Disruption Report #12: Container Rates to Return to a “Higher Normal” in 2022

If you enjoy the Disruption Report. You can find all the articles in the series by clicking here.


Container Rates to Achieve a Higher Normal in 2022

Bloomberg News reports that Maersk, the world’s largest containerized freight carrier, is anticipating container rates to be back to a new normal by 2022. It appears, however, that the new “normal” may not be so “normal”.

The article, “Maersk Sees a ‘Soft Landing’ for Soaring Ocean Freight Rates,” quotes Johan Sigsgaard, Head of Ocean Products, as stating about the current high cost of containerized freight:

“As it comes to an end, it will normalize at a different level and we expect rates will normalize at a level above historical.

India Struggles

There has been some movement of toy manufacturing facilities from China to India over the last few years. No one could have imagined, however, the coronavirus devastation taking place in the latter. It is a human tragedy with global implications for people, business, and world trade.

Computer Chip Shortages Continue

From toy companies to automakers, the ongoing shortages of computer chips is a problem for any industry that uses them in its products. The scarcity results from a high level of demand combined with too few manufacturers in too few countries controlling too much of the world’s production.

The biggest chip exporters are Taiwan and South Korea. Both countries are in a politically charged part of the world, making every challenge an even bigger problem.

For example, the demand for computer chips is so great that China has been trying to recruit Taiwanese talent for their factories. Taiwan does not like the idea and has banned Chinese recruitment. As Nikkei Asia puts it in its article, “Taiwan bans recruitment for jobs in China to combat brain drain:”

Taiwan has told staffing companies to remove all listings for jobs in China, a drastic move to prevent the outflow of vital tech talent to the mainland amid rising tensions between Taipei and Beijing.

Inflation and the Birthrate

The Wall Street Journal has an interesting piece by James MacKintosh. Entitled “Everything Screams Inflation,” the article lays out a number of reasons for the rise in prices. There were, however, one reasons cited that caught my eye.

Mr. MacKintosh makes the point that both the U.S. and China have either declining or stagnant population growth. As a result, the global work population as reducing in size. As Mr. MacKintosh puts it:

When workers have less competition, they can demand more for their labor as fear of factories moving elsewhere is reduced.

The article’s author maintains that we can expect to see an increase in labor union activity to take advantage of a continuing global shortfall in the worker population.

Leave a Reply