Global Shipping Update: China is About to Wreck Your Summer

April 23, 2022

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3:46 pm

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52 comments

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Economics

Shanghai image from a Tweet embedded below

Vessels Waiting to Enter Port of Shanghai

https://twitter.com/mnicoletos/status/1517597217573457924

Video Images of Shanghai

https://twitter.com/DRechts/status/1517524170795479040

Shanghai Covid Lockdown

https://twitter.com/lizalinwsj/status/1517324266185715712

China About to Wreck Your Summer

https://twitter.com/FreightAlley/status/1517713669882318848

“The coming volume drop in ocean container volumes (TEUs) leaving China for US ports is staggering. Our Ocean TEU Volume Index in SONAR now has a 14-day forward look at volumes, and it looks ugly. By early May 2022, we could see the lowest levels we’ve seen since May of 2020.“

https://twitter.com/FreightAlley/status/1515701185088573441

Deflation Anyone?

https://twitter.com/FreightAlley/status/1517612844870737926

What About Kitchen Appliances?

https://twitter.com/FreightAlley/status/1517636093839093760

“A large private consumer kitchenware manufacturer told me that they have seen a large contraction in demand over the past 8 weeks.”

Question of the Day

https://twitter.com/FreightAlley/status/1517714682232070148

Is the slowdown in Shanghai at all welcome? That’s the big question.

To the extent US merchants have ordered too much inventory in the face of falling demand, perhaps.

But Fuller notes there are just too many questions. For starters, what is China doing? Every other country on the planet is loosening restrictions.

What’s really going on?

What About the UK?

https://twitter.com/NeilRetail/status/1517731493208076291

Meanwhile, Back in the States

https://twitter.com/FreightAlley/status/1517699948757852160

“Truckload contract load volumes dropped 4.5% this week. 7th consecutive week of declining contract truckload volumes. Next week is EOM, hoping for an uptick.”

More Deflation Calls

https://twitter.com/FreightAlley/status/1517681242661076992

Recession Level Trucking Demand

https://twitter.com/FreightAlley/status/1517676616155074560

Important Point

I believe you get the idea, shipping is a mess and there is a slowdown as well. A US housing bust is underway.

Existing Home Sales Decline Again, But the Big Bust Starts Next Month

But here’s an important point about deflation and recession: When Fuller makes a recession or deflation call, it is specifically about the trucking industry, not an overall assessment.

He made that point clear in my video interview of Fuller that I posted on April 14.

See MishTalk TV with the CEO of FreightWaves: Trucking Recession or the Real Deal? for the video and discussion points.

Whereas he comments on the trucking industry, I am willing to go further. A very hard landing is on the way.

Thanks again to Craig Fuller for the interview and all of his Tweets.

For my stock market update, please see Expect More Stock Market Pain Because It’s Coming

This post originated at MishTalk.Com.

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Naphtali

2 years ago

Ah. The smell of globalism in the morning! Nothing like it!

FromBrussels

2 years ago

China ?! …. Covid ?! LOL ! There ain t no fn Covid ! This is ALL planned ….China wants to get the fn megalomaniac US of A together with its worthless EU vassal on its fn knees, Russia is a very important protagonist in this game too because the fn US of A wanted to destroy the world s biggest nation, a nation with IMMENSE natural resourses …Only morons(like fn Zardoz) won t see what s going on !

darthluzak

2 years ago

I hear that warehouses here are full of stuff and trucks bought 2,3 years are selling for more than bought. New truck prices are 250k for what was 150 2 years ago. There is shortage of parts too. Whomever got into transport business within last 2 years at these high prices will be in a world of pain. It will suck for a while and clear out as credit cards get declined at the pump. Company I work with already cut driver pay because of fuel prices. Still, its a best way to be homeless, live in a car and get paid for it.

Felix_Mish

2 years ago

Has anyone else noticed that public figures seem to say or act weirder than usual for a bit when they get Covid. Probably just my imagination.

jiminy

2 years ago

Reply to Felix_Mish

Shaking hands with the invisible man?

jfpersona1

2 years ago

Reply to Felix_Mish

Are you talking about that Brussels dude? He’s always like that…

Casual_Observer2020

2 years ago

China refused to use the free license on the mRNA vaccines because they thought they were smarter with their own vaccine which is completely ineffective. They have no choice but to shutdown but it is really just to control their population. This should be instructive as to how poor China’s science and technology leadership is. Likewise with Russia. Once again the West is prevailing. China is not smart. Russia is not smart. Everything meaningful they have is stolen or leveraged from western innovation. These countries refuse to admit they suck at science when it came to covid.

