Posted on 01/14/2022 6:22:07 AM PST by Browns Ultra Fan
Ever wonder why prices are rising so fast? One reason is that with rapidly rising energy prices under the Biden Administration, the costs are getting passed-through to consumers in the form of higher prices.
According to the Cass Corp Freight Index, the total spent in December on shipping goods to their customers in the US spiked by 43.6% from December 2020 to December 2021. Not surprising since energy prices over the past year have soared by almost 50%.
But at the same time, the Baltic Dry index (The Baltic Dry Index (BDI) is a shipping and trade index created by the London-based Baltic Exchange. It measures changes in the cost of transporting various raw materials, such as coal and steel) is crashing thanks to FEAR created by Omicron.
And yes, energy prices are surging again in 2022 after cooling off in Q4 2021.
Covid strikes!
(Excerpt) Read more at confoundedinterest.net ...
Meanwhile, there’s still the Ports America deal to worry about...
Shipping prices didn’t just go up because of energy prices increases. Not many ocean going vessels run on Natural Gas and the price they pay for the fuel oil is tiny compared to the value of the products carried.
International shipping prices went nuts because of a lack of shipping containers.
Shipping containers were in short supply because of congestion in the ports.
Congestion in the ports was mostly caused by COVID related labor shortage
The labor shortages were the result of strict lockdown rules in Democrat states and because of independent truckers being PAID by the freaking government to stay home.
Before all this Covid crap, shipping containers routinely cycled between continents 9 or 10 times per year. With the covid congestion, this dropped to 3-4 times per year. So, BOOM! In a very short time period, we had a 60-70% reduction in the apparent # of containers.
It got ridiculous in mid-summer. You couldn’t find a container to come from Japan to the US for ANY price. We paid $1.5M for 30 containers! Things have calmed down quite a bit since then. But, we still don’t have enough truckers.
(From the OP):" According to the Cass Corp Freight Index, the total spent in December on shipping goods to their customers in the US spiked by 43.6% from December 2020 to December 2021.
Not surprising since energy prices over the past year have soared by almost 50%."
"But at the same time, the Baltic Dry index (The Baltic Dry Index (BDI) is a shipping and trade index created by the London-based Baltic Exchange.
It measures changes in the cost of transporting various raw materials, such as coal and steel) is crashing thanks to FEAR created by Omicron."
SomeCallMeTim :" International shipping prices went nuts because of a lack of shipping containers.
Shipping containers were in short supply because of congestion in the ports.
Congestion in the ports was mostly caused by COVID related labor shortage"
"The labor shortages were the result of strict lockdown rules in Democrat states and because of independent truckers being PAID by the freaking government to stay home."
"Before all this Covid crap, shipping containers routinely cycled between continents 9 or 10 times per year. With the covid congestion, this dropped to 3-4 times per year.
So, BOOM! In a very short time period, we had a 60-70% reduction in the apparent # of containers."
Bidenomics.
Worse than Carter could’ve even dreamed of doing.
Somewhere along the continuum (perhaps circa 2008 or thereabouts), transporting empty shipping containers back across the Pacific seemed too expensive, so they sold them for relatively low prices and people repurposed them like crazy.
Stop paying people to not work.
Where are they still paying people not to work?
Those programs ended last September.
One article I read pushed the problem even further into the chain. They were writing that moving stuff from the port to the distribution warehouse was another bottleneck because those facilities were not 24/7 AND they were having a tough time getting people to move the contents from the unloaded containers to the trucks that would take them to the regional distribution site.
I recall seeing sat photos from Shanghai back in 2020 that showed tens of thousands of containers sitting on the side of rail lines and stacked up around ports. This was because the production was so slow in China, the boxes were not being filled and sent back to idle ports.
It appears we are about to enter that portion of the cycle again—with a couple major ports in China shutting down.
This has been an interesting education on how stuff works in the world.
Yes, I remember that the shipping containers were repurposed elsewhere.
At one point, preppers were using containers to build subterranean shelters, storm shelters, and root cellers.
After the earthquakes in Christchurch, New Zealand, the surface containers were repurposed to replace damaged residential housing, pending building repairs.
The containers do represent good temporary housing, but are structurally weak as reinforcement is primarily found only on the corners
therefore they are not really suitable for most subterranean structures due to side crushing from heavy soils, or exposure to high moisture/ flooding.
I have no idea what the market is now for shipping containers, but they do have promise for an inventive mind.
Adding to the problem, as I understand it that the State of California had issued new trucking regulations requiring dock transport vehicles
had to be only newer vehicles, and would not allow trucks from other States at the docking transfer sites,
thus creating additional logistics problems and further transit slow-downs.
I used to work in call centers, but call flow and container flow aren’t all that different on a spread sheet. They are all driven by calls, Handle time, post operation work time (the time to move from one operation to the next) and operator adherence to schedule.
You mess with any of those items in any work flow...and you are going to back up really, really fast.
And no one adheres to their schedule 100% of the time. You have water cooler time, bathroom breaks, and talking to your supervisors, etc.
If you have more volumne (larger ships bring more volume), slower access time (lines outside the port—> getting in and out), and fewer employees or hours worked in the local distribution warehouses...all of these things combined are really going to mess stuff up.
Now add on that the crap about emissions, work hours, and other over the road issues and you have BIG problems.
The only solution to a lot of this stuff is more hours, more trucks, and more employees.
And...Biden wonders where his inflation is coming from.
Business tv pundits are calling for $100/BL oil.by Memorial Day? Any takers?
Back in April, the wife and I drove from LA to Kentucky. Crossing the deserts in CA, AZ and NM we saw literally thousands of containers parked on rail spurs. I estimated more than 10,000, easily. I called our forwarder to tell him where all the freaking containers were. He told me they were all backed up there waiting to get out through LA.
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