Governing and owning are separate things. I am not a port authority. I am a small business owner. However note this as one of many references. Yes, I should have stated “stakes.” I would call them high stakes. https://digital-commons.usnwc.edu/cgi/viewcontent.cgi?article=8168&context=nwc-review Regardless, if I’m the “she” you are referring to, I will not stop posting, nor will I stop working to save my businesses and helping other small business owners. That is the purpose of this thread. What is yours?
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Really basic economics will tell you that getting the government involved in any significant way is NOT going to solve the shipping problem. No one wants shipping to be gummed up, least of all the shipping companies. There is no grand solution, other than getting out of the pandemic, which should bring things back to normal (or at least a new normal, but I would expect that to be much closer to the old normal than what we have today).
If anything, the lesson we should learn from the past year is how efficiently markets work, but also how precarious they are. The best solution is to get back to a point where markets can work again. With that goal, the best thing wealthy nations could do is to produce and distribute vaccines as quickly as possible, all around the world. It’s a rare confluence of maximizing profit while doing good.
I certainly don’t want to drive you off here, and I’m sympathetic to the plight of business owners hurt by the supply chain disruptions. There are wine importers who’ve had containers sitting on ships offshore for extended periods, potentially cooking their wine.
But there are a lot of knowledgeable Berserkers who share their knowledge and correct misconceptions. It’s one of the great values of the board. David Buecker is involved in importing, for example. I’m a financial journalist, so I follow the business world, and I’ve been fascinated by the various dimensions of the supply chain disruption and have read as much as I could about it. I’ve also been trained to look up and check facts (as I did with the ports). So, as you’ve discovered, if you post misinformation here, you can pretty much count on someone to call you out on it.
So, no matter how sympathetic I and others may be, we care about the facts, and it’s just a mistake to think (a) that the US government is in any position to solve the shipping problems, which involve a massive shortage of ships for the backlog of goods, or (b) that the Chinese control our ports.
Seems like the Chinese have significant interests in port operations in the US and around the world.
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I am also affected, but apparently by much less than many. I don’t have the numbers in front of me and am no longer involved in the day-to-day issues of transport, but over the past year our containers of bottled wine have been delayed by about 1 - 4 months and I believe costs have almost doubled. That’s survivable for us.
The tariffs were much worse; I am in the process of selling my business and since tariffs were first mentioned (2/19), the value of my business has halved, along with the money I will have available when I fully retire in 2+ years.
I don’t think the government can do anything about this. If they should if they could is a whole other topic.
Of course the Big Boys are far better positioned to endure this kind of disruption, but it’s always been that way. Small businesses like mine need to be flexible, nimble and paranoid to survive. This is Year 37 for Hand Picked Selections.
Nothing posted here says to me that there is any foreign control over our ports. I would strongly prefer that there be laws prohibiting any foreign entities from holding controlling stakes in any American port. Are there any such laws? I feel safe in stating that Emperor Xi does not wish America well.
Dan Kravitz
They have or were seeking control of some ports in Australia, but that became a political hot potato, as I recall, and I think the government nixed it.
As I explained above, they have minority stakes in some US terminals within ports, but it’s one thing to have a dock, some cranes and a warehouse and another thing to control a whole port. I believe the US government blocked a Chinese company from operating a former navy dock facility that was being converted to civilian use.
If anyone knows of a whole port in the US that is under Chinese control, I’d be curious to hear about it. Seriously!
There’s CFIUS, “an interagency committee authorized to review certain transactions involving foreign investment in the United States” for national security issues. It has blocked many deals, or raised so many questions that the buyers (often Chinese) backed away.
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This, too, is an interesting read including map of the world and their interests. https://digital-commons.usnwc.edu/cgi/viewcontent.cgi?article=8168&context=nwc-review
I personally hate the freight industry but I’m clearly angry and admittedly have a short fuse for anything threatening my good business(es). As Dan stated, needing to be flexible, nimble and paranoid are necessary for small business. There will however be casualties, especially “non essential” businesses already and otherwise hurt by Covid. Navigating Covid with a business that depends on air travel and tourism has been a tremendous challenge. But I. just. don’t. quit. Further, I’m not going to fall down a rabbit-hole of internet sleuthing of the freight industry.
Maybe my idea is ridiculous, sometimes great things come from that place.
I’ve only felt it at the very end of the supply chain, but trying to re-stock my wine list has been incredibly difficult; the shipments of most agencies I work with are at minimum 6 weeks behind and there are delays at every step of the way. Lots of scrambling to fill holes.
I’m aware of CFIUS and know that they vet foreign investments for potential problems. But I would hope there are some hard and fast laws about who may own what. The idea that this is simply in the hands of a relatively obscure panel, on a case-by-case basis, does not make me comfortable.
Dan Kravitz
I purchase “futures” directly from a small importer and so far haven’t noticed any price increases, only some delays. In fact, prices dropped immediately after the tariffs were lifted and seem to remain at the lower price. (I put futures in quotes, because the wines are generally delivered two months after ordering, although the last couple have taken an extra month.) I’m sure they are experiencing the same issues, so I guess it’s probably just a matter of time before they have to increase prices.
CFIUS is not obscure to people who deal in mergers, acquisitions & divestitures. It’s been around for nearly 50 years (about 35 or so in its current form), and reviews things on a case-by-case basis because MAD is a case-by-case activity.
If news about CFIUS were published in the news every day that would either indicate some massive global shift in investment, or naked political ploys. We have seen the latter not so long ago. Two words: Uranium One.
p.s. not trying to inject political discourse, just add some color to the story of CFIUS.
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CFIUS isn’t obscure, it’s just not terribly relevant unless you’re involved in cross border M&A in connection with strategic assets. Part of my practice does involve that and when the acquisition target (or, in the relevant circumstance, divestment) is American we have long discussions with our CFIUS colleagues.
I would add that having “hard and fast” laws is also not at all simple in this situation - what’s strategic shifts and some things become strategic as technology changes. Given that few assets are actually strategic, a bit of “know it when I see it” standard isn’t all that unreasonable (especially since it’s not arbitrary).
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The root of the problem lies in the increased consumption thanks to massive injections of cash into the economy. The problem will begin to abate when we (collectively) stop buying so much stuff.
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Umm…no.
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David & Greg,
Thanks for the info about CFIUS, it’s somewhat reassuring. I looked up Uranium One, a non-scandal that was not on my radar.
Yes, I still would like some firm laws, but it sounds like CFIUS in general is doing their job well.
Dan Kravitz
this is beyond some funny shït. what kind of drugs are you taking? hilarious.
I do not think the solution to a shortage of shipping containers during COVID is to decrease production and or consumption going forward.
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I posit that the number of containers in existence has not changed, it’s the demand for them that has changed. Sure, the delays tie back to Covid in one way or another, but to poo-poo the impact of increased consumer demand fueled by massive money hand-outs is to also to ignore a significant, if not the most significant factor.
And sorry for getting a bit afield from the subject of wine.
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The assumption that “increased consumer demand fueled by massive money-hand outs” is the most significant factor is unsupported by evidence, especially when confronted with quite a bit of evidence that we’re seeing the natural effects of COVID on various levels of the infrastructure chain. If the effect of the money hand outs on demand was so massive we’d be seeing massive inflation as opposed to Greece selling a 5 year bond into the market last week at 0% rates.