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A Third Of All Containers Shipped From Long Beach Port Are Empty
In the past several months, it has been virtually impossible to make any sense of the conflicting trends involving US and global trade. On one hand, there is global trade, which as we have covered since the spring, has been in a state of consistent decline. Some example of this:
- World Trade Slumps By Most Since Financial Crisis
- Something Just Snapped: Container Freight Rates From Asia To Europe Crash 23% In One Week
- Global Trade In Freefall: Container Freight Rates From Asia To Europe Crash 60% In Three Weeks
- South Korea Exports Crash Most Since 2009
And of course China's terrible trade data for the past 5 months, which has seen the longest stretch of import declines since the financial crisis.
In short: only an economist, either a tenured one or one employed by CNBC, is unable to see that the world is sinking into a global trade recession, with a economic one soon to follow.
Where things get more complicated, however, is when looking at the US. Here, macro data throughout the summer had suggested more or less smooth sailing in the trade space, and it was only a week ago that the facade started to crack, following the ugly advance trade report, when as we reported there was a "16% Surge In August Trade Deficit; Imports Jump As Exports Drop."
But what really confused us, and others, was the "micro" reports from the ground. Take the following article from Bloomberg in September, in which we read that "Record Long Beach Port Traffic Shows Strength in U.S. Demand." Some more details:
The Port of Long Beach -- which is poised to overtake neighboring Los Angeles next year to become the No. 1 shipping gateway in the country -- had a record month in July, with cargo volume up 18 percent from July 2014. Figures being released later this month will show unprecedented traffic again in August, and early signs in September are “very very encouraging,” Jon Slangerup, the Long Beach port’s chief executive officer, said in an interview at Bloomberg’s offices in New York last week.
Overall, the two ports are handling 4 percent more cargo this year than last, Slangerup said. With consumers showing no letup, he predicted a record year for Long Beach in 2015, taking out pre-recession highs set in 2007. West Coast ports are poised to regain share lost earlier in the year, when backlogs led clients to divert cargo to East Coast destinations like Savannah, Georgia, he said.
The article's punchline:
“When you look at the macros, you look at unemployment, consumer confidence, savings, available discretionary spending, all of those numbers suggest that we have more to spend,” Slangerup said. “The economy here is super strong relative to the rest of the world, and the strongest I’ve seen it in a very long time.”
As it turns out, the economy was neither "super strong", nor was "unemployment, consumer confidence, savings, or available discretionary spending" suggesting that we have more to spend. In fact just the opposite, because thanks to the WSJ we can now reconcile the seeming discrepancy between slowing macro and booming micro, at least as manifested by "record" west coast port traffic.
According to the WSJ, "shipments of empty containers out of the U.S. are surging this year, highlighting the impact the economic slowdown in China is having on U.S. exporters. The U.S. imports more from China than it sends back, but certain American industries—including those that supply scrap metal and wastepaper—feed China’s industrial production."
The magnitude of the shipping container "contagion" is stunning: in September, the Port of Long Beach handled a near record 197,076 outbound empty boxes. "They accounted for nearly a third of all containers that moved through the port last month. September was the eighth straight month in which empty containers leaving Long Beach outnumbered those loaded with exports."
As the chart below shows, the situation at LA and Long Beach is so dire, the amount of empty container has surpassed the 2008 crisis period, and is about to take out the all time highs from the peak of the 2006 credit bubble:
And here is the "record" West Coast port traffic in all its unglory: as noted above, empty containers now amount to a third of all West Coast port traffic in the US.
What is an empty container? The WSJ explains that after under normal conditions, containers filled with consumer goods are delivered to the U.S. and unloaded, they return to export hubs. There, they typically are stuffed with American agricultural products, certain high-end consumer goods and large volumes of the heavy, bulk refuse that is recycled through China’s factories into products or packaging.
Not any more:
Last month, however, Long Beach and the Port of Oakland both reported double-digit gains in exports of empty containers. So far this year, empties at the two ports are up more than 20% from a year earlier.
A big reason for the collapse in trade is the strong dollar: the empties are shipping out at a faster rate at many U.S. ports, particularly those closely tied to trade with China, while shipments of containers loaded with goods are declining as exporters find it tougher to make foreign sales. That’s at least partly because the strong dollar makes American goods more expensive.
