An anonymous worker from the West Coast Port of Los Angeles came forward on “The Stew Peters Show” to discuss the claimed issues around the cargo ship backlogs. {Direct Rumble Link} As the port worker noted, based on his 18-years working there, there is no supply disruption on the unloading end of the supply chain; though they are a little backed-up, but the port is offloading at a high capacity.
The interview is interesting because the ground report contradicts the popular narrative about COVID impacts on the current supply chain. There are ample goods flowing into the supply chain from the ports, yet there are claims of shortages at the warehouse and distribution level. WATCH
Stew Peters accurately reminds his audience that no nation generates and exports as much raw material foodstuff as the United States. This is a key point seemingly overlooked by most media. The U.S. exports around $73 billion in food products annually. The next closest food export nation Germany isn’t even close at $34 billion.
In very general terms, about one-third of U.S. food exports are North/Central America (Canada, Mexico, etc) exports; approximately one-third go west (Asia) and about one-third go east (Europe). There have been no reported issues with those shipments departing the U.S.
However, one point worth noting, by the LA dock worker, is the influence of predictive orders or automated-purchases based on historic norms and patterns. I think that overheard note by the worker was somewhat misconstrued, and a correct interpretation could explain part of the backlog of container vessels offshore.
It is technically correct that large multinational importers use AI (artificial intelligence) to predict orders. However, it’s not something weird or as complex as it sounds. As supply chains have optimized computer assisted ordering has become the norm, you might have heard it referenced as ‘automated replenishment’.
Essentially, decades of manufacturer, retail or consumer scan data for all kinds of goods create a historic reference point for inventory needs. Large retailers use automated ordering to restock their warehouses with raw materials, interim assembly products (parts), and also finished goods. Prior sales data helps to determine or predict future ordering needs.
The advent of technology tracking has thinned the supply chain to a process of ‘just-in-time’ replenishment. This is JIT inventory management and now how most companies operate. The goal for Just In Time (JIT) inventory is for the new stuff to arrive just as the last of the old stuff is distributed or sold. This means you don’t have to carry excess inventory or tie up money in material waiting for consumer sales or manufacturing use.
AI automated purchasing is just a larger scale version of JIT. People involved in the supply chains and logistics simply facilitate and tweek the arrival/departure times by coordinating with suppliers and distribution on a frequency schedule. You watch the supply chain and make requests for slight modifications as you take daily use or sales information into account.
It’s not totally or fully automated; it’s more akin to computer assisted depending on the type of product being managed. However, it does become more automated every year, and there are less and less people who remember the olden ways of making predictive purchases/orders with human brain power instead of computer assistance.
That said….. Think about the economy suddenly grinding to a halt. Which, we will remind people, CTH said happened quietly at the end of May of this year.
April and May of this year was when the first batch of stunningly fast inflation prices on food, energy and gasoline hit the checkbook of working-class Americans like a thundershock. At the end of May and beginning of June the data was clear. We were seeing our first double digit inflation months in recent memory.
So, think about the impact of that massive first round of Biden inflation hitting the wages of 70% of American workers all at once. Spending priorities immediately change. Disposable income immediately shrinks. Consumer purchasing patterns immediately shift.
The consumer impact is sudden. However, the supply chain impact is more akin to slowing down a freight train with thousands of boxcars. It takes time.
What I would say, based on my experience in overlay with the conversation with the dock worker (Stew Peter interview), is that many of those off shore container vessels are full of goods that have already slowed at the consumption end. People have stopped buying some stuff, some types of goods, and those ships are carrying cargo that is no longer needed within the supply chain…. at least not at the rate within the automated replenishment system.
Part of the reason for the excessive container ships could simply be a reflection of a U.S. economy that has slowed so drastically that inbound durable goods are not needed by those on the destination side. As a consequence, there’s no rush for the importing corporation to take immediate control of the inventory.
This outlook would also explain why the worker was saying some of the delivery containers are just being stored full of goods without being distributed; and why the executives within the LA port were leasing additional storage space to house containers that were in no hurry to get picked up.
Back when import wholesalers were more important because they distributed to a larger population of smaller retailers, when this type of a scenario unfolded the importers then begin prioritizing durable good cargo that was needed more urgently, and they delayed the off-loading of durable good cargo that was less urgent. In modern days, there are less ‘wholesalers’ because small retailers have been replaced by massive multinational corporations and giant box stores. Those big corporations have their own in-house purchasing, supply chain and inventory management specialists.
[Note: Perishable cargo and fuel oil always get a priority offload regardless when they arrive in the port system.]
I can make a few calls and trace this down, but I suspect that’s essentially what is driving a significant portion of this backlog of cargo container ships that are not in a hurry to offload. Keep in mind, with Joe Biden inflation going bananas, that durable good inventory is going up in value even as it sits there idle. So unlike times when purchasing agents desperately need to turn the merchandise to get their profit, an increasing static inventory valuation simply becomes another reason for a multinational to be okay with any port delay.
If my suspicions are correct, that also means the U.S. economy is in much worse shape than financial media are reporting… another reason for the media to avoid telling the story of cargo vessels and instead deflect the story to imaginary COVID-19 supply chain disruptions. So there’s that.
