Shipping Container Shortage Pushing Up Prices

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Freight shipping volume has been picking up in 2010 and while that is great news for the world economy it has caused an unexpected shortage of containers. According to the July cover article in American Shipper, this shortage in shipping containers is being sited as one of the main causes for the rise in freight rates and has led to difficulty in moving product to buyers. Many shippers have complained about signing contacts with shipping lines only to have rates rise the following week or to be denied space completely. The average price for a 20ft shipping container has grown from about $2,000 to $2,700.

One of the major reasons for the container shortage was the drop in production of new shipping containers in 2008 and 2009.  From 2004 through 2008, TEU supply grew by an average of 8% per year. Once the world recession hit, trade dropped dramatically and so did demand for shipping containers. There was a 95% reduction in shipping container production in 2008 and almost no containers were built in 2009. In response to the drop in demand many of the factories that build the containers, mostly based in China, were forced to shut down. Now with the increased demand for there is a reduced capacity for factories to produce new containers. Some estimate that it will be until 2011 before production will be able to catch up with demand.

While this shortage is bad for manufactures and ultimately consumers, container-leasing companies are appearing to benefit in the short run from this problem. Stocks of publicly traded container-leasing companies have reached 52-week highs this spring and summer. Additionally many leasing companies are taking the opportunity to increase their share of containers. Historically, liner carriers have owned about 55% of the world shipping containers with leasing companies owning the remained 45%. However, recently leasing companies have been responsible for 65-70% of the new container purchases. Leasing companies are also purchasing containers from the shipping lines who are in need of building up there cash reserve.

This shortage in shipping containers due to worldwide demand is a very good sigh of  economic expansion however many shipper are hoping that container product will soon catch up to demand.

Source: Boxed-Out, American Shipper

Shipping Container Imports to US Ports Up 16% in July

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Global Port tracker is predicting a 16% year-to-year rise in shipping container imports to the 10 busiest ports in the US. This comes after a 20% and 22% increase in year over year growth seen in May and June respectivly. Positive growth has been seen in each month since December 2009, which marked the end of a 28-month streak of declines.

However, this positive trend isn't expected to continue through fall. “The latest economic indicators are starting to look bleak, including consumer confidence, industrial production and employment numbers,” said Ben Hackett, founder of Hackett Associates, which produces the Global Port Tracker. “Sales will be slower in July and August; that much is certain. Inventories will rise, resulting in some sharp seasonal volume reductions.”

This table shows the Container Imports to the 10 busiest ports in the US for May 2010 and predictions for July through November. October, which is usually a high-volume month of the year as retailers stock up for the upcoming holidays, is only predicted to show a 3% increase from 2009 and November only a 4% increase.

Global Port Tracker data covers the ports of Long Angeles/Long Beach, Oakland, Seattle and Tacoma on the West Coast; New York/New Jersey, Hampton Roads, Charleston and Savannah on the East Coast, and Houston on the Gulf Coast.

Source: Hellenic Shipping News

Freight Rates Bubble About to Burst?

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Despite this year’s huge volumes and ridiculous increases in rates for container shipping lines, a better indication of the “recovery” will begin to be apparent by late August early September when most of the backlog that has plagued the China to U.S. market is out of the way.  One good indicator of this is the recent dramatic drop in freight volume from the U.S. back to China in raw materials like Lumber and Scrap Metal.  This is due to the fact many Manufacturing Companies in China are not getting new orders past Aug-Sep, so they don’t need any more raw materials from the U.S.

Meanwhile all of the Carriers are “Getting it while the getting’s good.”  Can you believe another $400-$600/40 increase set for August 1 for the Pacific Rim eastbound trade ?  My advice to anyone listening is to hold off your shipping till maybe Sept –Oct when rates will probably drop and space problems be alleviated, and I am a Shipping Company !

