Canary in the coal mine

Decades worth of change is happening in weeks these days and there's no shortage of new issues to deal with from supply disruption to exploding cost increases.

If I had to pick the most relevant challenge of all (besides the real possibility of global nuclear annihilation) it's got to be the price of Diesel Fuel which has reached a level where things get very ugly.

"Truckers just won’t truck at $6.49-a-gallon, and before long they’ll be out of business altogether, especially the independents who have whopping mortgages on their rigs that won’t be paid. The equation is tearfully simple: no trucks = no US economy."

Diesel sits at the top of the supply line daisy-chain since most commercial land transportation rely's on it so, when it becomes un-affordable two things need to happen:

  1. Prices increase dramatically so the new price of Diesel becomes viable for transportation businesses to survive
  2. Goods stop being delivered.

Along with the increased cost for transporting goods over land are other multiple factors causing disruptions. Shippers bringing goods from China, South America and Europe are encountering massive delay's causing huge headaches all the way down the daisy chain to the consumers. Last year in May I ordered Windows for my home and they're scheduled to be installed next week, more than 375 days after I paid 50% down!

The price increases and unannounced, arbitrary changes in terms such as requiring goods to be fully paid before shipping are reeking havoc on small business owners who find themselves dealing with a new problem every week after just coming off the most brutal 2 years in memory. The signs of stress are showing despite demand remaing strong:

Thirty-four percent of small retail businesses couldn’t make rent in April, up 6 percentage points from February, Retail Dive reports, citing survey data from Alignable. Retailers pointed to inflation, gas prices, supply chain issues, labor shortages and reduced revenues as compounding their financial woes.

Of course the bigger, better financed companies did well and by all measurements have fared very well compared to the small business operators:

Walmart, for example, paid $400 million in unanticipated supply chain costs in the fourth quarter last year. That is more than the revenue of hundreds of small retailers combined. And yet the company still posted sales increases and healthy operating profits. Smaller players typically have less money and less leverage with suppliers and carriers than the largest retail chains do. Lost sales from out-of-stocks can then become a financial crisis for some.

Capital on hand makes a difference whether you're a local grocery store or Walmart. Most of what I've been doing is financing businesses so they have the capital they need in a pinch. The cost is higher for immediate, unsecured capital in large amounts but in today's environment it's just like having extra ammunition clips the cost of which can never really be estimated, am I right?

Costs are increasing but rates are stagnant - my broken record keeps saying the same thing until it's not a thing anymore: Lock in capital at fixed rates and use the proceeds to secure materials & supplies. The prices are going to increase more than the rate you're paying guaranteed!

See how much you qualify for

Start here
+1 727-863-1950