Trying To Push That Proverbial Rope.

We are familiar or should be... with the causes of current supply chain problems.

Let's be clear... the bottleneck is EMPTY containers taking up room on chassis and spilling over into container warehouses, docks, etc. This is clogging up the system and creating situations where multiple movements of both empty and full containers beyond the normal efficient "just-in-time" movement cannot take place.

To keep the goods moving, more containers are being built and a premium is being placed on empty containers. Just as the goods traffic is snarled, so are the return of empty containers. This is why the major rails shut down for one week in July and have since started metering to their midwestern hubs. For every chassis laden with goods inbound to that midwestern hub, the port must take one chassis laden with either an empty container or outbound goods. Here's a sampling from Freightwaves.

Until such time as the hubs in middle America are "un" choked, the ports will remain congested. And yes, there are driver shortages throughout the system. Truckinginfo.

It was nice optics to have some politico state the ports were now going to function 24/7 and then get 24/7 news coverage of the statement, but saying that and doing that are very different things. Where is the in-depth coverage and follow-up?

COP26

A meeting in Glasgow is to begin soon, to discuss ways to reduce carbon emissions and achieve some targets. A noble cause and more power to them BUT... apparently China and India can't even supply the expected paperwork AND at least one of their leaders is simply skipping the conference.

The current goals are cutting emissions in half by 2030 and net zero by 2050. Considering China and India are nearly one half of current emissions... it would require the rest of the world to be net zero right now. As both China and India are having difficulty finding enough coal to currently generate electricity and driving prices of coal upwards... if they were the only emitters, that 2030 goal is toast, imo. 

This is no reason to give up on emissions reduction, but realism needs to be on the table. It is certainly admirable to hope for the best but... we need to prepare for the worst as well. 

It should be noted Jaguar Land Rover is furnishing 240 electric vehicles to transport these folks around. However, there is likely not enough recharging capacity available, so Diesel generators will be used to re-charge. But this is not going to be that dirty oil, but HVO (hydrogenated vegetable oil). The type in fryers. Presumably this makes everything alright... even these vegetable oils were grown and harvested with old fashioned diesel vehicles. Or maybe all farm vehicles in the U.K. are now electric. /s

Oh, and before I forget, this from Deutsche Welle - UN says national climate targets 'fall far short'. So the even promises are not making the grade and we should recognize that promises often fall short of expectations.  

Note: Article written on 10-16-2021 and links may no longer be viable OR behind a paywall.

Light At The End Of The Tunnel?

 

Courtesy of U.S.C.G.

We are awash in shipping containers, with railyards, rail lines, trucking companies, ports, harbors, etc. 

How did we get here and when will it end?

Covid did create a disruption and one the just-in-time inventory management system has struggled to adjust. It has taken about 35 years to develop what was a mostly very efficient, mostly smooth movement of goods. As this transition took place, the need for massive warehouses was reduced with the reduction of manpower required to keep those warehouses operating. 

As efficiency improved, the requirement for trucking, rails, etc. was also reduced... with the manpower required to maintain and operate. 

That was all and good, until Covid, which not only created shutdowns, uneven distribution, but also a massive shift in consumer spending habits. We had China nearly shutdown, which impacted industries and retailers in the U.S., which may or may not have taken advantage of impending goods shortages, to shutter operations for the good of their employees. This put a lot of stuff in the wrong place.

Then we had the so-called legitimate shutdowns, which were region by region and even county by county. A very uneven shutdown, to say the least. Then there was a very uneven re-opening, with some rushing to re-start, while others resisted these efforts. During all of this, there was a gigantic shift in consumer habits, which accelerated during all the stimulus period.

One only needs to look at the BEA's GDP numbers associated with good and services, and see a dramatic shift to goods, both durable and non-durable, with a sizable reduction in services. Goods have increased about 18% over 1st qtr. 2020, with about half being in 3rd qtr. 2020, holding steady in 4th, then accelerating in the 1st and 2nd quarters of 2021.

In addition, the importation of goods followed a similar pattern, with about a 12% increase over that period. Such surges are difficult to prepare for, in such a short period of time. Essentially... Just-in-time has been erased for the foreseeable future.

Clearly, the system while not broken... is in disarray. There are glimmers of hope going forward. Here are a few articles that seem to be clearing the fog of misinformation, imo.

• Containers Piling Up At U.S. Rail Yards Add to Port Strains
• More truckers won't solve US port congestion, supply chain issues: Harbor Trucking Association CEO
• Rail freight is at the center of the supply chain crisis
• UP metering domestic intermodal out of Chicago, Memphis

Even recognition of TOO many containers (Lot of empties) as a problem and potential action by the State of California... by executive order of the Governor.

Everyone is trying to avoid being the Grinch that stole Christmas. Not to mention it is important to shift blame to the average person for leaving the workforce at this time and proclaim "worker" shortage. 

From the St. Louis FED... THE COVID RETIREMENT BOOM. 

So we made the system more efficient by reducing the workforce and now proclaim we need more workers. 

Good Luck!