CNN says today that, yeah, inflation has "slowed sharply," but that could change any day now:
The risk that inflation could spike again is growing as disruption to one of the world’s main trade routes persists.
....“I do think that there is a level of complacency in the financial markets in respect of the inflation outlook,” UBS CEO Sergio Ermotti said Wednesday at the World Economic Forum in Davos, Switzerland, citing higher shipping costs caused by assaults in the Red Sea, which were likely to translate into higher costs for goods. “I can’t imagine inflation won’t suffer from that,” he said.
Well, I can imagine it. You know why? Because a drought has caused a 40% reduction in traffic and a 40% reduction in cargo weight through the Panama Canal over the past year. Inflation dropped like a stone anyway.
The Suez Canal carries more trade than the Panama Canal, but not that much more. It just isn't as big a deal as people think to divert cargo ships around the capes. The net cost is a little higher (longer journey but no canal tolls) and cargo is delayed for a couple of weeks. That's it.
Calm down, people.
I agree the inflation scare regarding the Red Sea is way overdone, but that said, it does appear that Europe likely is being significantly more negatively impacted than the United States.
Of course it is. There is one route from China to Europe. It usually runs through Suez and the Red Sea. There are two between China and America, one direct from Shanghai to LA and the other via the Suez and Red Sea to East Coast ports, usually Savannah, Norfolk or NYNJ.
That reads like a CEO trying to catch up with his failure of 4 years ago, to anticipate what would happen, following a pandemic that disrupted and broke supply chains. Once you have a mortgage backed securities collapse, suddenly everything involving a mortgage or securitized assets looks like a potential threat.
http://www.theguardian.com/business/2024/jan/19/us-inflation-caused-by-corporate-profits
Yep, They seem experts on blaming inflation for their greed and temporary fluctuations.
One thing your synopsis omitted was that the supply of VLC's is limited. If it's taking an additional eight or nine days to make the sailing from Shanghai to Rotterdam, the same number of ships can only carry a smaller volume of cargo. So, in a classic supply-demand squeeze, the price will rise.
Your scenario EMPTIED ships which means that people are going to drop the price to fill them.
Apropos of nothing, it looks as if Our Proprieter has handled the latest spammer outbreak. Thanks, Kevin!
The reason we didn't hear about problems with the Panama canal is that there were no drones and missiles there. What's the point of covering a problem if there's nothing that goes bang?
I've seen lots of news about the Panama Canal drought problem.
Low water and the resulting limits on ship traffic through the Panama Canal has hurt Gulf Coast and East Coast ports, but it has helped LA-Longbeach and Seattle-Tacoma.