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Inbound container volumes to the US are reverting to pre-pandemic levels
- caycep 4y agoI wonder if that means current inflation rates are probably COVID-inflated and will drop precipitously? in which case maybe the Fed shouldn't raise rates as aggressively? Or maybe there's not enough to really infer anything from this?
- pishpash 4y agoWhat aggressive? They should at least get back to neutral, and they're not even there yet.
- hpagey 4y agocame to say exactly this. We are not even at neutral yet.
- jmt_ 4y agoNot until we have returned to early 2019 levels of inflation should the Feds ease their funds rate increase plans in my opinion. Why lengthen this process if we don't have to?
- MisterMower 4y agoElections, they’re perpetually around the corner. See also, 1970’s stagflation.
- ilamont 4y agoIt's very strange. Some items have a glut of inventory, others are very difficult to find. Weird substitutions are taking place in some cases, like the GE light bulbs from Mexico a friend spotted at a local retailer in Boston. Prices seem higher regardless, which ties into higher fuel and labor costs.
- NonNefarious 4y agoOr the oligopolies that are allowed to operate unfettered in the USA.
- BbzzbB 4y agoI doubt the lightbulb cartel is still a thing. While oligopolies and monopolies exist, it's not the answer to every inflating article.
- tablespoon 4y ago>> Or the oligopolies that are allowed to operate unfettered in the USA. > I doubt the lightbulb cartel is still a thing. While oligopolies and monopolies exist, it's not the answer to every inflating article. An oligopoly doesn't have to also be a cartel, it just has to have few competitors. I think the GP is complaining about how the US as pretty much allowed any market consolidation short of outright monopoly for a long time, which means a lot of companies have too little competition and therefore too much market power.
- BbzzbB 4y agoIs an oligopoly that isn't a cartel problematic? If the lightbulb manufacturers jack up their prices, how long can that last until new incumbents come around and compete margins away? You know what people hate more than oligopolies? High prices. Consolidation is not de facto problematic. Unless said consolidation leads to cartel-like behavior or entrenching regulations (which even Adam Smith recognized as a problem and a propensity of elites, I'm not arguing in favor of laissez-faire capitalism), margins will be cyclical in a free market and colluding oligopolies will eventually face new incumbents, because high margins attracts competition and investments. There are exceptions like markets where cost is prohibitive for new participants, say telecom (hello Rogers-Bell-Telus), but I don't see how that applies to lightbulbs in the 21st century.
- minsc_and_boo 4y agoWell that shouldn't come at a surprise since U.S. antitrust law is aimed at protecting consumer interests, not protecting competition.
- la64710 4y agoAnd prices are rising? Looks like we need a Economics 101 …
- cwkoss 4y agoHas domestic manufacturing ramped up in the US since covid? Or is this purely a demand side signal of consumers tightening their purse strings?
- JumpCrisscross 4y ago> Has domestic manufacturing ramped up in the US since covid? Yes[1]. [1] https://fred.stlouisfed.org/series/IPMAN https://fred.stlouisfed.org/series/IPMAN
- arcbyte 4y agoOr it's the bullwhip effect in action in this part of the supply chain
- mindcrime 4y agoMy money would be on this, at least for a significant portion of the effect. This kind of situation is nearly inevitable, as one can see from observing people playing the Beer Distribution Game[1]. [1]: https://en.wikipedia.org/wiki/Beer_distribution_game https://en.wikipedia.org/wiki/Beer_distribution_game
- francisofascii 4y agoDoesn't have to be consumers tightening, but rather shifting demand to non-manufactured physical products like restaurants, concerts, travel, etc.
- rightbyte 4y agoYe I wonder what the shift from local consumtion to tourism etc leads to. All WFH porches are built by now. > Inbound container volumes to the US are reverting to pre-pandemic levels Does not sound too drastic.
- novaRom 4y agoCurrently, some of usually luxurious types of food are in lower demand in Germany than in previous years. It's basically a choice if you will first buy necessities like meat (+80% price increase), butter (+50%), wheat flour (+100%), pasta(+100%), sunflower oil (+500%), or asparagus (-11%).
