Blue Eagle Reflects on the American Economy’s SWAN Stocks as Markets Begin Mirroring Pre-COVID Numbers
Economists have reason to believe that the economy may be beginning to turn the corner: Simply put, import numbers are up and diesel prices are down. Sleep Well at Night (SWAN) stocks like import investments and the energy sector are beginning to reflect the broader transformation of the economy post-COVID. These trends have huge implications for the shipping industry, and we’re very cautiously optimistic as we mirror the numbers we’re seeing across freight and logistics.
Freight is Up
In spite of current trends and forecasts that we’re either early into a recession or about to enter one, Freightwaves is highlighting the upturn in US imports as a bright trend spot in the shipping industry.
Specifically, they write that, “amid all the doom and gloom on container shipping and the talk of an impending recession, U.S. imports are rising off their lows. Inventory-to-sales ratios are still much higher than pre-COVID, yet monthly imports are now either at or above 2019 levels, depending on which data source you use.”
Levels Are Mirroring Pre-Pandemic Levels
Although this number is down 18 percent from pandemic levels, it is up a whopping nine percent when compared to pre-lockdown import levels. This is welcome news. The shipping and logistics industry has really struggled to predict consumer trends throughout the pandemic.
Market Corrections are Coming out of China
Blue Eagle reported periodically on the tie between the Chinese port-wars and the broader global supply chain:
They say that culture is downstream of politics… but then so are supply chains. Right now the Chinese people are cruising down the stream on both–as culture, politics, and the supply chain are clashing; as a result, the wake for the world’s shipping industry is looking turbulent.
More specifically, politically driven lockdowns are strangling the city of Shanghai and stagnating its ports. Logistics experts estimate that a full twenty percent of shipping containers are backed up, with thirty percent of that backlog outside of Shanghai alone. Much of the shortages– reportedly especially in the United States and the UK are the result of Chinese lockdowns that followed a latent COVID-19 lockdown.
However, Beijing is bouncing back! We reported that supply chains are generally six weeks downstream of economic fallout so we are seeing the returning ripple energy of economy that is potentially righting itself, “China’s share of U.S. imports bounced back up to 36.8% in April from just 31.6% in March. China’s share had been as high as 41.5% in February 2022,” according to Freightwaves.
Diesel is Also Down
In other good news for the economy diesel prices are down. “Benchmark diesel price falls below $4/gallon mark. DOE/EIA number at its lowest level since the end of January 2022.” That spread has been marked with volatility since Russia invaded Ukraine, but while demand from China to South America is widely up, prices on diesel have continued to fall.
Even as we frame our reflections on the US economy, here’s hoping that our thoughts are mirrored across global economic reality and not shattered by prevailing trade winds.