Good day from the Wizard,
Inflation, Inflation, Inflation
Interest rates, Interest rates, Interest rates
Election, Election, Election
I know we are all tired of constantly hearing the same things or seeing the same ads on television.
We are hearing from many that the fall has been less than stellar for sales. Everyday business has been off, according to many industry leaders. We continue to try to figure out consumer demand patterns as consumers’ expenditure habits have changed since the peak of COVID in 2021. Some have even complained that oranges and other fall colors are not selling. So, at this point, things seem to be as clear as mud.
Production at many South American farms has been lower than usual despite major expansions. One major grower said he estimates that 90% of farms are throwing flowers away due to low everyday demand. European demand is low as well.
We all know costs have gone up. One industry expert told a group that the average cost of most goods has increased by 22%. It will be very interesting when companies start to figure out their bottom line.
Exchange rates have also been very interesting to follow as our US dollar gets very strong against other currencies.
This is making it more interesting for these countries to favor shipping their products to the States.
As usual let’s chat a little about Logistics since they influence everything we do!
There may be serious cracks in the freight industry.
We have some resistance to current freight rates and many buyers asking for lower rates. Some cargo companies must be salespeople again as they have space and services to offer.
For the near future, we don’t see freight dropping a great deal. Freight is not like the current real estate prices rebalancing. Interest rates are not a big factor in the price of freight. Increasing fuel prices are a big factor. Both Jet fuel and Diesel fuel prices have been increasing. Flowers compete with a lot of other high-paying cargo. Wintertime almost always causes diesel fuel prices to increase. Container prices are cheaper than in 2021. Trucking has dropped less and depends on the lanes. Please see the articles below on Diesel prices and freight rates:
Obviously, the freight issue is much better than last year. There are some issues, like the FedEx fiasco. The number of greenhouses in Europe closing for the winter because of high natural gas prices may put some pressure on flights from South America as European distributors have to replace European products. This may also create more competition for space in Miami as products headed to Europe may have to transfer there.
To conclude with good news, here is a snippet of an article from Reuters:
Some hints that U.S. price pressures are beginning to ease even as overall inflation remains high could encourage Federal Reserve policymakers to opt for smaller interest rate increases after they deliver a fourth straight supersized hike next week.
While the Commerce Department reported on Friday that underlying inflation pressures remained stubbornly high last month, the Labor Department’s Employment Cost Index showed a considerable slowdown in private-sector wage growth in the third quarter – it rose 1.2% compared to 1.6% in the second quarter – suggesting the likelihood of a scenario of ever-rising wages pushing prices higher may be receding.
One thing we are certain of is that everything is currently uncertain! As one industry expert reminded us, “Hope for the best and plan for the worst!” Who would have expected the Dow to increase 828 points as I write this on October 28th?
As always thanks for reading my rants,
The Wizard
