The U.S. Supply-Chain Crisis Is Already Easing

[Credence]

The supply-chain crunch appears to have already peaked in the U.S. When I first wrote this in mid-October, it felt like a bold assessment. Over the past two years, just about anything that could go wrong with global supply chains has gone wrong, from volatile swings in demand, a wave of extreme weather events and even a container ship getting stuck in the Suez Canal. But evidence keeps piling up to suggest that the U.S. is slowly but surely making progress in easing freight congestion and supply shortages.

Global average ocean freight rates for a 40-foot container have now declined for eight straight weeks, according to data released Thursday from maritime advisory and research firm Drewry. Spot pricing for the busy Shanghai-to-Los Angeles trade route has bounced around more but is still down about 19% from its September peak. Meanwhile, the number of containers lingering for longer than nine days at the Port of Los Angeles has dropped by about a third since the hub announced a plan in October to start fining ocean carriers for excessive dwell times, Executive Director Gene Seroka said this week. The threat alone seems to have driven meaningful improvement, so the ports of L.A. and Long Beach have delayed the penalties (which start at $100 a day and rise in $100 increments) until at least later this month. An influx of additional sweeper ships used to pick up empty containers is also helping to clear dock space for new cargo, while local officials have agreed to temporarily increase the number of containers that can be vertically stacked in nearby warehouses and container yards.

The Worst May Be Over

Shipping costs are still very high but they are trending down for a change

More; https://www.bloomberg.com/opinion/ar...already-easing

 

[mrjurrs]

The supply-chain crunch appears to have already peaked in the U.S. When I first wrote this in mid-October, it felt like a bold assessment. Over the past two years, just about anything that could go wrong with global supply chains has gone wrong, from volatile swings in demand, a wave of extreme weather events and even a container ship getting stuck in the Suez Canal. But evidence keeps piling up to suggest that the U.S. is slowly but surely making progress in easing freight congestion and supply shortages.

Global average ocean freight rates for a 40-foot container have now declined for eight straight weeks, according to data released Thursday from maritime advisory and research firm Drewry. Spot pricing for the busy Shanghai-to-Los Angeles trade route has bounced around more but is still down about 19% from its September peak. Meanwhile, the number of containers lingering for longer than nine days at the Port of Los Angeles has dropped by about a third since the hub announced a plan in October to start fining ocean carriers for excessive dwell times, Executive Director Gene Seroka said this week. The threat alone seems to have driven meaningful improvement, so the ports of L.A. and Long Beach have delayed the penalties (which start at $100 a day and rise in $100 increments) until at least later this month. An influx of additional sweeper ships used to pick up empty containers is also helping to clear dock space for new cargo, while local officials have agreed to temporarily increase the number of containers that can be vertically stacked in nearby warehouses and container yards.

The Worst May Be Over

Shipping costs are still very high but they are trending down for a change

More; https://www.bloomberg.com/opinion/ar...already-easing

New federal funds are being used to simply move the empty crates further inland from the ports opening new space for unloading.

Seems to me the answer to housing issues in some areas could come from repurposed shipping containers.

 

[multivita-man]

The supply-chain crunch appears to have already peaked in the U.S. When I first wrote this in mid-October, it felt like a bold assessment. Over the past two years, just about anything that could go wrong with global supply chains has gone wrong, from volatile swings in demand, a wave of extreme weather events and even a container ship getting stuck in the Suez Canal. But evidence keeps piling up to suggest that the U.S. is slowly but surely making progress in easing freight congestion and supply shortages.

Global average ocean freight rates for a 40-foot container have now declined for eight straight weeks, according to data released Thursday from maritime advisory and research firm Drewry. Spot pricing for the busy Shanghai-to-Los Angeles trade route has bounced around more but is still down about 19% from its September peak. Meanwhile, the number of containers lingering for longer than nine days at the Port of Los Angeles has dropped by about a third since the hub announced a plan in October to start fining ocean carriers for excessive dwell times, Executive Director Gene Seroka said this week. The threat alone seems to have driven meaningful improvement, so the ports of L.A. and Long Beach have delayed the penalties (which start at $100 a day and rise in $100 increments) until at least later this month. An influx of additional sweeper ships used to pick up empty containers is also helping to clear dock space for new cargo, while local officials have agreed to temporarily increase the number of containers that can be vertically stacked in nearby warehouses and container yards.

The Worst May Be Over

Shipping costs are still very high but they are trending down for a change

More; https://www.bloomberg.com/opinion/ar...already-easing

Bottlenecks are beginning to ease, though we could see a few more periodic hiccups in 2022-23 as demand ebbs and flows. But it'll be less noticeable across the broader spectrum of the economy as early as spring for the most part.

