The Black Swan

in LeoFinance •  2 months ago 

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No this is the right community and the post is not about birds so don't panic.

The Black Swan event which it has been nicknamed is what is playing out right now and it is to do with the China USA trade war. The latest issue to hit China is the shortage of containers specifically the 20ft ones. I have often wondered why the Chinese never run out of containers as surely they have more going out than coming in. This year is not done with us yet and is throwing out some interesting curved balls that will continue well into next year and beyond.
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Couldn't resist this image as Corona in the water looks like Second world war Mine.
Over the lock down periods many industries have been affected world wide and now with less being exported it has left shipping companies scrambling for containers at decent rates.

To highlight how dire the situation is a journey between Shanghai and Ho Chi Minh City was literally costing nothing. We are talking dirt cheap of $1 plus local port charges. That is ridiculously unrealistic and was fueled by the US - China trade war. Obviously this was being subsidized by the Chinese as this is how they got around the restrictions. Just shows you the US penalties didn't really work as Chinese goods suddenly became Vietnamese and all was good again. I had noticed not only Vietnam but the entire region was helping bypass the trade restrictions,

That same route due to no or very few containers is now $900 plus and we are talking about 20ft containers and not 40ft containers. The price between the ports is spiking this week and next week expecting to hit somewhere around $1300 per container. Surcharges are now also coming into place from the 23rd for 20ft containers with an extra $300 being imposed on top of all the other charges.

These rates should carry on until the Chinese New Year in February and the Trump taxation is finally hitting home. I couldn't be happier as what was allowed to happen was just so wrong for the rest of the world and America. They have had it all their own way for too long and now it has turned around and bitten them where it hurts and that is in lost profits. Knowing the Chinese they will cut more corners turning this into something profitable cutting back on even more "quality" in what they make. This is how 99% of the Chinese factories work and believe me you don't want a contract longer than 2 years as the product is unrecognizable from the original specifications that you agree with in month 1.

It has got to such a point that ships fully loaded with empty containers will have to sail to reposition the containers for future trades. The problem is the margins are still very tight with the USA Asia routes and now carriers are looking to concentrate on more lucrative European and African routes. Certain products like agricultural products are being shunned right now for more profitable goods as with the extra charges imposed the Chinese have to choose items to drop.

Customers are now being forced to use the 40 ft containers instead of the more common 20ft which is obviously going to end in exactly the same position as they are now, shortages of both types are expected over the next few weeks and the situation is dire.

With more containers hitting Indonesia the entire region and not just Vietnam has benefitted from this new export model of the Chinese. Warehousing is in short supply along with trucks and everything that happens in logistics. I only knew about this as companies I deal with have been warned that goods ordered may not be able to be delivered and delays are expected. This could shut down China's exports over the peal period. Pretty disastrous and a worse case scenario that has never happened before.

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The Chinese are applauding Biden because he will pull back all that Trump did with the Chinese.

Trump is a jackass but I do agree with him regarding the Chinese. American "leadership" was far too stupid for too long. The Chinese have pillaged everything they could while the West turned a blind eye.

They already bought Biden off so they will spend the better part of this decade completing their ascension in power.

By the early 2030s, the power basis will not be in the west but the east.

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I agree they have raped the west for what they wanted and the power has already shifted to the east. I read somewhere where the Chinese already own something like 30 percent of America already and you guys are toast now with Biden. People can't see it and it is already too late. China is already the world's super power.

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Very likely.

The one defense that the US has is to weaponize the USD. Since China pegs their currency plus also owns so many bonds, it would really hurt them.

Biden will never do that.

The only think holding China back is they cannot build a chip to save their life. Of all the top semiconductor companies in the world, none are Chinese. They seem to be lagging the US, Japan, and South Korea in this area.

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I saw that about them having no semiconductor chips and are reliant on the US for them. Biden does worry me though as he looks the type that will sell out the country. I would love to see at the end of his 4 years how many things have swung the Chinese way and how many components in the much sought after Tesla are Chinese parts. I see the touch screen is Chinese and talk of global spares supply coming from China. I think that would be worrying as an "American" car could be seen as Chinese if they are not careful.

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I'll tell you one thing, these things are great for storage.
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People are doing interesting things turning them into housing.

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That is pretty cool the way they're doing that, those things are pretty much bulletproof to. I'm sure it's saved a ton of money because they only run a few thousand dollars a piece. Well then again that was like 10 years ago that I needed them and I'm sure their prices skyrocketed.

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They are cheaper than that now and here can get a 40 ft for less than $1000 and in good nick with no leaks. The thing is they are so versatile and as you say nearly bulletproof.

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From what I remember the ones that were labeled seaworthy were a bit more expensive, the others needed patchwork and a good seeling on the roof. We added the pull-down doors for another 800 bucks because opening the big steel doors was a bit tuff for some of the weaker employees.

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People are making homes out of them as well. That can't be good for the shortage, but would be for the companies that make them!

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I think every country in the world has so many of them lying around except China as they have exported them all with their goods. We have container terminals with thousands of empties and definitely receive more 'tins" than we send out each year. I have always wondered as they do belong to someone as they are branded with serial numbers.

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They are fantastic to have around. The wooden floors used to be teak or mahogany as pine was too soft and wouldn't last. I have seem some good houses made out of them and I wouldn't mind having my office in one of them as it is the perfect size.

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@cryptoandcoffee, In my opinion whole world is experiencing those things that has never happened before. Stay blessed.

You are 100 percent right about that as these are interesting times we live in right now and nothing is normal. I wonder what is going to happen next?

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Every Next Phase is Unknown.

Wow, that is definitely an aspect that I don't think a lot of people think about. You make some very good points and it will be interesting to see what happens with all of this.

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