Ocean Shipping Costs Decline 84 Percent, Truckers on Verge of Losing Money

JeffD

3 years ago

So now that shipping rates dropped from $20,000 to $2000 (90%), when do retailers drop theier prices to match that huge windfall?

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RonJ

3 years ago

What a whipsaw looks like.

Never should have shut down the world economy, over a treatable virus.

Another FDA rigged trial:

“Previously, 100 mg of fluvoxamine twice a day was shown to be effective. We have mechanistic evidence that fluvoxamine

(SSRI-Selective serotonin reuptake inhibitor) works as it is a mast cell stabilizer. The NIH/ACTIV-6 trial used only 50 mg twice a day.

The ACTIV-6 study was designed to fail and produce headlines such as Study Debunks Use of Antidepressant Luvox as COVID Treatment.

The Pharma conflicted authors have an obvious interest in destroying cheap, safe, effective treatments.”

They did the same to HCQ and IVM- the FDA approved trials were rigged to fail. This is scientific fraud.

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Zardoz

3 years ago

Reply to RonJ

Toot toot! Kook alert!

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KidHorn

3 years ago

I suspect over the next few years we’ll have a glut of shipping boats and containers. The high prices of the last few years likely boosted construction. I also think we’ll have a glut of video cards and computer ships. Making bitcoin makes a lot less sense when electricity costs are high.

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vanderlyn

3 years ago

the plague years have had profound affects on society of world, even the great shoppers of usa. de globalization. work from home. less consumption oriented society. rates rising to quash inflation from plague years printing press helicopter drops. the boomers are dying off and retiring. their bratty 3rd base lifestyles of shopping and borrowing……..seems to be going out of vogue. sometimes things like great depressions, world wars, and global shut downs due to plagues……….have generational changes. i’m in the camp of there is always places to trade and make money. the carry trade in FX market is back big time. even Tbills looking good. oil looking great. and many high flying stocks now paying decent dividends. this ain’t a recession. this is a complete change in society.

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mrchinup

3 years ago

Wait until diesel price goes up 2 bucks and the truckers stop delivering. Should be interesting.

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KidHorn

3 years ago

Reply to mrchinup

They’ll get paid more and pass the costs on to consumers. There’s no way commerce will stop because of a pickup in transportation costs.

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Avery

3 years ago

Ah Christmas – a high Chinese Holiday since the mid – 90s!

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8dots

3 years ago

Berkshire Clayton Homes and Oakwood Homes, the biggest in the country, are booming.

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MarkraD

3 years ago

Reply to 8dots

A friend owns a company in residential service, in 2019 he broke all time sales, company was passed to him by his father.

This year he’ll beat that record, and he has the equivalence to to 2019’s sales in back log, most of it financed at early 2022 rates.

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8dots

3 years ago

Reply to MarkraD

Tell it to Jeff Snider. Jeff knows about black holes gravity, but not about gravity between US and the German yield curve.

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8dots

3 years ago

Macron & Canada Micron : Micron’s Bombardier CS300 was sold for free in stepping stones to Macron, produced in Huntsville AL.

Rent in Huntsville y/y is the highest in the nation.

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MarkraD

3 years ago

“… a long period of economic weakness with minimal rise in unemployment.”

I just had to copy/paste that, we live in strange times.

It it possible the Fed’s on the mark? … Will they know what to look for and when to alter course when necessary?

Dare I say it…”Soft landing”?

.

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Zardoz

3 years ago

Reply to MarkraD

Well maybe, but we’re a pessimistic bunch. Maybe call it a ouchie landing for better acceptance of the idea.

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8dots

3 years ago

The infantile “I want it now” from China is over. Five hundreds ships in Savannah and Long Beach unloaded their stuff from cranes to trains

and tens of thousands trucks, increasing demand for diesel. This boom is over. The economy have shifted internally. A tsunami of trucks, day and night, are moving stuff produced in the south : Toyota from Chattanooga, Mercedes in Tuscaloosa, Boeing in S.C, other flying stuff in Huntsville AL, Lockheed and General Dynamics missiles & ordnance in Arkansas, cotton, logging…real stuff is moving through a never ending road work clogging the mid west and the south. The economy of the mid west and the south is booming, but the experts in SF and NYC don’t

know about it, because they flyover, first class. Texas and the south produce affordable mini and micro houses, loaded on oversize trucks.

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PapaDave

3 years ago

Reply to 8dots

Sounds very energy intensive.

