Port workers get paid/Other stuff

So with the port strike lasting just 3 days, fortunately and hoping the remaining big issues get resolved, it will now take 3 weeks to work through the backlog according to Lori Ann LaRocco at CNBC. With some pretty heady wage gains in the coming years on top of already generous pay it begs the question of what the flow thru is on the price of manufactured goods. To say again, the Phillips Curve many times gets conflated with some saying higher wages should lead to higher inflation. No, the theory was that a tighter labor market should lead to higher wages and vice versa, basic supply/demand math. The reason why it doesn't always flow thru to higher inflation is if the business that has more expensive labor costs increases their productivity, they won't have to raise prices to the end user/customer in order to maintain profit margins. However, when productivity levers are not able to be pulled, prices to consumers could go higher and we've seen that writ large in the restaurant industry over the past few years.

If the union is going to push back on automation progress, these wage increases are not going to be offset by faster productivity at the ports and higher prices thru the supply chain will most likely occur. The trip back to 1-2% inflation on a SUSTAINABLE basis I continue to believe is many years in the future.

Shipping stocks are all trading down on the strike's end. Maersk in Copenhagen is down by 5.5%. Hapag-Lloyd is weaker by 11.6% in Germany. 

With respect to air cargo rates, World ACD said today that "average worldwide rates - based on a full market average of spot and contract rates - in week 39 edged up slightly (+1%, W/o/W) to US$2.61 per kilo, taking them +10% higher, Y/o/Y." But, "the changes to spot rates are more pronounced, for both W/o/W and Y/o/Y comparisons." Here, they jumped 4% vs last week and are up 20% vs last year. After the port workers getting back to work, hopefully we'll see a pullback in the coming weeks. https://www.worldacd.com/trend-reports/weekly/worldacd-weekly-air-cargo-trends-2024-week-39/