Trade and Investment

This stranded ship of soybeans could help you understand the US-China trade dispute

Soybeans grow in a field on BJ Reeg's farm in Bellevue, Iowa, U.S., July 26, 2018. REUTERS/Joshua Lott

The ship's cargo of soybeans was worth $20 million. Image: REUTERS/Joshua Lott

Aisha Hassan

Cargo ship Peak Pegasus became a bit player in the US-China trade drama on July 6 when it raced against the clock to deliver US soybeans to China before retaliatory tariffs kicked in. Users on the social media site Weibo cheered Pegasus and its cargo on, with one user writing, “You are no ordinary soybean!”

Alas, the ship arrived 30 minutes too late to the port of Dalian, and has been sailing in circles ever since.

Loading...

The 299-metre bulk carrier is carrying 70,000 tons of soybeans, worth about $20 million. Michael Magdovitz, an analyst at Rabobank, told The Guardian that Pegasus’ soybeans aren’t the only ones adrift; another carrier named Star Jennifer has also been waiting for a fortnight.

The Amsterdam-based trading company Louis Dreyfus is reportedly paying about $12,500 per day, to keep Pegasus afloat in an attempt to wait out the trade war. But commodities experts actually think this is a smart move, and keeping the carrier at sea for months might even make financial sense. Offloading the cargo in China would incur a 25% tariff, adding another $6 million in costs, and diverting the vessel to another port might be even more expensive.

Image: Bloomberg

China is the world’s biggest soybean importer and America’s largest customer, with trade totaling $14 billion last year. But the soybean saga might end soon. Due to strong demand for the commodity, which is used in biodiesel, oil, and feed for livestock—hog feed in China is 20% soybean meal—Pegasus might soon get a break. China has been relying on Brazil’s produce, but its soybeans supply will soon start falling just as US harvests pick up. Just last week, the first US shipment of soybeans in three weeks set sail for Shanghai, though whether it reaches its destination remains to be seen.

Have you read?
Don't miss any update on this topic

Create a free account and access your personalized content collection with our latest publications and analyses.

Sign up for free

License and Republishing

World Economic Forum articles may be republished in accordance with the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International Public License, and in accordance with our Terms of Use.

The views expressed in this article are those of the author alone and not the World Economic Forum.

Stay up to date:

United States

Related topics:
Trade and InvestmentGeographies in Depth
Share:
The Big Picture
Explore and monitor how United States is affecting economies, industries and global issues
World Economic Forum logo

Forum Stories newsletter

Bringing you weekly curated insights and analysis on the global issues that matter.

Subscribe today

2:06

Agility: Empowering SMEs to Navigate Global Trade

What's 'bi-globalization' and could this be the near future for geo-economics and global trade?

About us

Engage with us

  • Sign in
  • Partner with us
  • Become a member
  • Sign up for our press releases
  • Subscribe to our newsletters
  • Contact us

Quick links

Language editions

Privacy Policy & Terms of Service

Sitemap

© 2024 World Economic Forum