Amidst an Infrastructure surge and Global Supply Chain issues, Financial Keys is on the move.
Westconnex, NorthConnex, and Sydney Light Rail are all great examples of Sydney’s booming infrastructure works, designed to support its growing population, and increase mobility for its constituents.
Amidst an Infrastructure surge and Global Supply Chain issues, Financial Keys is on the move.
Westconnex, NorthConnex, and Sydney Light Rail are all great examples of Sydney’s booming infrastructure works, designed to support its growing population, and increase mobility for its constituents.
The very latest infrastructure works impacting the Sydney CBD and surrounds (presently Australia’s biggest public transport project) involves the build out of the Sydney Metro project. It is expected that by 2024, Sydney will have 31 metro stations and more than 66 kilometres of new metro rail, stretching from the ever expanding North West Region, to the Sydney CBD and onwards to the south west.
In June this year Sydney Metro announced Sydney Metro West running from Parramatta through to the Sydney CBD. One of the new stations for this line is in the commercial heart of the Sydney CBD - Hunter Street Station will become a new hub with easy connections to George Street, Light Rail, Sydney Trains services at Wynyard and Martin Place and the new Sydney Metro City and Southwest Station at Martin Place.
As part of the construction, a large vibrant precinct between George, Hunter, O’Connell and Bligh Streets will prioritise pedestrians and support a vibrant public domain in the heart of the Sydney CBD.
The Hunter Street Station has four access points, being the corner of Hunter and George streets and Bligh and O’Connell streets.
So after more than 20 years servicing you our clients from Suite 803, 37 Bligh Street and too many memories to remember, the Financial Keys team has now had to relocate to new offices.
Enjoying views across to the iconic sandstone buildings that are the Sydney GPO and Bank of Australia (CBA), Financial Keys has moved to;
We look forward to the next 20 years of the journey with you and to hosting you in our new office, that is, once all our new furniture, coffee machine and other items arrive! We have discovered, like many other businesses and individuals, that when you order an item, delivery time is varying greatly with some office items arriving four days later, others four weeks later and one item four months later. Thankfully we have received all requirements to operate our services but look forward to having a fully kitted out workplace in March.
Financial Keys has become one of the many millions of ‘casualties’ around the world, impacted by the slowdown in the Global Supply Chain.
Exacerbated by COVID lockdowns…..you see an item online , you enter your payment details, then check your mailbox every morning until viola, your order has been supplied. Underneath the bonnet of this seamless online shopping experience is a series of cogs and wheels ensuring the supply chain works.
The retailer speaks with the distributor, the distributor speaks with the manufacturer, who then orders the materials and produces the product.
Then comes the delivery of the goods or services.
Transport is conducted by shipping lines, airlines, trucking and parcel delivery companies facilitated at seaports, airports, warehouses and distribution centres.
Enter COVID
The global pandemic has disrupted many of the above processes on the supply side. Early on during COVID, China shut its ports temporarily, leading to backlogs at some of the world’s largest ports. Ongoing border issues and increased Covid related processes have slowed trade interactions further. And to exacerbate the issue, there is more demand than ever and huge shortages of workers, space and equipment.
“Two of the largest US ports saw a 30% increase in the amount of goods going through them whilst processing the cargo with 28% fewer workers.”[1] No wonder goods are taking a long time to arrive.
Shipping rates have soared since the beginning of COVID, with an increase of 500-600% for the period to September 2021.
Source: www.drewry.co.uk
[1] Whey the supply chain is in crisis, spurring an ‘everything shortage’ – Business Insider 21 October 2021
Australia is highly dependent on imported, overseas-made consumer goods.
Think about your last online purchase and try to imagine its origin – most likely coming from overseas. Additionally, we import more consumer goods than we export, which inturn creates a shipping container trade imbalance.
Today there is a backlog of empty containers at container parks in Australia, which desperately need to go back to the high-exporting countries but have no ship to take them. My weekend ride around the Botany shipping terminal confirms this.
In Australia, not all trucks operate 24 hours a day, while ships do.
Recently, the International Monetary Fund (IMF) predicted the crisis will have a long-lasting damaging economic impact and has cut growth outlooks for the US and other major industrial powers.
