Logistics managers are the Charlie Brown of Halloween. While the Peanuts gang all got tasty treats, Charlie Brown got rocks. Let’s be honest, logistics managers all over the world are being handed boulders. Nothing like a variety of headwinds to weigh down the flow of trade.
Here’s a look at the big three:
Boulder 1: Tanker and diesel crisis
“Economies around the world have been recovering, increasing the demand for diesel,” explained Andrew Lipow, president of Lipow Oil Associates. “Meanwhile, the pandemic resulted in the closure of refineries in the USA and elsewhere, but it also delayed the startup of new refining capacity around the world. Add to that the French refinery strike taking supply off the market and the impending European Union ban on the purchases of Russian crude oil Dec. 5 and Russian diesel Feb. 5, diesel prices are rapidly moving up.”
Diesel inventories in New York/New England markets are down more than 50% since last year and at the lowest level since 1990. Overall, reserves for diesel this time of year have not been this low since 1951, with the greatest shortfall in the Northeast region including New York and New England.
As the cold weather nears, it will be interesting to watch where energy traders direct their loads — to the Northeast or Europe. Let the battle begin.
Boulder 2: Strikes
You know it’s bad when strikes at the European ports don’t pack the punch they once did in the news. It has become backup noise.
The union Unite continues with its two-week strike in Liverpool, England. Congestion is affecting the German and Netherland ports as the flow of trade continues to move away from Liverpool. Schedule reliability is gone.
Bobby Morton, national officer for Unite, continues to press on, saying the same message over and over: They need a wage that matches inflation. Don’t be surprised by another strike. It seems like dysfunction is now the new normal.
Closer to home, the immediate strike logistics managers are watching is the railroad. Nov. 19, the day the Brotherhood of Maintenance of Way Employes Division (BMWED) of the International Brotherhood of Teamsters will be able to strike, will be here before we know it.
Richard Edelman, counsel for BMWED and chief spokesperson, told American Shipper the workers can’t take it anymore.
“The railroads consistently underestimate the frustration and anger of the workers,” he said.
This underestimation was clearly displayed when the Union Pacific CEO literally laughed on air when asked about the possibility of a strike during a recent interview with CNBC. I was told the clip was sent around to other CEOs with a caption: “This is not what you do.”
This is corporate America’s version of a red flag to a bull.
Boulder 3: Mississippi River drought
Record-low water levels continue to snarl river transit on the mighty Mississippi, pushing some freight to the trucks and rails. If a rail strike does happen, it will be a disaster. We all know there are not enough trucks or drivers to move the rail freight, but with the diesel shortage it will only compound the problem.
In addition to the boulders, logistics managers continue to be dealt rotten eggs: Xi’s never-ending “zero-COVID” closures.
So the holiday season is off to another joyous start for the men and women of logistics. I guess now’s the time for that letter to Santa to be written. Maybe good Ol’ Saint Nick can help.