I love Sundance’s analyses. He seems to figure out what is going on through all the deliberate obfuscations
The Man is a genius and can breakdown complex concepts so even the layman can understand quite quickly.
Pretty sure based on the little which is known about sundance’s personal history that he was/is involved in retail logistics and supply distribution, so this is also right up his alley.
He certainly clarified a whole lot of the Russian Collusion Hoax for me, and I could ‘see the work’ since nearly every word he wrote was based on documentary evidence that others had simply not taken the time to study closely.
He is also a brilliant writer.
We are so lucky to have him.
People who don’t come here to read Sundance’s work don’t know what they’re missing.
The contributions from the commenters is great backup for Sundance and quite informative too. Many very intelligent treepers here.
Sundance is an American hero.
Keep the merchandise off shore, wait for inflation to spike pricing and make twice, three times the profit.
Amjean: That’s what I was thinking, too. Or, there is political pressure being applied, somewhere up or down the logistics chain, to promote the narrative of supply chain disruption.
Nothing is as it seems.
Dont think for a second that most of the large businesses, Walmart, big box stores etc arent in on the fix. They are. Not just to drive up prices, but to bring in a new system which benefits them. Personally.
Perhaps another way to get rid of small retail stores.
The scumbag politicians always make out.
Probably both. Mussolini stated that fascism is government + corporatism.
Well, there IS the cost of keeping a ship idle.
There’s that, not to mention the logistics involved in refueling the ships and resupplying the crews. It’s unlikely that such long unloading delays were anticipated before the ships left port.
Inflation is rising fast enough to make this a profitable tactic.
It is a safe place to idle a multi-billion asset though: US waters.
If the supply chain is adjusting to less demand there may not be a cargo for the ship to pick up someplace else. The ship owner is at least making port time fees (probably at least a break even situation) while storing the cargo. After the ship has unloaded its cargo if it has no new cargo to get then the ship owner starts to lose money.
Plus if there are not enough empty containers to restock the ship the ship has no return load and no return containers. How would that ship get the next load? There may be requirements to return the empties or you can’t refill.
Remember that to reorder also costs two or three times more.
Unless one makes the bundle. Then bails with their gains.
If you are making a 17% markup, but the next shipload costs another 18% to restock…
Not if we don’t buy.
But the question is, who can afford to buy this stuff.
floating warehouses.
I do wonder the effects of sitting out at sea or land for extended periods. Many goods can be damaged by unforeseen circumstances as well as lack of preparation to remain in these shipping containers. The products could be damaged giving the manipulators major losses.
Or keep inventory at the regional distrubusion center and withhold it from the local retail outlet. That also is possible, depending on nearness of tax season.
In an odd way this is comforting inasmuch at least we don’t have a shortage.
Try telling that to many business’s that can’t get the product they need to do there jobs.
This. Supply chains of every industry are jacked up right now and it extends way beyond consumer goods.
The larger issue is the lack of labor.
That’s one of them and maybe that is the other which is order every week but never arrives.
Yes the other monster hiding in the closet at this time, we have the work but need more help and parts to get it done.
This is true. I’ve seen many people retiring this past year that would have otherwise stayed longer if it wasn’t for the dismal working environments these days – mask and vaccine mandates, and uptight co-workers.
Exactly…that’s what I am dealing with…forget the big business bs…I live somewhere there are limited supplies…can’t wait until Christmas (sarc) back to toilet paper shortage.
I have slowly been stockpiling flushable wipes, way easy to store.
They aren’t really flushable. Can stop up a septic tank, or so I’ve read. But I’m extraordinarily careful about that since I live on my own and have limited resources. And I don’t do stopped up toilets. (A small attempt at humor for a change). 😎
Yes, we experimented with the wipes and it takes an extremely long time for them to breakdown. They could easily clog up a system.
Absolutely not for septic worse than bacon grease.
My only point is it could be worse.
Don’t worry…. It will be.
AH! An optimist…
Too bad. When you make a deal with manufacturing 6k miles away for low labor your betting government doesn’t crash the economy.
But what we can do is stop buying durable goods. I’ve pissed my wife off to no end because I fixed my 1993 dryer 3 times for 1/5 the cost of a new one. Fixed the washer a few times as well.
Make them pay.
Back then most of the gears were made of metal, not the plastic, nylon that is currently being used.
And less computer control, or making it a “water/energy saving washer and dryer, that doesn’t WASH the closthes (clean), but thats o.k., cause the dryer doesn’t DRY them, anyway!Personally, I think best is a SOLAR dryer; clothesline, clothespins and pullys. Cost less than $50, even at todays prices.
Clothes smell freshest, no fabric softener needed!
I wash the bedding and blankets on sunny days for that reason.
Add smoke for CA fires.
You don’t live in western Washington State;)
Don’t get me started. Fricken door knobs with plastic internals. Lived in a house for 18 years not one door replaced. Live 15 years in a new home, had to replace almost all of them. Had to switch to solid wood toilet seats I’ve cracked too many coated MDF ones.
New kitchen appliances are a joke.
My husband always repaired our appliances and after 53 years; still doing what he can.
