Trucking, Container Carriers, FedEx, UPS, Other Freight Firms Warn of “Capacity Shortage,” Expect Americans to Keep Splurging Despite Jobs Crisis

Better produce a big-fat stimulus bill pronto and keep eviction bans and forbearance going, or else these companies will face economic reality.

By Wolf Richter for WOLF STREET.

“The ships are 100% full. The containers are 100% full. You can’t get a container built. You can’t pick up a ship from the spot market. The whole container-shipping cycle is at absolutely full pulse,” said Jeremy Nixon, CEO of Ocean Network Express, the world’s fifth-largest container line, during an International Chamber of Shipping virtual event last week, cited by FreightWaves. October’s ocean container market is “unbelievable,” he said. “We are sold out.”

“Our job now is to keep the network going from an operational standpoint,” he said. “The ports are getting jammed up now. We’re starting to see bottlenecks in the supply chain. That’s another challenge going into this winter.”

Numerous US ports have reported the highest volume of containerized imports for any September, including the Port of Oakland (+10.6% year-over-year) and the Port of Los Angeles (+13.3% year-over-year).

In domestic shipping, the fear of shipping-capacity shortages has crept into the calculus, and carriers are raising their rates, and shippers, such as retailers and manufacturers, are willing to pay.

FedEx and UPS have told some of their largest customers that most of their capacity is already spoken for, retailers and shipping consultants told the Wall Street Journal. Any extra trailers with holiday orders would have to wait, they were being told.

LaserShip and DHL eCommerce Solutions told the WSJ that they booked up their holiday capacity months earlier than normal and would no longer take new customers until next year.

ShipMatrix, a software provider for shippers, told the WSJ that the capacity shortfall could reach 7 million packages per day during the holiday shopping season, with total shipping capacity for the industry being 79.1 million parcels a day during that period (up from 65.3 million last year), as 86.3 million packages per day need to be shipped (up from 67.9 million last year).

Shipment volume in the US in September jumped 7.1% compared to August, according to the Cass Freight Index for Shipments, which tracks freight by truck, rail, and air, with a concentration on trucking. This comes after volume had already jumped 8.0% in July, reversing the brief plunge during the Pandemic and much of the shipping recession from late-2018 till the Pandemic.

Shipping volume almost caught up with September last year (-1.8% year-over-year), the 22nd month in a row of year-over-year declines, during which numerous trucking companies filed for bankruptcy, some of them after a messy collapse, that took some capacity off the road.

This stacked chart going back to 2009 shows how far shipping volume had already fallen by January and February 2020, how it plunged in April, and the surge since then (red line):

In January, shipping volume had plunged 9.4% year-over-year compared to the already weak January a year earlier, the steepest year-over-year decline since October 2009. Then the distortions of the Pandemic began, amid consumer panic buying of some items and demand shifting to households away from offices, restaurants, other businesses, and schools, with demand collapsing in those sectors.

Anything having to do with ecommerce boomed, while some segments of brick-and-mortar retail got clobbered. Carriers and supply chains where overwhelmed on one end, even as demand collapsed on the other end.

The dollar-amount spent on freight by shippers jumped by 7.2% in September from August, after having already jumped by nearly 10% in August, according to the Cass Freight Index for expenditures, surpassing September last year and approaching the peak spending levels of September 2018. The amount spent on freight is a combination of freight volume and freight rates:

It is uncertain that consumers will buy all this stuff, or will get enough government stimulus and extra unemployment money to be able to buy all this stuff, but retailers are counting on it, and they’re trying to stock up for it, and they’re trying to figure out how to fulfill orders and get that stuff to consumers.

This comes as an enormous number of people are still losing their jobs every week, even while others are getting hired back, and while over 25 million people are still claiming unemployment insurance under state or federal programs, according to the Labor Department.

Weirdest economy ever.

American consumers, flush with stimulus money and extra unemployment benefits, and with money not spent on services such as travel, and with money not spent on mortgage payments – nearly 7% of mortgages are in forbearance – or on rents due to eviction bans, have purchased a record amount of durable goods:

And retail sales of goods online and in stores rose to a new high, under the new requirements of working at home, learning at home, going to the gym at home, making coffee at home….

Some of this spending isn’t a boost for the economy, but just a shift from business spending to consumer spending. And the imported value of the goods is a negative for the economy.

But this spending and the shift early on in the Pandemic put massive pressures on unprepared supply chains, and retailers ran out of stuff, and supply chains ran dry, and now companies, haunted by supply shortages and lost business and increased lead times and chaos, are trying to load up for a monster stimulus-fed holiday shopping season.

Everything now depends on stimulus, extra unemployment benefits, eviction bans, foreclosure moratoriums, forbearance, and deferral programs that all rechannel funds into purchases of consumer goods, and a lot of these goods, or their components, are imported. Somebody better produce another big-fat stimulus bill and keep eviction bans and forbearance programs going, or else these companies will face economic reality.

Depicted by my 13 whiplash-charts. Read…  Stimulus & Debt-Deferral Economy: Americans Splurged. Huge Price Increases Boosted Auto Sales. Liquidation Sales Pumped up Department Stores

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  134 comments for “Trucking, Container Carriers, FedEx, UPS, Other Freight Firms Warn of “Capacity Shortage,” Expect Americans to Keep Splurging Despite Jobs Crisis

  1. Seneca’s Cliff says:

    I keep thinking about how much better off we would be if we had used the stimulus to buy half as much stuff, but all of it made in America. Using this stimulus windfall to buy imported junk is like eating cotton candy for dinner. It may be fun(for some) but your hungry again in an hour.