The real driver for inflation over the next 3-6 months will be energy, which in turn will push costs for shipping and rents. The crisis also has the potential to be magnified considerably by geopolitical events, particularly with regard to Eastern & Central Europe and China as well. There's always tension but Russia is threatening Ukraine and they are also increasingly destabilizing territories such as Bosnia that were once fairly stable.

 

[Felis Leo]

New federal funds are being used to simply move the empty crates further inland from the ports opening new space for unloading.

Seems to me the answer to housing issues in some areas could come from repurposed shipping containers.

I would not recommend that. I got turned off the idea after reading David Mims' book on the subject. A lot of those shipping containers are infused with highly toxic materials that are meant to keep insects and rats from infesting them and destroying the merchandise they transport. As neat as those shipping container houses are, the costs to make them safe and livable is prohibitively expensive and could probably be better spent simply building new homes from safer materials.

 

[j brown's body]

New federal funds are being used to simply move the empty crates further inland from the ports opening new space for unloading.

Seems to me the answer to housing issues in some areas could come from repurposed shipping containers.

Dang government, interfering with the markets again.

 

[DarkWizard12]

supply chain crisis eases right when Pete Buttigiege decided to go back to work

 

[Chomsky]

The supply-chain crunch appears to have already peaked in the U.S. When I first wrote this in mid-October, it felt like a bold assessment. Over the past two years, just about anything that could go wrong with global supply chains has gone wrong, from volatile swings in demand, a wave of extreme weather events and even a container ship getting stuck in the Suez Canal. But evidence keeps piling up to suggest that the U.S. is slowly but surely making progress in easing freight congestion and supply shortages.

Global average ocean freight rates for a 40-foot container have now declined for eight straight weeks, according to data released Thursday from maritime advisory and research firm Drewry. Spot pricing for the busy Shanghai-to-Los Angeles trade route has bounced around more but is still down about 19% from its September peak. Meanwhile, the number of containers lingering for longer than nine days at the Port of Los Angeles has dropped by about a third since the hub announced a plan in October to start fining ocean carriers for excessive dwell times, Executive Director Gene Seroka said this week. The threat alone seems to have driven meaningful improvement, so the ports of L.A. and Long Beach have delayed the penalties (which start at $100 a day and rise in $100 increments) until at least later this month. An influx of additional sweeper ships used to pick up empty containers is also helping to clear dock space for new cargo, while local officials have agreed to temporarily increase the number of containers that can be vertically stacked in nearby warehouses and container yards.

The Worst May Be Over

Shipping costs are still very high but they are trending down for a change

More; https://www.bloomberg.com/opinion/ar...already-easing

Thanks for this well written & well presented OP.

I'll just add that,

"Oil prices have also taken a solid retreat over the past month"

We just may be getting over the worst of this shortage/inflation phenomenon.

 

[Chomsky]

New federal funds are being used to simply move the empty crates further inland from the ports opening new space for unloading.

Seems to me the answer to housing issues in some areas could come from repurposed shipping containers.

Great idea, but the containers themselves are in short supply having increased in price 300-500%!

BTW, someone has already capitalized on your idea:

California-based company Crate Modular, for example, uses containers to make affordable multifamily apartments, temporary housing for people experiencing homelessness and school buildings.

"We procure these empty one-way-trip shipping containers, and then we bring them to our factory in Carson, California," says the company's vice president for development, Amanda Gattenby. "We convert them from shipping containers into housing by cutting the sides out, combining them together to make larger spaces, adding steel, putting in plumbing and electrical and drywall."

The finished apartments are fully insulated and include tiled bathrooms, air conditioning and high ceilings, Gattenby says.

Source:

 

[iguanaman]

I would not recommend that. I got turned off the idea after reading David Mims' book on the subject. A lot of those shipping containers are infused with highly toxic materials that are meant to keep insects and rats from infesting them and destroying the merchandise they transport. As neat as those shipping container houses are, the costs to make them safe and livable is prohibitively expensive and could probably be better spent simply building new homes from safer materials.

Steel is a terrible material for sheathing a home. It has no insulating properties and rusts too. If they have so many unusable containers why don't they melt them down as scrap?

 

[mrjurrs]

I would not recommend that. I got turned off the idea after reading David Mims' book on the subject. A lot of those shipping containers are infused with highly toxic materials that are meant to keep insects and rats from infesting them and destroying the merchandise they transport. As neat as those shipping container houses are, the costs to make them safe and livable is prohibitively expensive and could probably be better spent simply building new homes from safer materials.

