Tag Archives: Supply Chain

The Great Bottle Neck – Port of Los Angeles – Visual Capitalist

No doubt, in some form or fashion you have experienced some delay in a product.

Maybe a home furnishing?

Maybe a part or tool?

Maybe a vehicle?

Maybe clothing?

This great chart and comments from our friends here at Visual Capitalist helps explain:

Stuck at Sea

As of November 2, 2021, the Port of Los Angeles reported that it had 93 vessels waiting in queue. Altogether, these ships have a maximum carrying capacity of roughly 540,000 containers (commonly measured in twenty-foot equivalent units or TEUs).

On the other side of the equation, the port processed 468,059 import containers in September (the most recent data at the time of writing). Because the port does not operate on Sundays, we can conclude that the port can load roughly 18,000 containers each day.

That capacity seems unlikely to reduce the congestion. Over a two-week timeframe in September, 407,695 containers arrived at the Port of Los Angeles, which averages to around 29,000 containers arriving each day.

Have a Great “Delayed Supply Explanation” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.

A Dallas Texas based fee only

Financial Planning Total Wealth

Management firm.

jkfinancialinc

street-cents

Lumber Prices Show How Supply Can Catch Up to Demand – Supply Clearing High Prices

There’s an old saying in many commodity complexes … “What will drive high prices down? High Prices … What will drive low prices up?   Low prices” – the basic gist of this is that when prices get too high, demand slows and when prices are low demand picks up.

We first heard this saying in the oil patch but it fits across almost any commodity or other variable pricing asset.

Spot Futures Lumber Prices – Now thats a Clearing Price

For those of you that have not heard there are supply shortages in all parts of the economy. On a funny personal note …recently I had my golf clubs re-gripped and there were only a few options to have a complete set of the same grip ….all the other were back ordered to mid to late 2022. Part of the increased prices of used automobiles is a reflection of new automobiles being unable to be complete by shortage of semis.

We thought you would find this interesting and a great example of higher prices slowing demand. At one point in the most recent quarter, several publicly traded companies were completely shutting down certain aspects of their operations due to extreme high prices.

Trailing Three Year Spot Prices

Trailing Three Year Spot with Percentage Change – Up 530% Followed By Down 70%

Certainly tons of factors going into this move. BUT, if you are wondering how higher prices can in your commodity of choice (Bread, Wheat, Lumber, Semi’s….) look like when it eventually clears…. Here is a playbook!

Have a Great “Commodity Price Clearing” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.

A Dallas Texas based fee only

Financial Planning Total Wealth

Management firm.

jkfinancialinc

street-cents