I personally do not see a dramatic slowdown, because we are in PEAK SEASON after all, which traditionally lasts until around Oct-Nov when Christmas orders are all in.  This year witnessed an intense backlog in China that was due to many factors such as China’s continuing problem of a shortage of skilled labor coupled with rising labor costs, factories no longer getting government subsidies which have resulted in mass shutdowns and relocations to central China, shortages of equipment and of course the manipulated vessel space shortage created last year by all of the Carriers.  We can sit back and marvel at how well this strategy worked for the Carriers as all are again profitable by now rising back from the precipice of near disaster and bankruptcy last year.  Economists and Economy majors in Universities will be studying this for years to come.

However this was not a true indicator of a real recovery in the U.S. Economy nor was it for the Shipping Industry (Although most Freight Companies are relieved to see their profits up this year from last year’s dismal dance with an actual economical depression )  If the U.S. Economy doesn’t have a true recovery that is sustainable we are in for a slide in the 2nd half of the year. But have no fear, the freight rates will probably be propped up to no more than a 20% drop by you guessed it…more vessel’s parked in Singapore as well as the newest method of Carrier cost saving….”Slow Steaming.”  Most Carriers have learned from their mistakes and have figured out how to stay profitable in a down market. But hey, isn’t what is supposed to happen?  What doesn’t kill you makes you stronger.

The old days of the big volume Importer “ VIP account “ appear to be over, as everybody including Walmart had to “pay the piper” this year and will continue to do so.  I have no problem with that personally as it was getting embarrassing to see the “Big Dogs” make every carrier their female canine for so long.

But that doesn’t mean there won’t be repercussions.  I am sure in the coming months as Carriers start to come begging for more freight, they will find they have lost some loyal customers….either that or with high freight rates and the inevitable re evaluation of the Chinese RMB, some importers may end up becoming exporters one day…WHICH IS A GOOD THING.

Devin T. Burke
CEO, Universal Cargo Management

U.S. needs to step up to the plate in manufacturing exports

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The US manufacturing sector generates about $1.2 trillion or 12% of our GDP.  Our manufacturing sector produces about two thirds of our nation’s total exports of goods and services.  The manufacturing sector supports about 20 million HIGH PAYING jobs.  I believe our nation still leads the world in ideas, innovation and cutting edge technology. Where would China be without their amazing capacity to copy us?  However at current pace, China will indeed pass us up in “cutting edge” technology, as well as “Green” or “Sustainable” technology, simply because they work harder and outpace us in graduates from Universities in Science and Engineering degrees.

The U.S. is one of many countries with a decline in manufacturing employment

However our culture and free society still provides the best potential for future innovation let alone our far superior skilled labor force to lead the world in the coming decade for what the next Global generation will consider to be “IN”.

Our future societies in America will depend upon our ability to maintain a strong manufacturing industry to improve our quality of life and develop the job growth our nation so desperately requires.  The primary focus should be to look at what the Global community needs (not so much wants) instead of what the U.S. needs.  Without an exporting vision behind what we manufacture in this country, I am afraid we will sink slowly into the Abyss we are now heading into as a nation of debt ridden consumers with rising unemployment.  The hindrances we face now include an incredibly huge bureaucratic  government that is intent on destroying our nation’s manufacturing power (see small business, the backbone of our industries) with rising health care costs, unions, taxes, and  inflation which forces industries to look elsewhere to outsource to low wage countries.  You add that to the ability for countries like China to cheat on international trade rules and we have an awfully hard uphill battle on our hands to be able to compete in the Global marketplace.

A bright spot in current trends is that certain sectors like finance, information, technology services are growing in this country.  This of course is the backbone of any manufacturing industry.  What we need is a renewed focus on how to make manufacturing work in this country with more efficiency and less waste.  American’s just waste too much, we waste everything from what we consume to how we spend our time.  Thomas Friedman hit the nail on the head in his latest book HOT FLAT and CROWDED when he addressed this problem.    But we also need new people in our Government who will make it their priority to ensure government paves the way for the exporting industry to flourish rather than impede it’s progress.

