Rates for trucking, ocean containers, airfreight, parcels, you name it, the costs for shipping consumer & industrial goods are surging.
By Wolf Richter for WOLF STREET.
The dollar-amount spent by shippers, such as manufacturers or retailers, on shipping their goods jumped by 13% in December from a year earlier, driving the Cass Freight Index of Expenditures to a new record (red line). The amount spent on freight is a function of shipment volume and freight rates:
The Cass Freight Index covers shipments by all modes of transportation, but is heavily concentrated on shipments by truck, with truckload accounting for over half of the expenditures, followed by less-than-truckload (LTL), rail, parcel services, etc. It does not cover commodities.
The freight rates embedded in the index jumped by 6.0% in December compared to a year earlier. “Based in part on spot trends, the acceleration in freight rates is likely to persist in the coming months,” Cass said in the report.
Shipment volume surged 6.7% year-over-year, given the Pandemic shift in consumer spending to goods that need to be shipped, from services that are not shipped. But shipment volume in December (red line in the chart below) remained below the levels of 2018 (black) and 2017 (brown) at this time of the year:
While Americans have cut back buying services, and spending on services remains sharply lower year-over year, they have been buying all kinds of goods, and many categories in record quantities, to where periodic supply shortages have cropped up here and there since March, ranging from hot-tubs to low-end laptops.
Retail sales (goods) in December rose by 4.8% from a year earlier to a record $620 billion (“not seasonally adjusted,” red line in the chart below). Everyone got sidetracked by the dip in “seasonally adjusted” retail sales. That dip was likely due to seasonal adjustments that had gone awry, particularly for ecommerce, due to the massive distortions in spending during the Pandemic:
In addition to consumer goods, there are industrial goods that supply manufacturers, oil and gas drilling operations, and construction – and single-family house construction is going wild right now. All these goods have to be transported. And in terms of consumer goods, many of them are imported.
So the freight rates for shipping containers from China to the US – and to Europe and other countries – have exploded, amid a mad scramble for empty containers. The Shanghai Containerized Freight Index (SCFI), which tracks the average spot rate of shipping containers from Shanghai on 13 major shipping routes, nearly tripled from a year ago to a record of 2,885 as of Friday.
Container rates to the US West Coast, which account for 20% of the SCFI, rose to a new record of $4,054 per FEU (Forty-foot-Equivalent Unit), a standard measuring unit in the shipping industry. Chart of the SCFI via Shanghai Shipping Exchange:
FedEx and UPS, amid spiking shipment volume due to the boom in ecommerce, announced a slew of rate increases, most of which have now taken effect. These rate increases come on top of similar rate increases a year ago.
FedEx increased its rate for FedEx Freight by an “average” of 5.9%; and for FedEx Express, FedEx Ground, and FedEx Home Delivery by 4.9%. Surcharges increased between 3.2% and 9.3%. Among a slew of other increases, it imposed a new residential delivery surcharge (effective February 15). UPS increased its rates for Ground, Air, and International on “average” by 4.9%, in addition to other increases of fees and surcharges.
Air freight rates suddenly spiked in the spring. By December, the average rate per kilogram for example from Hong Kong to North America had shot up by 107% year-over-year to $7.50 per kilogram, according to the TAC Index, reported by Air Cargo News.
Before the Pandemic, roughly half of all air freight was carried in the belly holds of passenger planes. When airlines parked their passenger aircraft in March and April, they removed that freight capacity from the market, with massive effect. For example, from February to May the average rate from Hong Kong to North America shot up by 142% from $3.19 per kg to $7.73 per kg. As airlines began stuffing passenger compartments with freight, and as they began flying more planes, the spike began to wind down. But in October, prices began to spike again. In December, they hit $7.50 per kg, up by 107% year-over-year.
The pressures for each of these segments are different but all are related to the big shifts and distortions that occurred as a result of the Pandemic, during which consumers cut back spending on services and threw their stimulus money and stock market gains at goods, particularly durable goods, which created a lot of demand for the transportation industry.
But the transportation industry had its own issues when this demand for its services suddenly surged.
Planes were parked or retired in March and April, with airlines furiously trying to stay out of bankruptcy as their passenger business had collapsed. And the cargo capacity of those planes vanished from the market.
Trucking companies had just gone through their own crisis. Hundreds of them had filed for bankruptcy in 2019 as a result of the sharp downturn in the freight business, declining mileage rates, and pressures from debt. Many were liquidated. Most of them were small. But it also included regional carriers, such as New England Motor Freight and car-hauler Jack Cooper. And in December 2019, one of the largest full-truckload operators in the US, Celadon collapsed chaotically into bankruptcy. This took some capacity off the road.
In addition, trucking companies had drastically cut their purchases of new Class-8 trucks in 2019. They’re now trying to make up for it with historic spikes in orders, but it will be a while before these units are delivered.
And container carriers – having gone through a multiyear crisis of overcapacity and collapsed freight rates that sent some of the larger ones into bankruptcy, such as Korean carrier Hanjin in 2016 – have not sufficiently invested in containers, hence the current container shortage, and were purposefully slow in adding idled capacity in 2020, when demand surged, loving the resulting spike in freight rates all the way to the bank.
Perhaps fearing the exposure to this type of surge in freight rates, Amazon, for which shipping is a huge expense item, started to build its own transportation empire a few years ago, from last-mile delivery to a rapidly growing fleet of cargo planes for Amazon Air.
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I expect AMZN to challenge FedEx in the shipping business in the next couple years. FedEx is stuffed full of legacy costs, while AMZN has cheap independent contractors, plenty of warehouse space, and is always in your neighborhood for delivery. Pickup would not be that hard.
