Shipping costs rising again

[] is it Covid all over again? [] [] [] [] Late last week, I got a reader question asking about the rising price of shipping. The reader wanted to know what it means for the economy, if this trend will continue, and whether it could kickstart more inflation. Here are my thoughts: Yes, as you can see on the following chart, shipping prices are up from the historical baseline. Not quite as high as during the darkest days of the Covid supply chain disruptions, but still much higher than average: [] Problems in the Panama and Suez Canals Two major issues are driving up shipping costs. First, the Panama Canal is experiencing a severe drought, which means there’s not enough water to fill the locks. As a result, ships have to reduce their weight by 30%, which increases the cost per shipment. If you’re not familiar with how the Panama Canal works, here’s a graphic that explains it. [] 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](. [] [] Late last week, I got a reader question asking about the rising price of shipping. The reader wanted to know what it means for the economy, if this trend will continue, and whether it could kickstart more inflation. Here are my thoughts: Yes, as you can see on the following chart, shipping prices are up from the historical baseline. Not quite as high as during the darkest days of the Covid supply chain disruptions, but still much higher than average: [] Problems in the Panama and Suez Canals Two major issues are driving up shipping costs. First, the Panama Canal is experiencing a severe drought, which means there’s not enough water to fill the locks. As a result, ships have to reduce their weight by 30%, which increases the cost per shipment. If you’re not familiar with how the Panama Canal works, here’s a graphic that explains it. [] 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](. [] ABOUT US: We believe that the opportunity for financial literacy and freedom belongs to all people, not just those who already have years of investing experience. Prosperity Pub provides an array of educational services and products that will help you navigate the markets and become a better investor. Trading is made simple through our online forum full of trading techniques to give you the best tools to kick-start your investing journey. We offer collaborative webinars and training; we love to teach. No matter the opportunity, we bring together a strong community of like-minded traders to focus on analyzing market news as it’s presented each day. DISCLAIMER: FOR INFORMATION PURPOSES ONLY. The materials presented from Prosperity Pub are for your informational purposes only. Neither Prosperity Pub nor its employees offer investment, legal or tax advice of any kind, and the analysis displayed with various tools does not constitute investment, legal or tax advice and should not be interpreted as such. Using the data and analysis contained in the materials for reasons other than the informational purposes intended is at the user’s own risk. DISCLAIMER: TRADE AT YOUR OWN RISK; TRADING INVOLVES RISK OF LOSS; SEEK PROFESSIONAL ADVICE. Prosperity Pub is not responsible for any losses that may occur from transactions effected based upon information or analysis contained in the presented. To the extent that you make use of the concepts with the presentation material, you are solely responsible for the applicable trading or investment decision. Trading activity, including options transactions, can involve the risk of loss, so use caution when entering any option transaction. You trade at your own risk, and it is recommended you consult with a financial advisor for investment, legal or tax advice relating to options transactions. Please visit [( for our full Terms and Conditions. [Unsubscribe]( This email was sent to {EMAIL} by Prosperity Pub 101 Marketside Ave, Suite 404 PMB 318, Ponte Vedra, Florida 32081, United States [Prosperity Pub]( [] ABOUT US: We believe that the opportunity for financial literacy and freedom belongs to all people, not just those who already have years of investing experience. Prosperity Pub provides an array of educational services and products that will help you navigate the markets and become a better investor. Trading is made simple through our online forum full of trading techniques to give you the best tools to kick-start your investing journey. We offer collaborative webinars and training; we love to teach. No matter the opportunity, we bring together a strong community of like-minded traders to focus on analyzing market news as it’s presented each day. DISCLAIMER: FOR INFORMATION PURPOSES ONLY. The materials presented from Prosperity Pub are for your informational purposes only. Neither Prosperity Pub nor its employees offer investment, legal or tax advice of any kind, and the analysis displayed with various tools does not constitute investment, legal or tax advice and should not be interpreted as such. Using the data and analysis contained in the materials for reasons other than the informational purposes intended is at the user’s own risk. DISCLAIMER: TRADE AT YOUR OWN RISK; TRADING INVOLVES RISK OF LOSS; SEEK PROFESSIONAL ADVICE. Prosperity Pub is not responsible for any losses that may occur from transactions effected based upon information or analysis contained in the presented. To the extent that you make use of the concepts with the presentation material, you are solely responsible for the applicable trading or investment decision. Trading activity, including options transactions, can involve the risk of loss, so use caution when entering any option transaction. You trade at your own risk, and it is recommended you consult with a financial advisor for investment, legal or tax advice relating to options transactions. Please visit [( for our full Terms and Conditions. [Unsubscribe]( This email was sent to {EMAIL} by Prosperity Pub 101 Marketside Ave, Suite 404 PMB 318, Ponte Vedra, Florida 32081, United States [Prosperity Pub](