be re-used for commercial assets, also, but we’ve gotta get it cleared first,” U.S. Coast Guard Rear Admiral Shannon Gilreath said.
Biden visit timeline unclear. Tom Perez, senior adviser and assistant to President Joe Biden, said Sunday that the president’s plans to visit the area were still being worked out. He called the salvage operation a “Herculean undertaking” vital to minimizing the national supply-chain disruption caused by the collapse.
“The Port of Baltimore will be back,” Perez told MSNBC’s The Weekend. “The president has said this. We’re going to move heaven and earth to make sure we rebuild the bridge, we clear out the debris as soon as possible, so that we can minimize these disruptions.”
Moore announced that the Small Business Administration accepted his request to approve a disaster declaration, and that businesses harmed by the disaster can apply for up to $2 million in low-interest loans. That’s besides the $60 million the Biden administration has approved in immediate aid, as well as his promise that the government will pay the full cost to rebuild the bridge.
Moore on MSNBC’s The Weekend said members of Congress need to realize that reopening the port and rebuilding the bridge will help the national economy. He gave examples of farmers, car dealers and restaurateurs in various states who rely on goods shipped through Baltimore. “We don’t need your favors,” Moore said. “We need you to make sure the American economy continues to grow and thrive.” Moore also said he was working with lawmakers to support the families of the men killed when the bridge collapsed and to support port workers who are out of work. And he repeated his mantra: “Maryland Tough, Baltimore Strong.”
Cost of rebuilding bridge. Sen. Chris Van Hollen (D-Md.) on ABC’s This Week said, “We have submitted our request for rebuilding the bridge to the Emergency Relief Program.” The federal government, he said, will pay 90% of the cost. Next, Van Hollen said he and Sen. Ben Cardin (D-Md.) plan to introduce legislation to cover the other 10%.
Ship traffic at the Port of Baltimore remains suspended, but the Maryland Port Administration said trucks were being processed at marine terminals.

— Update on HPAI in dairy cattle:

A highly virulent bird flu initially found in dairy cows in Texas and Kansas has spread to more herds, extending to five states.
There’s evidence suggesting the virus may be transmitted from cow to cow.
The strain has been confirmed in Michigan, with presumptive positive tests in Idaho and New Mexico.
The virus strain found in Michigan is similar to a strain confirmed in Texas and Kansas that appears to have been introduced by wild birds, according to a USDA statement.
Idaho officials announced Thursday that avian flu was detected at a dairy cattle farm in Cassia County after the facility recently imported livestock from another state that had identified HPAI in cows. It did not provide details. But state veterinarian Scott Leibsle said avian flu was detected in the Idaho cattle after the farm imported cows from a Texas herd that had shown symptoms of HPAI.
USDA initially reported incorrect presumptive positive tests in Ohio.
USDA said there continues to be “no concern about the safety of the commercial milk supply because products are pasteurized before entering the market, or that this circumstance poses a risk to consumer health.” Dairies are required to send milk only from healthy animals into processing for human consumption. Milk from infected animals is being diverted or destroyed so that it does not enter the human food supply, USDA said.

— Angry farmers are reshaping Europe. Farm protests are changing not only Europe’s food system but also its politics, as the far right senses an opportunity. Link to an in-depth New York Times article on the topic.

— Study warns Trump’s 10% tariff plan would cost American households $1,500/year. A new study (link) warns Trump’s plan for a universal 10% tariff on all foreign imports would raise taxes on the typical American household by $1,500 a year. This latest study was conducted by the left-leaning Center for American Progress Action Fund, or CAP. An analyst from the Tax Foundation previously characterized Trump’s plan to impose a 60% tariff on all Chinese imports as a “massive tax increase on American purchases from China.” The 10% universal tariff plan would raise taxes by more than $300 billion a year, the foundation says (link).

Of note: Look for this topic to increasingly being a topic addressed to farm-state lawmakers, some of whom support Trump’s bid for the White House.

— Trump has not yet posted reduced bond in fraud case. Donald Trump and his associates, including his adult sons and his company, were ordered to pay over $464 million, including interest, by Judge Arthur Engoron in New York after being found guilty of fraudulently inflating asset values. However, Trump had the opportunity to post a reduced bond of $175 million as he appealed the civil fraud judgment. The clock on Thursday runs out on this opportunity. Despite a reduction in the fine amount by an appeals court in March, Trump and his co-defendants are still facing significant financial penalties.

— Where’s SAF details? The Biden administration promised Treasury Dept. tax incentive and GREET details from several departments “by March 1” but when that date came and went, USDA Secretary Tom Vilsack said it would be “weeks, not months,” before details were announced. Waiting.

Events of Note This Week

Monday, April 1

Easter Egg Roll. President Joe Biden and the First Lady host the White House 146th annual White House Easter Egg Roll with the theme “EGGucation.”
Federal Reserve. Fed Governor Lisa Cook scheduled to speak.
Middle East situation. Brookings Institution virtual discussion on “The Middle East crisis and the threat of Hezbollah-Israel escalation.”.
Outlook for Ukraine. Atlantic virtual discussion on “By air and by sea: What does the spring hold for Ukraine?”.