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8dots

3 years ago

Reply to PapaDave

PapaDave. A tsunami of trucks moving stuff day and night through road work are using a lot of diesel. Truckers sleep in truck stops or service stations to save motels/ hotels bills. Diesel stations for trucks have long waiting lines. Dots to dots in the south and from the south are shorter distances than from Tianjin to Long Beach and from Long Beach to every other place in US. Since 1978 our industries were decimated, but the trend have changed and reversed. The just in time from the south might be cheaper than ordering six months in advance, but the stuff is late or never produced. China became a casino. U never know what u get !!

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PapaDave

3 years ago

Reply to 8dots

Yep. Problem is, there’s a shortage of diesel. Lots of demand, as you mention, but not enough supply. Not enough refinery capacity, as we haven’t built a brand new refinery in decades. We keep closing small inefficient refineries, and updating/upgrading the ones that are left. Net result is no new capacity. Or even less capacity.

And no one wants to spend the money to build a new refinery, because it’s a 30 year investment, and it may not be needed 15 years from now.

So shipping costs are going to go up.

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xbizo

3 years ago

Great info, Mish. I think California’s CARB regulations are going to induce a number of companies to BK and let the dust settle before re-entering later. They can get out from under the debt burden after having had to accelerate their fleet purchases to unsustainable levels. Trucks will re-deploy at advantageous used prices. I remember in 2010 that a good used 24′ truck fell to $20,000 in that recession. 20% of new.

Maybe the beginning of an industry-by-industry debt re-set?

The one thing I continue to argue is that interest rates are now in the low-normal zone, not high.

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MPO45

3 years ago

Reply to xbizo

The one thing I continue to argue is that interest rates are now in the low-normal zone, not high.

Agree. Seeing some data that could push mortgage rates to 10% in 2023. That would do wonders for housing if it happens.

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xbizo

3 years ago

Reply to MPO45

Looks like it’s build-up your cash reserves time. Deals are coming in a couple years.

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PapaDave

3 years ago

Great post Mish. Confirms what you have been saying for a while now about slow growth, deglobalization, and supply chain changes.

And it adds further confirmation to what past commenters have said about this decade being one of slow growth.

I also expect this slow growth to continue throughout this decade. And in a slow growth scenario, demand for basics like energy and food will continue to rise, while demand for many discretionary items will flounder. Which is why my investment focus has been in these basic areas, particularly energy (mostly oil and gas, but also some renewable).

Moving away from massive ships and global bulk transport to smaller ships and more regional transport as we deglobalize means less efficiency, more energy use and higher costs.

Much like the current low water levels in the Mississippi river reduces bulk transport efficiency; requiring barges to run at half capacity or not at all; and requiring substitution with less efficient rail and truck transport. More fuel consumed and higher costs for it.

I know that some here will argue that energy demand and energy prices will drop. I would argue that will only happen during a very deep recession. And I still see no signs of that happening.

In addition, Biden just set a $70 floor price for oil with his SPR refill plan. And OPEC has clearly shown that they will cut supply in order to support a $90 price.

And oil companies will continue to gush cash flow at either of those prices.

As always, I am open to other investment suggestions, provided that people can give a reasonable rationale for them.

How are all the gold bugs doing?

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MPO45

3 years ago

Reply to PapaDave

PapaDave,

Gotta thank you for that Youtube reference for Shubham Garg. I watched all 4 hours of video and came out with a few prospects. Will try to trade some on monday. The call options for my picks have very juicy premiums.

Thanks again.

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PapaDave

3 years ago

Reply to MPO45

Hi MPO. Glad to help. Just paying it back to Mish’s great blog. I have learned a lot here from Mish and from some of his insightful commenters. As I have frequently said, thanks to the prophets who pointed out the wonderful opportunity in oil stocks back in 2020. It has made me a small fortune.

One of the things I really like about that video is how Garg gives upside potential for each stock at different oil price points. Which allows you to balance your portfolio in any manner you want based on where you think oil prices will go. Since I expect oil to average around $100 next year, I can focus on companies that should do best at that price point.

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vanderlyn

3 years ago

Reply to PapaDave

gold is money. looks terrific priced in many currencies, like JPY and EUR and GBP…………

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PapaDave

3 years ago

Reply to vanderlyn

That’s what makes a market. Different opinions. You’re welcome to own as much of it as you wish.

I prefer productive assets. Not dead ones.

