Look Beyond Your Lot

The lack of availability seems to be a common theme these days along with price escalation/inflation. The International Chamber of Shipping (ICS), a coalition of truck drivers, seafarers and airline workers has warned in a letter to heads of state attending the United Nations General Assembly that governments need to restore freedom of movement to transportation workers amid persistent COVID-19 restrictions and quarantines.

If nothing is done, ICS fears a “global transport system collapse” and suggested that “global supply chains are beginning to buckle as two years worth of strain on transport workers take their toll.” The letter was signed by the International Air Transport Association (IATA), the International Road Transport Union (IRU), and the International Transport Workers’ Federation (ITF), which represent some 65 million transport workers around the world.

“All transport sectors are also seeing a shortage of workers and expect more to leave as a result of the poor treatment millions have faced during the pandemic, putting the supply chain under greater threat,” the letter stated. “We also ask that the World Health Organization (WHO) and the International Labor Organization (ILO) raise this at the U.N. General Assembly and call on heads of government to take meaningful and swift action to resolve this crisis now.”

Meanwhile, retailer Costco said it’s chartering its own container ships between Asia and North America amid supply chain issues worldwide, according to Chief Financial Officer Richard Galanti during a recent conference call. He indicated that Costco is dealing with “port delays, container shortages, COVID disruptions, shortages on various components, raw materials and ingredients, and labor cost pressures, along with trucks and driver shortages,” Fox News reported.

Gene Seroka, Executive Director of the Port of Los Angeles, attempted to shed some light on the problem during a recent ABC News interview, noting that there’s a significant backup of container ships off the coast of major ports of entry. “We’re witnessing a pandemic-induced buying surge by the American consumer, the likes of which we’ve never seen,” he told the Fox News network on September 29. Another expert broke the issue down further by suggesting that over 69 ships are anchored off the Port of Los Angeles. It takes approximately 45 days to unload one of these super transports. That means there is already a three-year backup of ships to be unloaded!

During this week’s testimony by Fed Chairman Powell to Congress, he also noted that, in fact, inflation “may not be as transitory as once thought”. Powell said that the current spike in inflation is a “consequence of supply constraints meeting very strong demand,” saying it’s “associated with the reopening of the economy, which is a process that will have a beginning, middle and an end.”

“It’s very difficult to say how big the effects will be in the meantime or how long they last,” Powell said during a forum hosted by the European Central Bank. He indicated the current price surge is due to bottlenecks in the supply chain, although he believes prices will eventually come down on their own, and that the surge will continue into 2022 before dropping.

“The Federal Reserve doesn’t anticipate the current trend to lead to a new inflation regime, in which inflation remains high year after year,” Powell said. “Managing through that process over the next couple of years is going to be very challenging because we have this hypothesis that inflation is going to be transitory”

EDITOR’S TAKE:

Consumers are beginning to feel the pressure of limited supplies and rising prices and will soon have to make some difficult choices. They will likely reduce or delay expenditures for big ticket items such as automobiles or housing. Contrast that with farmers/ranchers who are facing a pretty solid ag economy at the moment. Wouldn’t it be wise to put them at the top of your prospective customer list? They have solid balance sheets and income statements with tax burdens to overcome – the ideal situation for you to sell them a truck or two. It’s time to look beyond the current situation and start targeting your best prospects – Farmers and Ranchers. Look beyond your lot!