Midwest containers via Florida

[BaltACD]

Euclid

The question is this:

 

Will the heavy fees solve the problem of unreturned containers?  If the answer is “No,” then what is the point of the gigantic fees?  How are the container ship companies supposed to police the return of containers from the truckers and railroads if those two entities have no skin in the game? 

They are supposed to move their empty boxes back home - doesn't matter who else is involved.

If terminals are space constricted because of holding empty boxes - THAT IS THE OCEAN CARRIERS FAULT.

[Euclid]

The question is this:

 

Will the heavy fees solve the problem of unreturned containers?  If the answer is “No,” then what is the point of the gigantic fees?  How are the container ship companies supposed to police the return of containers from the truckers and railroads if those two entities have no skin in the game? 

[Euclid]

Detention and hyper-demurrage fees:

 

This guy has some interesting information about the new fines/fees that will be levied for delays in taking back containers.  The fines have been reported to be $100 per container, per day,  starting after a specific time period. 

 

He says it is not just $100 per day which would be $3000 for 30 days.   He says this rate also includes what are called hyper-demurrage fees that increase exponentially.  Thus, after 30 days, the fee would total $46,500.  Although I don’t find any details about how he knows this.  He says the fees will be levied only against the shipping companies who own the container ships, rather than the truckers and railroads.

 

Overall, he gives information that is quite different than what has been reported on the news.  From my perspective there as been ambiguity in the news reporting that leaves it unclear as to who will be fined.  It sounded like it would be the railroads, the truckers, and the container ship companies.  But this guy says it will only be the container ship companies.   He suggests it is the container ship companies because they are the ones with deep pockets.  Hence the fine is about $46,000 per month for one unreturned container. 

 

What will this do to the price of imports if these fees are passed through to the consumer?

 

Look at this video starting at 1:30.    

 

https://www.youtube.com/watch?v=w_3PO0u4zD8

[SD60MAC9500]

 

Euclid

I have read that our ports must convert to automation in order to keep up with the supply chain shipping.  I see that the technology exists as demonstrated by what they are doing in China.  Why are our ports not doing the same?  Do we have any ports that incorporate the same degree of automation that is seen here in this video?

 

https://www.youtube.com/watch?v=BEr2Ze4Lxqw

 

LA/LB already use automation; bomb carts and straddlers. Other ports will add automation where the cost make sense. BNSF has a few IM ramps that use automated cranes. Automation doesn't always equate to higher productivity. You have to look at the entire system before spending the amount of capital required for automation. PR videos about China's port automation doesn't reflect port productivity. China spends enormous amounts money to puff up their facade..

Here's an update to current spot rates:

TransPac(Asia Pacific-West Coast) $17,478/FEU Rates are up 0.4% over the previous week

AisaPac via Suez Canal to East Coast of North America $20,115/FEU Rates are down 1% from the previous week.

 

 

 

 

[SD60MAC9500]

 

greyhounds

OK, this is how weird it is right now.

I buy groceries at Walmart.  I order on line and then go pick up my order curbside.

An item in my order for today was coffee K-Cups.  I didn't get them.  But, they're being shipped via FedEx and should arrive at my front door Tuesday.  No extra charge.

It's nuts.

 

Paper products probably aren't going to normalize until 2-3Q of 2022. Possibly sooner, but looking at some indexes I don't see it.

 

[zugmann]

greyhounds

It's nuts.

Hope not.  You ordered coffee. 

[greyhounds]

OK, this is how weird it is right now.

I buy groceries at Walmart.  I order on line and then go pick up my order curbside.

An item in my order for today was coffee K-Cups.  I didn't get them.  But, they're being shipped via FedEx and should arrive at my front door Tuesday.  No extra charge.

It's nuts.

[Backshop]

At the beginning, it was thought by some to be like the flu and people thought that they would get major league runs, so they stocked up on TP.

[zugmann]

rvos1979

The toilet paper deal in the US was actually just a demand shift. With everyone staying home, the demand for consumer products shot up, while the demand for commercial toilet paper plummeted. It takes some time for a tissue mill to change over product lines...........

I think it wa a little more psychological than that.   People needed to buy SOMETHING to prepare.  Pasta, paper towels and toilet paper were  very easy targets. 

[rvos1979]

Murphy Siding

Well, the market tested the upper limits on toilet paper there for a while...

The toilet paper deal in the US was actually just a demand shift. With everyone staying home, the demand for consumer products shot up, while the demand for commercial toilet paper plummeted. It takes some time for a tissue mill to change over product lines...........

[tree68]

Euclid

When toilet paper reaches $25 per roll, little mom and pop toilet paper factories will spring up.

Bidet sales will certainly increase...

[Euclid]

zugmann

 

 

Euclid

Yes, reduce supply and demand rises along with price. 

