Crypto News: Supply Lines: Davos on the docks

Supply chains across the world are healing, turning an annual shipping convention in Southern California this week into an opportunity to restore order and trust.

"Confidence in the industry's ability to deliver goods consistently has been shattered," according to the official theme for TPM23, organized by S&P Global Market Intelligence. The event is estimated to draw 2,400 representatives of the shipping industry through Wednesday in Long Beach, California.

After years of pandemic turmoil that left many importers waiting months for their goods — and paying mightily for the privilege — we'll be watching Davos on the Docks for clues on several key questions:

How will negotiations go for long-term container contracts as cargo owners hold the upper hand for the first time since 2019?
How much longer will global goods trade stay in a slump that began in the second half of 2022?
Can container carriers halt the collapse in shipping rates, and how will they manage capacity while pressing ahead with their stated goals of operating ships that emit less carbon?
What's the next big disrupter — labor unrest, geopolitical uncertainty, accelerated reshoring, cyber threats or some combination of all of them?

Lingering Inflation

The economic stakes are much wider than the world of logistics. Just because supply-chain strains are easing almost as fast as they broke down doesn't mean the pressure they're exerting on inflation will disappear as quickly. (Read Bloomberg's full story here.)

Spot rates for many ocean shipping lanes have fallen to pre-pandemic levels, but short-term prices for containers from Europe to the US East Coast are still more than double what they were in late-2019, according to data from Freightos. And high rates are still in place for the 70% of container cargo transported in containers under long-term contracts negotiated in the 'pay anything' mood of 2021 and 2022.

As the global economy decelerates, container ships are literally slowing down:

There are also higher costs for diesel, industrial equipment and major capital expenses like new and used trucks still abound. Add to that rising wages and high cost of turnover across the logistics industry, increasing costs of warehouse storage and you have a recipe for sticky inflation.

(Attention TPM23 attendees: I'll be in Long Beach covering the conference, so drop me a line if you want to talk supply chain, shipping contracts or pass along a tip. I'm at lcurtis7@bloomberg.net.)

—Laura Curtis in Los Angeles

River Disruptions | Shallow waters on Europe's Rhine River are disrupting barge traffic and forcing up the cost of shipping, an early indicator the continent may need to brace for a redux of the seismic economic shock caused by last year's drought. At Kaub, a key waypoint in western Germany, the ri2ver-measure is the lowest it's been this time of year since 2017. Any barges planning on hauling diesel further into inland Europe are restricted to loading at about half-capacity. Take on a full cargo, and the vessel will sit too low in the channel. "For the time of year, it's quite bad," said Mitchell van der Hoeven, a ship broker at Riverlake, which handles barging on the continent's inland waterways. (Read the full story here.)

Bumpy road | China's economy rebounded in February after the long holiday, although early indicators point to an uneven recovery. Meanwhile, China's lithium industry is reeling as its top production hub faces sweeping closures.
Tariff talk | Steel is threatening to become the latest area of commercial conflict between the US and Mexico after a bipartisan group of US lawmakers called on the Biden administration to restore Trump-era tariffs if necessary to stem a surge in imports.
Brexit talks | Rishi Sunak and Ursula von der Leyen will meet in the UK on Monday in the early afternoon for final talks ahead of an expected announcement of a post-Brexit settlement for Northern Ireland.
Green envy | Europe's initial anger at President Joe Biden's massive green subsidy plan has waned in light of assessments that rank EU incentives to boost clean technology as equal to or surpassing some of the benefits offered in the US law.
Running trains | Union Pacific said it's looking for a candidate to replace its Chief Executive Officer Lance Fritz.
Chips meeting | The US and three Asian partners with major semiconductor industries held a meeting among their officials earlier this month to discuss the global chip supply chain.
More sanctions | EU member states backed a 10th package of sanctions on Russia including tighter export restrictions and technology controls. Separately, the US will put more emphasis on blocking countries and companies around the world from sending Russia products and technology that could be repurposed for military use.

New leadership | CSX has begun a new chapter, after former Ford executive Joseph Hinrichs took over as CEO and president in September. He has taken what appears to be a more engaging strategy with customers and employees, according to Bloomberg Intelligence.
Beating inflation | Bloomberg Economics forecasts show global inflation headed down from 9.2% in the fourth quarter of 2022 to 5.4% in the fourth quarter this year and 3.6% by the end of 2024.
Run SPLC after an equity ticker on Bloomberg to show critical data about a company's suppliers, customers and peers.
Use the AHOY function to track global commodities trade flows.
Click HERE for automated stories about supply chains.
For FreightWaves content, click HERE.
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