All Container Heck Breaks Loose amid Flood of Orders from US Retailers to Supply Stimulus-Stuffed Consumers, Cancelled Sailings by Carriers, and Record Spiking Freight Rates

While US Farmers Struggle to Find Empty Containers for Exports.

By Wolf Richter for WOLF STREET.

The freight rates that container carriers charge for shipping containers from Shanghai to the US West Coast has exploded to a new record of $3,871 per 20-foot-equivalent unit (TEU) in the week ended November 13, and to $4,676 per TEU to the US East Coast, according to the Shanghai Containerized Freight Index (SCFI), which tracks the spot rates of shipping containers from Shanghai on 13 major shipping routes. The index includes ocean freight rates and seaborne surcharges.

The SCFI for all 13 routes jumped combined over 11% last week compared to the prior week, and by about 125% from a year ago (chart via Shanghai Shipping Exchange):

In dollar terms, US imports from China are not so hot.

China’s exports to the US have recovered from the plunge during the lockdowns in China and in the US, powered by a tsunami of orders over the summer from US retailers that were trying to keep up with record retail sales, as stimulus-fed consumers caused sales of durable goods to spike in a historic manner. Retailers are hoping that even more of it will occur going into the holiday shopping season, and they’re stocking up for it.

In September, US imports from China were up 2.6% from September 2019, though the remained down 17% from September 2018, down 9% from September 2017, down 2.5% from September 2016, etc. In fact, imports in September 2020, with the exception of last year, were the lowest for any September since 2013 in dollar terms:

In container terms, all heck has broken loose.

The Port of Los Angeles reported that in September, imports of “loaded” containers (as opposed to “empty” containers, and we’ll get to those in a moment) jumped 17% year-over-year, to 471,794 TEU, after having jumped 18% year-over-year in August, to 516,285 TEU. September and August represent the peak of shipping season. The combined total of those two months reached nearly 1 million TEU, the highest ever for a two-month period. Note the difference between the Financial Crisis and the stimulus-powered Pandemic:

Consumers in the US have got to spend all this stimulus money somewhere, and they’re going to spend it on stuff made in Asia – that’s the bet here.

At all US ports in September, imports of containers jumped by 12.5% to 2.11 million TEU, the highest for any month in the data going back to 2002, eking past the 2.10 million TEU in August, which had been the record before September, according to the Global Port Tracker by the National Retail Federation.

Then there were the cancelled sailings of container ships.

“2020 may come to be referred to as the year of the cancelled sailing,” said a report by Drewry, which provides maritime research and advisory services. Over the seven months from April to October, 150 sailings on transpacific route were cancelled, up 117% from a year ago.

This large reduction in shipping capacity was the “magic sauce,” as Drewry called it, quoting one of its customers, in pushing container freight rates into the stratosphere, as shown by the SCFI. Carriers benefited massively from the surge in freight rates.

Leading to distortions in the container business.

Shippers are groaning under the surging freight rates. And they’re also facing a shortage of empty containers to ship their goods, including lower-value goods such as agricultural and food exports from the US, as shippers of high-value consumer goods in Asia are grabbing every empty container they can get.

“Demand is driven by U.S. consumers who are ordering goods like sports equipment, entertainment devices and furniture,” Nils Haupt, spokesman for German container line Hapag-Lloyd, told the Wall Street Journal. “Ships from China to the U.S. are full and there is high demand for empty boxes in China.”

The Port of Los Angeles exported over twice as many empty containers (276,546 TEU), under red-hot demand from shippers in Asia, than it exported loaded containers (130,396 TEU) – this would be containers loaded with good made in the USA.

The government of South Korea last Thursday called in executives of container carriers to warn them against violating contracts with Korean exporters after complaints that empty boxes had been sent to China due to the higher freight rates carriers get at Chinese ports, according to the WSJ.

The clamoring in Asia for empty containers causes container carriers to hustle the empties back to Asia, thereby putting the squeeze on US exporters of agricultural goods, foods, and the like, which have lower value per container than consumer electronics, furnishings, and the like, and shippers of those high-value consumer goods are willing to bid up freight rates, and carriers are trying to get the empties to them.

US Farmers Struggle to Find Empty Containers for Exports.

Peter Friedmann, executive director at the Agriculture Transportation Coalition, a trade group representing US farmers, told the Wall Street Journal, “Right now we are grappling with a true emergency – carriers refusing bookings for trans-Pacific agricultural exports and canceling those already booked,” he said. “We are getting locked out of foreign markets.”

But hey, no problem as long as US ecommerce retailers can stock their fulfillment centers with Asian-made goods in hopes that consumers, in the weirdest economy ever, will blow their stimulus money on them.

Bounce back to what? The Pandemic Scrambled Long-Term Trends in both directions. Read..How the Pandemic Scrambled Long-Term Driving Patterns: Americans Already Drove Less, Hidden by Population Growth

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  151 comments for “All Container Heck Breaks Loose amid Flood of Orders from US Retailers to Supply Stimulus-Stuffed Consumers, Cancelled Sailings by Carriers, and Record Spiking Freight Rates

  1. JC says:

    Great, locally sourced goods will be more competitive. Assuming we import more than we export via containers.

    • Phil says:

      Where can I buy an Xbox made in Boston?

      • roddy6667 says:

        Right next to the Microsoft Surface made in Redmond.

      • JC says:

        buy something that matters and not that techno garbage

        • gl says:

          Nothing matters because none of this computes in our world of debased currencies. Up is down, black is white.

        • paul easton says:

          Have some respect. He is the Son of God. Where can you get God these days? I’d say check out Hong Kong. He is no longer legal there.

      • Thomas Roberts says:

        Phil,

        The Nintendo Switch has moved some of its production to Vietnam, Nintendo may shift more of it there, in the future. It’s not America, but, better than the CCP’s rendition of China.

        Overall, though, I expect electronics to basically peak in the near future and then for prices to plummet, similar to TV’s. Most consumer electronics are virtually there, gaming systems have a substantial generation left, until they stagnate. Cloud gaming won’t win though, your PS6 will last awhile with minor hardware updates every 2 to 3 years for awhile, until nothing can be improved, your launch PS6 will still play everything though. In theory, it could get to PS7 before that happens.

        So consumer electronics will lose importance first and then they won’t be worth enough to care that much, not sure where they will be made though. Certain electronics like medical or military stuff will improve for a lot longer.

        Right now, the parts on a motherboard are trending towards a single all in 1 chip, which could be made in America.

  2. Bob says:

    I’m confused. This is all still from the stimulus checks early last summer? I thought that money had already been spent.

    • wiley says:

      No,the better-off just stashed it or used some to pay down some c. Cards,or maybe used some to buy a home=new furnishings.Never got my stim. Applying for third time.This mess illustrates Again,the importance of local and diverse sourcing of many things.Maybe some food exporters could/would donate food to foodbanks,churches,schools where it would be appreciated.Globalism doesnt solve all problems and lift allboats? Many smarter farmers have created direct farm to table situations,delivery,pickyourown,co-ops,freezedried items,you name it!

      • michael earussi says:

        Globalism lifts all yachts, the row boats are pretty much left to sink.

      • Non-American says:

        Globalism makes goods cheaper. So you can raise the minimum wage to ensure your workers are better off. Or you can ensure your workers have things like free college and free Healthcare so they can reduce their living costs.

