Conversation

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

  • April US retail sales
    US consumers continued to spend more than ever before (see chart below). But there may be some signs of cooling demand. For example, grocery store sales were up 8.6 percent from April 2021, but were slightly down from March 2022: $68,286 million compared to $68,560 million (not adjusted for inflation). Spending at food service places […]
  • Price improves pull prospects for diesel
    During April, diesel volumes via the Colonial Pipeline declined. Mid-Atlantic diesel inventories saw sharp drawdowns (more). US Gulf Coast refiners diverted flows toward higher prices in Latin America and other markets (more and more). During the last week in April the price of diesel delivered into the New York Harbor market increased from $4.27 per […]
  • Mind the gap (between demand and supply)
    Inflation measures the rate of price increases over time. Surrounded by demand and supply networks, I experience price increases when demand exceeds supply. The greater the gap between demand and supply, the faster and sharper the rate of price increases. Mind the gap. Some inflation is helpful. An emerging gap signals where demand is going. […]
  • Watching ocean horizons
    [Updates below] This morning there are 111 vessels at the Port of LA with at least sixty-seven on the way, according to MarineTraffic (see chart below). This is less crowded than last fall, but still plenty congested compared to any pre-pandemic day. On Friday the Executive Director of the Port of LA said April cargo […]
  • Drilling into diesel demand
    [ May 13 update below.] Russian refineries typically sell a significant portion of their diesel fuel to European customers (more). Early-stage European sanctions related to the Russian invasion of Ukraine complicated, but did not stop this flow (also see second chart below). The complications and partial constraints did, however, increase prices. For example, the chart […]
  • Fuels find flows
    {May 11 update below] Russia’s natural gas suppliers continue to pay Ukraine’s pipeline operators to transport product to paying customers farther west (please see map below). As shown in the chart, bookings and flows have been roller-coastering, but recent volumes often remain within range of early 2020 and most 2021 levels (more from Reuters and […]
  • Logistics Managers Index eases
    The LMI focuses on the growth of US domestic flows. Slower growth, faster growth, or contraction is measured for a set of eight data indicators. Writing for the team of analysts, Zac Rogers provides this summary of April outcomes: Inventory and Warehousing metrics remain elevated, but Transportation has clearly slowed. Whether this slowdown will result […]
  • Amazon’s slower flows
    On April 28 Amazon opened its First Quarter 2022 report (through March 31) with these three outcomes: Operating cash flow decreased 41% to $39.3 billion for the trailing twelve months, compared with $67.2 billion for the trailing twelve months ended March 31, 2021. Free cash flow decreased to an outflow of $18.6 billion for the trailing twelve […]
  • Whither goest demand?
    According to the Bureau of Economic Analysis, March US Personal Consumption Expenditures continued to grow (see chart below). Not adjusted for inflation, Americans are spending more than ever before. The rate of expenditure growth is a bit less torrid than one year ago. The purchase mix is also much closer to pre-pandemic patterns: services, entertainment, […]
  • Re: Shanghai – Another Contrarian
    In an interview with Bloomberg the Chairman of Yang Ming Marine Transport Corporation perceives big flows are easing where most others argue there is increasing friction (including a rather apocalyptic Monday analysis at Bloomberg). Please see interview excerpts in the video below (less than 4 minutes). Before joining the Taiwan-based shipping company in 2020, Chairman […]
  • Shanghai’s slower flows
    Here’s one headline from a usually credible source: China’s COVID-19 lockdown is inflaming the world’s supply chain backlog, with 1 in 5 container ships stuck outside congested ports. [Please see April 26 update below.] The same day, here’s the headline from another credible source: Shanghai lockdown is not causing global supply chain chaos (yet) Can […]
  • Food flow milestones
    [Updates below] Russia’s invasion of Ukraine has substantially increased friction in physical movement of key commodities (such as wheat and sunflower oil) out of the war zone. Sanctions on Russia have also increased friction involved in buying Russian products, especially fossil fuels and fertilizer. In each case demand remains high. At least right now, I […]
  • Q&A