Side note. We’ve started working directly with manufacturers in Vietnam to replace some products that had China as their source through US companies. Vietnam is about 2x cheaper with no middle man.

Dutoit

2 years ago

Reply to Casual_Observer2020

It is a more a more common attitude in the west to think that what they are doing is the best and what the other do is completely ineffective. Probably this appears in every end of an empire.

With your hundred thousands of dead, you still think that you are the best….

William Janes

2 years ago

Reply to Dutoit

Common problem in China also. My experience with the Han which goes back to the 1970s is to paraphrase Churchill on Germany. They are either at your feet or at your throat. When will China become a normal country? Also do not believe China’s figures for death from Covid which I believe is about ten time the reported figure.

Dutoit

2 years ago

Reply to William Janes

Maybe you are right. But how can a country with 1.4 billion inhabitants be a “normal country” ? And what is a “normal country” ? A country following the western model ? In the west we represent a more and more tiny part of humankind. How can we pretend that we are the normality ?

Zardoz

2 years ago

Reply to Dutoit

Fake it till ya make it!

Kick’n

2 years ago

Reply to Dutoit

True, the norm has been autocracy for nations large and small throughout much of human history. I think we would just like China and all countries to step out of that “norm”. Embrace a more liberal, democratic, free market model. This is how the US became the world’s dominant economic powerhouse in the shortest time in history. Not just the freedom to think but to act on new ideas. Putin wants to make Russia “great again” but they will never be truly great until the autocrats step out of the way. Beating people into submission as autocracies tend to do just causes the best and brightest to leave. That’s why half of all of our grad schools are populated with foreign nationals. It’s what keeps the US the leader in most technical areas. More foreigners? Yes please!

Dutoit

2 years ago

Reply to Kick’n

Freedom to think in the USA ? I think this is less and less true

Doug78

2 years ago

Reply to Dutoit

Freedom to think is not the problem, freedom to say what you are thinking is the problem for those living in repressive countries.

Greenmountain

2 years ago

Reply to Doug78

Not sure Disney would agree.

Doug78

2 years ago

Reply to Greenmountain

Walt Disney is dead.

prumbly

2 years ago

Reply to William Janes

So what’s a “normal” country to you? The sheer arrogance of Americans and Europeans is breathtaking

kiers

2 years ago

Reply to Dutoit

note the COMPLETE lack of “hype” around foreign tech development…..say 7nm transistors, NTT-Docomo’s 1999 license on i-mode always on internet protocol for smart phones (you used to have to manually “start” internet data in those days to get to web). i-mode had always-on-internet “apps” more like what we ahve now, instead “WE” have the church of Elon Musk….etc etc.) It’s a glorified Anglo echo chamber. But the hype translates into share valuation and into money. Others get starved of it.

Zardoz

2 years ago

Reply to Casual_Observer2020

Covid is the perfect solution to their demographic problem. What would they want with an effective vaccine?

I’m just asking questions…

Kick’n

2 years ago

Reply to Zardoz

That’s actually a really good question. But I can’t think that they would want to let it get too out of control. In such a dense country a contagion could spread extremely rapidly. Especially if no one knows they’re infected until late. If too many die then people start to notice. Suddenly it isn’t someone else but someone you know. That’s when the cat’s out of the bag, people get angry, and the government has to get ugly. So far their control of information and fear of reprisal is keeping a lid on the place. If that information barrier ever comes down the all seeing nanny state might be in for a meltdown.

RonJ

2 years ago

Reply to Casual_Observer2020

Early treatment was always the key, but was obstructed for a mass vaccination agenda. Hundreds of thousands in the U.S. died, that could have been saved and the 2020 lockdown could have been avoided.

The U.S. isn’t any smarter than China or Russia.

FromBrussels

2 years ago

Reply to Casual_Observer2020

hahahhaha, fn CNN brainwashed IDI OT !

Dean_70

2 years ago

There are many theories as to what China’s government is up to. Nobody really knows and nobody will know until everybody knows, as it becomes obvious.

People think they know what the US is up to since our politicians very clearly tell the MSM. Somehow the narratives from our government are about as accurate as China.

Stock up on food just in case there is a massive shortage. Some major retailers are starting to limit purchases of select products.

William Janes

2 years ago

Reply to Dean_70

Why? We import precious little food from China. Stop. Food shortages have almost never been a problem in American History.

