Trans-Pacific deteriorating, brace for shipping ‘tsunami’

We seem to be entering a global version of The Beer Game (<a href="https:&#x2F;&#x2F;en.m.wikipedia.org&#x2F;wiki&#x2F;Beer_distribution_game" rel="nofollow">https:&#x2F;&#x2F;en.m.wikipedia.org&#x2F;wiki&#x2F;Beer_distribution_game</a>). The game is a training session on supply chain co-ordination designed to show effects of trying to order beer and bottles months ahead of time then demand changes etc. It&#x27;s mostly chaos<p>(I was speaking to someone who has seen their shipping from China to Europe quintuple - apparently all the containers stayed in Europe as no one wanted to send them back empty.)<p>The game is designed to show that &quot;local&quot; signals aren&#x27;t always indicative of full system - the example being that retailers etc are stockpiling right now on-shore. But this creates more demand than usual, slowing delivery. So the naive retailer will say &quot;OMG it now takes 3 months and 2x price to get widgets, I had better order <i>4 months</i> supply ... and so it goes - an infinite bug methodology.

This article feels extremely confusing... maybe someone here can clarify?<p>Nothing appears to be &quot;deteriorating&quot; whatsoever.<p>According to the article, in March we imported 1.5x as many goods as in March 2019, as retailers restock inventory. Which is amazing that such increased shipping capacity exists. And because there&#x27;s so much demand for shipping, shipping prices are rising.<p>This seems... great? We&#x27;re successfully restocking tons of stuff, but higher shipping prices mean that retailers will continue to give priority to what people are buying, and so a full post-pandemic restocking will be smoothed out over the rest of the year, rather than all at once?<p>I mean, scheduling restocking seems pretty flexible and can therefore respond intelligently to prices.<p>This article seems like everything is going great. What&#x27;s deteriorating? What&#x27;s the &quot;tsunami&quot;...??

A fear I had about winding down industry, shipping, and services for COVID-19 was that getting it all up and running harmoniously would be unmanageable. The incredible interconnectedness of all industry would cause problems. Say one node wants to start again, but it depends on 5 other input nodes that also want to start again. Those 5 cannot begin without their own connected nodes. And so like an apocalyptic version of trying to restart a global power grid you would have cascades of failures, rubber-banding demand and supply, and so on.

Really didn&#x27;t expect to be reading about literal containers on HN.

An interesting side effect here is that people are opting for domestic alternatives. We are in the process of remodeling our house and were going to get our windows from Italy and our heat pump system from Japan, but given the long lead times for container unloading (sometimes as much as 6 weeks on the west coast in addition to the 4 week voyage) we opted for American windows and a Carrier heat pump system (at higher cost).

&gt; &quot;We had one client who needed something loaded in May that was extremely urgent and who was ready to pay $15,000 per container.&quot;<p>Irrelevant observation that will impress none of you.<p>I first studied business (informally, I was just a kid reading books at the library) 50 years ago when the container business was relatively new. When I first started businesses around 35 years ago shipping was still pretty expensive.<p>So for me, the thought of spending $15K to ship 2,400 cubic feet of pretty much anything is kind of awesome. From lumber to textiles to appliances to iPhones (okay, the last one is a layup) a motivated businessperson could probably still figure out how to make that work in a lot of contexts.<p>There are tons of possibilities in this world and they&#x27;re always expanding.

Shipping is more elastic than you would imagine.<p>Ships can sail faster easily (but they use more fuel). They do that when prices are high like now. That increases throughput.<p>Shipping contracts can usually be resold - so someone importing low priority goods can make a healthy profit by selling their shipment slot on to someone else.<p>These two things mean shipping should never run out. Claims of this article that there is no space left &#x27;regardless of price&#x27; I am dubious of...

Another perspective - the ETF tracking shipping indices (BDRY) is outperforming every other US ETF for 2021 YTD at 177%, including leveraged index ETFs.<p><a href="https:&#x2F;&#x2F;etfdb.com&#x2F;compare&#x2F;highest-ytd-returns&#x2F;" rel="nofollow">https:&#x2F;&#x2F;etfdb.com&#x2F;compare&#x2F;highest-ytd-returns&#x2F;</a>

With global shipping, semiconductor manufacturing, and food prices spiking, is this generalized global inflation?

Interesting to note that the US only really has one container shipping line: Matson. It is an insignificant carrier in terms of capacity (less than 0.5 % world market share) which primarily services Hawaii.