- jandrese 4y agoLots of companies are predicting a crash in the near future. Companies are in pure profit taking mode and inventory imbalances are growing and the situation is becoming less stable by the day. China shutting down entire towns for weeks at a time is contributing to the problem. It's a big problem for a highly connected economy, if you have way too much of parts A, B, C, and E, but none of part D you are in the worst position. Not only are you making no widgets, but you are also paying to warehouse all of your excess of the extra parts. An entirely predictable result of over-consolidation of numerous industries.
- molyss 4y agono only paying the warehouse, but also you'll soon be on the hook to pay for part A, B, C and E even though you have no way to sell the widget you were supposed to build with them. And if you're really lucky, those stored parts might be either perishable or quickly deprecating due to technological changes.
- margalabargala 4y ago> Lots of companies are predicting a crash in the near future. Note that when a person/company/whatever believes this, they tend to take steps that improve that entity's position, but slightly destabilizes the system as a whole. So if enough entities believe that a crash is coming, it can become a self-fulfilling prophecy.
- teeray 4y agoIs there a scenario where predicting a crash and taking action anticipating one can lead to a reduced crash or none at all?
- QuarterReptile 4y agoThe one where conservative investment and slower growth are part of the culture, maybe?
- deleted 4y ago[deleted]
- baggy_trough 4y agoWould love to be able to find a new car to buy at a reasonable price.
- meristem 4y agoAn example of how some dealers see the situation: A friend went shopping for new/reasonable car, and the Toyota dealer told them “See you in a few years!”
- corrral 4y agoI think that era's ending. I guess the benefit, if there is one, is that expensive ICE cars make electric cars look less crazy-expensive than they did before.
- baggy_trough 4y agoMassive implications if so.
- milkytron 4y agoI'm hoping it helps the transition to other forms of transportation. The US has hamstrung itself to being dependent on foreign autos and oil for nearly all necessary transportation.
- deleted 4y ago[deleted]
- MisterMower 4y agoThe US has hamstrung itself because it won’t invest in domestic energy production, whether it’s lithium and nickel mines for electric battery production, or oil and gas production.
- howmayiannoyyou 4y agoThis is not an onshoring story. Vehicles and automobiles – $306.7 billion. Global supply chain issues have GREATLY reduced imports (availability of vehicles, while increasing prices). Machinery (including computers and hardware) – $386.4 billion. Chip shortage has greatly reduced both that category and categories the depend on chips (autos aside as previously mentioned). Aerospace – $139.1 billion. Airlines continue to struggle, now due to staffing challenges that find them cutting flights. FAA oversight has stalled Boeing production on 777X and possibly other models, cutting imports necessary to build these aircraft. Gems and precious metals – $60.8 billion. Massive asset price increase and expectations that cannot continue has greatly reduced speculative demand.
- salawat 4y ago...oversight hasn't stalled Boeing production. Boeing has stalled their own production by kneecapping their own Quality apparatus. The oversight is a given part. Don't blame the guy whose there to tell you you're doing it wrong.
- sandbx 4y agoGood news, hopefully folks have decided they don't need to buy more shit
- lifeplusplus 4y agoi haven't bought anything but food in last 4 months, the only thing I bought before that was a table subsidized partially by work firm. i have this estimate/sense/quota whether if i've over spent recently, and if i splurge on something that quota gets filled that i spent too much and need to delay or let go of future non-essential stuff, but recently just paying inflated prices on grocery has been triggering that sense and therefore not really even considering spending on anything else. Really feel the difference when $30 gives you only one bag and not too long ago it was 4 bags worth of items. hell i'm eating more carrots and eggs now, just stings less to eat this then say fish which costs $9 for small piece, that you need two of per person to have sizable portion for one meal only.
- bufferoverflow 4y agoCan't afford, not "don't need". And that is not good news.
- deleted 4y ago[deleted]
- count 4y agoThe uh, entire economy of the world depends on some level that people are going to need to buy more shit.
- rossdavidh 4y agoThey could shift to buying more services and less (not zero) shit, so this isn't necessarily true. Not that "dropping off a cliff" sounds great...
- lkbm 4y ago
- legitster 4y agoTarget recently announced that they are now overstocked. Automakers are saying the chip drought is almost over. Lumber prices are going down. Seems like we are returning to normal?
