Posts Tagged ‘Long Beach’

Supply Chain Disruption Update for October 11, 2021

Monday, October 11th, 2021

Supply chain problems have gotten so bad that Derek Thompson at The Atlantic deigns to notice them:

The coronavirus pandemic has snarled global supply chains in several ways. Pandemic checks sent hundreds of billions of dollars to cabin-fevered Americans during a fallow period in the service sector. A lot of that cash has flowed to hard goods, especially home goods such as furniture and home-improvement materials. Many of these materials have to be imported from or travel through East Asia. But that region is dealing with the Delta variant, which has been considerably more deadly than previous iterations of the virus. Delta has caused several shutdowns at semiconductor factories across Asia just as demand for cars and electronics has started to pick up. As a result, these stops along the supply chain are slowing down at the very moment when Americans are demanding that they work in overdrive.

The most dramatic expression of this snarl is the purgatory of loaded cargo containers stacked on ships bobbing off the coast of Los Angeles and Long Beach. Just as a normal traffic jam consists of too many drivers trying to use too few lanes, the traffic jam at California ports has been exacerbated by extravagant consumer demand slamming into a shortage of trucks, truckers, and port workers. Because ships can’t be unloaded, not enough empty containers are in transit to carry all of the stuff that consumers are trying to buy. So the world is getting a lesson in Econ 101: High demand plus limited supply equals prices spiraling to the moon. Before the pandemic, reserving a container that holds roughly 35,000 books cost $2,500. Now it costs $25,000.

The container situation is even weirder than it looks. With demand surging in the United States, shipping a parcel from Shanghai to Los Angeles is currently six times more expensive than shipping one from L.A. to Shanghai. J.P. Morgan’s Michael Cembalest wrote that this has created strong incentives for container owners to ship containers to China—even if they are mostly empty—to expedite the packing and shipping of freights in Shanghai to travel east. But when containers leave Los Angeles and Long Beach empty, American-made goods that were supposed to be sent across the Pacific Ocean end up sitting around in railcars parked at West Coast ports. Since the packed railcars can’t unload their goods, they can’t go back and collect more stuff from filled warehouses in the American interior.

And what about the truckers who are needed to drive materials between warehouses, ports, stores, and houses? They’re dealing with a multidimensional shortage too. Supply-chain woes have backed up orders for parts, such as resin for roof caps and vinyl for seats. But there’s also a crucial lack of people to actually drive the rigs. The Minnesota Trucking Association estimates that the country has a shortage of about 60,000 drivers, due to longtime recruitment issues, early retirements, and COVID-canceled driving-school classes.

In short, supply chains depend on containers, ports, railroads, warehouses, and trucks. Every stage of this international assembly line is breaking down in its own unique way. When the global supply chain works, it’s like a beautifully invisible system of dominoes clicking forward. Today’s omnishambles is a reminder that dominoes can fall backwards too.

However, there are two important words missing from Thompson’s analysis: “vaccine” and “mandate.”


  • The latest industry to suffer shortages: paints and plastics.

    Like other manufacturers, petrochemical companies have been shaken by the pandemic and by how consumers and businesses responded to it. Yet petrochemicals, which are made from oil, have also run into problems all their own, one after another: A freak winter freeze in Texas. A lightning strike in Louisiana. Hurricanes along the Gulf Coast.

    All have conspired to disrupt production and raise prices.

    “There isn’t one thing wrong,” said Jeremy Pafford, managing editor for the Americas at Independent Commodity Intelligence Services (ICIS), which analyzes energy and chemical markets. “It’s kind of whack-a-mole — something goes wrong, it gets sorted out, then something else happens. And it’s been that way since the pandemic began.’’

    The price of polyvinyl chloride or PVC, used for pipes, medical devices, credit cards, vinyl records and more, has rocketed 70%. The price of epoxy resins, used for coatings, adhesives and paints, has soared 170%. Ethylene — arguably the world’s most important chemical, used in everything from food packaging to antifreeze to polyester — has surged 43%, according to ICIS figures.

    The root of the problem has become a familiar one in the 18 months since the pandemic ignited a brief but brutal recession: As the economy sank into near-paralysis, petrochemical producers, like manufacturers of all types, slashed production. So they were caught flat-footed when the unexpected happened: The economy swiftly bounced back, and consumers, flush with cash from government relief aid and stockpiles of savings, resumed spending with astonishing speed and vigor.

