U.S. logistic managers are bracing for delays in the delivery of goods from China in early January as a result of canceled sailings of container ships and rollovers of exports by ocean carriers.
Carriers have been executing on an active capacity management strategy by announcing more blank sailings and suspending services to balance supply with demand. “The unrelenting decline in container freight rates from Asia, caused by a collapse in demand, is compelling ocean carriers to blank more sailings than ever before as vessel utilization hits new lows,” said Joe Monaghan, CEO of Worldwide Logistics Group.
U.S. manufacturing orders in China are down 40 percent, according to the latest CNBC Supply Chain Heat Map data. As a result of the decrease in orders, Worldwide Logistics tells CNBC it is expecting Chinese factories to shut down two weeks earlier than usual for the Chinese Lunar New Year — Chinese New Year’s Eve falls on Jan. 21 next year. The seven days after the holiday are considered a national holiday.
“Many of the manufacturers will be closed in early January for the holiday, which is much earlier than last year,” Monaghan said.
Supply chain research firm Project44 tells CNBC that after reaching record-breaking levels of trade during the pandemic lockdowns, vessel TEU (twenty-foot equivalent unit) volume from China to the U.S. has significantly pulled back since the end of summer 2022 — including a decline of 21% in total vessel container volume between August and November.
Asia-based global shipping firm HLS warned clients in a recent communication about the ocean transport business climate.
″It seems to be a very bad time for the shipping industry. We have the combination of declining demands and overcapacity as new tonnage enters the market,” it wrote.
HLS analysts are predicting a further 2.5% decline in container volumes and a nearly 5-6% increase in capacity in 2023, which will continue to negatively impact freight rates in 2023.
“The container shipping market will be further complicated by economic uncertainty, geopolitical concerns, and also the increasingly heated market competition,” HLS wrote.
OL USA CEO Alan Baer tells CNBC that there are some early signs of an inventory correction. Overall business volume and order flow out of Asia continue to be muted as carriers cancel more vessels, and there is little upside momentum leading into Chinese New Year. But Baer said, “Space has already tightened, so while demand is soft, space may be at a premium in January and throughout Q1. On the plus side, inventory depletion and the need to restart the order and delivery cycle appears to be inching upward.”
HLS cited trade data showing that U.S. imports from Asia plunged in October to their lowest level in 20 months. The spot rate for a container from Asia to the U.S. West Coast has crossed the breakeven point, “with little room for further reductions,” it wrote.
The large West Coast ports of Los Angeles and Long Beach have experienced the largest drop in trade, according to Josh Brazil, vice president of supply chain insights at Project44, as shippers also rerouted some of their shipments to the East Coast to avoid the risk of a major union strike at West Coast ports.
HLS expects most carriers to extend their West Coast rates until December 14, holding at $1,300-$1,400 per forty-foot equivalent containers (FEU). However, U.S. East Coast rates are expected to drop by $200 or $300 to average $3,200-3,300 per FEU in the first half of December.
The recent rise in Covid lockdowns in China continues to impact manufacturing operations and delay cargo outputs. There are also local access obstacles for cross-province and cross-city transportation, mostly related to truck driver testing requirements, with trucking capacity to be largely affected.
The fight for vessel space, the rollovers of cargo, and the slow trucking is tracked by the CNBC Supply Chain Heat Map.
Blank (canceled) sailings data shows the cut in vessel capacity on the transpacific route (China to the U.S.) continues at a significant pace. The 2M Alliance of Maersk and MSC has suspended almost half of its U.S. West Coast services for December. The Ocean Alliance (CMA CGM, Cosco Shipping, OOCL and Evergreen) and THE Alliance (Ocean Network Express, Hapag-Lloyd, HMM and Yang Ming Line) have cut overall vessel capacity by 40-50% up to Chinese New Year.
As a result, space for shippers is considered tight for cargo bound for the Pacific Southwest route and service reliability has declined, with carriers including MSC and Hapag-Lloyd rolling (not accepting) cargo on sailings in an effort to make up time. According to logistics managers, this is creating two weeks of delay. MSC said in its latest notice to clients, “ETAs are indicative and subject to change without prior notice.”