Welcome to the Umbrella Corporation
Today I received delivery on a 25lb bag of California grown Lundberg basmati rice, rated lowest in lead content amongst all rice tested. The vehicle delivering it was a Budget rent a van, which gave me a friendly honk as I pulled into my driveway as they departed.
While I have never seen this particular rice brand but you can get imported Basmati for less $ in any middle eastern shop.
I’m sure you are correct but Lundberg basmati rice has tested the very lowest in lead content. Indian rice also test very low. I buy Lundberg only because it’s a brand I know and tests low (est).
saw my plumbing vendor driving big truck
I asked what was going on
said he finally got semi load of water heaters(6 weeks late)
he sells like 200 a month
so he caravans smaller trucks to phoenix to buy from vendor there
said he’s made 6 trips in past month
Why can you not buy rice from your local shop? You are part of the problem of local businesses going under with monotonous regularity. And don’ t bullshit us about organics and sugar free and unleaded. It is just rice.
For some people rice is just rice. For other people, rice is sacred.
@Sit23 – it’s apparent that you don’t eat much rice.
Sit123, what’s wrong with local middlemen going under?
Times change; local middlemen are not as valuable as they used to be. Those middlemen could have and should have seen this coming for at least a decade. Plenty of time to get into another business.
I won’t cry for Amazon either when the next big shake-up renders them obsolete also.
Are you sure you don’t mean arsenic instead of lead?
correct me, it’s the arsenic that is the concern of rice consumers…
studies indicate it helps a ton either to ”parboil” briefly – 5 minutes, wash and cook,,, OR just soak in warm/hot water for about 20 minutes then wash and cook normally
does not seem to affect the outcome of the rest of the cooking process
Lundberg a very good source of several carefully grown rice varieties in the Sacramento River Valley area for several generations, either certified organic or not
Correct, thank you. I did mean arsenic, not lead. Thanks for that.
That which does not kill you makes you stronger. I never have and never will worry about the amount of arsenic or lead in my rice.
Think Freddie was referring to social (and maybe physical effort) problems. You can’t biochemically even “learn” to drink excess water…it will kill you as dead as excess arsenic.
Lowest arsenic level…in USA, nothing to brag about since USA has highest levels in the world so Lundberg is about the same as Asian rice but at maybe 10x the price?
we have a 25 pound bag of Lundberg at all times, too. i love that they’re here, HOME, and not in Asia somewhere. especially now more than ever. besides pandemic shortages of it early on reminded us how much it TASTES and cooks vastly better and we’ve tried wild rices fancy rices… but IT IS DIFFERENT /
Lundberg rice’s taste is clean bright earthy and has a nice nutty bite and maintains its lightness. don’t over cook it or over water it like i tend to by accident. alone even without salt it’s yummy. but butter salt and lime? i eat my way inward when it’s the base. i have my favored approach, like killing a little bit of time before turning ice cream over for the melted under side.
Not just USA, but planet Earth.
Below is the test results that tested rice all over the world, and Lundberg white basmati tested lowest of them all. White rice is lower than brown. I’ve read Indian rice is generally lower. Might have to do with the soil. If traditional pesticides were not used in that area before they were banned, the rice likely has less arsenic.
It is what it is, wrong or right.
Not just USA. World wide.
I have a reply in moderation because it contains a link to the rice tested all over the world not just USA.
Lundberg white basmati rice has the lowest tested level. It is a pretty large margin of lower, compared to other rice.
But yes, Lundberg does have other rice that test at higher levels. I don’t know why the link you provided seems to talk almost entirely of brown rice, which does have much higher arsenic than white.
Is the test I go by accurate? Hope so but who knows. USA rice can have very low arsenic levels if grown in soil that never used now banned pesticides that contained arsenic.
I once read a book that blamed arsenic in rice from India on all the hippies going there to convince the poor farmers to dig deeper wells as part of the green revolution. I just realized today I took it hook, line, and sinker. Definitely time to look at this issue again.
Rice contains much more arsenic than other foods. Rice from Arkansas and Texas is the worst. I buy organic foods to avoid glyphosate/round up in my food.
Amazon bought some commercial airline jets from Delta to increase Prime airfreight capacity.
Lundberg Organic is grown where there are not billions of lead shotgun pellets in the marshes where ducks died and the rice is grown. Cal Rose was our previous favorite, not organic though.
$6 for 50lbs at Costco pre Y2K, now up to $28.
We sampled some Y2K rice stored in a foodgrade plastic bucket, Gammaseal lid, buried behind some boxes in the garage. Totally edible, a tiny plastic taste, but if you’re facing starvation?
There is massive stocking up, restocking, going on as people suspect what’s ahead, both supply and price wise. Anyone who can afford it and does not have a year’s worth of household expendables and non-perishable food on hand, which you’ll use up anyway, is a fool.
Thanks. Good to know that things will be back to normal here – after a year. ;-)
I didn’t know it was grown in the US. Thank you! Good to know! Last time I went to buy Basmati it smelled like insecticide and started giving me a headache.. I don’t buy organic unless it’s on sale, but that was a bit much.
Does the California grown taste the same?
we live on Lundberg short grain brown – and not organic. tried it, notice no difference in taste so we stay with regular short or long grain brown.
it TASTES like rice and we don’t even rinse it anymore. the short grain brown tastes nutty and earthy with a snap bite and “articulation/individuation” (as opposed to a clumping stickiness) that i’ve wanted in a basmati but never find.
i don’t know about any insecticide smells, but compared to Lundberg, other rices feel dead and desicated like a collection of cut kitty claws now
cripes… i roll my eyes all the time at how californians talk about WINE and i just did it with RICES. i deserve a serious wedgie and head flushing for even calling rice “rices.”
at least i don’t (can’t) take myself very seriously.
but no. no insecticide smells have i detected on Lundberg anything.
