(I was speaking to someone who has seen their shipping from China to Europe quintuple - apparently all the containers stayed in Europe as no one wanted to send them back empty.)
The game is designed to show that "local" signals aren't always indicative of full system - the example being that retailers etc are stockpiling right now on-shore. But this creates more demand than usual, slowing delivery. So the naive retailer will say "OMG it now takes 3 months and 2x price to get widgets, I had better order 4 months supply ... and so it goes - an infinite bug methodology.
I think the overall effect is that we all have to get used to things being scarce or spotty for a while, that's all. The era of perfect infinite next-day availability of everything has come to a pause. Be patient, adjust expectations, make do, and give the system time to recover.
And wherever possible, buy local, buy on-shore.
Organic, local 7nm microprocessors only.
Buy local - I afraid other than some food there isn't much stuff that either does not come from off-shore or is made from off-shored components.
Sounds like how around here our naive consumers bought a few hundred rolls of toilet paper.
it's interesting to see cans from a brewery change depending on the week they were canned.
Might we also try what Pacifico did (maybe still does?) with their ballenas—-paying for bottles returned intact, which they then wash and use again? I liked seeing the wear ring around the glass and wondering who else held this bottle.
PS: Made by the company I work for
I mean, I understand why the signup form is there, I still don't want to do it.
It's actually gone up about ten fold since the beginning of 2020.
For a long time a 40ft container from China to the UK was in the region of $1,500-$2,000. By about November 2020 that had increased to around $7,000 and then in January quotes were coming through of up to $16,000. I think it's been fairly stable in the $15,000 region for a few months now.
The last I heard this is expected to continue for several months.
Equivalent problems of central planning are even worse.
This is why unlimited central bank money is so dangerous.
Without it the infinite escalation can't get very far before the retailers run out of spare cash/credit.
Nothing appears to be "deteriorating" whatsoever.
According to the article, in March we imported 1.5x as many goods as in March 2019, as retailers restock inventory. Which is amazing that such increased shipping capacity exists. And because there's so much demand for shipping, shipping prices are rising.
This seems... great? We're successfully restocking tons of stuff, but higher shipping prices mean that retailers will continue to give priority to what people are buying, and so a full post-pandemic restocking will be smoothed out over the rest of the year, rather than all at once?
I mean, scheduling restocking seems pretty flexible and can therefore respond intelligently to prices.
This article seems like everything is going great. What's deteriorating? What's the "tsunami"...??
So, for us service is deteriorating because we're not able to fulfill obligations and lose money. For our customers service is deteriorating, because they are not able to buy goods that will be delivered in a timely fashion.
This goes on for 3-4 months now, and this is definitely a problem, even if it doesn't look so from outside.
For them, service levels are deteriorating. What is normally easy has become a struggle.
Once a resource is overtaxed past a certain point, the inefficiency of being in an overtaxed state causes the system to handle the load even worse than in normal conditions, which exacerbates the overload, causing it to get worse ad infinitum.
At 12 I learned a lessons about that thrashing.
I was looking at low- to mid-range workgroup printers and business-class desktop PCs for some clients recently. From at least some manufacturers the ones that were available were selling for at least $50-100 above MSRP depending on models, or you could order at normal prices (don't bother looking for discounts!) with estimated delivery end of May or in June. This article makes me think there's a chance those might be optimistic.
I did! I noticed B&H had the model I wanted in stock, but the store was closed over the weekend for a holiday. So I checked back right before the store opened and placed the order JUST as it JUST as ordering opened up again.
Not 5 minutes after I ordered the printer, the page went from "in stock" to "more on the way" lol. I received the printer a week later. Most places had it a month+ out.
Ugh, and that was easy compared to getting some computer parts right now.
You’re right. Things are slow right now.
Last week I decided I liked it and went to see what Lenovo had available. All of the nice X1E's with the UHD display were showing "more than 12 weeks" delivery time!
The next day I remembered that the ThinkPad P1 is exactly the same machine as the X1E with a different GPU. Lenovo is wacky like this with their model names.
Some of those were showing 8-12 or over 12 week delivery too, but they had one P1 configuration in stock the way I wanted with UHD, 64GB, 1TB and an empty SSD slot.
It shipped the same day I ordered it, arrived Friday and is great! And was just $1625 plus another $149 for three-year premier support since I ordered it through Corporate Perks (who I highly recommend). Would have been $900 more if I bought it directly on lenovo.com, even at their "sale" price. The machines ship direct from Lenovo either way.