Some facts:

• Nearly 80% of all patents filed come from the U.S. manufacturing sectors
• U.S. manufacturing are responsible for two thirds of all R&D investment in this country.
• American manufacturing are the leading buyers of new technology in the U.S.
• American manufacturing directly employs 14 million Americans while creating an additional 8 million jobs in related sectors.
• American manufacturing is the largest single contributor to our economy.
• America leads the world in technologies related to Robotics, Nanotechnology, Laser and Bio technologies.

It’s time for American’s to step up to the plate and renew our focus on where we are strong and don’t give in to the temptation to acquiesce to developing countries that are hungrier.  I liken it to the L.A. Lakers continuing to get stronger so they can defend their title next year against those hungry “Beasts” of the east.

Devin T. Burke
CEO, Universal Cargo Management

The Coming U.S. Export Boom

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As we see the writing on the wall, CHINA will re evaluate their RMB relatively soon, we just don’t know how soon.  In fact China (the People’s Bank) went so far as to claim in it’s statement that “the basis for a large-scale appreciation of the RMB exchange rate does NOT exist”.  (Are they still smoking Opium ?)  Don’t forget even with all of this surging growth in China, they are still at best 50% unemployed.  A slight dichotomy to say the least.  That is because there is all of those hundreds of millions of former government subsidized farmers still out of work.  Behind the veil of prosperity lies the seeds of a real cultural revolution.  A society abandoned by it’s self serving (another word for communism-socialism) government long ago.

So if the RMB goes to say 5 per $1.00, what happens to that percentage of the existing employed that gets their walking papers in the urban communities where all of the factories will be shut down and moved into central China, where they are moving anyways ?

I would say China has quite a delicate time bomb on their hands.  But  they will eventually figure out how to create more jobs while inspiring their own half a billion middle class (with a savings rate of 34%) to spend more once their currency gets strengthened, and feel like the wealthy people they so desire to become. (Mao Tse Tung would be turning in his grave) when that happens get ready for an emergence of a new world superpower.

But an even larger factor holding China back is the People’s Bank , the very body behind China’s exchange rate policy, is currently stuck in U.S. Treasury bonds to the tune of $2 trillion.  Although China would love to create a new wave of appreciation in the Euro, Gold, Steel, etc and get a better return on their reserves, they have their hands tied to a sluggish recession in the U.S., which is the backbone of the China economy.  You take away the power of the American consumer that borrows and borrows so it can spend and spend, you break the back of China’s biggest customer.

So with the Obama administration and other world superpowers pushing hard on China and calling it a “currency manipulator”, the most obvious reason China has made it’s recent overtures to re evaluation is to inspire goodwill ahead of the upcoming G-20 Summit.

So bottom line here is that China is continuing to be very shrewd with buying time to see where they can move some of their reserves, inspire confidence in with the “ Old Money Club”, wait for the U.S. to get stronger, deal with this Oil spill and eventually move one step closer to being the guys running the show.

In the meantime us Americans need to think what do we have, or what can we produce that China will if not right now, eventually need ?  Because deep down inside the Chinese admire and want to emulate our backbone of honor, pride , integrity and ingenuity that is ingrained in the people of this great country while China’s honor is all about “saving face”.

Devin T. Burke
CEO, Universal Cargo Management

“Time is Money” But Now – You Must Know The Times! For Cash will be Key

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“What is the most important question my clients are to ask themselves, now?”

This was the question asked by a financial counselor who specializes in helping people understand and restore their personal credit. I thought it strange that he would be asking me. But upon quick reflection, and having some exposure to history, the answer came. Money moves like people; in predictable patterns, routed by the confluence of ideas, enacted by governments, and those they partner with to form a power base, intertwined with the behavior of individuals as a response.  “there is nothing new under the sun.”

So when we see people move into the halls of government, who believe that they have all the answers, and provides the best solutions for peoples problems, concerns and responsibilities, even for each individual life – what follows that is a false moral imperative, and a “responsibility” to capture as much of a societies recourse as possible to enact their “better” solutions, for the “common good”.  Sound familiar?