    • TinyTim says:

      The problem is all those factories that could be producing goods as well as jobs in America are now in China.

      • Joe Saba says:

        exactly – we’re not interested in much these days
        cutting back and saving 50% of paycheck
        it does help that only significant bill is mortgage and utilities

      • Seneca’s Cliff says:

        We have let our factories slip away but the Germans with higher factory wages than us still make their own hair dryers, office paper shredders and vacuum cleaners, among other consumer goods. We thought we could prosper on a service economy but fate had other ideas.

        • Harrold says:

          Ayn Rand was wrong.

        • Thomas Roberts says:

          Seneca’s Cliff,

          True, but, most people don’t seem to realize that most of the advanced machines that run those factories in China are from countries like America, Germany, and Japan. We could easily start equipping our factories back up.

          At the minimum the more advanced stuff like electronics and vehicles needs to come back. Shifting low end grunt stuff like furniture and textiles to countries like Vietnam and Bangladesh shouldn’t matter, eventually, this stuff too might be automated enough to come back.

          Some things like appliances could be made modular and easy to repair, instead of tossing an entire fridge, you could have a repair guy, swap out a generic easy to replace motor. If that happens then we could let appliances be made overseas for awhile and start making replacement parts in America, eventually, possibly decades later, making it all in America.

          Right now, the new factories are being placed in new Asian countries like Vietnam, because, this is cheaper, it does actually buy America more time. While, the effects of outsourcing would always eventually catch up to America, so far, the effects felt by the average worker are mainly the effects of America being poorly run in other ways.

        • Trailer Trash says:

          Exactly which “we” let factories slip away? I can guarantee it was not production workers at Dexter Shoe Company that decided to send all the shoe machinery to China. That decision was made by the company’s owner Warren Buffet (or his appointed hatchet men).

          How do I know? I worked there as a contract programmer just before the big shutdown that devastated the town of Dexter. It will likely never recover from the blow, just like dozens (thousands?) of other small towns all across rural US.

          Buffet says buying Dexter Shoe was “the worst deal that I’ve made”. Serves him right. I can’t understand why parasites like Buffet are held in such high esteem.

        • Lisa_Hooker says:

          @Thomas – German and Japanese machine tools yes. America doesn’t make much in the way of serious machine tools anymore after the EPA made the US foundries uneconomic. Plus the machinists that built on the castings have retired/died. Few kids want to become a machinist, unlike Germany and Japan.

        • Thomas Roberts says:

          Lisa_Hooker,

          There’s some major factory machinery still made in America, especially for electronics. But, back at college most students avoided engineering and related fields, because, they thought those jobs were always going to be outsourced (because they currently are, on top of us corps paying out dividends instead of investing in R&D). So it is becoming rarer, but, patents don’t last forever and many specialty machines cannot be improved that significantly upon, so catching back up shouldn’t be too hard (if actual effort happened).

          As for why those factories are being lost in the first place. It’s important to remember that corporations write most regulations in an attempt to stifle competition, that is partly why factories can be grandfathered in for many things. Also, if a big company wants to build a factory, there is never a problem with the governor letting things slide by. The EPA is there for the small guy. The real reason those factories were lost was outsourcing and the executives caring about their paychecks above the corporation and that means thinking short-term.

      • sunny129 says:

        @ TinyTim

        “The problem is all those factories that could be producing goods as well as jobs in America are now in China”

        Who made that possible? THINK!

        NOT china or other Countries! It is the US multi-Nationals who shipped our factories and jobs ( to exploit global labor arbtrage) with the blessing of both parties and the Wall St, touting the advantages(?) of globalization ‘to all’ who ‘participate’ Bill Clinton Et all! But American wage workers got shafted!

        CAPITAL can be mobile but the labor (workers) is NOT!

        Blaming China is just laughable! Trump also the gave same multi-Nationals tax cut also! This is greatest snow job pulled on American public with the complicit of MSM ( 90% of which controlled 5 mega Corps). America is being ruled by top 0.1% elites under Corporatocracy!

        America of course, is the best democracy money can buy! No difference between WARFARE vs the WELFARE parties!

        • eg says:

          Yup. And it was predicted long ago by James Goldsmith in his “The Trap.”

        • Sierra7 says:

          Sunny129:
          So very true.
          As a former owner of two small businesses and a union labor activist I was appalled at the rhetoric in the early 1990’s about “globalization” and how it was to be done and the subsequent casting American labor into the trash chute!
          There is no going back.
          Yes we have lots of good tech accomplishments and the ability to build what we need but under the economic system we (the 1%) embrace the American worker will have to labor at a “world-level playing field”. Smaller countries might make it work for a period of time but in the long run we will all become “rickshaw” (no insult intended) economies and the gap between filthy rich and the “commons” will increase.
          Our political/labor/business leaders have sold this country down the “greed” tubes while most Americans were at the mall having “fun”.
          Prepare yourselves.

    • Yeah but how many pillows do you need, even if it is the only one??

    • Alberta says:

      Hmm.

      Try to locate 100% pima cotton v neck woman tee made in USA, long or short sleeve.

      Should be easy.

      My dad grew pima cotton in AZ. Now, cotton is grown in India, Egypt, Andes and tees are manufactured in Vietnam

      Let me know if you locate a basic American grown and manufactured v neck tee which doesn’t retail for $70-$90,
      Please.