We’ve had to buy a few “new” age appliances (not “smart”) but they all have computers
in them and I absolutely HATE THEM!
Right now I am without a dishwasher for a week because we had a “bump” and the dishwasher and refrigerator starting flashing a “code”; signifying “call the technician”…we have had the dishwasher about 2 months…
The refrigerator was fine throwing the switch, defrosting, and back on again; however….not so with the dishwasher.
This is NOT progress…this is making appliances that only live a short time, must have a specialized technician to repair and cost $$ everyday all the way around. We as a nation are going backwards. There is a place for technology but it absolutely SUCKS in household appliances.
Everyday, every way I turn, I see forced dependency put upon the people of this country; and many have no clue. This will not end well.
How could you be without a dishwasher, isn’t hubby available ????
Very smart, staying away from anything dealing with the Internet of Things.
My lawn tractor caught fire this weekend. It was a 24 year old Craftsman. Electrical fire.
I thought it was time to buy a new tractor/lawn mower. There are NO such things in stock anywhere. No Home Depot. No Lowe’s. No Tractor Supply. No John Deere. Not in stores. Not online. I have checked with other people and they say it was this way in the spring when lawn mowers should have been in abundant supply.
So, I replaced the wiring harness in the old Craftsman and we will see if it fires up when I get a new gas tank (it melted partially in the fire).
Cause they’re made in China.
And China is making us. Dirty filthy communists that they are. Time to give those F***kers a black eye.
Hologram Joe and Heels Up Scamala have no idea what’s happening. They think when everything crashes, they will be safe.
Your wife should be happy. I was told by a dryer repair man that the old models are much better.
Our refrigerator’s freezer started getting warmer early this year and we were unable to get it repaired because no replacement compressors of the model needed were anywhere in the U.S. system. So we were forced to replace our 10 year old otherwise perfect condition French door refrigerator.
Couldn’t find a unit of the size we needed and we can’t fit a larger unit in our modest sized kitchen, so…. Had to purchase a slightly smaller unit and get that delivered quickly. Our dealer said at the time he’d been in the business 55 years (took over his fathers business) and had never before seen such a screwed up supply chain.
There’s plenty of dishonesty and horse manure being spread around to justify inexcusable inflation and harmful shortages, but the bottom line for many of us is we frequently cannot get what we need in a timely manner and at reasonable cost.
yeah if that were the primary cause, we would not be seeing shortages across so many points of sale on everyday items rotating around, would we?
Things ON a ship will eventually get unloaded.
If there are NO ships….
All the things being held offshore are for the elites, not us. At least that’s part of my suspicion
What a gift this site is.
Each and every day we are privileged to receive insights in to so very much of what is really going on.
Cheers!
Makes sense.
The politicians got rid of Trump and reinstated their own version of a command economy and following the standard traditions of command economies throughout the world, everything is going to crap.
Only now everything they’ve fouled up is being blamed on COVID-19.
Hey, don’t worry. I’m sure Washington DC has a five year plan to fix this….
Thank you, Sundance, for stating in plain language, aspects of this that few probably consider.
Thanks for your analysis.
All that I know, is the shelves are half empty here all of the time. (Western NC). Stores have two excuses: no one to stock shelves or ” it’s on our order list but we don’t get it”….week after week after week.
I actually contacted two of the companies whose products I had been buying weekly for a long time. One said that they had financial problems but had hired a new CFO and sure enough eventually the product started showing up again and the other one no longer made the product having been gobbled up by Contiga a huge multinational corporation and they make decisions on what is produced and according to them they only go with the most popular but, wait a minute, this is one of the products that was always hard to find because everyone wanted it.
The current method of inventory is pathetic…ask Walmart. They scan the buys and sells that does not account for theft and/or shelves that are not frequently organized so your product is miss shelved or whatever, so stupid.
Stop using Costco, Walmart, Walgreens, Sam’s Club as a reward for giving the world Wuhanvirus. Many lost their life, many given tremendous medical problems, many lost their freedoms Jobs businesses. etc while Big Pharma, China, Gates, Zuck, Amazon etc haul in billions.
Not talking about them; local grocery store chain included and everyone else. I mention Walmart and that is what you focus on. Nothing else exists here….ok…get off your high horse and get real…we don’t all live in NYC. Sounds like you are repeating something you read somewhere else.
There are very few small businesses and the ones here make you wear a mask..sorry but this idealistic idea of small businesses is obsolete….they are the problem. Big stores don’t enforce mask mandates. But no matter who, product is hard to find and I have to order online…
So you think I am stupid?
we stopped costco and later sams will not give them extra money shop wisely now you can still go to sams/costco for lunch as their dogs are loss leaders and not need a card they lose money while we munch and smile ps rx you do not need a card hurt them in the wallet
I am not seeing any food issues in Florida where I live. Hell, even toilet paper is plentiful in the stores.
Not seeing shortages in SW Missouri either
I haven’t seen any shortages here in SC yet either, I’ve been stocking up though.
Where I live COSTCO has been limiting both TP and Paper Towels to 1 bundle per customer for the past couple months.
@FrankieZee, your point is actually a little more significant than you would imagine.
