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Sat Nov 20, 2021, 09:57 AM

The U.S. Supply-Chain Crisis Is Already Easing

https://www.bloomberg.com/opinion/articles/2021-11-18/the-u-s-supply-chain-crisis-is-already-easing

The supply-chain crunch appears to have already peaked in the U.S. When I first wrote this in mid-October, it felt like a bold assessment. Over the past two years, just about anything that could go wrong with global supply chains has gone wrong, from volatile swings in demand, a wave of extreme weather events and even a container ship getting stuck in the Suez Canal. But evidence keeps piling up to suggest that the U.S. is slowly but surely making progress in easing freight congestion and supply shortages.

Global average ocean freight rates for a 40-foot container have now declined for eight straight weeks, according to data released Thursday from maritime advisory and research firm Drewry. Spot pricing for the busy Shanghai-to-Los Angeles trade route has bounced around more but is still down about 19% from its September peak. Meanwhile, the number of containers lingering for longer than nine days at the Port of Los Angeles has dropped by about a third since the hub announced a plan in October to start fining ocean carriers for excessive dwell times, Executive Director Gene Seroka said this week. The threat alone seems to have driven meaningful improvement, so the ports of L.A. and Long Beach have delayed the penalties (which start at $100 a day and rise in $100 increments) until at least later this month. An influx of additional sweeper ships used to pick up empty containers is also helping to clear dock space for new cargo, while local officials have agreed to temporarily increase the number of containers that can be vertically stacked in nearby warehouses and container yards.

For all the doomsday warnings about the knock-on effects of the logjams on corporate earnings, companies generally seem to be managing fine — at least the large, public ones. Target Corp. this week reported $2 billion of additional inventory on its balance sheet at the end of the third quarter compared with a year earlier as it stockpiled goods to meet holiday demand. The retailer said it had secured enough truck and rail capacity to support expected shipments in the final months of the year. In the industrial world, freight congestion and supply disruptions weighed on short-term sales, but the damage to profit margins ended up being fairly limited in the third quarter as companies flexed their pricing power. Most executives sound very optimistic about future demand in 2022 and beyond.

U.S. manufacturing output rose in October to the highest level since March 2019, Federal Reserve data showed this week. The factory production rebound was driven in part by an 11% jump in motor vehicles and parts, suggesting that even the automotive industry, hit hard by the semiconductor shortage, is navigating the supply crunch. Indeed, October marked the peak of the chip crunch at Toyota Motor Corp., Bob Carter, the company’s executive vice president for North American sales, told CNBC. That echoed commentary from Honeywell International Inc. Chief Executive Officer Darius Adamczyk, who also predicted that availability of industrial-oriented semiconductors would soon improve.


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Reply The U.S. Supply-Chain Crisis Is Already Easing (Original post)
CousinIT Nov 20 OP
Sherman A1 Nov 20 #1
Wounded Bear Nov 20 #2
Tomconroy Nov 20 #3
roamer65 Nov 20 #4

Response to CousinIT (Original post)

Sat Nov 20, 2021, 09:59 AM

1. If it wasn't, we would not have seen the numbers posted by Walmart

And Home Depot this week being as good as they were.

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Response to CousinIT (Original post)

Sat Nov 20, 2021, 10:02 AM

2. Supply problems tend to work themselves out over time...

After all, companies can't afford to shut down, they need income in steady doses.

That's not saying that there aren't things the government can do to help untangle things, but private enterprise is good at solving problems when they have to. Typically, they don't give a shit about the environment or helping people but their bottom line, yeah that gets their attention.

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Response to CousinIT (Original post)

Sat Nov 20, 2021, 12:27 PM

3. There is a shortage of Beaujolais Nouveau. A serious shortage.

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Response to CousinIT (Original post)

Sat Nov 20, 2021, 01:29 PM

4. Skilled labor problems are still very present.

My recruiter says it’s the best job market she’s seen in a very long time.

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