    • Lynn says:

      Can’t always find good that are *actually* made in the US, but I will buy Thai, Indonesian, Mexican or Vietnamese goods over Chinese.

      • Seneca's cliff says:

        My wife needed a new shredder to get rid of boxes of old bills, receipts etc. and her old one burnt out. I spent days looking for a U. S. made option but there were none except for ones big enough to be fed with a forklift. But I did find a German made one, for about 35% more than the made-in-China ones from Office Depot. The blades are real tool steel and it has a duty cycle double that of the old one.

        • nick kelly says:

          Good find and for sure worth 30% more.

          But you won’t that much stuff in the consumer market from Germany or Japan except of course autos.

          China has NOT cornered the market in heavy industrial machinery or even consumer power tools. The savvy industrial buyer looking at a milling machine is
          is not going to buy on price alone.

          Almost half of China’s exports to the US are in just two categories: budget apparel (19 %) (and consumer electronics (27%)

          I will bet that the Chinese stuff in Walmart
          accounts for at least 80% of their exports and I expect it’s more. Budget: linens, houseware, kitchen ware, toys, etc.

          One thing they have in common: not enough profit to attract US business, if indeed there would be a profit.

          It’s very ‘in’ to be anti-Chinese imports as though banning them would see an return of NY’s 1950’s & 60’s rag trade in apparel or US TV’s.

          Not happening, although you could make a case for outsourcing to SK for electronics and India, Vietnam etc. for apparel on geo-political grounds.

          It would make more economic sense to tariff German and/ or Japanese/ SK cars than the Chinese stuff in Walmart. The US can make autos at a profit, but not apparel or stuffed toys.
          But it’s not ‘in’ to be anti-German or Japanese.

    • MCH says:

      Damn you, we must stimulate the Chinese economy. More stimulation….

      Make China the richest country in the world, that is the objective.

      As for making stuff in the US. See Tim Cook, and his comments on how you can’t find any manufacturing engineers in the US

      • Lisa_Hooker says:

        There are manufacturing engineers in America – they are designing facilities in Vietnam.

  2. kevin says:

    Woohoo!! Extend & Pretend IS working!
    So says the Banksters & Porkliticians (i.e. Fat Pigs of Animal Farm ;-).
    Let’s print more fiat money… I mean confetti for Xmas & new year 2021!

    • Trinacria says:

      Yes, printing and more printing is what is required by a nation where the masses (read asses) have become so spiritually bankrupt (it seems gradually over the past say 30 years… then suddenly), aided of course, by the so called elite who are even more spiritually bankrupt. Clowns to the left of me, joker to right…here I am stuck in the middle…
      In fairness in this zoo that has been created, why shouldn’t the landlords, banks and everyone done the line get bailed out as well ?

  3. Freedomnowandhow says:

    Prices for construction wood have risen about 75% for raw 2×4×? material, and a shortage of pressure treated materials in the Midwest. Drywall, not so much. I understand most of our common lumber comes from Canada, perhaps shipping has slowed between us and Canada?

    • Al Loco says:

      I thought I was going crazy buying 2x4x104 5/8 last week but I found an old reciept. 11/23/18 it was $2.97. 10/12/20 it was $7.43! There are rail capacity issues also which might be coming into play but demand is obviously huge. I dont see how this can go on forever.

      • happy_man says:

        it accelerates faster with higher and higher prices until the currency is completely worthless like confetti. Then you get war, starvation, pestilence etc

    • Paulo says:

      Maybe you should question why your Govt imposes a 27% tariff on our softwood lumber? In BC logging country all of us know it is done to protect a less efficient US logging industry.

      The unfortunate result is that even here, where we cut the stuff, my costs have increased as all products reflect World price demand which includes factors like tariffs.

      • Freedomnowandhow says:

        Paulo thanks. I haven’t seen the price increase in plywood, most if not all produced in Canada. Does the tariff apply to plywood and O.S.B. board also?

    • Young Buck says:

      Everyone I follow in the lumber industry expects prices to come down beginning of next year, lets hope they’re right.

    • Lynn says:

      It’s starting to go down wholesale, so it should start to go down retail soon. Some of the mills had shut down or partially shut down because of Covid for a while.

  4. DawnsEarlyLight says:

    Is this all durable goods and materials? Is any of it perishable/food?

    • Wolf Richter says:

      Mostly consumer goods, parts and components for manufacturers, stuff that offices buy to use in the office, etc., but excludes commodities such as grains gravel, lumber, etc.

  5. wiley says:

    First comment is spoton!Pollute less,save more,spend on local/charity goods.Every$ spent on items from China strengthens their military,buowarfare research,hacking,etc.Why help their people buy luxurygoods while putting local shops/charities out of business,thus shrinking the taxbase while adding unemployment? I am still waiting for covd check.Problems galore!If I get it or other son gets his,they are spoken for by the landlord who is a smallholder and should not be put in a bad $ position.

    • Petunia says:

      Wiley,

      All the items sold at thrift stores are donated items. I both contribute and buy from my local thrift store, but I contribute a lot more than I buy. Please keep that in mind when you pick up a good deal at the local thrift shop. I am trying to keep a donate something every time we buy something balance. Hope you find something fabulous on your next thrifting outing.

      • Joe Saba says:

        I tried donating to thrift store 1 month ago
        ALL OF THEM SAID NO GO as they were full up
        put it on curb with FREE SIGN ON IT

        • Petunia says:

          I just donated this past week and it looked rather sparse on the none clothing items. I mostly buy books and that was extremely sparse. Everybody must be home reading.