The problem is spreading:
Outbound empties have mounted this year at other big gateways, too. In August, the Port of Los Angeles, the country’s largest single container port, handled more than 225,000 empty outbound containers, counted in twenty-foot equivalent units, a standard maritime industry measure. That was 21% more than a year earlier. The Port Authority of New York and New Jersey expanded its empty-container exports nearly 31.5% in the first eight months of this year, and empties outnumbered loaded container exports over that time.
Suddenly the discrepancy between the ugly macro data and the
Dollar-based or not, the end result is the same - global trade channels are rapidly slowing down.
And it is not just empty containers that are being shipped out: overall containerized exports are also tumbling: "Long Beach’s containerized exports were down 8.2% this year through September, while Oakland’s volume of outbound loaded containers fell 12.7% from a year earlier in the January-September period."
This data certainly puts that "record" Long Beach port traffic in a different perspective. Others admit the same:
“This is a thermometer,” said Jock O’Connell, an international-trade economist at Beacon Economics. “The thing to worry about is if the trade imbalance starts to widen.”
It is starting to widen: the U.S. trade gap has expanded sharply in recent months as exports have slipped, growing 15.6% in August to a seasonally adjusted $48.3 billion, according to the Commerce Department. U.S. exports fell 2% in the month to their lowest level since October 2012.
And as a reminder, net trade feeds directly into GDP, so the next time an idiot tells you that there are no direct linkages or contagion choke points between China and the US, feel free to take them to the Long Beach and show them the thousands of empty boxes whose contents one can label simply as "recession".
There is, however, a silver lining: if the containers remain empty, and once the US slides back into depression, they can always be used for housing, just like now in San Francisco's unicorn bubble mania.
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We stopped exporting our hope.
And are only left with a little bit of Change (you can believe in).
The guy who invents foldable hinged shipping containers than can be collapsed and stacked is going to make a fortune...
Please don't use the word collapse. Bad JuJu.
I have a solution to this problem (because I'm a solution-oriented guy, as you all know):
Instead of shipping them back, melt them down and produce raw steel with them. Adds to our GDP, creates jobs. Then ship the steel over to China where they make the raw steel into shipping containers for sending out more goods. Adds to their GDP, creates jobs.
There. I just fixed the global economy AND the imbalance of trade in 5 minutes. I'm gonna have a drink now. I think I need one.
While it does sound like a good ideal there is only one problem, we don't own the the containers in the first place.
Look, I'm a "big picture" guy. I can't be dragged down into the details. Just go make it happen.
Donald?
I think we need to financialize the empty air. It would be our greatest export!
They are working their way up from the trace gases like carbon dioxide first.
Next up on the bidding block is oxygen... I hear Soros and the UN/IMF/BIS are interested...
ZH, Tyler, empty containers from the Port of Long Beach or Port of Los Angeles, or San Francisco is nothing new, it's been this way for decades. It's called a "Trade Deficit". It is actually more profitable to keep those ships moving, even 1/3rd empty, than to have them sitting around doing nothing.
I don't see why we should be sending ANY of these containers, our future middle class housing stock, back to Asia.
Nonsense. America sells lots of services and the foreigners need something to put them in.
Well, yeah, there's that, also.
I got a ton of ideas to move.
The real laugh here is what is in the other 2/3s of the containers: recycled materials: paper, cardboard, electronics, batteries, bottles, and stock certificates.
I blame this global depression on white people. They're so greedy. The have their fingers in all the pies. They were created in Satan's basement. Whitey sucks.
I don't get it, what are we suppose to fill those containers with anyway ? WHAT have our "exports" been for the last 20 years ?? Electronics "Made in USA", really ??? LOL!
Maybe they'll use all those empty containers to store the corpses of all the domestic terrorists before burial at sea.
Or you could create a queer "financial product" called shipping futures. Traded back and forth by retarded coked out paper monkeys, this fantastic new product can "earn" hundreds of biilions and add positively to the GDP. #WINNING
Shipping futures... futures for an industry with NO future... PERFECT!
Where's Bylthe Masters when you need her...
A better solution would be to fill them with Mexicans/Guatemalans (they're small - they stack easily)/ Peurto Ricans/Cubans et. al. and ship them to China.
Or at least stack them end to end along the US-Mexico border. Cut a doorway in each and spray paint "su casa" on each one.
and the FDA approval to ship US chickens to China for processing and shipped back as variety food products ... didn't Chinese buy out Tyson ?
"...in September, the Port of Long Beach handled a near record 197,076 outbound empty boxes. "They accounted for nearly a third of all containers that moved through the port last month. September was the eighth straight month in which empty containers leaving Long Beach outnumbered those loaded with exports."
Uh;... wait a minute...
