[HN Gopher] Trans-Pacific deteriorating, brace for shipping 'tsu...
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Trans-Pacific deteriorating, brace for shipping 'tsunami'
Author : disgrunt
Score : 127 points
Date : 2021-04-27 20:38 UTC (2 hours ago)
(HTM) web link (www.freightwaves.com)
(TXT) w3m dump (www.freightwaves.com)
| ping_pong wrote:
| This sounds pretty interesting.
|
| 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?
|
| 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'm curious what the result of this will
| be.
| Red_Leaves_Flyy wrote:
| If American businesses have over bought and overpaid for
| inventory then expect bankruptcies and fire sales. Computers
| and cars are unlikely, but bread machines, lounge wear,
| exercise equipment, and similar items are likely to eventually,
| and randomly, saturate their markets. IOW people probably won't
| want a peloton in six months. If peloton overestimated demand
| it'll shock their books and if severe enough threaten their
| viability as a company.
| crazygringo wrote:
| This article feels extremely confusing... maybe someone here can
| clarify?
|
| Nothing appears to be "deteriorating" whatsoever.
|
| 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's so much demand for shipping, shipping prices are rising.
|
| This seems... great? We'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?
|
| I mean, scheduling restocking seems pretty flexible and can
| therefore respond intelligently to prices.
|
| This article seems like everything is going great. What's
| deteriorating? What's the "tsunami"...??
| ping_pong wrote:
| If I understand correctly, if you want to get something
| shipped, you can't pay a fixed price anymore. You have to pay
| spot, which is exhorbitant. So not only is there a massive
| delay in getting your goods shipped, there is a massive extra
| cost.
| fencepost wrote:
| Tried to buy a printer lately? Perhaps a computer? Part of the
| crap availability is likely due to the chip/component shortages
| that have gotten a lot of press, but some is also due to
| shipping.
|
| I was looking at low- to mid-range workgroup printers and
| business-class desktop PCs for some clients recently. From at
| least some manufacturers the ones that were available were
| selling for at least $50-100 above MSRP depending on models, or
| you could order at normal prices (don't bother looking for
| discounts!) with estimated delivery end of May or in June. This
| article makes me think there's a chance those might be
| optimistic.
| Stratoscope wrote:
| A few weeks ago I got a new ThinkPad X1 Extreme from work to
| replace my awful System76 Thelio Major. I was interested in
| checking out the X1E because I was due for a personal
| ThinkPad upgrade too.
|
| Last week I decided I liked it and went to see what Lenovo
| had available. All of the nice X1E's with the UHD display
| were showing "more than 12 weeks" delivery time!
|
| The next day I remembered that the ThinkPad P1 is exactly the
| same machine as the X1E with a different GPU. Lenovo is wacky
| like this with their model names.
|
| Some of those were showing 8-12 or over 12 week delivery too,
| but they had one model in stock the way I wanted with UHD,
| 64GB, 1TB and an empty SSD slot.
|
| It shipped the same day I ordered it, arrived Friday and is
| great! And was just $1625 plus another $149 for three-year
| premier support since I ordered it through Corporate Perks
| (who I highly recommend). Would have been $900 more if I
| bought it directly on lenovo.com, even at their "sale" price.
| The machines ship direct from Lenovo either way.
|
| So I thought I'd tell my friends and colleagues and checked
| again yesterday. Nope, all gone now, this model went up $200,
| and it along with all the other nice ones are "more than 12
| week" delivery too.
| Causality1 wrote:
| Indeed. In October of 2019 I ordered a basic printer for $36.
| The cheapest one on Amazon right now, at least with more than
| one review, is $90.
| WWLink wrote:
| > Tried to buy a printer lately?
|
| I did! I noticed B&H had the model I wanted in stock, but the
| store was closed over the weekend for a holiday. So I checked
| back right before the store opened and placed the order JUST
| as it JUST as ordering opened up again.
|
| Not 5 minutes after I ordered the printer, the page went from
| "in stock" to "more on the way" lol. I received the printer a
| week later. Most places had it a month+ out.
|
| Ugh, and that was easy compared to getting some computer
| parts right now.
| johncalvinyoung wrote:
| This situation is a mess for anyone waiting on something that's
| sitting in a container in Shanghai, or on a ship in the queue
| in Long Beach. A friend's business has a critical LCL shipment
| that was supposed to arrive to their supplier (likely receiving
| a whole container, but not _many_ containers) last week, but is
| stuck on a ship _somewhere_. That 's stressing out my friend
| the logistics manager ahead of an upcoming product launch.
