HawkGold
Well-Known Member
Illinois has slipped due to the state budget fiasco. Iowa State is pinching the budget so bad, they will slip too. I still use both as well as Purdue, which is pretty good. Been to workshops at all 3.
Manufacturing/Shipping Folks, What Are You Seeing?
- Thread starter Fryowa
- Start date
Fryowa
Administrator
When covid started we and 11 other local manufacturers in our area started a biweekly consortium to be able to see what other businesses were being faced with, how they were responding, basically a state of the union deal where we could all bounce ideas of each other. The covid part of that has faded out since the numbers here are for now nonexistent.
But, we’ve kept it going and turned our focus to raw material and shipping cost volatility. We use it to stay informed on what others are seeing to try and gauge the market and plan. Obviously there’s nothing proprietary being shared at these meetings, but for those of us who import in container quantities (9 out of the 11) we have agreed to share our invoice amounts on Asia containers among the group. None of our companies compete with each other and this way we can stay on top of things and go to negotiations as best informed as possible.
Anywhoo, one member of our consortium has three containers sitting in a trans load warehouse in LA. Been there for a week. They need to go to Savannah, GA, and they cannot find one single truck and driver willing to go in there and get it. Normally there are a zillion different trucking companies that do nothing but trans load, but they are all booked out to who knows when and won’t even give a quote. So…you’re more than welcome to hire your own Joe Blow to drive in there and get it, but good luck.
The TL warehouses are a union shop affiliated with the ports, and if you want to take a truck in there they make it almost impossible to do. California has nasty transport laws to begin with, but these TL companies ratchet it up to 11. Your truck and your driver have to be [insert bureaucratic organization here] complaint with their “standards” or they don’t let you in. You have to produce emissions documents, driver training documents, inspection documents, a minimum level of insurance that’s sky high, and a million other things. Basically any trucking company you want to hire says, “uhhhhh nope" the minute you ask them.
My natural response to that is if it’s your goods that you’ve already paid for them how can they stop you from picking them up, but where they get you is this…
It’s not the goods, it’s the container itself. The container is owned by the shipping company, and since the TL company has it under their care and responsibility they can technically say, nope, we’re not letting you haul it down the road unless you meet these 489 different certifications. Obviously it’s all bullshit and they’re just protecting their own trucks and drivers.
So…this customer is paying $440 per DAY PER CONTAINER as a fine to have them sit there and they’re being told it might be 4-6 weeks before one of their own companies can haul it out.
Of course, you’re more than welcome to haul it out of here yourself, my good sir……
I smell UCC lawsuits filling up the courts in a few month’s time.
But, we’ve kept it going and turned our focus to raw material and shipping cost volatility. We use it to stay informed on what others are seeing to try and gauge the market and plan. Obviously there’s nothing proprietary being shared at these meetings, but for those of us who import in container quantities (9 out of the 11) we have agreed to share our invoice amounts on Asia containers among the group. None of our companies compete with each other and this way we can stay on top of things and go to negotiations as best informed as possible.
Anywhoo, one member of our consortium has three containers sitting in a trans load warehouse in LA. Been there for a week. They need to go to Savannah, GA, and they cannot find one single truck and driver willing to go in there and get it. Normally there are a zillion different trucking companies that do nothing but trans load, but they are all booked out to who knows when and won’t even give a quote. So…you’re more than welcome to hire your own Joe Blow to drive in there and get it, but good luck.
The TL warehouses are a union shop affiliated with the ports, and if you want to take a truck in there they make it almost impossible to do. California has nasty transport laws to begin with, but these TL companies ratchet it up to 11. Your truck and your driver have to be [insert bureaucratic organization here] complaint with their “standards” or they don’t let you in. You have to produce emissions documents, driver training documents, inspection documents, a minimum level of insurance that’s sky high, and a million other things. Basically any trucking company you want to hire says, “uhhhhh nope" the minute you ask them.
My natural response to that is if it’s your goods that you’ve already paid for them how can they stop you from picking them up, but where they get you is this…
It’s not the goods, it’s the container itself. The container is owned by the shipping company, and since the TL company has it under their care and responsibility they can technically say, nope, we’re not letting you haul it down the road unless you meet these 489 different certifications. Obviously it’s all bullshit and they’re just protecting their own trucks and drivers.
So…this customer is paying $440 per DAY PER CONTAINER as a fine to have them sit there and they’re being told it might be 4-6 weeks before one of their own companies can haul it out.
Of course, you’re more than welcome to haul it out of here yourself, my good sir……
I smell UCC lawsuits filling up the courts in a few month’s time.
okeefe4prez
Well-Known Member
Of critical infrastructure that no one thinks about, the pipeline along the southeast and east coast got front and center attention when it got hacked so that is no longer number 1. Number 1 is the Long Beach Port. When they had a strike a few years ago you couldn't get Freedom Fries at McDonald's in Japan. I have no problem with the workers making coin, that place is expensive, but the ancillary grift out there is ridiculous.
You forgot to mention the best part. The company could find a trucker willing to go in and get the container and that trucker could check literally every single box to let the boys on the dock let him get it, but then when he shows up they will say "Yeah, sorry, the container is buried and it will take 12-14 days to get it out so you gotta be here between 3 AM and 8 AM every day in that window and it might show up."
UCC lawsuits ain't going anywhere. Absolute force majeure and the logistics companies are not engaged in the sale of goods so the UCC doesn't apply to their services.
Fryowa
Administrator
Booked 6 containers today, wouldn't quote an ETA on 4 of the 6. We get them when we get them. No cancellations of in-transit loads, so that's a bonus.
