Disruptions, shortages, and the flock
Beyond Mathematical Odds !
Thanks to Igor Chudov, I got over 100 new Subscribers in the last 30 hours, and my ADE post also brought quite a number, so did the Hidden Things series, so the situation demands an explanation. For you, new here, I mostly do interdisciplinary analysis of different fields.
Science, Molecular Biology, Medicine, Hybrid War, Forecasting, connecting dots others don’t in a complex system, with forecasting, among other things. Most of the time I stay away from opinion, I do prefer to make people thin\k for themselves, I am trying to find an in-between.
Pieces with Bio-something, or obviously SARS-CoV in the title are about science, or the current pandemic. I have a few posts explaining my perspective on the virus, and el health and general, and how to address it. It is pinned in my page, so it is easy for you to find it. Everything else is either analysis. Some people find my analysis, and forecasting rather…depressing, a PSA of some sorts.
For all my regular subscribers, this piece will be a mixture of opinion, and analysis.
I share the news above on Twitter, with minor comments, but begs a better explanation here. This is a filing from the biggest cooperative in the USA, leaving as a matter of public record, and a matter of fact, the current cost of the conflict in Ukraine, and as an undertone, sanctions.
The war and the disruptions in the sea already affected the delivery of wheat to Lebanon, the entire shipment of wheat got spoiled. Now Lebanon, runs out of wheat, and is faced with a major problem, which will lead, you guessed, to civil unrest. Like Sri Lanka. Peru, and elsewhere. I shall repeat myself, if by any reason readers don’t read the older pieces for better context. What the social/population dynamics in places facing civil unrest, and popular revolt. Under specific conditions, human behavior is predictable, hunger being one of them.
I have mentioned a few times recently, but watch out MENA (Middle East-Northern Africa), because things will pop out there first. The food in the region might not even last until the next harvest.
Be prepared for all sorts of supply shortages this spring
There’s a long list of ag products in short supply as the busy spring season begins to ramp up
The list of products facing supply issues is long, and growing longer — herbicides, fertilizer, parts, certain feeds and even ear tags.
Farmers will need to be careful here,” he said. “Someone may take their order and even their money, but will they be able to fulfil an order? Suppliers may not be able to get product to retailers, and subsequently to farmers, in time.”
‘At the mercy of the freight system’
Supply chain issues are also showing up at the parts counter.
“My biggest concern is if you have issues at seeding time and are unable to source parts,” said Bill Campbell, president of the Keystone Agricultural Producers, Manitoba’s main farm group.
“If they are 10 days out or on back order, what do you do for seeding if it’s your tractor or air seeder? These are huge concerns.”
“We’re actually trying to stock up extra on the pieces that we normally do sell,” Iwanchysko said. “In the past, you would do your regular stock and then as it starts to dwindle down, you start to reorder, just to keep it replenished.”
This should not be news for anyone, alas just confirmation of previously outlined scenarios. I have referred many times to how JIT (Just In Time, the logistical model up till early 2020) was dead in the water (heh), and even in February, And some of the big supply chain companies, and logistical experts already declared that JIT was never coming back, and the market would return to the JIC (Just In Case), which the article above exemplify.
If you plan to build a garden, or a farmer of any size, you should adapt, and try to do the same. The bigger your operation, the more you should look into it, because, as you are about to read as we go down, it will only get more disruptive the next 12 months+ .
Thousands of Russia-Linked Ship Containers Pile Up in Rotterdam
In normal times, the Dutch port of Rotterdam is like a machine: hundreds of ships come and go each day, and tens of thousands of boxes are loaded and unloaded from those vessels, all to keep Europe’s economy humming.
Right now, though, sanctions on Russia are snarling thousands of steel shipping containers, the boss of the port said in an interview that gave unique insights into how the beating heart of Europe’s real economy is being disrupted by the measures against Moscow.
Five-Fold Surge in Container Prices Fuels Mauritius Inflation
The main suppliers for the Indian Ocean island nation are China and India. The value of imports from the two countries amounted to 71.7 billion rupees ($1.6 billion) last year, a third of the total cost. Total import bills soared 30% to 215 billion rupees in 2021 from a year earlier, according to Statistics Mauritius.
“Mauritius is a small island economy and a net importer of food, manufactured goods, fuels and equipments,” said Bhavish Jugurnath, an independent economist. “Shipping costs is a major driver of inflation in the country, as we have been witnessing over the past months.”
When it rains, it pours, the entire supply chain has been living through a container shortage that comes and goes in waves, and per the last post, anyone who paid attention forecasted that the Shanghai lockdowns would affect the availability of containers. And now sanctions will also affect the movement of containers of Russian origin/ownership.
Which leads to further constrains, and higher prices, stocking inflation in poorer economies, and countries outside the preferable (most profitable) routes.
