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Preface. This is a long preface followed by two articles about how supply chains and complex tractors may be affected by energy shortages and consequent supply chain failures in the future.Which we’re already seeing as massive numbers of ships sit offshore waiting to be unloaded, and a shortage of truckers to deliver goods when they do arrive.

Supply chain failures will only get worse, affecting food supply and making the prediction of 3 billion more people by 2050 unlikely. We are running out of time to replace fossil fuels with something else that is unknown and definitely not commercial for transportation, manufacturing and other essential services and products. Even the electric grid needs natural gas to stay up, no matter how many wind turbines or solar panels are built (Friedemann 2016).

The reason time is running out is that global conventional oil, where 90% of our petroleum comes from, peaked in 2008 (EIA 2018 page 45), and world oil production of both conventional and unconventional oil in 2018 (EIA 2020).

In the unlikely event you don’t know why this is scary, consider that we are alive today thanks to heavy-duty transportation, which runs almost exclusively on diesel, four billion of us are alive due to finite natural gas derived fertilizer, 500,000 products are made out of fossil fuels, and much of our essential manufacturing (cement, steel, metals, ceramics, glass, microchips) depend on the high heat of fossil fuels. There is not much time to come up with processes to electrify or use hydrogen to replace fossil fuels, which don’t exist yet, let alone rebuild trillions of dollars of infrastructure and a new unknown energy distribution system, triple the electric grid transmission system, and replace hundreds of millions of vehicles and equipment to run on “something else” (Friedemann 2021).

…click on the above link to read the rest of the article…

World Economy Braces For Supply Chain Chaos As COVID Closes China

March 16, 2022

World Economy Braces For Supply Chain Chaos As COVID Closes China

The global economy is in disarray as the war in Ukraine unleashed a commodity shock with increasing risks of stagflation. Adding to the turmoil is an outbreak of COVID-19 in China that may unleash another supply chain crisis.

News from China over the last day shows a new outbreak of the highly contagious omicron variant has infected more than 5,000 people, the most since the early days of the pandemic in early 2020. China’s zero-tolerance approach has shuttered factories and placed some 51 million people into some form of lockdown.

As of Tuesday, omicron variant infections have been reported in 21 provinces and municipalities nationwide, including the capital of Beijing. According to CNN, five cities are in lockdown, including Changchun, Jilin, Shenzhen, Dongguan, and Langfang.

Lockdowns have forced factories to idle production and risk snarling production from Apple iPhones to Amazon Echo & Alexa devices to Toyota SUVs to smart television to all sorts of other electronic devices. Disruptions to exports may induce shortages and drive up inflation, just as the Federal Reserve embarks on hiking interest rates to control inflation at four-decade highs.

A Bank of America Corp. survey of fund managers published on Tuesday showed confidence in global growth this year is the lowest since July 2008, and stagflation expectations have jumped to a whopping 62% of respondents.

“You take all these little paper cuts and you start to add them up and you could be looking at a potential significant slowing of the global economy,” said Jay Bryson, chief economist at Wells Fargo & Co.

China’s zero-tolerance policy has reminded us that supply chains are still subjected to massive disruptions. The lockdowns couldn’t come at a worse time, as spring tends to be one of the busiest shipping seasons of the year.

…click on the above link to read the rest of the article…

Loss of Russian Oil Leaves a Void Not Easily Filled, Straining Market

March 10, 2022

Loss of Russian Oil Leaves a Void Not Easily Filled, Straining Market

Global production will take time to ramp up, so the U.S. and other buyers will chase limited supplies, creating upheaval unseen in decades.

A Rosneft refinery. Russia is the world’s No. 3 oil producer, after the United States and Saudi Arabia.

Credit…Andrey Rudakov/Bloomberg

HOUSTON — Before its forces invaded Ukraine, Russia provided one out of every 10 barrels of oil the world consumed. But as the United States and other customers shun Russian crude, the global oil market faces its greatest upheaval since the Middle East tumult of the 1970s.

An energy price shock will probably last as long as the confrontation goes on, since there are few alternatives to quickly replace Russia’s exports of roughly five million barrels a day.