Price is still getting higher and no way is it going to stop anytime soon. LA might as well start a mail delivery service out to ships waiting in port; they aren't going anywhere any time soon.
These 6 were booked at $21,520 each to LA, transload to Omaha is $11,500 each as of now but will be re-calculated at the time of shipment, i.e. it's gonna be more by the time they actually hit the road.
These containers less than a year ago would cost us $5,500 to our door from China, folks. This is going to start hitting your pocket books REAL hard within a few months.
Price is still getting higher and no way is it going to stop anytime soon. LA might as well start a mail delivery service out to ships waiting in port; they aren't going anywhere any time soon.
These 6 were booked at $21,520 each to LA, transload to Omaha is $11,500 each as of now but will be re-calculated at the time of shipment, i.e. it's gonna be more by the time they actually hit the road.
These containers less than a year ago would cost us $5,500 to our door from China, folks. This is going to start hitting your pocket books REAL hard within a few months.
okeefe4prez
Well-Known Member
Just heard the 30k barrier has been broken if you want "expedited" out of China on one large container. That is without a berth in Long Beach so you could still be floating off the coast of California for 60+ days. This is unreal.
Fryowa
Administrator
Expedited definitely. We haven't gone that route and instead are pushing lead times out to customers. We can get away with long lead times because 1) customers aren't going to get product anywhere else, 2) demand is still through the roof all the way down the supply chain.
We are booking equipment for dealers out to October of 2023 and customers aren't batting an eye. It's absolutely ridiculous. Still holding steady for us at $20-22K for a container from Shanghai to our door after transload. With China right now it isn't shipping prices that are still climbing so much as it is lead times.
okeefe4prez
Well-Known Member
Yeah, this dude said load times are a month now and their model predicts with Chinese New Year next week and the current backlog it will be extended to 60 days by the middle of February.
Fryowa
Administrator
For us we have basically 2 container configurations. One is a full container of a single product from a single factory. High-volume stuff. Right now we are roughly 60 days out on those and that 60 days starts not when product is finished, but when it's loaded on the container.
The other is a mixed container which might have as many as 20-30 different components from possibly 5 or 6 different factories. Those lead times are pretty much a shot in the dark, but we estimate double the time for our forecasting purposes. If you have product from 5 different factories that's 5 different sets of paperwork and red tape, and if there's anything the Chinese government is good at it's red tape and holding shit up. We don't play the bribe game, it very rarely works out.
Local company here that I won't name had a whole division go belly up because the played they bribery game during covid (technically it's legal in China, but it's nothing more than extortion) when things were shut down. Well, if you pay a freight forwarder an extra 5 grand to get your container moving, you're gonna pay 6 grand the next time and so on. It's much safer waiting it out.
Eventually China is going to feel the pinch when lead times get too long because companies aren't going to let their money sit in hock that long, and shipping will normalize. The trick is keeping your business above water long enough to ride it out and not make any dumb decisions like paying what amounts to ransom.
MelroseHawkins
Well-Known Member
When does the time come when you say F it and just use a manufacturer in the states? When does the cost difference of the product come in to play when evaluating that cost difference with the shipping nightmare?
As far as a consumer on a much lower level as far as products, I'm willing to pay more if is made in the US and to avoid that shipping. I try to find out if a product I am interested in is coming from China and if is I do all I can to avoid it like the plague. I've had to cancel products I've ordered from Amazon in the past, because 3 months down the line I never got it, and didn't know if I would. I'm pretty much done with it and trying to order locally even if I have to pay more.
Hell, as a consumer and ordering from China, I might not ever get the product if it has to go thru the LA port. If the product gets on a train, who knows what gang ends up having it.
okeefe4prez
Well-Known Member
This is a loaded question. You know how the cost of housing, higher education, healthcare and a few other things have gone through the roof over about the past 40 years? Well, we've had monstrous inflation. But the government is in a dance with industrial companies to tame that inflation by importing everything from China, southeast Asia or Mexico. Think of what a Maytag washer cost 30 years ago. Now multiply that by the inflation calculator plus 1 or 2% per year. It would be a freaking disaster. Hell, I remember my dad bragging about his $600 RCA console TV that he bought in 1977. He was so proud of that thing. You can get a bigger one now for under $100. I cannot put into terms how monstrous the deflation driven by importing is. It is astronomical. For things like tooling, the costs in America are at least a multiple of 10 higher and then that works into the marginal cost of every component, which is also a multiple higher than China.
MelroseHawkins
Well-Known Member
Yea, I kind of put that into perspective and figured this exact reply would be coming. But, with what's going on, when do people say enough and agree to pay more. My post wasn't about "Buy US!" while holding up a confederate flag. It was more looking at the balance of dealing with this crap, delays etc. vs willing to pay more.
We've seen it over the years with automobiles. People have shifted over the past 3 decades of primarily buying cars from GM, Ford, Chrysler, etc. to foreign cars such as Honda, Toyota, Kia/Hyundai, etc.. People were getting less expensive, more reliable cars with greater warranties. Some fought it for years but ended up caving over time. Why, because the wages and benefits in American factories were so much higher that it played into the higher price of American automobiles. Great wages for the auto workers but bites them in the end, unfortunately.
In looking at the US as a whole, I think we are getting into real trouble or a pinch becoming so reliant on China and the products. If we are that reliant they can really take actions to control and cripple our economy. I didn't worry about it so much, even in the recent past. The past year, it has really been evident how this all affects our economy.
The US is only as strong as our economy. To eventually take down the US, you have to take down the economy somehow. I think China has figured that out, and worse, we are letting them.
We have to become self-reliant in the US or we are toast.
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