In times when governments do what the Obama administration is doing, by fiat as some would argue; or by coercing a political class, the current crop of elected officials, to work against the interests of their constituents; that’s you and me, we see tragedy follow. This supplanting of interests – theirs for yours, renders them functionally obsolete. Their policies work to destroy or take by force, large portions of the lives they were elected to protect. This happens as “governments” view of itself, becomes an extension of the politician who wants to become a savior. He enacts programs and policies that always make others reliant on his ability to “save – heal – deliver – restore” them.  Those that simply want opportunity to apply their God given talents and initiative, are an enemy  of this new “savior”.  So they must be de-funded. That’s ok, because the new ends of government must have new recourse so that the savior can keep on  “saving” and directing lives of peoples. Government must now “Provide” what for generations past,  people expected to do for themselves.

Therefore, because of these policies which mirror those of FDR in the 1930s we will see ever increasing taxes, declining home values, and even declining wages, as happened then. The more yet to come is staggering inflation, and a government that struggles to make it’s interest payments to the world. They will rely on inflation to promote “tax creep” and the principle of paying back “hard dollars” with soft dollars” . Because of this – the question: “what is important right now – in these times with my money?” is pivotal to all you will be able to do in the “times” yet to come.

1. How much cash do you have?

Cash on hand, reserves, emergency funds, rainy day funds etc. this is critical for fewer and fewer will have access to credit. So emergencies will require cash.  Investments, ventures, opportunities will be “cash and carry” And watch how much politics will determine who gets credit, how much and on what terms. Whether by accident or design, the governments reach into every aspect of lending and financial management will have effects far beyond new taxation. Just watch who gets what deals and who doesn’t – especially the transactions that require major recourse. At some point banks may serve as instruments of political will more and more. How soon until that effects you personally may only be a matter of time.   

2. Is your cash reserve pile increasing or decreasing?

Are you living and operating your business on less than your incoming revenues?  Cash money. Cash positions, liquidity. Is it increasing in your life, your company, your balance sheet? Each day are you growing stronger financially or growing weaker?

If weaker is the answer, change something fast. If not, keep growing your cash – you’ll see why in a moment. (In the future – we may deal with the need to invest in strategies that grow companies and interests to provide for your future more than using your cash to provide for the future of the “Collective”.

3. Are you ready for the shift?  It has already begun.

The next move that will happen in waves or stages:

Further devaluing of assets – in real-estate and other goods i.e. transportation – cars, trucks, etc. Possible stocks and financial paper backed investments will take another big hit. This may take 8 – 12 months to realize.  This will exert more pressure on our languishing economy. An added factor is the re-indexing or increased float about to take effect with Chinas Currency. The RMB is set to gain in value by a possible – some say probable - 25% over the next year. Those accustomed to buying goods made in China, will see that they can buy 25% less or pay 25% more with each purchase.  This will leave many importers scrambling for new supply points, to sustain price points for their customers. And their customers will be scrambling to maintain price points for their customers – and so it goes.  If you have not started looking for additional suppliers outside of China – it may be a good time to begin.

4. Shift # 2  Are you Exporting yet? This shift has already begun.

In this upswing of the RMB – and other factors set to devalue the US dollar, Export may be the salvation of many.  With the RMB Adjusting, the middle class in China will in effect receive a 25% increase in salary. With their saving rate above 30% each individual will accumulate more reserves, and still have more money on hand to spend at their whim – while we in the US will have less discretionary money to play with.  

“Cash is King”

So be ready – You will be able to buy used goods, some fixed assets like real-estate, at super “bargain basement” prices. You will need Cash to do this. This will produce a wealth transfer to bolster the advantage  of those “advantaged” or soon to be “advantaged” if you are “sitting pretty” with cash. New goods will cost more. Therefore those selling new goods to the US market must work their “niche” aggressively – from every angle. And keep your customers “Happy.”

