Stormy Seas on the Horizon

Shipping stocks are collapsing as rates and demand for most industry segments continue to rise. Recession fears are growing almost as much as new job listings. Inflation is spiraling while trucking rates collapse. China decides to print more money as the US Federal Reserve raises rates. The US Navy watches mines proliferate in the Black Sea and does nothing.

Cargo is no longer king, confusion is.

All of this reminds me of the Bill Murray quote from Ghostbusters “Human sacrifice! Dogs and cats living together! Mass hysteria!” From US Navy’s new apathy towards protecting commercial shipping to President Biden’s threat to punish foreign shipowners.

Boomers are making nearly every problem in transportation and logistics worse.

While that’s an accurate statement it’s a bit misleading and unfair. A more accurate statement would be that the baby boomer generation is not only the largest generation but also the best trained and educated. This generation built the most complicated but successful system of international trade the world has ever seen. The problem is now they are retiring en masse resulting in major skill shortages throughout the maritime world.

It’s their exodus that’s causing the most problems.

Can Generation X Save Shipping

This is especially bad for shipping because the boom and bust cycles of shipping created huge gaps in employment. Generation X is now taking over the most skilled jobs in the maritime workforce but my generation will fail for two big (and lots of small) reasons. First, X is much smaller generation than the boomers. Second, X entered the workforce in the 1990s which was a terrible decade for shipping.

Anecdotally I’m at the tail end of GenX and my class of 2000 at NY Maritime College graduated less than 100 students. Today over 1,500 students are enrolled at the school. I was one of only a handful of classmates who found work as an officer aboard ships while many classmates left the industry altogether. Today many companies are desperate to hire young officers.

Some nations in Europe and Asia did slightly better at supporting maritime jobs throughout the 1990’s but many of those nations are facing an outright demographic collapse. And which nations are demographically collapsing the fastest? Maritime nations.

Global Demographics

“The truly terminal demographies of Germany, Italy, Japan, Korea, and China are looking at least a 4 percent reduction of GDP annually,” says Peter Zeihan, author of The End Of The World Is Just The Beginning. “China is the worst off… its labor force peaked in the 2010s. In the best-case scenario, the Chinese population in the year 2070 will be less than half what it was in 2020.”

China’s growth has been a major contributor to the shipping industry’s growth this century. Many believe that China grew so fast because it wanted to become the next superpower but Zeihan suggests it was because they had to. Peak Boomer was their last opportunity to build out infrastructure for a declining, not growing, future. If they had spread their investments over a longer time horizon they would not have the workforce available to build the infrastructure party officials believe they need for the coming decades.

Zeihan also says that Russia invaded Ukraine now for the same reason. If Russia had delayed invasion plans any further they would simply not have the population needed to support the war effort.

Port congestion and the boomer exodus

“Anyone believing port congestion is improving might want to read up on the operational updated provided by Hapag Lloyd on Friday,” said shipping expert Lars Jensen in a LinkedIn post early this week. “There is typically a lot of attention on North America when discussing this, hence below are excerpts of a few examples related to Europe, Asia and Latin America instead.”

Ningbo: Most terminals are under severe yard and berth congestion. The port might be affected by strong wind / monsoon, which might cause port closure and lower vessel productivity.

Yantian: Due to strict COVID-19 controlling and preventing measures, vessel productivity has decreased with longer port stays.

Shekou: Pilot availability is limited and pilot service might not be available at time requested due to COVID restrictions.

Hong Kong: Reefer facilities and resources at HKSPA is limited and utilization is on high level. Vessel berthing will be prioritized for pure loading vessels or vessels with loading volume more than discharge volume

Singapore: Priority is given to export calls to relieve the yard density which is around 80%.

Antwerp: upcoming holiday season will lead to reduced labour availability.

Rotterdam: With the start of the holiday season, the first labour related impacts are visible with less gangs being deployed. In addition, several COVID infections have been reported within the workforce. Yard level at DDE has risen again to 85% with special concern about open 40’ positions. Reefers at DDE are at 100% of the plug utilization. ECT and RWG stopped to accept empty containers this week.

Hamburg (CTA): The ongoing tariff negotiations are having a negative impact on labour availability. Due to the strike the waiting time of import heavy vessels has increased again.

Hamburg (CTB): Last week’s strike and the ongoing labour dispute with the union are increasing the delays accumulated at CTB even further. Slight rise in COVID infections reported at the work force negatively impacting the already tense labour situation. Extreme waiting time for vessels.

Le Havre: High amount of vessel activity in the port of Le Havre is leading to labour shortage.

Poland, Denmark, Sweden, Finland: Limited trucking availability.

Benelux: Summer holiday season is arriving, and most vendors already announced less trucking capacity with approximately 50% of usual transport capacity.

