Stuck Ships and Supply-Chain Inflation
By Paul Krugman
It has been a week since the Dali, a container ship, struck the Francis Scott Key Bridge in Baltimore. Its still stuck there, and the images remain amazing, in part because the vessel is so huge compared with whats left of the bridge. How could planners not have realized that operating superships in the harbors confined waters posed a risk?
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Well, it would have been quite a big deal if it had happened in late 2021 or early 2022, when global supply chains were under a lot of pressure. Remember when all those ships were steaming back and forth in front of Los Angeles, waiting for a berth?
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Still, global supply chains dont have as much slack as they did, say, last summer, after the pandemic disruptions were mostly a thing of the past, because Baltimore isnt the only problem. The Panama Canal is operating at reduced capacity because a historic drought, probably in part a consequence of climate change, has limited the supply of water to fill the canals locks.
Elsewhere, the Houthis have been firing missiles at ships entering or leaving the Red Sea, that is, heading to or from the Suez Canal. Presumably as a result of these and other problems, the New York Feds widely cited index of global supply chain pressure, while still not flashing the red lights it was showing in the winter of 2021-22, has worsened significantly since last August:
Continued at The New York Times - Gift Link