Thanks Kitten, well, it’s telling that people are switching to rice over wine, lol. Bread is $5 a loaf in my town.
I like short grain brown rice too, but there is nothing quite like white basmati. It’s worth analyzing when one buys 25 – 50lbs of it at once.
Beans- nope, I won’t get into those. I’m not suffering that much yet.
When I worked in thin film optical coating, as a coater, we used zinc arsenide, cadmium telluride, zinc selenide, and other compounds…with just about every heavy metal there was, including radioactive thorium fluoride.
We crushed it, put in in the various heating devices, cleaned the machine and glass beaded all removable parts after every coating run, and always had to unload hot after right coating, 150 C, saves time. Did a massive cleaning when machine was deemed too dirty and ability to achieve hi-vac suffered, or chunks of this crapp was falling off it. Many machines were so big you had to crawl inside and close door to keep dust down.
Heavy metal compounds have a very (sorta sweet) distinct smell, was even in the shop air face mask they gave us to wear for “protection”, along with gloves and smocks.
At first, everyone peed in the bottle every 3 mo, never got any report back, just “you’re ok’, and they finally dropped that as an extra expense, as everyone was always “ok”. Got bad “contact dermatitis” once. Was before OSHA started getting strong enough…..which still hasn’t happened.
I just hope over time my liver has managed to make most of the stuff water or bile soluble. The first line supervisors were in a glass enclosed room on the shop floor, and didn’t like the door left open or for a worker to come in dirty. Those above them were in another building.
Anyway, on topic, when I used to eat rice, I ate Minute Rice…never cultivated a taste for much of anything, although when I worked with a lot of Asians (mostly Philipino) years later, they were damned picky about their rice.
Makes it hard for me to answer the “have you lost your sense of taste” question at docs, dentists, etc.
Oh yeah, when I did eat rice I put Parmesan or Romanoff(?) cheese on it, along with my usual straight peanut butter sandwiches and skim milk. Seemed to be good for sleeping after coming off graveyard shift, for a while. Ate a lot, since I’ve been one meal a day for pretty much over 40 years now. Solves the “what sounds good?” problem, anyway….food sounds good.
Best rice I ever tasted was Saman from Uruguay.
You may want to check the rate you show for China to USA west coast the rate you show is per 40ft not per 20ft container.
The same thing was happening in the late 1800’s with the robber barons and the uber-rich. Then along came Teddy Roosevelt. The monopolistic giants in oil, railroads, meatpacking and other industries were split up.
All it takes is a pissed off public and one president.
The Octopus, by Frank Norris is all about the railroads being the only game in town, and similar to Amazon, they could game the shipping rates to their favor, in this case against wheat farmers in the Cali central valley.
OK: someone broke the ice. Do you not recall that Trump was elected to drain the swamp? How much progress do you think he made?
For a well- documented read enter: ‘Timeline of 666 5 th Avenue…’ which lays out the case that Qatar was blockaded by Saudi and UAE to extort financing for the Kushner building facing foreclosure.’ Included is testimony by Secretary of State Tillerson saying he knew nothing about J. Kushner’s meetings in Saudi prior to the blockade.
I liked what the other Republicans said about Teddy, “He’s after anyone with more money than he has.”
Maybe that should be a part of the oath of office?
We are all basically subsidizing Amzn shipping costs as they get a much better deal than individuals or very small businesses. If they do end up controlling their own shipping it might end up costing them more than now. If not- if they pay delivery people less, it may get chaotic. People making less money are going to care less.
“The freight rates embedded in the index jumped by 6.0% in December compared to a year earlier.”…. Calling Dr Jerome, please DELETE shipping rates from your inflation figures weather consumer or producer …..Please pick up, Dr Jerome….
Because these rate increases are one offs, they can’t be included in the Fed’s inflation index./s
Dr. Bennell, the circuits are busy. (The Body Snatchers 1956).
Its just a big watermelon for decoration, get used to it.
Freight rates and such are not included in the new and improved Federal CPI which excludes all items that have increased in price.
A sensible path forward for Americans is to lean to live a higher quality life with less. Problem solved.
By “Americans” you mean the bottom 95% or so. Somehow I don’t see An Gore selling all his megamansions. You see, someone ELSE is supposed to live with less.
MD has the highest number of millionaires per capita in the US…and it isn’t because of the f****** crab cake industry. Nope, it comes from being the suburban bedroom of those selfless “public servants” of the DC political class.
You’re going to need a bigger wall, DC.
If only we could get a wall around DC.
And fill it up with water? ?
Millionaires don’t really count….say, $5M-$10M+ and then you’re beginning to get into the real pigs that ought to have the living crapp taxed out of them.
To pay for the Green New Industry we all need, of course.
Hell, there is currently $125 Trillion (with a T) household and “non-profit net worth in the US…and that’s only what the Fed knows or speaks about.
Yes but is Al Gore really happy .. I mean truly dep down ??
He wasn’t for a long time, and by the time manbearpig did show up, he was into bowling. Stayed out of the renegotiations that bought us 5 more years.
Questioning the American Dream is unconstitutional. It isn’t? Then an amendment is way overdue.
Speaking about shipping cost, I am guessing the spike in December was caused by companies trying to get ahead of Chinese New Year.
“This country was founded on the principle that one corporation couldn’t hog all the slaves, leaving the rest of us [corps] to wallow in poverty.”