        It costs $1200 a month for a studio in Tokyo. Which would be equivalent to $1200 month to find a studio in LA or NYC which are smaller cities. Of course, the Japanese invest in their citizens by building affordable places to live. You can’t profit from selling your house as easily because the houses themselves are often worthless in value compared to the land. And they all get 30-60 days of paid vacation regardless of job in many poor countries like Japan. I mean to be fair, America is like 10x richer with much cheaper resources.

        Near 3rd world country France paid people to stay home for a good month with everyone’s salaries paid for. The US could easily lock down for a 2 months with 0 job loss and everyone would come out richer by the end of it.

        Unless of course all that wealth went somewhere else..

    • MonkeyBusiness says:

      Keep believing in that. I’ve said it again and again, Americans are flush with money.

      • RightNYer says:

        From where?

        • GotCollateral says:

          From not paying rent and mortgages… walking dead… lol

        • MonkeyBusiness says:

          Does it matter? Shows up in their spending. You seem to have trouble accepting record retail sales.

        • RightNYer says:

          No, I accept it fine. It’s from stimulus (which has waned) and deferment of rent. It’s that simple.

        • MonkeyBusiness says:

          If stimulus has waned, then we should be seeing a drop off. Deferment of rent assumes that people have money for rent in the first place, but that could only come from the stimulus … or something else. How many people have rent for a few months saved up?

          People have other sources of money. If it’s from credit, then they are confident.

          Americans have money. No problems.

      • Juanfo says:

        Americans make $50k/y driving a freaking delivery van. No doubt at all in my mind America it is the land of endless opportunity. The American Dream is absolutely thriving.

    • Wolf Richter says:

      Bob

      Stimulus checks and extra unemployment benefits were partially spent, and were partially used to pay down credit card balances (which have plunged), and were added to savings. The latter two mean spending in the future. In addition, many people skipped vacations this summer, particularly those involving flying. And they didn’t eat in restaurants. And some skipped their mortgage payments (forbearance) and rent payments (eviction bans) and so on. and some of this money “not spent” was then spent or will be spent on goods, particularly durable goods.

      Click on the two links in third paragraph (under the first chart). Those two articles have a lot of the data you’re looking for.

      • RightNYer says:

        I’m really curious to see what happens in January when the eviction moratorium ends.

        • Joe Saba says:

          they’re gonna extend and pretend some more

        • MonkeyBusiness says:

          Extension or riots. That’s really the new American way.

        • Heinz says:

          Absolutely no guarantee that eviction moratoriums will end (extensions are likely, especially if partial or full lockdowns are implemented). And mortgage payment forbearance (for federally-backed mortgages) will likely continue after individual one year forbearance periods start ending.

          In Weimar Germany during their great depression in 1930s a rallying cry amongst downtrodden population was: “First Food, Then Rent!” (Erst das Essen, dann die Miete).

          In other words, paying for housing always plays second fiddle to keeping from starving, when push comes to shove.

          I might add, not entirely in jest, that many modern Americans are so obese that it would actually be difficult to starve them, at least for many months.

          Also, I believe there are wide swathes of what amounts to moratorium/forbearance fraud in which recipients of such leniency use their extra cash on consumer goodies and non-essentials.

      • Bob says:

        Got it. Thanks Wolf.

  3. Lee says:

    Amazing that with all the shipping going on in the world, regular mail and parcels between countries are still shut down.

    If you look at postcrossing.com’s postal monitor (good source, but some of it is out of date) it shows that lots of countries are still not connected to the world via mail.

    Australia doesn’t send mail to 103 countries, Barbados 242, Hungary 147 (lots of countries in Europe are in a similar situation), Japan 114, Sweden 25, UK 13, and the USA only 23.

    And when looking at some the destinations it often boggles the mind.

    After 8 months of being shut down regular airmail between Japan and Australia started up again on the 10th of November. Parcels, except for ship, are still not on either. Before that you could send airmail to weird places such as Dominica, but not Australia!!!

    China isn’t listed so it looks like they can send mail everywhere. Taiwan, according to the site, still has 231 countries blocked.

    And even if mail does go through, the times can vary quite a bit. I’ve had mail from here in Melbourne reach the UK in 10 days, but coming the other way take 4 or 5 weeks.

    And I’d guess that much of that time inbound is because domestic mail here in Oz is still screwed up with letters and packages taking 10 days to weeks just to get from Sydney to Melbourne or Perth to Melbourne.

    So far the longest time a domestic parcel took was just over five weeks from South Australia to Melbourne and a little over 3 weeks from Sydney. One from a suburb near us took about three weeks to get delivered. It went via Sydney.

    Now that we can travel without restriction, we have cut back our online purchases in Australia to almost nothing. Internationally, we are buying stuff again from Japan – small stuff that can be sent via airmail small packet and a few other items from countries with mail service to Australia.

    And people complain about the USPS in the USA!!

    • Anthony A. says:

      Well,in our area (fairly upscale north of Houston, TX), outdoor mailboxes at the Post Office are being robbed. Lots of cases of identity theft and bank deposit theft in the last few months around here. The Post Office is permanently taking out all the outside boxes.

      I summarize it’s “crime” moving north into our area.

      BTW, mail delivery sucks too.

  4. GL says:

    I was in our local Best Buy today and nearly half of the aisles were crammed at least two high with big screen TVs of every shape, brand and size. You could barely walk through the aisles. I wasn’t aware that many people watched TV anymore.

    • Wolf Richter says:

      Not to watch TV. But to watch streaming movies. Netflix, Amazon, Disney, etc. Gotta have a big screen to watch a movie — since we don’t go to the movies anymore.

      • Dan Romig says:

        Some of us watch sports on our TV.

        I love the helicopter shots of France, Italy and Spain during the bike races. The technology that allows the detailed coverage of the riders from the motorbikes is impressive as well.

        Ever seen Jutta Leerdam skate the 1000 meter longtrack?

        • doug says:

          and drones are replacing the expensive helicopters for some bike races.
          I agree Dan, the countryside is fun to see during the TDF.

        • Wolf Richter says:

          I’ll add cross-country ski racing to your list. I love watching them power up the hills, both classic and skating. The technique and power. And the winter landscapes.

      • Lance Manly says:

        The stuff is so cheap the margins must be horrible. Big reason you don’t see this stuff being manufactured in the US. Try to pitch to a CEO that they need to make an investment to get a razor thin margin. Good luck.

        • RightNYer says:

          Yeah, and the problem with that is that it also eliminates repair jobs. Back when people spent the equivalent of $2k on a TV, it was worth paying a skilled repairman for (then equivalent of) $50/hour. Now it’s not, so not only did we lose the manufacturing jobs, but the repair jobs as well.

          And instead, we fill up our landfills with more crap.

      • Ethan in NoVA says:

        I’m going to the movie theater this weekend. It was $100 to rent it for 2 hours with 10 people, so we’re bringing random stuff to plug into it. I’m going to try to get a pic with an Apple IIc computer from the 80s hooked to the movie theater running a text adventure game.

        Friend rented a nicer one for his kids birthday party, they played 8 player switch games on it.

      • Thomas Roberts says:

        Wolf,

        Movies at movie theatres don’t last long enough to compete with anything in that way. Those streaming services do compete and win against sports though, including B&M sports stadiums. Would be interesting to find out exactly what people are watching at same time as the game they used to watch.

        Movies at home, justifies bigger “theatre room” expenses though.

