Why is Everything so Expensive?

Recently I've been looking for something relatively simple: a folding canvas outdoor chair. 

Pre-pandemic, you could have picked one of these cheap chairs for less than a tenner. The going rate was about £8.

Now, you can double or treble that amount. 

But why? What is making such originally cheap goods so expensive? Is there some post-pandemic profiteering going on?

Well, sort of. The big Shipping companies saw an opportunity during the pandemic to dispose of their smaller container ships. Now, this was a logical step: the ships were laid up at anchor with crews on board, so they were being paid, but the ship wasn't earning money.

The companies then decide after a few months that this may be a good time to pay off the crews and scrap the smaller, less efficient ships. I say efficient, what I really mean is cheaper to run. Instead of a crew of 15 being in charge of 10,000 containers and earning the revenue from them, the companies could instead have a crew of 15 on a AAA container ship in charge of 50,000 containers. So the smaller container ships went off to the scrapyards of Pakistan. Where incidentally, Covid wasn't really a thing, certainly lockdowns weren't. So the ships were processed in short order.

Which is great, had the pandemic continued and the shipyards been able to produce enough AAA container ships to match the global demand.

Well, it didn't quite go to plan. The world opened up within a matter of weeks and the demand for imported goods spiked almost immediately. 

And now there weren't enough ships to move the containers. Yes there were the handful of AAA container ships available from before the pandemic, but the smaller ships were gone, scrapped, never to return. 

There simply wasn't enough capacity. So the law of supply and demand kicked in and shipping prices started to skyrocket as importers struggled to guarantee supply chains. The pre-pandemic shipping cost of moving a container from the Far East ballooned from £1500 pre-pandemic, to ten times that within weeks of the pandemic ending and the world opening up. And this was before the price of oil went up. This was just a week or two after the pandemic when oil was relatively cheap.

The going rate now is around £20,000 to £30,000 because the increased price of oil has been added into the mix. To ship a single container. Failure to pay usually ends up in severe delays as your container gets gazumped and bumped off the ship in favour of someone paying more. That's how the market works now. To guarantee supply, you have to pay dearly.

Which gets me back to the folding chair at the start of the article. How many can you get into a container? As a simple maths exercise say 10,000 chairs. 

Instantly the shipping cost per chair has gone from a negligible 15p to a pretty substantial £3. 

So along with the other increased costs like wages, local transport and energy, that £8 chair is now looking more like twice that. 

And that's the thing, these are not insubstantial increases. It's no wonder inflation is so high. The cost is in-built because that particular item is being shipped half way round the world. 

But that's the weakness in globalist theory. Yes, you maximise profits, but there is a risk. Sadly the global corporations mitigated the risk by controlling governments who handed out large sums in compensation for their losses.

During this pandemic the whole world shut down. Products made in Malaysia or Taiwan had to wait for their governments to open up and then take weeks or months to restart full production from scratch.

This should be a lesson to the globalists that their ideology is not robust. Relying on a handful of shipping companies to transport goods from places thousands of miles away is a risky practise. 

So is relying on your ideological enemy to provide the bulk of your energy needs. 

We have to get back to a more local production and supply chain. Maybe not duplicating production in every town and city, but at the very least each continent should have the facilities to produce everything that continent needs. Most continents have the majority of raw materials and workforce able to do this.

Inflation: Over a Decade in the Making.

 Well, the shit really has hit the fan, the Chickens Really have come Home to Roost, and other proverbs.

Yes, inflation has struck in a big way.

It's not like I was saying this over a decade ago. Back then Money was being printed to prop up the financial institutions and the Banks relied on cheap Chinese goods and cheap imported labour to keep the lid on inflationary pressures. Economists looked into their teacups and the leaves revealed all would be good as long as nothing changed to upset the status quo

Had the supply of any of those two things happened, it was a sure bet to anyone with a brain that inflation would start to creep up.

In the end both happened at much the same time: Brexit killed off the cheap Easter European Labour market and at the same time Covid killed the supply of cheap Chinese goods.