    Suddenly, companies were scrambling to acquire raw materials and parts to meet surging orders. Panic buying worsened the shortages as companies rushed to stock up while they could.

  • Expecting these problems to be transitory? Dubai’s largest port operator says to expect supply chain problems to extend in 2023.
  • Adding to shipping woes: Marine fuel is at a seven year high.
  • India institutes rolling blackouts over a coal shortage.
  • Brazil is also having to import more natural gas.
  • Energy problems are only expected to get worse:

    A global energy crunch caused by weather and a resurgence in demand is getting worse, stirring alarm ahead of the winter, when more energy is needed to light and heat homes. Governments around the world are trying to limit the impact on consumers, but acknowledge they may not be able to prevent bills spiking.

    Further complicating the picture is mounting pressure on governments to accelerate the transition to cleaner energy as world leaders prepare for a critical climate summit in November.

    Translation: Green energy mandates = blackouts.

    In China, rolling blackouts for residents have already begun, while in India power stations are scrambling for coal. Consumer advocates in Europe are calling for a ban on disconnections if customers can’t promptly settle what they owe.

    “This price shock is an unexpected crisis at a critical juncture,” EU energy chief Kadri Simson said Wednesday, confirming the bloc will outline its longer-term policy response next week. “The immediate priority should be to mitigate social impacts and protect vulnerable households.”

    In Europe, natural gas is now trading at the equivalent of $230 per barrel, in oil terms — up more than 130% since the beginning of September and more than eight times higher than the same point last year, according to data from Independent Commodity Intelligence Services.

    In East Asia, the cost of natural gas is up 85% since the start of September, hitting roughly $204 per barrel in oil terms. Prices remain much lower in the United States, a net exporter of natural gas, but still have shot up to their highest levels in 13 years.

    Wait, you mean relying on Russian benevolence wasn’t an optimal strategy? Do tell.

  • There’s also panic buying to secure winter supplies, especially in China, where “the central government there has given state-owned energy companies a directive to secure winter energy supplies at any and all costs.”
  • Steel and roofing supplies are also facing shortages.

    Steel, roofing and insulation materials are some of the most difficult products to get right now, said Ken Simonson, chief economist at the Associated General Contractors of America. Bar joists, which are used to frame roofs, can have lead times of anywhere from 10 months to 14 months.

    Costs have also soared, with the index for steel mill products rising 123% YoY in August, according to the Bureau of Labor Statistics’ Producer Price Index. Copper and brass mill shapes jumped 45.3% YoY, while plastic construction products saw increases of just under 30% YoY.

  • Also in short supply: HVAC parts:

    A few weeks ago I spoke with several people intimately involved with large companies in my industry and they all agree that we have probably another year of supply chain disruptions and problems. That wasn’t exactly music to my ears as the last year and a half has been an intense marathon trying to keep my buildings full of product that my dealers need. The reasons are everything that you have heard before here and on other media outlets – labor shortages, raw material issues and now, chip problems.

    The chip problem could be a really big issue as those chips go into printed circuit boards that control furnaces – and we need furnaces now for Fall.

    My one large exception mentioned above is that my inventory levels are absolutely enormous and we are setting new records daily. This is killing my turns and as a result cash, but this is the new model. We simply can’t predict when things will come in so we have to pile in sometimes a full years worth of a widget. We are absolutely bursting at the seams and it is extremely stressful trying to keep everyone happy. We don’t dare cancel any orders as we would go to the back of the line, so it is what it is.

    Freight is a major issue right now. We get damage all the time and the LTL lines are all extremely slow and sloppy. Hardly a day goes by where we don’t have a freight problem.

    Parts don’t really seem to be an issue. Sure, there are certain things that we have problems with, but in general the parts world is OK so there is that silver lining.

  • Even oats, the lowly horse and breakfast food, is hitting all-time highs.

    This year, a devastating drought in North American oat fields has resulted in the lowest harvest for the cereal grain in years, pushing prices to record highs, a warning sign that breakfast inflation is imminent.

    Scorching heat waves in Candian oat fields slashed production to an 11-year low. Canada, the world’s biggest exporter, ships most of its oats to the US, its largest consumer.

    The result so far has been a new record high in oats futures trading on the CME. The sudden spike in prices has yet to ripple through supply chains to affect consumers, though that will be coming.

    According to Bloomberg, “the situation for North American farmers was so dire in the summer that many cut their losses and harvested damaged plants to be sold as feed for animals.”

