Whoops, not very good if you’re hoping for sticky inflation. https://www.bloomberg.com/news/arti...s-as-supplies-climb-and-omicron-hits-iea-says
Inflation should subside a bit but not disappearing so fast.... Freight costs and logistics will stay above pre-pandemic levels for 2022 easily.... Many items are still 40-50% higher and that does not deflate that easily....
Shipping: how many retailers and manufacturers have changed their efficiency models from “just in time” to anticipated based stock? I’m not seeing empty shelves and Christmas is less than 2 weeks away.
The port of LA still says that the thoughput and output portside is limited by trucking. Same old, same old. Joe was slap-happy and still is over his announcement that he was demanding/ordering 24/7 work schedules by longshoremen, as if he were a logistics genius or something. Meanwhile the port just says that they are already offloading more than they have space for, so how does it help to stack them ten high high rather four, when they have already figured out what their max is. Then Joe went away. No one knows what was/is being done about trucking that was aggressive and meaningful, rather than just bloviating and actually moving more containers. Instead, we are getting into slowing down shipping from China, having four week rather two week crossings and having them ship less and calling that a success. Now, I know that some who follow this closely will pipe up and say all sorts of zippy things about what is new and great with the trucking situation. Tell it to the port, not me. Idiots.
First off there is no political fix so i will ignore the political bullshit that gets thrown around. A president cannot solve a problem that exists outside this country. As for shelves, retailers spent JUL, AUG and SEP loading up on as much inventory as possible which caused the last spike in freight rates. There was a lot of effort to ensure shelves would not be empty this Xmas. However, the port of Long Beach and Los Angeles still have 60-80 ships backed up and other ports are still quite congested with no shipping space. What this means is when the U.S. restocks afther holidays between end of December and the begining of Chinese New Year (Feb 2022) there will be another shipping crunch. People trying to ship into Houston, Charleston, and NY are still facing high rates and lack of space. That just cannot change overnight. It will take until May 2022 for the backlogs to catch up and for people to replenish fully inventories. Just in time will be replaced by 2-3 months of inventories and that will require mass purchasing and continue to stress the supply chain. Just because oil backed off $80 does not mean it is now cheap to ship goods from Asia. Inflation can deflate a little as we work towards normalizing but as long as demand remains strong, trucking and shipping companies have no incentives to reduce prices as they are making up for years of shitty margins in one year. Hard to turn down that money.
The Biden disaster continues. https://www.cnn.com/2021/12/14/economy/producer-price-inflation-november/index.html New York (CNN Business)A key inflation gauge showed that US prices continued to climb in November as pandemic-era supply chain chaos and a labor shortage continues. The producer price index — which tracks the average changes in selling prices that domestic producers receive over time — rose 9.6% over the 12 months ended in November. It was the biggest jump since the data series was first calculated in November 2010, according to the Bureau of Labor Statistics, and a larger advance than economists had expected.
Right. This is exactly what I’m looking at but you’re telling me inventories are about to deplete and we are going to have another crunch. Look at the September number you’re showing, it’s a 400x yoy increase. That’s huge. Where were we in 2019? Also, I wonder how much of this is true consumer demand vs business loading up inventories?
I dont think inventories will deplete, but businesses always restock after the holidays and the Chinese New Year always interrupts things for a bit. The West Coast ports are easily 4 weeks behind just to unload and there are more ships still coming. As for rates in the past the below chart might be better. Pre-pandemic the rates were about normal for quite some time. The spike in rates is 10x in some routes. That will not ballon pop back down anytime soon. Just google carrier earnings (COSCO, MAERSK, CMA)... they are making billions. Supply chains were interrupted going back 6 months at least. Stores might be stocked with gifts but in general raw amterials and manufactured products out of Asia are still extremely short and shipping them to U.S. is still backed up. There are still chip shortages as well. Xmas is just covering things up because there is a momentary break. I am already seeing Janaury routes completely full and companies are afraid of getting stuck with no supply so ordering 2-3 months at a time. It will take a few months before the demand pressures are relieved. I think it will be by the summer but then the Xmas shipping season begins again so hopefully we have all this cleared a bit. The trucking situation is really bad right now and premiums to truck anything from the port are really high. Most of the price increases I experienced this past year were logistics pass throughs. JAN-MAR restocking could keep things going and after Easter this is a small lull into June but not sure we have any pauses anymore. Too many U.S. businesses are short materials and supply to simply stop buying.
HELL OF A JOB BROWNIE!!! I look forward to Psaki arguing that Joe has gotten inflation headed in the right direction by failing to control the virus and by increasing our dependency on OPEC again. We know she can do it. And we know you will eat it right up.