    • Thomas Roberts says:

      GL,

      Watching tv is bigger than ever, it’s just what they are watching that changed. Though, some people endlessly watch “social media”, but, tv might be on in background. Also, best buy had TV’s out like that last year for black Friday.

    • Amazon has a firestik? ready TV for $80. This is the business model? Give the product away, and make it up on subscriptions? So how much is all that stuff going to cost me? Rhetorical question

  5. A says:

    I have the tiniest violin to play for all those red hat wearing farmers. They got exactly what they voted for. Actions have consequences. Enjoy the unemployment line!

    • FDR Liberal says:

      A:

      In the long run, you won’t if the remaining family farmers go broke or are bought out by corporates.

    • wiley says:

      Nice!Maybe You become more sympathetic when your food is unavailable or costs more due to the Continuing Tsunami of Farm Bankruptcies,many of themmedium/smaller generational farms!China understands the Importance of food redundancy,they are trying to insure against their hunger by buying Smithfield pork,JBSmeat processors,other processors,and record amount of U.S. acreage.Wisconsin farmers are Really hurting!Not everyone is happy to sit In front of a screen all day,its not good for you.Foreigners should Not be allowed to buy farms,food processors,ranches of importance.I know you Cant in many countries,including China.Just buying a small home in China recently got more difficult.

    • Dan Romig says:

      Food producers, or farmers, don’t go to the unemployment line. They keep on keeping on. Or, they get old and sell out, which isn’t always a bad thing, to rural Ag. companies.

      The farmers I did business with are not typically Democratic – anymore; they used to be.

      The family I was partnered with, Friederichs Seed of Foxhome, Minnesota are fourth-generation owners of 1,500 prime acres on the Ottertail river. They have invested in and run a large seed cleaning and storage facility that employs quite a few people.

      So yeah, it is a problem if they can’t sell non-GMO soy products to their buyers across the Pacific damn it!

      In 2020, Minnesota had an average soybean yield of 51 bu/acre, and production is up 25% from last year. South Dakota yield averaged 47 bu/acre, and production was up 58% this year!

      If you enjoy Giants brand sunflower seeds, there’s a good chance they were sourced and cleaned in Foxhome.

      • IdahoPotato says:

        “Food producers, or farmers, don’t go to the unemployment line. They keep on keeping on.”

        This year alone, Federal farm subsidies amounted to $46 billion – which is an estimated 40 percent of total farm income this year.

        They don’t need to go to the unemployment line when taxpayers keep shoveling money their way.

        • Dan Romig says:

          Yes, the system is messed up indeed.

          Sugar is the poster child for what’s screwed up in the USA in terms of subsidy & tariff. Sugar beets are coming in to the drop-off locations by Fargo and Grand Forks as I type.

          American Crystal Sugar, Inc. has a bought and paid for Congress taking care of business for them.

        • A says:

          When Biden puts a stop to the socialist gravy train from Washington, where all of us get taxed to provide governent hand-outs to unprofitable farms, they’ll all go belly up. These farmers haven’t been profitable since China stopped buying their crops. (Wonder why china wouldn’t want to buy crops from such “nice” people?)

        • roddy6667 says:

          2/3 of a dairy farmers income is from government subsidies. They produce a product for which there is a lot less demand than product. It’s like paying companies to manufacture buggy whips.
          Some of the biggest welfare queens in America wear cowboy hats and drive $90,000 pickup trucks.

        • IdahoPotato says:

          Nice to see you posting again, Dan. You were missed.

      • Paulo says:

        hah…..Last night while it snowed my wife just finished cleaning and saving the last of our seeds while we listened to music. Then, we streamed a good flic while the old timer here sipped a Crown Royal. Cost? Pennies with a few bucks for whiskey. Experience, priceless.

        Many people these days are even disinclined to use an automatic bread making machine, let alone whip some loaves up on the fly. Too hard…too much trouble. Imagine actually cooking and eating at home.

        Down the street from us our local ‘every aid and subsidy imaginable queen’, left another new motorised electric kids toy out in the snow and rain….for what 3 weeks now? Does anyone remember when your parents used to admonish, “Now bring in your bike before supper”! Her yard is festooned with kids toys, Walmart lawn ornaments. Christmas means buying more…and more…and more, or at least someone will be buying them. What, plastic sports car quit working? Better buy another one.

        I thought some hard and worrying times would prompt many people to live mindfully. Clearly, I am wrong again. We have a long long ways to go and many belt notches to tighten before North Americans discover reality. (Canada included!!!!)

        • GirlInOC says:

          I get severe morning sickness when I’m pregnant. Basically every minute of the day, for days on end, lasting weeks & weeks, it feels like the worst hangover imaginable.
          I’m sure I left a toy or 2 in the front yard when I wasn’t physically & emotionally able to pick it up in time for a storm. People experience all kinds of different ailments that might prevent them from doing “mindful” things like picking up toys.
          I just want for & hope that the
          “every aid and subsidy imaginable queen” has a loving, happy, & thriving family. Certainly I don’t mind at all that the poors have toys. Even (especially!) in the middle of a pandemic when they’ve been stuck at home, parks closed, schools closed, & play-dates canceled. God bless that “every aid and subsidy imaginable queen” for creating a fun place for her kids!

      • messianicdruid says:

        Did you hear about the new hybrid Chinese winter wheat ? They plant it in Sichuin and it comes up in Kansas.

    • Shiloh1 says:

      Any candidate in Iowa 9 months ago talk about ending the ethanol subsidies?

      • Dan Romig says:

        I brought this up to the Chair of the House Ag Committee, Rep. Colin Peterson, in December 2005 at the Prairie Grains Convention in Grand Forks. His response was not only disappointing, but a flat out lie; a lie that caught the attention from many ‘industry players’ in attendance.

        Rep. Peterson is a Democrat in the Red part of western Minnesota. His 30 year run has now ended.

        My point to him was that U S subsidized corn ethanol was an absurd policy. It takes damn near as much energy, in total, as it produces, and our tax dollars were being taken to pay for it. Yet, sugar cane based ethanol is nearly eight to one return on energy, and there’s plenty of it out there. But the import tariffs skewed the market. We were, and still are burning food in an inefficient way to get energy.

        Peterson’s response to me was that my stats were way off, which he had to have known was not true, and that it was a good policy to continue the status quo to build up the refineries in the midwest and to raise the price of corn.

        Since I ran a wheat seed company, I did not like having Uncle Sam favoring corn over wheat. Since I have a physics background, the idea of getting 1.5 times the energy back instead of 8 is just stupid. Since I’m a cheap ass, paying more at the pump pisses me off. And since I’m a motor head, I do not want gasoline with ethanol.

        “Don’t let the door hit you in the ass on the way out of DC!” is what I have to say to Rep. Peterson.

        • Paulo says:

          It is actually a net energy loss to produce ethanol. But try and take away a goodie.

          I used to know a few grain farmers from Alberta. The world was always going to end and God knows they were going broke. But, they always had a new top line PU 4X$ and their own semi + trailer to haul their horses around. Plus, every new John Deere ever invented.

        • Wolf Richter says:

          Making alcohol or methane out of ag waste products is great. Growing crops to make alcohol as fuel is stupid (making the drinkable kind is OK tho). But once a policy takes off and people make money off it, and a lobby forms around it, it’s almost impossible to back out.