Moreover, look to see what it is that you do, that you can export. The weak dollar will open up opportunities for the prepared; “cash in hand”.  The new middle class in China are buying Americana. GM Sales in China are skyrocketing.  But I guarantee – as opportunities abound and grow to new dimensions for those who see them, your view will be obscured by your ability to access them. We will see a credit crunch more severe than we can imagine. Governments will drain credit resources and increase your taxes to pay for their extravagance. So  the ability to “leverage other peoples money” – will at some point feel like a relic, an adage of some forgotten “days gone by”. Cash will again be king. PS. – you noticed this with Lending Requirements enacted in the last 2 yrs. – First question of a lender is: What are your “Reserves”?  This question may soon be the only question that counts.

This “Cash is King” time will produce great pressure on Government’s ability to collect tax revenues, and more panic will emerge from those in tax reliant positions – government workers, politicians, unions etc. and we will hear more and more about how many are not paying “their fair share” – but more for another posting.

Be Ready. Be Aware. Be Prepared. Be Aggressive. Cash in Hand will be like a scepter, that can make you “King” or “Queen” of an increasing domain.

Dave Stover
Account Executive, Universal Cargo Management

Is it the end of the cheap made-in-China era?

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Where once low-tech factories and scant wages were welcomed in a China eager to escape isolation and poverty, workers are now demanding a bigger share of the profits. The government in China is also pushing foreign companies to make investments in areas it believes will create greater wealth for China, like high technology.

In response, many companies are striving to stay profitable by shifting factories to cheaper areas farther inland or to other developing countries, and some are even resuming production in the West. Some companies have moved production to other countries in the region such as Vietnam, Indonesia or Cambodia. However these countries lack the huge work force, infrastructure and markets China can offer, and most face the same labor issues as China.

These areas also lack the intricate supply chains and logistics systems that have helped make southern China an export manufacturing powerhouse.  For manufacturers still looking to boost sales inside China, shifting production to the inland areas where many migrant workers come from, and costs are lower, offers the most realistic alternative.

Check out the full article on Yahoo! News: Companies Brace for End of Cheap Made-in-China Era

Spotlight: Vietnam – Up and Coming Air and Ocean Cargo Shipping Hub

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• Vietnam’s economy has experienced rapid growth since the 1986 economic reforms and growth in international exports to Europe and the United States has accelerated in the past 5 years.
• Exports and imports have grown multi-fold and while there is a trade deficit, this gap is expected to narrow as export industries continue to grow.
• Containerized volumes have grown every year by almost 20%. However port and infrastructure improvements will need to continue to keep up with the growth trend.
• 24 of Vietnam’s 126 ports handle ocean cargo shipping however the country currently lacks deep water port facilities and can currently only handle small feeder ships. Development of deep-water ports are planned and should lead to large improvements in international cargo shipping activity.
• Vietnam’s logistic industry is still being developed and the country currently lacks in key infrastructure including warehousing and depot facilities to match with demand. Logistic costs can be a significant contributor to the high cost of doing business in Vietnam. Improvements over the past 10 years have brought down these costs significantly and these should continue to drop as Vietnam continues to invest in new infrastructure and technology to meet international shipping standards.
• Various companies (including companies in China) are now producing their commodities in Vietnam...the main question is can Vietnam handle the growing exports?

Ocean and Air Port Information:

Ho Chi Mihn city serves as the key port for both ocean and air imports and exports. More than 70% of Vietnam’s transport containers pass through this port.  Due to recent growth, congestion has become and will continue to be a problem as container volume growth exceeds port capacity expansion plans.

Alternate ports near Ho Chi Mihn are being developed as well as new international ports at Van Phong Bay (near Nha Trang) and Cai Lan in Quang Ninh providence.

Three international airports serving Hanoi, Danang and Ho Chi Mihn City handle international air cargo shipping. To meet the increased demand in passenger and freight traffic, the government has plans to develop an additional 3 international airports by 2015.

Key Products:

• Major exporter of seafood, rubber, rice and coffee
• Agricultural and aqua-products sector contributes to 30% of GDP

In Summary:

Vietnam has good potential to develop into a major air and ocean cargo shipping hub in Asia. As improvements are made to the ports, infrastructure and the logistics industry opportunities for shipping to and from Vietnam will continue to expand.

