The U.S. Cargo Ship That Failed to Beat Soybean Tariff Is Now Just Drifting Aimlessly at Sea

The U.S. Cargo Ship That Failed to Beat Soybean Tariff Is Now Just Drifting Aimlessly at Sea
Ryan Felton 8 Aug 2018 https://jalopnik.com/the-u-s-cargo-ship-that-failed-to-beat-soybean-tari...

Ah, man, it was only a month ago that we’d diverted our attention for a moment from the toxic wasteland of social media to follow Peak Pegasus, a cargo vessel carrying a boatload of soybeans, as it raced to a port in China in a—now futile—effort to beat a new soybean tariff. I’d already forgotten about its journey, but The Guardian checked in this week and, turns out, Peak Pegasus is now a victim to our fledgling trade war with China.

As The Guardian put it, the ship has been “bobbing aimlessly” in the Pacific Ocean for a month.

The Peak Pegasus, a 229m-long bulk carrier weighing 43,000 tonnes, has become the reluctant symbol of the potential consequences of this tit-for-tat trade spat.

The ship, owned by JP Morgan Asset Management, was due to unload around 70,000 tonnes of American soybeans in the Chinese port of Dalian on 6 July, shortly after Trump imposed a first round of tariffs on $34bn-worth of goods.

Having arrived too late, Peak Pegasus is now “sailing around in circles” while its owner tries to figure out what to do.

It’s not like that isn’t a costly exercise, either. The Guardian says the owner is “thought to be paying about $12,500 a day to continue chartering the ship,” which amounts to something north of $400,000 at this point.

What’s funny is, commodities experts says it makes total sense to keep the boat floating at sea, “potentially for months,” The Guardian says.

The market price of US soybeans has slumped since the trade war began as firms from China, the world’s largest importer, sought alternative sources.

That means potential alternative buyers for Louis Dreyfus’s soybeans in Europe or elsewhere would probably demand a discount on what they would have sold for originally.

Offloading them in China would incur a 25% tariff, adding around $6m to the cost of bringing them into the country.

This is fun.