General

As 2021 draws to a close, the traditional Christmas in the West is also approaching.

However, due to factors such as continued tension in the supply chain, prices have continued to rise. Some American media recently reported that at the end of the year, American consumers are likely to usher in the most expensive traditional holiday in history.

And this happens not because the supply of goods is insufficient, but because the goods people need are blocked in the port...

Cost pressure is huge, US retail giants have raised prices

According to CCTV Finance, according to the data reported by McDonald’s, the company’s labor costs in the United States have increased by at least 10% since the beginning of this year, but company executives said that even so, it is impossible to recruit enough quickly. Of employees to ensure that the store is open 24 hours a day. In order to cope with the pressure of rising costs in all aspects, the company is increasing the price of domestic menus in the United States. At present, the overall price is 6% higher than the same period last year.

McDonald’s cost pressure mainly comes from two aspects: one is the rising wages of American employees; the other is the rising prices of raw materials, paper and other supplies.

According to McDonald’s internal executives, since the second quarter, the average salary of McDonald’s American restaurants has been rising, with an average increase of more than 15%, and even if the salary is increased, McDonald’s still faces difficulties in recruiting.

In addition to wages, the prices of McDonald's food raw materials, paper and other supplies are also rising. According to foreign media quoted McDonald’s executives, McDonald’s is expected to increase the cost of goods this year by 3.5% to 4%.

The largest chain restaurant companies in the United States, including Domino’s Pizza, Chipdo’s Mexican Restaurant, etc., have also stated that there are labor challenges in the third quarter, which put pressure on sales in the United States, and they have all announced Increase menu prices.

According to Xinhua News Agency, a large number of American companies disclosed that the shortage of the entire supply chain is turning into general inflationary pressure. The shortage disrupted business operations and forced them to increase customer prices.

Whirlpool said that the price of steel, resin and other raw materials rose "substantially" because of "inefficiency in the supply chain." The home appliance manufacturer's cost this year will therefore increase by nearly 1 billion US dollars.

Vivek Sancaran, CEO of the Albertson supermarket chain, said: "Every day, there is something out of stock in the store." He said that the company is replenishing goods every day, but one thing is replenished, and the other is out of stock.

When asked which raw materials and materials are difficult to purchase, Jack Harton, chief financial officer of the Zippor fast-food restaurant chain, replied: "They are not easy to buy."

And even if they don’t dine out, the price of cooking at home for American consumers is also rising. A related person from the U.S. Department of Agriculture said that the price of traditional turkey and related ingredients for the year-end holiday is expected to be 4% to 5% higher than last year. They said that this year the United States will usher in "the most expensive holiday in history" because "almost everything is much more expensive." The price of beef, another major food during the holiday season, has increased by 17.6% year-on-year in September this year.

At the same time, statistics from the American Automobile Association (AAA) show that the average price of gasoline in the United States was 3.394 US dollars per gallon on October 27, or about 21.7 yuan, which is nearly 60% higher than the same period last year. It is also the highest level in the past 7 years.

The continued congestion in the US supply chain has also affected the supply of drugs. According to a report by CBS on the 21st, affected by multiple factors such as the epidemic and supply chain issues, the shortage of medicines facing American hospitals is becoming more and more serious. According to the American Medical Association, the problem of drug shortages has become an "emergency public health crisis."

According to data from the US Food and Drug Administration, there are currently 109 drugs in the United States listed as short of supply. According to the American Association of Health System Pharmacists, drugs and antibiotics for chemotherapy and heart disease are the most in short supply.

Major American manufacturers such as General Motors, General Electric, 3M, and Boeing are all facing logistics problems and rising costs caused by global supply bottlenecks. These problems may continue until next year, but these companies agree that increasing commodity prices can alleviate the impact on profits. Blow.

A large number of retailers are struggling with insufficient inventory and supply chaos, and consumers are reminded to buy Christmas supplies in advance. Customers will either sigh at the empty shelves, or stay away from soaring prices.

In the coming Christmas season, many Americans may have to face a Thanksgiving Day without turkey, Christmas without gifts, toys, and Christmas trees. Even due to the lack of loggers, there is an extreme shortage of wood and pulp, and even the supply of new books is already very difficult.

U.S. ports are heavily congested, and containers cannot be shipped out

It is worth noting that the rapid rise in prices faced by American consumers is largely due to a "ship jam."

As we all know, the United States is a country that relies heavily on globalization. Almost all industrial chains of airplanes, automobiles, computers, furniture, and clothing rely on global supply chains.

Since September, there have been rare ship jams in several important gateway ports in the United States.

The Ports of Los Angeles and Long Beach, located in Southern California, are the gateway ports connecting the shipping routes between Asia and the United States. Last year, the ports of Los Angeles and Long Beach handled a total of 8.8 million imported containers, accounting for 40% of the total imported containers in the United States.

However, affected by factors such as the imbalance between supply and demand in the global shipping industry and the weak port operating capacity, the congestion situation in Southern California ports has continued and worsened. On September 24, according to CCTV Finance, there were a total of 97 cargo ships in the two ports, which was twice that of the same period in August. The average arrival time has been extended from 6.2 days in mid-August to 8.7 days in September. Shipping logistics giant Maersk predicts that serious congestion in major global cargo ports will continue at least until the end of this year.

According to the port data monitored by Goldman Sachs in real time, the number of berthed freighters has increased to more than 70 (basically zero congestion before the epidemic), and the cargo loaded is equivalent to 200,000 containers, many of which are loaded by American factories for domestic production of products. The backlog of parts and raw materials of the company has reached the highest level in history.

