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Proprietary Data Insights Financial Pros Top Marine Shipping Searches November
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Who Gets Hurt From Maritime Backlog Try ordering a piece of furniture and see how long it takes to get it delivered. What was once a process of weeks can extend 6-8 months. That’s great for furniture dealers who can cut off typical promotions. But this doesn’t work for everyone. Many of the products shipped from China are inputs to finished products here in the states, everything from medical equipment to toys. Given the elasticity of medical demand, meaning you’ll pay whatever you have to so you don’t die, we can expect those companies to pass along price increases over time. Toys and substitutable products, on the other hand, could see some serious demand erosion. Products like toys and clothing are subject to trends as mercurial as a Tik Tok video. If kids don’t get whatever they want this year, they’ll forget about it and go for something else. That leaves retailers like Wal-Mart (WMT), Costco (COST), and Target (TGT) in a bind. While they’ll be able to move everything they get on store shelves, they’ll likely suffer from lower sales volume this holiday season. Gap (GPS) clothing already expressed this concern in the company’s last earnings report. Clothing companies can have good and bad years as a normal part of their business. Fast moving consumer goods rely on fairly steady volume. While these companies can offset losses from pricing power, they could ultimately lose or miss out on customer loyalty, the driving force behind their future growth. |
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Supply Chain |
Santa Threatens to Capsize Vessels At The Port of L.A. |
Key Takeaways
A whole new generation of children will find disappointment this Christmas as toys for girls and boys float in the Pacific. Roto-Rooter That Mess Ships moored outside the Port of L.A. crested to 111 in early November. That number dropped to 86 by the 16th and 60 on the 22nd, a 30% drop. On Tuesday, November 30th, Executive Director Gene Seroka announced they were down to 46 ships. So everything’s all good right? Depends on who you ask. The numbers listed above are reported by the Port of L.A. However, data provided by MarineTraffic puts the number closer to 100. The discrepancy stems from a new policy, as of November 16th, employed by shipping trade groups that encouraged incoming vessels to wait out in the open ocean rather than at the ports. Unsurprisingly, the drop in container ships reported by the port came precisely when the new policy was implemented. In fact, on Sunday, there were 96 ships waiting to enter the port of L.A. and Long Beach: 56 in the open ocean, 40 near the port. Another 31 ships were docked and in the process of being unloaded, bringing the total to 127. Tiny Progress Recently, the ports delayed imposing fees on carriers for excess containers of $100 per day citing a decline in lingering cargo containers. In total, the ports said idle empty containers dropped by 37%. Rates Climb Again Companies felt the pinch of higher shipping costs up through October, where rates peaked at some of their highest levels ever. Shortly thereafter, prices collapsed on fears of a Chinese and Brazilian economic slowdown. Recently, prices have begun to creep back up, hitting levels we saw over the summer. Luckily, those increases may have been temporary. The Bottom Line: We still expect ports to start clearing out after the beginning of the new year and return to normal levels after the Chinese New Year. However, our opinion has shifted. We now expect backlogs to remain a constant part of supply chain issues until demand claws back. In the meantime, keep an eye on shippers like Star Bulk Carriers (SBLK) and the Breakwave ETF (BDRY) as proxies for maritime congestion. If congestion begins to clear, that is VERY good news for the markets as it means we’ll all see less inflationary pressures. |