Oil prices were already rising fast as the world economy emerged from Covid-19 shutdowns and producers stretched to meet growing demand. International oil companies had cut back investment over the last two years.

Now traders are bidding up crude prices to levels not seen in years, expecting that Russia — one of the top three oil producers, along with the United States and Saudi Arabia — will be sidelined. With the announcement of the American embargo on Tuesday, prices will probably climb higher, energy analysts say.

“We are catastrophically tightening,” said Robert McNally, a former energy adviser to President George W. Bush. “What we need right now is countries producing more oil.”

That will not be easy. Only Saudi Arabia, the United Arab Emirates and Kuwait have spare capacity, together a little more than 2.5 million barrels a day. Venezuela and Iran could contribute about 1.5 million barrels a day to the market, but that would require lifting American sanctions against those countries…

…click on the above link to read the rest of the article…

What If It Breaks?

March 7, 2022

What If It Breaks?

Making your entire economy a Landfill Economy dependent on the fantasy of infinite replacements and substitutions is the height of hubris and folly.

Very few people ask: what if it breaks? It’s a question we can ask of a great many things: touchscreens, motherboards, tools, vehicles, supply chains and entire systems: what if it breaks?

The first thing we notice is the great number of things which can’t be repaired, they can only be replaced. Good luck repairing the touchscreen or motherboard in your vehicle. Oops, the puncture in your tire is in the sidewall, no repair possible, buy a new tire.

The entire economic system assumes two things: 1) there will always be replacements for everything that can’t be repaired and 2) there will always be substitutes for everything we want. Beef too expensive? Then buy fake-meat. If that’s too expensive, substitute chicken. And so on: there will always be a substitute that can scale globally that will get cheaper as it scales.

Unfortunately, both assumptions are false. There are no replacements for oil and fertilizers. What we have are ifs: if we build 1,000 nuclear reactors, then we can convert this electricity into hydrogen which will be the fuel of the future. And so on. If, if, if. Nice, but getting beyond if is non-trivial: oops, we need hydrocarbon energy to build the 1,000 nuclear reactors and all the complex equipment to convert seawater into hydrogen on a scale large enough to matter.

Not only are there no substitutes for many things, there are no replacement parts, either. Too bad about your entire Smart Home system going down. The vendor of the do-hickey that’s connected to your hub went out of business and so there’s no replacement parts or software upgrades….

…click on the above link to read the rest of the article…

“Energy Shortages Could Threaten Social Cohesion”: Germany Warns Against Ban On Energy Imports From Russia

March 6, 2022

“Energy Shortages Could Threaten Social Cohesion”: Germany Warns Against Ban On Energy Imports From Russia

At a time when US officials are saying virtually every day that the US is in “active discussions” to ban Russian oil imports, Germany’s economy minister said that while he regrets the country is still dependent on imports from Moscow, he warned against a comprehensive ban on energy imports from Russia.

As Dutesche Welle reports, “Germany is currently still dependent on Russian fossil fuels”, Economy Minister Robert Habeck said on Thursday; he spoke out against a ban on energy imports from Russia in the wake of Moscow’s invasion of Ukraine.

“I would not advocate an embargo on Russian imports of fossil fuels. I would even oppose it,” he said after meeting German business leaders. “We need these energy supplies to maintain the price stability and energy security in Germany,” Habeck added, warning that “a shortage in supply could threaten social cohesion in Germany.”

Habeck stressed Germany “must free ourselves” from imports of Russia’s gas, coal, and oil. In February, Germany stopped the controversial Nord Stream 2 natural gas pipeline. It has since joined other European nations in introducing a raft of sanctions against Russia over its invasion of Ukraine. Berlin even overturned its longstanding practice of blocking weapons exports to conflict zones.

Habeck, however, said Germany has already begun to feel the effects of those decisions.

“The impact of the sanctions and of the war on all sectors of the economy is so strong that we can fear a big impact,” Habeck said. The minister said any hopes that Europe’s largest economy would return to post-pandemic levels later this year were dashed.