- chiefalchemist 4y agoImmediately below the article title: "Inbound container volumes to the US are reverting to pre-pandemic levels" The direct answer to your question is, yes.
- colechristensen 4y agoStraight from supply crunch to recession.
- InefficientRed 4y agoWell, yeah, there's an intentional effort right now to crush demand because folks realized supply chains don't normalize in two financial quarters (see: "transitory"). All of COVID seems like a case of impatience. The fact that the pandemic would last years was kind of obvious by late spring 2020 -- when in the history of humanity have humans ever experienced a pandemic that didn't last for years/decades? (I'm not here to debate masks or whatever public health measures; that's entirely tangential to the point that pandemics don't just go away after a few months.) Pandemics do end. Just not in a few financial quarters. The same thing is happening with "Transitory Inflation" now. The supply shock IS transitory and things WILL normalize, but only in the same sense that pandemics do eventually end. Shit takes years, not quarters. I think by 2024-2025 we'll be in this weird state where supply is back to normal but where there have been years of policy aimed at crushing demand.
- mupuff1234 4y agoWhat is being done to crush demand?
- khuey 4y ago
- sdenton4 4y agoCrack that whip! https://en.wikipedia.org/wiki/Beer_distribution_game#:~:text=The%20bullwhip%20effect%20(or%20whiplash,chain%20toward%20the%20production%20end https://en.wikipedia.org/wiki/Beer_distribution_game#:~:text.... https://www.youtube.com/watch?v=j_QLzthSkfM https://www.youtube.com/watch?v=j_QLzthSkfM
- karmelapple 4y agoSince we’re talking beer, a Simpsons whip reference: https://youtu.be/5teVixi8XLU https://youtu.be/5teVixi8XLU
- mediaman 4y agoDrops in containerized freight, and the following drops in China-US freight prices, will start putting pressure on a lot of manufacturing onshoring initiatives started during the pandemic. For many classes of bulk goods, freight was becoming 50-100% or more of total landed cost for goods imported from China, which overwhelmed labor cost differentials. In addition, Chinese production problems provided more reasons to move production closer to demand. But US labor costs increased substantially during the labor crunch of 2021. Prevailing wages that were around $15 ramped to $18-22 as companies worked to compete against the likes of Amazon hiring hundreds of thousands of warehouse workers. Entry level Chinese wages have not increased nearly as much. So if freight costs collapse such that the landed cost only has 25% of landed cost as freight, and US manufacturers have experienced an increase in labor costs relative to Chinese production, this could spell some very challenging times over the next 1-2 years as a recession applies cost management discipline on the supply chain and US manufacturers find themselves in potentially an even worse comparative cost position than pre-pandemic, vis-a-vis offshore production. This is also why many US manufacturers were wary about adding capacity: they know about the bullwhip effect, and they also knew that it would affect not only consumer demand but also their supply chain advantage versus offshore production, and so any capital intensive capacity added to meet short-term demand may go idle 1-2 years afterward. And most manufacturing capacity doesn't pencil out if you only get a couple years of good utilization out of it.
- lumost 4y agoA smart move would be tostart ratcheting up tariffs. Given the amount of international capacity, the bullwhip effect should be bluntable via tariffs.
- whatshisface 4y agoIf the bullwhip effect obeyed predictable timing, companies would already be compensating for it. If you have a secret formula that can predict when it will hit, don't bother trying to convince the polity to do something about it - become a billionaire by buying ahead of the shortages and fix the problem yourself.
- 4y ago
- dukeofdoom 4y ago
- loofatoofa 4y agogreat cost breakdown of a typical canadian outing. would love to see one for a hockey game, and then one for ice fishing.
- 0des 4y agoMeanwhile there's folks like Camping With Steve who walk in to Canadian Tire with a 20 and come out with a river boat and a 7 day camp.
- hbn 4y agoBut at least our great leader goes on TV and cries about plastic straws and the supposed influx of nazis, so the tax-funded propaganda department can write positive articles about him and young people can rest assured that they're being lead by people with consistently popular, corporate-backed Good Opinions™ as the value of their labour nosedives into nothing
- kylehotchkiss 4y agoWildfire risk too high. Reduce expenses by $45. 3 hours of work saved.