Spiking even more in LA next couple weeks mb, so I suspect you are correct:
TEU volume at Port of LA up hugely the past week and the next two weeks in case Wolf does not approve the link above.
At this point, it appears CCP is going to allow full participation in Chinese New Year travel, perhaps to show the world how much they are in control of the virus…
It’s been suggested that people not travel during Chinese New Year, and there’s an outbreak right now in several cities in the Northeast.
I think most people will stay put this time around, but the CCP better have a strategy to deal with this next year. You can cancel CNY once or twice with good reasons, but doing it every year will not be practical.
Cancelling Chinese New Year travel, in longevity ,would work out much like when they tried to cut the consumption of vodka in Russia in 1914. Didn’t work out very well, to say the least!
That Shanghai containerized shipping index chart was really a total mind blower by itself, no?
I remember when first interested in containers for my unfinished off grid home project, there were lot’s of “one way” containers around with cheap plywood floors and much cheaper metal in them than Korten Steel. Imagine they are coming back?
I was lucky to get good used Korten containers pretty cheap in 2013, (me and the guy with the Customs License got along well and had many mutual friends in Ukiah area, although the Aussie Standards treated inch+ hard plywood wood floors present some health hazards. Unmistakeable smell of Chlordane like chemicals, plus arsenic, etc, as mentioned above, when cutting them. Had to rig an outside air hose.
Less buying for landfill gadgetry & other items maybe.
Hard Rubbish collection in my area is a time to gaze at consumerism in all its glory.
What poor quality manufactured products really means & though they are cheap, how expensive it is to turn them over for a new replacement.
The fashion driver .. don’t you just get sick of looking at that ‘thing’ why on earth did you buy it in the first place & the moment I touched it it fell apart.
It’s not as simple as that, because, the powers that be, greatly degrade the social fabric of America and even if people could learn to be happy with less; because the average person has little power in America, the growing monopolies in America will pay you less and less and you will struggle for your simplified life style. The only way forward is unifying and knocking down shillls along the way. If enough people unified (way less than 50%), it would be an easy victory.
I think we are in the very early stages of a crack-up boom
Economist Friedrich Hayek famously described this situation as like grabbing a “tiger by the tail”; once the central bank decides to accelerate the process of credit expansion and inflation in order to head off any recession risk, then it continually faces the same choice of either accelerating the process further or facing an ever greater risk of recession as distortions build in the real economy.
I’ve been lurking on Wolfstreet for a while. I’ve never commented before but I have been compelled to do so by that article you posted. It is a real eye opener. I’m afraid this will end very badly.
Thanks for posting it.
Sounds about right
Sounds pretty spot on….
“In the crack-up boom, the central bank attempts to sustain the boom indefinitely without regard to consequences, such as inflation and asset price bubbles. The problem comes when the government continuously pours more and more money, injecting it into the economy to give it a short-term boost, which eventually triggers a fundamental breakdown in the economy.”
The Fed is getting closer and closer to only extending the boom for a month. “Indefinitely” is beyond their concern.
I actually don’t think it’s the early stages. The 2009-2013 “recovery” years were the early stages. Now is the late stage. The crazy swings in housing prices, Bitcoin craziness, and so forth is what happens when no one trusts the currency anymore.
I’d call the 2009-13 era the “early late stages”. Still think the stage was set with puppet RR’s handlers, in 1980s.
The Coles shopping delivery man came today ..
‘Hello, how’s things, busy?’
‘Ah, not really, it’s mostly quiet now.’
‘Why’s that do you think, is it that people have moved to ready cooked foods due to shortages, because of covid & they realise that they like the convenience?’
‘Not sure, they lifted restrictions & instore shopping improved, people like to get out & about.’
‘Shopping is a bit of an excursion really, a time to go a bit mad & buy.’
But in asking the delivery guys every week or so, I have gauged that Super Markets have lost real market share that most likely will not return. I won’t be surprised if there is a downsize in SMart stores.
I like to cook, I like fresh fruit & veg & now that I have a little freezer I have to fill it up .. so I’m cooking for 2 while I can still see .. so I need shop.
So what’s happening to those containers when they get here? There should be a glut
To find out, go back up to the article, click on the link under either “amid a mad scramble for empty containers,” or under “hence the current container shortage,” which leads you to the article I wrote on Dec 20, explaining what happens to those containers. It’s a huge issue for US exporters, such as farmers, and could be in violation of the US Shipping Act of 1984. The Federal Maritime Commission is investigating.
We’ll OK, to spare you the trip back upstairs, here is the link of the article:
EVERYTHING is rising in price.
Corn, Soybeans, Wheat all 30% gains in a couple of months.
Lumber, Aluminum, Copper….
The inflation is manifest. And the Fed will turn a blind eye. And the population will not be happy.
The removing “food and energy” game (20% of the CPI) will work for a while.
It must be a certain demographic or income segment doing all this mythical buying because there isn’t much evidence of it on the ground
I am visiting in a middle class town in CT. You can’t go more than 5 minutes without seeing some kind of delivery van go by.
If it’s the town I came from in CT, you probably are seeing drug deliveries.
You have to sit in a wealthy neighborhood in order to see the delivery trucks coming and going every 5 minutes.
Yeah. Wal-Mart shopping is still strong. I go there to get misc items like tape, whiteout, pens, etc, and a jar of whey protein powder much cheaper…all same brands as elsewhere.
Also to continue my study of all the big loaded SUVs and luxury cars the “entitlement” poor are supposedly seen driving everywhere. Still no dealer plates, they all say “Joe’s Used Cars”, etc. Which means they don’t even qualify for 30 day dealer “as is” warranty.
