“We still haven’t seen the full ripple effect of supply chain issues that are now going global because of China’s COVID situation and Russia’s war on Ukraine,” RBC’s head of digital intelligence strategy told MarketWatch.
The lifelines of global trade are becoming more expensive, with port congestion worsening and turning widespread world-wide.
Widespread expectations that inflation may have already peaked, as suggested by some signs in the last consumer-price index report, may be “wishful thinking,” according to Ben Emons, managing director of global macro strategy at Medley Global Advisors, who has been tracking the flow of goods. “We still haven’t seen the full ripple effect of supply chain issues that are now going global because of China’s COVID situation and Russia’s war on Ukraine,” Tran, RBC’s head of digital intelligence strategy, told MarketWatch by phone. “There are very few levers you can pull when you look at the ripple effects. We almost need to let it run its course.
Equity prices would continue to fall and the U.S. dollar would turn “super strong with a total gain of 25% versus last year against other major currencies,” Emons said.The dollar would benefit from its status as the world’s primary reserve currency in a scenario in which global central banks are unable to contain inflation, and a stronger greenback would eventually negatively impact commodity prices — pushing down the prices of everything from metals to agricultural products, he said.
Instead, operational efficiency at both ports has “eroded over recent months.” With a queue of 19 vessels as of Monday, the current turnaround time is 6.9 days, compared with 3.4 days prior to COVID. “L.A. and Long Beach should be doing better by using this opportunity to completely reset and clear the bottlenecks, but are not: That’s what’s gone global,” Tran said.
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