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Zardoz

3 years ago

Reply to PapaDave

The gold I bought in 2007 hasn’t done much. I’m not a believer anymore.

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Salmo Trutta

3 years ago

Non-union truckers? The port is a union monopoly. The monopoly is protected by government’s regulations.

If you look at short-term money lags, you’ll see an uptick corresponding to Atlanta’s GDPnow 2.9% forecast for the 3rd qtr.

5/1/2022 ,,,,, 0.109

6/1/2022 ,,,,, 0.111

7/1/2022 ,,,,, 0.087 bottomed

8/1/2022 ,,,,, 0.123

9/1/2022 ,,,,, 0.100

10/1/2022 ,,,,, 0.124

11/1/2022 ,,,,, 0.151

12/1/2022 ,,,,, 0.143 understated

But N-gDp, the inflation component, is now decelerating rapidly

5/1/2022 ,,,,, 1.320

6/1/2022 ,,,,, 1.230

7/1/2022 ,,,,, 1.193

8/1/2022 ,,,,, 1.277

9/1/2022 ,,,,, 1.197

10/1/2022 ,,,,, 1.202 top

11/1/2022 ,,,,, 0.960

12/1/2022 ,,,,, 0.638

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Captain Ahab

3 years ago

Although the causes/issues are somewhat different, it might be helpful looking back at 1978-83–the Fed funds rate swung wildly, at high levels, until the economy ‘settled’ down. Maybe the 2022 approach (to return to sanity) is to get rates to a ‘soft landing’ level and keep them there, if not forever, for a prolonged period. Long enough, learning occurs. Hell, with luck, interest rates might become ‘normative’ with a positive real rate.

No surprise with the transportation industry collapsing. As always in ‘evolution’, the low-hanging fruit go first. Next up, retailers.

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MPO45

3 years ago

So trucking companies go bankrupt and lay off all the truck drivers. Truck drivers go and find new work or retire but then a few years later the economy recovers and there are no truck drivers to be found. Sound familiar?

Businesses can’t function with this level of dysfunction and lack of predictability. Businesses can’t make investment, hiring, expansion, etc decisions without some baseline predictable model to follow.

Personally, I have my PUTS targeting January 2024 because I think it’ll take another 15 months for everything to sink in: housing, recession, employment, etc. The PUTS grow in value every month but we’ll see what surprises are up ahead.

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Captain Ahab

3 years ago

Reply to MPO45

Aka decision making under uncertainty. Recessions sort good from bad. People innovate. Business is refreshed.

The real problem is government that thinks it knows better, and takes care of its friends.

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StukiMoi

3 years ago

Reply to MPO45

“Businesses can’t function with this level of dysfunction and lack of predictability.”

To the contrary. Pretty much 180 degrees: What business can’t function with, is inflexibility.

From seasonal farm labor, to big gold finds, to oil finds, to Lithium finds, to shale finds, to fishing seasons, to Elvis uprooting Sinatra: What can be profitably delivered will always vary greatly over time.

Which is exactly no problem at all; were it not for 100.0000000000000000000000000% of the population; both individuals and “businesses”; now being so corralled into indentured servitude to a gaggle of deadweight money printing beneficiaries, that they can no longer afford to move to the opposite side of the bed, for fear of missing some “all important in order to save the system” debt payment or similar nonsense.

Copared to occasionally and temporarily coming out of retirement for a split, if rates offered in your line of work should six double overnight: An entire nation ditching everything to hop aboard wagontrains to effectively nowhere; on nothing but a hope and a prayer; was nearly infinitely more disruptive and less predictable. Yet that was what Americans did, back when America was still great, and still retained aspirations of being a civilised country. Heck: as late as the 60s; seemingly half the country’s young still retained the effective freedom for a somewhat downscaled reenactment; just this time with wagon trains replaced by VW vans, and gunsmoke replaced with a smoke of a different kind. Then, the next decade: Nixon effectively nixed all that: From then on; the indentureds were to be put back on the plantation were they were born on. Where they were to serve as nothing but predictable, robotic handmaindens to rank retards on Fed welfare.

It’s this current scleroticism: Near everyone being so tied and burdened down by mindless debt, usury rents and “obligations” to useless nothings; and by “mandates” to keep them pliant, subservient and “predictive”; which is why the country no longer functions. And hence no longer effectively retain the flexibility to deal with, and profit from, what always has, always will be, an ever changing and unpredictable world.

