It is reported today (Tuesday 14 December) that there are around 75 ships milling around outside the port of Los Angeles waiting to dock. It is like a holding pattern; you hang around and nip down to Mexico, then return to find your landing slot still has not yet opened. As America is the ultimate destinatiion for around 40 per cent of Chinese exports it is a concern on both sides of the superpower see-saw.
One ingenious solution is to load piled up cargo onto aircraft. However, this instantly increases shipping costs by 100 per cent and no-one want to pay $10 for a piece of plastic pipe which their dog will ultimately find under the table and chew. It certainly is a conundrum. Freight prices on routes from Shanghai to North America reached $14 per kilogramme for the first time last week, up from $8 at the end of August and above the previous record of $12 achieved when the pandemic first hit supply chains in early 2020. There have been similar rises from Hong Kong to Europe and the US, and on the transatlantic routes between Frankfurt and North America, according to data from the Baltic Exchange Airfreight index and TAC Freight, cargo data providers.
The fact is, even for Americans there is an upper limit on what people will pay for rubbish and we are peaking around that about now. This is of most concern to car boot operators who, in two years time, will find they have no absolute crap to hawk, being left only with single shoes and something that looks, but not does not behave, like a miniature accordion displayed in the boot of someone's Ford Focus. Imagine a world full of less junk? It is unthinkable.
Half of air cargo would normally be carried in passenger jets, but we have the issue that passengers are becoming even more rare than single-use plastic cracker gifts and if planes are flying it is to Malaga and the Canaries, not Chongqing, so there is nothing to load up for the return flight.
Part of the solution may be to replace human idiocy with artificial intelligence. UK logistics company Unipart, for example, is building a machine-learning product to try and create more agile supply chains. John Neill has his finger on the button: “You can start teaching the system to use data about container usage and locations, port congestion, vehicle movements, driver shortages and raw material. You then have far more information to manage and plan delivery lead times than before.” There is a snag which shouldn't entirely put John off. Recent carnage on the high seas has meant data has been skewed, with shipping routes looking like the tangled lights you rescued from the bottom of your Christmas tree box last Saturday. Without data artifical intelligence becomes as stupid as a Tory MP with a party popper and glass of sparkly.
Some more local numbers to grapple with before you open your advent calendar window this morning. The UK's GDP growth was just 0.1 per cent in October, which was announced under the Omicron wire and doesn't look like improving for at least three months. This minimal rise in output is well below economists’ forecasts of 0.4 per cent and far weaker than the 0.6 per cent expansion the previous month. It leaves the economy still 0.5 per cent below its pre-pandemic level, which you could still see as a real win bearing in mind that it was a global pandemic and we are still enjoying some frisky tail winds at the end of it.