- danans 4y ago> Beer $50 That's 28 bottles of Molson (https://www.thebeerstore.ca/beers/molson-canadian https://www.thebeerstore.ca/beers/molson-canadian). Hope you're sharing! > Park Pass $59 x 2 = $120 Isn't that park pass enough for a whole year's camping? > Hours of work = 25 hours 25 hours is a full work week in Canada? > Gas $100 That seems like the big one.
- dukeofdoom 4y agoOne day of camping is $59/night at Ontario Parks. 25 hours is just based on the hourly rate. This does not factor normal living expenses, or include taxes or deductions, or everyday food or housing expenses which are crazy. So 25 hours if he lives with Grandma, and Grandma feeds him. Realistically if lives alone he would have to save for a month to have $375 left over for a camping trip, if not months.
- mberning 4y agoI am very concerned about the state of the economy in the near to mid term. Working class people are getting absolutely crushed by inflation and high asset prices. Many of the things people depend upon have a relatively inelastic demand (such as housing and transportation) and the money to pay for those things will come at the expense of something else. I feel that the "trickle up" effect is going to lead to low revenues, low profits, cost cutting, job loss, etc. across the board.
- joshstrange 4y ago> I feel that the "trickle up" effect What do you mean by this? Corporations are posting record profits all while raising prices. It's greed pure and simple.
- baggy_trough 4y agoAlternately, it's supply and demand.
- mberning 4y agoThey are, for now. Keep in mind those record profits are tallied in an increasingly devalued currency. So there is certainly a greed component, but it’s not the only factor. The pain of the lower classes in society trickles up to higher classes as they constrict their spending, default on loans, etc. In demand and highly compensated engineers may find themselves jobless and struggling if the economic pain carries on for too long.
- deleted 4y ago[deleted]
- coliveira 4y agoThe big problem for the US in the near future is: the US dollar is suffering massive inflation. As this happens, they lose purchasing power, even compared to nations like China, and especially oil producing nations of OPEC. This happens at the same time when China and their trading partners are looking to decouple from USD holdings, afraid of the threats made by the US. Don't be fooled, this is the beginning of a realignment where commodity exporting nations will start to privilege Asian countries and reduce their exposure to US/EU nations that will spend several years mired on stagflation.
- pirate787 4y agoThis isn't really supported by the data. Chinese inflation is comparable to US inflation and many other countries are experience worse inflation than the States.
- somenameforme 4y agoWhat data in particular are you talking about? US Inflation Rate (currently 8.3%) : https://tradingeconomics.com/united-states/inflation-cpi https://tradingeconomics.com/united-states/inflation-cpi Chinese Inflation Rate (currently 2.1%): https://tradingeconomics.com/united-states/inflation-cpi https://tradingeconomics.com/united-states/inflation-cpi I'll grant CPI is not necessarily apples to apples because how companies compose their weightings tends to vary heavily, but it seems like the most reasonable figure to look at that I can think of?
- more_corn 4y agoWorking as intended. This will add a dip to offset the supply chain spike, biting into inflation.
- shadowgovt 4y agoI've been playing an interesting game as of late where about a dozen players participate in a goods-trading economy. The economy is small, and money values, though they can of course be fractionalized to the hundredths digit, are also generally small (each player tends to start with about 200). It's interesting to observe, over and over again, how an economy that size will just seize if only one or two players become someone whom everyone wants something from but they want for nothing. Money just pools in their coffers and since they never spend it, it's just gone from the economy. Eventually, people struggle to conduct basic transactions because the amount any individual is holding dips too close to the minimum fractionalization threshold, nobody can afford anything in the market place (except, of course, the one or two players who never spend), and what trade happens happens on a per-unit bartering basis (massively inconvenient given players in different timezones) or not at all. ... fortunately, global-scale economies are far more immune to this effect; with millions more players, millions more categories of good, and far more currency in cycle, such a seizing is basically impossible. ... unless the disparity between median holdings and maximum holdings is proportionately similar to that 200-a-person economy and the few who have all the money can't (or won't) spend it fast enough to keep it in circulation, perhaps...
- rossdavidh 4y agoI have read that the "Opium wars" in China were a result of European annoyance that China didn't want to buy anything from them. In order to prevent the scenario you describe, Europeans tried to ship them opium, and then when China tried to ban it, they went to war. One (of many) disproofs of the "international trade makes war less likely" theory.
