[HN Gopher] Trans-Pacific deteriorating, brace for shipping 'tsu... ___________________________________________________________________ Trans-Pacific deteriorating, brace for shipping 'tsunami' Author : disgrunt Score : 127 points Date : 2021-04-27 20:38 UTC (2 hours ago) (HTM) web link (www.freightwaves.com) (TXT) w3m dump (www.freightwaves.com) | ping_pong wrote: | This sounds pretty interesting. | | Is this article suggesting that imports will see lots of | inflation because of costs to ship goods to the US? And then a | backlog growing in Asia, which will eventually flood the US just | in time for the end of the Pandemic? | | It sounds like the beginnings of an old-fashion over-inventory- | driven recession. But the mechanics these days are different than | what we would have seen in the US during the 1980s, since the | factories are in Asia. I'm curious what the result of this will | be. | Red_Leaves_Flyy wrote: | If American businesses have over bought and overpaid for | inventory then expect bankruptcies and fire sales. Computers | and cars are unlikely, but bread machines, lounge wear, | exercise equipment, and similar items are likely to eventually, | and randomly, saturate their markets. IOW people probably won't | want a peloton in six months. If peloton overestimated demand | it'll shock their books and if severe enough threaten their | viability as a company. | crazygringo wrote: | This article feels extremely confusing... maybe someone here can | clarify? | | Nothing appears to be "deteriorating" whatsoever. | | According to the article, in March we imported 1.5x as many goods | as in March 2019, as retailers restock inventory. Which is | amazing that such increased shipping capacity exists. And because | there's so much demand for shipping, shipping prices are rising. | | This seems... great? We're successfully restocking tons of stuff, | but higher shipping prices mean that retailers will continue to | give priority to what people are buying, and so a full post- | pandemic restocking will be smoothed out over the rest of the | year, rather than all at once? | | I mean, scheduling restocking seems pretty flexible and can | therefore respond intelligently to prices. | | This article seems like everything is going great. What's | deteriorating? What's the "tsunami"...?? | ping_pong wrote: | If I understand correctly, if you want to get something | shipped, you can't pay a fixed price anymore. You have to pay | spot, which is exhorbitant. So not only is there a massive | delay in getting your goods shipped, there is a massive extra | cost. | fencepost wrote: | Tried to buy a printer lately? Perhaps a computer? Part of the | crap availability is likely due to the chip/component shortages | that have gotten a lot of press, but some is also due to | shipping. | | I was looking at low- to mid-range workgroup printers and | business-class desktop PCs for some clients recently. From at | least some manufacturers the ones that were available were | selling for at least $50-100 above MSRP depending on models, or | you could order at normal prices (don't bother looking for | discounts!) with estimated delivery end of May or in June. This | article makes me think there's a chance those might be | optimistic. | Stratoscope wrote: | A few weeks ago I got a new ThinkPad X1 Extreme from work to | replace my awful System76 Thelio Major. I was interested in | checking out the X1E because I was due for a personal | ThinkPad upgrade too. | | Last week I decided I liked it and went to see what Lenovo | had available. All of the nice X1E's with the UHD display | were showing "more than 12 weeks" delivery time! | | The next day I remembered that the ThinkPad P1 is exactly the | same machine as the X1E with a different GPU. Lenovo is wacky | like this with their model names. | | Some of those were showing 8-12 or over 12 week delivery too, | but they had one model in stock the way I wanted with UHD, | 64GB, 1TB and an empty SSD slot. | | It shipped the same day I ordered it, arrived Friday and is | great! And was just $1625 plus another $149 for three-year | premier support since I ordered it through Corporate Perks | (who I highly recommend). Would have been $900 more if I | bought it directly on lenovo.com, even at their "sale" price. | The machines ship direct from Lenovo either way. | | So I thought I'd tell my friends and colleagues and checked | again yesterday. Nope, all gone now, this model went up $200, | and it along with all the other nice ones are "more than 12 | week" delivery too. | Causality1 wrote: | Indeed. In October of 2019 I ordered a basic printer for $36. | The cheapest one on Amazon right now, at least with more than | one review, is $90. | WWLink wrote: | > Tried to buy a printer lately? | | I did! I noticed B&H had the model I wanted in stock, but the | store was closed over the weekend for a holiday. So I checked | back right before the store opened and placed the order JUST | as it JUST as ordering opened up again. | | Not 5 minutes after I ordered the printer, the page went from | "in stock" to "more on the way" lol. I received the printer a | week later. Most places had it a month+ out. | | Ugh, and that was easy compared to getting some computer | parts right now. | johncalvinyoung wrote: | This situation is a mess for anyone waiting on something that's | sitting in a container in Shanghai, or on a ship in the queue | in Long Beach. A friend's business has a critical LCL shipment | that was supposed to arrive to their supplier (likely receiving | a whole container, but not _many_ containers) last week, but is | stuck on a ship _somewhere_. That 's stressing out my friend | the logistics manager ahead of an upcoming product launch. | | And no telling what the next product in queue is going to take | in terms of component sourcing. Yikes. | adrianmonk wrote: | This article is written for "FreightWaves" which is "The | Fastest Way to Navigate the Freight Market". The target | audience is people who need to ship stuff. | | For them, service levels are deteriorating. What is normally | easy has become a struggle. | lazide wrote: | It's a tsunami of freight - 1.5x March this year over 2 years | sounds decently typical considering normal growth. The issue is | that April/May/June it wouldn't be odd considering the | circumstances if it was 5x or 10x - if there was enough | containers, or enough ships, and there isn't. As TFA was | pointing out, it isn't even about rising prices to get a spot. | Sometimes you can't get a slot period. | | Remember all those supply chain shocks and people talking about | needing to restock to get things working in chips, | manufacturing, etc? Right now there is 100 containers of socks | stuck on a ship and in the way. | | At least, that is what I got from the article. | CameronNemo wrote: | > Right now there is 100 containers of socks stuck on a ship | and in the way. | | This seems like a real easy problem to fix. Some simple | import tariffs could get a lot of the cruft out of the way in | no time, and they could be eased back too. | lifeisstillgood wrote: | Sadly I don't think it works like that. Ignoring the usual | long lead time on tariffs, and the difficulty in applying | such rules (Socks now have 10x import duty. Ah but not | medical support stockings. And socks on baby clothes are | exempt, but if the socks are sold as a bundle ...) | | The _real_ problem is that the cruft is _already in the | system_. If we did something clever and said all non-urgent | shipments get delayed and the urgent ones come through we | would have | | 1. Some containers have both important and cruft in them. | | 2. The cruft containers are on the upper port side of the | ship. If we don't unload those the ship will topple. If we | unload but don't onward ship we have a ton of containers | literally sitting on the dock. | | 3. If we sort that out, the cruft _orders_ are part of the | game now - the container of socks is going to _come back_ | loaded with medical computers. But now they don 't have a | container to come back in. | | No the solution to this is transparency. A global | blockchain / ledger (not The blochchain), would let people | see some of the worst problems ahead. But that tech exists, | but not the usage of the tools or the trust. | wikibob wrote: | How does a magical blockchain do anything that a database | wouldn't, in this scenario? | Retric wrote: | High shipping costs are effectively a tariff on bulk goods. | It's not particularly effective as shortages drive up | prices. | gonesilent wrote: | We still have Trump's tariffs to deal with, more will just | be yet another burden on consumers. | icegreentea2 wrote: | I'm curious, how does the restocking work out here? Is this | restocking recovering from the initial drop in Asian exports from | like a year ago? Have companies been working with that dent in | their inventories for the last year-ish? | inetsee wrote: | As I was reading these comments I was reminded of some articles I | read quite some time ago about the impact of global warming | produced sea level rise on container ports. Many existing ports | weren't built with sea level rise in mind, and building new | container ports is expensive and takes quite a while. A quick | search on "sea level rise container ports" produced articles that | said a lot of the impact depends on the amount of sea level rise. | Five feet or less will probably not affect current ports very | much; as the sea level rise gets higher the impact on existing | ports becomes greater. | | Would anyone who knows more about this topic care to comment? | ksdale wrote: | I am not a person who knows much, but google says that current | sea level rises are between 3 and 4 millimeters a year. At that | rate it will take 300 years to reach 5 feet. | | It seems like increasingly severe storms will (would) have an | impact a century before sea level itself becomes a problem, | even in places where the sea level is already basically a | problem. | arbitrage wrote: | Is there anywhere else that can ease the load on existing harbour | infrastructure? | | If the demand is this extreme, shouldn't a new eceonomic | opportunity be ripe for the picking, here? | zdragnar wrote: | Ports for big ships have historically been constrained by | geography- ideally you need a very deep, well sheltered bay. | | A shore with shallow waters for hundreds of feet simply make | for very costly places to unload, and get treacherous in rough | weather. | | On top of that, coastlines tend to be the most densely | populated regions. Building up infrastructure for a new harbor | sounds like a nightmare to get through zoning, let alone an | environmental impact review. | skybrian wrote: | Maybe some US manufacturers will benefit? | AnimalMuppet wrote: | Yes and no. There are, for example, a few ports on the Pacific | coast of Mexico. They don't have the transportation | infrastructure to carry large amounts of cargo to the rest of | the continent, and they (probably) don't have the cranes to | efficiently unload container ships. | | The US ports don't have the space to expand. I don't think the | Canadian ones