 

 

Assuming I'm not an econ major - is there an upper limit?  Are people going to fork out 75,000$ for a Kia Soul?

 

Yes there is an upper limit.  Manufacturers can pass onto the consumer as much cost increade that they want, but in the end, it is the consumer who decides how much they are willing to pay.  Generally, the higher prices rise, the more reluctant consumers are to pay the price.  

The customers will seek out altenatives to replace the products they feel are priced too high.  Also high demand and rising prices are an enticement for new manufactuerers to enter the market with offers of lower cost products.  These will be sold to consumers who have quit buying products that they consider over-priced, and are seeking lower cost alternatives.  

When toilet paper reaches $25 per roll, little mom and pop toilet paper factories will spring up.

[tree68]

Post on FB today - first rerouted container ship arrives in Florida.  Christmas is saved!

[rdamon]

Murphy Siding

 

Well, the market tested the upper limits on toilet paper there for a while...

 

 

 

Along the same lines I am sure production has shifted to these high-demand items as well and new producers entering the market with the money to be made.  

 

Even with the record demands we could see a supply gut that will force a price war.

[BaltACD]

Murphy Siding

 

zugmann 

Euclid

Yes, reduce supply and demand rises along with price.  

Assuming I'm not an econ major - is there an upper limit?  Are people going to fork out 75,000$ for a Kia Soul? 

Well, the market tested the upper limits on toilet paper there for a while...

Or maybe for a Dog Tested Subaru

At one time I made a commitment to myself that I wasn't going to pay more for a vehicle than I paid for my first single family house - times changed and that threshold was exceeded in 2003.

 

[Murphy Siding]

zugmann

 

 

Euclid

Yes, reduce supply and demand rises along with price. 

 

 

Assuming I'm not an econ major - is there an upper limit?  Are people going to fork out 75,000$ for a Kia Soul?

 

Well, the market tested the upper limits on toilet paper there for a while...

[zugmann]

Euclid

Yes, reduce supply and demand rises along with price. 

Assuming I'm not an econ major - is there an upper limit?  Are people going to fork out 75,000$ for a Kia Soul?

[Euclid]

zugmann

 

 

Murphy Siding

Here's a guy who sees the big picture of supply and demand.

 

 

The fast food places near me have like 2 people working there now.  All drive-thru.  Now people will stack in lines of 20+ and wait 30-45 mins for "fast food" crap.  I don't see demand slacking off anytime soon.  If anything, it makes morons want the crap more. 

 

 

 

Yes, reduce supply and demand rises along with price. 

[zugmann]

Murphy Siding

Here's a guy who sees the big picture of supply and demand.

The fast food places near me have like 2 people working there now.  All drive-thru.  Now people will stack in lines of 20+ and wait 30-45 mins for "fast food" crap.  I don't see demand slacking off anytime soon.  If anything, it makes morons want the crap more. 

 

 

[tree68]

greyhounds

Chassis are being used to store freight.  That means they can't be used to move freight.  

Another article (cited in this thread, I believe) said that empty cans were occupying chassis as well.  

Assuming that said empty boxes are headed back overseas, it just compounds the problem.  Can't unload the ships, so there are no empty ships on which to load the empties.  It's a big circle.

[Murphy Siding]

Convicted One

 

 

Murphy Siding

Honestly, you need to go read some books. If consumers buy less

 

 

 

If demand goes down, why would not prices follow?  If the price increases are driven by geedy entrepreneurs eager to exploit spiked demand,,...then do away with the spike and let the distributors choke on their overpriced monkey mahogany Malay doors!! Eventually they'll get sick of looking at their stagnant inventory, and do the obvious thing needed.  

 

Here's a guy who sees the big picture of supply and demand.

[greyhounds]

Euclid

I doubt that there is one magic bullet that will fix the supply chain problem such as providing more chassis(s).   I have heard every imaginable reason for the supply chain breakdown.  If inadequate chassis supply is the only problem, I would think we could manufacture enough new ones inside of a couple days—once all the contracts have been signed.  But I don’t think a chassis supply deficiency is the only problem.

Nobody said it was the only problem.  But it is a problem.  And it's a problem that can't be fixed in "a couple days".

Chassis are being used to store freight.  That means they can't be used to move freight.  

The Wall Street Journal (paywall) had a good report on the chassis situation.

https://www.wsj.com/articles/a-simple-piece-of-steel-and-wheels-is-holding-up-the-global-supply-chain-11635452843?mod=hp_trending_now_article_pos4

A quote from the article:

“'The chassis are the biggest issue' in problems that stretch from the docks at the neighboring Los Angeles and Long Beach ports to warehouses deeper into California and intermodal rail yards in the Midwest, said Matt Schrap, chief executive of the Harbor Trucking Association, which represents port truckers in Southern California."

