Small coincidences and the supply chain
Drug shortage continues
This is a shorter one, had matters to attend to, in parts it is the logistical side of the post below that I didn’t include for length's sake. Nothing I am about to write or give small portions of my opinion is new if you read similar posts, they are my forecasts coming to pass. I won’t bother to cover the Russian blockade in the ports of Ukraine, the Western elites, and the American government bear more of the blame than Russia (which shares parts of the blame too).
Every cascade effect from the insistence of the American government to pursue a fruitless, costly proxy war with Russia because some “highly intelligent” people on policy and the military thought they could win, is on the government’s back, but the empire and the people will bear the cost.
First, a simplistic measurement of how the Shanghai lockdowns affected some ports in the US.
China’s zero-tolerance in the Covid-19 pandemic and the lockdown in Shanghai have affected the Port of Oakland in the United States, which has seen a 7% reduction in its box volumes in April, compared to the same month last year.
In particular, the port's containerised import loads fell 17% last month, while exports sagged 18%. The decline is largely due to the closure of factories and ports in China, Oakland’s largest trade partner.
According to the Port of Oakland, the disturbance in the port of Shanghai is delaying the import shipments to the US and that wreaks havoc on ocean carrier scheduling. “US exports have been hampered by vessel schedules thrown into disarray in China,” said Port of Oakland maritime director, Bryan Brandes, who admitted that “most of Oakland’s business depends on the Asia-US trade route”.
Apart from China, the cargo flow in Oakland has been affected by additional factors, such as the reduction of the number of ships stopping in the Californian port.
It goes further than merely long wait times in ports again, or domestic supply issues.
10.5% of containership fleet remains unavailable due to delays
The number of containerships delayed at ports has started to improve, however 10.5% of the global fleet capacity remains unavailable.
As global supply chain disruption continues there has been a significant improvement in the number of containerships waiting at port for berths according to analysis by Sea-Intelligence.
Since between January and April the percentage of the global fleet unavailable due to delays fell from 13.8% to 10.5%.
As I wrote months ago, and so did some experts, there would be a shortage of containers, and even though companies are addressing such shortage by adding containers into the market, they got stuck in ports given the capacity to deal with the surge in load.
It is no surprise that wait times for ships are getting long even in Europe. That graph is from 2 weeks ago, this was 2 days ago.
Container shipping situation worsens due to congestion, delays, and empty containers
Congestion levels at ports in mainland China have increased between 30-40% since March
High rates on shipping routes departing Asia combined with port delays incentivises carriers return with empty containers
Governments and others looking at ways to discourage ships operating at less than full capacity
Supply chain challenges continue to worsen, exacerbated by higher levels of port congestion and shipping delays at ports in Shanghai and elsewhere in China due to Covid-19 lockdowns. Coupled with ongoing congestion at ports elsewhere in the world and low backhaul rates to Asia, container demand is far exceeding capacity.
Congestion at Chinese ports increased in March and April as Covid-19 lockdown measures were introduced in Shanghai and later extended to other parts of the country.
Container shipping rates departing Asia also remain significantly elevated over routes inbound to Asia from the US and elsewhere. This differential in freight rates, along with severe delays at ports, has disincentivised carriers from taking shipments from the US, Europe, or elsewhere to Asia, with disproportionate negative impacts for agricultural exports.
Per previous analyses and confirmed with newer information and data, what I described as “The Coming Supply Shock” is coming, and it will make the last year’s supply shock look like it was a fun game.
For brevity's sake I won’t cover other supply related issues here, but Japan is experiencing a shortage of fridges and other home appliances, and this shortage will be experienced elsewhere, not only that, when the ports get “really” flood with cargo, and a jam-like never before happens (high probability of this happening, but maybe not…) there will be weeks of waiting for a product you ordered.
If you want/can afford it, I would advise you to buy your Christmas presents in the next few weeks, or whatever electronics you might need, the supply crunch is real, and once it comes, it will take weeks for it to get into “normalcy”, or whatever that is now.
This is a collateral damage this hole mess gave birth too.
Supply Chain Snags Poised to Spur New Wave of Corporate Distress
Rising costs, delays, hinder firms’ ability to handle debt
Consumer demand will determine whether defaults are likely
Rising helium costs, missing auto parts, and shipping delays are spurring a new wave of financial trouble for companies already saddled with debt amid broader concern that the US economy is on the brink of a downturn.
Companies from Party City Holdco Inc. to Diebold Nixdorf Inc. have reported earnings in recent weeks that were crushed by supply chain pressures and red-hot inflation. One company, Armstrong Flooring Inc., has already been pushed into bankruptcy after higher costs eroded its cash. And auto collision repair company Service King is negotiating with creditors over ways to ease its debt load as it struggles to secure auto parts and get mechanics back to work.