Good point. I'd factor in the savings of 'reducing' what we use and the economies of scale cleaning would be subject to if the plan actually had merit. I visited a storage container 'mall' in Las Vegas, and didn't think of their previous life at all.

Downtown Container Park - Boutique Shopping, Unique Dining, Live Music

Visit Downtown Container Park, The Best Shopping, Dining and Entertainment Shopping Center in Las Vegas, Nevada. Learn about Family Events, Stores and Restaurants in Downtown Las Vegas, Nevada.

downtowncontainerpark.com

 

[mrjurrs]

Dang government, interfering with the markets again.

Seems like the cigarette butt theory of the markets. 'I'm done with it, I'll just throw it down here and be done with it'.

 

[RetiredUSN]

The supply-chain crunch appears to have already peaked in the U.S. When I first wrote this in mid-October, it felt like a bold assessment. Over the past two years, just about anything that could go wrong with global supply chains has gone wrong, from volatile swings in demand, a wave of extreme weather events and even a container ship getting stuck in the Suez Canal. But evidence keeps piling up to suggest that the U.S. is slowly but surely making progress in easing freight congestion and supply shortages.

Global average ocean freight rates for a 40-foot container have now declined for eight straight weeks, according to data released Thursday from maritime advisory and research firm Drewry. Spot pricing for the busy Shanghai-to-Los Angeles trade route has bounced around more but is still down about 19% from its September peak. Meanwhile, the number of containers lingering for longer than nine days at the Port of Los Angeles has dropped by about a third since the hub announced a plan in October to start fining ocean carriers for excessive dwell times, Executive Director Gene Seroka said this week. The threat alone seems to have driven meaningful improvement, so the ports of L.A. and Long Beach have delayed the penalties (which start at $100 a day and rise in $100 increments) until at least later this month. An influx of additional sweeper ships used to pick up empty containers is also helping to clear dock space for new cargo, while local officials have agreed to temporarily increase the number of containers that can be vertically stacked in nearby warehouses and container yards.

The Worst May Be Over

Shipping costs are still very high but they are trending down for a change

More; https://www.bloomberg.com/opinion/ar...already-easing

When people go back to work, good things happen.

 

[mrjurrs]

Great idea, but the containers themselves are in short supply having increased in price 300-500%!

BTW, someone has already capitalized on your idea:



Source:

I don't think containers are in short supply, I think containers in the places they are needed are in short supply.


There are some unbelievable homes, as well as some potential for 'tiny' houses.

 

[Felis Leo]

Good point. I'd factor in the savings of 'reducing' what we use and the economies of scale cleaning would be subject to if the plan actually had merit. I visited a storage container 'mall' in Las Vegas, and didn't think of their previous life at all.

Downtown Container Park - Boutique Shopping, Unique Dining, Live Music

Visit Downtown Container Park, The Best Shopping, Dining and Entertainment Shopping Center in Las Vegas, Nevada. Learn about Family Events, Stores and Restaurants in Downtown Las Vegas, Nevada.

downtowncontainerpark.com

It is admittedly neat. And I agree, if it were economical to clean and refurbish old shipping containers by the tens of thousands into livable housing units, it would not be a bad idea. Especially for affordable, high-density housing. They have the same dimensions as a small studio apartment. Perfect for a single person or couple. But otherwise, the same effect could be accomplished through the production of thousands of single-wide mobile homes.

 

[Lycanthrope]

This is encouraging news for everyone regardless of partisanship.

 

[HangLow]

 

[mrjurrs]

It is admittedly neat. And I agree, if it were economical to clean and refurbish old shipping containers by the tens of thousands into livable housing units, it would not be a bad idea. Especially for affordable, high-density housing. They have the same dimensions as a small studio apartment. Perfect for a single person or couple. But otherwise, the same effect could be accomplished through the production of thousands of single-wide mobile homes.

My grandparents mobile home was effectively a house. There was a carport, but that baby never moved once.

 

[Chomsky]

I must admit there's been substantial progress in clearing-out the back-log, since Biden cracked-down on it, and it has been impressive. My understanding is the back-log has been reduced by over 30%.

Is Biden responsible? It's hard to say. all we can say is Biden addressed it, and subsequently it got better. I'll take it!

(Looks like oil prices have been coming down, too.)

 

[MTAtech]

New federal funds are being used to simply move the empty crates further inland from the ports opening new space for unloading.

Seems to me the answer to housing issues in some areas could come from repurposed shipping containers.

One of my sons attended an equestrian school in West Virginia that used them as student housing. I didn’t think they were particularly to code.
As an aside, the students were 9 females to each male. No comment.