The drop in manufacturing orders from the U.S. and the E.U. is also impacting Vietnam, which has been booming as a manufacturing hub as more trade moved away from China.
Since early this year, 12,500 companies were closed per month, a 24.8% increase year over year, according to the Vietnam General Statistics Office report. The combination of the lack of manufacturing orders and loan interest rates increasing from 6.5% to 13.2% in Vietnam led many companies to close factories instead of signing new order contracts, according to HLS. Canceled ocean sailings bound for Vietnam are up 50% for December.
NOTE: The CNBC Supply Chain Heat Map data providers are artificial intelligence and predictive analytics company Everstream Analytics; global freight booking platform Freightos, creator of the Freightos Baltic Dry Index; logistics provider OL USA; supply chain intelligence platform FreightWaves; supply chain platform Blume Global; third-party logistics provider Orient Star Group; global maritime analytics provider MarineTraffic; maritime visibility data company Project44; maritime transport data company MDS Transmodal UK; ocean and air freight rate benchmarking and market analytics platform Xeneta; leading provider of research and analysis Sea-Intelligence ApS; Crane Worldwide Logistics; DHL Global Forwarding; freight logistics provider Seko Logistics; Planet, provider of global, daily satellite imagery and geospatial solutions, and ITS Logistics provides port and rail drayage services in 22 coastal ports and 30 rail ramps throughout North America.
WHY THIS IS HAPPENING AND WHO IS TO BLAME
If you find yourself wondering how it is even possible that demand for goods from China has dropped forty percent (40%), the reasons are staring you right in the face. It's very simple: Russian Sanctions imposed by the Illegitimate Biden Regime.
You see, it worked like this: Back in 2014, the US and Europe overthrew the democratically-elected President of Ukraine, Viktor Yanukovich. They did this because the US and Europe wanted Ukraine to leave Russia's sphere of influence, and come into the US/Europe sphere of influence, so they could get Ukraine to join NATO, and put US missile defenses on Ukrainian soil.
Russia told the US and Europe this was a "red line" and that having US missiles on Ukrainian soil would give those missiles about a five minute flight time to Moscow, and a five to ten minute flight time to Russia's strategic nuclear missile silos. Russia made clear that no nation on earth can defend against missiles with a five minute flight time and that Russia simply could not -- and would not -- allow that threat to be developed. It was an existential threat to Russia because there was no way for Russia to know if those missiles were conventional, or nuclear. Russia simply could not sit back and do nothing, and allow this to happen, knowing the missiles could end up being nuclear, which could decapitate Russia and wipe the nation out.
Yanukovich spoke with his people in government, in business and in the regular population, and asked them if Ukraine should move from Russia's sphere of influence, to the West. They all said "no."
When the time came for Yanukovich to give an answer the the US and Europe about moving Ukraine into the Western sphere of influence, he told the US and the EU "Thanks, but no thanks." Ukraine's future, he told them, remained aligned with Russia.
Well, that was an answer the the US and the EU just weren't willing to accept. They wouldn't take "no" for an answer.
The US and Europe moved to gain control of Ukraine. The US and the European Union (EU) fomented, incited, and financed protests, demonstrations, and riots inside Ukraine to destabilize the Ukrainian government. The violence escalated fast as the US Embassy in Kiev paid out upwards of a million dollars a day, in cash, to the protesters!
Over the course of a few months, the violence got so ferocious that in March, 2014, Ukraine's President Viktor Yanukovich, fled the country and Ukraine's government collapsed.
When that happened, guess who was right there to finance and support a new, puppet government, favorable to the west? You guessed it: The U.S. and Europe!
Once the new puppet government was elected, the US/EU told its new puppet government in Ukraine to begin attacking and purging Russian-speaking people in the eastern part of that country. They did this because it was that geographic region that elected Yanukovich and it was that region that said "no" to moving to the US/EU sphere of influence. And that region spoke softly but carried a big stick: That region is where about 90% of Ukraine's Gross Domestic Product comes from. So when those people speak, government HAS to listen because that's where the money comes from.
Knowing that the eastern regions of Ukraine would be the most problematic, the US and EU told their puppets in Kiev to mass troops along the borders of Luhansk and Donetsk. They did. Those troops began artillery shelling and mortar bombing civilians in those two states, which they call "Oblasts." They wanted to "break" the Russian-speaking population there and drive it out.