In October, Australia Post urged Australians to send their Christmas parcels by early December to avoid disappointment. However, increasing supply capacity requires investment in infrastructure, such as building new factories and adding new ships to a shipping route – this all takes time. For many Australians we are already experiencing a shortage of products for this Christmas and with a higher price, especially those which require chips.
Thankfully there is a lot.
Shipping freight rates are falling - if you want to secure yourself a 40-foot shipping container today, it’ll cost you about 10 percent less than it would have a couple of months ago. The average global freight rate has fallen for eight consecutive weeks. And there’s reason to hope that this (slow but steady) decline will persist even as Christmas draws near.
Time for that ‘tiny home’ shipping container project?
Many retailers have already stockpiled the goods they expect to sell over the holiday season - the potential for the holiday season to turbocharge the global supply-demand mismatch, as households across much of the world simultaneously increase their goods spending, has long worried analysts. In the US big-box stores saw this crunch coming from nautical miles away, and they’ve been steadily building up inventory in anticipation. The big three in the US - Walmart, Home Depot, and Target are all fully stocked for the holidays.
Backlogs at major ports are reducing from record highs - the ports are still a mess…but they are slowly getting better.
Chinese manufacturing is powering up - in China, the government has long capped the prices that utilities can charge consumers for electricity. This year, as the global recovery elevated energy prices, that regulation pushed many Chinese utilities to the brink of insolvency. With the cost of coal skyrocketing, and consumer price caps fixed, power plants were forced to choose between operating at a loss or shutting down. As a result, utilities started rationing electricity between households and the manufacturing sector, forcing Chinese firms to scale back production.
However, in recent weeks, as the government has empowered coal-fired plants to charge higher prices, the electricity crunch has eased and manufacturing has returned to something resembling normal capacity.
COVID-related factory closures have let up in Southeast Asia - earlier this year, COVID-19 outbreaks in Malaysia and Vietnam forced authorities to limit production. That took a toll on the global supply of textiles and semiconductors. But output at factories in Southeast Asia rebounded over the past month, as case numbers fell and normal production resumed.
Car production is revving up - in October, U.S. manufacturing output reached its highest level since March 2019, a surge driven by an 11 percent jump in the production of automotive and car parts. Meanwhile, Toyota has set a December output target that exceeds the Japanese firm’s pre-pandemic norm. It would be reasonable to assume that these developments suggest the global supply of motor vehicles is in the process of catching up to demand and the global shortage of semiconductors is easing somewhat, since chip shortfalls had previously been restraining automotive manufacturing.
Short term risks - COVID’s (or Omicron) resurgence could ease commodity crunches in some sectors. Locked-down economies use less energy than open ones, and thus, as case numbers have climbed in Europe, oil prices have fallen.
Ultimately though, supply chains cannot fully recover until vaccines and antivirals render COVID a rarer and less serious ailment than it remains today. The best macroeconomic policy may therefore be a sound, global public-health policy.
Order your Christmas gifts early!
Shop and buy local and maybe even think about celebrating Christmas and the festive season differently this year.
Once our office is finally fully furnished, we look forward to welcoming you for a visit, which will provide a great opportunity to see the ever changing city.
The Australian equity market (as measured by the S&P/ASX 200) started the year off much like the previous finished, although most of the steam had been taken out of the rally with January producing a solid +1.20% return. February was much more muted with the uncertainty of an imminent reporting season hanging over the market however with better-than-expected results, coupled with softer-than-expected domestic inflation data, March provided some highlights as Australian shares hit new record highs. The quarter ended on a high with March producing +3.27% closing the quarter off with an attractive +5.53%.
2023 made for another very interesting year in investment markets as macro / regime driven events resulted in extreme shifts in investor sentiment on an almost monthly basis. Investors chose to shoot first and ask questions later in what can best be described as a year of maximum noise.
The Australian equity market (as measured by the S&P/ASX 200) started the September quarter with a flurry but ended up in the red as the global “higher-for-longer” narrative (interest rates) coupled with the ever-increasing cost of living concerns caused consumer confidence to wane.