It&#x27;s not just COVID either, the Suez Canal&#x2F;Ever Given logjam of some ~70k containers is still being unspooled. Some 20k of those are still physically on Ever Given, which escaped the canal only to get even more firmly wedged in the quicksand of Egyptian bureaucracy for almost a month and still counting now.<p><a href="https:&#x2F;&#x2F;www.freightwaves.com&#x2F;news&#x2F;ever-givens-arrest-and-manifest-and-the-impact-on-us-importers" rel="nofollow">https:&#x2F;&#x2F;www.freightwaves.com&#x2F;news&#x2F;ever-givens-arrest-and-man...</a>

This sounds pretty interesting.<p>Is this article suggesting that imports will see lots of inflation because of costs to ship goods to the US? And then a backlog growing in Asia, which will eventually flood the US just in time for the end of the Pandemic?<p>It sounds like the beginnings of an old-fashion over-inventory-driven recession. But the mechanics these days are different than what we would have seen in the US during the 1980s, since the factories are in Asia. I&#x27;m curious what the result of this will be.

As I was reading these comments I was reminded of some articles I read quite some time ago about the impact of global warming produced sea level rise on container ports. Many existing ports weren&#x27;t built with sea level rise in mind, and building new container ports is expensive and takes quite a while. A quick search on &quot;sea level rise container ports&quot; produced articles that said a lot of the impact depends on the amount of sea level rise. Five feet or less will probably not affect current ports very much; as the sea level rise gets higher the impact on existing ports becomes greater.<p>Would anyone who knows more about this topic care to comment?

Wonder if this could spur local manufacturing again if transportation costs start to out weigh labor &#x2F; material costs.

I feel like article is missing conclusions on what will be affected by this. Will consumer prices be higher? Delays in shipping?

Can anyone fill in some of the macro view?<p>Why are imports (seems to be many&#x2F;most routes, worldwide) so high, in general? I get the speculation on restocking&#x2F;stockpiling vs consumer demand, and how there may be a feedback loop here.^<p>Before that though...? What are we transporting more of? Why? I&#x27;m confused.

ever since Nvidia saw how much people were willing to pay for GPUs, the whole world has gone crazy and is finding ways to manufacture scarcity.

Are there good stock plays off the back of this event or is it not protracted enough to invest in without buying special instruments?

I recall reading a few years ago that the port of Oakland was in a precarious spot due to being outcompeted by excess capacity in Southern California ports as well as gulf coast ports via the Panama Canal. I would guess that is not currently an issue given the shipping backlog?<p>Edit: yeah I’m seeing articles about a historic backup at the port of Oakland.

Ports may have to do something like what aviation did a few decades ago. At major airports, you have to book a landing slot before you can take off. This eliminated circling the airport waiting to land. Los Angeles and Long Beach may have to have a scheduling system like that.

It&#x27;s going to make manufacturing in the U.S. cost-effective again.

Lot&#x27;s of discussion here about how congestion might help US industry. I think that&#x27;s backwards, high shipping rates seem to be a sign that more things are being imported from oversees instead of created locally than normal. This seems like a bad thing<p>&gt; He noted that January trans-Pacific imports were up 10% versus 2019 (comparisons to 2020 numbers are skewed by COVID) and 13.5% in February, then jumped 51% in March. “So, we’re now at 1.5 times pre-pandemic levels.”

Between this, collectible prices skyrocketing and the crypto ponzi I&#x27;d say most of the Fed&#x27;s&#x2F;Central Banks inflation is being soaked up according to plan.

The article reads like those that real estate agents push - how there is such acute housing scarcity in a given market, with advice to home buyers to be prepared to act fast with aggressive offers &amp; inflated prices to secure their home purchase.<p>i.e. it serves to stoke demand and set a higher water mark on pricing. When the tight spot eases up you don’t hear about prices relaxing, terms easing up, etc.

More like another boom phase after bust one.

I&#x27;m curious, how does the restocking work out here? Is this restocking recovering from the initial drop in Asian exports from like a year ago? Have companies been working with that dent in their inventories for the last year-ish?

It feels like ports in Portland could be used for this. Too bad they are dead, right?

Sounds oddly similar to a database deadlock. Wonder who the optimizer will select as the victim.<p>But that&#x27;s what happens when you put all your manufacturing in one large transaction.

Is there anywhere else that can ease the load on existing harbour infrastructure?<p>If the demand is this extreme, shouldn&#x27;t a new eceonomic opportunity be ripe for the picking, here?

OT: why does that site ask to install Google Widevine DRM?

Would this be an argument in favor of more domestic manufacturing?