Likely they will most all stop running or fail smog shortly, and expensively, but poor people don’t know that. They just need wheels. The rest are stuck walking to more close by Dollar Trees, and taking public transit to their jobs, if far away.
Also see the homeless in cars and old mobile homes, campers, etc, needing a place to reorganize what little they have in the daylight.
The formerly $30 grocery bag of maybe a decade ago is now the $60-$70 bag of the *downtrodden.
* e.i. ‘lowlyMokestanis’ . .not to be confused with the Realm’s griftgear-turners – the MPCs, currently floating above dark waters, with nary a spot (so far, anyway..) on their pressed slackings!
I always enjoy your posts, even though I don’t always understand them.
Low-cost reliable international shipping is probably the key driver of the globalization.
Higher cost of shipping = less globalization.
Ok for me.
In general I agree with you, but specialty product needs cannot be scaled up for individual markets. Take tools, or auto parts for just two examples. Not every country will be making their own brands of routers, or wrenches. I had to order some cables from the States. I live in in Canada. It took a month and it isn’t Canada Post that is the problem. I receive Canada Post packages in days, a week at most, from all over Canada. From Europe stuff can take a month. The delays are, as the article says, based on the collapse of the passenger airline market. Filling the AC bellies with freight is often the profit and makes up for dirt cheap seats.
Globalisation is often decried as the worst event to befall our society. Yet, if you look around we are surrounded with every luxury and product imaginable, and much of the stuff is available to those on the lowest rung. I was reading about the French Revolution the other day and compared the reports and images of the DC insurrection and those I also see of food banks on the nightly news. I don’t think the 95% peasant class of 18th century France were 100 pounds overweight as they wandered in search of food. Go to any thrift store. Castoff products are unimaginable luxuries compared to what was available when my Dad was a kid in MN, 100 years ago. Before Globalisation and reliable transport.
Be careful what you wish for. Besides, as someone who once spent a year of my youth lifting and stacking planks and beams in a sawmill, 8 hours per day, two 10 minute breaks (timed) and a rigid 1/2 hour lunch, (back stacking lumber at exactly 30 minutes), today’s North American worker would most likely call in sick or just not show up. Who is in our fields? East Asians. Who is in America’s fields? Latin Americans. Who makes our stuff? Asians or robots, unless it is a specialty niche product.
“Go to any thrift store. Castoff products are unimaginable luxuries compared to what was available.”Especially clothing, wool jackets, shirts that only CEOs could afford when new, furniture, yesterdays latest and greatest products, pennies on the dollar.
Try your local thrift store, or used computer stores, then employee owned retail businesses, if there are any left, then Amazon dead last.
Globalization is not evil. Improved the lifestyle everywhere (yes, some regions benefited better than others).
Yet, in its current version, it is associated with totally unsustainable resources usage.
By the end of current century, I dunno how people will power the electricity plants and what will be the output.
And somewhere on the planet they are harvesting grapes. Beautiful greens and reds are plentiful at the grocery produce section.
re: The French Revolution
An instant understanding of the French Revolution came upon me by visiting the Palace and Gardens of Versailles. Such incredible over the top opulence by the very few along with a complete disconnect with the many could not help but set-in motion both the French Revolutionary Terror and the bloodshed of the Napoleonic wars. It is well worth the visit to experience firsthand the monument to social disconnect that is Versailles. Once seen, it is a startling mirror to the Ivory tower golf clubs, resorts, hotels and McMansion palaces of today.
Don’t need Versailles. Just look at the background of the US Capital “invasion” videos. Marble pillars, marble walls. Intricate mosaic floors in the hallways. Dark wood paneling everywhere in the chambers. US leaders have always accoutred their privileged environment with great style and cost. “It’s good to be King.” – M Brooks
That didn’t work out so well for Louis, Marie and Co., but c’est la vie, Let them eat “freedom fries.”
Visit Hilton Head, that’s a famous DC lobbyist and other party hacks hangout. The Capitol “luxury” belongs to all.
“Let them eat freedom fries”….love it…..thanks…..will swipe that line from ya.
Some one else may even swipe it for T-shirt material.
Piling lumber was always an entry level job. Good physical labor. As opposed to tapping on a keyboard and having to buy some mechanical device to get your body in shape.
Globalization requires incomes in the consuming countries. Canada is more that 50% government and Services. So ever increasing debt is the only source of funds to pay for foreign (mainly China) products.
Canada is still exporting dirty coal, while claiming to be Carbon killers.
I worked in the woods and in the mill right alongside 20s-50s+ guys with families…..as a kid with an “entry level” job….choker setter, bucked on landing, and in the mill pulling green chain….2x4s….it is fast working.
And you don’t “pile” it. You keep up and stack it in tight, neat “units” to be banded and loaded onto lumber trucks.
Working in woods is more of a “piling” operation, which makes it more dangerous….logs roll….not that mills are safe, either.
Paulo’s bunch uses mostly high line yarding, (even helicopters) in the woods, and I never looked around a mill when I was up there. (MANY times)
Unless we are in a never ending line of pandemics, a lot of these stats are one offs. Everything got pretty lean in the mis-named ‘good times’ so now we are whipsawed in the ‘weirdest economy ever.’
Yes, this is precisely what the Fed will say when its core PCE inflation measure perks up. It’s just going to be a one-off thing, and we’re going to ignore it – they already said they would do that.
There will be, and there are already, lots of these one-offs. And they’re coming one after the other. And then they’ll feed into each other. And some of them unwind, but won’t totally unwind. And that level becomes the base for new increases. This has happened in used cars, which experienced a historic one-off jump in retail prices, that has now unwound just a tiny little bit, but it’s already at the wholesale level strengthening again and is becoming the base for new price increases.
