What is happening that prices are through the roof?
World inflation is totally uncontrollable, from LATAM, with a generalized 8 percent, walking around the US with 7 percent in most offline and online prices and shelves.
In Europe and Asia it is a bit the same, prices go up every week, they increase as the pandemic deteriorates and fear with paranoia is cured in the minds of millions of customers.
Where do these high prices come from everywhere? There are many factors, but today I want to delve into the part of the commercial scales and the productive chain, and, of course, in the transportation of the products that arrive at our homes and that we buy online or offline.
What is happening is a matter of transportation and for this I looked for Hector del Castillo, CEO of America Fresh (americafreshclean.com), which is one of the leading manufacturers of detergents and cleaners.
He has it very clear and clears my mind with a five minute call, his answer is very sensible. He is a manufacturing entrepreneur and, from China to the world, for more than 15 years, he has produced millions of tons of product to sell it in various parts of the world.
Héctor tells me that this whole wave of inflationary prices is about a simple trade war to deflate China and, in a way, it is very true. In just 15 years, China has been able to lift more than 400 million people out of poverty and into middle-class status; it has become the factory of the world and it is unstoppable. During the global pandemic, he was able to stop them for two years, and the US views them with great suspicion.
For the same reason, what has been done in post-pandemic times is that the fleets of ships with Norwegian and American flags that transport products from China have decided, due to costs, to optimize their ships and park them to take out fewer ships to transport all the products from China for the world.
This has generated an increase in transportation of more than 100 percent, which means that in China there are many products detained or stored without reaching the shelf with the customer; this automatically generates inflationary prices that are directed towards the client.
In short, Western countries have decided to declare a trade war against China to stop its commercial force by containing the transportation of its products to make them more expensive, regardless of whether customers pay more.
How is this going to end? Many manufacturers are already producing alternately in Turkey, India or Pakistan, as alternative factories, while this trade war ends. Meanwhile, China, at this moment, builds its own ships to transport its products to the world. He will finish assembling them around 2027 and the commercial world will be his again.
Will he seek a rematch?