|
| And no telling what the next product in queue is going to take
| in terms of component sourcing. Yikes.
| adrianmonk wrote:
| This article is written for "FreightWaves" which is "The
| Fastest Way to Navigate the Freight Market". The target
| audience is people who need to ship stuff.
|
| For them, service levels are deteriorating. What is normally
| easy has become a struggle.
| lazide wrote:
| It's a tsunami of freight - 1.5x March this year over 2 years
| sounds decently typical considering normal growth. The issue is
| that April/May/June it wouldn't be odd considering the
| circumstances if it was 5x or 10x - if there was enough
| containers, or enough ships, and there isn't. As TFA was
| pointing out, it isn't even about rising prices to get a spot.
| Sometimes you can't get a slot period.
|
| Remember all those supply chain shocks and people talking about
| needing to restock to get things working in chips,
| manufacturing, etc? Right now there is 100 containers of socks
| stuck on a ship and in the way.
|
| At least, that is what I got from the article.
| CameronNemo wrote:
| > Right now there is 100 containers of socks stuck on a ship
| and in the way.
|
| This seems like a real easy problem to fix. Some simple
| import tariffs could get a lot of the cruft out of the way in
| no time, and they could be eased back too.
| lifeisstillgood wrote:
| Sadly I don't think it works like that. Ignoring the usual
| long lead time on tariffs, and the difficulty in applying
| such rules (Socks now have 10x import duty. Ah but not
| medical support stockings. And socks on baby clothes are
| exempt, but if the socks are sold as a bundle ...)
|
| The _real_ problem is that the cruft is _already in the
| system_. If we did something clever and said all non-urgent
| shipments get delayed and the urgent ones come through we
| would have
|
| 1. Some containers have both important and cruft in them.
|
| 2. The cruft containers are on the upper port side of the
| ship. If we don't unload those the ship will topple. If we
| unload but don't onward ship we have a ton of containers
| literally sitting on the dock.
|
| 3. If we sort that out, the cruft _orders_ are part of the
| game now - the container of socks is going to _come back_
| loaded with medical computers. But now they don 't have a
| container to come back in.
|
| No the solution to this is transparency. A global
| blockchain / ledger (not The blochchain), would let people
| see some of the worst problems ahead. But that tech exists,
| but not the usage of the tools or the trust.
| wikibob wrote:
| How does a magical blockchain do anything that a database
| wouldn't, in this scenario?
| Retric wrote:
| High shipping costs are effectively a tariff on bulk goods.
| It's not particularly effective as shortages drive up
| prices.
| gonesilent wrote:
| We still have Trump's tariffs to deal with, more will just
| be yet another burden on consumers.
| icegreentea2 wrote:
| I'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?
| inetsee wrote:
| 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't built with sea level rise in mind, and building new
| container ports is expensive and takes quite a while. A quick
| search on "sea level rise container ports" 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.
|
| Would anyone who knows more about this topic care to comment?
| ksdale wrote:
| I am not a person who knows much, but google says that current
| sea level rises are between 3 and 4 millimeters a year. At that
| rate it will take 300 years to reach 5 feet.
|
| It seems like increasingly severe storms will (would) have an
| impact a century before sea level itself becomes a problem,
| even in places where the sea level is already basically a
| problem.
| arbitrage wrote:
| Is there anywhere else that can ease the load on existing harbour
| infrastructure?
|
| If the demand is this extreme, shouldn't a new eceonomic
| opportunity be ripe for the picking, here?
| zdragnar wrote:
| Ports for big ships have historically been constrained by
| geography- ideally you need a very deep, well sheltered bay.
|
| A shore with shallow waters for hundreds of feet simply make
| for very costly places to unload, and get treacherous in rough
| weather.
|
| On top of that, coastlines tend to be the most densely
| populated regions. Building up infrastructure for a new harbor
| sounds like a nightmare to get through zoning, let alone an
| environmental impact review.
| skybrian wrote:
| Maybe some US manufacturers will benefit?
| AnimalMuppet wrote:
| Yes and no. There are, for example, a few ports on the Pacific
| coast of Mexico. They don't have the transportation
| infrastructure to carry large amounts of cargo to the rest of
| the continent, and they (probably) don't have the cranes to
| efficiently unload container ships.
