Most freight movements are local. But local deliveries often depend on significant upstream flows. Below is a map that the US Bureau of Transportation Statistics developed showing upstream flows by proportional ton for the United States. Some crucial domestic flows depend on global flows (mostly maritime flows) suggested by the screen capture farther below of August 22’s ocean vessel traffic.
Late in the pandemic volumes delivered to US east coast ports — through both the Panama and Suez canals — grew in part to avoid congestion at US west coast ports. Flows through the Suez Canal now have dwindled due to the Houthi threat in the Red Sea. Flows around the Cape of Good Hope have surged, but mostly toward European destinations. The transpacific channel, especially into the ports of Los Angeles and Long Beach, has grown for many reasons including a possible October 1 dockworkers strike for US east coast and Gulf ports. The continuing risk of a rail shutdown in Canada has pointed even more vessels toward US west coast ports.
Pandemic era congestion and other sources of domestic freight friction prompted an expansion in US freight capacity. In December 2019 there were just about 1.65 million carriers in the United States. By December 2022 there were over 2 million carriers. That’s where the US has more or less remained even as the number of trucks, drivers, and hours driven has slowly declined from a summer 2022 peak. (Here and here and here.) Despite softening consumer demand, volatile fuel costs, and many other pinch-points, US freight capacity continues to be robust — probably even a bit higher than needed.
Demand growth for freight has slowed, especially for direct purchases of goods. But demand remains at least five percent above pre-pandemic trend even for goods. Food inflation is way down. Upstream food flows are abundant. Fuel prices and inflation are not flat, but despite geopolitical and other storms fuel stocks and flows have been entirely sufficient. Affordable fuel costs and persistent demand keep trucks and truckers hauling. Tender rejection rates are below five percent in most markets.
Todd Davis at Freightwaves comments, “intermodal capacity appears to be more capable of handling current levels of demand and may keep the truckload market from experiencing significant tightening. A caveat: The bulk of hurricane season lands this time of year.”
So far Hurricanes Beryl, Debby, and Ernesto have claimed my sustained attention. Beryl was the earliest-forming CAT5 on record. All three caused significant flooding. Two of the three (Beryl and Ernesto) resulted in extended, wide-area US grid loss. Yesterday Accuweather forecast six to ten named Atlantic tropical storms for September.
Where there is extensive and extended grid loss, water, food, and fuel supply chains are disrupted. If storm damage and grid loss reduces cell coverage and/or other telecommunications, supply will be more difficult to calibrate with demand. If major public water systems or grocery distribution centers are taken down this will be shock to any regional ecosystem of supply. As previous posts have emphasized, in the United States there is substantive Supply Chain Resilience unless major capacity concentrations — nodes or channels or modes — are lost.
Water, food, and fuel capacity concentrations — and the channels by which each capacity flows — are where I focus. All of these capacity concentrations are important. But fuel is especially important. When the grid is gone, fuel for the emergency generators supporting water pumps and treatment facilities is how water flows persist. Trucks and truckers hauling food and bottled water can be creative and courageous finding alternative routes, but even the most tenacious trucker can’t make up for lack of fuel. So, inside every cone of uncertainty where are the refineries, pipelines, fuel storage facilities, and loading racks? Do they survive? Is the grid still connected — if not, how quickly can it be? What can be done to facilitate continuous flow of fuel to support continued flows of water and food and more?
