Thursday, August 26, 2021

👉Supply-Chain Chaos -- Container Rates Skyrocket Even Higher

👉Supply-Chain Chaos -- Container Rates Skyrocket Even Higher

Another week, another record for container shipping spot rates. And alarmingly for shippers, upward rate momentum is accelerating. There is a scramble to get empty containers to West Coast ports so they can be returned to Asia and used for US imports. There is no Cure For High Prices quite like High Prices. It's called inflation, you print money it buys less. And More Inflation is coming. Costs of everything is going up, and quick. The prices of some things the regime can control, others it can't, international shipping is a can't for the Plunge Protection Team. Use the pandemic to disrupt the supply chains and voila! Prices up; profits down. The trend here is that every person in the US is going to be a multi-millionaire from government handouts, and there will be nothing to buy anywhere. With continual shutdowns, i don't see how anyone can expect the shelves in stores to get restocked anytime in the foreseeable future. Between the real and manufactured supply chain issues, rising costs of fuels worldwide, shortages of containers and glut of containers sitting empty at the end of routes requiring a deadhead run to fetch, retooling to assemble goods in Indonesia and points outside China, folks need to consider the rising inflation here and in other countries. They've managed to conceal it from the consumers with product shrinkage and shortages rising demand. It's become obvious the banksters think they can print themselves out of this pickle but we all know what that means. Rising inflation; and if they play their cards wrong as they have been, we likely will see hyperinflation within the next couple years. Unless your flush with bucks like most of us we have eliminated our debt, stacked a little gold and silver and stored up hard goods, supplies and food - holding our collective breaths to waiting to learn how the government will creatively legislate our stacks away from us. Shipping rates used to be in the cellar, which creates low capacity. Now as shipping rates rocket up, and especially with so much low cost money to borrow, shippers will be able to invest in shipping containers. Spot ocean container rates are up triple digits year on year, ergo they must be near their peak. They’re so high they don’t have much more room to run. So goes a common belief in the container market, despite the fact that this premise has already been proven wrong, and that container rates could theoretically have a lot more room to run if the upper limit is defined the same way it is in non-containerized shipping. There is already enough shipping chaos, logjams, container port congestion, rail terminal congestion, container shortages, delays of all kinds, along with various shortages, including the semiconductor shortage that has wreaked havoc in the auto industry and consumer electronics, amid surging consumer prices and exploding transportation costs across the spectrum as an overstimulated economy is grappling with a supply chain nightmare. And now China has suspended operations at the newly built Meishan container terminal at Ningbo-Zhoushan port, China’s second busiest port after Shanghai. The mega-terminal accounts for about 25% of the port’s traffic. What’s unbelievable about it is how stupid Jerome Powell and Co., and Congress are. They overreacted in grotesque fashion and just printed like there was no tomorrow. These are the distortions you get from such myopic, reckless behaviors. The ivory towers who softened the ground for it to happen, have never thought about it. Figurately speaking, that ship has sailed. Printing dollars is so much more fun. The few chip factories currently under construction, will have to find customers outside of defense and the auto industry or ship to Asia. However, hardly by the container. When you print and spend $4 trillion, it’s got to be produced and shipped by somebody. Think about Powell effortlessly buying $120 billion in assets, then think about a Chinese production worker killing themselves to make $4/ hour to get the 1000 pieces per day out the door. All of the QE has kept the big lie wheel turning, once it starts to strip some gears we will have significantly lower demand and massively increased poverty. Once we start to see a major drop in consumption in the U.S., these will start to move the opposite way. Container inventories will jump. The Fed Prays for a Black Swan. Speaking of rates, they are rising into the taper. That’s like super charging a rocket. But the bankers know this. What the Fed bankers don’t know is their next policy move. They want to remain dovish but how can they with the system as weak as it is? Their only hope is an outside catastrophe they can use as a scape goat. The end may or may not be in sight... but it is coming... This kind of profligacy must always come to an end... The problem is there is no price discovery mechanism left in the market. The FED has their heavy hand on everything, so everything is fake. In about two weeks millions upon millions of bums lose those billions in UI pandemic stimulus bonuses in half the states. With a dollar of government spending estimated by most economists to circulate through an economy at 7 to 10 times, removing that scam and this phony economy craters. The cheap Chinese crap purchases come to a screeching halt and watch money velocity stick pin straight down even worse than it already is and inflation out of control. Those ports will clear right on out shortly. Everyone was complaining about the UI bennies program, including me. NOT ONE person ever asked what happens when it stops. The red states were right in stopping it, but their economies are going to take a hit. States like California, Illinois, and New York are not about to turn down the free money and will milk that until the cows come home. Even If you like it or not, NEVER turn down free federal money for your constituents because you can't fill a few burger flipper jobs. That was stupid. Empty shipping containers will become the poor man's tiny home. Welcome back to The Atlantis Report. You are here for your daily dose of the truth, the whole truth, and nothing but the truth. Please take a second to hit the like button, hit the subscribe