    What this means for consumers is that dwindling supplies and record-high prices will soon affect foods like cereals, oatmeal, and granola bars, all popular breakfast items.

    Randy Strychar, president of Ag Commodity Research and Oatinformation.com, said Cheerios, the US’ most popular cereal, is made entirely of oats. He said there’s no substitute for the ingredient: “You can’t make a Cheerio out of barley.”

    General Mills, the maker of Cheerios and Nature Valley granola bars, nor Quaker Oats Company, the maker of oatmeal, among others, have yet to announce price increase of their oat products, but that could be imminent or at least create an illusion of stable prices through shrinkflation.

  • Retailers say they’re getting ready for a lot of bare shelves.

    Before retailers can make their sales, they need stuff to sell. That’s where the trouble is this year. Container ships are packed, ports are clogged, contracts with carriers are falling to the wayside. And the rush to ship goods for the holidays is only adding traffic to what was already intense congestion.

    “There aren’t enough containers. There aren’t enough ships. There aren’t enough trucks or trains. There is more volume now than any part of the supply chain pipe can adequately handle,” Burlington Stores Chief Financial Officer John Crimmins told analysts in late August. Trying to accelerate and pull forward orders “even further increased the pressure on the supply chain, helping to drive even higher rates,” the executive added.

    So not only are retailers competing with each other for sales, they are competing just to get cargo space to ship goods into the country. Freight has skyrocketed as a result, and shipments still lag or even fail to materialize. Many of the bottlenecks are tied to the unexpectedly swift surge in consumer demand in the U.S. this year, combined with capacity shortfalls at numerous points along the supply chain.

  • That’s one reason big retailers like Walmart are chartering their own vessels. (Hat tip: Director Blue.)
  • There’s even a backup for ships to unload at the Port of Houston:

  • Why does UK have a truck driver shortage? Evidently they get treated like garbage compared to European drivers.
  • LinkSwarm for October 25, 2019

    Friday, October 25th, 2019

    Welcome to another Friday LinkSwarm! Lots of China and technology news this time around.

  • How much public, firsthand evidence is there of this so-called Ukrainian quid pro quo? Right now, zero: “The problem with this narrative is that all we have to rely on is Mr. [William] Taylor’s opening statement and leaks from Democrats. What we don’t know is how Mr. Taylor responded to questions, or what he knew first-hand versus what he concluded on his own, because like all impeachment witnesses he testified in secret. Chairman Adam Schiff, with the approval of Speaker Nancy Pelosi, refuses to release any witness transcripts.”
  • RedState has been doing the heavy lifting on the Katie Hill story. You know, Ms.-I-Had-Sex-With-A-Female-Staffer-And-Brushed-Her-Hair-In-The-Nude.

    Now there are further revelations:

    We all know that if she was a Republican, this would dominate news cycles for weeks on end…

  • In the other big viral news this week, a Texas judge has blocked inflicting tranny madness on a 7-year old boy. This was right after Governor Greg Abbott threatened to intervene in the case.
  • “Moloch Announces Forcing Your Kids To Become Transgender Is Acceptable Form Of Sacrifice.”
  • Durham is coming.
  • 17 Democrats who weren’t held accountable for scandals by their constituents. Lots of familiar names. (Hat tip: Ed Driscoll at Instapundit.)
  • Public employee pensions are bankrupting state budgets. (Hat tip: Director Blue.)
  • Huge protests by farmers against global warming tax hikes in The Netherlands.

  • A California gun law so bad even the ACLU opposes it.
  • USA Today may cease print publication.

    (I had forgotten this meme came from The Critic…)

  • “Trump Rids Major U.S. Container Port of Chinese Communist Control.”
  • This is a bad look: “Apple CEO becomes chairman of China university board.” What’s a little widespread rape and torture next to the almighty buck? (Hat tip: Stephen Green at Instapundit.)
  • Quintin Tarantino refuses to recut Once Upon a Time in Hollywood for China. Good for him.
  • Was Russia’s August explosion a nuclear-powered cruise missile’s reactor exploding? Color me skeptical. By the way, there’s a Wikipedia page for Russian military accidents.
  • Squid bomb drone.
  • “The Universe Is Made of Tiny Bubbles Containing Mini-Universes, Scientists Say.” An elegant, worm ouroboros structure which answers many questions, but since it’s from vice Motherboard, a salt shaker is probably in order.
  • Quantum supremacy? Maybe, maybe not.
  • MIT Media Lab scientist Caleb Harper straight up lies about delivering a “food computer” to a Syrian refugee camp. (Hat tip: Dwight.)
  • China may be suffering a pork shortage, but America is enjoying a bacon glut. (Hat tip: The Other McCain.)
  • Why do our global elites hate meat?