Bingo! The perfect storm conditions arrived. 

So prices started to tick up as demand outstripped supply. The demand for cheap labour outstripped the supply of cheap labour, so companies had the start offering higher wages to poach people. But then again we're only talking going from minimum wage to just above minimum wage. But the inflationary pressure is there and it added an extra 10-20% to bills in Restaurants and Retail.

Covid stopped the supply of cheap Chinese Goods for a while. So stocks dwindled to nothing in the West. Then everyone got the all clear and opened up at the same time. Cue container shortages, the cost of shipping going up 200-300% and a backlog as Chinese factories took weeks to fire up the foundries.

It depends on how savvy the supplier is, but again that another additional cost, anywhere between 5 and 20% on top of the increase above.

Oh and then a little guy in Russia started a little war, just to add Vodka to the bonfire. So fuel costs started rising.

So it cost more to ship the goods from China, it costs more to ship the goods locally in your own country and it costs more to pay the people serving you.

That's why inflation is now at close to 20% in real terms. An it doesn't look like it's going to slide back any time soon. 

Sadly the people responsible, the Banks and the Governments that sanctioned the printing of money to prop up their economies have no way to resolve the issue.

They have no way to import cheap labour, they cannot reduce the price of imported goods. The supply of desperate people from Ukraine will no doubt be cynically exploited by Western corporations. Governments will allow them to work in the West, as a "humanitarian" gesture, but we know the truth. Corporations are desperate for desperate people who will work for minimum wage. 

Why do you think it was mooted at one time to allow the illegal immigrants to work? To undercut the people unable to afford to work so cheaply. And why do you think the Rwanda solution has firmed up just now, when there is apparently a ready supply of Eastern European cheap labour available for the picking? Do you really not understand?

Yep, fuck the working class poor. yet again, several times over. 

It really is time to fuck the globalists instead.

 

COVID-19: New Manufacturing Strategy Required.

It's become quite apparent that relying on China to produce EVERYTHING is a mistake when it comes top strategic supplies.

The fact that the Chinese government requisitioned western-owned PPE factories for their own ends shows that the Chinese cannot be relied on to produce the goods (literally) in a crisis.

The supply chain for PPE to the NHS needs to be reviewed and some form of production needs to be encouraged within the UK's borders. Security of supply needs to be written into procurement contracts.

The same goes for drugs. Most of the world's drugs are made in China or India and not within the UK's borders. Again this needs looking at and contractual obligations for supply need to be reinforced.

The pandemic has show the fatal flaw in the globalist ideology. When it comes to the crunch, global supply chains cannot guarantee supply. No matter how much capacity there is, centralisation in cheap labour markets only reduces security of supply.

Next time it might not be a pandemic. An asteroid could drop on China or India and a huge chunk of manufacturing capability would be removed from the world.

Governments need to learn that leaving things up to market forces is not the best policy when it comes to strategic supplies. Yes you can have stockpiles of PPE for the NHS, but to ensure continuity of supply in times of crisis, you'd have to keep a huge amount of kit.

The problem then is one of shelf life and expiry dates. The NHS normally doesn't use enough kit to refresh stocks quickly enough to use a mountain of equipment within the expiry dates. We've already seen that with equipment sent out to NHS trusts with original expiry dates expired.

But the issue is not restricted to PPE. International shipping across the world has been impacted by the virus and it's proving difficult to get parts shipped from one side of the world to the other as countries close borders.

Even for us, posting or couriering parts out to customers around the world is proving difficult as the number of flights that could carry the packages have been reduced by 80%. Only courier companies Like DHL and FedEx that have their own aircraft are able to keep close to a normal timetable.

Hopefully this will be another nail in the coffin for globalism. Paying a small premium for a product to ensure continuity of supply is a price worth paying. Global corporations need to understand this. Governments across the world need to take this message on board and adjust procurement strategies accordingly, favouring local supply where possible.

It's not just about jobs, or xenophobia as the globalists would have chanted before the pandemic. There is some sense in keeping jobs and production within our own borders.

Hopefully it's a lesson learned.