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KAI RYSSDAL: I’ll tell you who is in the money, though. Shipping companies, that’s who. I saw a report from a firm in Singapore the other day saying container volumes — that is, how much stuff its moving — is up more than a third from a year ago. And they’re raising prices, too. Bloomberg News reported this morning that ports in Asia are so busy, they’re clogged with ships waiting to load up. Bloomberg says shipping companies can’t keep up with increasing consumer demand here and Europe.
Marketplace’s Alisa Roth says that is true, as far as it goes.
Alisa Roth: For the last two years, Americans have been buying less. So manufacturers have been making less, and retailers have been stocking less.
Craig Sherman works for the National Retail Federation, a trade association for the retail business. He says that’s starting to change — retailers are slowly stocking up again.
Craig Sherman: And if retailers are increasing their inventories, they’re doing that because they expect to be able to sell merchandise. Retailers are definitely anticipating improvements in the economy.
More demand means more imports. The Retail Federation predicts the amount of cargo coming into the U.S. will increase by nearly 20 percent this year. That would get imports close to what they were in 2008.
But right now, a lot of those imports can’t get to us. There are containers full of merchandise sitting in ports all over Asia, because the shipping companies simply can’t handle all the traffic. It’s not that there aren’t enough ships. But during the recession, shipping companies cut back the number of vessels in service — much like the airlines did when fewer people started flying.
Ross DeVol is an economist at the Milken Institute. He says it just cost too much to keep ships in the water.
Ross DeVol: Many of those shipping companies have been very reluctant to bring in capacity too quickly. So they’re trying to be strategic about how they add that capacity, trying to get prices back up so that they can cover their operating costs.
He says he doesn’t know how long it will take for shipping companies to get their capacity back in line with demand. But Craig Sherman, from the Retail Federation, says it had better happen soon. If stores can’t get the merchandise their customers want, it could slow down the recovery.
I’m Alisa Roth for Marketplace.
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