    Today, the vegetarian ideology is not a stand-alone philosophy. It is tied inexorably to other ideologies such as socialism, globalism and extremist forms of environmentalism. There are very few vegetarian promoters that are not politically motivated. This has caused a rash of propaganda, attempting to rewrite the history of the human diet to fit their bizarre narrative.

    Even though human beings have been omnivores for millions of years, the anti-meat campaign claims that humans were actually long time vegetarians. They do this by comparing humans to our closest evolutionary relatives, like chimpanzees and gorillas, and arguing that these animals have a strict vegetable diet (which is not exactly true).

    Of course, Native American tribes, living closest to how our prehistoric ancestors lived long ago, had meat heavy diets, but don’t expect the environmentalists to accept this reality. What they conveniently do not mention is that over 2 million years ago human ancestors broke from their vegetable diet and began eating meat. Not only this, but the diet changed our very physical makeup. We grew far stronger, and smarter.

    Yes, that’s right, the rise of meat in the human diet tracks almost exactly with the rise of human intelligence and advances in tools and technology.

    My theory is that “ethical humanism” among our chattering classes is a low-calorie substitute for traditional religion, and forgoing meat is our punishment for environmental sins. Either way, I say it’s spinach and I say to hell with it. Speaking of spinach…

  • Russian fighter with freakishly large biceps nicknamed Popeye gets clock cleaned by guy 20 years older. You’ve seen those “Skipped Leg Day” memes? This guy looks like he skipped everything but biceps day for five years.
  • I regard GNU Foundation head Richard Stallman as a fanatic who’s just a few steps shy of being a complete lunatic. But he’s right to defy Social Justice Warrior-types who want him removed for objecting to the lynch mob regarding the late Marvin Minsky’s minimal ties to Jeffrey Epstein.
  • “Florida man arrested for having sex with stuffed ‘Olaf’ at Target.” I doubt police will just let it go…
  • For Halloween, please enjoy this review of The Night Stalker, the TV movie that introduced Carl Kolchak to the world.
  • Texas vs. California Update for March 13, 2014

    Thursday, March 13th, 2014

    Time for another roundup of Texas vs. California:

  • Texas surpasses California as the top tech exporter.
  • Victor Davis Hanson wants to “save” California by making liberals eat their own dogfood.
  • Texas is creating jobs at all income levels.
  • Vallejo still can’t afford its pensions:

    The California city of Vallejo emerged from bankruptcy just over two years ago, but it is still struggling to pay its bills.

    The main culprit: Ballooning pension costs, which will hit more than $14 million this year, a nearly 40% increase from two years ago.
    Amid threats of legal action from the state’s pension giant, CalPERS, Vallejo did little during its nearly three-year stint in bankruptcy to stem the growth in its pension bills.

  • Rising CalPERS pension costs are also threatening Long Beach’s financial stability.
  • Berkeley is looking a little better for the short term, but after that they too will be feeling the CalPERS squeeze.
  • Pacific Grove is having a referendum to roll back pension increases.
  • California is getting ready to hike gas taxes again, adding another 12¢ a gallon to gas prices.
  • Is there a Democrat-on-Democrat battle over unions brewing in California?
  • California nursing home chain files for bankruptcy. “The dagger in the heart is that we have been overwhelmed by a wave of class-action lawsuits.”
  • A list of former Los Angeles city employees earning six figure pensions. (Hat tip: Pension Tsunami.)
  • California rancher’s are selling their cattle to Texas ranchers due to drought.
  • Cagney Global Logistics relocates from Denver to Irving, Texas.
  • San Jose-based sheet metal manufacturer Cortec is expanding in Pflugerville.
  • Even punk rock queen Exene Cervenka is getting out of California while the getting is good:

    Now when I think about California, I think of a liberal oppressive police state and regulations and taxes and fees. I’d rather go someplace and have my own little place out on the edge of town. I’m a country girl at heart. It makes me happy when I see people in Texas open-carrying. It makes me feel safe. I’m not even a gun owner, but I’d like to see a gun rack in every pickup truck, like my boyfriend had when I was fifteen years old in Florida. An armed society is a polite society.

  • No End In Sight for Texas Oil Boom.