If 1/3 of the containers are empty, that means 2/3 of the containers have something in them.
Since when does 1/3 "outnumber" 2/3?
I also noticed that, but I guess 1/3 comparison refers to all (inbound+outbound) containers, it follows from the phrase "They accounted for nearly a third of all containers that moved through the port last month."
The plot thickens.
Since more than one third of containers that are loaded are inbound.
I made up the numbers --
197,076 outbound empty
196,924 outbound full
over 1/2 empty outbound
200,000 Inbound full
197,076 + 196924 +200,000 = 594,000 total
197,076/594,000 = 33.1% almost 1/3
... all containers that moved through the port ...
equals both inbound and outbound.
2/3 of both inbound and outbound containers have something in them.
197,076 is one third of the containers that were both inbound and outbound. Not one third of only the outbound.
[deleted] answered many times already, hah
inbound vs outbound vs total
rounded:
200k empties out of 600k total monthly volume
300k import & 300k export
so we imported imported 300k boxes and exported 100K boxes (of real stuff) and 200k empty BLS Hope N Changes...
It's that new math.
That's so common core, and.............raycist!
Is this "Liftoff"?
No worries... they're going to become new homes for the urban population.
The Russians have much better uses for used empty shipping containers.
It's a small Klub and US ain't in it.
http://edge.liveleak.com/80281E/ll_a_u/thumbs/2013/Dec/11/b1c2aeef2ad6_s...
This has QE4 written all over it.
Why?
It's just pretty clear that America is exporting it's most precious commodity!
Air!!!
Debt.
Can we add 'disease' behind Debt, so people understand what it really is.
Too bad we couldn't export the FSA to China in those containers.
Loose change, change. For a change.
Bullish! fill them up with papers, ink and printers, Yellen will approve!
We should stop shipping empty containers and turn them into homes like they have in San Francisco. Only $1,000 a month rent. A steal.
The US DoD can fill those empty containers with oatmeal and drop it in the middle of the desert in Syria, and hope one of the good moderate folks go and find it.
Well shit,,I might as well get loaded and head to the brothel....
You may want to leave the herbal viagra at home...
yea...ask lamar odom.
Musta be one hell of a hooker, left him crumbled on the floor, but don't fear the wookie is at his bedside.
Haven't these people considered setting the ship on fire and collecting on the insurance?
They will now!
Thanks!
Awesome the new housing boom. Shipping container homes.
http://www.digitaltrends.com/home/fifteen-amazing-shipping-container-homes/
Nice find!
I was thinking about cutting a 20 footer in half and using it as a security shed
As China provides cheap (volouminous) thingies to US, it is absolutely believble, that these many containers go out empty for decades.
What was the question?
They are not empty. U.S. is exporting smog in them
Our smog is considered to be fresh air in Shijiazhuang.
Export undesireables and free shitters !
We are going to need a lot more containers.
somebody's going to have to go back and get a shitload of dimes
Not empty...full of hot air.
One day the emptyness will probably be "portable housing".
Thinking Outside the Box by Moving Into Onehttp://www.nytimes.com/2015/10/14/us/live-in-boxes-in-oakland-redefine-h...
We need the FSA, they are the only ones spending government money on Main Street.
No sarc.
They are not empty -
We are shipping clean air to China.
Not out of LA we're not
Deja vu, except this time 'round the Fed is at the zero bound, a Democrat is in the Whitehouse, and the Chinese aren't going on a Treasury buying spree...
They make luxurious Tiny houses though....
Yes they do.
I was watching a program where an arctic researcher was living in a tent for several years conducting summer studies until a polar bear walked in. After that he got himself an 8 by 8 foot plywood shed.
He said that although the tent was fine... after the shed he could never go back to living in a tent.
We will all have to learn to live happily with less... probably a lot less... except for the bane of human civilization 'the bankers' and politicains of course. And anyone who dresses in expensive suits or robes.
however the existing home base here in the usa is extraordinary ... we can be much more efficient, moving forward
i hear Monsanto et al is buying up gobs & gobs of farmland in the bulgaria romania, areas to get people off the land and into cities, dependent upon food produced by others ...
off topic : the Amsterday Dance Event dj sets are being livestreamed on BEATPORT.com, very nice !
The containers were not empty, they were filled with debt. USAs #1 export!
How depressing or pathetic in other words.
That is because Kalifornia is what we call a 'one way' market. Imports only since they've virtually driven out any export oriented business other than trash, ahem...'waste paper' and some dried fruit and nuts (I know, but it's true - I'm not slagging them).