The artillery shelling and mortar attacks killed thousands of civilians. Seeing this, Russia sent "Little Green Men" into Luhansk and Donetsk. They were fully trained and equipped Russian soldiers, in typical green uniforms, but with no flags and no identifying patches, to help those two oblasts defend themselves against the Ukraine Army. Luhansk and Donetsk fought Ukraine to a standstill.
Russia watched in horror as these events unfolded right at their front door. And Russia knew where all this was heading . . . the decapitation and conquest of Russia itself, by grabbing Ukraine, causing Ukraine to join NATO, placing US missiles inside Ukraine with a five minute flight time to Moscow, then telling Moscow, either you do what WE want, or Russia will be destroyed.
There was another component for Russia in this new situation: Crimea. For 300 years, Crimea was actually part of Russia. That changed about 50 years ago, when then-Soviet Union Leader Kruschhev, GAVE Crime to Ukraine. Yes, he just GAVE IT. and overnight, Crimea changed from being Russia, to being Ukraine. No one there liked it, but in the then-Soviet Union, one didn't dare complain.
Anyway, in Crimea, Russia has a naval base. It is their only warm water naval base in that region of the world. All the rest of Russia's naval bases freeze-over in the winter. So having that naval base in Crimea, is of national security interest to Russia.
The new Ukraine government began negotiating a new NATO naval base on . . . Crimea. So not only was Russia watching the forcible overthrow of Ukraine and the installation of a puppet government, they were now seeing the potential loss of their naval base on Crimea, and the commencing of putting a NATO naval base there!
Russia knew it had to act. So they began massing troops at the naval base, and going out into the population of Crimea asking if they wanted to vote to RETURN to Russia? The people of Crimea, having seen the overthrow of their democratically elected President in Kiev, and the massing of troops against Luhansk and Donetsk, told the Russians "yes" we want a referendum to decide on us returning to Russia.
A public referendum was held and the vote was staggering. Upwards of 96% of the voters in Crimea voted to return to Russia. The Referendum was monitored by election observers from the United Nations, who certified the election was legitimate.
The West was outraged. They called the Referendum a "sham" and said the West would not honor it. The West, they said, would never agree to Crimea being part of Russia.
Next, the West imposed economic sanctions on Russia. By the way, these new Sanctions, were on top of the Sanctions the US imposed based on the LIE of "Russia Collusion" in the election of Donald Trump. So now, with these new Sanctions, trade began to be seriously affected. But global markets are such, that the markets were able to get along.
In 2016, Donald Trump was elected President of the US and most of the troubles in Ukraine . . . stopped. The Ukraine army was till shelling and mortar-attacking Luhansk and Donetsk, but far less.
The US Economy picked up, there were plenty of jobs, companies were moving manufacturing back to the US and things were looking up.
Then "COVID" struck. But it turns out that the ENTIRE Covid debacle, was a manufactured crisis designed to wreck the economy, to prevent the re-election of Trump. The proof? All in all, the mortality rate of COVID is 0.3 percent. That means 99.7% of the people who catch it, survive! It is, in fact, no worse than a nasty Flu season.
But that isn't what we were all lead to believe. We were told this was worse than the Spanish Flu outbreak of 1918 that killed millions. We were told we had to stay home . . . just two weeks . . . to flatten the curve. We were told we had to wear masks . . . none of which protected anyone. (Masks have pores so we can breathe through them. Those pores are 4 microns in size. (Four one-millionths of a meter). But the Coronavirus that causes "COVID" is only 0.04 microns, a hundred times smaller than the pores on the masks! The virus goes right through those pores.
To give you a reasonable analogy: Using a mask to protect yourself from COVID would be like using a chain link fence to protect yourself from Mosquitoes. It doesn't work. Ever. Not even a little. Yet we were all told to put on masks even though they don't work.
The hype of COVID hit the economy hard. We all saw the supply chain disruptions. But that's over now. It's been over all this year. So why the forty percent drop in manufacturing orders to China? MORE RUSSIAN SANCTIONS!
