The period between Labor Day and Christmas is typically peak shipping season. Don't expect much of a peak this year...
No Backlog at California Ports
The Wall Street Journal reports Southern California’s Notorious Container Ship Backup Ends
The queue of ships waiting to unload at the ports of Los Angeles and Long Beach fell from a peak of 109 ships in January to four vessels this week.
Descartes Datamyne, a data analysis group owned by supply-chain software company Descartes Systems Group Inc., says container imports to the U.S. in September declined by 11% from a year earlier and by 12.4% from August.
Shipping lines have canceled between 26% to 31% of their sailings across the Pacific over the coming weeks, according to Sea-Intelligence
In September of 2021 the average cost for shipping a container from Asia to the U.S. West Coast exceeded $20,000. Last week, the average cost to ship a container from Asia to the U.S. West Coast had declined 84% from a year earlier to $2,720.
The real reason that supply chain constraints are easing is because far fewer goods are moving through the supply chain. The last time that the port of LA handled so few loaded import containers in September was during the Great Financial Crisis. https://t.co/faRSdXRz53 pic.twitter.com/aN0JZv1mud— Craig Fuller 🛩🚛🚂⚓️ (@FreightAlley) October 22, 2022
2022 September vs September Prior Years
2022 vs 2021: -26.6%
2022 vs 2020: -27.2%
2022 vs 2019: -14.6%
2022 vs 2018: -17.1%
2022 vs 2017: -11.6%
The last positive comparison vs other years was September of 2009 coming out of the great recession.
Truck Shipping Rates Barely Positive
Today’s daily national truckload index rate was $1.78, just $.03 above the breakeven rate for some of the truckload carriers in the market. Note: this is peak season. https://t.co/n7DPRFzKlh pic.twitter.com/XHr8Tliqr1— Craig Fuller 🛩🚛🚂⚓️ (@FreightAlley) October 22, 2022
Great Purge Coming Up
We are on the cusp of a Great Purge in trucking capacity, as carriers struggle to keep up with challenging conditions. The latest carrier to shutter. https://t.co/des372S3Lj— Craig Fuller 🛩🚛🚂⚓️ (@FreightAlley) October 21, 2022
Mega ships work well when you have a lot of volume concentrated at single origin points, but less useful when trade is distributed around the world and at much smaller ports. Unfortunately for the container carriers, they will have these massive ships they won't fill. 2/— Craig Fuller 🛩🚛🚂⚓️ (@FreightAlley) October 20, 2022
The same thing happened in the airline industry. The large mega airliners (A380) were once viewed as the saving grace for the airlines, but were replaced by mid-sized planes that were more fuel efficient, could land in many more locations, and offer more direct service. End.— Craig Fuller 🛩🚛🚂⚓️ (@FreightAlley) October 20, 2022
What About Railroads?
This is why the LTLs and railroads are starting to feel the pain https://t.co/zwGHFi2JDE— Craig Fuller 🛩🚛🚂⚓️ (@FreightAlley) October 21, 2022
Keep Those Rate Hikes Coming!
Keep the rate hikes coming? pic.twitter.com/9ALQ7yQSYY— Jeffrey P. Snider (@JeffSnider_AIP) October 21, 2022
Question of the Day
Q: Are we in recession or just headed for one?
A: The question is moot.
Not only does Fed policy operates with a lag, the Fed appears committed to holding rates at a high level for some time. Sooner or later does not matter much.
GDPNow Creator Pat Higgins On the October Surge in the GDP Forecast
GDPNow data from the Atlanta Fed, chart by Mish
I had bookmarked a recession starting in May, but if GDPNow is close to accurate, the US will have skirted a recession through Q3.
For discussion, please see GDPNow Creator Pat Higgins On the October Surge in the GDP Forecast.
Spotlight on Current Real Final Sales (RFS) Estimate - October 14
Base GDP Estimate: 2.8 Percent (Above Chart)
RFS Total: 2.9 Percent (Above Chart)
RFS Domestic: +0.6 Percent (Report Details)
RFS Private Domestic: +0.2 Percent (Report Details)
Collapse in Imports
It's a collapse in imports thus improved balance of trade that caused a surge in the GDPNow model.
The collapse in imports certainly matches the data and analysis of Craig Fuller.
How much the model overreacted or underreacted to that improved balance of trade remains to be seen.
Expect a Long Period of Weak Growth, Whether or Not It's Labeled Recession
I keep returning to my August 19, 2022 post Expect a Long Period of Weak Growth, Whether or Not It's Labeled Recession
Lost in the debate over whether recession has started, is the observation that it doesn't matter much either way.
Housing leads recessions and recoveries and housing rates to be weak for a long time.
Add it all up and you have the opposite of the Covid-recession, a long period of economic weakness with minimal rise in unemployment.
It does not matter whether you label this a recession or not. Besides, the NBER might not even announce the recession until it's over. That happened once already.
The Fed is going to overshoot. Fears of stirring up inflation again will keep them from aggressively reacting.
Many millions of the 22 million boomers age 60+ but still working will retire. This will prevent a huge jump in the unemployment rate that most expect.
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