|
| The US ports don't have the space to expand. I don't think the
| Canadian ones can, either. Prince Rupert might be able to, but
| it would take time.
|
| The problem is the sheer scale of what you are asking for. We'd
| need either more ports, or more berths at existing ports, with
| more cranes, and more transport connections from the ports to
| the country.
|
| If there's one thing where you could get more throughput by
| throwing money at it, it would be in more efficient container
| cranes. And even that requires someone figuring out a more
| efficient crane, and then probably a few years of building it
| out at the ports, and upgrading the dockside infrastructure to
| handle the increased throughput.
| briffle wrote:
| The Port of Coos Bay in Southern Oregon has been trying to
| expand their port for 15 years now.
| https://www.portofcoosbay.com/projects But the projects take
| quite a bit of time (dredging the bay deeper and wider to
| service 1000' ships, taking over and repairing a basically
| abandoned railway with 100 year old tunnels and bridges,
| etc). Couple that with some initial resistance from state
| legislators that serve Portland (which lost its largest
| container ship terminal contracts a few years ago), and these
| things take years to get into place. Could be real fast, if
| they got a guarantee of business from somebody, but shipping
| companies don't want to pay to develop in only a few years,
| and then have their backlog clear up before then.
| toast0 wrote:
| Building a container port to handle large vessels is a big
| capital expenditure. And you also need a labor pool, and
| trucking / rail facilities. It's not something you can come up
| with quickly to take advantage of an event that everyone hopes
| is short term.
|
| Labor shortages related to covid on the US west coast leading
| to delays wouldn't be significantly helped by adding another
| port on the US west coast.
|
| From the bottom of this article, it does look like there's some
| room in alternate non-US ports, although that seems expensive
| and time consuming.
| GnarfGnarf wrote:
| It's going to make manufacturing in the U.S. cost-effective
| again.
| [deleted]
| belval wrote:
| I feel like article is missing conclusions on what will be
| affected by this. Will consumer prices be higher? Delays in
| shipping?
| Spellman wrote:
| Guessing the big issue is delay in shipping of
| components/goods.
|
| And for critical items bidding up the price of transport will
| pass those to consumer or force reorganization of the supply
| chain to other avenues (local or other shipping).
|
| Medium term it's a big hiccup on the global JIT economy.
| bruiseralmighty wrote:
| Sounds oddly similar to a database deadlock. Wonder who the
| optimizer will select as the victim.
|
| But that's what happens when you put all your manufacturing in
| one large transaction.
| d_silin wrote:
| More like another boom phase after bust one.
| malwarebytess wrote:
| 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.
| colechristensen wrote:
| Inefficiency brings up business opportunity. Some industry
| can't realign quickly? Make a bet that a new business will be
| nimble enough to deliver faster and take their market share.
| rob74 wrote:
| Yay, that's exactly the thinking that got us into this mess -
| trying to squeeze every bit of efficiency out of the supply
| chain has spread every step of production far and wide (I
| already mentioned the global journey a pair of jeans is going
| on before being sold for next-to-nothing in a mall near you:
| http://competendo.net/en/A_Pair_of_Jeans) - which was
| possible until now because of cheap logistics, but the
| current situation reveals how fragile this really is. Maybe
| what we need is not more efficiency, but more common sense...
| colechristensen wrote:
| But there's always some potential mess and fragility
| regardless of your model... robustness comes from the
| ability to react to failure i.e. to take advantage of an
| opportunity like this shipping crunch.
| sokoloff wrote:
| Many consumers will buy from a more efficient supply chain
| because the price to them (for goods in stock) is a few
| percent lower. They don't have nearly as powerful incentive
| to overpay for years in hopes of having more stable supply
| after a pandemic-induced global disruption event.
| omegaworks wrote:
| I _guess_ but that upstart better be willing to bet a massive
| amount of capital on creating that infrastructure only to
| potentially see its advantage evaporate as the supply lines
| normalize.
| macintux wrote:
| An industry like shipping doesn't seem a likely target for
| disruption. It would take a massive investment to make even
| the smallest dent in the problem, and it's mostly an analog
| system.
| acchow wrote:
| Imagine Amazon couldn't restock items and it hit their top
| line significantly.