Wait till our future president Biden unleashes his trillion dollar relief package. That’ll stoke inflation.
1.9 trillion relief package. And there will be a 2-3 trillion dollar “green”, reparations, and city/state bailout budget after that. I have heard there will be some sizeable tax increases to offset at least some of that.
It already has
Today’s headlines suggest Biden is going to give a path to citizenship for 11 million illegal aliens. So the guy your grocer paid $5-6 bucks an hour will now want $15.
That will stoke inflation.
@$15/hr that is more tax revenue for the Gov!
It’s all playing yet again into the hands of Amazon. The larger you are, the better the shipping rates you get. Another American good job industry, UPS, Fedex, bites the dust (high pay, benefits, medical insurance, retirement) as costs are cut to compete with growing Amazon contracted cheap labor delivery.
The COVID epidemic created some insane distortions as well documented by Wolf above. One I witnessed first hand was house renovations/projects. Starting with the 2020 shutdowns, Lowes and Home Depot sales went off the charts: 1st pressure treated lumber was sold out (decks and the like). Then the garden centers were packed and over the summer/fall lumber, plywood, etc doubled in price as major builders saw a major ramp in larger projects.
Some of the smaller buying was due to stimulus money in the pockets of Americans with time on their hands. The bigger projects are from wealthy folks with a lot of money on their hands and no place to “invest it”. Thus the extravagant houses and remodels.
Prices followed demand AND shortages. A double whammy.
I predict that a lot of this price increase will not stick as things normalize more. The one caveat is whether Biden is successful passing a new $15/hour minimum wage. Should that occur, many of the currently increased prices will hold and other prices across the board (food staples, etc.) will rise to meet this new income level and then stabilize at a new permanent higher level.
Which means of course that they will get some of their much desired inflation (real and lasting this time) but the minimum wage earners will be right back to where they were before with minimal income/buying power.
Thanks for the opportunity to comment!
One thing to remember about raising the minimum wage to $15 (from say $7.25 around here) is that the Gov collects more in taxes from those who got the “raise”!
My guess, in terms of the $15 minimum wage: If it passes, it will be phased in over a few years. All cities and states that have living-wage measures have phased them in so that businesses can plan and adjust to them. I would expect any big federal increase to follow the same line of thinking. It might rise in increments of $1 or $2 per year or something. That’s what I expect.
There are not that many people left that earn the federal minimum wage since living wage measures in many big states and cities far surpass it already. But yes, when/if it passes, it will still cause an increase in demand.
The min wage program in Washington state has worked fairly well. I think it caused some inflation, but overall everyone has been adapting
It’s been the rule for federal contractors since ’14.
Speaking of demand. After the phase-ins and things settle down I expect a demand for a $20/hr minimum wage. At the least.
The Minimum Wage issue has always been a trade-off between Politics and Economics.
Doing the “right thing” to keep some employers from paying poverty level wages, versus the economic certainty of Capital (now insanely cheap to the very few) from wiping out lower paying jobs, is always messy.
Governments (encouraged by Government Employees), love to tax the working poor. And they especially love taxing away the supposed gains from the increase of Minimum Wages.
The thing is you cannot have a functional labor market when a country opens its doors big and wide to labor in cheap countries, either through offshoring of work or bringing these low-wage workers in. If a country encourages that type of global search for cheap labor, which is what the US does, and which amounts to systematic wage repression, it has to have some bottom level of wages.
That said, I don’t see why the minimum wage should be the same in a town in Oklahoma, where the costs of living are relatively low, as in San Francisco. To impose the San Francisco minimum wage on Bartlesville, OK, would be nuts. But that’s what a federal $15 minimum wage would do. I think it’s better to have local or state-based living wages that are appropriate for the locations it covers.
At least 30% of the items in our main grocery chain store are imported. Frozen fish all comes from China and Indonesia and other Asian countries. Many of the condiments and spices come from Europe and India. Even the fresh fish comes from mostly Oceans abroad like Norway. The price increases I’ve noticed are mainly on these imported items. Some have gone up 20% in the last 2 months. These increases may be due to increased costs of Air Frieght, or devaluation of the dollar or a combination thereof.
In terms of freight costs, for example, fish caught off the coast of California, and therefore from California, is shipped frozen to Asia for processing (de-boned fillets) and shipped back to California for consumption. So it has to cross the Pacific twice. Thankfully, the shipping rates to China are pretty low. But for you in the Swamp, transportation costs include getting that frozen fish across the US, so from California, to Asia, to the US West Coast, and then to the US East Coast. That’s a lot of global travel for a dead fish.
Then there are farmed fish and crustaceans. “Atlantic salmon,” tilapia, etc., can be farmed anywhere, including China. Vietnam is big into shrimp farming. So, if they’re farmed in Asia, they cross the Pacific only once, but in the expensive direction.
Frozen fish, like frozen meat, is shipped in refrigerated containers on container ships, and then by rail or truck. So it doesn’t thankfully involve air freight, unless it’s a fresh or live product (which is not common and is very expensive, such as fresh sea urchin from Japan).
We’ve had two planes go off the runway at Vancouver International in last year or so that were carrying seafood to I believe Japan. Off Canada’s east coast they catch big tuna that are individually boxed in wood and 24 hrs later are up for auction in Tokyo.
Wolf, Good information. So I take it every time we eat fish here on the East Coast it has been frozen at one time or another. I like the taste of fish that hasn’t been frozen. We eat fish here 4 or 5 times a week and are on the Mediteranian Diet. What ever happened to those promised local (USA) farm raised fish farms that they show off at Sea World in Disney.