Representatives for Armstrong Flooring and Diebold Nixdorf declined to comment, while Party City and Service King didn’t respond to a request for comment.
It’s an acceleration of a trend that emerged at the end of last year, as companies hit with rising prices struggle to pass on these costs to customers. Specialists in troubled companies say that the pain isn’t going to let up any time soon, as supply chain issues show no signs of improving while consumer demand is set to slow due to higher interest rates.
“Those three factors are for sure a recipe for distress, and we’re starting to see that,” Angelo Rufino, managing partner and chief investment officer of Brookfield Special Investments, said in an interview. “We are rapidly sharpening our pencils.”
“Simply stated, the company’s increasing costs significantly outpaced its pricing power,” Armstrong’s Chief Executive Officer Michel Vermette said in court papers.
These pressures will be magnified by Russia’s invasion of Ukraine, which has strained the global food supply system, leading to higher prices, said Jim Mesterharm, head of AlixPartners’s turnaround practice in the Americas.
“The supply chain challenges don’t necessarily have an end game set at the moment,” he said.
The most affected by these events are small businesses, and similar to a trend seen in China since 2021, there is massive consolidation going on, and this acceleration of zombie companies that can’t repay the debt will spur more and more of these. A similar trend in the entire planet (bold part) is at play and not even massive companies like Amazon can deal with costs pilling up and now they are shedding excess warehousing space.
This to say, right now, retailers have some products (region dependent), and can fulfill orders, but the global economy, driven by unabated inflation that has no signs of stopping anyway soon and costs pilling up faster than companies can pass on to consumers, will inevitably send a signal to industry to stop producing so much, which cascades into longer wait times and scarcity. I am talking in a timeframe of months here, not weeks.
And now comes the “coincidences” section of the title. There were many accidents going on lately, here are a few of them.
As soon as the avian flu was given a little room to breathe and rebuild flocks, therefore in a few weeks the price of eggs of going down, and such an accident happens.
A few days before the one above.
The one below had me surprised and given how the metal markets are strained because of the supply chain and energy costs, this doesn’t help. On a normal day, this would be nothing, in a strained interconnected global system that has been experiencing metal shortages for over a year, it is something.
The last one is another one with massive ramifications. Because that industrial block not only produced nitrate (used in fertilizer production) but also acetone, used in many chemical reactions and among the most important ones, drugs. I slightly covered a lot of the industrial fires in the regions in India that are big producers of API (Active Pharmaceutical Ingredients), and India is one of the top producers and most important in the world.
This leads back to a very early post of mine. One I warned about the growing drug shortage, with quite a few sources.
Report: US plant closure portends drug shortages—some critical
In its first analysis, the newly formed End Drug Shortages Alliance (EDSA) warns that the recent shuttering of a troubled Teva Pharmaceuticals manufacturing plant in Irvine, California, could affect the availability of 24 generic sterile injectable drugs, including 5 essential medications for which the company had an over 15% market share.
The Israel-based, multinational Teva, one of the world's largest generic drug producers, closed the plant after receiving the latest in a string of warning letters from the US Food and Drug Administration (FDA) about observations of contamination, dirty changing rooms and scrubs, and a years-long lack of sterilization and testing of equipment.
In an October 2021 letter, the FDA detailed possible mold contamination of the company's injectable drugs from unaddressed water leaks. In response, Teva recalled more than 2.5 million vials of injectables used for indications such as cancer, arthritis, schizophrenia, and muscle relaxation for intubation. It also halted production at the facility.
What I said in that very early post still holds true. Drug shortages are fast to develop and are very very hard to forecast, and the supply chain on them can be either long or fragile (high demand for X drug, as an example). So what I advised in that very early, the shorter post still holds true.
Go on Google and search for whatever drugs you or a loved one uses and see if there recently were, or there are shortages of those drugs. Talk to your doctor, voice your concerns about the supply and build a small stock of them. This is merely for people who need medication for any reason to mitigate the risk of a supply shock getting in the way of their health.
Of course, a lot of the most common diseases can be treated with natural compounds and supplements, but this isn’t the post for this.
Hope you all have a nice Friday, a new post probably coming today (it is already Friday here!!!).
Don't want to send another e-mail so soon, so here, confirmed cases of MonkeyPox in Chicago, Philadelphia and LA county.
https://thehill.com/healthcare/3509950-chicago-philadelphia-la-county-record-first-monkeypox-cases/