Due to the geography (length of the state 700/miles + surrounded by water on three sides), Florida logistics are essentially like delivering to an island.
If Florida is getting ample distribution to support a strong economy (one of the most stable GDP’s in the nation due to DeSantis economic freedom), then all other states are/should be in good inventory shape.
It takes more time to fulfill essential durable good shipments to Florida than most other states. If the Sunshine State has no issues with replenishment, that tells you others should be seamless – and if they are not, the issue is specific to the region.
Just an fyi…
Warmest best.
Freedom — a force multiplier!!
Prior to Covid, our local northern Michigan chain grocery store had full shelves all the time. Then Covid hit and of course the toilet paper disappeared for a while. Then other items were in short supply, but then things started coming back to normal. Then late this summer, the shortages started again, but now shelves here and there are empty – one week it’s the garbanzo beans, the next week you can’t find your favorite type of pickles. Lately, there’s been a run on certain brands of canned cat food – and of course, we are restricted to 2 packages of toilet paper. I feel like we are living in the Soviet Union of the 1960s.
I spent some time in Moscow in the late 1990’s. We are not there.
Yet.
Moscow and areas around it are a perfect example of a command and control society with elites, few in what might be the middle class, with a majority scraping by.
Most people lived in state provided housing which were row after row of giant concrete buildings with tiny apartments. Heat was also state provided, and the only way to regulate it was to open a window. It was shocking to see so few houses that might be considered modest, single family here.
We were allowed to shop in a certain grocery store because we were foreigners. It was little different than grocery stores here, but you could tell the customers there were rather privileged. Although there was a huge variety of food, we bought salami, cheese and bread because we could not trust getting sick from so much else.
We traveled to another city about 2 hours outside of Moscow. People were beside the road selling giant bags of what looked like popcorn, and one little boy with a stringer full of fish that weighed almost as much as him.
When we got to our destination city, a closed military city, the only grocery store we could find was small, bare shelves and a long line of people out the door.
Random shelves are bare here where I live, but it appears to be more a slight delay in getting whatever should be on the shelves, or a lack of labor to stock them.
I have noticed our stores like Food lion and Harris Teter have been running big ads on cheese, can goods for a few weeks now.
It varies by grocery chain up here in N Alabama. Kroger has had numerous empty shelves regularly. Publix, shelves seem full all the time (Publix HQ is in Florida, so maybe that’s got something to do with it).
Lucky you. Here in NM, empty shelves are common. Products I used to rely on are no longer there. My grocery runs are at least $25 to $50 more than they were. It’s been tough.
I live in central NC. No issues with supply here. The major issue is someone to stock the shelves.
A contractor came by to give us an estimate recently and made the offhand comment that a local restaurant was only open 3 days per week not for lack of food supplies but for lack of wait staff.
That is everywhere, even in Red States that have canceled unemployment checks months ago, it’s also auto parts stores. The Federal Government is still giving out stimulus to lower wage workers.
Just as everyone suspected. We are not ignorant to these greedy bastards.
What happens when the goods go up in price but nobody has the money to buy them?
Revolution.
We remember back to the days of the Carter Administration. I bought a house with a 13.5% mortgage interest rate. My neighbor across the street bought essentially the same house 2 years earlier than I did for 1/3 the selling price of mine.
The Dems have done this to us before!
Carter malaise. I can still see his sweater.
And they were ugly sweaters too!
Well…then the same stuff happens today as it did during Jimmy Carter years…you buy what you can afford and the other stuff sits on the shelf until the store runs a special…and so it goes.
Waiting for the day when we get notified of “gas rationing” days…Long lines; carpools …it was fun/sarc
We can shoplift up to $1,000 in some areas.
Like new vehicles ?
Channel your inner Johnnie Cash.
If you only knew how close I was to the Bill Patch – Johnny Cash – One Piece At a Time Cadillac.
Good question!!
That’s the Stagflation. We remember it well.
It could be a more accurate picture. Media covers for Joe and they have been saying it’s pretty bad in many cases. So it calling it bad could be the cover. Perhaps going by their usual Joe damage control it’s much much worse.
Could the reason be, the Truckers started about a month back, a slowdown to protest the vax mandates from their employers? Now we know that SouthWest pilots, American Airlines pilots, Amtrak workers, and air traffic controllers are doing that…
Doesn’t sound as plausible as the explanation Sundance is presenting!
Heck, some of my friends still think the increase in gas price is do to more people driving because the CoVid vaccine is so successful so now they can take the vacation this year they missed last year due to the lock down! I kid you not! These aren’t high school dropouts either but retired Aerospace Engineers! Glad we went to the moon in the 1960’s. Don’t think we could do it today. Teachers Unions and Department of Education are killing us!
Mandates werent the only reason…..hours of service rules went out of control, couldn’t get a descent meal anywhere. Virtually no safe places to park and rest….treated like crap at the shippers and by the DOT. We didn’t deserve to be treated like that and this economy will learn the hard way
The WP put out a story yesterday blaming the issue on the pandemic, specifically on Americans shifting their discretionary spending from things like movies and dining to durable goods, causing a flood of imports.