So I thought I'd tell my friends and colleagues and checked again yesterday. Nope, all gone now, this model went up $200, and it along with all the other nice ones are "more than 12 week" delivery too.
I could be wrong though, or air freight could be experiencing a similar spike in demand right now.
Remember all those supply chain shocks and people talking about needing to restock to get things working in chips, manufacturing, etc? Right now there is 100 containers of socks stuck on a ship and in the way.
At least, that is what I got from the article.
This seems like a real easy problem to fix. Some simple import tariffs could get a lot of the cruft out of the way in no time, and they could be eased back too.
> For the month of May, everything on the trans-Pacific is basically sold out. We had one client who needed something loaded in May that was extremely urgent and who was ready to pay $15,000 per container. I couldn’t get it loaded
And no telling what the next product in queue is going to take in terms of component sourcing. Yikes.
The positive thing is that a lot of capital is floating around ready to be invested in a coming post-covid boom, but at the same time hundreds of thousands of companies worldwide are either already bankrupt or close to - then there's these shipping issues that seem non resolvable in the near term - and worst of all a lot of industries already seem way overvalued, especially the housing markets i many cities.
If the economic bubble bursts, then shipping slows down while thousands and thousands of companies close, and is bought up by megacorps laying off millions to automation and centralisation, while QE and other tools are slowly becoming unfeasible because of the gravity of climate change and a disappearing petrodollar hegemony.
So many confounding factors ending in an inflationary nightmare!
Is this take way too pessimistic?
It can be more efficient and less polluting to sail a ship with 1000 tons of tomatoes from Mexico than have a local farm drive a few crates of tomatoes to the local farmer's market in his 1970 Ford pickup.
But for reasons I don't fully understand (possibly Triffin's Dilemma[1]), this hasn't worked for the US. Triffin's explanation basically says it can't work for the global reserve currency issuer because we have to keep exporting our currency to other places (and exporting currency means importing goods and services)
[0]https://en.wikipedia.org/wiki/Balance_of_trade#Monetarist_th...
It gets worse, because the USD is so widely adopted, transactions aren't limited to just USA <-> everyone, everyone <-> everyone is equally possible and it effectively has the same effect as the US importing products from China in regards to the deficit if the exporting side decides to purchase treasury bonds. E.g. foreign country puts the money into American companies, the investment pays off and then they use the profits to import something from China who then puts it into treasury bonds. Even though the US did nothing, the deficit must grow anyway.
Combining this with low interest rates, a ton of money is exiting the bond market looking for yield. A lot of it is flowing to stocks, decreasing earnings. Overall, I believe it means greater investment availability. It's really the perfect storm for a very prosperous time in the US (expansion!).
Producing locally, also minimizes time to market and means you can distribute production. E.g. Arrival is doing that in the UK for assembling buses and vans. They don't build giga factories but instead have small, low cost factories that they can setup close to where the demand is.
Basically producing close to where the demand is, or close to where the resources you need are (or ideally both), minimizes cost.
As an example, I designed a part with micron-scale tolerances. Some 3D printing firms were able to provide it within a week. Others said they could but messed up the tolerances. Milling it out of metal turned out to be faster and more accurate.
As another example, I have a dream of making a part with 100 nm tolerances. It turns out there is only one supplier of 3D printers which can do this, and they are in Germany. One company in my country have their device, but a production run for them costs tens of thousands of dollars per part due to the slow printing required by the high precision and their high fixed capital costs. As a result, they mostly get hired to make molds for more traditional manufacturing methods.
The trade-off between "might need" and "will need" is fascinating to think of (and pay for).
"Realizing mitochondria were the "powerhouse" due to a voltage gradient created by chemically transforming ATP to ADP across a membrane gave me a eureka moment about how small such a mechanism can be, and how powerful in great numbers." [1]
The international shipping container is a similar example of a small mechanism that powers our global economy at scale.
Inflation requires their not to be a way for prices to reduce.
The intent is to get inflation to the average target of 2%, so it’s of course good if we see some.
The Fed's balance sheet is double what it was a year ago, and quadruple was it was after the first round of liquidity during the GFC.
https://www.federalreserve.gov/monetarypolicy/bst_recenttren...
A bull market is not inflation by the way.
If the demand is this extreme, shouldn't a new eceonomic opportunity be ripe for the picking, here?
A shore with shallow waters for hundreds of feet simply make for very costly places to unload, and get treacherous in rough weather.
