Business

Around the Next Corner

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What lurks in hiding for us there? Nothing good, and that is the general feeling one gets from the ripples and small currents in the wide ocean of the blogosphere. I’ve been paddling in that ocean since … 2002, when I gave up on Slate as an original aggregator news site shortly after 9-11, because the communities which gathered in the various comments sections just got too angry and irrational for words. Something let me to Instapundit, and through his links to the original incarnation of Sgt. Stryker’s Daily Brief. I became a contributor when the original Stryker appealed for other contributors and have been paddling away at the margins of the digital information ocean ever since. Back in the pre-internet day, I had subscriptions to all kinds of magazines. As a military public relations professional, I reasoned that I should know when and from which direction the next political-military-social sh*t-storm would arrive. Tracking blogs and digital media serves the same purpose for me that print media once did.

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Worthwhile Reading

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A teacher’s experiences in an American high school…a highly-rated American high school…with thoughts on the power of incentives.

Related: the effects of easing up on school troublemakers.

Research suggests that CEOs born in “frontier counties with a higher level of individualistic culture” are more effective at promoting innovation.

The market value of Tesla…$1.2 trillion…now exceeds the market value of the entire S&P 500 energy sector.   (The components of that sector can be found here.)

“Believe the science”, bureaucracy, speed, and creativity:   America needs a new scientific revolution.

Planning is a bigger job than planners can do.

Offshoring is not just for manufacturing jobs: Teleshock.   See also my 2019 post Telemigration.

Interesting memoir by a woman who started as a clerk for Burlington Northern Railroad, worked her way up to Yardmaster, and then worked closely for many years with the legendary RR executive Hunter Harrison, focusing mostly on improved data and methods for performance measurement and operational support.   (The author has since made a major industry & career change and is now focused on bioinformatics research related to cellular development!)

 

Rediscovering the Competitive Advantage.

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We’ve long understood that the cost advantage in freight transportation depends on distance, with railroads, and water carriers where waterways are available, making the longer hauls more cheaply, particularly with bulk commodities.  The cost advantage of rail over highway transportation appears for shipments travelling farther than five hundred miles, give or take.  The railroads, however, have been shying away from much of that intermodal business, that despite signs of strain in long-haul trucking manifesting themselves long before anybody heard of Wuhan, let alone of virology research there.

A week ago, I noted, “There are no short-term solutions, and the railroads have to think about how best to do shorter-haul and retail intermodal trains.”  Then an executive with a freight-forwarding company rented a boat to look at what was going on shoreside at Los Angeles and Long Beach and posted his impressions.  Among his suggestions to ungum the works was an all-hands effort by the railroads to get the containers somewhere inland and let the truckers pick them up there.

I don’t know if somebody in Omaha heard him, or if somebody noticed that there was money to be made.
Union Pacific, the Port of Long Beach, and the Utah Inland Port Authority have announced the launch of direct rail service between the Long Beach and Utah facilities to help address ongoing port congestion.

The executive directors of the two facilities, Mario Cordero of Long Beach and Jack Hedge of the Utah authority, said in a joint statement that the direct, regularly scheduled service “will allow cargo destined for all of the Intermountain West to be rapidly evacuated from terminals in Long Beach to Salt Lake City for further distribution throughout the region. Much of this cargo traditionally moves to Utah, Colorado, Nevada, and Idaho by truck, and thus must be removed from the port terminals one container at a time. Reengaging this direct rail service will allow removal of blocks of containers at a time.”

Cordero also said the agreement immediately reduces pressure on terminal storage, gates, chassis, and the local drayage community on the coast. … It’s a major step forward for exporters from the region.”
It’s a research project for another day to work out why those boxes weren’t already moving on stack trains to Salt Lake City rather than as one container at a time with a driver putting in more than a full day on the road between the coast and Salt Lake.  Several commenters on that post are noting that the reluctance of the railroads to go after those 500 mile intermodal moves goes beyond Union Pacific.  Perhaps, dear reader, you’ve heard of North Baltimore, Ohio.

How much money might Union Pacific have been leaving on the table?  A Railway Age analysis includes this.  “Millions of TEUs [a 20′ x 8′ x 8′ basic container load — Ed.] of international goods are imported to or exported from the Intermountain West annually, but only 10% of this cargo currently moves by rail. This initiative aims to provide consistent, reliable movement of cargo by rail, which improves fluidity and reduces delays of shipments already set to come to the Intermountain region, rather than increase cargo volume.”  The value proposition might have been there as early as 2018, and the allocation studies I referred to at the start of this post are over fifty years old.  And only now Union Pacific and Utah Inland are going after this traffic, and only now claiming the environmental benefits and less highway congestion??

