Category Archives: Managerial Econ

Posts relevant to Managerial Economics.

Quote

Blanking voyages masks real impact of Covid

Spot rates for container shipping are staying up, but only because ocean carriers continue to blank voyages big time.

If you were shipping and you feared your voyage would be blanked, what would you do?  You would be prepared to buy some shipping at spot, to be sure you can get on the ship.   Your ratio of long-term (and possibly delayed) contracting for shipments and your short-term purchases would change in favor of the short term.  And that would keep short term demand up in spite of a long-term need going down.  That’s what’s happening now.

With COVID-19 out there, and no certainty about international trade, it seems certain that conditions are much worse than are being reported based on shipments. At some point the other shoe will drop, and all prices will go down.  We need not to trust the BIMCO spot prices for future predictions right now.

logo

By    

via Blanking voyages holds ocean rates steady, but masks the real impact of Covid – The Loadstar

1 Comment

Posted on May 4, 2020 by in Managerial Econ, Microeconomics, Shipping, Supply Chains

Tagged , , , ,

Quote

ITF Study on shipping alliances makes EC exemption decision ‘puzzling’

Why did the EU decide to extend shipping alliances’ rights?  This article in the Loadstar points to a short piece on Linked in calling attention to a study by Olaf Merk (and others) critiquing alliances and what they have done to the ocean shipping and port industries.

The study points out alliances were useful in the distant past, but today they are serving to consolidate ocean shipping, reduce offers and most every service, and they also put great pressure on ports to engage in competition on facilities, a costly endeavor that results in over-allocation of capital for the use of few lines.

I’ve attached the Merk etal. article below. He’s an eminent port and maritime economist, and what he writes should be taken seriously.

logo

By Alex Lennane 22/11/2019

 

via Study on shipping alliances makes EC exemption decision ‘puzzling’ – The Loadstar

The Impact of Alliances on Container Shipping

1 Comment

Posted on November 23, 2019 by in Logistics, Managerial Econ, Shipping, Strategy, Supply Chains

Tagged , , , , ,

Quote

Assessing tariff impact SKU-by-SKU

The hard but accurate way to figure out the effect of tariffs on your product line draws a page from ABC accounting. Examine each and every SKU.  Apparently Home Depot has done this.  The results should be a finer-grained snapshot of tariffs’ effect.

It should also supply information for decisions as the tariff situation changes in the short term, as it most certainly will.  The article states that at a similar company, Lowe’s, tariffs cost it 40 basis points of gross margin. That’s a lot in a business where markups are not that large.

supply chain dive logo  by

via Home Depot assesses tariff impact SKU-by-SKU | Supply Chain Dive

Leave a comment

Posted on November 23, 2019 by in Logistics, Managerial Econ, Production Operations, Strategy, Supply Chains

Tagged , , , ,