Published on 10 May 2021 While the entire country is on a countdown to the end of the health crisis, the retail industry should brace itself because a huge wave of closures is coming. Analysts from stockbroking firm UBS are warning that "at least tens of thousands" of store closures will occur as a result of the permanent shift in consumer behavior and the rise of e-commerce, whereas a new study conducted by Morgan Stanley experts found that 1 out of 3 shopping malls will soon disappear from the U.S. economic landscape. The decay of struggling U.S. malls has been years in the making. Industry analysts have been speculating for years what would be the ultimate catalyst to trigger malls' undoing - and after the sanitary outbreak hit, they had their answer. It seems like hundreds of commercial properties have reached the point of no return across the U.S., and that's mainly attributed to the fact that the strict social distancing restrictions forced consumers to learn to buy the things they like, want, and need using online platforms. In face of endless possibilities and increased convenience offered by the virtual experience, it's very unlikely customers ever resume their previous spending patterns in physical stores. Already, 18 major retailers filed for bankruptcy, mostly concentrated in apparel and footwear, home furnishings, grocery, and department stores, according to Green Street reports. Some of these businesses spent over 100 years building their brands into household names, but in 10 short years, a retail apocalypse swept across the industry and left stores empty while malls started to lose relevance. The decay of the sector, like so much in the last decade, can be traced back to the last financial crisis. After the housing bubble burst, several retailers struggled to make it through the Great Recession. Hundreds of thousands of employees were laid off and private equity firms intervened, but in that process, they burdened mall brands with massive amounts of debt. Even companies that managed to stay afloat during the current recession, have been announcing mass store closures hoping to curb their expenses. Consequently, such closures are having a huge impact on mall occupancy rates and recent numbers are already showing it. In the first quarter of 2021, regional malls in the United States registered the highest vacancy rate in history at 11.4%. The outlook for the sector remains bleak as many more closures are expected. In a report released in April, UBS predicted that in the best-case scenario roughly 80,000 retail stores would close all across the nation in the next few years, affecting nearly 9% of all retail stores, which means one in eleven stores in the United States is on the verge of disappearing forever. In the worst-case scenario is that twice that number of stores could be shut down, accounting for as many as 150,000 closures. In face of this gloomy forecast, and considering it would be incredibly difficult to fill in all that vacant retail space during one of the worst economic recessions this country has ever experienced, according to a team of Morgan Stanley analysts, 30 to 35 percent of U.S. malls are likely to close for good over the next few months. In other words, 1 out of 3 shopping malls may go extinct even before the economy reopens. Until two years ago, Green Street Advisors still expected them to disappear by 2030, but after last year's events, that forecast got remarkably adjusted: now they anticipate the malls will fade out before the end of this year. Investors are now having to assess if the best move is to reoccupy the vacant space or cut out the distressed property from their portfolios entirely. Remaining a viable option for investment in a market that is becoming increasingly distressed will certainly not be easy. Already, some of these property owners have taken some desperate measures to keep doors open. As a sign of the times, while vaccines roll out across the country, thousands of people are getting vaccinated in abandoned Kmarts, Sears, and Toys R Us, instead of CVS pharmacies or local health clinics. For mall owners that have seen store vacancy rates skyrocket over the past twelve months, the symbolism of having deserted stores transformed into mass vaccination clinics underscores how rapidly our economy has changed after the health crisis began, and how the retail apocalypse is turning our once-thriving economic landscape in a dystopian scenario. And even though the end of the outbreak might be in sight as the distribution of the vaccine ramps up, for decaying malls, it seems that this "new normal" means that the new dystopian reality is here to stay. https://www.epiceconomist.com

Source https://m.youtube.com/watch?v=4c9-VERGsTA Published 16th June 2021 14:23 Description Global Shipping Chaos Is Worsening Supply Chain Crisis As Freight Rates Shot Up By 300 Percent Epic Economist47,055 views16 Jun 2021 For the past twelve months, global supply chains have been facing a crippling shipping crisis that has only become more acute. But now, global traders are extremely alarmed about the proportion of the chaos the world is about to experience as a new round of lockdowns is severely aggravating the logjam of box ships and containers in Asian ports. Since 2020, a critical shortage of shipping containers has been causing massive delays in the delivery of imported goods from China to Europe and the U.S., which resulted in widespread shortages and rising prices for businesses and consumers. But again, businesses and consumers have to brace for yet another shipping crisis, more shortages and more expensive products, as a virus outbreak in southern China is interrupting port services and delaying deliveries. In the Chinese province of Guangdong, a sudden uptick in new infection cases was recorded during the past week. In response, authorities decided to completely shut down districts and businesses to prevent the virus from spreading uncontrollably. However, major Chinese ports are currently halted, which has been jacking up already-soaring shipping costs as waiting times at berth "skyrocketed," according to analysts in the shipping industry. "The disruptions in Shenzhen and Guangzhou are absolutely massive. Alone, they would have an unprecedented supply chain impact," said Brian Glick, founder and CEO at supply chain integration platform Chain.io. Spiking shipping costs have been a direct effect of the closure of the Chinese ports. But higher freight costs are plaguing the industry since the burst of the sanitary outbreak, skyrocketing by almost 300% over the past 18 months. Small and medium-sized businesses that managed to navigate through the recession are now facing extra hardships to send their products overseas as they can't afford the exorbitant freight rates. According to Drewry Shipping Consultants, prices for containers climbed from $1,486 per 40-foot container in May 2020 to $5,472 by May 2021, but as more and more companies have started to look to convert ocean freight shipments to air freight - since they simply cannot afford both the delays and the huge costs - that is likely to further increase shipping costs. "This is uncharted territory in terms of carrier profits - in terms of freight rates, in terms of just the level of disruption that the supply chain is seeing," emphasized Simon Heaney, Drewry's London-based senior manager for container research. Heaney revealed he hadn't seen this level of disorder in the market in his career of more than 20 years. "It's unprecedented in terms of the chaos that we're seeing right now," he said. In a recent Bloomberg piece, one leading economist argued that most Americans are not fully aware of the full impact the current shipping crisis will have on higher prices for consumer goods. It's a ripple effect, and even if companies pass the cost of rising shipping fares directly to their customers, this will only have a minor effect on headline inflation - "but its full impact might be being overlooked," argued Volker Wieland, an economics professor at Frankfurt's Goethe University. "Even if the order of magnitude is smaller than estimated, the dynamic builds over a year and has significant effects. That means there's a danger we're underestimating the impact." Some big companies, including Costco and Chipotle, have announced that they will pass some of the higher freights costs to their customers, while industry analysts told Bloomberg that the prices of low-cost and bulky goods, such as toys and cheap furniture, is going to soar in the coming months. This crisis may also affect the delivery of other international products that don't come from China. For instance, olive growers in Europe can no longer afford to export to the U.S. This news couldn't have come at a worse time for U.S. supply chains, given that much of California and other key agricultural states are experiencing the worst drought in history and millions of acres of crops are at risk of being destroyed since there's no available irrigation water to all the farmers of the region. "If you would have asked 100 economists a year ago on this date where the world would go, probably 100 economists would have told us: "it's going to be doom and gloom, we're going to go into a recession". And that is what it looked like: Global shipping volumes tanked," said Sanne Manders, the Chief Operating Officer of Flexport. With all things considered, we should all be preparing for the challenges that are looming on the horizon because we're about to enter times of horrific inflation, turbulence in international trade, acute food shortages, explosive prices, extreme weather, and another