Such a view is comically, and insultingly, out of touch with reality. Millions of Americans lost their jobs last year or, if they were lucky, merely lost a large percentage of their wages. They did not shift their discretionary spending, they lost it entirely. Only a Beltway elitist could write an article based on the premise that the average American had play money to throw around in 2020.
Along with other obvious causes the article did not mention inflation directly- for mysterious reasons anything which could attach responsibility to COOTUS’ policies failed to be of sufficient interest to be included- but the author pointed out the average cost of a shipping container was roughly $5,000 in January of this year, passed above $10,000 in July, is now over $20,000, and is still climbing.
That is a 400% in increase in 10 months, a number which suggests there will be little play money in both the near or long term futures, unless one happens to belong to the Beltway Cocktail Circuit.
Hehehehe….wait till that shithead Governor of California gets around to banning all internal combustion engines. Today weed whackers and leaf blowers. Tomorrow semi trucks hauling out/into the ports. What’s stopping him? Its not like he needs to get “reelected”.
no problem getting re-elected…mandatory mail in ballots does the trick.
Why are republicans not playing by the same rules and the same game that Dems are in these elections?
I mean hell, what stops them from mailing in extra ballots? They should Try flooding the system with so many damn ballots that only an authentic audit could actually determine the real winner. I know this isn’t feasible, but heck something has got to give. We all know that the left isn’t going to let go of the power they have right now and will do “whatever it takes” to keep it.
Nope. What does the trick is 70% Democrats and Republican leadership that don’t give two shites about CA
What jobs will there be for the illegals if they ban mowers and leaf blowers.
Fecal squirters.
He is not banning lawn mowers or leaf blowers. He banned GAS powered mowers and leaf blowers. Their electric replacements come at about twice the price and get only half the job done of the gas powered ones.
We don’t even have enough electricity to power things as it stands let alone add in millions of new electric powered items.
Thank God I don’t have to rely on PG&E (Pacific Gas and Electric) for electricity. We had a red flag windy day today. OMG, winds up to 30 mph gusts, and PG&E turned off power to 10s of thousands over the possibility that some branch might fall on a power line and cause a fire! Wish I were joking but I’m not.
mike,he also banned gas powered generators.
Wow! They really don’t want you to have any independence — no getting away from government intrusion. Have they banned pitchforks and tar and feathers yet?
People will drive across state lines, it will create a profitable underground economy.
Mike, I want to thank you for doing your job. This country is desperately short of truck drivers, so each and every one of you is appreciated more than you can imagine.
Everybody, take a look around at wherever you may be right now. Nearly everything you see was once on a truck
Again SD NAILS IT.
The 90’s profitability boom was nothing more than pushing inventory onto suppliers lowering inventory cost thus showing a better bottom line (which CEO’s received huge pay packages). Suppliers then worked with manufactures to the JIT model.
By not pulling durable goods cargo off ships, suppliers are forcing Chinese to become near shore floating warehouses. It shows how much stuff we don’t need.
Well done SD
My late father started a new book and stationery business sixty years ago in a small town which he ran on a simple principle of not sitting on too much stock and having sufficient on time like for Christmas and the beginning of the new school year. This was long before computers became one of the main tools for stock control but looking back I have the greatest admiration of what he achieved. It saddens me that so many small family businesses have been forced to shut their doors and deprive us of the pleasure of shopping where the owners knew you and your family and your tastes.
“I believe that _______regards the truth as its most precious commodity, perhaps that’s why they use it so sparingly”
– Mark Twain
Vessels waiting at anchor= massive revenue losses .
Especially if those cargo ships sink
Unless they are insured, then the insurance companies bought it.
Stew Peters had THIS, too:
https://www.redvoicemedia.com/2021/10/sources-vaxxed-delta-pilot-dies-in-flight-emergency-landing-required/
I’m a truck driver, been in some of these ports, and what Sundance is stating sounds exactly correct. I just talked to a buddy of mine in Mobile AL, he was at the port when we talked. He said everything is moving smoothly, no issues down there… Like the port of Savanah GA, in all of the stories I read today, not one mentioned the fact that many of these ships are normally in Long Beach, surprise, surprise. I’ve been doing this crap for thirty years, Sundance nailed it.
What do you all think would happen if there was a significant slowdown in those raw agricultural exports from the United States?
Something has got to give somewhere with increasing inflation, labor issues and the cost of a container among other things.
Could get ugly, there is coffee beans sitting on the docks in S Amercia that is not going to get shipped, it is going in the ocean… Coffee prices will be skyrocketing. That was in Bloomberg News this morning.
Oh dear. The Starbucks crowd will be flabbergasted.?
Exports are cheaper with U.S. inflation running high.
The value of the dollar (trade currency) drops in proportion to the rate of inflation. Chinese and European currencies are stronger…. as a result their purchases from us cost less.
They buy our food cheaper than we can but it ourselves.
That dynamic with inflation of Federal Reserve notes would be more to the benefit of the rest of the world and the U.S. Government for it to continue indefinitely (it cannot).
This currency inflation reminds me of Gresham’s Law. Here is a link for anyone interested in reading more about it.
https://www.investopedia.com/terms/g/greshams-law.asp
What is the explanation for the big box retailers having chartered their own container vessels if it is to their advantage to leave their goods in the harbor?