    • America’s farmers no longer grow the food America eats, GMO feedstocks and soybeans for export. Many of them are absentee landlords. Seems likely they recognize Trump is someone with the same business practises, on debt, bankruptcy, and financialization. In the 30s those consequences were land management abuses. It was fifty years from the time they broke buffalo grass to the dust bowl. Now they raise ag products for biofuel, (using carbon based fertlizers, what happens when fossil fuel ends?) With modern ag tech a wider variety of perishable foods are grown (organically) in smaller plots closer to (sunbelt) urban centers, or imported from Central America. The big farm is an outdoor assembly line, subject to the whims of globalization, and in some places, like the Central Valley in CA, a falling water table. The changes in American diets, imposed largely by the AMA, causes farmers antipathy toward the medical profession. Rip off that mask. Serve up the steaks. Call my tax attorney.

    • Lisa_Hooker says:

      Apparently the red hat wearing farmers didn’t get what they voted for, the blue hat wearing city dwellers did. Where ya been? It’s OK though, the city dwellers grow fiat, so it’s all fine, for a while.

  6. Brady Boyd says:

    I’m worried with all these new Covid19 lockdowns I may not be able to all my cheap quality plastic junk from China.

    • MonkeyBusiness says:

      I sense sarcasm here, but that “junk” you are talking about powers the American economy. Don’t forget a ton of our most critical drugs are also made in China. Americans seem to have this belief that China makes only junk, but when this country was scrambling for PPE, our leaders were begging China for those, because our country can’t make them. Junk is better than none.

      But hei ignorance is bliss.

      • 91B20 1stCav (AUS) says:

        Monkey-you illustrate the trend back to the “…America is transitioning into an ‘innovation’ and service economy…” declarations heard during the Clinton years (not that it wasn’t happening before then…). What worried me then (and now, when i spell a friend part-time at his establishment), was the lack of more thoughtful reasoning when China and Chinese goods were center of conversation at the retail counter, hearing often: (A) the wish to buy American-made goods (B) but only at Chinese-goods prices, or (C) the feeling that if greater trade protectionism was enacted, American small-goods factories, plant and personnel, were not only waiting and able to immediately take up the slack (even though they were, in great part, disappearing or no longer extant), and that (D) all would be happy with the much-increased retail price levels (unless, of course, a less-informed opinion couldn’t/wouldn’t acknowledge that the higher labor-wage levels necessary would result in higher retail pricing-i.e. there would be plenty of ‘Muricans-not the opiner, of course-available to work for Chinese-level wages. We could go to American wages already depressed from legal/illegal immigrant labor gladly embraced by many businesses in the absence of a U.S. citizen card-check policy, the missed opportunity to tie free-trade agreements to verifiable congruence with U.S. environmental/safety/labor regulations, and the advent of ever-more automation in the manufacturing sector in any case, but we won’t…).

        All to agree, we have surrendered our capacity to manufacture many things deemed necessary for a happy and healthy first-world nation on the altar of ‘efficient’ financial ‘engineering’. An old saying was: “…do not bind the mouths of the kine that tread the grain…”. Perhaps now, that margins are so thin worldwide, that critique of the societal lubricating qualities of mundane financial inefficiencies no longer resonates. The future, more than ever, has become a battle of millimeters, rather than inches…

        may we all find a better day.

        May we all find a better day.

  7. Bobber says:

    It looks like US tariffs were just a threat. So the new motto is: “Talk loudly and carry a pea shooter”.

  8. Seneca’s Cliff says:

    My wife and I finally made our first COVID Time purchases using the funds we saved from skipped vacations and reduced auto expenses. We ordered furniture and entertainment devices (stereo equipment). But instead of coming in containers from China, it is all coming from where it was made(different places) in central New York State.

    • drg1234 says:

      You must be buying very high end equipment. MacIntosh?

      • Seneca’s Cliff says:

        Yes McIntosh, I started buying good audio equipment way back in the late 1970’s but had thought of McIntosh as overpriced for the sound quality. The result was a string of “great for the price” value gear that broke, or wore out its welcome. If I had bought a couple of good pieces from Binghamton back then I would still have it, could get it fixed if needed, and it would be worth as much or more than I paid for it. I rectified that problem now, with a couple of their least extravagant items. Still entirely made in the same factory from the sheet metal, to winding the transformers to stuffing the boards. In a market full of posers who charge almost as much for stuff “designed in America” but made in China you have to respect 65 years of single minded dedication.

        • VintageVNvet says:

          McIntosh receiver, with a B&O turntable and some decent/affordable speakers system was $8K in the early 80s, and worth every penny for the quality of the sound in my clearly damaged hearing and otherwise challenged mind…
          And, when I needed cash, I sold the system for $5K to an equally huge fan who had work, while I did not.
          Currently dedicating my excess of time and $$ to saving up for another McIntosh receiver, now, as it should be, quite a bit more $$,, though likely about the same ”value” as it was 40 years ago.
          Your comment re quality is exactly right SC, on the money and especially on the performance,,, and I suspect if our current owners would emphasize that again, as was done in the 50s-(early) 80s, USA manufacturing, of many or most types, would once again be the best, with the possible exception of some, but just some, of the Europeans and Japanese, especially companies in all countries , who have maintained quality in spite of wars, etc., etc.

    • Dan Romig says:

      Nice to hear Seneca’s Cliff,

      If you have a SACD player in the stereo, I highly recommend auditioning the equipment with a recent BIS engineered recording of the Minnesota Orchestra. Mahler is the latest composer that’s being featured. Recorded at Orchestra Hall in both 5.0 and two channel format on the discs.

  9. 2banana says:

    I am not following the logic.

    Televisions made in China come to America in a shipping container.

    That same shipping container has to go back to China to pick up more televisions.

    Why not fill them with agricultural goods for the trip back?

    “The clamoring in Asia for empty containers causes container carriers to hustle the empties back to Asia, thereby putting the squeeze on US exporters of agricultural goods, foods, and the like…”

    • Wolf Richter says:

      2banana,

      There is so much pressure to get empties to the exporters in China that no one wants to wait for the time it takes to ship the container to the location in the US where it’s going to be loaded with food (could be in the Heartland), ship it to China, and wait till it’s unloaded and available again.

      • MCH says:

        So, weird, so you have a bunch of ships sailing with empties across the Pacific. If that isn’t so serious out of whack supply demand problem, I don’t know what is.

        What happens if and when the demand for stuff from Asia stops.

        But if there is one bright side to something like this, it’s that the US consumers will make out like bandits. Cheap (relatively speaking) stuff from Asia, and food should become even cheaper as well, after all, farmers can’t export the supply, so they’ve got to sell it somewhere. Cheaper groceries. This is a win win… classic

        • Ellie says:

          … or those farmers sell out to developers, sometimes referred to as the last harvest. We cannot expect farmers to remain farmers if they cannot make a living. And if offered a few million for their land, why not sell?

      • Olivier says:

        I had the same question as 2banana. In a way this is as crazy as flaring: there’s a certain economic logic to it (in the right circumstances) but it’ still outrageously wasteful (always).

    • Charlie says:

      Containers, the last I checked, accounted for around 19% of grain commodities exports. The key is getting access to the containers as they are owned by the shipping companies. Class 1 railroads need 110 cars worth of containers to make efficient shipping from the heartland to the west coast. Again, I have been retired for a year from the grain business but shipping companies give only about 4 days of “free” time for a container to be filled and back on the rail line heading back to China. As anyone who has been in the logistics business, there is risk of getting containers in time to meet sales and shipping schedules. More companies are working to reduce that risk given the computerization of shipping and handling grain.

