Wednesday, 26 June 2024

The Return of Supply Chain Woes?

deja vu all over again
 
   
     
   
 
JUNE 26, 2024
   
PROSPERITY PUB MARKET TALK
The Return of Supply Chain Woes?
 

Just when we thought the chaos of the global supply chain was behind us, it seems like we’re back in the thick of it again.

Remember those floating traffic jams and soaring freight costs during the pandemic? They’re making a comeback.

Recent disruptions are sending global shipping prices skyrocketing once again. 

Houthi rebels in Yemen have been firing on ships headed for the Suez Canal, forcing vessels to take the long way around Africa. This detour adds up to two weeks to their journey, causing delays and increasing costs.

On top of that, a severe drought in Central America has limited the number of ships passing through the Panama Canal, another vital trade route.

Dockworkers in the U.S. and Germany are threatening to strike, rail workers in Canada are on the verge of walking off the job, and all these issues combined are stirring up a storm in the shipping industry.

Shipping prices for containers from China to the U.S. and Europe have shot up dramatically, reminding us of the worst days of the pandemic.

 
 

The real world effects of this? Companies could face product shortages and shipping delays, especially as we head into the latter half of the year and the crucial holiday shopping season.

It’s like a replay of late 2020 into 2021, and it could also drive inflation higher, impacting the broader economy.

So, what does this mean for us in the trading world? Well, volatility and uncertainty are the names of the game.

Keep an eye on companies heavily reliant on international shipping and those who might benefit from increased shipping costs — companies like Fedex (FDX), UPS (UPS), CSX Corp (CSX) and even Old Dominion Freight Line (ODFL).

It might also be a good time to look at domestic suppliers and companies with robust local supply chains. A couple of names to look at on that front could include Home Depot (HD), Lowe’s (LOW), Ford (F) and Caterpillar (CAT).

As always, stay informed, stay flexible, and keep looking for those opportunities.


— The Prosperity Pub Team
 
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