The conventional wisdom among central bankers is that the public perception of the future path of inflation is at least partly a self-fulfilling prophecy, per Investopedia.
- If people believe future inflation will be high, they might buy now to avoid higher prices.
- If they believe there will be rate cuts, the stock market could soar, money would be cheaper and easier to come by – and people wait to buy in anticipation of lower prices.
LOGISTICS
As the rate gap between long-term deals and the spot market is widening, the long-term deal space was largely impacted by the carriers due to serious bleeding over the past few months. Thus, a significant peak season surcharge is expected before the Lunar New Year, per Flexport.
As carriers struggle with volume declines and lower rates, some reports show they are seeking to increase or introduce other types of fees to increase revenue in other ways, even as service levels are likely to suffer due to growing overcapacity, per Freightos.
The massive capacity growth could soon become unsustainable as freight rates are likely to continue trending downwards, according to a recent Sea-Intelligence analysis.
Asia – N. Europe and Mediterranean ocean rates increased significantly on early-month General Rate Increases (GRIs) last week, with Mediterranean prices continuing to climb so far this week. With these increases, rates to N. Europe remain 8% below 2019 levels, but the sharper climb to the Mediterranean has prices 32% higher than pre-pandemic, per Freightos.
Carriers including CMA CGM, Hapag-Lloyd and MSC are likely to increase rates on services from India to US East Coast and Gulf ports. CMA CGM has raised their peak season surcharge by an additional $200 per container ($400 total) effective December 15. Indian exports continue to rise and the increase in demand will continue to drive rates up as the market develops as a global supplier, per UPS
Rates are expected to continue climbing as we approach the second half of December and there is a high likelihood that another wave of GRIs effective first of January will reflect the pre-Lunar New Year rush demand, per Flexport.
Following North Europe, Mediterranean GRI is also thriving in December supported by the strong demand. However, space is very tight at the moment as we observe a cargo rush before the Lunar New Year, per Flexport.
Ex-China air cargo rates continued to cool this week, possibly indicating that the e-commerce-driven increase in demand over the last couple months may be starting to subside as the holiday season nears, per Freightos.
Month-on-Month ocean and air rate changes … new services … seasonal outlook. Read More
INSIDE SOURCING
A Vertical Supply Chain Backed by Product R&D
Most conversations about apparel sourcing focus on Vietnam, a fast growing alternative to China, Bangladesh for competitive prices and of course China (the pros and cons of either staying or leaving).
Few brands talk about Pakistan, however those that do are very bullish on the nation.
Yes, it has its challenges – but so do the other sourcing nations. However the upside, say brands that source there, more than justifies any inconveniences. Read more
PODCAST
The Power of ‘Conscious Leadership’ in Building a Successful Organization
In an uncertain economic environment, senior executives need to find new ways to tackle greater challenges, while also becoming stronger and more effective team leaders.
Jeffrey Deckman has bootstrapped two multi-million dollar companies, several non-profits and multiple political organizations. He’s also the author of the bestselling “Developing the Conscious Leadership Mindset for the 21st Century.”
In this podcast he talks about new methods that leaders can use to support their teams and navigate unexpected challenges.
You’ll Learn
- The Organizational Trinity – The “invisible” force that drives all organizational performance
- How to Develop the Conscious Leadership Mindset
- The biggest mistakes leaders make that they don’t realize they are making?
MATERIALS
Cotton futures traded below 82 cents per pound, down from recent over one-month highs of 82.6 cents per pound, as traders assess updated forecasts for the global demand and supply.
Oil prices were on course for their longest weekly losing streak in five years, weighed down by concerns about a supply surplus and weak Chinese demand.
You can find the current Month-on-Month and Year-on-Year prices here.
CURRENCY
The US dollar weakened against the euro, pound and Chinese yuan on speculation that the US Federal Reserve could cut rates to 4.6% by the end of next year.
MARKETS
The Bank of England kept rates steady at 5.25% at its meeting today, and warned it was too soon to conclude that inflation in the UK was on a firmly downward path.
Rate cuts from the Bank of England could come as soon as June, the European Central Bank in April and the Federal Reserve in March, according to The Times.
The US Federal Reserve kept rates unchanged at 5.25% at its December meeting. Speculators think a rate cut could come as soon as Q2 2024.
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