So when I bid on these contracts I insist on higher premiums for other trade lanes because it costs money to move empty boxes.
Cali is TOTALLY CONSUMPTION driven market.
Just Cali or maybe the entire USofA?
Should be called....
The hollow HULL of "global recovery".
We should ship them containers full of Mexican illegals and FSA types.
and bankers, and lawyers, and the whole IRS, etc, etc...
Does it cost less to ship an empty container .... prolly not much .... but supply and demand would indicate a cheaper shipping rate .... and we still can't export our shit ?
With Vlads new Kaliber play pretties a port full of empty containers right now is a good thing.
http://www.liveleak.com/view?i=a79_1386750042
https://en.wikipedia.org/wiki/3M-54_Klub
The Klub-K that was so cute & deadly.
well, maybe foreigners are buying shipping containers
should put those empty containers on crewless ship that's loaded up on top of a ship shipping ship
So? Fill them with reserve notes. Problem solved.
This is why we MUST pass TPP - in order to ship even LESS.
Well I guess we can all convert all those empty containers into "Syrian" refugee housing units.
They are full of industrial espionage, business secrets, copyright infringements, patent theft and trademark counterfeits ?
Empty containers, sort of like Fort Knox...
I thought they were all empty? Are the 2/3rds carrying cardboard and other recycled material?
Syrofoam squiggles.
If they are empty .... toss 'em in the drink .... and let them float home ?
We look at stock markets.
The value of the companies within the stock market.
We look at the companies themselves to see how they are doing.
Let's look at the global consumer base.
1) The once wealthy Western consumer has had all their high paying jobs off-shored. As a stop gap solution they were allowed to carry on consuming through debt. They are now maxed out on debt.
2) Japanese consumers have been living in a stagnant economy for decades.
3) Chinese and Eastern consumers were always poorly paid and with nonexistent welfare states are always saving for a rainy day. Western demand slumped in 2008 and the debt fuelled stop gap has now come to an end.
4) The Middle Eastern consumers are now too busy fighting each other to think about consuming anything and are just concerned with saying alive.
5) South American and African consumers are busy struggling with economies that are disintegrating fast.
Oh dear.
Start moving in all the Chinese labourers from Red China where all the jobs have gone because they all want to come over and bring in millions of Syrians as well.That way labour can be competitive with China and other foreign countries.Most only make anywhere from $3 dollars to $10 dollars a day anyways.You could re-establish modern day slavery in America.Get the whip out...
Slavery in the US wouldn't be profitable. Government regulations would screw that up too. Regulations for minimum housing standards, medical care, food and benefits would mean it would cost more to own slaves than hire minimum wage earners....
Minimum wagers are fast figuring out they do better financially on the gov cheese line. Fuck off all day, smoke dope, get paid. Only in America (and most of Europe).
need to print more dollars .. ie ISSUE more US debt as well sa inflate the fed balance sheet in order to drive down the USD index.
uhh
That LBC dude be smokin' too much of Da Chronic wit Snoop an' Dre.
Empty containers are awesome. It's just showing the rest of the world that they live and die by the dollar. You toil and work your ass off to send us stuff. You get nothing in return. Mwhahahaha. Fuck GDP. The balance of trade does not matter in a fiat monetary world. We export our dollars to which we have an unlimited ability to create more of. Who's the sucker here? I get stuff. You get diluted.
Why send an empty container back. Scrap it and send it to the local mini mill for reprocessing into usable steel for GM and Ford.
Because it's cheaper to send them back than to make new ones, maybe?
A guy I know bought two empty containers last year to put on his farm - uses them to store his tractor and supplies .
They are pretty nice - they have hard wood floors in them - solid as hell -
https://www.lewrockwell.com/2015/10/bill-bonner/are-you-prepared-for-financial-prohibition/
Bill Bonner posted this a few days ago on LewRockwell. He says that containers can be purchased for as low as $1500 and then turned into homes.
Also for any ZHers who would like to move to Asia, now is the time, should be able to bargain down the West bound cost to Asia.
JWR thinks 50% of Americans could die when it hits the fan. STOCK UP NOW, if you can and hide it from looters, if you can.
wtflol
It's not easy to fit too many 'decent wage' middle class manufacturing jobs into those containers these days.
:/
Figures being released later this month will show unprecedented traffic again in August, and early signs in September are “very very encouraging,” Jon Slangerup, the Long Beach port’s chief executive officer, said in an interview at Bloomberg’s offices in New York last week.