Following the logic of this article it would be to ship things they are actually selling as opposed to what was loaded on the warehoused container ships.
Thanks. Makes sense. They have to have something on the shelves.
Not it makes much more sense to me. Thanks, Sundance. And God help us this Christmas.
Please elaborate on the durable goods going up in value. Price – yes, as inflation strikes. But with the economy tanking and wages stagnant, many families won’t be able to afford those goods and they sit there. No or significantly reduced demand, I would think, would result in lower value. I’m sure I’m missing something.
They aren’t going to ship all the unpurchased crap back…
Sometimes it takes time for sellers to realize they are meeting price resistance. Often at first after some disruption (lockdowns, etc. constitute that) some consumers are euphoric, expecting upcoming better days, and willing to pay more, so initial sales are fine.
However, as others consider purchasing more soberly, and surely so when there are signs the trail ahead is risky, they look more critically at price.
The wild card is that inflation can make prices soar even if demand is also crashing: ‘Stagflation’ (stagnancy + inflation) is the term that was used to describe a less-than-crushing episode of that during Jimmy Carter’s presidency, but the inflation then was minor then compared to what we could now be facing. Carter got an F on economics (and Ford did too), but for Biden they are going to have to activate a lot more of the Alphabet to find an applicable grade.
All that said, I haven’t looked into this at all economically until I read Sundance’s article, which set me thinking. Although I have been hearing wailing about the supply chain for months, everyone in business I talked to just said that nobody wants to work anymore, and that was why there are no supplies.
Eventually thats what will happen, first the inflation, stagnation, then depression.
It’s the hedge funds (wall street) and the balance sheets in china that wall street prop up with their soft loans. Until the ships make port they are in transit and the LCs or whatever covers them financially run for the month in which the delivery was meant to be made, no movement to next month / next payment and calculation of profit and loss. Just another banker’s trick to shift when the massive financial crash caused by wall street defaults actually lands.
Many such cases.
A note to Sundance. Could this be the reason that China now has limited days of production, blaming it on lack of energy (oil, gas and coal) for the companies to run, when it really is that there are no orders to be fulfilled. Hell, if all those ships are out at sea ,full of Chinese manufactured goods, that means that the plants in China have to go dark. That would make a lot of sense to me now. So now you have millions and millions of Chinese out of work, which doesn’t look good for XI. Can the implosion of inflation in the USA actually be a blessing in disguise in brining down the CCP?
Sounds like a ready made excuse for the CCP to start a war somewhere to distract the Chinese people from that problem.
Someplace like Taiwan maybe? Under the guise of re-uniting the Motherland, of course.
Yes.
I don’t think that is the plan. China Inc is the gravy train of slave labor the globalists feed on.
Not sure what the US could do to fix it other then to normalize our life’s and economy. Two things the kapos of the globalists will not willingly do.
For us to return to being good little consumers they will have to crush their current political controls, turn the spigot D to R and celebrate new freedoms”. That might mask the moves. In any case they will not give up the reigns or their slaves willingly.
It is possible that the masters of the Universe just didn’t game out everything. We may be heading into the world of unintended consequences.
We plan,God laughs
This is what I’ve always said to any one that would listen. China crushing America crushes China. We are their life blood. Crush us and you kill yourself.
I feel like China is realizing they got played by globalists and is about to push back.
Interesting
Satan controls Mr globalist who uses but can’t control the CCP/china to build his world wide distribution/control infrastructure. Mr globalist finances the Muslim Brotherhood who in turn employ’s terror groups as shock troops throughout the Middle East to overturn the current P T B with world wide repercussions. Remember Barry’s Arab spring?
The Muslim brotherhood controls much of what passes for policy at 1800 Pennsylvania Av. This is after all
obama’s third term.
Satans caravan of foolish devils all think they will end up in control at the end of this reign of terror and chaos. I pray A Holy God is about to disabuse them of that foolish notion.
Astute observations, M8
“This outlook would also explain why the worker was saying some of the delivery containers are just being stored full of goods without being distributed; and why the executives within the LA port were leasing additional storage space to house containers that were in no hurry to get picked up.”
I have a nephew-in-law (I guess you would call him) who works at a railroad and he says basically the same thing for what’s going on there. He spoke of when lumber prices went way up and there was no shortage of lumber, just that people were buying it a lot less at the inflated prices.
Makes sense.
Excellent analysis, Sundance. Tyler Durden would be jealous! 😉
Interesting observation, but why are many store shelves at retail outlets empty? Wouldn’t they at least want to refill, before suspending re-supply?
I have been posting about jit, for some time, and have known of its strengths and weaknesses, for many years.
Glad, as well to see Sundance delve into it, with pertinent analyses.
Its SELLING point is that if material is sitting still, at ANY point in the supply chain, it is costing $.
THEREFORE, jit attempts to keep it moving, all tje time from raw material, to retail shelf.
This current situation “puts the lie to that”, in that due to rapid inflation, it (the product) will be worth more later, than now, so allow it to sit.
jit is extremely vulnerable to sudden changes in supply or demand, or a break anywhere in the chain; one weak link is all it takes.