Tuesday, April 2

Federal Reserve. Fed Governor Michelle Bowman to speak on bank mergers; New York Fed President John Williams, Cleveland Fed President Loretta Mester, and San Francisco Fed President Mary Daly scheduled to speak.
Baltimore bridge collapse costs. Washington Post Live virtual discussion on “The Economic Impact of the Baltimore Bridge Collapse.”
DOE EV Working Group. Energy Department virtual meeting of the Electric Vehicle Working Group for a review and vote of the EVWGs first report, updates from subcommittees, and a series of technical presentations. Runs through Wednesday.
Energy outlook. Resources for the Future discussion on “The Global Energy Outlook 2024: Peaks or Plateaus?”
China/Taiwan situation. Atlantic Council’s GeoEconomics Center virtual discussion on a new report, “Retaliation and Resilience: China’s Economic Statecraft in a Taiwan Crisis.”
SEC issues. Practicing Law Institute discussion on “The SEC Speaks in 2024,” with remarks from SEC Chair Gary Gensler and other SEC commissioners. Runs through Wednesday.
Navigation safety. U.S. Coast Guard meeting of the National Navigation Safety Advisory Committee. Runs through Wednesday.
U.S./Japan relations. Center for Strategic and International Studies conference call briefing on “Japanese State Visit and Trilateral Leaders’ Summit.”

Wednesday, April 3

Federal Reserve. Fed Chairman Jerome Powell to speak on the economic outlook in California; Fed Governor Michelle Bowman to speak on bank liquidity and regulation; Fed Vice Chair for Supervision Michael Barr to speak on the Community Reinvestment Act; Fed Governor Adriana Kugler to speak on the economic and monetary policy outlook; Chicago Fed President Austan Goolsbee scheduled to speak. .
NATO Foreign Ministers meeting. Secretary of State Antony Blinken and NATO Secretary General Jens Stoltenberg deliver remarks at the NATO Foreign Ministers Meeting in Brussels.
Cyber threats in the Middle East. Middle East Institute virtual discussion on “The Current Cyber Threat Landscape of the Middle East,” focusing on " how the war in Gaza has affected the volume and types of cyber threats currently facing the region.”
OAS meeting. Permanent Council of the Organization of American States regular meeting to consider the draft resolutions “Support for democratic transition in Haiti” and “Follow-up on the situation in Nicaragua,” among other topics.
U.S. economic outlook. Washington University in St. Louis discussion on “The Outlook for the US Economy and Monetary Policy.”

Thursday, April 4

Federal Reserve. Fed Governor Adriana Kugler scheduled to speak; Interim St. Louis Fed President Kathleen O’Neill Paese and new St. Louis Fed President Alberto Musalem are scheduled to speak; Cleveland Fed President Loretta Mester scheduled to speak.
Rural America and small towns. Brookings Institution book discussion on “The Overlooked Americans: The Resilience of our Rural Towns and What It Means for Our Country,” focusing on “how small towns are doing as well as, or better than, cities on many measures, including homeownership, income, and employment.
NATO and the war in Ukraine. Washington Post Live virtual discussion on “The Future of NATO and the War in Ukraine.”
North Korea policy. Center for Strategic and International Studies virtual discussion on “Revisiting U.S. Policy Towards North Korea.”
Russia, China and war. New America virtual discussion on “The Return of the Great Powers: Russia, China, and the Next World War.”
Private credit growth. Brookings Institution discussion on “Why is private credit growing so fast? Is it a risk to financial stability?”

Friday, April 5

Federal Reserve. Fed Governor Michelle Bowman scheduled to speak; Boston Fed President Susan Collins, Richmond Fed President Thomas Barkin scheduled to speak.
Port safety and security. House Transportation and Infrastructure Coast Guard and Maritime Transportation Subcommittee and Transportation and Maritime Security Subcommittee field hearing on “Port Safety, Security, and Infrastructure Investment.”
EVs. United States Energy Association virtual discussion on “Electric Vehicles: Understanding How It All Fits From Car Makers To Utilities And Infrastructure.”
Europe and the war in Ukraine. Center for Strategic and International Studies and the Association of the U.S. Army discussion on “Strategic Landpower,” focusing on “challenges in Europe, and the ongoing war in Ukraine.”
U.S./Japan relations. Hudson Institute conference on “Stronger Together: The Importance of U.S./Japan Economic Relations.”

Economic Reports and Events for the Week

The main event will be Friday’s U.S. Employment report, with economists expecting an addition of from range of 150,000 to 230,000 jobs in March. That would mark a deceleration from the 275,000 additions in February. In terms of Federal Reserve speakers, the spotlight will be on central bank chair Jerome Powell who will be delivering a speech on economic outlook at a Stanford forum on Wednesday. The personal consumption expenditures price index, released Friday during the market closure for Good Friday, showed inflation rose 2.8% in February, in line with expectations. The inflation gauge closely watched by the Federal Reserve rose 0.3% from a month ago, the Commerce Department said.