    Fairly late on Friday evening a colleague sent me an email with earnest, even urgent questions regarding likely supply chain outcomes over the next three to nine months. She is concerned about the same issues which I am closely watching. Probably you too. As due diligence, I reviewed the usual rate-limiting parameters: Russian aggression (including […]
  • Command and Control Constrains
    Twenty-six million residents of metropolitan Shanghai have been “locked down” since about March 28. While officially denied until the last minute, the lockdown had been widely anticipated for at least two weeks prior. The challenges involved in supplying locked down large cities have been well-known since Wuhan. Recent lockdowns in Hong Kong and Shenzhen reconfirmed […]
  • Demand: Destruction or Deceleration?
    Updated below with take-aways from the April 14 Retail Sales Report. On April 11 World Trade Organization economists predicted that 2022 global GDP will grow about one-third less than previously predicted because of, “1) the direct impact of the war in Ukraine, including destruction of infrastructure and increased trade costs; (2) the impact of sanctions […]
  • April demand curves
    It’s been about a month since the UK’s covid hospitalization rate began to bend up again (see chart below). Over the last several months the US has typically lagged UK by four to six weeks. Hospitalization rates have been especially troublesome (e.g., delta or omicron) when similar demand curves coincided for the UK, Denmark, Israel, […]
  • Accumulating friction, persisting flow
    Flows are shaped by friction. Newton’s First Law of Motion can also be applied to demand and supply. “Every body perseveres in its state of rest, or of uniform motion in a right line, unless it is compelled to change that state by forces impressed thereon.” [Corpus omne perseverare in statu suo quiescendi vel movendi […]
  • Three Legged Stools (4th leg needed?)
    Goldman Sachs has conducted a textual analysis of earnings call transcripts since 2010 for Russell 3000 companies. This focused on supply chain references overtime. The researchers found that these companies have recently focused on three strategic options: “Reshoring appears to be limited so far, as construction of new manufacturing facilities has mostly gone sideways and imports are still growing faster […]
  • Two independent analyses
    On April Fool’s Day I looked at some Federal Reserve and Bureau of Economic Analysis outputs for February and offered a big picture flow assessment for the United States. I felt a bit exposed offering, “The demand patterns in yesterday’s report reinforce this sense of improving equilibrium between pull and push.” This afternoon I am feeling […]
  • More even demand
    Yesterday’s release by the Bureau of Economic Analysis on February Personal Income and Outlays includes good news for supply chains. Overall personal expenditures increased slightly, from $16,678 billion in January to $16,713 billion in February. Considering inflation, this implies a potential reduction in product flow. This potential seems to be confirmed by a 2.5 percent […]
  • Shanghai’s asymmetries
    As China imposes it’s largest lock-down since the early days in Wuhan, the United Kingdom is shedding the last of its pandemic restrictions. Numbers alone do not explain the distinction. [Updated through April 4, see below.] According to the South China Morning Post, “Shanghai reported 3,500 new locally transmitted cases on Monday, most of them […]
  • (Re-)construction ahead
    Thursday BlackRock’s chairman, Larry Fink, included the following concise assessment in his annual letter: Russia’s aggression in Ukraine and its subsequent decoupling from the global economy is going to prompt companies and governments worldwide to re-evaluate their dependencies and re-analyze their manufacturing and assembly footprints – something that Covid had already spurred many to start […]
  • WSJ: Chain Reaction
    The Wall Street Journal has produced a video primer on recent supply chain stress. It is fifty-four minutes of well-researched, well- produced insight on sometimes hidden aspects of sociology and technology and their intersections. I have characterized supply chains as “socio-technical systems,” so I am sympathetic. The video is a great companion piece to Arriving […]
  • Substantive scarcity
    There are real risks of insufficient sources. These include: Lengthening duration, deepening scale, and expanding scope of drought. For example, this year has started very dry in California’s San Joaquin Valley, Sacramento Valley and Central Coast. According to the National Oceanic and Atmospheric Administration, “Many of these areas have experienced record dryness since the start […]

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