In November 2020, we witnessed the beginning of an increase in the price of container transport.
Today those prices are ten times higher!
Was it the beginning of the end for cheap goods from China?
Is there any sign of the situation calming down, or will this become the new normal?
Dozens of cargo ships grounded off the California coast illustrate the shipping disruptions that have become a feature of recovering economies, fueling inflation, slowing growth and challenging the global economic model that has ruled for three decades. According to the data coming to us from America, there is no chance that things will return to normal in the near future.
The number of container ships anchored or floating in San Pedro Bay near the ports of Los Angeles and Long Beach broke all previous records in mid-September.
We wrote about this recently (August) when a record of 43 ships anchored in front of the port of California was set. At that time, the media following this announced an increase in the inflow of ships and even greater delays due to the upcoming holidays in America.
Three weeks later, according to the Marine Exchange in Southern California, 73 container ships were docked in San Pedro Bay, a new all-time record.
Which means that about 500,000 containers are trapped. A terrifying amount, it is said that if that amount of containers were arranged in a row one after the other, that row would be half the length of the American continent, from the west coast to the east coast.
However, this is not the end of the problem, as the number of ships waiting to be unloaded has also increased in other American ports.
Over the weekend we came across a YouTube video titled "The Cargo Shipping Crisis Is Artificial - Creating a Supply Chain Nightmare" by user "iAllegedly" where you can see the ports outside of Los Angeles and large volumes of ships waiting to be unloaded but unfortunately also a large amount of empty containers standing in the port.
In the video, personal views are expressed and are by no means our view, especially not the fact from the beginning of the video where China is blamed for the situation.
Although it is claimed in the video that the crisis was manufactured, nowhere is it explained how and what caused it.
The author of the video has repeatedly stated that he does not believe it is caused by a labor shortage, and there have been baseless attacks on China and mismanagement of the economy by the current US administration, but nothing concrete about how the current supply chain situation was produced .
We are not interested in the author's opinion, but we are interested in the footage of the harbor and the amount of ships there, and we wanted to share it with you.
In any case, from an economic point of view, it is a disaster because the goods are stagnant.
In order for goods to move smoothly from overseas factories (mostly in China) to customers, cargo ships, shipping containers, cargo terminals, truckers, dispatchers and railways must all work in concert.
If this wheel gets stuck anywhere at any time, it affects the entire supply chain.
At the beginning of that chain are producers from China.
Now we come to a new problem, the cessation or reduction of the work of many factories due to the lack of electricity in China.
This year, a perfect storm of factors - including some coal supply disruptions and rising industrial and household demand - have caused power shortages across the country.
What is the exact cause of the power outage is as difficult to say as whether China is saving electricity while ports around the world are jammed?
2017. In 2018, China officially banned cryptocurrency mining, however, this summer the control became more rigorous as they realized that they had problems with the lack of electricity as a country. Did the modern miners cause the blackout in China, or is it perhaps a problem related to the import of coal from Australia.
Australia is the world's largest exporter of metallurgical (coking) coal, which is used for steel production. China has relied heavily on importing coal from Australia, which is of good quality and relatively cheap.
However, in the last two years, the relations between these two countries have cooled significantly and the purchase of coal from Australia has been suspended. Since Beijing launched an unofficial boycott of Australian coal last October in a major escalation of the two countries' trade conflict, global coal flows have undergone major changes.
While Chinese imports of Australian coal effectively dropped to zero, imports from other countries and increased to fill this deficiency. Since coal accounts for nearly 60% of China's energy consumption, its continued supply is critical to the country's energy security.
However, the Chinese president recently announced that China will no longer build new thermal power plants outside of China, and that China will be a country with zero carbon dioxide emissions before 2060.
Does China want to take advantage of the moment when ports around the world are filled with goods and get rid of coal imports as soon as possible, and suffer the immediate consequences in the form of a lack of electricity.
Is China trying to get rid of coal this suddenly and does it want to switch to renewable energy sources in the next couple of years.
It sounds nice, but it is difficult to implement in practice.
However, when it comes to China, nothing is impossible.
In any case, the supply chain was interrupted in two places.
If and when it will be re-established and returned to normal is hard to say, but one thing is certain, we will all feel these consequences.
Finally, see the comparison of the price of transport from China to the Mediterranean in the last 12 months (October 2020 - October 2021) with the 12 months before that period (October 2019 - October 2020)
