Can Investors Avoid Rising Supply Chain Risks?

Key Points

  • Supply chain issues are worsening again, reversing improvements seen earlier this summer.
  • This increases the risk to corporate sales, manufacturing production, and consumer inflation.
  • European stocks may offer a potential opportunity for investors seeking to avoid those rising risks.

Shipping logjams are back to the worst levels of the pandemic, posing new risks for investors.

One way the rapid worsening of supply chain logjams can be seen is to look at the four-fold rise in number of containerships at anchor waiting to be unloaded in San Pedro Bay outside of the U.S.’s busiest ports of Los Angeles and Long Beach. After dropping to less than 10 in June, the number of ships is back up to 40. Most are coming from China and have taken about 14 days to cross the Pacific and now must wait as long as several weeks for an opportunity to unload and get put on trucks.

San Pedro Bay crowded again

Source: as of 8/27/2021.

The rise and fall and rise again in the port logjam can be seen in the chart below. July and August have seen a steady rise in congestion back to the peak of February. While there is often a seasonal surge in shipments in the late summer, the chart shows how this year’s back up is 10 times that of a year ago.