For the summer season, typically quiet, it’s certainly been busy out there with lots of developments as we are just weeks away from the Labor Day holiday. There are three main stories in shipping that are setting up the next few weeks and months.
1. Ningbo Port Explosion Driving Asian Supply Chain Snarls
On Monday, we reported about the explosion that occurred in China at the Ningbo Beilun Phase 3 Terminal. It is now widely expected that the explosion will cause cascading effects in the Asia-Pacific region.
Since the explosion, containers have not been moving at Ningbo Port. The port carries over 33 million TEUs as of last year and demand has remained high.
There’s no word on exactly what caused the explosion, or when the trade lanes in question are expected to return to normal, but as with anything in shipping these days, we must assume it will be a while longer.
2. Diesel Fuel Prices Plummet, in a Boon for Truckers
As the summer season reaches the last month and a half, diesel prices are declining in a good sign for truckers and fleet operators. As of yesterday, the national average price of a gallon of diesel fuel was $3.70/gallon. Diesel prices are down about $0.67 year-over-year, and even more from 2022 highs, per the U.S. Energy Information Administration.
The post-Covid demand boom, general inflation, weather-related issues, and other supply chain disruptions all contributed to the sky-high diesel rates seen over the past few years. However, the weather is looking quieter around Gulf Coast refineries and this is allowing diesel prices to fall.
Diesel prices are also expected to fall further into the fall and winter seasons as demand drops, and refineries change production formulas for colder weather.
3. Inflation Numbers Down and Demand Up
The latest Consumer Price Index (CPI) numbers as of today show good news for combating inflation. But even better, the Producer Price Index (PPI) also saw a drop last month. Both customers and producers are paying less for goods, after a long few years post-Covid.
This is great news for shippers, truckers, and the supply chain in general, as it points to still-strong economic demand and likely a continuation of sky-high shipping demand that has been seen over the past year and a half.
With demand likely to rise further as consumers pay less, and more goods are demanded and produced, there are actually workers now to move goods, compared to right after the Covid pandemic when truckers were in short-supply.
Of course, the risk of a port worker strike still looms, but overall, it’s good news on the inflation front.
