| | | | Ships start out either on the left in the Pacific Ocean or on the right in the Atlantic.
They then have to enter a series of locks which are filled with water from Gatun Lake, raising the ship and allowing it to enter the next lock, until it makes its way across and does the process in reverse on the way down the other side.
Coincidentally, just 4 days ago, the Panama Canal Authority just announced that in August, they will increase the number of daily crossings from the current 24 to a more typical 35.
If this actually happens, it could mean that the issues at the Panama Canal are more or less resolved.
Another big problem that I don’t see ending anytime soon is happening in the Suez Canal in Egypt.
The Suez Canal is plagued with challenges, including piracy and ongoing conflicts in the region. The cost of insuring shipping containers passing through this area has skyrocketed, further pushing up shipping expenses.
Impact on the Economy and Inflation
These increased shipping costs are bound to trickle down to consumers.
As I mentioned above, we might be starting to see a light at the end of the tunnel for the issues in Panama, but until there’s a long-term resolution to the issues in the Suez Canal, the cost of goods is likely to remain high.
This could potentially kickstart more inflation as businesses pass these additional costs onto consumers.
Domestic vs. International Shipping
It’s important to note that these issues primarily affect ocean freight and shipping from overseas.
Once goods hit our ports, the impact on prices is less pronounced unless there’s a significant increase in gas or diesel prices. However, many of the items we rely on come from overseas, so the effects will still be felt.
A Silver Lining
There’s a bit of good news in this scenario.
Many U.S-bound products from China are shipped directly to California without needing to pass through either the Panama or Suez Canals.
This means that for now, at least, goods coming from China should not see the same level of price increases due to shipping costs.
To sum it all up… While we navigate these shipping challenges, it’s crucial to stay informed and adjust our strategies accordingly. We’ll keep an eye on these developments and how they might impact our trading decisions.
— Geof Smith
P.S. Did you see Jeffry’s automated trading tool? It spits out 3-5 high-probability trades per day. It’s definitely worth your attention. Check it out here.
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