Containers already pilling up in Shanghai, leading to food spoilage, and driving the container shortage upwards, and more bottlenecks. It is also impacting shipbuilding in China, one of the biggest builders in the world, closing 3 of its biggest yards.
At some point a new way of transporting good will come, maybe a reader could invent one, a decentralized approach ? This is how containers were born. From a trucker, stuck in a long line in a port.
U.K. Extends Energy Aid to Keep Factories From Shutting
The U.K. government stepped up financial help for energy-intensive companies, such as steelmakers, facing surging costs from spiking power and gas prices in recent months.
Britain’s Energy Security Strategy confirmed it would extend a compensation program for another three years that gives electricity-intensive industries a refund on the cost of the emissions trading scheme. Under the current formula, about 60% of expenses are compensated, and officials said they would now look to increase that to 100%…
Puerto Rico Power Slowly Being Restored After Massive Outage
Power might not be fully restored until Friday, officials say
Puerto Rico’s power infrastructure is notoriously fragile
The massive outage in Puerto Rico was caused by a fire in one of its most important power stations, no real cause mentioned yet. But I didn’t write this one for the mere causality aspect, but the trend. East of England, Japan, Cape Town, Johannesburg have been hit by blackouts recently. The UK is in talks of doing rolling blackouts, and the EU itself too.
Global Energy Upheaval Threatens Years of Natural Gas Shortages
Asia curbs LNG spot buying in gamble that summer will be mild
LNG demand seen significantly outpacing supply on Ukraine war
The natural gas market’s delicate balance is crumbling, putting the global economy under further strain as nations struggle to secure enough fuel.
War, the energy transition, severe weather and surging demand are creating a period of upheaval that is tightening supply like never before. Nations and companies are grappling to secure enough gas amid a global power crunch as economies recover from the pandemic.
Natural gas is a key component in the global economy that keeps factories buzzing, lights on and houses warm. The competition for a finite supply of the fuel will only get worse if current conditions persist, with skyrocketing prices and supply gaps threatening to upend economies, boost inflation and grind supply chains to a halt.
“The market of today is one of the most challenging I’ve ever seen,” said Susan L. Sakmar, a visiting assistant professor at the University of Houston Law Center. “The world needs a bigger energy pie to share. Absent a global recession or more Covid lockdowns that slow growth, I suspect many parts of the world will face energy shortages.”
LNG importers in China and India have drastically cut back spot purchases, and are instead maximizing domestic supply and consuming gas in storage, traders said. This strategy will help to save money, but comes with an enormous risk that allows little room for surprises -- a bet that hasn’t paid off recently.
If there is a sudden spike in demand for gas, or if a contracted shipment isn’t able to be delivered due to a production issue, some of Asia’s top consumers may be short of gas this summer or next winter.
Besides sharing for the sake of keeping the reader up to date, I don’t have anything more to add besides I was right again. Demand for natural gas kept growing as other form of fuel got tight, or expensive (coal, oil), and as countries started pushing it as a greener solution (one of my first posts here was exactly talking about this happening), and now with war in Ukraine, and sanctions on Russia, the market got really disrupted.
This could change in the next year, but as we learned the last 2, disruptions, shock waves, and ripple effects tend to have drastic, disproportionate effects in the system, and takes a lot of time to accommodate the changes.
Poorer nations will get more affect, (again, as previously covered), and as I wrote above, many nations, first and third world, will experience blackout short term, and long term, given the current costs of the energy markets, putting even more inflationary pressure on first world economies, since they can “afford” the expensive LNG, and outbid other nation short on cash (and by afford, I mean, print themselves into literal oblivion). Of course, exporting nation are not free from the effects.
Natural gas in the US reached a 13 year all-time high this weeek. Among all the variables already discussed, the analyst referred in the article is correct, the world is low on coal, given the massive demand, and logistical difficulties to transport so much coal.
According to the head of the group of German companies Bosch Stefan Hartungdue to denial of supply of Russian gas all German enterprises will not only have their supply chains disrupted, it threatens them with a complete stoppage of production.
Given the massive dependency of Germany on Russian gas, this should be expected, and it now rests on the shoulders of the politicians to make sensible, smart choices, or send their economy, and most of the EU into a depression. Germany is already experiencing a shortage of flour, and oil. And other countries will too, as you are about to see.
Spain allows rationing products in case of market stress to prevent shortages
Spain temporarily authorised stores on Wednesday to limit the sale of some products to prevent sell-outs when markets are under stress, days after some supermarkets ran out of sunflower oil
Greece is rationing sugar (I have already covered the sugar shortage in the world before), and flour, and at different levels it is coming to most countries, rich and poor alike, very few will escape it. Walgreens is now rationing baby formula, now a new shortage, but an intensifying one.
40% of Belgian food producers to halt or reduce activity
Around 50% of Belgian food producers are facing shortages of ingredients such as oil and flour needed to make their food. Last year, rapeseed oil was available for €750 per ton. Now the same amount will cost €2,200 – almost three times as much.
