Posted by Tina
One of the major shippers out of North Korea filed for bankruptcy last Wednesday sending the shipping and retail worlds into a state of mild panic. The company is Hanjing, one of the worlds largest container shipping companies. It handles about 8% of Trans-Pacific trade volume for the US market and it’s ships are frozen in ports and at sea causing a rippling effect in related industries from dock workers to truckers to retailers. The depth of disruption and chaos will depend on how long it takes to resolve the companies problems. Retailers are already asking our government for help in getting the matter resolved quickly. Zero Hedge reports with reference to the WSJ:
As reported Wednesday, after the company’s bankruptcy protection, on Wednesday, terminal operators, ports, cargo handlers, truckers and others have refused to handle its cargo, for fear they won’t get paid. That is causing turmoil at U.S. ports and beyond, said shippers, importers and freight forwarders. Then as we followed up yesterday, U.S.-bound cargo has been delayed at the point of origin, and cargo-laden Hanjin ships are unable to get into U.S. ports. Worse, already delivered cargo is sitting unhandled, clogging ports and occupying containers needed elsewhere. Several Hanjin ships have been seized by creditors or barred from shipping cargo from Busan, South Korea’s main port, and vessels have been turned away from ports in the U.S., China, Canada, Spain and elsewhere.
According to the WSJ, freight brokers in Asia said about 540,000 containers are expected to face delivery delays that one of them said could range from a few days to more than a month. Meanwhile, as we also reported yesterday, shipping rates have soared as freight capacity shrank overnight, and indicative rates from Busan, South Korea, to Los Angeles had risen to $2,300 a container by Thursday, up from $1,700 four days earlier. One U.S. importer said he was getting rate quotes of $2,000 a container, compared with $700 before the Hanjin news.
Meanwhile, the reason why we immediately speculated that retailers will immediately use (and abuse( the Hanjin bankruptcy as a scapegoat (and apparently, demand a government intervention) is because the turmoil will only aggravate problems for retailers grappling with the challenges and high costs of e-commerce and at a crucial time. Those most likely to be affected include Wal-Mart, Target, J.C. Penney and clothing retailers. As the WSJ adds, a target spokeswoman said the retailer is watching development closely and assessing the situation. Marilee McInnis, a spokeswoman for Wal-Mart, said, “Right now, we are waiting to hear the final determination on bankruptcy proceedings and the implications to their current assets before we will be able to assess any impact.”
The biggest hit may come for the $25 billion US toy industry, however, which has been sweating the Hanjin news, as it prepares for the holiday season, responsible for half its annual sales.
Just what we needed in an already struggling economy. (Shop early if you have kids.)
South Korea. Geez, what kind of slip was that? Never mind, we know. The “evil empire” that colors your world view comes out in the oddest ways.
And anything that encourages domestic production is a good thing, long term.
“South Korea. Geez, what kind of slip was that?”
What kind of slip was it? What do you “know?”
Idiot! “Domestic production” depends on parts or products stranded on those ships. (I know…my production was delayed by nearly a month by a dock workers strike recently) Even if these ships only carried soft goods and toys, production in America isn’t going to ramp up quickly enough to make it work…and wouldn’t since the risk to reward ratio right now is total crap!
There’s no excuse for this brand of idiocy. You are smart enough to get this stuff, you just stubbornly refuse to give up your sacred beliefs.
You lefties really are idiotic. Your anti-business policies chase businesses out of the country and make American retailers and manufacturers more dependent on goods and parts from over seas and then you have the audacity to crow when we are further stifled by the monetary conditions adopted by your choice in a fed chairman and the lousy (worldwide) economy it and your tax and reg policies spawned.
The only cure for this idiocy is a complete change in direction…no Democrat offers such a change.
We warned you eight years ago. Would you listen? No. He77, you wouldn’t even stop to consider. And in eight years you have yet to acknowledge…to own up to…the massive failure of your policies and leadership.
Please. Eight years ago we were in the depths of a global recession brought on by a passel of unrestrained, unregulated, and extremely imaginative (in the most nefarious vein) capitalists.
You want to go back to that? … you vote for The Donald. Because he, and Paul, will cut them loose again.
Libby that’s simply not true.
Ridiculous, purposely complex, legally confusing regulations on capitalists are and have been in abundance and we’ve added thousands and thousands of pages!
Wikipedia offers a cursory review of US Banking Regulations and Securities Regulations. Then there’s safety and health regulations, environmental regulations, taxing regulations…on top of that are state regulations. Most consumers never have to deal with most of them so they have no idea. It would be wise to find out they cost consumers
We are regulated to death! And it costs the consumer a lot of money because it becomes a huge part of the cost of doing business! When regulations are written stupidly it can cost us even more.
