logistics, supply chain, real state
“Tighter Warehouse Space Adds to the Supply-Chain Squeeze” [Wall Street Journal].
“‘Space in our markets is effectively sold out,’ said Thomas Olinger, chief financial officer of logistics real-estate firm Prologis Inc., in an Oct. 15 earnings call. ‘In the last 90 days, supply-chain dislocations have become even more pronounced, with customers acting with a sense of urgency to secure the space they need.’…. The squeeze on distribution space is adding to the broader congestion in supply chains, from tight container shipping capacity to backups at inland rail hubs, that has locked down inventory restocking efforts and dragged down economic recovery efforts during the Covid-19 pandemic. Space has been particularly hard to find near U.S. ports as shippers and logistics companies seek out warehouses to store containers and goods. The surging demand for warehouse space since the pandemic began has been driven by the move by consumers to online shopping and efforts by retailers to position goods closer to their customers for faster delivery. After the pandemic moved more shopping online, ‘a good percentage of that behavior change, it turns out, has stuck,’ said John Morris, who leads CBRE’s industrial and logistics business in the Americas.”
NK
https://www.nakedcapitalism.com/2021/10/200pm-water-cooler-10-27-2021.html

Manufacturing and logistic: 

“Chinese magnesium shortage: Global car industry to grind to a halt within weeks amid ‘catastrophic’ halt” [New Zealand Herald (dk)]. 

 

“The world’s largest carmakers and other users of aluminium could be forced to halt production within weeks amid a ‘catastrophic’ shortage of magnesium across Europe. Magnesium is a key material used in the production of aluminium alloys, which are used in everything from car parts to building materials and food packaging. China has a near-monopoly on global magnesium manufacturing, accounting for 87 per cent of production, but the Chinese government’s efforts to reduce domestic power consumption amid rising energy prices have slowed output to a trickle since September 20. In Shaanxi and Shanxi provinces, the world’s main magnesium production hubs, 25 plants had to shut down and five further plants slashed production by 50 per cent as a result of the power cuts Europe is expected to run out of magnesium stockpiles by the end of November. On Friday, a group of European industry associations representing cars, metals, packaging and other sectors issued a joint statement warning of the ‘catastrophic impact’ of the production cuts, which they said had already resulted in an ‘international supply crisis of unprecedented magnitude’. The statement called for urgent action from the EU Commission and national governments to work with China to stave off the ‘imminent risk of Europe-wide production shutdowns.'” 

...

 

Mr Horter promised another update within weeks but warned "in the meantime, you may want to consider letting your customer base know of this silicon and magnesium availability crisis and also let them know that other products or inputs needed for making billet or slab may also reach a crisis point".

 ...

...  the current crisis was a "clear example of the risk the EU is taking by making its domestic economy dependent on Chinese imports".

Europe has grown almost entirely dependent on China for magnesium since Chinese dumping forced the closure of Europe's remaining magnesium production plant in 2001.

"Between 2000 and 2021, China's magnesium production increased from 12 per cent of the global supply to 87 per cent, creating an effective international monopoly on a 1.2 million tonnes per annum market demand," European Aluminium's report said.

"The magnesium sector is only one in a long list of production leakages since the early 1990s.

"European primary aluminium production alone has lost more than 30 per cent of its capacity since 2008. In parallel, China continuously increased production capacity to meet the steady increase in European and global demand for both aluminium and magnesium."

European manufacturers now face "dramatic risks" as China is expected to direct its remaining magnesium production to its own industries, with European companies no longer receiving the necessary raw materials to continue production.

 

The Stagflation Threat Is Real, by  Nouriel Roubini Aug 30, 2021

 

        While these persistent negative supply shocks threaten to reduce potential growth, the continuation of loose monetary and fiscal policies could trigger a de-anchoring of inflation expectations. The resulting wage-price spiral would then usher in a medium-term stagflationary environment worse than the 1970s – when the debt-to-GDP ratios were lower than they are now. That is why the risk of a stagflationary debt crisis will continue to loom over the medium term.  

There is a growing consensus that the US economy’s inflationary pressures and growth challenges are attributable largely to temporary supply bottlenecks that will be alleviated in due course. But there are plenty of reasons to think the optimists will be disappointed.

 

 In fact, there are multiple factors behind this summer’s mini-stagflation. For starters, 

the Delta variant is temporarily 

    boosting production costs, 

    reducing output growth, and 

    constraining labor supply. 

Workers, many of whom are still receiving the enhanced unemployment benefits that will expire in September, are reluctant to return to the workplace, especially now that Delta is raging. And those with children may need to stay at home, owing to school closures and the lack of affordable childcare. 

 On the production side,
Delta is 

    disrupting the reopening of many service sectors and 

    throwing a monkey wrench into global supply chains, ports, and logistics systems. 

Shortages of key inputs such as semiconductors are further hampering production of cars, electronic goods, and other consumer durables, thus boosting inflation. 

 

 

For starters, there is the

     trend toward deglobalization and 

    rising protectionism, 

    the balkanization and reshoring of far-flung supply chains, and 

    the demographic aging of advanced economies and 

    key emerging markets. 

Tighter immigration restrictions are hampering migration from the poorer Global South to the richer North. The Sino-American cold war is just beginning, threatening to fragment the global economy. And climate change is already disrupting agriculture and causing spikes in food prices.  

Moreover, persistent global pandemics will inevitably lead to more national self-reliance and export controls for key goods and materials. Cyber-warfare is increasingly disrupting production, yet remains very costly to control. And the political backlash against income and wealth inequality is driving fiscal and regulatory authorities to implement policies strengthening the power of workers and labor unions, setting the stage for accelerated wage growth.

 “Record 60 Cargo Ships Wait to Unload at Los Angeles, Long Beach” [Maritime Logistic Professional]. “A record 60 container vessels are at anchor or adrift in the San Pedro Bay, waiting to be unloaded at the Port of Los Angeles/Long Beach seaports and another 20 are due to arrive in coming days, a port executive said on Wednesday. With the pandemic still raging around the world, U.S. consumers have not fully resumed previous spending on restaurants and travel, yet they continue to splurge on goods ranging from appliances and home exercise equipment to sweatpants and toys. Volume at the Port of Los Angeles – the busiest U.S. gateway for trade with Asia – is up 30.3% so far this calendar year. 

"The global supply chain has been reeling due to
- overwhelming demand for cargo;
- temporary COVID-19 closures of ports and factories in Asia;
- shortages of
shipping containers and
key products like resin and computer chips;
- and severe weather.
Transportation costs have spiked, exacerbating delays and fueling product shortages. ‘Disruptions continue at every node in the supply chain,’ said Gene Seroka, executive director at the Port of Los Angeles.

Containers are waiting on Port of Los Angeles docks a peak of six days for truck pickup, Seroka said. Containers on chassis are waiting 8.5 days ‘on the street’ for warehouse space or to be returned empty to the port. There are nearly 8,000 containers ready to be whisked away by train, with the wait clocking in at 11.7 days, Seroka said.”