| colechristensen wrote:
| Then manufacture locally and sell what can't get a place on
| a ship.
|
| The lack of shipping capacity creates business
| opportunities and not just for building ships or ports.
| twic wrote:
| Logistical black start:
| https://en.wikipedia.org/wiki/Black_start
| m463 wrote:
| Well that's a fascinating page.
|
| The trade-off between "might need" and "will need" is
| fascinating to think of (and pay for).
| habitue wrote:
| Really didn't expect to be reading about literal containers on
| HN.
| m463 wrote:
| same as docker - dependencies are downloading slowly before you
| get a container.
| midasuni wrote:
| Logistics is a massive global system, plenty of hacks
| dmoy wrote:
| Flexport is commonly featured here
| rrdharan wrote:
| Their hiring posts certainly are but I can't recall seeing
| much else about them beyond that - am I just mistaken?
| [deleted]
| zenmaster10665 wrote:
| Are there good stock plays off the back of this event or is it
| not protracted enough to invest in without buying special
| instruments?
| throwawayboise wrote:
| By the time you ask and get an answer here, the market will
| already have priced in any opportunity that might be mentioned.
| disgrunt wrote:
| Domestic commodities seem like a good investment near term.
| T-hawk wrote:
| My guess would be that there must be something to do from an
| investing angle -- but also that industry insiders and
| specialists who look at such things dedicatedly and
| professionally would have already priced in or arbitraged
| anything far ahead of a layman's understanding and
| participation.
| bradj wrote:
| For sure shipping equities with exposure to freight rates like
| Maersk, and maybe other logistics equities, like railroads.
| etaioinshrdlu wrote:
| With global shipping, semiconductor manufacturing, and food
| prices spiking, is this generalized global inflation?
| XorNot wrote:
| Shipping prices are extremely elastic is my understanding, so
| no. If you own a ship you always want to be running it near
| full capacity, so once the demand surge subsides prices will
| also fall.
|
| Inflation requires their not to be a way for prices to reduce.
| [deleted]
| underseacables wrote:
| Would this be an argument in favor of more domestic
| manufacturing?
| macmac wrote:
| 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.
| wonderwonder wrote:
| Wonder if this could spur local manufacturing again if
| transportation costs start to out weigh labor / material costs.
| pmlnr wrote:
| That would be a good outcome: less transportation means less
| pollution, plus redundancy in production, which is seriously
| needed.
| jayd16 wrote:
| The cost of bootstrapping manufacturing is also probably
| impacted though.
| wonderwonder wrote:
| Very much so. Seems like a good time for the federal
| government to make low cost loans available to those seeking
| to bring manufacturing back to the US.
| adrianmonk wrote:
| Depends on how long it continues. If demand is back to normal
| in 2 months and it takes 3 months to ramp up your
| manufacturing, then you'll be too late to get any benefit from
| this.
| sokoloff wrote:
| It's not just your manufacturing steps, but you need the
| upstream suppliers to also be local. There are reasons well
| beyond just price for a lot of electronics development to be
| done in and around Shenzhen.
| lazide wrote:
| Even worse, you'll have blown however many million $ it took
| to ramp up production.
| ummonk wrote:
| 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?
|
| Edit: yeah I'm seeing articles about a historic backup at the
| port of Oakland.
| lifeisstillgood wrote:
| We seem to be entering a global version of The Beer Game
| (https://en.m.wikipedia.org/wiki/Beer_distribution_game). 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's mostly chaos
|
| (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.)
|
| The game is designed to show that "local" signals aren'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 "OMG
| it now takes 3 months and 2x price to get widgets, I had better
| order _4 months_ supply ... and so it goes - an infinite bug
| methodology.
| myself248 wrote:
| Heh. I was just about to ask if this was another term for the
| bullwhip effect, and the page actually links right to it.
|
| I think the overall effect is that we all have to get used to
| things being scarce or spotty for a while, that's all. The era
| of perfect infinite next-day availability of everything has
| come to a pause. Be patient, adjust expectations, make do, and
| give the system time to recover.
|
| And wherever possible, buy local, buy on-shore.
| jerrysievert wrote:
| which is interesting as there is currently a beer can supply
| problem. breweries are now ordering more cans than ever, from
| as many places as possible in order to get their product in the
| hands of covid-plagued consumers.
|
| it's interesting to see cans from a brewery change depending on
| the week they were canned.
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