      Agriculture is enjoying unprecedented demand from China for soybeans, grain sorghum, and corn. The trade deal that the current president worked out is working. Farmers are enjoying some of the best prices for these crops not seen since about 7-8 years ago. This vast majority of this grain is being shipped in cargo vessels and not in containers.

      Finally, I get a little weary of those who complain about subsidies to farmers while your stomachs are full. This is the “cheap food” policy that was adopted after WW2 to insure you won’t go hungry. Maybe we ought to go away from it so that the complainers could go back to being hunters and gatherers. (sarc)

      • 91B20 1stCav (AUS) says:

        Charlie-well said last paragraph. A hungry population is prone to act out, often violently, in the quest for food. Much easier to manage a population whose belly isn’t gnawing steadily in the face of uncertain supply. This was recognized subsequent to WWII and the preceding depressed decade. That lesson appears to be fading.

        may we all find a better day.

        • Thomas Roberts says:

          This is partly true, but, the inverse is also true. North Korrea, is accused of intentionally starviing it’s population, so that they are so worried about food, changing the country is not something the 90% even think about.

          It’s the long transition period where stuff can go wrong for those in power, in regards to food.

        • Thomas Roberts says:

          Charlie,

          China buying alot of food this year has nothing to do with the trade deal, it is because, of China’s massive food shortfall this year. Locusts, floods and other natural disasters all took a heavy unknown toll on their food production. The floods were made worse because of China’s very poorly designed dam systems and flood controls throughout the country that actually made everything worse. China even with imports, may still short of a lot of food.

        • 91B20 1stCav (AUS) says:

          Thomas-i take your point re: NK. Meant it more as a choice (and attendant chances taken) made by the U.S. administration in the wake of WWII and the Great Depression. I do think, in the macro, a well-nourished population will give a nation a deeper well of its human resources to draw on, be they military or domestic.

          On the other hand, perhaps morale WILL improve if the beatings continue…

          may we all find a better day.

      • Lisa_Hooker says:

        Millions and millions with tummies full of fructose, arse planted in a sofa, streaming movies and Your Tube to their giant screen TVs, what’s not for a politician to like?

      • MooMoo says:

        considering what world prices for ag will be in a year or two… I reckon a fairly few homo sapiens are about to starve to death.

        Guess that happens when you shut down an economy on an almost global basis, so that you can “build back better”

        lol

    • Juanfo says:

      Probably cheaper to buy new containers in china than ship them back from the United States. What a sick twisted world we live in.

  10. TimTim says:

    There’s a deft hand behind this I think.

    Answers on a postcard…

  11. Nik says:

    WTF…??? Stimulus Money…lololol That horse left the Barn months ago and Congress isn’t going to FEED it again til next year. Sure there will be nice sales on-line,though I think too many Brick n Mortar retailers are buying into all that ‘Legerdemain’ in the Stock market..! aloha amigos

    • FDR Liberal says:

      Nik,

      The wealth effect IMHO from holders of assets is causing this now. People “think” they are “rich” again because the markets are up, up, up.

      • Geoff says:

        Exactly my thoughts, combined with the wealth effect of home prices screaming up, in most places…

      • RightNYer says:

        Yep, and the assets are only “up” because of Fed-induced euphoria that causes there to be no real sellers.

        If even a small number of people tried to sell to “lock in” their gains, prices would plummet, and fast.

      • Old School says:

        Hussman’s out with his latest article. He mentioned Jeremy Grantham is saying we are in bubble and is recommending 0% allocation to stocks. Hussman’s got a portfolio for a 30 year time frame and he is under 10% stocks and the rest t-bills for that portfolio.

        Its kind of ironic that the Fed is making it tough to hold cash right now, but if you believe these two value money managers that is exactly what you should be holding, as Fed as generated GOAT stock bubble.

        • Mr. House says:

          “Its kind of ironic that the Fed is making it tough to hold cash right now”

          Just right now? Try the past 12 years. You already live in tyranny, its just slowly creeping from the financial realm into every other aspect of life.

        • MonkeyBusiness says:

          This bubble has even managed to partly reinflate the Japanese stock market. We are now back at the levels last reached over 29 years ago!!!

          Wait till it reaches 40K.

        • sunny129 says:

          Your CASH earnings(?):

          ZRP or below, inflation at least 2% if not more=
          The REAL rate is at least NEGATIVE 1.5%. this is before taxes!

          CASH $ is losing purchase power by at least 1.5-2.0% and probablt next decade!

        • messianicdruid says:

          Gold is a sapling, silver is an acorn.

  12. KGC says:

    The large majority of the container business is conducted in FEU (40′ boxes). 20’s are increasingly problematic. Shipping a 20′ container costs 3/4 of what a 40′ costs (or more, depending on where it’s going). This is due to a number of factors; 20’s take twice as much handling for the same amount of cargo, they have to be paired with another to fit the space allocated, etc.

    The agricultural issue is that of bulk, unprocessed, product vs. finished goods. Processed food products are being shipped, they have a high enough value to insure their sales. But bulk soybeans, corn, rice, etc. are like sand (which is shipped in large quantities for many reasons). They don’t have a huge value for the amount of space they take up.

    One of the issues this is going to raise is famine, or, at least, food shortages. Nations and States that require food to maintain their populations are going to have issues, which is something that has been predicted since the pandemic broke. Take a look around and you’ll see there are very few actual exporting nations for food. And when those supplies are constrained, and costs rise, instability increases.

    Weaponizing food availability is not a new idea. This is going to be an interesting next 2-3 years.

    • Nik says:

      Great ‘off the grid’ observation amigo…When it all goes down,Argentina will finally be off its Ageless ‘tango’ of Debt n Default…lolol aloha

    • Kaleberg says:

      I think they use TEUs as a measure, but simply count a 40′ container as 2 TEUs. It’s like FTEs (full time employment equivalents). It’s a useful aggregate measure, but we all know that there is a difference between two half time and one full time job.

      The food issue is on target though. That Club of Rome report back in the 1970s predicted a lot of this. Some things build slowly, then suddenly seem to turn into crises.

      • KGC says:

        It’s because nobody wants to halve their production numbers.

      • Mora Aurora says:

        Kaleberg,

        I remember reading in ‘The Limits to Growth’ about the Club of Rome and discussion of various predictive models and factors that might lead towards a more stable, healthy World growth. If memory serves correct, the only model that predicted a ‘positive’ outcome was a conservative ‘limit’ to credit and the money supply.
        And today…well…

    • Wolf Richter says:

      KGC,

      TEUs are a standard metric in the shipping business. It doesn’t mean “twenty-foot container.” It means “Twenty-foot Equivalent Unit.” One 40-ft container = 2 TEUs.

    • MooMoo says:

      “One of the issues this is going to raise is famine, or, at least, food shortages. Nations and States that require food to maintain their populations are going to have issues, which is something that has been predicted since the pandemic broke. Take a look around and you’ll see there are very few actual exporting nations for food. And when those supplies are constrained, and costs rise, instability increases. ”

      yep…well said.

  13. Felix_47 says:

    This destruction of manufacturing capacity and ability is exactly what we should expect given the dominance of finance over our two party system. Our industrial policy is determined by the best funded lobbyists who feed our politicians on both sides of the aisle. Until we get money out of politics with campaign funding reform expect the government of put its had on the scales for finance consistently.

