We have to get back to maritime reports again since it looks like port congestion will be one of the hottest topics this year. The map above shows the traffic routes of the Shenzhen region as well as the vessels in the area. Despite allegations that the south-Chinese port congestion was a non-issue it looks like ports are operating below 50% capacity. The dots on this map are vessels waiting to access ports due to congestion, their number is hitting multi-year highs. Delays are adding up to 2 weeks or more creating disruptions on the most important east-west maritime cargo routes. Container rates are over the roof (Drewry’s composite at USD 8400) and there are serious lags in supply channels.
The cargo backlog will lead to shortage of base materials, commodities, parts and accessories – from iron ore to computer chips (the latter is about to bring the car industry on its knees pretty soon according to BMW’s Milan Nedeljkovic). Those goods that actually arrive on time or with a short delay will be way more expensive (shipping costs + large demand) pushing producer price indices to decade highs.
We are about to witness the quick deterioration of global growth outlooks. I think stagflation trade might be a hot topic again.