      • Ethan in NoVA says:

        I have a collection of vintage computers. The Goodwill stores in this region send all of the computer stuff to Dell for eCycling. The collectable stuff never hits the shelves, and this makes me sad.

        The local Goodwill stores are so boring I quit going.

        • nick kelly says:

          I guess u saw the EARLY Apple someone dropped off. On plywood with wires all over and the word ‘Apple’ hand- lettered in a sort of hippy multi-colored letters. Sold for about 175 K and the store was trying to locate donor to give her half.

  6. Ralph Hiesey says:

    So seems like the Fed will need to print more money and fire up the helicopters to distribute money to absorb all this stuff.

    Meanwhile job losses, and apparently insufficient income from the bottom 80% doesn’t provide sufficient demand to absorb it. No need to hire more people here since the goods keep coming in from other places

    But the money has to end up somewhere. Does that mean inflation in assets like houses and property and stocks?

    Inflation at the high end. Deflation at the low end. Or what?

    Can’t make no sense out of it

    • sunny 129 says:

      ‘Fed will need to print more money and fire up the helicopters to distribute money to absorb all this stuff.’

      YEH sounds great but Fed can only LEND but cannot give away ( only Congress can) or deposit directly into consumers, as of now. Mr. Powell is talking about ‘direct depositing’ digital $ ( can be coverted real $) with accts of citizens at the Fed.

      That means Fed has to by pass both Congress, Banks and probably IRS! Is this his pipe dream?

  7. Dano says:

    Heaven forbid anyone might actually save money! Then again, when the Lords at the Fed give you no incentive to do so, and every incentive to spend it all before they inflate it away, why not?

    I guess I’m just getting too old for this nonsense. History knows where this leads, and it’s never a good place.

    Got gold?

    • Kurtismayfield says:

      I am sorry, what financial.incentive do I have to save, when asset inflation will outpace it every year? Only way to save is invest in more assets.

      • polistra says:

        There’s ALWAYS an incentive to save, regardless of returns and interest. It’s ALWAYS better to have a stockpile of money and supplies and inventory. JIT and debt force us to rely solely on the whims of Wall Street, which is why both are strongly encouraged by Wall Street.

        • Paulo says:

          Exactly polistra. Well said.

          I’m a saver and always have been. I may be losing the inflation race with GICs and Term Deposits but I still have cash to buy whatever and whenever should I choose to do so. I’m 65 and just had to chunk out my recently departed father-in-laws house. My God, he had been paring down for years at our urging, but we will be dealing with ‘stuff’ for a good year. I won’t do this to my kids.

          This year I am building my Christmas presents. Using local wood and enjoying the Covid diversion. Nothing nicer than puttering in a well appointed wood shop with the wood stove humming along to Sirius radio. Usually my wife pops in for a looksee and a hot cuppa and chat around coffee time. Do WS over lunch and before breakfast. Doesn’t cost a dime. :-)

        • gorbachev says:

          Well Paulo .That is a hallmark moment.

      • Old School says:

        My understanding is that zero interest rates usually lead to a bubble and then to a bust. Last 10 years was bubble phase. Don’t know when it will burst, but idea of having savings is to prepare for the next phase for two reasons: 1) Don’t want to have to sell assets in a down market to pay bills. 2) Best time to purchase assets is after a purge.

        Also you can look at it from a statistical basis, since stock volatility isn’t a perfect bell curve you have to be prepared for at least a four sigma event which is stock market loss of around 70%. No body knows what year it will come but one day it will happen.

      • nodecentrepublicansleft says:

        I believe it was Dr. Doom, Nouriel Roubini, who said something to the effect of: “I don’t invest very much. Yes, I lose a little bit to inflation but I never lose 50% at one time like I can with most investments.”

        But what the hell would that guy know anyway. Buy some dinars!! :)

      • Saltcreep says:

        Save in gold, and otherwise invest in whatever is working at some given time, whether it be stocks or bonds or commodities or properties or currencies or cryptos or stocks and bonds in other countries that are behaving differently.

        Easy to say and hard to do. But it’s getting harder and harder to tread water these days, and we’re getting more and more forced to juggle around quickly as conditions change just in order to avoid loss of real capital…

  8. CRV says:

    Or is this importing/hoarding of goods a sign that people/businesses prefer goods over dollars? If so, and all these goods are going to be chased by existing and to be created dollars, will the prices not be going up like … in a hyperinflation?
    It’s like textbook coming to reality. Get your goods now you can. Get rid of your currency while it still buys something. I know i’m doing it to some extend here in Euro-country.

    • Engin-ear says:

      The macro-economy resisted nicely up to here thanks to liquidity injections and gifts;

      That improved the public mood enough to try to return to previous lifestyle and associated consumption.

      After this spring lockdowns, shown by the red curve, there is an obvious the wave of re-stocking that comes and hits the ceiling of logistics capacities.

      How long this wave will last before returning to the natural level? A quarter?

  9. MarMar says:

    “The ports are getting jammed up now.”

    If Trump loses the election but refuses to concede, there will almost certainly be stoppages at all the ports. 2020 = the year of supply chain disruptions.

    • nodecentrepublicansleft says:

      Only an insane, sore loser would try something like that.

      Surely our President would never act in such a way…..

  10. c_heale says:

    I thought there was a massive problem with cargo ships unable to leave port due to COVID and their crews all in the wrong places since they have been unable to get home.

    • Petunia says:

      Shipping companies care about the ship first and the cargo second, the crews are irrelevant. They can pick up a crew just about anywhere if they have to, to protect the ship and the cargo. I come from a family of sailors.