Once there IS a disruption, it can take quite awhile to resolve; remember T.P.?
The multinationals may be benefitting, short term, by having the material sit, but bear this in mind;
They are NOT allowing this material to sit, BECAUSE it will be worth more later (due to inflation).
They are letting it sit, BECAUSE THERE IS NO DEMAND FOR IT, and there is no demand, because of inflation.
Don’t put the cart, before the horse. Also, inflation is INCREASING, not “stabilising” or decreasing, and is going to STAY with us, contrary to predictions of admin and Wall street, financial news, etc.
Therefore, there likely won’t be a demand for these products, later any more than there is now, since the demand drop is a result of changes in buying CAUSED BY INFLATION.
At what point does the storage, and $ ‘sitting still’ cost more than inflation can “cover”?
That will be time to burn the warehouses, and sink the ships, and file insurance claims, I guess.
Perhaps thats when the multinationals experience the negative consequences of their decisions?
I think the demand is still there. The money is not. Gas and food inflation is creating pressure to heavily weigh what we need v. what we want. And what we want is going to wait until we have extra $$ to buy it because what we need comes first.
What if demand changes from the high end uber-pricey appliances to the basic ones due to inflation?
The best you could do at that point would be to seriously discount the price of your high-end inventory to get it moved.
toilet paper?
References to the great TP shortage of 2020 are always shaky. There were no shortages of TP, the same amount was still being produced and shipped, but it was in the wrong places and the wrong packaging for the suddenly shifted demographics of the end-users. The same applied to frozen vegetables and chicken and many other products. Few consumers expect to buy TP on wagon wheel size rolls but the office buildings and restaurants where those consumers previously spent 1/3 of their waking hours each week had standing orders (and supplies on hand) for those wagon wheels. Same issue with chicken or vegetables. Most consumers don’t expect to buy chicken breasts in 40 pound boxes or cooking oil in 500 gallon palletainers. But restaurants do.
Even if there were sufficient small tubes for winding home-size TP rolls how many machines are in the factory to do that, how long does it take to convert more, how much more handling is involved, etc.? Likewise, warehouses of vegetables from the previous summer were already packaged for wholesale use by institutions and businesses. Suddenly schools and restaurants no longer had need for 20 or 100 pound bags of frozen beans, or hundred pound sacks of onions. I wonder how many 1/2 pint cartons of milk got destroyed for lack of a place to use them? Repackaging of frozen vegetables or fresh chicken at the warehouse is just not practical even if the packaging is available. Repackaging cooking oil or butter, etc. all entail similar issues.
It would seem that JIT is a cousin to the issues that we witnessed 18 months ago, but just as the underlying issues were different the solutions also will be different.
There are no AI’s in existence. Period.
That is correct. It is simply computer code and data bases, but AI sounds better just as sanitation engineer sounds better than garbage man.
Judging by the AIs I have contended with directly, you are sure right. They should call it Artificial Stupidity. Human judgment, when used, is liable to catch a false premise or outside factor that an AI would never question or compensate for because when the program was written, it wasn’t yet foreseen, maybe couldn’t be foreseen. If AIs had been running supply chains in the Third Century BC, ships might still be trying to unload at the City of Pompeii to this day. A human of that time would have heard about the spectacular volcanic eruption that destroyed the place.
Sundance is usually on target. However, here it seems he didn’t address the elephant in the room. The mere fact that importing a container from China now costs 20 thousand dollars just for shipping instead of the 2500 pre covid price. That definitely has an impact and can’t be ignored in an analysis.
In Westhampton NY the local surf shop had to drastically increase prices as the shipping container cost went from $3000 to $18000. The demand dropped off a cliff. This is anecdotal but gives a real example why demand may be dropping due to inflationary pressures.
Is it or is it not transitory?
As a financial executive I marvel at your breakdown. No clue what your background is but you remind me of many of my professors as I studied for my professional license.
I can also say that from my real world experience you are 100% correct In hour analysis, Sundance.
Thanks for this SD
A service/consumer economy with no demand is one that is up a creek. The last employment number was pure crap, so the hiring is weak, not a lot of cash generation and prices much higher. Adds up to a very weak economy, so everyone cuts back on costs/products including suppliers.
So what’s interesting presently is the media push to get people to start spending now or else they’ll have nothing to buy at Christmas because the supply chain is screwed up. Not sure anyone’s going on a spending spree cause some swamp creature tells them to do it, no matter what the reason.
So who is supposed to hire all the illegal aliens?
after 10 years of massive invasion from muslims to sweden and programs for work training only 15% work yet are having 36 to 44 kids per 4 wives and overwhelming the native population with crime and rape work is NOT their goal per nordstjernan
The impact of what is going on with the real or supposed supply chain failure is driving manufacturers I know crazy. I suspect that <i>if this is artificial in some way</i>, it must be very important to whatever the real intentions of important actors are.
So, Sundance, I have no right to ask anything of you, but I think to get to the bottom of this would be well worthwhile. If it is due to known or at least natural factors, that is one thing – people will find a way to solve it. If it isn’t, though, it could be very costly to the nation for it not to be exposed.
“Keep in mind, with Joe Biden inflation going bananas, that durable good inventory is going up in value even as it sits there idle.”