…click on the above link to read the rest of the article…

The second Cold War is here — and supply chains will be the front lines

March 3, 2022

The second Cold War is here — and supply chains will be the front lines

Entire supply chains will be rewritten, creating massive volatility and unpredictability

We are witnessing the remaking of the world order in front of our eyes — and this will impact global supply chains in unforeseen ways.

We are about to experience the most dramatic and unpredictable supply chain map we’ve experienced since World War II.

If the Russia-Ukraine conflict’s international ramifications keep spreading, we face a real possibility of a bifurcating global economy, in which geopolitical alliances, energy and food flows, currency systems, and trade lanes could split.

During the first Cold War, the world was anything but flat. There were two worlds — the East and the West. That world is being recreated as we speak, and with it, Western companies will start to shift sourcing away from the East and more toward Western and neutral states. North American economic integration will become a new priority. Surface transportation across the Eurasian continent will become more complex, and possibly contested.

Entire supply chains will be rewritten, with new sources and partners — all in the interest of corporate and national security. This will create massive volatility and unpredictability.

Companies will prioritize vendors that can provide consistent and dependable supplies, likely paying a premium. In the end, those costs will be passed on to consumers in the form of higher prices.

While prices will become an important consideration for consumers, brands that offer a consistently and predictably available set of choices will enjoy pricing power.

The future market winners will be the corporations that make the investments in supply chain infrastructure and reliable, Western-friendly production locations.

Supply chain analyst roles will become the hottest jobs of the next decade, prized by corporations, consulting and even Wall Street for the ability to interpret, analyze and predict disruptions and risks in a new world order…

…click on the above link to read the rest of the article…

The Total Collapse in Confidence of Government on Every Level

February 13, 2022

The Total Collapse in Confidence of Government on Every Level

QUESTION: Greetings!
You have said “they” want the economy to turn down, this is their goal with all the lockdowns.
So now you say that if the economy has a low after March it will mean a decline into 2023.
Does this mean “they” are winning if this happens?

ANSWER: No. This is the most disastrous economic mess I think I have ever seen in history or my personal career. Here we have a collapse in the confidence of governments thanks to the COVID regulations. There is even confusion in businesses in NYC do they demand masks or is that now out completely? The WEF conspirators thought they would win. Just look at the Truckers who have brought Trudeau to his knees.

Biden and Western Leaders are begging Putin to PLEASE invade Ukraine. They now think this will provide the distraction they need to escape from their disastrous COVID scam that was the brainchild of the WEF and has FAILED to work.

Now, add to this mess, we are staring in the face of a total collapse in the confidence of central banks. They have nothing they can do about this type of inflation. Raising rates will have ZERO impact upon shortages other than making them worse. The Fed can keep raising rates until they hit 20%. All they will do is bankrupt more companies in the supply chain, bankrupt emerging markets, and in the end, the shortages will get far worse and prices will soar.

We are facing the total collapse of any confidence in government I suppose this is part of the computer warning that 2022 is a Panic Cycle Year in politics. Even the WEF crew has lost control. As an EXXON Gas Station boldly posted: “YOU ASSHOLES VOTED DEMOCRAT” and we now see what we will get when the only agenda is Climate Change.

“I’ve Never Seen A Market Like This”: Goldman Sees Shortages Of Everything, “You Name It, We’re Out Of It”

February 7, 2022

“I’ve Never Seen A Market Like This”: Goldman Sees Shortages Of Everything, “You Name It, We’re Out Of It”

It’s probably not the endorsement Biden’s flailing administration wanted.

In a time when social networks have been swamped with photos of empty shelves from across the nation, Goldman’s head commodity strategist and one of the closest-followed analysts on Wall Street, said he’s never seen commodity markets pricing in the shortages they are right now.

“I’ve been doing this 30 years and I’ve never seen markets like this,” Currie told Bloomberg TV in an interview on Monday. “This is a molecule crisis. We’re out of everything, I don’t care if it’s oil, gas, coal, copper, aluminum, you name it we’re out of it.”