button, and don't forget to also hit the notification bell. Thank You. Much of the increase in shipping costs is due to demand increases that are not global in nature; the USA has super-charged consumption with stimmies and what one might consider to be ill-begotten asset price inflation. The inflationary pressures resulting from that are not limited to the USA however. They are even being felt in China. Inflation is cropping up seemingly-everywhere. No joke- search for headlines for South Korea, Australia, etc. in addition to the USA. And it’s present in China, too. I’d encourage anybody doubting this to start searching for articles on factory floor inflation, or simply examining a graph of the price of Chinese rebar (steel-reinforced concrete produced in China). Much of this has to do with surges in commodity prices. China has been actually trying to curb exports in its steel industry by implementing “export tariffs” (yup, you heard that correct – they are FINING steel companies are attempting to export their product). Thus far – it’s met with very limited success. And keep in mind that the steel industry in China is a huge user of coal – which is in short supply. It will be fascinating to watch this because the CCP believes it can control everything internally – but they have curiously been able to prevent their own steel companies from producing too much – thereby causing commodity price inflation surges. The CCP has always exerted a fairly-heavy hand over corporate activity. Remember that state-owned-enterprises are the largest employers in the industrial sector. It’s not fully-true that the west can do nothing but suffer inflation. Quite a lot of lower-value/high-labor manufacturing (e.g. shoes) has been moving out of China for a decade. This is a light industry though, so it is relatively easy to move. But moving around supply chains for heavier industrial work is a big project. And there isn’t excess industrial capacity in other countries to replace China in the near-term. China seems to be doubling-down on a zero covid strategy involving lots of interventions such as these. They may abandon that if they are ultimately-successful in producing a more effective vaccine that would enable them to achieve true herd immunity. But these sorts of disruptions – if repeated – do move the needle in terms of corporations moving at least some capacity out of China. Whether or not the USA is poised to recapture any of that is another discussion… China cannot indefinitely perform these sorts of interventions that lead to such disruptions before transnationals, as well as smaller companies that perform contract manufacturing in China, start to spread their manufacturing operations outside of China. Retail corporations generally don’t manufacture anything. Doubtless they are terrified about what this means for the holiday shopping season, though. Despite what magical-thinking free-market fundamentalists would have you believe – factories are not magical widgets where one flips on a switch and watches finished goods issue forth a moment later. ‘Gearing up in the states’ would require a whole change of mindset, investment etc. – which cannot be done on a compressed timeframe. The best policy right now would be to simply cool demand a bit (i.e. no more stimmies). China wants to export high-value merchandise. I think there are plenty of poor Americans ready to take those jobs. If not we open the borders. The Marshallian K indicator is crash flashing, below zero, which is GDP vs M2, which on the face of it is ridiculous. Chinese ports shutting down? Covid surge? Tight labor market? GDP is way oversold and liquidity, or seedcorn is being given away? The Fed absorbs excess cash through RRP? Who comes up with this stuff? This time next year we will be in recession and if the market is down 20% that is the reason. Of course the GDP numbers are getting a lift from supply chain inflation. More products not made by Americans shipped at top price by container ships not made by Americans and killing American jobs being bought by Americans as fast as they can get them. Is there something crossing that ocean and arriving at our ports that I cannot live without...? Serious question. Just what the hell are we importing that is so god-awful important...? How do we put an end to such dependency... as one way or the other it will happen. The world cannot sustain current levels of complexity. My honest answer is simple...we can't, and we are screwed. Being in business now for over 35 years I have learned the American (Actually the worldwide) conundrum... Everybody wants to make $100 or more an hour yet they do not want to buy products made by people that get paid $100 or more per hour. The world is spoiled with cheap Chinese crap. But It will end , because it has to... From the perspective of geopolitics alone the level of complexity is not sustainable... We are in a time of great transition ;such times are always better to read about. This was The Atlantis Report. Please Like. Share. Leave me a comment. Subscribe. And please take some time to subscribe to my backup channels, I do upload videos there too. You'll find the links in the description box. You will also find a PayPal link if you want to make a donation. Thank you wholeheartedly to all those of you who have already donated. Stay safe, sane, and healthy friends!

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“Control oil and you control nations; control food and you control the people.” Henry Kissinger

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The few who understand the system will either be so interested in its profits or so dependent on its favours that there will be no opposition from that class, while on the other hand, the great body of the people mentally incapable of comprehending the tremendous advantage that capital derives from the system will bear its burdens without complaint and perhaps without even suspecting that the system is inimical to their interests.
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USA Banker's Magazine, August 25 1924

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litical Correctness is a Political Stand Point that does not allow Political Opposition , This is actually The Definition of Dictatorship
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