The Bloomberg podcast odd lots recently had an episode about this. Essentially, there's bubbles in the pipeline now. Expect Halloween and the shopping around that time to feature lots of scarcity.
Port of Los Angeles says shipping volume will plummet 35% next week
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Re: Port of Los Angeles says shipping volume will plummet 35% next week
#152Stopping the flow of Chinese products, often made with child or forced labor, is a good thing: https://www.dol.gov/agencies/ilab/reports/child-labor/list-o... . Weren’t we upset about the Uyghurs five minutes ago? Trade with China is bad. It means a race to the bottom with a foreign country that doesn’t have our labor protections or environmental laws, and whose “comparative advantage” is cheaper labor. This was a wi…
Stopping the flow entirely would collapse western society as we would have no access to technology. I don't think anyone sane disagrees the geopolitical impact of dependence on China is a bad thing, but the mechanism by which this flow of goods is being disrupted is going to have a very negative impact on people's quality of life.
Re: Port of Los Angeles says shipping volume will plummet 35% next week
#153Earlier quoted context omitted.
Genuine question but how likely is that to happen? The media doesn't seem to be doing a good job articulating what the (likely) real world impact is going to be. I keep hearing how other countries are negotiating but when you look into the details, there is nothing of substance actually happening.
I don’t think the media really knows what will happen. Trump randomly decides to lift tariffs and any prediction is off.
Or he doesn't lower them randomly, but in response to other countries lowering their own tariffs and other protectionist measures against the US, resulting in the more "balanced" trade which, whether we agree with it or not, has been the goal all along.
But yes, whatever the reason, the situation could change too quickly for safe predictions. In 2020, the US economy had recovered from the massive disruptions of the Covid lockdowns by Q4. There were shortages of toilet paper and eggs for a while, then there were surpluses and sales for a while, and then it smoothed out.
Re: Port of Los Angeles says shipping volume will plummet 35% next week
#154This could get really ugly when the shelves start going empty. This may make the toilet paper incident seem quaint in comparison.
> the toilet paper I guess these US manufacturers will need to step it up: Kimberly-Clark, Procter & Gamble, and Georgia-Pacific
As we learned from COVID-19, manufacturers really don't like building new factories or even changing the tooling to support a different kind of product (such as commercial vs household toilet paper) for a short-lived surge in demand.
An antifragile solution would be learning to use a bidet.
Re: Port of Los Angeles says shipping volume will plummet 35% next week
#155The youtuber 'What's going on with shipping?' has a good description in; it includes pointers to loads of sites with the actual data. https://www.youtube.com/watch?v=2GgcIuQ4X5k
Sal Mercogliano who runs "What's Going On with Shipping?" is one of the best informed commentators in the subjects of logistics and shipping. He's also a skilled presenter... enough so that I subscribe to his channel and I've not got any real special interest in subject (but I do recognize it's economic importance).
Also, in a different comment, his work at Campbell is mentioned, but I think that leaves open why he has anything important to say on the subject. His bio at the U.S. Naval Institute is more informative:
"Dr. Salvatore R. Mercogliano is an associate professor of history at Campbell University in North Carolina and adjunct professor at the U.S. Merchant Marine Academy. He holds a bachelor of science in marine transportation from the State University of New York Maritime College, along with a merchant marine deck officer license (unlimited tonnage 2nd mate), a master’s in maritime history and nautical archaeology from East Carolina University, and a Ph.D. in military and naval history from the University of Alabama."
Re: Port of Los Angeles says shipping volume will plummet 35% next week
#156Earlier quoted context omitted.
> the toilet paper I guess these US manufacturers will need to step it up: Kimberly-Clark, Procter & Gamble, and Georgia-Pacific
The feedstock for toilet paper (wood pulp) comes from Canada. https://www.yahoo.com/news/trumps-tariffs-on-canadian-lumber...
Paper is one of the things one should be least worried about.
We source chips from Canada because it's marginally cheaper to source it from there. It's not like the US doesn't have a ton of sources of wood pulp. Canada just has bigger cheaper sources (comparing like for like quality).
We also burn a lot of "less than ideal for paper" chips for energy rather than feed them into a paper mill, also for marginal cost per result reasons.
Wood chips suitable for paper pulp are also hugely elastic in the same way that recycled metal is. Huge volume is either directed into the supply chain or not based on marginal price. The people making every wood product are choosing what do with their waste based on chip prices and energy prices. Even your local tree service is choosing what to chip and where to dump based on economic conditions and balancing act between relative prices.
If you wanna be worried about something be worried about stuff we don't make much of in the US. Super high volume commodity widgets made from metal, all manner of electronics, etc, basically the kind of stuff where our only domestic capacity is super high dollar stuff to serve defense and aerospace.
Re: Port of Los Angeles says shipping volume will plummet 35% next week
#157Not too long ago I tried to raise money for a PCB assembly plant in the US, but couldn't raise the funding and got a "real job". Posts like these really make me wish I didn't give up lol
This is something I am personally mixed about, working in electronics and having had boards made both domestically and in China.
The thing is that China is just really damn good at electronics manufacturing. Their tooling is cutting edge, their workers are career electronics manufacturing workers, and their supply chain is insane.
However I do have a feeling of "if you build it, they will come". But I think it would need to rely heavily on automation. And I'm also not sure how you would deal with the waste in the US. In China the volume is high enough to have local companies that deal with all the byproduct. In the US I would imagine you would have to pay through the nose to dispose of it through some small time contractor 6 states away.
Re: Port of Los Angeles says shipping volume will plummet 35% next week
#158I found out yesterday that the port of LA has a free real-time dashboard (https://tower.portoptimizer.com/) so you can check the stats yourself. While it's interesting that next (week 19) shows a 35% drop YoY, the following week predicts a 25% increase from w19 and "only" 8.7% drop YoY.
Re: Port of Los Angeles says shipping volume will plummet 35% next week
#159Earlier quoted context omitted.
A retailer would be irrational to let stock run out instead of continuously raising prices.
For stuff that people need and will buy at heavily inflated prices, sure. But there are a lot of non-essential items that people probably won't buy if the price increases significantly. And for those items, I suspect a lot of stores will just let the shelves stay empty instead of spending a lot of money for inventory they can't sell.
Candy bars for example. They want to charge $3 for a single candy bar now, but no one wants to pay that much so they're selling them 2 for $5.
But retailers have studied that this trick isn't going to last because not everyone wants to buy candy bars in bulk, and they won't spend more than $3 for a single candy bar, which means if it goes any higher they won't by any candy bars at all.
Re: Port of Los Angeles says shipping volume will plummet 35% next week
#160Earlier quoted context omitted.
I both agree and have been worried that this is overly reductive. As far as I can tell, literally nothing that I buy regularly is directly sourced from China. Or anywhere other than the US & neighboring countries. The vast majority of my groceries are locally sourced. And the vast majority of the rest come from expected regions, for instance San Marzano tomatoes from Italy. I do not regularly buy clothes, children's…
Where do the farmers that grow your food get their fertilizer and fuel from? Or the electronics and hydraulics in their tractors?
That's exactly my point.
In other words, the threat model people should be worrying about isn't "bare shelves due to no goods from China to stock them" but rather "bare shelves because the entities who make the goods to stock them are missing critical components". And that's much harder for someone to predict what impact it'll have.
I imagine that my daily life is very skewed away from direct impact from a Chinese embargo relative to other US citizens. And even still, I'm pretty sure it's going to be a problem.