      • Sam says:

        True.

        I’ve read accounts that ocean going ships crews refer to their job(s) as a prison cell with a paycheck.
        And the most prized possession is hearing protection to enable sleep.

        • Harrold says:

          Most crews are from the Philippines.

        • Lisa_Hooker says:

          A career as an American Merchant Mariner hasn’t been viable for a couple of decades – excepting some cruise ships.

          There is no “hearing protection” that will protect someone from a two-story high diesel engine. It permeates the ship.

  11. Michael Engel says:

    1) 100M CV19 good to go immunity doses are on vaccine holiday.
    2) When “FDR vaccine” will be confirmed demand will be great. We the People trust FDR.
    3) Those in the back of the line, who not get a shot, risk their lives.
    4) The “FDR vaccine” will be sold out within days. The immunity lines will be jammed. The rich will buy immunity in the black market.
    5) “FDR vaccine” will save the world. It will happen few weeks after the 2020 election will be over.
    6) The vaccine scientists will Nobel Prize in medicine.

    • Doubting Thomas says:

      Michael Engel – I want to understand your post, but I can’t because I don’t know what the “FDR vaccine” is. Please let us know what you mean by the “FDR vaccine”. Thank you.

    • FDR caught the polio virus in 1921, he was in a wheelchair thereafter. He pushed for development of a vaccination, which didn’t come until after his death, in 1955.

      • Harrold says:

        FDR most likely had Guillain-Barre syndrome.

        Recently, there have been cases reported following infection with the Zika virus and COVID-19.

        • Michael Gorback says:

          Doesn’t matter what FDR had. Where’s the HIV vaccine? 40 years and counting.

          Where’s the hepatitis C vaccine? A flu vaccine not based on guesswork? Ebola vaccine, Zika vaccine, herpes (1 and 2), and RSV?

          If you want to dive into vaccine development try

          Tannock GA, Kim H, Xue L. Why are vaccines against many human viral diseases still unavailable; an historic perspective?. J Med Virol. 2020;92(2):129-138. doi:10.1002/jmv.25593

          It’s long and technical (45 pages of specialized medspeak) but it spells out the reality of developing vaccines, which i would summarize as “the low hanging fruit has already been picked”.

    • sunny129 says:

      @ Michael Engel

      The last successful vaccine developed was for MEASLES. It took nearly 4 years!

      There has been no vaccine produced against any kind of Corina viruses including SARS ( Covid 1) or MERS. The high expectation for Covid 19 vaccine should be tempered with the harsh reality, not hype generated by Wall St and pro commerce zealots!

      • Winston says:

        And the longevity of antibody-based immunity to SARS-CoV-2 is STILL unknown at this point. With seasonal flu H3N2, the one that vaccines typically have the most trouble stopping, immunity declines to zero after a mere five months.

  12. nick kelly says:

    ‘Reports of demand recovery in some markets appear to be more wishful thinking spurred by multi-trillion-dollar cash injections rather than a viable economic recovery’

    This is Cyril W talking about oil on Oilprice but you get the picture. It’s mind boggling that the Fed injecting 3 trillion in about 3 months, just to keep the market afloat is seen as bullish.

    • Toyal says:

      How Stupid can ppl possibly be??!!
      This is insane.
      What is true, ppl rarely value money handed to them which they did not labor to for.
      Hence the frivolous spending on any and everything!
      I saw a comment from a cashier @ Walmart, and she listed all the ridiculous items ppl were purchasing via check out

  13. Underground says:

    Who’d a thought the pandemic would be the economic stimulus of our lifetime.

    • Old School says:

      This is why it’s so hard to be a retail investor. Obviously the rules have changed and the Fed is doing more and more to influence asset prices and is now getting it’s nose inside the tent on fiscal policy. Can’t remember which Fed governor warned the Fed not to get itself into this position about 15 years ago, but here they are where asset prices and the real economy hang on their every word.

      • lenert says:

        Greenspan said the Bush tax cuts were totally fine but i can’t remember if that was before or after he was hawking ARMs.

    • nodecentrepublicansleft says:

      I assume that comment is met in jest since the pandemic is the economic destruction of our lifetime. It just hasn’t fully hit yet.

      As some smart person suggested: we’re like an airplane whose engines have shut off….no longer flying but floating forward…..towards something somewhere between awful and terrible.

      I hope they’re wrong, but looking at the raw #s, it looks like things are going to get ugly before they get better.

      • MCH says:

        oh shut up and just enjoy your stimulus. Nutjob Nancy is going to make it happen. I guarantee it. And you’ll be floating in bliss not having to pay rent and enjoying stimulus money.

        The pandemic is the best thing that’s ever happened for a certain set of people.

        • Yeah for everybody, consumers have money to spend and corporations have products and services to sell. If they figure out how to nationalize consumer essentials, housing and transportation, they can expand the role of discretionary income. We just have to wait and see if this is a victory for the second level marketing boys.

      • Lisa_Hooker says:

        Good analogy. The big thing about landing an aircraft after a loss of power (and you’ve picked a likely spot) is that you only get one chance to do it right.

    • DawnsEarlyLight says:

      Stimulus today, hangover tomorrow!

  14. 2banana says:

    Which should be a massive warning to the few remaining sane folks to hunker down, get out of debt and save.

    “Everything now depends on stimulus, extra unemployment benefits, eviction bans, foreclosure moratoriums, forbearance, and deferral programs that all rechannel funds into purchases of consumer goods, and a lot of these goods, or their components, are imported.”