RonJ

2 years ago

Reply to William Janes

There is apparently a fertilizer supply issue, which can result in reduced yield, regardless what country the field may be in, including the U.S. What is fertilizer availability in the U.S. at this time?

prumbly

2 years ago

Reply to William Janes

“Food shortages have almost never been a problem in American History”

Hence the enormous lines outside every food bank in the country

thimk

2 years ago

China sanctions the world ! Six000mileyear has a post that i can align with . the timing of this is suspect . well good thing we have a large inventory build , but how long will it last. my spider senses say this ain’t good

Casual_Observer2020

2 years ago

All good. We need a bout of deflation. Companies will also be happy if they can cut some of those overpriced employees they hired recently.

Additionally if the Fed sees a slowing economy and falling prices they may slow down their rate hikes and/or QT. They might accidentally get the soft landing out of sheer luck.

Nuddernoitall

2 years ago

Mrs. Santa Claus suggests all will be (sort of) well shortly:

YELLEN: “Well, it may have peaked but look, you know, inflation has been high. And I think the shocks emanating from this unjustified attack on Ukraine will prolong inflationary pressures. So the outlook is uncertain. As you know, the Fed is taking steps to bring inflation down. But I think we’ll have to put up with high inflation for a while longer.”

My analysis of her one paragraph remarks:

“Well, it may have peaked but look, you know, inflation has been high.” Yellen has been hanging around Kamala it would seem.

“And I think the shocks emanating from this unjustified attack on Ukraine will prolong inflationary pressures.” Politician at work here.

“So the outlook is uncertain.” NBC newsreader thinking, why did we book Yellen.

“the Fed is taking steps to bring inflation down” Their steps are less the size that a toddler has taken in the past year.

“we’ll have to put up with high inflation for a while longer.” Thank you Secretary for your insightful remarks with us today.

Felix_Mish

2 years ago

Reply to Nuddernoitall

Nice humor!

I liked the NBC newsreader’s thoughts, especially, as they suddenly realize they booked a Magic 8 Ball.

kiers

2 years ago

Reply to Nuddernoitall

she architected sanctions and central bank usurpation of reserves on Russia back in NOV 2021! Documented.

Doug78

2 years ago

The actions of China’s leadership is more and more strange. By now we have vaccines that help keep covid from causing sickness and death. We have some decent treatments and we also have the alternative of just going for herd immunity yet Xi doesn’t do any of these and doubles down on the least effective action for covid. I wonder if he has been watching too much of “The Walking Dead” and that that fear has seeped into his mind. You may think I am jesting but Stalin was obsessed by cowboy movies and Hitler would binge watch Laurel and Hardy and Mickey Mouse films. Xi could have an irrational fear of his population suddenly turning into ravenous anti-communist zombies.

Siliconguy

2 years ago

Reply to Doug78

“The actions of China’s leadership is more and more strange.”

I’ve noticed that too, from the beginning. What they are doing is reasonable for a real bio weapon, something with a 30% fatality rate. But that’s not what Covid is, so what the heck?

Is it rehearsal for the real bioweapon? Did the real get loose in Wuhan and they covered it up by releasing the less dangerous precursor, but they still have real one popping up from time to time? Or are they afraid it might?

What they are doing makes no obvious sense.

Doug78

2 years ago

Reply to Siliconguy

No. That is a movie scenario. In reality the top man who doesn’t have a firm idea on what is going on and what to do gives orders to his underlings to jump and clap their hands and they jump and clap their hands and they give the same order all the way down. No one questions the order even if it is ridiculous because if they don’t the consequences are dire. Mao did that often and he was obeyed. Xi wants to be emperor and to be obeyed without question.

Zardoz

2 years ago

Reply to Siliconguy

Maybe long Covid is what has the 30% fatality, but takes 18 months to kick in, and THEN you become a zombie!

Doug78

2 years ago

Reply to Zardoz

That could account for my recent tendency towards cannibalism.

Christoball

2 years ago

Reply to Doug78

In todays market; many are biting their finger nails. This is just the beginning.

Doug78

2 years ago

Reply to Christoball

You are right. I started biting their fingernails and then one day I didn’t stop at the fingernails. Originally I thought I had acquired a personality defect but then I realized it was the fault of covid and that by supressing my cannibalistic tendencies I was doing not only doing wrong to myself but to society in general. Now I indulge without guilt nor second thoughts.

Six000mileyear

2 years ago

China is waging a bullet-less world. It’s impossible to achieve Zero-COVID since there is no vaccine that blocks the replication of COVID is a person. Yet, china is imposing COVID lockdowns, which are straining global supply chains. The empty cargo ships in China are not being used to transport goods between two, non-chinese trading partners. China can increase the economic pain by confiscating these cargo ships to coerce the rest of the world to agree to its policy demands.