Swamp Creature and nick kelly,
All fish that is harvested in the oceans by commercial fishing ships HAVE to be frozen on the fishing ship. These ships are out on the ocean for weeks. And the fish would go bad otherwise.
Bluefin tuna arrives frozen even in Japan at the big fish market in Tokyo (now the new Toyosu). I watched an auction. Fun. But these things are frozen rock-solid on the ship, which is out at sea for a long time. Then the buyer cuts up the frozen tuna with special power saws, such as big stationary band saws. The pieces stay frozen until they’re sold to a retailer or restaurant.
Live fish is a different story. At the Toyosu market, they sell small live fish such as trout, live sea creatures such tiger prawns, sea urchin, and of course fugu (blow fish, pray before you eat). Fugu is killed and taken apart by the chef who you pray knows what he’s doing. Until then, they’re gallivanting around in an aquarium for the bemusement of the passersby.
Trout and other small fish can be handled that way – in a tank until the last moment. But that’s hard to find today. In China Town here in San Francisco, you can (or rather could) see some tanks with live fish and shrimp.
There are many types of small sea creatures that can be shipped and sold live, such as sea urchin, crab, and oysters and served fresh. If they go a long distance, they’re flown. Fresh sea urchin is expensive.
But wait… you can buy fresh local fish. And it’s not that expensive.
For example, here in San Francisco, there is still a little bit of a fishing port left with small boats that go out into the Pacific and come back the same day and sell their stuff to a special store that then retails the fish the same day.
There are other little fishing ports — they’re more like marinas — along the coast where these fishermen/women sell their stuff essentially direct to people. Quite a crowd shows up on those days. I think these small fishing ports still exist on the East Coast as well.
I don’t think I ever ate fresh (never frozen) albacore, but someone I know went out on a one-day fishing cruise off Long Island and caught one, and he told me that you simply cannot compare the taste and texture of an albacore that is fresh to one that was frozen. I would say the same about trout, which I have eaten fresh a number of times.
No seafood tops properly prepared abalone….nothing. And I’m one of those people who doesn’t like that”low tide taste” of most seafood, anyway, or a gourmet of any kind Too bad one can hardly get it anymore.
I suggest a wolf street.com inflation index. You know the one where
everything is included.
Have a gander at the Chapwood Index and Shadowstats.
They paint a realistic picture of inflation pressures on average man or woman in the street.
Guv statistics are a fantasy wrapped in a fairy tale. Believe them at your own risk.
The Chapwood index is a silly joke. At 11% inflation per year, the cost of living on average for everyone across the US would more than DOUBLE every 7 years. That is total BS!
We’ve lived in San Francisco for 14 years, one of the cities in the Chapwood index. Our cost of living has increased maybe 40% in those 14 years. But Chapwood says our cost of living in those 14 years should have MORE THAN QUADRUPLED. This is totally nuts!
Inflation is higher than what CPI indicates, but it’s not 11% per year across the US. That is just a bad joke
Chapwood Index and Shadowstats seem to have their own flaws in their inflation calculation methodologies and they are overstating inflation for the average individual, but not by much.
Both arrive at the same conclusion– inflation has been running very hot in recent years, on the order of high upper single digits to double digits.
That is more in line with reality than the CPI– which is polished to perfection to support the narrative that average person’s steadily declining standard of living has nothing to do with inflation.
I thought MIT had some sort of inflation tracking program. Maybe not an index, but taking in absolutely everything. I never got around to searching it because healthy food is the last thing that I’m giving up. I’m a cheapskate in everything else.
A little off topic but I have to say the City Of Washington DC (the Swamp) is currently locked down with 30,000 armed troops, more than are in IRAQ, Afghanistan, & Africa combined. The City is under marshal law. Nearly every business in downtown is closed. No one can even go to work downtown or near there without the fear of being arrested. People are even afraid to leave their homes near the mall/downtown area. It looks like a neutron bomb went off except for military troops.
In the words of an Army Colonel in Vietnam who burned down a small hamlet
“We had destroy the village in order to save it”
The Narrative is working.
I guess the seat of govt is not stormed very often.
Maybe the people that occupy the seat of government are doing something wrong too?
And that mob is the answer? Why not just have Civil War II?
Empires end when foreign policy becomes domestic policy.
I’ve said it before: who says there’s no justice in this world?
The chickens have come home to roost.
Nothing says “Freedom!” like miles of razor wire and blast barriers. Versailles on the Potomac is now Baghdad on the Potomac.
They’ll call it the “New Green New Deal Zone”, there in DC.
Land of the Free, Home of the Barricaded.
A previous example would be France. The “chickens came home to roost” when France refused to let loose of Algeria. Her occupation of Vietnam only adds to the story of colonialism and the host being “invaded” by the occupied.
On the subject of fish:
I do sorely miss the good fresh fish that was always available to the consumer way, way back…..Santa Cruz, SF; even when the SF Bay was clean enough to enjoy bass (and other species) fishing. Not sure if Santa Cruz still has the “Salmon” sale days for just caught fresh fish in the Monterey Bay. Just another consumer product that has been almost ruined by the profit motive.
Love rice! Did it just the other night for myself, oldest daughter and husband. Jasmine rice in a rice cooker with couple bullion cubes, sliced mushrooms and pat of reg butter. Dash of soy sauce when serving. Son-in-law asked my daughter why she didn’t fix rice like that! LOL! As an Italian we ate lots of “Aboro” short grain rice….risotto. Takes a bit longer to finish but is perfect for that dish.
