I don't know if this is normal but I went to Ikea to look for couches and every single one I was interested in won't be available for weeks. I wish I knew that before I took my old one to the dump.
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"A pessimist thinks things can't get any worse. An optimist knows they can."
I don't think this will be a permanent feature. Shipyards across Asia are completely full with orders for new container ships.
It takes awhile to build new ships, so it could last for a year or two, but not long enough to make moving production to N. America logical, probably.
but the ships are only part of the supply chain. What good are more ships if they can't be unloaded, and have problems with storage and transport once unloaded?
Maybe some companies have to look at abandoning the "just in time" philosophy and keep more parts and materials on hand.
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i don't know... one of my customers was talking with his bauer rep and the cost of shipping is insane. a container that cost $3k is now $15k-$20k.
the guy who runs one of my bands is a 'higher up' at a local flooring company. they are now seeing bills for $30k to get a container to north america.
but as mentioned in the original post - supply for lots of stuff is a huge issue already. i see it often in my industry.... shirts, caps, jackets, track suits, hoodies, bags, etc - all very limited stock.
Perhaps its $30k for every container if you don't ship regularly and don't have contracts with freight companies. I'm not familiar with that market.
For companies that ship a fair number of containers a month you definitely see containers that cost up to $30k but the average 40' container cost is a lot cheaper than $30k.
Its also very hard to find containers right now in general and then boat space. So its possible we get up a $22k average, but that isn't the market now.
but the ships are only part of the supply chain. What good are more ships if they can't be unloaded, and have problems with storage and transport once unloaded?
Maybe some companies have to look at abandoning the "just in time" philosophy and keep more parts and materials on hand.
I agree with that, but right now the price is high mostly because so many ships are stuck waiting there's a shortage of ships. If you build more ships you'd still have the delay but probably not the higher prices.
And if you build more ships and the ports fix the delays (post covid when longshoremen want overtime, for instance) you could end up with more ships than necessary and a price crash.
Good information in the video, but I agree. He does that real annoying thing, where he has really jarring changes in tone throughout the sentence. I don't know how to describe it properly in text. But it always makes the guy sound sarcastic or condescending, and is not a great delivery of a subject if you want to engage listeners.
As GordonBlue says, the problem is a global system that’s calibrated to be extremely efficient during optimal conditions, but is so fragile that it breaks down if conditions become sub-optimal due to a global disruption. It isn’t just container ships, but microchips and other critical material.
So how do we factor these once or twice a decade catastrophes into the global trade system? Or do we just keep the machine calibrated to optimal conditions and take it on the chin if there’s a war, another pandemic, etc?
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Originally Posted by fotze
If this day gets you riled up, you obviously aren't numb to the disappointment yet to be a real fan.
As GordonBlue says, the problem is a global system that’s calibrated to be extremely efficient during optimal conditions, but is so fragile that it breaks down if conditions become sub-optimal due to a global disruption. It isn’t just container ships, but microchips and other critical material.
So how do we factor these once or twice a decade catastrophes into the global trade system? Or do we just keep the machine calibrated to optimal conditions and take it on the chin if there’s a war, another pandemic, etc?
Thats true, but the system is also self-healing.
Lumber prices were absolutely ridiculous for awhile there. Then mills got re-started and people decided to hold off on that new fence for a year. Now they've come way down again to something much more reasonable.
The same thing will happen with container shipping and microchips, the lead time is just longer because they're more complicated.
The same thing will happen with container shipping and microchips, the lead time is just longer because they're more complicated.
In the case of microchips, that ‘just longer’ is going to be 2-3 years of highly damaging shortages across a range of important industries. Auto manufacturers alone are going to lose billions.
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Quote:
Originally Posted by fotze
If this day gets you riled up, you obviously aren't numb to the disappointment yet to be a real fan.
In the case of microchips, that ‘just longer’ is going to be 2-3 years of highly damaging shortages across a range of important industries. Auto manufacturers alone are going to lose billions.
I think it'll be less than that, but we'll see.
I agree in cases like that keeping some extra inventory on hand would have been smart.
I think the 2-3 years is coming from people looking at order numbers and capacity. But in times of chip shortage (and this has happened multiple times) customers order more than their actual demand. They do this because they realize now they should keep some inventory, and because ordering 100 makes it more likely that you'll get the 50 you need.
But once the industry catches up to the 50 there isn't an actual shortage any more, it'll just take some time to restock the channel with inventory all the way through.
I agree in cases like that keeping some extra inventory on hand would have been smart.
I think the 2-3 years is coming from people looking at order numbers and capacity. But in times of chip shortage (and this has happened multiple times) customers order more than their actual demand. They do this because they realize now they should keep some inventory, and because ordering 100 makes it more likely that you'll get the 50 you need.
But once the industry catches up to the 50 there isn't an actual shortage any more, it'll just take some time to restock the channel with inventory all the way through.
so your idea is to maintain the status quo for the supply chain except for more boats, as it will fix itself? (plus the current problem isn't just a ship shortage. look at how many ships are waiting offshore right now.)
that's pretty optimistic and doesn't solve (or prevent) any problems, least of all the North American overreliance cheap Asian manufacturing.
and the fact it seems many companies seem to have a poor understanding and implementation of the JIT philosophy.
so your idea is to maintain the status quo for the supply chain except for more boats, as it will fix itself? (plus the current problem isn't just a ship shortage. look at how many ships are waiting offshore right now.)
that's pretty optimistic and doesn't solve (or prevent) any problems, least of all the North American overreliance cheap Asian manufacturing.
and the fact it seems many companies seem to have a poor understanding and implementation of the JIT philosophy.
No, not at all. I think shortages in the economy will generally work themselves out though. The economy needs more shipping space you can see the ship orders. The economy needs more chips, and the semi capital equipment manufacturers are going full out building chip factories.
Some of the stuff where the government is involved (port capacity) is harder to get solved.
I talked to some bike shops to ask about buying a bike next year when there is no shortage - they said that it would be just as bad as this year as they will only then be fulfilling their back-orders from this summer in 2022
I talked to some bike shops to ask about buying a bike next year when there is no shortage - they said that it would be just as bad as this year as they will only then be fulfilling their back-orders from this summer in 2022
Asking a bike shop whether you should wait to buy a bike or order now is a lot like asking the police union/management whether we can safely cut police spending.
The person answering that question has incentives that may not align with yours. They might be both predicting the future correctly and being honest with you about it, but it is worth considering the incentives side of it.
I deal with shipments from China/India almost every day. This is a huge global problem at this time which has no end atleast until the Chinese New Year next year and even then it's not a guarantee.
Prices of goods will keep rising in my estimate.
Just this morning we paid 80k (USD) freight for 4 containers from Shanghai.