Around 70% of companies have had to make changes to their products, or will have to do so in the near future. Products may even begin to taste slightly different
People around the world, more attentive, or with weaker stomachs (gastritis, gastric inflammation, has the weird side effect of enhancing your taste level, in some people) that the taste of certain foods changed drastically, sweets specially (remember, sugar shortage). This change in food production is disastrous, and by no fault from the producer.
Government, both at national, and local level should move fast to deal with this. Regardless of how rich you are, and this is the second time I am saying this, big producers will NOT collapse their own stability, to sell food to Europe because Europe is paying an exorbitant premium out of desperation.
No secret, some players have been amassing quite the sizable positions, seeking to secure their own food supplies. I am talking about China, buying one of the biggest amounts of corn, and might be just the start of it.
Reminder, in case you missed, quite a few countries stopped exporting any type of food, and grain early in March, because of the conflict in Ukraine, and they will resort to this more, and more.
New readers should read, at least, the other two opinion pieces, would advise the analysis to for a deep dive, and start, slowly, stocking non-perishables.
One of the main reasons for all this in Europe, and MENA, is of course, Ukraine.
With ports mostly shut, farmers are also considering switching to crops more suited to local consumption than for export. Even at this early stage in the growing season the situation looks bleak, with analysts projecting output down between 30% and 55%, depending on the crop. That adds to risks for shortages of key staples and may further raise global food prices already at a record
Don’t know how well those efforts will go, since the Ukrainian government seems to be very close to the EU, and hellbent into driving the entire continent into economic depression. I do understand the choice to ban all imports from Russia.
But this will affect more than one market, more than merely fertilizers, grains, seed oils. Already covered before, it will massively impact chips.
This series of posts begun with me, attempting to write a longer piece on semiconductors alone, and how a decent portion of the experts of the field were mistaken, and this critical industry would be affected by more disruptions. One thing I mentioned but feel paid attention, was the tool shortage.
Are we deep into a global semiconductor shortage conundrum?
Efforts to expand production capacity will be hindered by the "worst in decades" wait period for key equipment.
The delays in getting chip production equipment are the “worst in decades” as component shortage and logistic delays mount throughout the global supply chain, industry sources claim
Reports are indicating that chipmakers trying to expand production capacity will have to wait 1.5 years or longer for key equipment
Leading chip tool makers including Applied Materials, KLA, Lam Research and ASML warned clients that the waiting period is 18 months for some crucial machinery
Reality knocks back. I know optimism is often needed, specially when things look dire, or expanding business, or attempting to solve the current 2 years mess, but one point, as a generalist, who understands complexity quite decently, was “where these factories, and people will source the materials needed, if every time I go looking, there are bottlenecks, shortages, or constraints in said materials.
Just to make my point again, and again, that for the near future, the semiconductor industry will still suffer from these shocks. Most industries apparently from the given disruptions to the system. But as a starting point, now we can address a fairly underreported, but critical shortage, that comes in waves. Tools.
Underreported by both the media, and specially industry, for obvious reasons. Whose business would get better if they announce “We can’t function properly because our tool suppliers are facing difficulties to source materials, or for X reason.” Yet, it is one of the most critical.
I covered before how Bayer, would not be able to meet demand for its pesticide, because one of their main suppliers for a chemical use to produce the product faced a specific problem. One of their machines broke, and the part needed to fix it, would take roughly 3 months to fix. This isn’t unheard of, semiconductors factories faced similar problems, here and there, but not as systemic as Bayer, since the semi market has other players. Farming tool, mechanical tools, you named, in the last 6 months there was a shortage of it. And there is no reason there won’t happen again this year.
I don’t mention this merely for awareness, but people from all walks of life, and industry subscribe to me, so you should go look into your supplier, and perhaps have a sparing part, or two, and sparing tools that breakdown more often. This is the second time I propose this, but this time, there is enough data to back it up.
This entire piece, and the last one written with the Shanghai lockdown in mind, taking into account, partially at least, its cascade effects. There are now rumors, both from official sources, and from Chinese netizens, of another lockdown, compounding the effects of a lockdown in Shanghai.
If this lockdown actually happens, not only this will fracture Chinese society (they can’t deal with the current lockdowns anymore, as I previously wrote about, specially given the lack of food), it will undermine the CCP, but. It will cause a massive crack in the already brittle supply chain. From this piece, and now reading it again, was quite…timed.
Those two’s in our year are not numbers. They are black swans, and a flock is coming
And the flock will keep coming. Like particles in a Kessler Cascade.
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My German colleague optimistically says they will fire up chip factories within a year. I asked him where the wafer will come from? He has no idea.
Very very interesting article. I will definitely be reading any other related ones.
By the way when you wrote this:
"New readers should read, at least, the other two opinion pieces" which pieces were you referring to? Did you mean two of your other pieces related to this topic? If so which ones?