Financial services media highlights Financial services media highlights

A bridge collapse, an earthquake, and a possible worker strike: Ports around the world are dealing with shipping delays.

Several unpredictable events in the past week will likely lead to shipping and trade delays around the world.

Both importers and exporters who rely on the port will need to adjust their operations, likely shifting to alternative ports of the eastern seaboard. This could result in long-term supply chain delays.

CSX and Norfolk Southern have both announced changes in cargo rail service to handle shipments that have been diverted to alternative ports. CSX has already completed a shipment on a new rail line established for this purpose. In the long term, this bridge collapse could also be used to justify higher prices for global catastrophe reinsurance. 

Across the world, Taiwan experienced a 7.2-magnitude earthquake on April 3rd, making it the country’s biggest earthquake in 25 years. Taiwan is one of the world’s largest manufacturers of semiconductor chips, which are a key component in building computers and other electronics. While the damage was limited relative to the size of the earthquake, this will likely cause a slowdown in the global semiconductor chip supply chain. 

Finally, a potential port worker strike in Chile could further impact the global supply chain. Workers already launched a 24-hour strike in early April, with the potential for future action if their demands are not met. Workers are protesting layoffs and poor safety conditions at the port. Chile is one of the world’s largest exporters of copper and lithium, among many other raw materials and goods. 

With so many potential shipping disruptions, the world is bracing for potential supply chain delays. The impact of these events could continue through the remainder of 2024, although many companies are already taking steps to mitigate the impact as much as possible. 

The price of gold has reached record highs at the beginning of April as investors look for a hedge against inflation and other forms of market instability.

Of course, many investors are trying to pinpoint when the precious metal will hit its peak. However, there are factors beyond inflation that could keep prices high. Signs indicate that the US Federal Reserve could cut interest rates, which is often correlated with high gold prices and investment levels. Gold prices also aren’t affected by political unrest the same way that many stocks, bonds, and other commodities could be, which makes them attractive in times of political uncertainty. 

This price spike coincides with record-high gold exports from Canada, particularly to the United Kingdom and Switzerland. Canada now has a trade surplus of $1.39 billion CAD.  

This coincides with an increase in layoffs. Layoff rates in the US were up 7% in March, the highest number since early 2023. Layoffs have been particularly prevalent in the tech sectors as companies are looking to reduce costs. Many government agencies have also cut jobs in recent months. 

The US Bureau of Labor Statistics is set to release its next job report in early April, which will provide more detailed information about the employment market. The Fed is also considering an interest rate cut, which could be announced shortly thereafter. The Fed considers the current job market when deciding to make rate cuts. If layoffs and unemployment claims remain consistent, this could support the case for further rate cuts. 

Both US stocks and bonds have seen ups and downs in the run-up to this jobs report. While the job market appears to be slowing down, it’s still relatively strong. In fact, neutral payroll growth is actually increasing. Many experts attribute this to rapid immigration rates over the past year, which has helped fill shortages in low-paying jobs.

Gasoline prices have been increasing in the first few months of 2024.

Consumers are feeling the impact of these high gas prices, with Utah, Alaska, and Idaho seeing the largest price increases. Prices are also up 60% since 2020 in the United States, which could become a key issue for voters in the upcoming presidential election.

While these price increases are frustrating for consumers, there are some factors that could keep them in check in the coming months. Winter storms have limited outputs from US refineries, but levels should return to normal as the weather warms back up. However, they will need to compensate for ongoing oil supply issues internationally. The ongoing Russo-Ukrainian war and Houthi conflicts in the Red Sea have both caused supply chain issues, leading to higher prices. 

The COVID-19 pandemic left the travel industry reeling. Strict international travel restrictions, attraction closures, and social distancing rules meant that travel was not safe or advisable in most cases. However, four years after the onset of the pandemic, the travel industry is finally rebounding. 

It’s estimated that the travel industry will contribute a whopping $11.1 trillion to the global economy in 2024, a record number. Approximately one in 10 people globally are employed in the tourism sector, making this industry’s rebound essential to a stable job market. 

Interestingly, major markets like the US and China are not major contributors to this tourism growth. In the US, this is likely because the high value of the dollar makes trips to the country expensive for many international travelers. Both American and Chinese travelers have also been spending money on domestic trips, rather than international ones. 

However, other countries have seen a huge boost in their travel rates. For example, Japan welcomed 2.73 million visitors in December 2023, a record number. Markets like Mediterranean Europe, North Africa, and the Caribbean have also seen very strong tourism numbers.