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TheWindowCleaner

3 years ago

Reply to StukiMoi

“It’s this current scleroticism: Near everyone being so tied and burdened down by mindless debt, usury rents and “obligations” to useless nothings; and by “mandates” to keep them pliant, subservient and “predictive”; which is why the country no longer functions.”

You are 100% right. Ancient empires used to practice debt jubilees in order to rescue their domestic economies from always increasing debt. they guaranteed a livable social contract by doing the same. We haven’t had debt jubilees (except for Finance or severely crippled economies after wars (Germany after WW II) since Rome. Debt jubilee, a universal dividend of a reasonable amount ($1000/mo.) and a 50% Discount/Rebate policy at retail sale and we’ll end the human civilization long reign of Finance and have not only almost permanent good economic times but beneficial price and asset deflation for the individual and yet business will get 100% of its price with the rebating back of its discount to consumers.

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Captain Ahab

3 years ago

Reply to TheWindowCleaner

There is no need for a debt jubilee, because it only rewards bad behavior, and does not solve the underlying problem. It is like Bidum repaying student loans regardless of whether ‘they’ graduate, and/or make a conscientious effort to repay what they owe. How about gov’t-funded scholarships based on RACE, GENDER, and MERIT instead? Does that make you feel uncomfortable because you still aren’t included?

What you propose is about mediocrity, and will create generations of LEECHES. There is no need to act responsibly, or to be motivated to succeed. BTW, that ‘ancient jubilee’ was not to save the common person, but the banker.

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TheWindowCleaner

3 years ago

Reply to Captain Ahab

I see you’ve acculturated the projection, pain and slavery myths of private finance very, very well.

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vanderlyn

3 years ago

Reply to Captain Ahab

jubilees were ancient kings hanging the money lenders when the rates of usury exceeded kingdom’s income rates to the king and peasants. of course all episodes are different in history. hell, the bank bailouts of 2008 by obama and W, were bankers jubilee. forgiveness for being really dumb lenders.

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Christoball

3 years ago

Reply to TheWindowCleaner

The jubilee is all of the massive amounts of bankruptcy in the near future.

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TheWindowCleaner

3 years ago

Reply to Christoball

Student debt can’t be discharged in babkruptcy. Conservatives and libertarians can only think in terms of pain. They’ve acculturated private finance’s slavery mentality very well.

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Christoball

3 years ago

Reply to TheWindowCleaner

Student debt joined the ranks of child support in things that could not be discharged by bankruptcy. The Great Society was misnomer-ed by LBJ and passed out money to unwed mothers, to ensure their feminist position apart from tradition, morals and biology could exist. One bad day in court could have a guys kids separated from him except for every other week end, and have his money separated from his wallet for years to come. If the mother was on public assistance then the money was neither given to the kids or the mother but given to the aid agency to reimburse them for the public assistance doled out to mother. Money that a father could have used to spoil the heck out of his kids went instead to the state. When recipients of welfare apply they are required to sign a criminal negligence complaint against the father to give the state standing in collecting child support. Along with this also came the lack of ability to discharge child support debt through bankruptcy because it was now a debt to the public rather than a private debt, much the same way federally insured student loans are. What comes around goes around. The sins of the parent has truly been passed down to the children, hopefully not for seven generations. Aint liberalism great.

Many homeless and criminal types have a lack of father in the home as part of their social DNA. To make matters worse, whole races of people with low marriage rates and high participation in this system have in effect become indentured servants. The civil war accomplished far less than what it is attributed to have. The greatest gift a mother can give to their kids is their father. To financially support the separation of kids from their father is quite the opposite. Aint liberalism great.

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vanderlyn

3 years ago

Reply to Christoball

the amerikan empire, pax amerika, is a very evil empire. at home and abroad. not one in 10 amerikans can handle the simple truth they live in a very evil empire. too dumbed down by a century of self.

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HippyDippy

3 years ago

Reply to StukiMoi

That’s an amazingly accurate description of our present system. Of course, it was always the goal of certain elements of our founders that envisioned this feudalism for our future. But this system is not going to last. It’s so bogged down by both the weight of itself and its corruption and incompetence that its become a laughingstock of the world. It will fall, which is great, but how it falls will determine how we rebuild. Every single problem we have with our economy is due to government. The same can be said for virtually every other aspect of our society. Remember, our drug war had its roots in CIA headquarters. After all, they created the sixties. Ain’t the state great? Everything a slave could desire.

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Ocean Shipping Costs Decline 84 Percent, Truckers on Verge of Losing Money

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