  15. Brant Lee says:

    Oh HECK yeah. We’re talking TV’s the size of a billboard this year. You have to tear out a wall cause the doors aren’t big enough to get em in the house.

    I got a cold chill reading the first lines: “The ships are 100% full. The containers are 100% full. You can’t get a container built…”
    Where does this country go from here? It’s like 2am ordering the last drinks before passing out and wondering where you are when you wake the next day.

    I paid my daughters rent this month. Her place of employment closed in July. Most of her unemployment pay has stoped coming. She can’t even find a crap job. I told her, the jobs are gone because we don’t make anything. We’re not even producing essentials for life except food, for as long as that lasts. We had to wait three months for China to produce facemasks to import here.

    I would at least fill the empty containers going back west full of trash, plastic, rubbish. Throw in some retail executives and politicians.

    • happy_man says:

      USA is importing more and more packaged food from china. Look around your grocery store.

    • Yeah, Brant, regarding the contents on returned containers, please include the Bankers. And watch the Banksters pay themselves bonuses with PPP money this year!! They paid themselves bonuses in crap years 2008 and 2009 from Taxpayer Bail-out money, why not 2020 with the doo doo hitting the fan in early 2021 since they are under-reserved for all the Bazillions in shaky loans ready to start stinking.

    • nick kelly says:

      The containers going back to China had been filled with recyclable trash for decades. In the past 1-2 years they have drastically cut back on what they’ll take, so many go back empty.

      .

  16. Petunia says:

    I ordered something from a favorite south Florida store last week. The expected delivery date given was 3 weeks out, due to covid. I got it in a week, which is a little worse than average. The Amazon Prime items we ordered took a few days but one was delivered on a Sunday, which is a holiday type schedule where I live.

    Looks like they are doing holiday deliveries already. But I see much fewer trucks on my street than before covid.

    • RightNYer says:

      What was the store, just out of curiosity? I’m in Fort Lauderdale, and I’m noticing a huge difference in business activity between Brickell and Boca, for example.

      • Petunia says:

        It was from a Palm Beach store.

        I saw a video of Bal Harbour about 2 weeks ago. Everything was open, families were out dining, no masks, no social distancing. It made me miss Florida for the first time in 5 years. Ocean Drive, on the other hand, made me want to stay away.

  17. Michael Engel says:

    1) The DOW Transport started to misbehave three years ago, in Jan 2018.
    2) After x3 stopping actions, in Feb & Dec 2018 and in Mar 2020,
    it popup up to a new all time high, in a dead cat bounce, thanks to new
    Fed fads and Xmas fads.
    3) Technical followed fundamentals.
    4) The Trucks & Rail peaked in May 2018 and fell sharply until Dec 2018.
    5) The Trucks and Rail rose until May 2019 peak and fell sharply until Dec 2019.
    6) The 2020 chart is different. The Trucks & Rail collapsed from Mar to Apr turned around and jumped until Sep high.
    7) Ports bottlenecks & jams might keep the Trucks & Rail at peak level in Oct/Nov and drop moderately in Dec 2020. After the Q2 starvation consumers pent demand is rising.
    8)

  18. mgold-8 says:

    Thanks for yet another really insightful and fascinating write-up, Wolf.

    “…with total shipping capacity for the industry being 79.1 million parcels a day during that period (up from 65.3 BILLION last year), as 86.3 million packages per day need to be shipped (up from 67.9 BILLION last year)….”

    I am guessing you meant “million”?

    Also “….and with money not spent on mortgage payments – nearly 7% OR mortgages are in forbearance…”

    Feel free to fix these and erase all but the first sentence of this comment. I am just trying to uphold your (well-deserved) reputation for producing perfectly flawless prose!

  19. I think the surge in Durable Goods has a lot to do with people like me waiting 90 days to get a freezer for stockpiling frozen food and even buying a mini-refrigerator because the wait time for a 22 cu.ft. side-by-side is now 4 months!! My main frig is now 18 years old and still kicking. Back up to back up.

    All of this will not last as growth in incomes have to keep it going, and near-term prospects for that are less than favorable as unemployment, via the real stats, stays stubbornly high. And those missed rent and mortgage payments have to be made up sometime.

  20. MiTurn says:

    In retirement, my wife and I have discovered selling on Ebay. What fun! We sell (I should say ‘she’ as it’s her business and I mostly help her) used books and extra-large upscale men’s leather shoes (talk about niche!). Business has been fine — we make a few extra bucks and enjoy the process of doing this together.

    What has been a bugaboo is shipping times. The USPS media-rate service has been greatly extended. Sometimes it takes over a month for a customer to get their books. Expedited service is better, but sometimes still longer than the usual. Some customers have attempted to get around this by using other carriers, such as UPS or FedEx. But they’re balls-to-the-wall too and the extra cost does not translate to faster shipping. The whole parcel shipping system appears overwhelmed.

    I wonder what the holiday seasons will be like. Better ship those presents now!

    Strange times.

  21. Wisdom Seeker says:

    Excellent article. The next question is are the heavy truck and railcar orders picking up? That would indicate that shippers think demand will remain high, that it’s not just a print-and-spend stimulus sugar high or temporary pent-up-demand blip. (If the unemployed begin to find new work, that would potentially sustain demand growth.)

    Another interesting question is how much prices are being pushed up and whether any of that might actually show up in the Fed’s metrics and push interest rates back up? They’ve signaled a tolerance for 2%+ inflation for a while, but CPI and PCE could go much higher than that if the economy slams into more capacity limits.