Monday, April 1

PMI Manufacturing: S&P Global’s final manufacturing PMI data for the nation.
Construction Spending: The Commerce Department is projected to announce a 0.5% gain in construction spending for February after a 0.2% decrease in the prior month.

ISM Manufacturing Index is anticipated to report an increase in its manufacturing PMI to 48.5 in March, compared to a reading of 47.8 in February
The Bank of Japan’s Tankan quarterly sentiment survey is expected to reveal a slight decline in the sentiment of large manufacturers due to challenges like the nationwide production halt at Daihatsu Motor, a Toyota Motor subsidiary. However, large non-manufacturers are expected to show continued growth, supported by record-high share prices and robust inbound tourism, indicating overall expansion in the Japanese economy. This data may increase expectations for another interest rate hike later this year.

Tuesday, April 2

Motor Vehicle Sales
Factory Orders: New orders for U.S.-manufactured goods probably gained 1% in February, after slipping 3.6% in January, the Commerce Department’s Census Bureau is projected to report. . Meanwhile, on the same day, job openings increased 53,000 to 8.810 million on the last day of February, the Labor Department’s Bureau of Labor Statistics is expected to say in its monthly Job Openings and Labor Turnover Survey report.
JOLTS: Job openings increased 53,000 to 8.810 million on the last day of February, the Labor Department’s Bureau of Labor Statistics is expected to say in its monthly Job Openings and Labor Turnover Survey (JOLTS) report.
Federal Reserve: New York Fed President John Williams moderates discussion at Economic Club of New York. Cleveland Fed President Loretta Mester speaks on economic outlook at Cleveland Association for Business Economics and Team NEO Luncheon. San Francisco Fed President Mary Daly participates in fireside chat followed by audience Q&A in partnership with the Henderson Chamber of Commerce, Latin Chamber of Commerce Nevada, and Vegas Chamber of Commerce. Fed Governor Michelle Bowman speaks on the implications of bank mergers for the future of the banking system at a virtual event. St. Louis Fed President Alberto Musalem takes office. He replaces James Bullard.

Wednesday, April 3

MBA Mortgage Applications
ADP Employment Report is expected to show that private payrolls added 150,000 jobs in the last month.
PMI Composite Final: The Institute for Supply Management is expected to say that its non-manufacturing PMI fell to 52.5 in March from 52.6 in the prior month.
ISM Services Index
Federal Reserve: Fed Chair Jerome Powell speaks at Stanford’s business, government, and society forum. Chicago Fed President Austan Goolsbee gives opening remarks at virtual event on preventing elder financial exploitation.
Fed Governor Adriana Kugler speaks on the outlook for the US economy and monetary policy in St. Louis. Fed Governor Michelle Bowman speaks on bank liquidity, regulation and the Fed’s role as the lender of last resort.

Thursday, April 4

Jobless Claims
International Trade: The Commerce Department’s Bureau of Economic Analysis is expected to report that the country likely posted a trade deficit of $66.5 billion in February.
Fed Balance Sheet
Money Supply
Federal Reserve: Cleveland Fed President Loretta Mester speaks on economic outlook in virtual event. St. Louis Fed President Alberto Musalem gives introductory remarks at 2024 Women in Economics symposium. Richmond Fed President Thomas Barkin will deliver a speech on the economic outlook to the Home Building Association of Richmond. Philadelphia Fed President Patrick Harker participates in fireside chat about second-chance employment. Chicago Fed President Austan Goolsbee participates in moderated Q&A at Multi-Chamber economic outlook luncheon.

Friday, April 5

Employment report is anticipated to show nonfarm payrolls likely increased by 198,000 jobs in March, following a creation of 275,000 jobs in the previous month (analysts’ guesstimates range from 180,000 to 216,000). The unemployment rate is expected to have remained unchanged at 3.9%. Meanwhile, average hourly earnings likely gained 0.3% in March, rising 4.1% annually.
Consumer Credit
Federal Reserve: Fed Governor Michelle Bowman speaks on risks and uncertainty in monetary policy at a Manhattan Institute event in New York. Richmond Fed President Thomas Barkin speaks on the economic outlook with updated data. Dallas Fed President Lorie Logan speaks at an event hosted by the Duke University economics department.

Key USDA & international Ag & Energy Reports and Events

USDA’s weekly Crop Progress returns Monday, while the latest global food-price index from the United Nations will be published Friday.

In the energy sector, the OPEC+ alliance’s Joint Ministerial Monitoring Committee will hold discussions on Wednesday, though the group looks unlikely to recommend any changes to oil supply policy.

Monday, April 1

Ag reports and events:

Export Inspections
Cotton System
Fats & Oils
Grain Crushings
Crop Progress
AmSpec Malaysia March 1-31 palm oil exports