>> WELCOME BACK TO
CHEDDAR EVERYONE I'M KRISTEN
SCHOLER AT LOCAL OFFICIALS IN
CHINA IT SHUT DOWN A MAJOR
SHIPPING TERMINAL DUE TO THE
COUNTRY'S 0 COVID POLICY WILL
DISTRICT SHOW OF FORCE AGAINST
JUST ONE POSITIVE
COVID CASE. THE LATEST SQUEEZE
ON ALREADY STRETCHED
SUPPLY NETWORK SO JOINING ME
NOW TO BREAK IT ALL DOWN IS
ALEX HIRSCH AND CEO CO-FOUNDER
OF THE LONDON BUT THEY SUPPLY
CHAIN TECHNOLOGY COMPANIES AND
CARGO. ALEX THANK YOU SO MUCH
FOR COMING ON THE SHOW THIS
AFTERNOON. WHAT IS THE
SIGNIFICANCE OF THIS MOVE BY
CHINA AND WHAT IS THE POTENTIAL
RIPPLE EFFECT.
>> YEAH, THANKS FOR HAVING IT'S
THE 3RD LARGEST PORT IN
THE WORLD. THAT THE TERMINAL
THAT'S CLOSE AS 20% ABOUT THE
PAST 08:26AM. I NOT SEEM LIKE A
BIG NUMBER BUT 20% OF THE LARGE
NUMBERS THAT A VERY LARGE
NUMBER. I THINK IT'S
SIGNIFICANT BECAUSE THE PAST
YEAR HAS BEEN ONE OF THE MOST
CHALLENGING IT SUPPLY CHAINS.
DEMAND GROWTH HAS BEEN
SIGNIFICANT IN LARGE PART
BECAUSE OF THE U.S. CONSUMER
AND THERE'S BEEN SEVERAL ONCE
IN A
GENERATION SHOCKS THAT REALLY
CRIPPLED SUPPLY CHAINS LIKE THE
MTN CRISIS THEY HAVE A GIVEN
SITUATION PULL CONGESTION IN
THE U.S.. SO LONG STORY SHORT
WHAT THIS MEANS IS IT'S GOING
TO BE HARDER TO GET GOODS
FROM CHINA INTO THE U.S. IS
GOING TO BE LONGER LEAD TIMES
WHICH MEANS MORE RISK OF
CONSUMER BUSINESSES RUNNING OUT
OF STOCK AND ULTIMATELY IT'S
GOING TO PUSH PRICES OFF AND
YOU MIGHT SEE THAT THE
INFLATION.
>> SO LET ME ASK THIS ALEX TO
WE KNOW WHAT THIS POOR
IN PARTICULAR. THIS DOCK SHIPS
IS IT TECHNOLOGY
IS IT FURNITURE DO WE HAVE ANY
SENSE AS TO THE GOOD
SPECIFICALLY COMING OUT OF THIS
ONE.
>> YEAH IT'S IT'S A CROSS
SECTION IS A LOT OF
CONSUMER GOODS. I'M IN AND
AROUND THE REGION AS A LOT OF
TIMES YOU'RE BEING
MANUFACTURED, BUT IT'S ONE OF
THE LARGEST PORTS IN THE LOT AS
I MENTIONED BEFORE SIR REALLY
IS A CROSS SECTION. AND IT'S
GOING TO HIT. YOU KNOW COMING
INTO PEAK SEASON COMING IN SORT
OF THE
YOU KNOW CHRISTMAS SEASON, IT'S
REALLY CAN HIT WIDE RIGHT TO
BUY CONSUMER GOODS AND B TO BE
GOODS THAT ARE USED IN
THINGS LIKE YOU ALL TO
MANUFACTURING ET CETERA DO WE
KNOW HOW LONG IT'S IT WILL BE
SHUT DOWN FOR.
OUR BEST GUESS RIGHT NOW IS
IT'S 3 WEEKS THAT WILL BE SHUT
DOWN 4 AND THEN ANOTHER 3 WEEKS
TO RECOVER.
THE REALITY IS WE DON'T KNOW AS
THE MISS CHINA OPERATES A
STRICT 0 COVID POLICY.
IT'S TOUGH TO TELL SO RIGHT NOW
WE'RE BRACING FOR 3 PLUS 3
SITUATION, BUT IT COULD
OBVIOUSLY DID
ON THAT.
>> OKAY, SO BASICALLY A
SIX-WEEK BACKLOG. IT SOUNDS I
THINK FOR A LOT OF PEOPLE
CERTAINLY IN THE WINTER LAST
YEAR THEY WERE WAITING AT LEAST
2 TO 3 MONTHS FOR ANY SORT OF
FURNITURE. AND YOU'RE RIGHT
BACK TO SCHOOL SEASON PEOPLE
STILL WORKING AT HOME WITH A
DELAY TO THE RETURN
TO THE OFFICE AT THIS CERTAINLY
IS GOING TO CREATE CHALLENGES
IN AND HIGHER PRICES WHICH WE
KNOW IN SOME CASES ARE
ALREADY HIGHER ALEX ANY
ESTIMATE THERE ARE IN TERMS OF
HOW MUCH THIS COULD RAISE
PRICES SPECIFIC LEON WHICH GOOD
TIMING
DOES THIS SEND THE PRICE OF
LUMBER FOR INSTANCE SOARING
AGAIN WE JUST
SEEN IT COME DOWN, BUT IS THAT
TRANSITORY AS A FACTOR NOW A
NON TRANSITORY THING.
