Preliminary thinking, speculation, and hypotheses. Earnestly intended and honestly attempted, but almost always needing further consideration, clarification, correction, or not-yet-found confirmation. These are research notes and homework still underway. Conversation is derived from the Latin meaning to turn together.

  • US freight resilience
    Last week J.B. Hunt released its 2022 fourth quarter and year end results. The Wall Street Journal reported: Slowing shipping demand helped push fourth-quarter profit at J.B. Hunt down 17% from the same quarter the year before and revenue growth fell short of expectations as retailers pulled back on inventory restocking and consumer spending sagged […]
  • US retail sales
    December retail sales extended November’s decline (see chart below). According to the US Census Bureau, “Advance estimates of U.S. retail and food services sales for December 2022, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $677.1 billion, down 1.1 percent (±0.5 percent) from the previous month.” But as […]
  • Rechecking vital signs
    Here again is my irregular update on five subsurface indicators of supply chain fitness that may help us anticipate the next six months or so. Southern Hemisphere Agricultural Production: Argentina’s crops are in trouble (more). But Brazil is expecting bumper crops, especially of soybeans (more). Argentina is even buying from Brazil to fulfill its domestic […]
  • Torsten Slok talks supply chains
    As regular readers (or even occasional readers) know, I am biased toward demand. In my experience contemporary high volume, high velocity supply chains reflect and serve demand. Sustained effectual demand shapes supply capacity. Where effectual demand can be communicated, effectual supply will flow — perhaps with difficulty, perhaps with stubborn delays, but push follows pull. […]
  • PJM Problems: Demand and/or Supply?
    PJM is a regional transmission organization (RTO) that coordinates grid operations for Ohio, Pennsylvania, New Jersey, Delaware, Maryland, West Virginia, District of Columbia, and significant parts of Virginia, Illinois, Michigan, Kentucky and North Carolina. About 4AM eastern on December 24 I sent several clients personalized messages that included something like: This morning’s PJM Stage 2 […]
  • Update on US Diesel Stocks
    A late December deep freeze — even along the Gulf Coast’s refinery row — resulted in reduced petroleum processing. But production quickly came back strong. Earlier today Reuters reported: The U.S. Energy Information Administration (EIA) said crude inventories jumped by 19.0 million barrels last week, the third biggest weekly gain ever and the most since stocks rose […]
  • Managing Risk
    [Updates Below] Tuesday, January 3, the World Health Organization’s Technical Advisory Group on Virus Evolution (TAG-VE) met to review new information on SARS-CoV-2 variants. Here are excerpts from the January 4 TAG-VE statement: As of 3 January, 773 sequences from mainland China have been submitted to the GISAID EpiCoV database, with the majority (564 sequences) […]
  • European energy flows
    [Updates Below] Europe’s second week of winter begins with Frankfurt breaking 60 degrees Fahrenheit. Autumn in Paris (and Berlin and Amsterdam) was remarkably mild. The EU has consumed one-fifth to one-quarter less energy than usual. Much higher costs have also contributed to declines in demand (more and more). EU natural gas storage facilities are more […]
  • Vital signs updated
    [Updates Below] There are several helpful tools to assess the overall health of supply chains, including the Global Supply Chain Pressure Index and the CSCMP Logistics Managers Index. Toward the end of November, I suggested five indicators for fitness of emerging global flows focused on the next six months or so. Here’s an updated assessment: […]
  • Increased real US consumer demand for food
    In November 2018 US consumers spent 983.7 billion chained-2012-dollars on food-at-home. In November 2019, 991 billion chained-2012-dollars were spent on food. This November (according to this morning’s report and Federal Reserve analysis) the amount spent was 1033.6 billion chained-2012-dollars. This is an inflation-adjusted figure. We are spending above trend on food-at-home — establishing a new […]
  • Demand-driven shortages
    This morning Dr. Ashish Jha responded to a reporter’s question making the crucial — and too often neglected — distinction between demand-driven or supply-driven disequilibria. In terms of strategic — and responsive — potential actions, this is a crucial differential diagnosis. Below I have teed-up the full four minute interview. The push-pull distinction begins about […]
  • Wind-blown rolling waves never stay
    [Updates Below] In late 2019 and early 2020 something strange was happening in China. Sparse reports and lush rumors swirled. As is often the case with China, we were left listening to the contours of silence much more than anything else. I watched and listened with increasing alarm, but also with deep uncertainty. It was […]