can, either. Prince Rupert might be able to, but | it would take time. | | The problem is the sheer scale of what you are asking for. We'd | need either more ports, or more berths at existing ports, with | more cranes, and more transport connections from the ports to | the country. | | If there's one thing where you could get more throughput by | throwing money at it, it would be in more efficient container | cranes. And even that requires someone figuring out a more | efficient crane, and then probably a few years of building it | out at the ports, and upgrading the dockside infrastructure to | handle the increased throughput. | briffle wrote: | The Port of Coos Bay in Southern Oregon has been trying to | expand their port for 15 years now. | https://www.portofcoosbay.com/projects But the projects take | quite a bit of time (dredging the bay deeper and wider to | service 1000' ships, taking over and repairing a basically | abandoned railway with 100 year old tunnels and bridges, | etc). Couple that with some initial resistance from state | legislators that serve Portland (which lost its largest | container ship terminal contracts a few years ago), and these | things take years to get into place. Could be real fast, if | they got a guarantee of business from somebody, but shipping | companies don't want to pay to develop in only a few years, | and then have their backlog clear up before then. | toast0 wrote: | Building a container port to handle large vessels is a big | capital expenditure. And you also need a labor pool, and | trucking / rail facilities. It's not something you can come up | with quickly to take advantage of an event that everyone hopes | is short term. | | Labor shortages related to covid on the US west coast leading | to delays wouldn't be significantly helped by adding another | port on the US west coast. | | From the bottom of this article, it does look like there's some | room in alternate non-US ports, although that seems expensive | and time consuming. | GnarfGnarf wrote: | It's going to make manufacturing in the U.S. cost-effective | again. | [deleted] | belval wrote: | I feel like article is missing conclusions on what will be | affected by this. Will consumer prices be higher? Delays in | shipping? | Spellman wrote: | Guessing the big issue is delay in shipping of | components/goods. | | And for critical items bidding up the price of transport will | pass those to consumer or force reorganization of the supply | chain to other avenues (local or other shipping). | | Medium term it's a big hiccup on the global JIT economy. | bruiseralmighty wrote: | Sounds oddly similar to a database deadlock. Wonder who the | optimizer will select as the victim. | | But that's what happens when you put all your manufacturing in | one large transaction. | d_silin wrote: | More like another boom phase after bust one. | malwarebytess wrote: | A fear I had about winding down industry, shipping, and services | for COVID-19 was that getting it all up and running harmoniously | would be unmanageable. The incredible interconnectedness of all | industry would cause problems. Say one node wants to start again, | but it depends on 5 other input nodes that also want to start | again. Those 5 cannot begin without their own connected nodes. | And so like an apocalyptic version of trying to restart a global | power grid you would have cascades of failures, rubber-banding | demand and supply, and so on. | colechristensen wrote: | Inefficiency brings up business opportunity. Some industry | can't realign quickly? Make a bet that a new business will be | nimble enough to deliver faster and take their market share. | rob74 wrote: | Yay, that's exactly the thinking that got us into this mess - | trying to squeeze every bit of efficiency out of the supply | chain has spread every step of production far and wide (I | already mentioned the global journey a pair of jeans is going | on before being sold for next-to-nothing in a mall near you: | http://competendo.net/en/A_Pair_of_Jeans) - which was | possible until now because of cheap logistics, but the | current situation reveals how fragile this really is. Maybe | what we need is not more efficiency, but more common sense... | colechristensen wrote: | But there's always some potential mess and fragility | regardless of your model... robustness comes from the | ability to react to failure i.e. to take advantage of an | opportunity like this shipping crunch. | sokoloff wrote: | Many consumers will buy from a more efficient supply chain | because the price to them (for goods in stock) is a few | percent lower. They don't have nearly as powerful incentive | to overpay for years in hopes of having more stable supply | after a pandemic-induced global disruption event. | omegaworks wrote: | I _guess_ but that upstart better be willing to bet a massive | amount of capital on creating that infrastructure only to | potentially see its advantage evaporate as the supply lines | normalize. | macintux wrote: | An industry like shipping doesn't seem a likely target for | disruption. It would take a massive investment to make even | the smallest dent in the problem, and it's mostly an analog | system. | acchow wrote: | Imagine Amazon couldn't restock items and it hit their top | line significantly. | colechristensen wrote: | Then manufacture locally and sell what can't get a place on | a ship. | | The lack of shipping capacity creates business | opportunities and not just for building ships or ports. | twic wrote: | Logistical black start: | https://en.wikipedia.org/wiki/Black_start | m463 