Ordered three items from regional drug store: just a bit over $35 for “free shipping”. Two of the three items came separately from different parts of the US and I mean far away. Where can the profit come from with that kind of investment???? The on line cost was only couple dollars total over what would be paid in store.
May we all see better days!
I believe that troops in the capital during political inaugurations is typical for most banana republics. Nothing will happen in the US until women are out in the streets beating on pots and pans.
Our new president has promised to import pot/pan beaters if the domestic supply is insufficient.
30K troops for a “virtual” inauguration and no parade ????
Something else is amiss…..
Some troops are directing traffic and pointing people to the free parking areas. They may also be handing out inauguration programs with new government slogans to be chanted at the appropriate times. We love ‘merica, land of the free and stimulus for all!
Directing traffic as in PT Barnum’s “This way to the Egress.”
What traffic! There ain’t none. The city is a ghost town except for troops and homeless. You have to show an ID to leave the area in your car. These 30,000 troop are useless. They are guarding the ducks on the mall. Where were they on Jan 6th when we needed them????
The weren’t needed on the 6. All that was needed was for the cops there to drop the first 10 up front and the rest would have trampled each other to get out of there.
SC, you mean the Elites won’t be showing up in their chauffeur driven limos to witness the spectacle?
!00% agree Nick…..best and most realistic post in this whole little political BS thread.
As a older person I have realized that buying newest phone tv computer has not improved my life whatsoever better to pay down debt cut out business elites they starve us commeners payback time
Used computers usually sell for around $150 to $250 and have a warranty for a year. That’s for a computer that NASA could only have dreamed of ten years ago.
‘Before the Pandemic, roughly half of all air freight was carried in the belly holds of passenger planes.’
I’m puzzled by this. I thought the belly hold was for the passengers’ stuff. Does that qualify as air freight?
If not and the planes were dual passenger/ freight it must have been a heck of a job during construction to figure out how much of the plane to devote to each.
Luggage doesn’t count as “air cargo.” The belly hold is HUGE, nearly as big as the passenger compartment. And you can pack it in, unlike live passengers, which you have to place into a seated position, with some headroom, and an aisle or two in between, plus toilets, and all the other stuff. And passengers don’t have a lot of checked luggage these days. Much of it is carry-on.
Next time you fly, watch how they load the special pallets of air freight. And then multiply this by the tens of thousands of planes flying every day all over the place (well, before the Pandemic).
The USPS set up a system (1997 or so) called, “Scan where you band”. Went to a short impromptu 3 day course on it at Vegas air port mail facility. Most other guys there were from other airport facilities, so I didn’t get as much maint knowledge out of it, compared to them.
Basically, when a clerk banded and then weighed a tray or tub of mail at Gen Mail Fac, Petaluma, it’s flight out of SFO or OAK was scheduled by computer. Usually almost instantly, or at least was in the queue.
With the current forced mail slow downs, I’m sure it’s utility is now lost and it’s back on the Airport Mail Facility to work the Air Cargo schedules out.
On a routine flight to St Louis from DC I wanted to carry one bag on but they talked me of it. Then AA lost my luggage, actually they didn’t load it. A low level employee in St Louis said the reason they didn’t load my luggage (one bag) was because they reached the weight limit with the excessive amount of freight and could not load my bag without going over the limit. He told me flat out that it was 1st come 1st serve In other words air freight had priority over passenger baggage if it was loaded 1st. That was the last time I ever flew AA.
I doubt that “low level employee” exists.
Anyone happens to know publicly traded company name that produces shipping containers?
Wolf, looking at my charts, seems like USD is ready for at least a bounce, and markets just may go into some kind of ‘dip’ ;)
My 5 are mostly Hyundai and another name that escapes me. But they were designed to last around 17 years in service IIRC, and I bought them in 2013.
Update….looked a pic of my 5 stack and 2 of the orange ones (like the Hyundai is) say “TEX”…don’t know what outfit that is. Nothing on blue ones I can read. Hope it’s some help, seems like a good investment.
I can see the day , if it hasn’t happened already, that airlines say “The hell with passengers” and start ripping the seats out of planes and using passenger planes exclusively for cargo or converting them, including the belly of the plane and the passenger area. This will happen sooner rather than later if freight rates continue to spike. Or if they go bankrupt and are bought out by private equity firms and rededicated to freight hauling companies. Planes will be valued like real estate assets and be dedicated to “Highest and Best Use” . Passengers ain’t one of them.
We got the Dems in now (The War Party), WWI, WWII, Korea, Vietnam, Lybia, Arab Spring. A new War would help move this process forward faster. During Vietnam, Air freight was one of the best cyclical industries. Time to take the plunge now and cash in.
Just to add to your whining, I saw many years ago a “stand-up” seat patent by Airbus. Had a small padded bench to kinda rest your butt on and take most load off your feet. Very efficient looking. Even better than the “cattle cars” the Army used. An open top tractor trailer rig with 4 rows of seats. Carried a lot of kids.
Something is up. The Chinese currency is higher against the dollar, and exports are off the charts. Currencies and trade deficits don’t always correlate but still. Commodity prices are rising and Wall St analysts are screaming buy cyclicals!!! Couple things wrong with that. Copper prices may be rising because China in no longer dumping supply in order to keep raw material prices low which they make up on finished goods. Will the price of US manufactured goods rise, and how will China play that? There is an economic shift in China’s economy, the dustup with Aus, their iron supplier. They are outsourcing labor, (Vietnam, Iran?) The B in Bric, Brazil, is ready to realign. Large population of urban poor. Figures the outcome will redraw borders in SA, a continent of boutique nations. China on hte move, which way?