Another quote from the article:

"Normally, there are enough trailers to handle the thousands of containers moving through the ports. But executives say the unrelenting heavy flow of imports that began in the middle of 2020, coupled with labor shortages at warehouses and other cargo-handling facilities, has resulted in the frames being away from the ports for long stretches, crimping the ability of operators to turn around the equipment to carry new boxes."

 

[Euclid]

I doubt that there is one magic bullet that will fix the supply chain problem such as providing more chassis(s).   I have heard every imaginable reason for the supply chain breakdown.  If inadequate chassis supply is the only problem, I would think we could manufacture enough new ones inside of a couple days—once all the contracts have been signed.  But I don’t think a chassis supply deficiency is the only problem.

 

Maybe our Administration could just issue an executive order to slow down imports being shipped to our country.   That would have the same effect as China intentionally slowing it down for the same purpose, that is, to allow time for our intake end of the supply chain to catch up. 

 

This move would be a no-brainer for an Administration that has already blamed the problem on our consumers wanting too much stuff.   Just slow it down and extend Christmas to a number of days in order to give time for the celebration to acquire the necessary gifts.  Or just limit the number of purchases of products made overseas to reduce the quantity coming in to our intake ports.  If excess demand is the problem, just reduce the demand to something sustainable.

 

The supply chain worked fine up until now, so something must have changed.  I conclude that what changed was that product demand rose to an unprecedented level.  So it is just one cause, but it manifests in a breakdown of every element of the supply chain, including too few chassis(s). 

 

Fix the root cause.

 

[Convicted One]

Murphy Siding

Honestly, you need to go read some books. If consumers buy less

 

If demand goes down, why would not prices follow?  If the price increases are driven by geedy entrepreneurs eager to exploit spiked demand,,...then do away with the spike and let the distributors choke on their overpriced monkey mahogany Malay doors!! Eventually they'll get sick of looking at their stagnant inventory, and do the obvious thing needed.  

[kgbw49]

greyhounds

 

 

rdamon

The CEO of CH Robinson was on a financial news program this morning and refered to the shortage of chassis being a growing problem as loads are not getting unloaded quickly.

 

 

Well, this is someone with knowledge talking sense.

 

If you slow down a transportation system you decrease the capacity of that transportation system.  If the chassis aren’t being turned as fast as normal, and they’re not, it’s going to suck capacity out of the rail intermodal network.

 

And the government cannot edict more chassis.

 

Well, they can because they issue edicts all the time. They had a meeting and said the ports should go 24/7. Problem solved because we had a meeting and we said so.

On to the next problem that requires the attention of the best and brightest of the nation who all congregate inside the beltway. They just need to meet and issue an edict.

They can issue any edict they want. It doesn't mean it will actually do jack squat  in the real world, but that is beside the point. They have ruled, and therefore the problem is solved abracadabra. Then they can all tell each other what great things they have done at the next soiree.

Meanwhile, the ingenuity and tenacity of all of us subjects will ultimately result in the solutions that actually end up solving the problems.

[greyhounds]

rdamon

The CEO of CH Robinson was on a financial news program this morning and refered to the shortage of chassis being a growing problem as loads are not getting unloaded quickly.

Well, this is someone with knowledge talking sense.

 

If you slow down a transportation system you decrease the capacity of that transportation system.  If the chassis aren’t being turned as fast as normal, and they’re not, it’s going to suck capacity out of the rail intermodal network.

 

And the government cannot edict more chassis.

[Backshop]

Euclid

 

 

Shadow the Cats owner

With most fleets now mounting dash cams even rear end accidents are beginning to be proven the fault of the car.  

 

 

I assume you referring to "rear end accidents" as ones where the truck hits the car.  By what reasoning would such rear end accidents be deemed the fault of the leading vehicle?

 

Go to YouTube and type "brake check semi" into the search function.  You'd be surprised at all the stupid stuff people do.  They pull into a lane 10 feet in front of a semi at 60mph and slam on their brakes for no reason.  It happens more than you think.

[ClassA]

I feel like I have seen more chassis riding stacked on trains lately than usual. It appears that they are frantically repositioning them as fast as they can. 

 

rdamon

The CEO of CH Robinson was on a financial news program this morning and refered to the shortage of chassis being a growing problem as loads are not getting unloaded quickly.

 

[BaltACD]

Electroliner 1935

If you guys were younger, I would say: "CHILDREN, CHILDREN, PLEASE BEHAVE NICELY!" but as you are not children, I will just say I'm hoping you will moderate yourselfs and act more responsibly. Not claiming each other to be wrong or misinformed or anything else that applies in repeated baack and forth diatibes. As Rodney King said. "Can't we just get along!"

The only difference between children and adults is the price of the toys.

[rdamon]

The CEO of CH Robinson was on a financial news program this morning and refered to the shortage of chassis being a growing problem as loads are not getting unloaded quickly.