wrote: | Well that's a fascinating page. | | The trade-off between "might need" and "will need" is | fascinating to think of (and pay for). | habitue wrote: | Really didn't expect to be reading about literal containers on | HN. | m463 wrote: | same as docker - dependencies are downloading slowly before you | get a container. | midasuni wrote: | Logistics is a massive global system, plenty of hacks | dmoy wrote: | Flexport is commonly featured here | rrdharan wrote: | Their hiring posts certainly are but I can't recall seeing | much else about them beyond that - am I just mistaken? | [deleted] | zenmaster10665 wrote: | Are there good stock plays off the back of this event or is it | not protracted enough to invest in without buying special | instruments? | throwawayboise wrote: | By the time you ask and get an answer here, the market will | already have priced in any opportunity that might be mentioned. | disgrunt wrote: | Domestic commodities seem like a good investment near term. | T-hawk wrote: | My guess would be that there must be something to do from an | investing angle -- but also that industry insiders and | specialists who look at such things dedicatedly and | professionally would have already priced in or arbitraged | anything far ahead of a layman's understanding and | participation. | bradj wrote: | For sure shipping equities with exposure to freight rates like | Maersk, and maybe other logistics equities, like railroads. | etaioinshrdlu wrote: | With global shipping, semiconductor manufacturing, and food | prices spiking, is this generalized global inflation? | XorNot wrote: | Shipping prices are extremely elastic is my understanding, so | no. If you own a ship you always want to be running it near | full capacity, so once the demand surge subsides prices will | also fall. | | Inflation requires their not to be a way for prices to reduce. | [deleted] | underseacables wrote: | Would this be an argument in favor of more domestic | manufacturing? | macmac wrote: | Interesting to note that the US only really has one container | shipping line: Matson. It is an insignificant carrier in terms of | capacity (less than 0.5 % world market share) which primarily | services Hawaii. | wonderwonder wrote: | Wonder if this could spur local manufacturing again if | transportation costs start to out weigh labor / material costs. | pmlnr wrote: | That would be a good outcome: less transportation means less | pollution, plus redundancy in production, which is seriously | needed. | jayd16 wrote: | The cost of bootstrapping manufacturing is also probably | impacted though. | wonderwonder wrote: | Very much so. Seems like a good time for the federal | government to make low cost loans available to those seeking | to bring manufacturing back to the US. | adrianmonk wrote: | Depends on how long it continues. If demand is back to normal | in 2 months and it takes 3 months to ramp up your | manufacturing, then you'll be too late to get any benefit from | this. | sokoloff wrote: | It's not just your manufacturing steps, but you need the | upstream suppliers to also be local. There are reasons well | beyond just price for a lot of electronics development to be | done in and around Shenzhen. | lazide wrote: | Even worse, you'll have blown however many million $ it took | to ramp up production. | ummonk wrote: | I recall reading a few years ago that the port of Oakland was in | a precarious spot due to being outcompeted by excess capacity in | Southern California ports as well as gulf coast ports via the | Panama Canal. I would guess that is not currently an issue given | the shipping backlog? | | Edit: yeah I'm seeing articles about a historic backup at the | port of Oakland. | lifeisstillgood wrote: | We seem to be entering a global version of The Beer Game | (https://en.m.wikipedia.org/wiki/Beer_distribution_game). The | game is a training session on supply chain co-ordination designed | to show effects of trying to order beer and bottles months ahead | of time then demand changes etc. It's mostly chaos | | (I was speaking to someone who has seen their shipping from China | to Europe quintuple - apparently all the containers stayed in | Europe as no one wanted to send them back empty.) | | The game is designed to show that "local" signals aren't always | indicative of full system - the example being that retailers etc | are stockpiling right now on-shore. But this creates more demand | than usual, slowing delivery. So the naive retailer will say "OMG | it now takes 3 months and 2x price to get widgets, I had better | order _4 months_ supply ... and so it goes - an infinite bug | methodology. | myself248 wrote: | Heh. I was just about to ask if this was another term for the | bullwhip effect, and the page actually links right to it. | | I think the overall effect is that we all have to get used to | things being scarce or spotty for a while, that's all. The era | of perfect infinite next-day availability of everything has | come to a pause. Be patient, adjust expectations, make do, and | give the system time to recover. | | And wherever possible, buy local, buy on-shore. | jerrysievert wrote: | which is interesting as there is currently a beer can supply | problem. breweries are now ordering more cans than ever, from | as many places as possible in order to get their product in the | hands of covid-plagued consumers. | | it's interesting to see cans from a brewery change depending on | the week they were canned. ___________________________________________________________________ (page generated 2021-04-27 23:00 UTC)