In the nineties under Bill Clinton, lending rules were relaxed to meet regulations devised to expand a plan that begun under Carter. It was purposely done to further a social engineering housing agenda. The regulations were absurd but perfectly legal. At the more extreme end of the spectrum people could get a loan on a house with no down payment and without a work record. These easy lending standards created a buying frenzy. Soon people were buying and flipping since the demand drove prices up. Those in and out in the beginning made a nice little profit. But such meddling in the market was bound to create trouble and it did. Banks and lending institutions had to find a way to financially make the bad loans (they were regulated to make) marketable…enter the bundled securities, fully embraced by Fannie and Freddie. This legally placed the full faith of government behind the bad loans. It was this BAD regulation that caused the conditions that led to the credit crisis and crash.
As I have always said….as a capitalist…regulations should be simple so they are understood…just like the Constitution and Bill of Rights! They should be clearly written to protect our equal rights as citizens and at the same time should never upend common sense standards that protect us all, including investors! How many pensions suffered because of this crash? How many people lost their homes and their savings?
What’s sick is this condition continues today despite Dodd/Frank. Banks are required to hold more money in reserve in case of defaults…which means there is less money invested (loaned) into the middle class economy. And bad loans are still being made:
FHA Bad Credit Home Loan
Fannie Mae: “Fannie Mae has access to the most loans in the industry. In fact, they are the company that assisted in creating the subprime loan. A subprime loan is a loan designed to provide financing to individuals whose credit histories are less than perfect or bad. These loans are offered at slightly higher interest rates with some small fees attached to them. Some subprime lenders offer these loans at competitive rates, but others take advantage of the fact that they are providing loans to people with substandard credit. It is important to perform research and shop around for subprime loans. Fannie Mae, being the mortgage giant, offers a range of subprime loans for their customers that are safe and affordable.
“Safe and affordable”…Just like Obamacare!
The “nefarious” characters atthe base of the housing crash were political social engineering meddlers, many of whom profited obscenely from conditions spawned by these regulations. The bonuses Gorrelick and Raines awarded themselves alone are ridiculous…they didn’t produce a drop of wealth…just sucked it up off a low cost housing scam. We all ultimately paid the price for their irresponsible bad regulations.
No person who is running a legitimate business, no capitalist, wants unfettered capitalism. There has to be rules to keep everyone honest. We are not the enemy. You meddlers make of yourselves an enemy when you make it possible for people to be less than honest and to get caught up in get rich quick schemes. That’s exactly what bad regulations do.
Nefarious lawyers and politicians know exactly how to write regulations to leave themselves room to be greedy without getting into trouble with the law. Look there for the culprits!
Hillary is a politician, a lawyer, and a deceitful, opportunistic, Wall Street sponsored nefarious character. She would be a terrible choice!
Trump is not a politician. He is not a lawyer. He is a businessman who knows how bad regulations are strangling business while opening back doors for nefarious characters to slip through. Trump is the only sensible choice.
In order to provide realistic background music for Libby’s comments, perhaps the theme from Rod Serling’s “Twilight Zone” should begin playing whenever someone reads one.
That or Monty Python’s Flying Circus opening theme.
https://www.youtube.com/watch?v=-rutX0I6NxU
The Federal Register is the document that compiles all the federal rules and regulations that businesses are required to comply with. As of 2010 the Federal Register was 81,405 pages long. Federal regulations serve as a hidden tax on the economy. Costs imposed by regulation do not end up on any Federal budget, nor do they add to the national deficit. However, 81,405 pages of regulations strain the economy by creating huge costs that business are obligated to meet.
It is not just large corporations but the entire economy that ends up bearing the cost of regulation. Complying with regulations is not cheap. The cost of complying with federal regulation increases businesses’ expenses by billions of dollars every year. Some of the compliance cost associated with federal regulation comes out of businesses’ profits, but much of the costs are passed down to consumers in form of higher prices. Compliance costs associated with regulations cut into businesses’ profits, while higher prices increase the day to day expenses of all consumers. Because regulations create artificial costs that must be paid by both producers and consumers, they cost the economy money and act as a drag on economic growth.
Just how much money are federal regulations costing our economy? The answer appears to be quite a lot. Every year economist Clyde Wade Crews of the Competitive Enterprise Institute releases a report, entitled “The Ten Thousand Commandments” analyzing federal regulations and their costs. Crews’ analysis found that in 2010 the federal government spent around $55.4 billion dollars funding federal agencies, and enforcing existing regulation. But these costs barely compare to the compliance costs that regulation imposes on the economy. Crews’ report cites the work of economists Nicole V. Crain and W. Mark Crain, whose study of the net cost of regulations determined that in 2009 federal regulation cost businesses and consumers $1.75 trillion, or nearly 12% of America’s 2009 GDP. As a comparison, in the same year, corporate pre-tax profits for all businesses totaled about $ 1.46 trillion. (emphasis mine)