In a reversal of the event from April 2020, when WTI oil briefly hit a negative $40 per barrell as speculators paid others to take deliverable oil contracts off their hands as they had no storage for it, futures curves in several key markets are trading in super-backwardation – a structure that indicates traders are paying bumper premiums for immediate supply. The downward sloping shape in prices is generally taken to mean commodities are severely undersupplied.

The shortage of, well, everything has translated into record price of virtually all commodities: the Bloomberg Commodity Spot Index, which tracks 23 energy, metals and crop futures, has touched a record this year. That has been driven in part by surging oil prices, which have hit their highest level since 2014 and earlier today Brent rose as high as $94, assuring even more pain at the pump.

Separately, assuring even more pain for logistics, Bloomberg notes that diesel futures are in their strongest backwardation since 2008, excluding expiry days.

Additionally, all six of the main industrial metals traded on the London Metal Exchange moved into backwardation late last year, in a rare synchronized bout of tightness last seen in 2007.

…click on the above link to read the rest of the article…

“The System Is Broken”: Boots-on-the-Ground View by a US Manufacturer on the Supply Chain Chaos

February 4, 2022

“The System Is Broken”: Boots-on-the-Ground View by a US Manufacturer on the Supply Chain Chaos

“We are simply limited to what our suppliers tell us we can have. It really isn’t supposed to work this way!”

For what seems like a long time now, Wolf Street has been discussing the apparently never-ending shortages that US manufacturers, construction companies, retailers, and other businesses have been struggling with. So here are the boots-on-the-ground observations by an Ohio-based manufacturer, with operations in other states, about the global supply-chain chaos. Todd Miller is the president of Isaiah Industries, which manufactures metal roofing shingles for residences and commercial buildings and sells them under several brands, such as Classic Metal Roofing Systems, in North America, Japan, and the Caribbean. He shared his observations with Wolf Street:

By Todd Miller, president of Isaiah Industries:

Over the years, we have seen some situations where metal supply was tight and caused some disruption for us and our customers. However, we’ve never seen anything like we’re experiencing now as it goes beyond just metal supply to also include the specialty coatings we use.

Supply shortages started in 2020 with Covid-related closures at the leading metal mills where we buy steel, aluminum, and copper. Once the consumer demand for virtually everything under the sun started to accelerate wildly in the latter part of 2020, mills were caught with shortages, and significant delays and backlogs developed – a situation that has yet to be rectified.

Generally, consumers are understanding of the price increases. But now delays and shortages threaten our ability to meet consumer needs. We currently are running about a 60-day backlog on orders, the bulk of which we are waiting for raw materials to arrive. Historically, our backlog was a couple of weeks at the most.

…click on the above link to read the rest of the article…

Just-in-time gives way to “buy everything you can” as U.S. supply disruptions persist

January 31, 2022

Just-in-time gives way to “buy everything you can” as U.S. supply disruptions persist

Container trucks , ships and cranes are shown at the Port of Long Beach as supply chain problem continue from Long Beach, California, U.S. November 22, 2021. REUTERS/Mike Blake

Jan 28 (Reuters) – Stephen Bullock eight months ago gave up on the idea of buying raw materials and parts only shortly before they were needed on his assembly line.

Instead, he told his purchasing manager to “just buy everything you can,” and they could store the excess, said Bullock, chief executive of Power Curbers Companies, a maker of heavy equipment used to build concrete sidewalks and other infrastructure projects.

Roughly two years into a pandemic that has snarled supply chains across the globe, U.S. companies are scrambling not just to produce enough to feed current demand – but to also refill inventory shelves. That buildup was key to the fourth quarter’s hefty 6.9% annualized growth in gross domestic product, with inventory investment contributing 4.9 percentage points, according to the U.S. Commerce Department.

Spending shifted during the pandemic from services to goods, a boom that has strained supply chains and emptied warehouses. Excluding inventories, GDP grew at a more modest 1.9% rate in the latest period.

This boom in demand, coupled with shortages, has fueled a wave of inflation that increased at a pace last year not seen in nearly 40 years. This set the stage for the Federal Reserve to now look towards raising interest rates in March.