Freight Rates and Container Shipping Costs up 350% from China

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If you are an importer from Asia into the U.S. you are tearing your hair out trying to figure out how to afford the dramatic increases in freight rates, coupled with the tremendous space problems occurring in every port throughout Asia, especially China. Freight rates have increased an average of 350% since this time last year if you ship from China to the U.S. West Coast ports.

If you are a student of the events leading up to the present day situation, you will remember it began around last August when the financially drained Ocean Freight Carriers decided to band together and stop the bleeding by parking most of their older, smaller vessels right off the coast of Singapore to create a limitation on capacity, with every intention of raising freight rates immediately. This is exactly what happened in September last year, first with the Freight Forwarders who are the bastard children the Carriers love to kick around, while protecting the ridiculously low rated contracts all of the BCO's held, from a guy that ships 50 Feus a year on up to Walmart. What happened was the inevitable, the BCO's started having a hard time getting space because they were still paying $750/40 from China to the West Coast, while the Forwarders got more space while paying $1,000-$1250/40 on through the end of the year. Then came the first boom being lowered on Jan 15, everybody, including Walmart, had to pay an average of $800 increase immediately or they wouldn't get on board. Since Chinese New Year was coming up, the Carriers timed it perfect and got away with it. But then it became like Crack, and the Carriers were hooked, so another increase came in March, right after CNY, which has never happened, nobody is shipping, China factories are just getting back from 2-3 weeks of playing Mahjong. However guess what, everybody was shipping, due to delays of production from before CNY, cargo not shipped due to space problems, increases in orders in the U.S. due to lack of inventory, and we were off to the races and haven't looked back.

Yes now since May 1, which is always the traditional GRI (General Rate Increase) As all service contracts are renewed between the Carriers and the Shippers, June 15 which was the traditional PSS (Peak Season Surcharge) we are indeed looking at rates from China to the U.S. West coast around $3,000/40 and climbing.

I haven't seen it this high since that brief period during the Longshoreman's Dock strike in the West Coast in Oct and Nov of '02.

And before that in the beginning of '85 before rates plummeted by year's end. Last Summer an importer paid about $2500-3000/40 to ship to interior regions to the door, $2000-$2500/40 to the East Coast cities to the door. Now the rates are over $5,000/40 to interior regions door, and around $4500/40 average to East Coast cities door . Right now coming into July 4th, with the season just kicking in to full swing, which usually lasts through September in a bad year, and through November in a good year, we are still experiencing space constraints, although now that most Carriers are bringing in new vessels, and there has been some softening of space constraints, everything is being tightly monitored and if you don't pay you don't ship. This is the market the Carriers have always dreamed for.

It's payback from '08 and '09 where last year the average carrier lost half a billion, with Maersk reportedly losing $2b, wow !.

So where do we go from here?

Well we have the FMC doing their fact finding investigation looking into vessel capacity, container availability,( unfair practices by the carriers , collusion?) You would think possibly, however when the report due July 31 comes out, don't hold your breath.
Senators Blanche Lincoln of the Senate Agriculture Committee and ranking member Saxby Chambliss have stated regarding the problem of service contract holders not having their contracts honored "These contracts are supposed to ensure that the carriers will provide the necessary weekly equipment and vessel space and the rate will be fixed, unfortunately it has come to our attention that carriers are now routinely failing to honor these contracts."
The two Senators asked the FMC to provide information on what authorities it may have or should have to ensure that these contracts are honored. "Including the ability to penalize carriers for egregious practices." Wow, let's see if the current mood of Washington which is that of punishing any Company that dares to make a profit carriers over to this issue. We shall see.

In the meantime MSC, MAERSK and CMA/CGM, the three largest ocean Carriers in the world have teamed up to jointly operate a transpacific loop starting July 10th. The service called EAGLE by MSC and YANG TSE by CMA will cover just Shanghai, Xiamen, Qingdao, Hong Kong, Kaohsiung with Long Beach.

This will help alleviate a lot of pressure in this very busy loop in the Pacific Rim.