>> I THINK I THINK THERE'S 2
THINGS TO NOTE THAT NUMBER ONE
IN MONTREAL LEVELS THE U.S.
BUSINESS IS STILL
VERY LOW. SO WHAT THAT MEANS AS
WELL THEY'VE HAD A REALLY GOOD
YEAR FROM THE SALE SUSPECTED
ESPECIALLY KNOW YOU AND THEY
SAID IF YOU
CONSUMER-FACING SPACE IMAGE
LEVELS ARE STILL LOW SO THESE
BUSINESSES NEED TO GET STOCK
AND EVEN THOUGH THEY'VE BEEN
PUTTING STOCK IN
ALL YEAR. SO THAT CREATES ONE
ISSUE WHEN YOU THINK ABOUT
INFLATION IS HOW THEY ADJUST
THAT PRICE IS GOING TO PEAK.
THE OTHER THING IS YOU
MENTIONED A NUMBER
OF THAT ACROSS WHEN SITUATIONS
LIKE THIS HAPPEN IT HAS RIPPLE
EFFECTS ACROSS THE ENTIRE
SUPPLY CHAIN IT'S GOING TO MEAN
THAT TO MOVE GOODS FROM THE FAR
EAST INTO THE U.S. THAT PRICE
IS GOING TO GO UP
AND BUSINESSES HAVE BEEN GOING
TO HAVE TO TAKE DECISIONS ON
WHETHER THEY PASS THAT PRICE ON
TO THE CONSUMER OR NOT I THINK
WILL HAPPEN IN REALITY IS
IF THIS IS A 2 WEEK PAUSE TO
MAKE SITUATION WE MIGHT NOT SEE
SIGNIFICANT PRICE RISE.
IT IS ENDS UP BEING A 3 WEEK
PLUS 3 REGAL FOR POSSIBLE
SITUATION IN YOUR SUNDAY TO GO
INTO TOTAL AND IT'S REALLY
GOING TO PEAK.
YOU KNOW WE COULD SEE MORE
PRESSURE ON INFLATION AND
ULTIMATELY THE PRICE THAT
CONSUMERS PAY FOR GOODS.
>> AND LET'S LET'S TALK
CHINA'S
ACTION LOOK I THINK MOST PLACES
IN THE U.S.. IF THERE'S A COVID
CASE WITH CONTACT TRACING THOSE
WHO HAVE COME IN TO AND INTO
CONTACT WITH THAT PERSON WILL
BE CONTACTED AND ASKED TO
QUARANTINE BUT I THINK IT
DOESN'T NECESSARILY
MEAN THAT.
>> AND OUTRIGHT OFFICE OR POOR
OR BUSINESS. WELL ENTIRELY SHUT
DOWN BUT FOR EACH BUSINESS IT
IT MIGHT ACTUALLY BE DIFFERENT
TALK TO YOU ABOUT THE
SIGNIFICANCE OF THE 0 TOLERANCE
POLICY IN CHINA AND IF
YOU'RE SEEING THOSE STRINGENT
MEASURES A COMPLETE BASED ON A
SINGLE COVID CASE ELSEWHERE.
>> IT IS IT IS HAVING A
VERY LARGE IMPACT THE REALITY
IS I MENTIONED BEFORE THIS
PARTICULAR PART OF THE POLL IS
20% OF THE
TOTAL CAPACITY. IT'S THEIR 35
MILES AWAY FROM THE RESIDUAL
80% CAPACITY AND SO WHAT'S WHAT
ME NOW IS IS WHAT HAPPENS IF
BECAUSE IT WAS A DELTA DELTA
STRAIN WHAT
HAPPENS IF THAT'S THE CASE YOU
KNOW 3035 MILES AWAY WE'RE
SEEING FLIGHTS BEING SHUT DOWN
INTERNALLY WITHIN CHINA.
I I KNOW THAT THE FISA NATION
WAS SHUT DOWN TODAY DEFINITELY
TAKING IT VERY SERIOUSLY AGAIN
THE BACKDROP OF THIS WHOLE
SITUATION. IT'S A VERY FRAGILE
SUPPLY CHAIN IS A
WORLDWIDE HIM ON HIS EXTREMELY
STRONG THAT IS NOT CAPACITY YOU
CALL BUILD SHIPS OVERNIGHT TO
SATISFY
ADDITIONAL CAPACITY. SO WHEN
YOU HAVE THE SITUATIONS WEB
PORTAL TERMINAL TO CLOSING DOWN
IT JUST HAS IT HUGE
HUGE EFFECT ON A VERY VERY
FRAGILE MARKET.
>> AS WE GOT TO LEAVE IT THANK