Bullock, whose company is based in Salisbury, North Carolina, said supply chain problems have continued to grow worse in recent months – not better.

…click on the above link to read the rest of the article…

A Farming Insider Has Warned Me That The Coming Food Shortages Are Going To Be FAR WORSE Than We Are Being Told

January 31, 2022

A Farming Insider Has Warned Me That The Coming Food Shortages Are Going To Be FAR WORSE Than We Are Being Told

The information that I am about to share with you is extremely alarming, but I have always endeavored to never sugarcoat things for my readers. Right now, there are shortages of certain items in grocery stores across the United States, and food supplies have gotten very tight all over the globe. I have repeatedly warned that this is just the beginning, but I didn’t realize how dire things have already gotten until I received an email from a farming insider that I have corresponded with over the years. I asked him if I could publicly share some of the information that he was sharing with me, and he said that would be okay as long as I kept his name out of it.

According to this farming insider, dramatically increased costs for fertilizer will make it impossible for many farmers to profitably plant corn this year. The following is an excerpt from an email that he recently sent me…

“Things for 2022 are interesting (and scary). Input costs for things like fertilizer, liquid nitrogen and seeds are like triple and quadruple the old prices. It will not be profitable to plant this year. Let me repeat, the economics will NOT work. Our plan, is to drop about 700 acres of corn off and convert to soybeans (they use less fertilizer, and we also have chicken manure from that operation). Guess what? We are not the only ones with those plans. Already there is a shortage of soybean seeds, so we will see how that will work out. The way I see it, there will be a major grain shortage later in the year, especially with corn. I mean, we are small with that…

…click on the above link to read the rest of the article…

Rickards: Bad News, I’m Afraid

January 22, 2022

Rickards: Bad News, I’m Afraid

The breakdown of global supply chains is well-known by now. Whether it’s finding groceries in your supermarket, buying a new car or buying appliances like dishwashers and refrigerators, goods are scarce. Also, deliveries take forever and choices are limited.

Many people wonder why the problem isn’t going away. Here’s the answer:

The supply chain is a complex dynamic system. When any complex system collapses, you can look for specific causes but that’s usually a waste of time. Systems collapse internally because they are too large and too interconnected and require too many energy inputs to keep going.

Any specific cause is more likely to be a symptom than a true cause. It’s frustrating, but that’s the answer.

Most Americans’ first encounter with the supply chain meltdown was in the spring of 2020 during the first wave of the coronavirus pandemic. Shoppers noticed that items like hand sanitizer and paper goods at Costco and other big-box stores were cleaned out.

It seemed that Americans who were locked down and quarantined at the time were hoarding these products because they had no idea when they would be allowed to venture out again.

The shortages were real, but were limited to specific products. The other aisles at Costco were stocked and so were all the other stores around (at least those that were allowed to remain open).

Now It’s Everything

But it’s not just Costco this time. It’s every supermarket, convenience store and other retail outlet from coast to coast. And it’s not just cleaning products and paper goods. Your local supermarket might have bare shelves for eggs, peanut butter, milk and other staples.

It’s not a case of being stocked out of all goods all the time. Your store is like a box of Cracker Jack – you never know what’s inside.

…click on the above link to read the rest of the article…

Imports take ‘dramatically longer’ to reach US as bottlenecks bite

January 21, 2022

Imports take ‘dramatically longer’ to reach US as bottlenecks bite

Indicators on trans-Pacific delivery time are all trending in the wrong direction

container shipping — Port of Long Beach (Photo: Shutterstock/Gagliard Photography)

Planning to import goods from Asia by ocean and sell them in America this summer? Better act fast. The trans-Pacific cargo move can now take over three months. According to multiple sources, average transit times have risen to double pre-COVID levels — and they’re still increasing.

Methodologies and data sources differ, so time estimates vary. But each dataset shows the same trend: With every passing month, more vessels, container equipment and goods inventories are getting waylaid in the Pacific.