    • MonkeyBusiness says:

      Money and politics are two sides of the same coin. Clean politics is impossible. A politician can always trade for a future benefit.

      • sunny129 says:

        A POLITICIAN in my dictionary:

        An induvidual who is hypocrite, intellectually dishonest and his/her integrity for sale! Applies tp 99.99% of politician of any stripe!
        For most it is a life-long lucrative career!

    • sunny129 says:

      @Felix_47

      ‘Until we get money out of politics with campaign funding reform expect the government of put its had on the scales for finance consistently’

      Agree.

      First Citizen vs United has to be reversed. An uphill battle considering 6-3 conserve majority in SCOTUS

  14. Claude says:

    Great for China
    they produce and export and then invest in China infrastructure and technology
    While in US they consume what they cannot produce and pay for with real earned money
    US has found the the magic way of not working and making tons of money and buy everything from abroad.

    • CRV says:

      “While in US they consume what they cannot produce and pay for with real earned money”
      You better replace ‘real earned ‘ with ‘freshly printed’ and add: ‘maybe to be worked for in the future’.

      “US has found the the magic way of not working and making tons of money and buy everything from abroad.”
      If by ‘making’ you mean ‘printing’ you’ve got it right.

      The (majority) of the US doesn’t have to produce (important to make the difference between work and produce) as long as the rest of the world is willing to ship stuff to it in exchange for freshly printed iou’s.
      Beware the day there will be no demand for those iou’s anymore.

      I feel bad for the farmers though. Hard work and nobody to ship their goods to. What a waste of resources. Don’t forget you can’t do without food. It’s a strategic product. When these farmers go broke and there is no produce anymore, maybe the Chinese will sent the US some leftover bats.

      Weird world.

    • MonkeyBusiness says:

      There’s no magic. Or rather the magic is our armed forces. Why do you think we have 900 bases around the world.

      “Give us stuff or see what happens!!!” Best country ever!!!

      • sunny129 says:

        ‘Why do you think we have 900 bases around the world’

        To protect the immense commercial interests of US Multi-Nationals (geo-politica and national security come 2nd!)

  15. Yort says:

    I seen the number one trending article today at CNBC was the $50,000 student loan bailout that is said to be possible via a single executive order signature. So somehow 44 million student loans will get $50,000 each “vanquished” (word they used), at a cost of $2.2 trillion??? Thanks J-Pow for planting your (M)agic (M)oney (T)ree seeds…you wise Sir have “vanquished” capitalism in America (golf clap).

    Ok serious question, if “This is the Way”, and other weird ideas like this get executive order signed by one elected official, are we are talking tens of trillions of printed fiat dollars over the next few years? If so we better start mining the moon so we can build infinite shipping containers to keep up with our infinite money printing press run by infinite energy used to produce infinite materialism. Then we can build infinite carbon capture machines that use the infinite energy provided by the infinite money supply to capture the infinite heat created by infinite materialism via the infinite perpetual Fed ponzi scheme??? You don’t even want to know what really happens below the waist during those Fed Zoom meetings. Seriously, these guys are financial pervs, very disturbed minds, nasty human-like creatures who haunt the bottom 99%ers waking retirement dreams…

    Here a Trillion, There a Trillion, Everyone Getz a Trillion…The End….(sigh)

    • sunny129 says:

      ‘you wise Sir have “vanquished” capitalism in America (golf clap)’.

      Our good ole, genuine ‘American Free Market Capitalism’ took it’s last breath in the hands of Fed, on the March of ’09. Crony (share holder) capitalism took over and regining today!

      Financialization of the economy, favoring the Wall St over the Main street and financual repression for the bottom 90% on the Main street!

  16. Dano says:

    Some of this from the last year falls on the American railroads. Companies like CSX and UP have swallowed the PSR (Precision Scheduled Railroading) pill in response to investors who want a higher percentage of ROI and have quit responding as much to customer demand. They’re running their trains when they are scheduled and if you have more work than that, talk to us tomorrow. That’s why Warren Buffet’s privately-held BNSF is outperforming UP, although BNSF has had a bit of the fever themselves. In the past, railroads would pull equipment out of storage to run more trains and call back more under-scheduled people to work longer hours and move more freight when there was demand. Today, if there’s more demand they raise prices to push away the extra business, rather than bring unused equipment on line. It’s slowly getting better. but railroads serve American business much better when they’re not run by fund managers.

    A lot of the boxes needed are tied up in merchandise storage of loads that are stuck in transit and are waiting for too long to be moved. Some specialty retailers are swallowing the cost and paying for air cargo for their containers of high priced goods. Of course this pushes out some of the international mail containers which are left waiting in bonded storage for another flight. Getting parcel mail from eastern Europe is now taking 30-45 days, and the delay isn’t Customs.

    Covid may be a problem, but that’s not what’s holding up freight traffic. You can bet somebody’s making a buck on it.

  17. historicus says:

    So the stimulus is going to end up in the pockets of the Chinese.
    And so it goes….

  18. Lance Manly says:

    I wonder if some of those that paid down credit cards and such are getting a bit worried that there may not be a new gravy train for a while and might pull back in the holidays. Especially in the case of a covid super spike. And the whole thing about the wealth effect of the markets is off point. 10% of the population own 80% of the equities.

    • Lance Manly says:

      And there you are disappointing retail sales numbers and Sept marked down. Someone could have a lot of junk to unload before it is over

  19. doug says:

    In our household, we are spending more because money in savings returns virtually nothing.
    The question becomes: do we leave the money in savings, generating less than real inflation, or use it now before the value is reduced?
    Screw it, we are spending.

    • Anthony A. says:

      It’s OK to spend it if you have more coming in. It’s the fixed income (SS) retired folks that can’t be so adventurous. But, no one at the top cares about the old folks.

      • Lisa_Hooker says:

        Old folks are well taken care of if you’re a Senator or Congressperson or GS-15+.

  20. pieter says:

    in terms of what is going on in the ocean and air market. It takes two to three weeks for containers to cross the Pacific Ocean from China to California. The number of arriving boxes can be determined in advance. The Port of Los Angeles released The Signal, a tool powered by Port Optimizer, to show what’s en route. Nine of the top 10 carriers calling in Los Angeles feed their data into the system. Since August, the weekly numbers have bounced around between 100,000 and 130,000 twenty-foot equivalent units (TEUs).
    According to data from manifest records through Friday, this week’s volume is 118,568 TEUs, up 4% year-on-year. Next week’s volume is 127,896 TEUs, up 30% year-on-year and 7% week-on-week. Then the numbers go ballistic. For the week of Nov. 15-21, The Signal shows imports into Los Angeles of 183,878 TEUs, up 30% week-on-week and 59% year-on-year. This raises yet more concerns about the so-called “Shipageddon” supply-chain scenario: the fear that holiday demand will collide with inventory restocking and overwhelm the system.