  22. Russell says:

    How does this increase coincide with the Baltic Dry Goods Index falling like a rock, down for the eighth straight session and 20% for the week? There is a disconnect between the two.

    https://www.hellenicshippingnews.com/baltic-index-posts-worst-week-in-3-months-as-vessel-rates-fall/

    • Wolf Richter says:

      Russell,

      “There is a disconnect between the two.”

      Ha, no, they’re totally disconnected and always have been totally disconnected. The Baltic Dry Goods index is totally unrelated to US consumer demand. It tracks the cost in the spot market of shipping dry bulk commodities such as ores, coal, grains, and it always goes all over the place, and people go nuts watching it. It’s impacted by supply of ships for specific dry goods, and by demand for shipping of those dry goods. Look on a 20-year chart to see how useless this thing is except for people in the dry-goods shipping industry.

  23. JLS says:

    US will be the first country in human history that becomes rich by spending and spending.

    A new slavery system is born. It is based on generations. Baby boomers and other adults are salve holders of future generations.

    Long live spending, and long live slavery!

    • MonkeyBusiness says:

      You are too pessimistic. At least there’s one thing that b**mers and mill**nials agree upon i.e. shopping is good. It’s even better when it’s other people’s money.

  24. MonkeyBusiness says:

    No more stimulus.

    Best party of the century!!!

  25. STEPHEN says:

    Just wait until the vaccine comes online, and airfreight capacity becomes fully absorbed by the unprecendented demand for temp-control slots. The spillover into ocean freight will suck up every reefer plug and reefer box in the world. I’ve read big-time respected ocean freight analysts call for temp control rates as high as $25k to US west coast.

    • Harrold says:

      No way air freight becomes fully utilized. There are airplanes everywhere and with the 737MAX coming back online soon to be more!

      • STEPHEN says:

        Airlines parked a good chunk of their passenger fleets. Result was 42% decrease in total global airfreight lift capacity from this time last year (September figures).
        Those planes cannnot be put back into service just to carry freight in their bellies. They will stay parked until passemger demand recovers, or they are covered into freighters. Pax-to-freighter conversions take several months, and there is already a backlog at the MRO facilities capable of doing it.

        Freighter capacity did increase nominally, but it hasn’t been enough to offset. Freighter load factors are historically high; I’m having trouble finding ad-hoc space for larger consignments.

        It is coming.

        • Lynn says:

          Oh, that variable would explain some of it.

        • Harrold says:

          Those planes are ready to be put back into service. They are just sitting at airports around the country.

          Boeing is ready to deliver the 400 new 737MAX stored at Boeing Field and San Antonio next month.

        • nick kelly says:

          If there is a backlog, i.e., an inability to do the conversion then it will take as long as it takes. This can only be because these guys are the only game in town, not surprising given the pre-covid size of the conversion biz.
          However, given that a plane can be built by Boeing or AB in weeks, once they have a production line with some volume, there is obviously no inherent reason to take months to convert an existing plane to freight.

          Given a production line (not a moving line!) of a few dozen or so and a serious ‘time is of the essence’ performance contract, this should be doable in 2 weeks per plane, after a teething on the first 2 or 3.

          Given the dire situation of Boeing, this could be an interim survival business. With its defense connections, there could be Pentagon ‘pedal to the metal’ money and persuasion brought to bear.

    • nick kelly says:

      About 10 days ago I cautioned that the vaccine hope was wildly overhyped and we would have to be VERY lucky to see anything in 2021. At the time I wrote that, Sanofi had just announced probs with their version. Since then two more have followed: J&J and Pfizer.

      So I’m going to double down and say we’ll be very lucky to have one thoroughly TESTED in 2022.

      That would still be a fraction of normal.

      • Winston says:

        And as I said above, the longevity of antibody based immunity to SAR-CoV-2 is still unknown.

  26. The expectation is for new prez to raise stakes on stimulus to more than 3T, while the party of old prez wants 1/2T, and old prez himself wants 1.8T, but does not have his party’s support. Party of old prez is leaving Congress, no matter all deals go directly are made with Treasury. Distance between old and new prez is not that great. New prez wants to avoid the mistakes of 2009, not enough stimulus to spark the economy, just enough to spark resentment. Old prez came in on wave of resentment, which is no mandate to govern. New or Old Prez, show them the money, and the resentment ends. Holiday spenders front running the Fed?..

  27. Mr Wake Up says:

    So many goods sold during a financial pandemic because Americans have been socially programmed to be highly addicted and stimulated towards consumerism for decades.

    Germans from the 40’s where dismissed from their duties on the front lines of battle and hired on Madison Ave to move their propaganda skills onto the new front lines – the American souls for consumerism!

    Just consider this retail therapy for most people.

    When people with little to no money or even when people are living via extend and pretend they purchase more goods to feel wealthy.

    Its a poor state of mind but just consider homeless people.
    They live surrounded by junk and items discarded by others and hoard in order to feel like they have riches and they are not even aware of this most the time.

    Just my take on the consumerism effect on society!

    Buy more sh#t is the message all day every day…

    • Sam says:

      “Its a poor state of mind but just consider homeless people.”

      Excellent example of an manifestation of Affluenza.

    • Ralph Hiesey says:

      But Mr. WakeUp– if you don’t buy the sh#t –the economy will go into the toil#t.

    • nodecentrepublicansleft says:

      Ever watch the tv show “Hoarders”? It’s like a train wreck I can’t turn away from. The people are mentally ill imho.