Flexport

Flexport launched its weekly Ocean Timeliness Indicator (OTI) in early December. The OTI uses data from Flexport’s freight forwarding customers back to March 2019, measuring the time from the cargo-ready date at the exporters’ gate to the date when products leave the destination port (i.e., the landside transport time from the factory to the port in Asia, the Asian port wait, the ocean journey, and the North American port wait). The OTI is an average for loads from all Asian countries to all North American ports on any of the three coasts.

Flexport’s Asia-U.S. OTI reached an all-time high of 114 days last week. That’s 41 days or 57% higher than at the same time last year, and 63 days or 125% higher than at the same time in 2020, pre-COVID.

Chart: American Shipper based on data from Flexport

A shipment time is not included in the average until the import cargo leaves the U.S. port, meaning the indicator is retrospective. Goods included in the average in the first week of January might have left an Asian factory in early October, at a time when the queue of waiting ships off Los Angeles/Long Beach was around 40% smaller than it is now.

…click on the above link to read the rest of the article…

Governments have been screwing up their supply chains for 2,000 years

January 21, 2022

Governments have been screwing up their supply chains for 2,000 years

On the evening of March 16th in the year 37 AD, one of the most controversial emperors in Roman history appeared to be dying in his bed.

Friends and family gathered to pay their final respects to Emperor Tiberius, who had ruled for more than two decades.

For some Romans, Tiberius was literally a god, and they worshipped him as a divinity. And many of Rome’s powerful politicians respected Tiberius for his numerous achievements.

Tiberius had managed to greatly strengthen the empire without waging costly wars. He improved civil services, cut taxes, reduced spending, and built up an astonishing surplus in the Treasury of nearly 700 million silver denarii, worth roughly $2 billion today.

Many Romans, however, including a number of prominent Senators, utterly despised Tiberius. They viewed him as a horrible tyrant who was a major threat to Rome’s republican democracy.

For most of his reign, in fact, several Roman Senators constantly plotted against him. Some even spread false rumors about Tiberius as a sexual deviant in an effort to discredit him.

So when the Emperor was finally on his deathbed, his enemies were relieved. Hours later, though, they panicked when Tiberius appeared to be recovering from his illness.

It was at that point that a Praetorian Guard commander named Quintus Macro, who had a sacred duty to protect the emperor, allegedly smothered Tiberius with a pillow, finally ending the political chaos.

Even in death Tiberius was controversial. Some Romans cried out for his body to be thrown in the Tiber River (a common ritual for criminals), while others demanded that his body receive divine rights of a god.

The Senate refused to provide divine honors, and wasted no time moving on from Tiberius. Two days later on March 18th, they appointed a young nobleman named Gaius Germanicus as the new Emperor.

…click on the above link to read the rest of the article…

Experts Are Warning That Empty Shelves And Food Shortages Are Going To Continue For Many Weeks To Come

January 18, 2022

Experts Are Warning That Empty Shelves And Food Shortages Are Going To Continue For Many Weeks To Come

The term “return to normal” is being thrown around a lot these days, but will things ever truly return to the way that they were before the pandemic came along? I don’t think so. From an economic standpoint, an extraordinary amount of lasting damage has been done over the past two years. A seemingly endless list of major problems has thrown thousands upon thousands of critical supply chains into a complete and utter state of chaos, and this has resulted in some very painful shortages. For quite a while, the mainstream media kept insisting that the shortages would soon be gone, but now they are being forced to admit the truth. If you can believe it, NPR has even published a major story about the growing shortages in this country…

No, you’re not imagining it. Some grocery store shelves are bare again, conjuring bad memories of spring 2020 for many.

Social media is rife with images of empty supermarket aisles and signs explaining the lack of available food and other items. Stores such as Aldi have apologized to customers for the shortages.

Nobody in the mainstream media ever imagined that the shortages would last this long.

For certain items such as computer chips, the duration of the shortages is now approaching two full years.

Of course fear of Omicron has made things even worse, and one expert interviewed by NPR suggested that supermarkets in the U.S. are now facing a “perfect storm”…

“We’re really seeing the perfect storm,” Phil Lempert, editor of the website SupermarketGuru.com, told NPR.

Isn’t it strange how that term just seems to keep popping up all over the place?

…click on the above link to read the rest of the article…

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