Good day,
The United States’ quixotic trade war against all comers, including close allies like the EU and our biggest trading partners, including Canada, Mexico, and China, appears to be heating up, but as Bloomberg reported this morning, economists are “all over the map on trade war’s duration, scope.” Bloomberg surveyed 31 economists and analysts on how big the tariffs will get and how long they’ll last, but responses varied widely. Estimates of the trade war’s duration were almost evenly distributed in a range between three months and three years, with a median estimate of 12 months.
“The variation in responses underscores the difficulty of predicting President Donald Trump’s actions, along with skepticism that either China would quickly fold or that Trump would follow through on his biggest tariff threats,” wrote Reade Pickert and Catarina Saraiva.
Did you know?
The Bureau of Labor Statistics reported that the producer price index (PPI) rose 0.3% in June from May’s levels, beating expectations of a 0.2% gain. Year-over-year wholesale inflation rose to 3.4% during the month, marking the fastest pace of producer price increases since 2011.
Quotable:
“The size of these tariffs and the goods they are being placed on are really not big enough to derail the [overall economy]; they really impact specific industries but [won’t significantly hurt] the broader macro economy. What you do worry about is how these tariffs spill over into the rest of the economy. Just thinking about how the growth of the economy is, much of it is driven by how consumers feel about the economy, how businesses feel about the economy.”
-Ibrahiim Bayaan, FreightWaves Chief Economist, during yesterday’s Market Update webinar
In other news:
U.S. warehouse supply at its tightest in two decades
For U.S. retailers, manufacturers, importers and exporters, warehouse space is at its tightest since 2000, when the first dot-com boom was driving strong consumer spending and imports from China were beginning to surge. (Wall Street Journal)
May says U.S. trade deal is back on track after Trump’s criticism
British Prime Minister Theresa May said she and Donald Trump had agreed to complete a trade deal between their countries as soon as the U.K. leaves the European Union, moving past tensions raised by the U.S. president’s criticism of her Brexit strategy. (Bloomberg)
Quiet week for spot rates, but box carriers need to act to ‘stop the rot’
On the transpacific, spot rates gained 8.4% on the week for US west coast ports, to $1,685 per 40ft, and 3.3% for east coast ports, to $2,710 per 40ft. Carriers serving both tradelanes have endeavored to impose FAK and GRI increases to take advantage of peak season demand. (The LoadStar)
Bargain hunters: Canadian Pacific, two unions bag mutually beneficial pacts
It would have been difficult at that point in late 2017 for anyone to predict how long — and acrimonious — the contract talks between the railroad and those two unions would turn out to be in 2018. (Progressive Railroading)
Lufthansa Cargo to offer spot market capacity on digital platform
Lufthansa Cargo will begin offering spot market capacity through online platform cargo.one as it pushes its digital offering to forwarders. The German cargo carrier has signed a co-operation contract with cargo.one allow customers to book available capacity for its express service td.Flash and its standard service td.Pro “completely digitally and in real time across the entire available route grid.” (Air Cargo News)
Final Thoughts:
Yesterday, FreightWaves hosted its inaugural Market Update webinar with Ibrahiim Bayaan and Craig Fuller. Bayaan explained the current state of the US economy, including the tailwinds driving growth and potential risks in the future. “Right now, the economy is kind of firing on all cylinders heading into the third quarter,” Bayaan said. “The second quarter is likely to be the strongest quarter of the year. The third quarter will still be strong, not as strong as the 4.2% GDP [growth] we expect in the second quarter, but still good.”
That strength, pending something unexpected, should continue. The outlook for 2019, though, will be start to “return to normal,” Bayaan noted, pointing out that 2018 has been helped by a number of tailwinds.
“Right now, the economy has a number of things helping it,” he said. “We are still kind of benefiting from the tax cuts and there were a couple of one-off [events] that helped trade [during the second quarter].”
Hammer down everyone!
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