On top of that, coastlines tend to be the most densely populated regions. Building up infrastructure for a new harbor sounds like a nightmare to get through zoning, let alone an environmental impact review.
The US ports don't have the space to expand. I don't think the Canadian ones can, either. Prince Rupert might be able to, but it would take time.
The problem is the sheer scale of what you are asking for. We'd need either more ports, or more berths at existing ports, with more cranes, and more transport connections from the ports to the country.
If there's one thing where you could get more throughput by throwing money at it, it would be in more efficient container cranes. And even that requires someone figuring out a more efficient crane, and then probably a few years of building it out at the ports, and upgrading the dockside infrastructure to handle the increased throughput.
Labor shortages related to covid on the US west coast leading to delays wouldn't be significantly helped by adding another port on the US west coast.
From the bottom of this article, it does look like there's some room in alternate non-US ports, although that seems expensive and time consuming.
The only goat dairy on the Big Island imports all their feed from continental US. Apparently local forage would make the milk taste "off". Nobody grows hay in Hawaii, probably because there is no dry (enough) season to dry it in, and (maybe?) nobody has thought of trucking it to the dry side. Or something. Agriculture is always harder that it seems like it ought to be. Cheap shipping forgives a lot.
https://www.investmentnews.com/etf-managers-group-nasdaq-fin...
> Expense Ratio 3.32%
Would anyone who knows more about this topic care to comment?
It seems like increasingly severe storms will (would) have an impact a century before sea level itself becomes a problem, even in places where the sea level is already basically a problem.
Due to the geography of the earth as well as other factors, the effects and experience of sea level rise is not the same everywhere. At this moment the sea level at the port of Miami is 8 inches about the 1950 level, significantly more than 3-4mm a year and the rate is accelerating.
Also keep in mind the sea does not need to permanently cover land to make it unlivable. It's well within the realm of possibility that due to expanded floodplains, increased intensity and frequency of storms, that portions of Miami could be unlivable in as little as 30 years, and the entire city unlivable by the end of the century. There's virtually no chance that all the populated areas on the costs will remain livable in the same timeframe.
Irrelevant observation that will impress none of you.
I first studied business (informally, I was just a kid reading books at the library) 50 years ago when the container business was relatively new. When I first started businesses around 35 years ago shipping was still pretty expensive.
So for me, the thought of spending $15K to ship 2,400 cubic feet of pretty much anything is kind of awesome. From lumber to textiles to appliances to iPhones (okay, the last one is a layup) a motivated businessperson could probably still figure out how to make that work in a lot of contexts.
There are tons of possibilities in this world and they're always expanding.
Why are imports (seems to be many/most routes, worldwide) so high, in general? I get the speculation on restocking/stockpiling vs consumer demand, and how there may be a feedback loop here.^
Before that though...? What are we transporting more of? Why? I'm confused.
I don't understand why.
Is this article suggesting that imports will see lots of inflation because of costs to ship goods to the US? And then a backlog growing in Asia, which will eventually flood the US just in time for the end of the Pandemic?
It sounds like the beginnings of an old-fashion over-inventory-driven recession. But the mechanics these days are different than what we would have seen in the US during the 1980s, since the factories are in Asia. I'm curious what the result of this will be.
And for critical items bidding up the price of transport will pass those to consumer or force reorganization of the supply chain to other avenues (local or other shipping).
Medium term it's a big hiccup on the global JIT economy.
Edit: yeah I’m seeing articles about a historic backup at the port of Oakland.
This is precisely why the US and the world has farm subsidies. Because these kinds of supply / logistical shocks to the food supply can result in some real issues and political changes.
If we port / shipping subsidies we would keep capacity and subsidize return trips. A big part of the problem is a lack of empty containers in Asia.
Ships can sail faster easily (but they use more fuel). They do that when prices are high like now. That increases throughput.
Shipping contracts can usually be resold - so someone importing low priority goods can make a healthy profit by selling their shipment slot on to someone else.
These two things mean shipping should never run out. Claims of this article that there is no space left 'regardless of price' I am dubious of...
https://www.freightwaves.com/news/ever-givens-arrest-and-man...
> He noted that January trans-Pacific imports were up 10% versus 2019 (comparisons to 2020 numbers are skewed by COVID) and 13.5% in February, then jumped 51% in March. “So, we’re now at 1.5 times pre-pandemic levels.”
i.e. it serves to stoke demand and set a higher water mark on pricing. When the tight spot eases up you don’t hear about prices relaxing, terms easing up, etc.
But that's what happens when you put all your manufacturing in one large transaction.