Makes sense, is this the point where we start irrigation with Gatorade? Because electrolytes...
They ran out of gold to ship to the Chinese.
Fatca , the Obama tax on enterprising American small businesses that have the wherewithal to export overseas, will cause a noted reduction in exports. California agriculture exports down due to drought.
They ship the empty containers to the empty cities in China.
Makes sense, right?
Wait, I've just been inspired, collapsible containers! We'll make a fortune! Wait, better yet, tie them together and put an outboard motor on the back, float them home by themselves! Wait, oh this is it for sure, weld them together until we have a bridge from Long Beach to Shanghai! Then Elon Musk can build a hyperloop inside!
You're welcome.
They need to send them back empty to China otherwise they cannot return full of crap.
People are stupid, is what it is.
My prediction fulfilled.
"What is an empty container? . . . . they typically are stuffed with American agricultural products, certain high-end consumer goods and large volumes of the heavy, bulk refuse that is recycled through China’s factories into products or packaging."
We send our food, our...(what high-end consumer goods? We don't make anything! Oh, wait...weapon and space technologies, that's right), and recycables ("bulk refuse"..sure) turned into yet more Walmart-quality products.
Didn't see that coming, did we!
If you can't fill them with Natural Resources (Coal, Lumber, Wheat...), fill them with sand.
Then dump the sand-filled containers in a nice big ring, somewhere in the South China Sea.
Tell the world you are preserving the Environment, making coral reefs and Eco-tourism for Chinese citizens. For each destination build an airstrip, a control tower, solar desalination and power plant, hotel, hospital, and sophisticated Defense against Modern Pirates. Maintain 12 NM boundary for security and marine life preservation reasons.
It's worse. Those containers empty or loaded with goods nobody wants are being dumped into the ocean for insurance money or just to diminish shipping capacity and raise margins. It is because not only China;s export collapsed by that China's import collapsed even more destroying already weak BDI .
An interesting take on the lies and fallacies of the global trade I found at:
https://contrarianopinion.wordpress.com/economy-update/
We pretend to manufacture .... they pretend to buy our stuff !
Home sweet home!
Not the shipping containers.
America... also known as "The World".
Wasn't there a longshoreman strike on the west coast earlier in the year?
They had a backlog of empties to move out from that quarter where empties out had plunged. This means that the more recent months are going to be skewed higher by that one-time event.
The chinese are importing LA's smog because it will improve the air quality in Beijing.
This must be the result of lower oil prices. Back when crude was over $100 a barrel, it was cheaper to NOT ship those empty containers back. Now that the cost of shipping them has tumbled (per the article), I guess that they want them back now. That is too bad. It used to make for cheap all metal storage/housing solutions for the more industrious person.
I wonder how the higher shipping price (and thus retention and repurposing of empties) had skewed the data previously?
Interesting possibility.
Here are some signs of a coming recession.
http://www.zerohedge.com/news/2015-10-02/us-factory-orders-flash-recession-warning-drop-yoy-10th-month-row
http://www.zerohedge.com/news/2015-10-02/us-financials-default-risk-spikes-2-year-high
http://michaelekelley.com/2015/09/27/vix-predicts-pits-while-pundits-have-fits/
http://michaelekelley.com/2015/05/29/mergers-and-acquisitions-set-record/
http://michaelekelley.com/2015/02/20/fed-warns-of-two-bubbles/
Here is how to prepare.
http://michaelekelley.com/2014/10/16/8-things-to-do-when-recession-happens/
Here is how to get your mind off this stuff.
http://michaelekelley.com/category/humor/
Good luck!
Them containers ain't empty bro, they full of LA smog bein' sent to Beijing. Heh heh.
How do you cure low demand? A world war. Soon they will be melting the steel containers to make guns, tanks and bombs.
Too many empty containers going back to China---Easy Solution
200,000 new Obama Syrian refugee terrorists and a 2 week supply of water and food and show them their new "Mobile Home".
Then the Federal Government will take the Planned Parenthood body part price list and determine each one of these terrorists were worth 1 million each so they need
to adjust up the GDP by 200,000,000,000,000
da qwestshun be "id da cuntainuh steel emty when it wud arrived at da destinashun"?
Take a look at the Total container chart above.
Every time the empties out number the full outbound, immediately after the total container rate drops by about 50%.
Also the empties have exceeded the fulls by quite a margin, Wal Mart needs to ditch a heap more employees.
Look on the bright side -- at least all of the jobs being shipped overseas don't require containers.