  • Farther horizons
    [Updates Below] In three weeks, a new year. In three months, the likelihood of another million-plus deaths from covid (more) and, almost as certainly, a worsening war in Europe. In three years? The sharp slope of pandemic demand has eased (even as core demand increases). Compared to one or two years ago, many wealthy people […]
  • Diversifying flows
    In a good overview, the Wall Street Journal reports, “The hierarchy of U.S. ports is getting shaken up. Companies across many industries are rethinking how and where they ship goods after years of relying heavily on the western U.S. as an entry point, betting that ports in the East and the South can save them […]
  • US diesel push and pull in context
    Here is a long excerpt from yesterday’s EIA Petroleum Status Report for last week. U.S. crude oil refinery inputs averaged 16.6 million barrels per day during the week ending December 2, 2022 which was 53,000 barrels per day less than the previous week’s average. Refineries operated at 95.5% of their operable capacity last week. Gasoline […]
  • Quick fitness update
    [Update Below] Twelve days ago I set out five vital signs to regularly monitor. Here’s a very quick update: Southern Hemisphere Crop Production: Drought is casting doubt on Argentina’s corn crop as well as Brazil’s soybeans. Australian wheat is mixed, but record yields in the west seem to be making up for flooded fields in […]
  • Bloomberg on fossil fuel flows
    Yesterday Kevin Book provided a wonderfully concise explanation of recent conditions. Even with breaking news regarding Russia’s oil flows and potential unleashing of (some) domestic demand in China, the explanation has held for more than twenty-four hours, which should not be taken for granted. Selecting the image below will take you to the Bloomberg website. […]
  • October personal consumption of food
    [Update Below] According to the US Department of Commerce, Bureau of Economic Analysis, “Personal income increased $155.3 billion, or 0.7 percent at a monthly rate, while consumer spending increased $147.9 billion, or 0.8 percent, in October. The increase in personal income primarily reflected increases in compensation and personal current transfer receipts. The personal saving rate […]
  • Chicken or egg, food or flow, push or pull?
    In the United Kingdom eggs are in short supply. Culling flocks due to avian flu has reduced upstream production. There are social and regulatory constraints on imports (more and more). Avian flu has also reduced stocks of broilers and egg laying hens on the continent (France and Netherlands (US too)). Constrained supply and higher production/transportation […]
  • Five vital signs
    The fitness of global flows is threatened. Pre-pandemic stresses have mostly persisted, especially related to climate change and terms of trade. The war has imposed further constraints, especially on energy and food (more and more). Demand is certainly not declining. As winter descends on the Northern Hemisphere current constraints will tighten — especially in Europe […]
  • Food flows and food security
    [Update Below] On Wednesday the G20 Summit in Indonesia concluded with a communique that includes: Most members strongly condemned the war in Ukraine and stressed it is causing immense human suffering and exacerbating existing fragilities in the global economy – constraining growth, increasing inflation, disrupting supply chains, heightening energy and food insecurity, and elevating financial […]
  • Streams flowing slow and shallow
    For the week ending November 12, barged grain movement in the United States was down one-third from last year at this time. Oceangoing grain cargoes from US Gulf Coast ports are down roughly 40 percent compared to 2021. Upstream sources (in this context literal as well as figurative) are not nearly as sparse. It has […]
  • US maritime inflows
    [Update Below] Over the last year, inbound maritime flows to the United States have slowed and dispersed (see chart below). This adaptation seems to be accelerating in the current quarter. Recently declining demand for imports is behind the slowdown (see second chart below). The dispersion is part of a long-term trend. Demand-pull is usually fickle. […]
  • “Competition for non-Russian diesel barrels will be fierce.”
    [Updates below] The International Energy Agency’s November Oil Market Report summarizes recent market behavior: Diesel prices and cracks (differential to crude oil price) surged to record levels in October, and are now 70% and 425% higher, respectively, than year-ago levels while benchmark Brent prices increased just 11% during the same period. Distillate inventories are at […]

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