Image source: Wall Street Journal video screenshot

According to industry insiders, an average ocean-going vessel needs 8,000 trucks to pull away. Therefore, to pull out the containers on the 70 ships stranded outside the port, nearly 600,000 large trucks are needed.

According to Goldman Sachs estimates, the two ports of Los Angeles and Long Beach alone have a backlog of US$24 billion (approximately RMB 153.5 billion) in cargo. The congestion crisis is not limited to the above two ports. According to data from Goldman Sachs, the time required for ships currently loaded to pass through the seven major US ports is three times the historical normal level.

At present, the waiting time for ships in the Port of Seattle is as long as 28 days. As the congestion spread to other ports in the United States, due to the increased waiting time for ships to berth in Seattle, which affected the reliability of the shipping schedule and caused shipment delays, Maersk, MSC and ZIM announced that they will temporarily cancel TP9/Eagle starting this week. /ZP9 Service stops at the Port of Seattle. To stabilize the shipping schedule and provide customers with more reliable products and services.

▼Maersk Line

▼Mediterranean Shipping

The port jump started with the 5610TEU "Akinada Bridge" deployed by Star this week. According to data, 2M and ZIM deployed 7 vessels ranging from 4,253 teu to 8,850 teu to operate this route, and the west coast of the route is now only the Port of Vancouver.

In September, the total throughput of the ports of Seattle and Tacoma exceeded 330,000 TEUs, a year-on-year increase of more than 7%. Seattle usually has no ships waiting outside the port, but in recent weeks it has been reported that an average of 12 to 15 ships are moored in Puget Sound waiting for dock space.

Ryan Petersen, chief executive of Flexport, an international freight forwarding company, said that he rented a ship on the 21st to observe the conditions of the Port of Los Angeles and Long Beach up close. The next day, he sent 30 tweets to tell the world what he had learned, and tried to answer this question-what caused the two largest ports in the United States to almost stall?

During the three-hour round-trip inspection of each terminal, he said that "less than 12 containers were unloaded." According to him, there are always hundreds of cranes in these two ports, but "only about 7 are still in operation, and they are running quite slowly." The containers on the terminal are in a "full" state. "Because the empty containers block the available space, the new containers shipped from the sea or land have nowhere to put them."

Prolonged port congestion has had a huge impact on the US economy, not only disrupting the supply chain, causing a large number of commodities to be out of stock, and a large number of factories slowing down or even stopping production. The congestion may continue until at least the middle of 2022.

Yanci, President of Maersk (China) Co., Ltd., said: The tension in the maritime supply chain is not only reflected in ports, but also related to land transportation. For example, the rail capacity of the port to the inland is insufficient, and the freight truck is insufficient. On the whole, the global shipping logistics market will continue to be tight until at least the end of this year.

Biden: The two major ports need to operate 7x24 hours

Faced with such a serious congestion problem, the Biden administration also felt pressure.

US President Biden delivered a speech on the 13th of this month, announcing that the Port of Los Angeles and the Port of Long Beach will implement a 24 hours a day, 7 days a week work system to solve the problem of port container congestion and allow cargo trucks in the United States to be in traffic. The smoother night delivery of goods can cope with the tension in the supply chain of consumer goods. U.S. Transportation Secretary Pete Buttigieg subsequently admitted that U.S. supply chain problems "will certainly continue into next year."

On October 25, the Port of Los Angeles announced that in order to improve port operation efficiency and improve congestion, the Port of Los Angeles and Long Beach will charge shipping companies a new surcharge. From November 1, the Port of Los Angeles and Long Beach will target truck transportation. For containers that are overdue for railway transportation, a surcharge of 100 USD/container will be charged to the shipping company, and an additional 100 USD/container will be added per day.

The Biden administration stated that this new policy is to alleviate the increasingly serious congestion of cargo ships.

In addition, the White House press secretary stated that the Biden administration will continue to promote solutions to supply chain problems and plans to discuss the issue of global supply chain disruption with leaders of various countries at the G20 summit this weekend.

But this round of supply chain crisis has affected US economic data.

In fact, in September this year, the inflation rate in the United States has soared to a record high. According to data from the US Bureau of Labor Statistics, the annual rate of CPI in the United States rose to 5.4% in September, exceeding market expectations and has reached a high since 2008.

Under the pressure of the supply chain crisis and rising commodity prices, the momentum of the US economic recovery has become increasingly weak. On Thursday evening, data released by the Bureau of Economic Analysis of the U.S. Department of Commerce showed that the actual annualized GDP of the United States in the third quarter of this year increased by 2% from the initial value, which was lower than the median value of 2.6% expected by Bloomberg economists and the previous value was 6.7%. It is the slowest growth rate in more than a year.

Consumption is the largest component of US GDP, accounting for about two-thirds of overall economic activity. In the third quarter, consumption growth slowed to 1.6%, which is also the slowest growth rate since the second quarter of 2020.

In addition, the huge trade deficit once again dragged down the overall GDP growth of the United States. As exports fell, imports increased, and companies tried to introduce goods to meet domestic demand, the merchandise trade deficit in September widened to the highest level in history.

For the fourth quarter, the expectations of Wall Street institutions are also lowered. Goldman Sachs pointed out in the report that the US GDP growth forecast for the fourth quarter of 2021 will be lowered from 5% to 4.5%, and the GDP growth forecast for 2022 will be lowered from 3.6% to 3.3%. This is the fourth time Goldman Sachs has lowered its US GDP growth forecast in four months.

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