SHENZHEN factories reopen
Last week in Disruption Report #49, I reported that the Chinese government had closed all factories in the toy manufacturing center of Shenzhen due to a Covid breakout. Since then, the government has managed to test 17 million people, and factories have reopened. Good news!
ARE high container prices NOW BEING DRIVEN BY the fear of missing out?
I ask the above question due to this discomforting GCaptain headline: “Pay-Anything Mentality Grips U.S. Importers Fearful of More Shipping Woes.” Here is how author, Laura Curtis, puts it:
U.S. importers, straining under a tapped-out supply chain, are increasingly offering top dollar for long-term shipping contracts that may not even be honored as they try whatever it takes to guarantee the arrival of their products.
Contracts are typically negotiated on a yearly basis with importers and carriers agreeing to a minimum capacity level between certain ports, and the spot market used for freight shipped outside of the agreed terms. But this year, importers are prepared to pay more, locking in higher, pandemic-era prices for two or even three years — despite some predictions they won’t stay as elevated — in order to protect themselves from the volatile spot market.Pay-Anything Mentality Grips U.S. Importers Fearful of More Shipping Woes, Laura Curtis, GCaptain
Last year, many waited for shipping prices to come down, only to discover that they had literally missed the boat. This year, the reverse is occurring, and FOMO (fear of missing out) rules the day.
Back-Ups at East Coast Ports
The east and Gulf Coast ports in the United States are starting to look like the Port of Los Angeles with ships waiting offshore to unload. According to an article in American Shipper, 63 container ships waiting to unload as of last Friday.
February volumes at East/Gulf Coast ports rose 27.3% year on year compared to 5.9% growth for West Coast ports, according to McCown. It was the ninth straight month that East/Gulf Coast ports outpaced year-on-year growth of West Coast ports.East Coast ports about to get slammed by a lot more ships, Greg Miller, American Shipper, March 18, 2022
The increase is due to shippers bypassing the west coast and shipping through the Panama Canal to the East and Gulf coasts. It makes sense from a domestic shipping point of view. The population of the east coast states is roughly twice that of the west coast. That means that the cargo is in closer proximity to the greater part of the country’s population once off-loaded.
FLIGHTS RESUME TO HONG KONG, QUARANTINES REDUCED TO 7 DAYS
Hong Kong will allow flights from the U.S., the U.K., and some other European countries effective April 1. Arriving passengers who wish to stay in Hong Kong will have to quarantine for seven days provided they have been vaccinated.