In January of 2021, Joe Biden was sworn-in as US President, and within DAYS, all the troubles in Ukraine began all over again! Later that year, Ukraine massed 100,000 troops on the borders of Luhansk and Donetsk. They also massed tanks, artillery, fighter jets, bombers and the like.
Toward the end of 2021, Ukraine started shelling and launching mortars against Luhansk and Donetsk all over again.
Russia, seeing the writing on the wall made a formal treaty proposal seeking iron-clad, legally enforceable security guarantees. Within literally HOURS, the West laughed the proposal out of the office and threw it in the trash.
So Russia re-issued the proposed treaty, having it brought by Diplomatic Couriers to the Presidents of the US, all EU and NATO Countries. But this time, the proposal made clear: "If Russia cannot obtain iron-clad, legally enforceable security guarantees by Diplomatic means, it will secure them by military or military-technical means." The US and the West took about three weeks before they rejected Russia's proposals yet again.
In those weeks, Ukraine increased shelling of Luhansk and Donetsk to levels never-before-seen. Civilians in those two states were being killed almost daily. The two states, which were supposed to be autonomous, pursuant to the Minsk Agreements, signed by Ukraine in 2015, declared Independence. They then asked Russia to come into their new "countries" and defend them from the Ukraine army.
About a month later, having exhausted all Diplomatic efforts, seeing Luhansk and Donetsk being shelled again, those two states formally asking Russia for help, and finding itself facing a hostile and aggressive West, Russia sent troops into Ukraine.
When Russian troops entered en-masse, the West imposed more economic sanctions upon Russia, but this time, they went after Russian natural gas and oil. The US said it would not buy any Russian natural gas or oil, and NO ONE WHO DOES BUSINESS WITH THE U.S. CAN BUY IT EITHER.
Those sanctions forced all of Europe to try to find gas and oil elsewhere, and that meant the Middle East.
With Arabs having to try to make up the loss of Russian gas and oil, prices skyrocketed worldwide. We in the US watched as our gasoline prices rose from about $2.50 a gallon, to almost $6.00 a gallon. We watched as Diesel fuel, which powers the trucks that move everything in our nation, rise to upwards of $7.50 a gallon.
The costs of transporting goods, doubled, and even tripled. And THAT caused the price of food and everything else to go up . . . big.
Seeing the economic impact, the illegitimate Biden regime began releasing oil from the US Strategic Petroleum Reserves, which helped prices come down a bit . . . for awhile. But now they are rising again.
Just this week, I had to pay $5.99 a gallon for diesel fuel for my 2021 GMC Sierra 3500 AT4 pick-up truck. The truck took 32 gallons. The cost to me: $195. for ONE fill-up!
Everyone else is paying similarly high prices for their diesel fuel, and that's why prices for food and everything else continue to skyrocket.
Well, Americans only have so much money. And if they need to spend it on fuel, and on food, and to heat their homes now that fall is here and winter is coming, then there isn't much left to buy other stuff. And THAT is why orders for manufacturing from China, have fallen forty percent.
There isn't much money left in the US Economy. People aren't buying "stuff" because they don't have the money. And they don't have the money because the US imposed economic sanctions on Russian gas and oil, forced everyone who does business with us to do the same, which drove up fuel costs, which then drove up the costs of everything else.
Our own government did this. They imposed Sanctions over Ukraine. Our own government is directly and exclusively to blame for what's happening. They are guilty.
Oh, and all those useful idiots, supporting Ukraine, they provide the cover for the politicians to continue to the sanctions against Russia, and thereby continue to wreck our finances and smash our economy.
All your pals out there saying "Glory to Ukraine" are the ones cutting YOUR throat economically because in their stupidity, they provide the political cover for the Sanctions which are destroying us.
As the slowdown in China-manufactured goods begin to hit home, stores will see empty shelves again. Only this time, it won't be for days, it will be for months.
As as the Sanctions on Russia continue to strangle oil and gas, prices for diesel fuel will continue to rise, thereby affecting the costs of everything else you buy.
This winter, as you sit in your house and have to decide whether to buy food, or turn the heat on, (because you won't be able to afford BOTH) you can thank your support for Ukraine, for shivering in the cold and being hungry.
