[New post] China Just Shut Down A Major Shipping Port, Record High PPI Shocks Investors, Margins Crushed
User ID posted: " https://www.youtube.com/watch?v=ypGfqO-YKT4 China Just Shut Down A Major Shipping Port, Record High PPI Shocks Investors, Margins Crushed by Silver Report Uncut China just shut down what has been the worlds busiest shipping port. Chinese authorities "
China just shut down what has been the worlds busiest shipping port. Chinese authorities on Wednesday closed a major container terminal at the Port of Ningbo after they claimed a dock worker became ill, raising fears among traders that supply chain disruptions that occurred when Yantian terminal in Shenzhen reduced output by 70% for a month earlier this summer would be repeated. We warned about this last week and it doesn't mean it's over for the other major ports, I would say it's only just begun.
July's PPI soared to a new record +7.8% YoY up 1.0% MoM. The index for final demand services rose 1.1 percent in July, the largest one-month increase since data were first calculated in December 2009.
Services - Product detail: About 20 percent of the July advance in prices for final demand services can be traced to margins for automobiles and automobile parts retailing, which climbed 11.2 percent. The indexes for airline passenger services; hospital outpatient care; machinery and equipment wholesaling; traveler accommodation services; and securities brokerage, dealing, investment advice, and related services also increased. In contrast, prices for portfolio management fell 1.8 percent.
The index for final demand goods moved up 0.6 percent in July following a 1.2-percent jump in June.
Goods - Product Detail: Among prices for final demand goods in July, the index for tobacco products increased 2.7 percent. Prices for gasoline; diesel fuel; gas fuels; consumer, institutional, and commercial plastic products; and eggs for fresh use also moved higher. In contrast, the index for beef and veal fell 11.6 percent. Prices for residential electric power and for softwood lumber (not edge worked) also declined.
Nearly half of the broad-based advance in July is attributable to margins for final demand trade services, which jumped 1.7 percent. (Trade indexes measure changes in margins received by wholesalers and retailers.)
Core PPI (ex Food, Energy, & Trade Services) rose 0.9% MoM (almost double the expected pace of inflation) sending it up a record 6.1% YoY
Hey guys welcome to the Silver Report Uncut if you haven't already be sure to come over and subscribe to our channel on odyssey it's an excellent platform you can find all of the content we typically post here plus other stuff you can and you get paid to interact on there I'll leave a link in the description be sure to come over also if you're on telegram follow our channel there our channel is just t dot me forward slash silver report so we've posted a couple of videos recently and we didn't have Wi-Fi yesterday so the Wi-Fi guy was supposed to come over he never ended up showing anyway we got it resolved temporarily so I'm sorry I didn't post an episode yesterday either way follow grow at home as well it's our other channel I'll leave a link in the description for that and we've been posting some videos about our time here in Mexico I got a lot more stuff to upload now that we have access to the internet again now let's talk about shipping this is going to be a major, major issue coming up though it's not getting a lot of headlines so far now we warned about this last week Goldman Sachs came out in fact they were warning that port closures or stricter control measures at ports they could put further upward pressure on shipping costs that were already very high and they were referring specifically to China now it actually looks like the worst case scenario is in play because authorities on Wednesday in China they shut down a major container terminal at the point of Ningbo now this of course it raised fears that supply chain disruptions could be as severe as when they closed the Yantian terminal and the Shenzhen they reduced output by 70 percent this was a month this was earlier on in the summer and they're worried that it could be repeated now of course the reason they cited they said it was over one person who came back confirmed and according to freight waves they cited local media reports and logistics operators they said that all operations at Ningbo Meidong container terminal also referred to as the Menshen terminal they were immediately suspended after that one person came back with results that they said were confirmed and they said with this sudden suspension we expect a delay and plan sailings that might affect your cargo planning please know that we are working on alternatives and hope for your understanding on a matter that is beyond our control unquote now there are five container terminals at Ningbo the port's decision to shut down vessel and gate operations for at least a day effective it eliminated 20 percent of the port's capacity it's the third largest container port in the world this is after Shanghai and Singapore but for the most it handled more freight in the first seven months of this year 18.7 million 20-foot equivalent units than any other port in China so as far as this year it has been the busiest container port in the world now the effects are already clearly visible on Thursday the Mediterranean Shipping company they pushed back estimated arrival times for two vessels that were departing Ningbo to the US the MSC Danit and the Sukhoi service they're now scheduled to arrive on the US west coast on September 15th there's also the Mersk Seville and the lone star service they're part of a 2m alliance they'll arrive on the first east coast port on October 2nd according to the updated schedule this was issued on Thursday so with vessels rerouted to Shanghai ports in the area they're experiencing