I don't think you are quite getting the correct nuance here. International shipping has long been a business like airlines, incredibly tight margins, often losing money. They've been in the dumps for a decade. But right now, with COVID and all the stimulus, there is an insatiable appetite for Amazon and online crap.
Therefore freight rates from the sellers ports (China) to the buyers (LA) have literally 10X'd. It went from about $1,400 USD for a container to $14,000k.
So your comments about "shipping times" and "being unable to export" aren't quite getting to the truth of the matter.
Before all this, ships would collect exports from all around Asia, then head over to the US, unload them, then load up for the return trip. They'd stop off in Korea, Japan etc unloading as they went.
Now, the money making play is loading up a pile of home gyms and XBoxes and breadmakers and other shite that people bought online, rushing across to LA, dump them, then rush back "shipping air" (ie empty) to grab another load. They're simply making hay while the sun shines. They're trying to do that one-way run as fast as possible, as many times as possible, while the market still supports 14k per container.
They don't want to stop off around Korea or Malaysia picking up and dropping off stuff. They don't want to spend 3 days in LA loading up US goods. They don't want to struggle back fully loaded. They don't want to give up their empty containers, they want to keep them.
They can save days and days in waiting and travelling distance and speed doing it like that. Back to Shanghai! There's another pile of consumer crap waiting! Chop chop, time is money!!
So yeah, your broad outlines are correct, but....whose fault is it really? *Just* the shipping companies?
I think you're definitely right in saying that shipping delays are effectively tariffs and pushing prices up for Americans.
But are the delays being caused by the shipping companies.. You say they are, but I feel don't really offer any evidence.
Is it possible that the delays are being caused by poor port infrastructure/efficiency in the US? It is well known that the ports of LA and Long Beach are considered some the least efficient ports in the world. On top of that, port productivity for LA/Long Beach deterioated further in 2021 because they were unable to uncommdate the spike in sitting containers. Between underinvestment and pushback against automation, these are probably better explanations for your graph comparing US delays with other countries.
I think the government should actively be monitoring shipping companies for anti-competitive/cartelling behavior. I'm just not sure that they're the primary reason behind the recent shipping problems we're facing.
I don't think you are quite getting the correct nuance here. International shipping has long been a business like airlines, incredibly tight margins, often losing money. They've been in the dumps for a decade. But right now, with COVID and all the stimulus, there is an insatiable appetite for Amazon and online crap.
Therefore freight rates from the sellers ports (China) to the buyers (LA) have literally 10X'd. It went from about $1,400 USD for a container to $14,000k.
So your comments about "shipping times" and "being unable to export" aren't quite getting to the truth of the matter.
Before all this, ships would collect exports from all around Asia, then head over to the US, unload them, then load up for the return trip. They'd stop off in Korea, Japan etc unloading as they went.
Now, the money making play is loading up a pile of home gyms and XBoxes and breadmakers and other shite that people bought online, rushing across to LA, dump them, then rush back "shipping air" (ie empty) to grab another load. They're simply making hay while the sun shines. They're trying to do that one-way run as fast as possible, as many times as possible, while the market still supports 14k per container.
They don't want to stop off around Korea or Malaysia picking up and dropping off stuff. They don't want to spend 3 days in LA loading up US goods. They don't want to struggle back fully loaded. They don't want to give up their empty containers, they want to keep them.
They can save days and days in waiting and travelling distance and speed doing it like that. Back to Shanghai! There's another pile of consumer crap waiting! Chop chop, time is money!!
So yeah, your broad outlines are correct, but....whose fault is it really? *Just* the shipping companies?
Container rates drop 41% month on month. Weird that. https://www.freightwaves.com/news/us-import-demand-drops-off-a-cliff
I think you're definitely right in saying that shipping delays are effectively tariffs and pushing prices up for Americans.
But are the delays being caused by the shipping companies.. You say they are, but I feel don't really offer any evidence.
Is it possible that the delays are being caused by poor port infrastructure/efficiency in the US? It is well known that the ports of LA and Long Beach are considered some the least efficient ports in the world. On top of that, port productivity for LA/Long Beach deterioated further in 2021 because they were unable to uncommdate the spike in sitting containers. Between underinvestment and pushback against automation, these are probably better explanations for your graph comparing US delays with other countries.
I think the government should actively be monitoring shipping companies for anti-competitive/cartelling behavior. I'm just not sure that they're the primary reason behind the recent shipping problems we're facing.
Would be curious what you thought of
https://noahpinion.substack.com/p/interview-ryan-petersen-ceo-of-flexport?s=r
Can I comment?
Better that foreigners reap the benefits of tariffs than Americans. No, wait...