Question
Please help with these questions. 1. What is the relevance of article to a subject we have or are covering in class. 2. Effectively connect
Please help with these questions.
1. What is the relevance of article to a subject we have or are covering in class.
2. Effectively connect the article to the subject in class citing areas we've discussed or content in the chapter.
3. Put yourself in the position of a leader for the company you chose for your team project, how would it effect your business and what actions would you take if any, to address the matter.
I will paste the Wall Street Journal Article in the bottom, but here are some notes to help you:
For question 3 we chose the company that produces metal water bottles, and our main customers are Costco, Walmart, and Target. Here is the article. Thank you!
Shipping Stocks Will Sink as U.S. Consumers, China Lose Ballast
Container shipping industry has started to slow amid U.S. inflation, Shanghai's Covid-19 lockdown
Container shipping rates have started sinking. This might only be the beginning of their descent.
A steady fall in the World Container Index compiled by London-based Drewry Shipping Consultants is the latest hint that Americansand developed world consumers more generallymight be starting to spend less on goods as fiscal stimulus drains away,inflation at a four decade high eats into wage gains, reopening economiesshift back toward services and the Fed initiates aggressiverate increases. Another factor might be thelockdown in Shanghai, which appears to be disrupting the flow of goods out of Chinameaning less need for container shipping.
The World Container Index is down 16% since the beginning of the year, with key routes Shanghai to Los Angeles and Shanghai to New York down 17% and 16% respectively. But most striking is the steep fall since March 10the WCI is down 13% since that date alone. That suggests that eitherspring retail sales data in the U.S. will hold some nasty surprises or that the large Covid-19 outbreak in China, which really started to gain steam around mid-March, is already having an even bigger impact on global supply chains than many appreciate.
Shipping companies have started employing "void sailings," where ships continue to sail but don't load or discharge containers at ports, to reduce their supply on offer, and therefore support rates, according to George Griffiths, who covers the global container shipping market at S&P Global Commodity Insights.
While the WCI is still far higher than it was before the pandemic, the trajectory will likely remain downward with significant new ship supply setting sail by the end of this year. Theboom in container rates over the last two years was driven by the switch away from services toward goods owing to the pandemic and government stimulus. But if Americans really are beginning to tighten their belts now, shipping rates might only see a modest pickup when China's lockdowns end.
The cost to ship bulk goods such as grainwhich are facing more disruption from thewar in Ukrainehas also fallen since mid-March. But the Baltic Dry Index, a barometer of that part of the shipping world, has performed better overall in 2022. It is still roughly flat for the year.
Container shipping stocks meanwhile, are a mixed bag.A.P. Moller-Maersk is down about 20% since mid-March.Evergreen Marine and Cosco, which also operates other types of vessels, have also struggled but fared somewhat better. If China's lockdowns don't ease soon andU.S. consumers don't step up to bat, investors in the sector, and perhaps more broadly in retail, may ultimately wish they had abandoned ship earlier.
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