    As has been advised throughout Q3, the tight space, high rate levels, and void sailings on ocean freight, predominantly on the transpacific eastbound trade, have led to build up of congestion and equipment shortages that are now at critical levels. What does this mean for container shipping for the rest of 2020? We are afraid no one has firm answers, as the Coronavirus (which started this chain reaction) is clearly being tackled differently by governments around the world and on top of that, there is the question as to how consumers will behave. Global schedule reliability plummeted in 2020-Q3 to the lowest recorded figure of 65.0%; all top-15 carriers recorded Q/Q and Y/Y declines. Carriers ramped up capacity significantly, and coincidentally schedule reliability dropped slightly in July, and then really tanked in August and September. There continues to be a shortage of 40’ and 45’ ocean freight container equipment in many Asia and S.E Asia origin ports, while steamship lines continue to blend in void sailings or skipped calls in their vessel rotations, maintaining a supply and demand scenario.

    All Major US ocean port terminals continue to experience congestion and delays, especially Los Angeles/Long Beach, which is experiencing record level volumes the past few weeks. . In August, the US reported the highest trade deficit in the past fourteen years, and the volumes we’re seeing through the twin ports of Los Angeles and Long Beach are supporting that data. Both ports are hitting record TEU numbers monthly and quarterly as we move into the final two months of the year. There are still labor shortages being reported at the terminals having a direct result on vessel unloading times. This then further delays the outbound loading and departure of export cargo, causing the shortage of equipment due to the extensive turnaround times.

    Rail service from the major N. America ports to the US Inland Rail Ramps are seeing delays of over one week. This predominantly represents the time it is taking from the day of vessel unloading to the departure day of the trains. Chassis shortages remain at critical levels across the US and causing increased demurrage and delayed deliveries on imports or late recovery of cargo on exports. The shortages have been an issue at the major port terminals for weeks, but now having further impact at inland rail ramps. Appointment restrictions at some US port terminals on empty container returns has improved, but it still creating backlogs and delays. The impact directly effects timely returns, forced detention charges, and further delay the use of the chassis on new loads. Thousands of containers and chassis remain idle at warehouses and distribution centers in major ports and rail ramp locations, waiting to be unloaded. With the surge in volume, replenishment in inventories, and preparation for holiday sales, this has been one of the larger factors of the chassis shortage across the US. The majority of drayage companies have begun to implement congestions surcharges and peak season increases to cope with the demand. As always, we will continue to keep you updated as much as possible and ask that all forecasts be provided as soon as available.

  21. pieter says:

    Now for airfreight: With the growing number of issues in the ocean market, we are seeing a growing spike with air cargo. We are in the annual “peak season” months for air cargo but capacity tightened quickly, more so than expected for this time of year. Rates are increasing rapidly and returning back to the levels we saw during the PPE material push months ago, with double digit levels per kg and priority service options at a premium. Furthermore, the release of new electronics, such as those by Apple, Sony, Lenovo etc.. are directly contributing to seasonal demand and will impact space availability in the coming months. We can attribute the some of the spike in rates and capacity limitations from the ongoing ocean containers being converted into air cargo. This trend is forecasted to continue through NOV, into DEC and possibly through CNY 2021; which will continue to limit capacity levels week over week.

    There is growing sentiment that importers could continue to replenish inventories well into the first quarter of 2021, as they still continue to recover from past lockdowns or proactively ship to ensure timely arrival of seasonal merchandise. With the current shipping activity more warnings are coming from the transportation arena that the challenges are likely to be experienced for several more months to come with both air and ocean cargo. This will mean continued tight space, higher than normal rates being maintained by the carriers, and even additional delays for portions of the country exposed to extreme weather in these winter months.

    • Wolf Richter says:

      pieter,

      Air cargo capacity is still WAY down because passenger aircraft that used to carry freight in their bellies are now parked. There are some efforts underway to use passenger aircraft for freight in the passenger compartment — by loading freight on the seats, or by taking the seats out entirely. This large-scale parking of passenger aircraft has pushed up freight rates.

      • Pieter says:

        yes most of my cargo is typically Freighter moved as it is palletized freight. They have been utilizing passenger areas since July for parcel or broken pallet movements. Seems to be helping revenues.

    • rj not in chicago says:

      Have a buddy who flies heavies (Atlas Air Cargo) to / from SE Asia. They can’t find enough pilots to meet demand right now.

  22. Gershom says:

    The Fed’s Ponzi markets are a peculiar shade of green this morning that looks just like red, but that would be un-possible, since the Keynesian fraudsters at the Fed are engaged in the most reckless expansion of their balance sheet since “The Creature from Jekyll Island” took control of our money issuance in 1913. Could it be that the Fed’s financial crack cocaine – endless created-out-of-thin-air “stimulus” – is having less and less of an effect on the strung-out junkie that our “markets” have become? Or are the deteriorating fundamentals finally starting to overwhelm the Fed’s Ponzi markets and asset bubbles?

  23. gnokgnoh says:

    The mix of comments about American farmers, Chinese products, and McIntosh audio video equipment is fascinating.

    So, commenters are paradoxically deriding protectionism by subsidies for American farmers in order to maintain resiliency…or certainly to protect American products. One side effect is that it keeps prices low, because the farmer is getting the money directly from the taxpayer, so they can sell their cheese for less. Therefore, the American consumer has a false sense of cheap food prices.

    Continuing that theme, cheap audio video products are derided, because costlier American products are well-made and last longer. But, but, McIntosh is not competitive, at least not for the folks that cannot afford their products. But, that is exactly what is being castigated for farmers in order to keep their prices low. We pay, whether through subsidies or higher prices, for our products, but we pay and must pay and should pay. But, I also earn more than my musician brother, who has not bought a new audio video product in 20 years. He brilliantly works the after market, cash economy.

    So, are tariffs good? Are subsidies for American producers good? Is simply paying higher prices for American products good? The latter is the most honest and, by far, the most transparent economically. But subsidies theoretically come from taxes, so the burden falls less on the low-income consumer, if taxes remain progressive.

  24. Gershom says:

    Bitcoin broke through the $17,000 barrier this morning, fueled by growing awareness of younger retail investors that the Fed’s deranged money printing means it is prudent to trade increasingly debased FedBux for items of tangible value as the dollar’s purchasing power is being destroyed. Never mind that Bitcoin has an intrinsic value of zero, or that the Fed is not going to forever tolerate the existence of rival counterfeiters. The sentiment is correct, even if retail investors have chosen the wrong vehicle as a store of wealth. Me, I’ll continue buying physical precious metals on any and all dips as a hedge as the Fed propels us down the road to Weimar 2.0 as it prints (inflates) away all government and corporate debts.

  25. Mr. House says:

    let me get this straight. Millions unemployed, lines of cars at foodbanks, millions going to be evicted by the end of the year. Half the country doesn’t have 400 for an emergency and this is the best they can come up with?

    • Gershom says:

      I guess I’m not the only one experiencing cognitive dissonance. Economic fundamentals are deteriorating at an accelerating rate, yet consumers are out spending money they don’t have with wild abandon. This is not going to end well.

      • Mr. House says:

        I had posted a link to a yahoo article with larry summers and janet yellen saying the problem was too much savings. But it didn’t make it thru it seems. I’ve been exp. cognitive dissonance the past 12 years, but have come to the conclusion i’m being gaslighted.

        • Wolf Richter says:

          Mr. House,

          Instead of just posting the link, summarize in one or two paragraphs what the article says — sort of what you just now did — and then add the link at the bottom. That works a lot better :-]

        • sunny129 says:

          @Mr House

          For the past 30-35 years, the majority of American middle class has maintained their ‘middle class’ standard of living by borrowing, one way or the other.