Doug78

2 years ago

Reply to Six000mileyear

So they will tell their clients who buy 80% of their exports to do what China wants them to do or they will cut off China’s exports to them, their largest by far clients? I think I have heard that somewhere before .

Webej

2 years ago

For starters, what is China doing? Every other country on the planet is loosening restrictions.
What’s really going on?

I have seen one or two hypotheses, none make much sense to me.

Any others out there?

Roadrunner12

2 years ago

Reply to Webej

I very well may be out to lunch (meaning wrong) but the first thing that popped in my head was China was purposely limiting consumption of energy as it was experiencing an energy crunch. If I remember correctly, several regions were facing blackouts due to lack of energy inputs. China ordered increased coal production. I believe an energy crunch may possibly be the reason for lockdowns.

thimk

2 years ago

Reply to Roadrunner12

yes , or to a lesser extent pollution reduction .

Felix_Mish

2 years ago

Reply to Webej

I notice Shanghai today is kinda like a miniature Great Leap Forward or Cultural Revolution. It seems to me all three are natural consequences of a “Chinese characteristics” system of government. Over-centralized or mono-culture power without a balancing responsibility is an Achilles heal of their system. Not enough feedback? Zing. Off the rails they go.

Someone else said the same thing in another thread here, I think. @Doug78 ?

Felix_Mish

2 years ago

Reply to Webej

What others have you found?

I’ll throw out a reasonably popular, but uncompelling one: Practice/test run.

Data point: Some news reports not long ago had the CCP telling Chinese to stock up. Does the CCP leadership envision a near-future straight from a cookie-cutter, Hollywood, dystopia-future flick? Or are they just channeling their inner Mormon?

StukiMoi

2 years ago

Reply to Webej

Everyone else is loosening restrictions, because consequences of covid are getting less serious. Due to mutations, vaccines and many/most of the most vulnerable already being dead. Rendering it no longer worth the costs, to continue fighting covid.

No one besides China, and perhaps a few smaller Asian countries, is in any kind of position to even entertain the remotest , faintest hope of anything resembling “zero covid.” Anywhere else simply can’t afford the costs regardless. Hence can’t (even pretend to) value individual lives of oldsters all that highly. They simply don’t have the wealth/resources to do so.

It’s not any different from how the West’s covid response differed from the African one: The West could afford SOME restrictions in an attempt to minimize the worst of it, while the Africans couldn’t afford to do much at all. Just as is currently the case with China vs The West. Faced with milder, but much more contagious, Omicron; and a population at less, yet not zero, risk; the current cost/benefit has priced the West out as well. The Chinese now being the only ones left with the enough resources.

Shutting down the equivalent of New York, LA and San Francisco combined, in order to fight for the lives of a few individual at-risk old ladies, seems completely insane from a Western POV. But China is almost all old ladies (who were barred from having kids) these days. 95% of them not living in Shanghai. Those 95% don’t want the virus from Shanghai to spread to them, too. So they support the localized shutdowns, no matter how large the locales end up being in absolute terms. Then, since the government over there, unlike anywhere else, has enough resources to at least try to fight the fight, they do their best to abide.

Going forward, this is also not likely to be the last pandemic. For those who can afford to, it’s generally preferable to betatest fire control systems with firecrackers today, rather to wait until you’re faced with arming them with nukes. The latter not being far from what the situation in Wuhan resembled.

LawrenceBird

2 years ago

Don’t know about hard landing but certainly the transport sector was set up for a bust/boom/bust as a result of the pandemic and the insane rush to restock/restart.

Nasty Edwin

2 years ago

This will take most by surprise. It will be politically difficult or next to impossible to get stimulus measures passed because of the fears of inflation. Didn’t the last stimulus measures cause all this inflation? Deflation and Austerity are on the way. Hard landing indeed.

Karlmarx

2 years ago

Reply to Nasty Edwin

Falling prices in one product or sector do not deflation make. Even recession will not be deflationary considering that there will likely be zero net job reductions from the next recession.

Asset price deflation for sure. I would argue that this will be a profits recession and a come to whoever your savior is for credit markets, but with supply still struggling it would take a complete collapse in demand to lead to overall deflation.

Of course, the Fed could do its job and …… well, that was the start of a silly thought wasn’t it.

Curious-Cat

2 years ago

How to invest in this environment? Or keep money under your mattress?

TexasTim65

2 years ago

Reply to Curious-Cat

Keep your powder dry unless you want to buy ‘puts’ on some stocks/sectors you think are ripe for further decline.

Doug78

2 years ago

Reply to Curious-Cat

10 million Dogecoins will get you a seat to Mars.

Global Shipping Update: China is About to Wreck Your Summer

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