Recession vibes at the Port of Los Angeles; Quietest period since 2009
The economy is in trouble. But you didn’t need us to tell you that. We’ve had enough warning signs well in advance:
- Recently, FedEx warned of a global recession with slowing shipping demand.
- The world’s largest container shipping company Maersk warned of “plenty of dark clouds on the horizon.”
Amazon laying off 10,000 employees right before its busiest period (the holiday season) is also a troubling sign.
Here’s another red flag
…This time, from one of the main US shipping gateways to China. The Port of Los Angeles is seeing its quietest period since 2009.
Earlier this year, there were hundreds of ships waiting outside the port. But now that demand is falling, retailers are pulling back on new orders.
Target’s earnings report yesterday sums up the state of retail.
- As one of the largest US retailers, Target overstocked on inventory during COVID. Now that demand is falling, it’s holding back on new orders.
- To get rid of that inventory, they offered major discounts on products that brought down their profit margins.
To recap: Ordered too much inventory → offeredr big discounts → margins went down → unhappy investors.
Target reported earnings falling ~50% in the third quarter and lowered forecasts for the busiest time of the year.
From Target’s CFO: “As we look ahead, we expect the challenging environment to linger beyond the holiday season and into 2023.”