More inflationary problems with Shanghai port chaos

Shanghai is one of the world’s busiest ports and is usually a well-choreographed operation. Containers ships drop off component parts, empty containers and pick-up exports etc. However with the port in total lockdown the number of ships waiting offshore to be loaded and offloaded of goods is quite staggering – see image from Scott Gottlieb (Twitter).

This is the accumulation of 3 weeks when the port is not operational – workers are in lockdown. The effect of this will be to clog up other ports as ships arrive at the same time and are completely out of sync with what is normal.

The graph below shows that twice as many ships are waiting near Shanghai ports as opposed to last year, which was already above average.

Although consumer and business spending has remained strong, the delays will add to inflationary pressure as goods arriving late from China will mean a short supply in the shops. Add to this the Ukraine war and rising energy and food prices and we have a major inflationary problem on our hands. It’s time to ‘batten down the hatches’.

Source: Thoughts from the Frontline – 23rd April 2022

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