I’m also puzzled by the way Our Political Masters are working the problem.  There’s now a Container Excess Dwell Fee in Los Angeles, applied to containers that aren’t railed out within three days or trucked out within nine.  Forgive me my age, but what ever happened to per diem charges for rolling stock in motion, and demurrage charges for rolling stock sitting around?  The per diem charge is the rental a railroad company pays to the owner of the car for a day, and there used to be a chess game called get-the-foreign-road-cars-interchanged-by-midnight, sticking the receiving road with the per diem charge; while the demurrage charge applied to a consignee who treated a freight car as free warehouse space rather than unloading it promptly and releasing it for service.

Power Line’s Paul Mirengoff suggests that the Biden administration’s efforts to untangle the ports aren’t likely to succeed quickly.  But if you’re thinking about parallels to incapacitated presidents current and past, some of the port jam-ups bring to mind the logistical nightmare that was mobilizing the American Expeditionary Force.  That, too, is outside my area of expertise.

Why, though, weren’t the freight railroads better positioned to go after some of those container hauls before the current emergency manifested itself?

(Cross-posted to Cold Spring Shops.)

Unpacking the Port Part Two

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Ginny provided an excellent link to a discussion about the port mess on the West Coast. I read the entire (long) thing and the comments and had a few things to add here.

I doubt that some guy (although he is a logistics company CEO) could rent a boat, put out a few tweets and change a municipal rule. It isn’t like the guy has millions upon millions of followers. I suppose it could have happened but sounds doubtful (8 hours is what it took). And while it is great that they can stack containers higher, that isn’t going to solve the overall problem.

As many others (including me) have pointed out the problem didn’t happen overnight and won’t be fixed overnight. The problem needs a team of people to come up with a game plan that is realistic, and a bunch of rules will need to be changed if the issue is going to be fixed. Mayor Pete is clearly underqualified and probably doesn’t care, as evidenced by his extended time off to play mom. While taking time off to take care of a child in and of itself isn’t a bad thing, taking off so long is, of course, ridiculous and a bad look. Full disclosure – when my wife bore my two children I think I took off one or two days for each.

I have said before that there needs to be a Port Team, or something on the federal level and they need to get with the state and local governments as well as the unions and fix the archaic rules that everyone is playing under, and come up with some out of the box solutions. I figure this would take the team around a month to come up with, and I would involve everyone, including the army logistics people, or anyone else I could think of to help.

This will not happen.

So, back to reality. In the world of industrial distribution, things are somewhat like they have been for the past year and a half. Anything imported is completely crazy and unpredictable as to when it will arrive. Everyone is more accepting of substitutes, as sometimes there is no choice – and many times the substitutes are much more expensive. But if the choice is “heat” or “no heat”, it makes things easier. Winter will have no mercy on facilities or homes that don’t have parts or units that work to keep them thawed. I get very little time off, but I have no choice right now as we need stuff and I have to do whatever it takes to get it.

There are some holes in the inventory but nothing too tragic, with the notable exception of imported finished goods such as ductless mini split systems, all of which are made “over there”. That industry is pretty much tanked. Domestically made products are doing much better, although the continuing labor shortages and problems with getting certain raw materials such as plastics and foam (we really didn’t need that Texas freeze on top of all of this) hurt lead times.

It is still pretty wild with some things, but overall, it isn’t the end of the world unless you are relying on imported stuff. LTL continues to be a major issue and I expect problems with food chain eventually. We need autonomous trucks and fast.

Unpacking the Port

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I hate silliness – bureaucrats wielding power arbitrarily, ignoring consequences, etc. – ask me about our local Home Owners Association, for instance. But this Instapundit link is to a great, productive, tactful moment when analysis, persuasive writing, an understanding of his audience and human nature wielded the power of a leader, appropriate to such rare skills. Many of you (esp. Dan) have a better appreciation of the common bottleneck but even I can see this “impactful” (an ugly word but so appropriate here) of Peterson’s skill. Of course, why this is a “temporary” fix is another question. And why libertarians have a point about minimal control and why a disproportionately (well, disproportionate to the American tradition) strong state often stifles free enterprise.