'It's All Happening Again.' The Supply Chain Is Under Strain

These microcrises are all to be expected.

Globalization is coming to an end. As China and Russia become more militant, and the US becomes more insular, pax americana's guarantees of freedom of the seas will wane. Perhaps not to the degree that people like zeihan think it will, but this is an example.

Will know if the US decides to bomb the houthi rebels into Oblivion which is what would have happened about two decades ago.

The main reason behind this is because petrol shipping was the prime reason underlying globalization and free seas.

But with the bakken shale the US is oil independent, and it can defend whatever exports shipments it wants. Also, solar wind and EVs are the harbinger the end of the oil age. Yes, we'll still use petroleum but the demand will greatly diminish, to the point that it is no longer a primary concern of US foreign policy and military strategic policy.

This is sadly an inevitable consequence of a market after growth-through-innovation as ended. Competitive pressure and the need to extract profit means every millimeter of slack in the system is used or eliminated. As this happens, the system becomes more and more fragile.

And when the system has crises, they do not spur some kind of extra capacity or sane response to the crisis. Instead you get consolidation, gouging and further crisis.

This is especially true, and especially hard to remediate, in a highly international market where regulation cannot effectively be imposed.

Just a taste of what's to come as the US exits the global commitments to ensuring freedom of navigation it has policed since WWII.

Before the US, it was the UK. The UK ended the widespread piracy and slave trade during their tenure.

One wonders what the CCP will do. So far, it doesn't look promising, if the South China Sea is an example.

> Then, a severe drought in Central America dropped water levels in the Panama Canal, forcing authorities to limit the number of ships passing through that crucial conduit for international trade.

This was surprising to me, as I'd always kind of assumed that the Panama canal would use ocean water for the locks. It turns out that the locks don't pump water at all, they just use gravity, necessitating reservoirs of fresh water.

See a longer discussion here: https://news.ycombinator.com/item?id=37055679

I can't cope with it anymore. I work in grocery and we're seeing weeks long waits for containers and shipping dates, coupled with items arriving with the minimum allowed life, leaves us with very short turnaround frames. It's no wonder people can't keep the shelves stocked. Getting out of SC as soon as I possibly can.

The geopolitical calculus here seems a bit hard to follow.

Surely China suffers disproportionately from more difficult export traffic to the point that it should be incentivized to tell Iran to tell the Houthis to cut it out

At what point does the risk added by using just-in-time inventory methods override the savings?

When Russia invaded Ukraine in 2022, we found out their Army was mostly a paper tiger.

It seems the Houthi are showing that our Navy is about the same... lots of money and technology invested into systems that aren't up to the challenges of the 21st Century.

I just hope we can replace enough of the machine tools industry here at home in time to avoid catastrophe when globalism collapses. It's really going to suck when the dollar stops being our primary export. We're going to suffer the same fate as Britain after the loss the Pound Sterling as the international reserve currency.

Factors that I see from the article that are driving up shopping costs/delays:

1. Unexpected problems in key canals. (Houthi attacks on the Suez route and drought on the Panama route.)

2. Possibly some market manipulation by carriers. (The article gestures in this direction but doesn't actually claim collusion to fix prices.)

3. Demand is really high. This drives the congestion in key ports that the article mentioned.

The article text doesn't emphasize factor 3 much, but the subtext of that is everywhere. And that's actually a good thing. Lots of things being shipped means lots of economic activity means lots of jobs etc etc.

tl;dr The world is complicated and sometimes multiple factors combine to make things like this flare up.

My bet: We are going to be fine. The actors in this system will adapt, especially from price signals. Supply of shipping will go up a bit, demand will go down a bit, people will find alternate routes/ports/methods for getting their goods where they want them.

Free flow of container shipping traffic is what globalism is. Salmon caught in US processed in China and shipped back to US. Is only possible because of how cheap shipping costs are.

Isn't this exactly what Peter Zeihan said was going to happen? I think it is.

Guess I should wait to sell my investments.

Inflation is only bad if you don't have debt.

If it becomes that lucrative to ship containers new entrants will join the market at better rates