a burst of congestion as around 30 vessels that are waiting at anchor at the Yantian port this would show that vessels congestion at Shanghai and Ningbo main ports could place just about all three ports as almost inoperable now according to Freightways if you think our supply chain issues were bad before they said that the impact potentially could be greater than what happened at Yantian in late May and June so the real damaging effects that we had to shipping it could be much worse and they said the limited activity in Yantian it forced vessels to wait more than a week to reach a berth and it created ripple effects worldwide many vessels skipped Yantian for other ports in south China creating massive congestion at those locations backlogged shipments took weeks to clear from the docks and they're still being pulled from warehouses and factories upsetting delivery schedules for retailers and manufacturers if something goes sideways in Ningbo it's going to be a real problem at least as big potentially as what happened in Yantian unquote and that was a sea freight executive at a large logistics company that's what he said during a customer briefing the freight forwarding division of CH Robinson they told their customers in an email to expect port delays and congestion perfect timing correct and it's likely this is not going to stop either probably move on to other ports it's going to greatly intensify they say any lengthy closure could result in cargo diversion to other terminals and ports these could put a strain on their operations exacerbating capacity challenges that have led to the record shipping rates 10 times greater than normal that's where we're at right now 10 times higher than normal for certain routes and everything is getting messed up once again now Michael every he concluded in his daily note saying that the further disruption to shipping at China's busiest ports and even the Vietnamese and Thai production are being impacted by this in short the shipping snarls they're going to get worse anecdotes are the shippers telling clients that they will not deliver except at a premium or of smaller firms of countries being pushed down the priority list of ships refusing to pick up goods exports from some locations and of a structural supply demand mismatch of sought after shipping containers now that's a very good point if there is already so much that is messing with shipping and the congestion is getting so bad the more complex and lower valued countries the goods typically would be shipped for they might be passed over and manufacturers or companies seeing how shipping is already coming at such a premium may just focus on whatever is the most profitable destinations so the developed nations may end up having a little bit more firm but emerging markets they may enter a period of very very dark days moving forward now we also need to talk about this Producer Price Index now after soaring to a record high of 7.3 percent year on year in June the PPI it was expected to moderate modestly this was in July it's just 7.2 percent year on year of course they were very wrong about that and July's data came out and it soared to a new record it soared to 7.8 percent year on year so it was expected to go down it's up one percent month on month so these would be the prices that producers pay and they keep rising and the other day we mentioned how Tyson was coming out and saying that the prices are just rising too fast for them to even keep up with rising prices so the energy and transportation cost they continued to soar the most in July the food cost actually dropped month on month and the index for final demand services it rose 1.1% in July the largest one-month increase since the data was first being calculated in December 2009 for services about 20 percent of the July advance in prices for final demand services can be traced to margins for automobiles and automobile parts retailing they climbed 11.2 percent so almost all of the advance in July it comes from those really, really high used car prices and the prices for auto parts and that of course they were blaming on the supply chain the index for airline passenger services hospital outpatient care machinery and equipment wholesaling traveling accommodation services and securities brokerage dealing investment advice related services they also did increase now we also see the index for final demand goods it rose 0.6 percent in July following a 1.2 percent jump in June so for goods among prices for final demand goods the index for tobacco prices had increased 2.7 percent the prices for gas diesel fuel gas fuels consumer institutional consumer and commercial plastic products and eggs they all moved higher the index for beef and veal it did fall 11.6 percent and prices for residential electric power and softwood lumber they also declined though they were at extremes so they're still not out of the water yet nearly half of the advance in July it's attributable to margins for final demand trade services which jumped 1.7 percent this is significant it often leads to price increases and the core PPI minus food energy and trade services it rose point nine percent month on month this is almost double the expected pace of inflation and it jumped by a record 6.1 percent year on year now the spread between the PPI and the CPI it continues to grow wildly the issue is the prices that the producers they continue to pay they're going to require higher prices for consumers they're going to need to pass these on or else there's not going to be any point for them to be in business and obviously by the time all of these controllers are done with what they're doing there's going to be a lot of these companies out of business this may be just another it's just bad sign I thank you guys for stopping by and joining us as always stay free
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