Midstream constraints

Trucks, pipelines, barges, and ports get most of my attention. Railways and ocean-going vessels are crucial to discharging upstream capacity and long-distance volumes, but not as vital to the flows I most often follow: consumer-facing food and fuel. Air freight — belly cargo and more — is important to some flows (e.g., fresh fruit, flowers, pharmaceuticals), but my focus is usually on higher volume, lower per-unit-value flows.

Freight volumes are seriously difficult to estimate, but according to the US Bureau of Transportation Statistics in recent years trucking has accounted for about 13,000 million-tons (MT) per year of US freight, pipelines carry about 3800 MT per year, rail accounts for 1500 MT, and inland waterways carry a bit more than a 900 MT. Air cargo carries lots of value, but not much volume. Construction material, refined fuel, and food/agriculture products are the largest truck cargo categories. Accordingly, I am usually preoccupied with trucking capacity and capabilities.

If refineries are operating and pipelines are delivering fuel to racks, trucks will usually be able to pickup and deliver food and related products. The pipelines — e.g., Colonial, Central Florida, Olympia, and plenty more — are fundamental. For Florida (especially in hurricane season) if barges are able to deliver fuel to Tampa, Port Everglades (Ft. Lauderdale), Jacksonville, and Port Canaveral then trucks should be able to keep coming and going. Barges and other vessels need working ports. In addition to Florida’s ports, the inbound ports at San Juan, Honolulu, and Anchorage are key to feeding hundreds-of-thousands, so I am attentive to what is happening (or not) at outbound facilities for Jacksonville, Oakland, Long Beach, and Seattle/Tacoma.

My choices inevitably exclude. This does not mean other places are unimportant. For example, the Mississippi River and the Port of New Orleans are the principal routes for US agricultural exports. I try to be aware of what I am excluding. I want to be able to quickly insert what I have left out. My particular priorities have more to do with my own intellectual and strategic constraints than anything else. Given personal limitations related to available data, time, perceived risks, relationships, understanding, and potential influence, where and how can I be most constructive?

Even after setting boundaries, details can be challenging. For example, consider the map below. According to FreightWaves, “height represents outbound tender lead time. The taller the market, the more advance notice tenders will need to secure reliable capacity. The colors represent the Headhaul Index. The darker red a market turns, the greater the ratio of inbound loads to outbound ones. On the flip side, more vibrant blue markets have higher volumes of outbound freight.”

Each freight market has a different pattern of pull and push. As usual, Central and South Florida — tall and red — are pulling much more inbound freight than they send outbound. Tourism, retirement services, and financial management fees generate lots of income that can pull plenty of volume. But backhaul opportunities are slim. As usual, Eastern Pennsylvania — tall and blue — is pushing lots of volume into mid-Atlantic metro areas. There are also seasonal dynamics at play as implied by the elevations emerging as harvest arrives across the northern tier.

National freight capacity (more) provides important context, but regional variations can be significant especially if a planned bottleneck becomes a chokepoint. The cyberattack and resulting shut down of the Colonial Pipeline is an example. Problems right now on the Mississippi River and Panama Canal are relevant. The George Washington Bridge into New York City or the I-5 serving Seattle or the I-95 umbilical cord for Miami are just a few local examples of highly concentrated localized midstream capacity. Upstream needs midstream to deliver to downstream.