- karpierz 4y agoI'm not sure how that's a disproof? The claim is: if "international trade" then "war less likely". The example you've proposed is: "Europe couldn't effectively trade with China, and so waged war on China." The issue from the outset is the lack of international trade?
- 4y ago
- chiefalchemist 4y agoImmediately below the (hyperbolic) title / headline: "Inbound container volumes to the US are reverting to pre-pandemic levels" The news is: supply chain is evening out and returning to previous norms. But such honest would certainly be less click-worthy.
- rossdavidh 4y agoShould be top-rated comment.
- adamc 4y agoBut it will cause some dislocation for, say, truckers.
- Animats 4y ago"Inbound container volumes to the US are reverting to pre-pandemic levels". This does not sound like a problem.
- frankcort 4y agoDoes anyone know a good way to access this sort of data (not using OP's SONAR service?)
- jlbbellefeuille 4y agoI haven’t seen this mentioned yet… The West coast Port Workers Association contract is being renegotiated and if I was a savvy buyer I would stock up inventory before and after the negotiation window instead of having my inventory stuck on a boat in the Bay Area. This obviously isn’t the whole answer, but a possible contributing cause. Also there has not been a lot of coverage on this considering how big of a deal a strike would be if they could not come to terms. The most recent article was about 4 weeks ago according to a cursory google news search. https://www.reuters.com/business/retail-consumer/us-importers-turn-prayer-president-ahead-west-coast-port-labor-talks-2022-05-10/ https://www.reuters.com/business/retail-consumer/us-importer...
- jganetsk 4y agoAll signs pointing to a stock market recovery: - Decreased consumer savings - Decreased foreign savings Plugged into the profit equation: https://www.levyforecast.com/assets/Profits.pdf https://www.levyforecast.com/assets/Profits.pdf US corporate profits should be shooting back up
- mupuff1234 4y agoRecovery from what exactly? The market as a whole hasn't gone down much.
- davedunkin 4y agoS&P 500 is down 14% from its high at the end of last year, Dow is down 10%, NASDAQ is down 25%. Those are significant drops over a 6 month period.
- adam_arthur 4y agoOn a historical valuation basis, the S&P is not cheap at all. Of course, it depends on the course of earnings, where current estimates seem quite optimistic
- MisterMower 4y ago“Dow is down 10%” “Those are significant drops” It’s going to be hilarious when you kids see a REAL recession.
- l30n4da5 4y agothose are well in the range of 'market correction' and not 'market crash', though. hell, those aren't even recession numbers. had this discussion with my friend just last night when he tried blaming our current market on our current administration. our ecomony was _heavily_ propped up by the fed during the pandemic. the market needed to correct itself eventually once the propping stopped.
- givemeethekeys 4y agoSo, we finally have some demand destruction for goods. What about fuel, services, housing, and food? Is there an oversupply of those?
- objektif 4y agoI do not understand why this author needs to play the role of an economics expert. Please stay on the topic and report the facts. Consumer spending, inflation, rates etc are complex topics.
- SN76477 4y agoI have noticed at the local grocery, they will strike out any old costs that are going down and they have a lot of them lately. Things are good
- blahblarblar 4y agoWe were making too much stuff. Banks decided we needed to buy less stuff so they made less money. Now the leftover stuff will sit because we won’t make enough money for ourselves to buy it. We’ll adjust by reducing how much stuff we make so there’s no extra stuff to sit. Once that happens the economy will not be bad anymore and then we’ll make more money to buy stuff that doesn’t exist so we can start making more stuff…
- jpster 4y agoPerhaps one cause is inventory overhang, as Target now suffers from. https://www.axios.com/2022/06/07/target-prices-retail-inventory https://www.axios.com/2022/06/07/target-prices-retail-invent...
- caterama 4y agoWhat a well written, gripping analysis! One of the most interesting plots was the Ocean Booking Volume Index... booking volume vanishes right around the start of Feb each year. I think this is about when Chinese New Year is celebrated. That's crazy!! Every year, booking volume collapses for a few weeks for Chinese New Year, bottoming out at less than 1/2 the minimum during the most recent early 2022 Shanghai lockdown.