      Notice how in this culture, if you spend your life collecting cats, magazines, lamps, chairs, dinette sets, etc…you are considered insane.

      Yet, if you devote your life to being vainglorious and the pursuit of $ (say through activities like money laundering)….you’re admired.

      Michael Douglas says people used to often come up to him quoting his character from the film Wall Street, saying “greed is good”. He used to politely put his hand on their shoulder and explain: “You misunderstood the film.”

  28. Trinacria says:

    After reading yet another informative article on this site, a couple of thoughts came to mind:
    1. it has been said that things like sports and religion are the opium of the masses….wrong it’s shopping…as Carlin would say for stuff we don’t need, we money we don’t have to impress people we don’t like.
    2. if I recall, didn’t the native people who inhabited Manhattan “sell” the island for a few trinkets ? If so, what has changed as “we” are selling our souls for a few trinkets….
    For an immigrant like me who truly believed in the American Dream….how truly shameful !!!! Problem is so many are so far “gone” they don’t even recognize how shameful this truly is… there I said my piece !

    • Trinacria says:

      I said “truly” so many times because it’s true !!!!

      • Sam says:

        The American ‘dream’ of disinflation: More stuff for less money.

        More powerful than any drug. Ymmv.

    • Earl Smith says:

      One of the interesting facts is that the tribe that “sold” Manhattan island to the Dutch did not own it. They just were unauthorized hunters that were trespassing on another tribe’s hunting ground.

      By the same measure if the Indians had invested the $24 in AAA bonds they could buy the island back with all improvements and have quite a bit left over.

      Just demonstrates the amount of inflation that has occurred in the last 400 years.

      • nick kelly says:

        No doubt it wasn’t the owners who sold it, the Eiffel Tower has been ‘sold’ twice by skilled fraudsters.

        But I think you’d find that the value of Manhattan Island has kept up with inflation of its own.

      • As the cartoon said, first Indian said, “They want to buy our island for $30 in beads?” The other Indian said “Okay. Give them gambling, and we’ll get it back..”

  29. Sam says:

    “Laissez les bon temps rouler”.

  30. Xabier says:

    Consumerism in an economic crisis and pandemic?

    Pavlovian reflexes, in a Potemkin Economy.

    Gosh, how Russian the USA has become…..

    • Saltcreep says:

      Markets in Potemkin economies being upheld depends on Pavlovian responses.

      The alternative is to see the grim reality, and note that the cause and effect stuff, where cause is reverse engineered from effect, isn’t actually working like that…

  31. Yort says:

    Something for nothing is the new American Dream:

    Per Poll 987 likely voters from Oct. 15 to 18, according to the Times. The margin of error for the poll was 3.4 percentage points. Seventy-two percent of respondents to the poll supported a stimulus package totaling $2 trillion. Just 21 percent of respondents opposed a package of that size…

    • sunny129 says:

      Tell me, WHO is NOT for the FREE LUNCH!?

      The bottom 50% in America don’t pay any Federal or state tax ( only pay roll) . For them all these stimulus in Trillions is ‘easy-peasy’ money shower from the sky! No one, lawmaker or otherwise is not worried about deficit spending or debt!

    • Wolf Richter says:

      Those 21% who opposed the $2 trillion “package of that size,” did they favor a larger one, something like $4 trillion?

      • BuySome says:

        If they expect me to share any of that $2tril. with anyone else than I oppose it. If I get to keep it all to myself then the sky’s the limit. Pollsters always miss the real people.

  32. David Hall says:

    Housing starts are up nearly 2%.

    Railroad intermodal shipping grew on some lines.

  33. The market dog says:

    Wolf I am an insider of one of the companies you mentioned. Things are not as rosy as it seems and we cancelled and increase in the peak surcharge as reports show demand could seriously falter after Xmas…

  34. Kasadour says:

    retailers ran out of stuff, and supply chains ran dry, and now companies, haunted by supply shortages and lost business and increased lead times and chaos, are trying to load up for a monster stimulus-fed holiday shopping season.

    Many of the problems with supply chains and retailers running out of stuff won’t be cured with ever more cash stimulus. Many factories, and processing plants are running at <25% output due to labor problems, other shortages due to natural disasters, and even more shortages due to more lockdowns/quarantines coming.

  35. Sierra7 says:

    I’m glad that I’ve never been a “shopper” and never considered any homes I’ve owned as “assets”, and always have been a “saver’. First generation American from poor Italian immigrants; I look at the lives my (and their mother) large subsequent progeny are living and it is like another world………
    “Shopping (consumerism)” is a symptom of complete boredom.
    “Savings” even in times of negative value is a form of economic discipline.
    Too many Americans are bored and lack the foresight for “saving” and succumb to the propaganda that everything is an “asset”.
    I remember the days when a “family unit” was the target of consumer advertising; then every member became an “economic unit” to target; until ultimately it included the family pets!
    Everything is now “marketable”.
    What a country!

  36. Sunny Leone says:

    Ufff the Jobs Crisis just effected me as well.

  37. Stevie says:

    Wasn’t there a huge shipping glut a few months ago? What happened to that?

    • Wolf Richter says:

      Stevie,

      Before that glut ever hit prices, shipping companies, with Maersk in the lead, pulled their container ships out of service, massively, just like airlines pulled their planes out of service. In other words, they cut capacity. Airlines cut capacity by 70%, and more on international routes, and this has cut capacity of transporting freight in the bellies of passenger planes. So now freight rates have soared, AND many container ships and planes remain out of service.

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