Devin T. Burke, CEO
Universal Cargo Management, Inc.
www.universalcargo.com

The Future of Your Business Could Be International Shipping

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Recently we have seen China come out and say that they will  "further reform the RMB exchange rate regime and enhance the RMB exchange rate flexibility"

We all know that CHINA has undervalued their currency for the greater part of the past decade where they have been the hub of manufacturing for all developed countries in the world. The Chinese government  has had the goal of their  export manufacturing being the engine for economic growth and job creation in China for the past 25 years. The strategy has largely worked, with China putting up better than 10% annual GDP growth for the past 30 years.  By announcing their plans to reform their fixed-rate system, China is finally signaling a willingness to allow supply and demand to determine the value of its currency.  They are following in the vision implemented by Deng Xiao Peng over 20 years ago when they opened up Shenzen and Guangzhou as their “experiment” with FREE ENTERPRISE.   Interesting that it came about the time the Berlin wall was coming down and the whole world had seen not only  that communism doesn’t work, it is a destructive force with Tsunami power in demolishing societies, as it tragically did with China from 1949 until the early ‘90’s when China started to wake up and smell the coffee brewing over in West.

So now if you walk down a major street in Shanghai, you will see at least 3 Starbucks within one block radius.  You first have to pass  a KFC, McDonalds and a few Malls the size of a small town (underground up to 5 floors high) and you would swear you were in Manhattan.

 Given China's trade surplus and all of that foreign investment cash  flowing into China, the consensus is that China's currency should appreciate quite a bit -- with some experts suggesting that their exchange rate will strengthen  to 4 or 5 RMB to the dollar rather than the current 6.8 RMB to the dollar , 25% increase, coming soon !!!

So if you are an average American that has a home filled with about 75% of goods made in China, or worse yet, your business is directly related to imports from China; Importer, Wholesaler, Logistics, Transportation, retail, etc, you have to see the writing on the wall that the U.S. dollar is only going to get weaker.   Besides the China factor, history has proven that recessions always follow with inflation.  

So money will continue to be tight, consumer costs will continue to rise, and let’s not forget about the hidden inflations ; TAXES,( thank you Democrats) ILLEGAL IMMIGRATION (Thank you Ted Kennedy ’64), INTEREST on our National debt, soon 40% of tax revenue to the U.S, Treasury will go towards servicing the debt, and who really pays for this ? (Thank you Progressive movement), the U.S. Bogus system of calculating actual inflation, cooked books (Thank you past Administrations going back 20 years) and then we have the brand new one courtesy of Mr. Obama, the HEALTH CARE BILL.  Health insurance will go up dramatically, forcing employers to pay more in premiums and taxes which will be passed on in the rising costs of goods and services to the public and further increased unemployment.

What we are left with in the coming decade is among other more dire circumstances, which I will not delve into, but one of great significance. That is the U.S. will have to become an economy dependent upon exports.  Not just of Cotton, Lumber, Scrap, waste paper, Agriculture, Rawhide, etc, but actual consumer manufactured goods.

Most people don’t realize that with all the ballyhoo about our trade deficit with China being so huge, is that the U.S. economy is still at least 4- 5 times larger than China’s and our exports still outnumber those of China.  It is mind boggling I know, but now that you see our dollar destined for another WEIMAR REPUBLIC, together with CHINA’s growing middle class (more than the population of the U.S.) with an RMB at 4 or 5 per USD, it doesn’t take a Rocket Scientist to deduce that China as well as other healthy economies (wherever they are) can afford to buy goods made in the Good old YOO ESS OF AYE.

So if you are wondering “ where is the future of my business”….now is a good time to seriously evaluate how manufacturing and exports can fit into the picture.

I would also like to add that it has become “In” and trendy in China to buy goods made in the USA now.  In fact the “Yuppies” of China are willing to pay higher prices for higher end merchandise and anything that reflects the American way of life.   The real truth is that people in China are in love with America and want to emulate our lifestyles.  This is the future. (that and our children better start learning mandarin)