So what we’re seeing is more like Carters gas lines of the 70s, part II, while the oil tankers sat offshore waiting for the price to go up.
Assuming this analysis is spot on, then the “trucker shortage” is fake too. There are simply fewer containers to move over the road, so there are fewer drivers needed.
Adding to the “spot on” analysis in an indirect way, Norfolk Southern is reopening some idled intermodal capacity as we speak. I’ll bet they make some good money storing containers in these facilities and on their sidelines. The announcement was made in August, and the reopenings began about a month ago.
Norfolk Southern to reopen Pennsylvania intermodal facility | News | Norfolk Southern (nscorp.com)
My personal experience last year was that product shipping from Iowa to St. Paul left the plant then the trailer sat for 12 days in a parking lot before the trucking company hooked back up and drove it the 4 hours to make delivery. My order was on that trailer and I had confirmation of when it loaded, when it left the plant, but then it just evaporated for nearly 2 weeks. That to me says shortage of drivers, or rigs. That was summer 2020.
I understand the premise but Cargo Ships get paid for delivering containers and doing it again and again…etc.
I mean are they just willing participants in the hold pattern? Unless they are getting compensated, are they just victims?
thank you again, Sundance!
I am not happy to hear the details of this, but am happy to get factual details of what’s happening on the ground.
Thanks Sundance.
540 in the video. The taxis are at the warehouse and are not coming back to us at the port. He says this is the problem.
Did he say taxis or chassis? I was curious about this, too.
He said “Chassis”. These are the trailers that the cargo containers ride on.
They have no available trailers at the port, so people from the warehouse need to show up with a trailer to get a container loaded onto it.
Chassis
Buy American. That stuff can sit in those containers if from China
Problem being that we make so dang little in this country anymore. And much of what we do still make now relies on parts from China or other countries.
They’re not just from China, its global.
The world is fake, news, statistics, climate whatever, 😉
Not sure I buy that importers would avoid delivery of ordered goods on such change in demand. The truck driver shortage seems real enough. That affects port takeaway capacity.
Simplest explanation is early 2020 lockdowns meant staffing at a minimum. A lot of what we bought in 2020 and early 2021 was inventory within the system. Then bang, we print $6 trillion in new stimulus, but no one thinks to prints $6 trillion more stuff. Everyone has $, no one has supply, and we cannot handle all the incoming.
Truth will be in the amount of containers and ships year over year.
True Gem! The stimmy checks goosed the china pipeline for a while. Once the checks ended, someone forgot to slow down the spigot.
The stimmy buying also slammed all the shipping containers to this side of the ocean.
Can we hope and pray that people here in the US are deliberately choosing NOT to purchase crap made in China? I have put out the word not to buy me stuff from China and have indefinitely postponed two $6000 purchases of items from China.
“I can make a few calls and trace this down, but I suspect that’s essentially what is driving a significant portion of this backlog of cargo container ships that are not in a hurry to offload. ”
With JIT inventory, that would suggest less warehouse space available. If people are not buying, there is no need to restock the warehouse as often, so it sits on a ship.
If the Acme Widget company normally has warehouse space for 2 containers per month delivered to them for sale, but suddenly sales is a quarter of that, they have no need or space for their usual 2 containers of widgets.
Multiply that by thousands of companies sitting on unsold inventory, and it explains the backlog.
I’m not buying it, I personally know of a medium cap $2 billion dollar per annum revenue company (I have no interest in it financially.) that has items sitting in those container ships. They need those items like last month, so instead they are building their products without certain components that are on the ships. These products are backlogged orders that are processed years ago and large ticket items.
I’m remembering the president in waiting was in South Korea earlier (when in a splendid show of the skills she’ll bring to the international stage, she shook hands with their president and then promptly wiped her hand on her trousers…awesome) and she made a point of suggesting that parents here do their Christmas shopping for their kids RIGHT DARN NOW!
I also remember thinking what an odd statement to make and wondering what was behind making it. The start of panicking the plebs (us) at home? Knowing how awful the economy was, how much worse it would get, trying to front load Christmas purchases so her “boss” wouldn’t look like the complete incompetent we all know he is? I bet that was at least a part of it.
“….what an odd statement to make and wondering what was behind making it.”
Always consider the source, Betsy. I stopped trying to make any sense out of anyone in this Fake Administration long ago. Try it. It will increase your sanity levels tremendously.
We ordered bathroom mirrors back in April and they still haven’t arrived. Projected delivery is this month. I can’t believe we are a part of an AI purchasing program.
Window glass was 16 weeks out last fall, that may be related.
I can’t say precisely what is causing the slowdowns, but I can speak to some segments of the Durable Goods sector.
Specifically in Consumer Electronics, Major Appliances, Furniture, Fitness Equipment, and Computers and Office Equipment, the demand is still very high. Sales have been extremely strong for over a year.
Manufacturers are struggling to get goods into the country, and they are doing everything in their power to expedite shipments. Shipping costs for a container that were about $2-3K last year are often more than $20K now. Of course, prices are rising to compensate for these costs.
Not sure how this fits what may be happening in other areas, but port congestion is real, and has been getting progressively worse for months.