The Coming Supply Shock - More Than a Feeling

Paul Rappaport is a legendary figure in the music industry on the promotions side of the business. For 33 years at Columbia Records he worked with icons such as Bob Dylan, Bruce Springsteen, Pink Floyd, The Rolling Stones, Billy Joel and Elvis Costello.

Known as Rapp, his new book, “Gliders Over Hollywood: Airships, Airplay, and the Art of Rock Promotion”, is a fantastic read. If you have any interest in knowing about life in the music industry during the 1970’s and 80’s, it offers an insider’s view of all the characters and acts.

One story that jumped out to me was when Rapp heard Boston’s More Than a Feeling for the first time.

After listening to the track only once, and having no idea who the band Boston was, Rapp looked at the other promoters in the room, and as he explained on the Bob Lefschitz podcast, told everyone that this band was “going to explode”.

He heard it once and knew it would be a monster hit.

He knew things were about to change.

In what feels like a year ago, last month was Liberation Day.

And similarly to Rapp, the instant I heard about “reciprocal” tariffs, I knew things were about to change…maybe not explode, but probably implode.

That same week, Flexport CEO Ryan Petersen explained that 28% of customers on an informational call were pausing shipments from Asia.

The countdown to the stock out is on.

I’m writing this post today as I take a break from back-to-school shopping for next fall. Even though THE CURRENT SCHOOL YEAR ISN’T YET OVER! When looking on the horizon, you can see there will be a shortage of pencils, paper, and notebooks this fall.

As Gene Seroka, Executive Director of the Port of Los Angeles calmly explains here, he expects a reduction of fifty-thousand, 20-foot containers beginning this week.

There’s been a 6x increase in blank sailings.

Factories I speak with tell me they're either holding finished goods or have completely paused orders for their US customers. (Side note: their business to other countries is perfectly normal).

And goods that are entering the country, well, prices are going up.

As Ken Giddon pointed out this week “an item that cost us $100 will now be $175.”

Kent Bikes paid duties and tariff of 181.47% on their most recent shipment.

Wyze Camera said a $167,000 shipment was hit with a $255,000 tariff, in a now viral post.

Ford meanwhile made a U-Turn and is increasing the price of their cars.

This is not financial advise, but maybe this is good news for companies like $XPO ( ▼ 3.63% ) which manage bonded warehouses - although the offset in freight volumes could be massive.

Meanwhile I can’t help but think a business like $REAL ( ▲ 3.05% ) and others similar to it will benefit as their goods are already inside the country - warehoused in someone’s closet!

American made goods may have an advantage for the moment, yes.

As do certain importers who are thinking strategically and taking a gamble.

A business owner I spoke with this week told me he was continuing to import - from China, at 145% - his top-3 besting selling products and is making the bet that his competitors have paused. He and his management team think they can take share.

This same company also has a strong presence in Europe and we discussed their blended margin approach to offsetting what they believe will be a short-term disruption in price.

There will be winners and losers in this shifting arena and when it’s said and done, I hope we can say we’re all better off (I don’t expect that, but I hope for it).

Meanwhile I’m loading up on #2 pencils and retro Trapper Keepers (IYKYK).