          This also coincides nicely with the well known stagnation of rate of wage growth for majority of wage workers in the bottom 90% (since late 80s!)

    • Lance Manly says:

      K shaped recovery.

    • sunny129 says:

      Apparently 50% of consumption (out of 70% of consumers in our ‘consumption’ economy is done by top 10%, who own nearly 90% of Wall st health! Not entirely by the bottom 90% who own less than 10% of that wealth.
      h/tCharles H. Smith (oftwominds)

  26. Gershom says:

    “Demand is driven by U.S. consumers who are ordering goods like sports equipment, entertainment devices and furniture,” Nils Haupt, spokesman for German container line Hapag-Lloyd, told the Wall Street Journal.

    How many of these people blowing their stimulus on consumer goods from China stiffed their landlords for months of rent because Uncle Sam interjected himself into contract law in yet another government overreach related to the scamdemic?

  27. BuySome says:

    Jeez folks, every why has it’s ultimate answer in “rampantly excessive real estate speculation”. It is at the core of every one of our inefficiencies. We are still horse trading when the world is in a bullet train environment. Farm and factory are what produce surplus and profit. RE and all the retrofitted components to support it do not create wealth…they can help multiply it or suck the life out of it. Right now the ship is listing to port, so many people are running for the starboard life boats and tossing cash to bribe their way into the limited spaces available. Others have spent on card decks and game boards to retire to their cabins and wait out the event. (Odd that Martha Stewart is polishing the deck chairs.) Some others are sewing cash into life vests in the hope of staying afloat long enough to swim to any debris or boats that have floated away empty or been launched below capacity. Pumps are running, lights are on, soundings are being taken every few minutes. No one in the command staff knows what will happen next. There are two knowns…an ocean of water that you can’t live in and a lot of untapped soil holding it all up. It might be wasted if used only as a graveyard.

  28. Micheal Engel says:

    1) Yesterday the hollow bones DOW made a new all time high.
    2) Last week the weekly Dow was a black Doji Star, half size, on higher volume than Nov 2 bar.
    3) Oct 26 (L) was a Spring under Jan 2018 three years TR Ice.
    4) Oct 28 close and Oct 30 close predicted a successful bull run.
    5) Denver snow.
    6) If the DOW fall under Jan 2018 Ice and reach 25,000, it might be a
    case of : ” I am falling and I cannot get up”.
    7) Yesterday SPX was a Throwover an uptrend between Jan 2018(H)
    and Feb 2020(H). Today SPX fell under this line. Sept 2 high was upthrust #1. Yesterday high was #2.
    8) Fundamentals & TA to add color.

  29. nick kelly says:

    The worst situation in the world is at the UK’s largest port Felixstowe. Shippers have just put a $175 surcharge on containers heading there. The ships want to unload and get back but are waiting days. One just put a bunch of stuff on the quay and beat it.

    UK retailers that pre-ordered hot items like e-bikes are worried they’ll miss some Xmas buying.
    Some ships are being diverted to Rotterdam and the containers are moved overland to the UK at extra cost.
    Observers of the industry note that Rotterdam is also at record volume but seems to handle it.

    All that’s missing is a strike.

    • fajensen says:

      This is only the beginning. The UK voted to have borders 4 years ago and then immediately ignored what that means for 3 years and 10 months!

  30. Micheal Engel says:

    UPS is hiring because drivers on vacation created bottlenecks.

  31. ADR says:

    When do all those homeowners in forbearance have to start paying the mortgage again? That could put quite a dent in spending, when it eventually happens…

  32. Scott says:

    When I read about carriers refusing bookings for trans-Pacific agricultural exports and canceling those already booked, it reminded me of the new Regional Comprehensive Economic Partnership (RCEP) free-trade agreement between China and 14 other countries. It creates a massive trading bloc in Asia that America, though its insular policies, will play no part in. It seems like the lack of containers may be a harbinger of our future here in the states.

  33. Martha Careful says:

    Remember last year when people were freaked out by repo rates, then, thankfully the Fed stepped in and figured out how to fix it (lol). Everything that was broken and looking fragile last year, including retail imports is now totally fixed and supercharged, and within one year, risk is meaningless and pointless in terms of future growth.

  34. rj not in chicago says:

    Have a buddy who flies heavies (Atlas Air Cargo) to / from SE Asia. They can’t find enough pilots to meet demand right now.

    • jim b says:

      So it’s agricutural products now, is it? Sounds like a colony. Back in the confederate past. Luckily the slaves are robots now and the pioneers are obese (or chubby at least). The funny thing is that the only things you can really buy from the USA are weapons. Weapons to make you a regional power. Look at the UAE. Sezannes from Europe, F-30’s from the USA.

      • Wolf Richter says:

        The US manufactures a lot of stuff, from oil drilling rigs to automobiles — and most of the foreign auto companies have set up plants in the US to manufacture in the US. In 2019, the US manufactured, as measured by manufacturers’ prices, $1.3 trillion worth of stuff (and this is not ag).

        That said, US companies have shipped a lot of manufacturing overseas, and manufacturing output has remained flat for about 13 years, despite the growth of the economy and population.

  35. Al Loco says:

    Dont forget tht Zirp is a real estate stumulus that is still going berzerk. If you happen to own a suburban single family home you are seeing a nice bump in value as people fight to get out of cities. There appears to be enough people pulling cash to have Fannie and Freddie impose the adverse market fee. This is way more significant than a $1200 check.

  36. Maybe the container shortage has something to do with affordable housing, too many containers being taken away from the shipping business and put to use as shelter?

    • Juanfo says:

      Was thinking the same thing. Container houses are up everywhere down here. Nice shiny new containers too not just old rusted out ones.

  37. Trailer Trash says:

    People are worried about the “Red Chinese” buying farmland. So what. How are they gonna get all that dirt back to China? Same with factories. Sure they can move the machinery, but not the buildings or all the infrastructure that supports factories. If push comes to shove, Chinese owned assets in US will be worth zero to them.

    If farmers can’t export ag commodities, that is a big deal, if one still wants to eat after they go out of business. When one examines the economics of grain commodities, the numbers make no sense. Someone mention 50 bushels an acre for soybeans. Even at $8 a bushel (about the same price as DECADES ago) times 50 bu. per acre yields $400 an acre PER YEAR.

    Think about that. The gross revenue from 40,000 square feet of valuable dirt and a million dollars of fancy machinery is $400 in a good year. Or in a bad year, zero.

    I am amazed anybody is still growing ag commodities. And grateful.

    • Dan Romig says:

      Soybeans are @ around $12 per cash. Some are advising to wait as they predict short-term futures to hit $13 soon.

      You’re so right about costs versus revenue for growing ag commodities. Farmers are well aware of these numbers before, during and after each season.

      40,000 square feet of dirt ain’t much though. 640 acres to the square mile. An acre is 43,560 square foot.

      Mike Friederichs remarked to my dad and me five years ago that, “Farmers around here probably aren’t going to break even for the next three to five years.” Mike was right on the mark @ five.

      One way to set up a business plan is to grow crops on contract for specific buyers. Of course, you can clean some of the 2020 spring wheat harvest and and treat it with a light fungicide to plant in 2021with the ‘game plan’ of simply having common spring wheat to sell after harvest.

      “Middle class entrepeneurism” was used in another comment by ‘Still Self Employed’ and that resonated with me. Farmers, seedsmen (seedswomen too!) and rural ag business people are the definition of that catchy description.

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