Ecuador: Due to ongoing nationwide protests, export shipments are being affected as their containers are not arriving at established CY cut off. Import shipments also delayed due roadblocks in interstate roadways.

Costa Rica: a cyber-attack to Government Customs System took place since week 17 and many tasks are manually performed. This causes delays at gates for in/out cargo. Route 32 in Costa Rica is closed again due to landslides

Mexico: trucking services delayed due to port congestion at several locations.

While Lars does not describe the reason for all these port problems, it’s clear just from reading them that both skilled and expert labor is in short supply.

Can Millennials Save Shipping?

Some who study the labor market hope that Millennials, with the help of online training and AI, can step in to provide the skill gap that retiring boomers are creating but there are a few problems with this theory. First, the average millennial is less interested in industrial operations like shipping and is more attracted to digital jobs they can do from home. Second, unlike America, many maritime countries don’t have large millennial populations. Third, rapidly escalating higher school costs have resulted in a less-educated workforce.

Could rapidly increasing wages retain Boomers?

Many boomers are already working beyond their planned retirement date and, in the well-paid maritime industry, have the wealth they need to retire. While many enjoy their job the pressure on performance is increasing exponentially alongside supply-chain chaos and Covid caused most boomers to rethink work-life balance.

Also Read: The End Of The World Is Just Beginning For Shipping

Those that remain are not interested in new and emerging problems like port congestion but want to work on big “legacy-leaving” problems like climate change. This is resulting in the boomers who are staying put focusing on what boomers do best, using their high degree of education and expertise to create MORE complicated solutions (Wind Farms and Digitalized Fueled Decarbonation require a MORE skilled workforce) to global problems.

Complicated and human resources intensive solutions that are setting Generation X up to fail.

Green Revolution Is Important But Complicated

“It’s hard to justify spending so much time on an advanced LNG regasification facility for cruise ships when the world is facing an energy crisis and famine,” said one industry executive. “What the world is asking for right now is big and simple coal and grain bulkers not complicated green hydrogen distribution systems.”

The recent conferences I have attended make this point clear. Nearly every session (and most of the “hallway chatter”) included questions about decarbonization and digitalization but only a few about Russian mines and world hunger.

“Today’s shipping conferences give me the same feeling as visiting the old Worlds Fair buildings in Queens or reading a vintage copy of Popular Mechanics,” said one GenX classmate of mine. “It’s yesterday’s vision for the future. I hate to say it but green hydrogen and next-gen wind farms feels a lot like the flying cars my parents promised that I’d own ‘once I grew up’. I’m told my generation is cynical but I think we are just more focused on simple solutions.”

“Boomers are focused on getting what they want, while my generation wants to focus on what we currently need.”

Follow The Money And Power

Inter-generation strife is likely to increase as those baby boomers who do stick around will retain control over purse strings and board seats (we have already seen that Boomers vote and are unwilling to give up political control of government spending). Their goals may place more complexity and problems on already overburdened Generation X managers. That said Generation X will be well compensated for the added stress. Adding more complexity and stress to the system will accelerate the rate of retirement and the competition for Generation X’s talent is about to go into overdrive.

GenX’s Moment To Shine

“Generation X will benefit the most,” says Peter Zeihan. “Demand for skilled labor will accelerate alongside the massive shortage of skilled talent. This is Generation X’s moment to shine.”

If Zeihan is correct then the exodus of Boomers will lead to fierce competition among employers and Generation X salaries will climb faster than 2021 freight rates. And the smartest maritime companies have already started massive retention and hiring programs for Generation X.

Related Book: The End of the World Is Just the Beginning: Mapping the Collapse of Globalization by Peter Zeihan

How much the Millennials will benefit is anyones guess. They could catch some of the overflow that’s about to pour into the pockets of GenX or the entire system could collapse just when their moment to shine finally arrives.

The Future Is Foggy

The big question that remains is what are we missing? What are the second and third-order consequences of generational differences? One trend, for example, is for maritime and logistics companies to hire naval officers (this trend seems especially strong for US and Israel Navy officers in technology startups) over merchant mariners because most senior officers have advanced degrees the government paid for while many Millennial in the civilian shipping industry did not want the burden of student loans. Some civilians who did take out loans to fund higher education left the industry for more lucrative opportunities in finance, entertainment, or technology. The result is a more educated and experienced workforce on paper, but in practice, there is an experience gap because naval officers don’t have experience managing working ships. This is just one small example.

A bigger example is the Japanese stock market. Their largest generation peaked in the 1990’s and the financial consequences have lasted decades.

Will, there be more consequences as a result of the generational turnover? Certainly but the problem with managing the brilliant and effective but complicated interconnected and human resource-dependent systems baby boomers have created is the chaos they could create is difficult to predict.

And if Generation X does solve problems by returning us to simpler systems… what will that mean for the green revolution and the environment it hopes to protect?


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