Truck driver work stoppages are serious, as demonstrated by a strike that “paralyze(d)” Brazil in 2018. In just one week, a nationwide truck driver strike hampered Brazil’s airline industry, gas stations, and grocery stores. It even forced schools and colleges to cancel classes.
There are other ways supply chains can crumble. In the US this past year, we’ve seen supply chain crunches of the trucker and non-trucker variety limit our access to toilet paper, food, and medical supplies.
And now, for reasons totally unrelated to the coronavirus or to trucking, a new kind of panic buying is taking hold in some areas of the US...
The Colonial Pipeline shuttered May 7 following a cyberextortion attack. It is neither a train nor a truck nor a plane, but it is a vital part of America’s logistics infrastructure.
The pipeline supplies some 45% of the Eastern Seaboard’s fuel. The temporary shuttering of this major artery threatens not only passenger cars and big rigs, but the major airports in cities like Atlanta, Charlotte, and New York. Bloomberg called it “the most important conduit for distributing gasoline, diesel and jet fuel in the U.S.”
Should the Colonial Pipeline re-open by the end of this week, as its operators predicted on Monday, we should see only short-term gas shortages, wrote commodities guru John Kingston wrote on FreightWaves. In the meantime, Americans are seeing what happens when the supply chain that’s supposed to keep us all fed, clothed and housed loses a major chair leg for a few days.
The Biden administration may possibly go one step further and temporarily lift a 101-year-old law that governs what kind of ships can move oil on our fair waterways. The Jones Act allows only boats that are built, owned, and staffed by Americans.
These are fairly common reactions from the Department of Transportation on how to temporarily ease a supply chain crunch. (Though, usually, these responses are only needed for weather-related disruptions.)
… with a few problems
Truck drivers need petroleum to move your petroleum. And just like you, they may be running out of places to buy more fuel… and that fuel is getting more expensive.
An oil tanker in Los Angeles, which is not at risk for oil shortages amid the Colonial Pipeline attack. Just picture this without the palm trees. (AP Photo/Richard Vogel)
Then there’s the cost of diesel.
A single truck trip may cost a truck driver hundreds or even thousands of dollars in fuel prices. Pricier fuel means for many truck drivers that their take-home wages are that much lower. (Some truckers actually make money off higher gas prices, a weird dynamic I wrote about last year.)
Wholesale diesel prices in Atlanta are up around 8.5% from early last week to Wednesday, per FreightWaves SONAR data. As of Wednesday, we’ve seen just a 3% week-over-week bump in what diesel actually costs customers in Georgia, per AAA — but it’s still an important data point to keep an eye on.
(Speaking of truck driver strikes and fuel prices, check out this excellent History.com article on a 1973-74 truck driver protest sparked by rising diesel prices. The strike led to nationwide food shortages and even several deaths.)
And then there’s the fact that more oil tank truckers are just not in the workforce right now.
Around 20-25% of tank trucks are parked right now, the National Tank Truck Carriers trade group told CNN Business last month. That’s up from 10% of trucks parked in 2019.
Long-time readers of Modes/my trucking coverage at Business Insider will know that the trucking industry often speaks of a so-called “truck driver shortage.” Economists and drivers alike say the industry’s decline in pay and working conditions is what’s sparked the waning interest in trucking.
The moral of the story
Buying things is something we take for granted. Obviously! But that simple act actually rests on a sometimes-precarious network of, say, pipes that can be paralyzed by random Russian hackers, planes that have to reroute for lack of fuel, or trucks that can be too expensive for workers to operate.
The shakiness of this network is a little scary and totally unpredictable. I’m thinking about the text I sent to a friend in the logistics start-up world last January saying that I didn’t think this virus would really be such a big deal (ha ha ha), or about the fact that I spent several hundred words in an early March 2020 edition of Modes talking about… refrigerated train cars?
Customers in Charlotte, North Carolina flock to fuel on Tuesday. (AP Photo/Chris Carlson)
Even the wisest of folks can’t predict the next few months of freight… let alone me! All anyone can do is keep informed, hope for the best, and prepare for the worst. For that reason, I take comfort in the fallbacks that people much smarter than I have designed — and I hope that this is my last newsletter about the pipeline.
Are you struggling with an oil shortage in your community? Do you think this ransomware attack will be impacting us for weeks ahead? Are you a fuel trucker with an opinion on all this? (Also, do you need any coffee?! Thanks for all that you’re doing this week!)
Leave a comment or email me at rpremack@businessinsider.com.
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This is what happens when supply chains crumble
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I often go back to an article of mine about a certain doomsday situation: What if America’s ~2 million truck drivers suddenly stopped working?
Truck driver work stoppages are serious, as demonstrated by a strike that “paralyze(d)” Brazil in 2018. In just one week, a nationwide truck driver strike hampered Brazil’s airline industry, gas stations, and grocery stores. It even forced schools and colleges to cancel classes.
There are other ways supply chains can crumble. In the US this past year, we’ve seen supply chain crunches of the trucker and non-trucker variety limit our access to toilet paper, food, and medical supplies.
And now, for reasons totally unrelated to the coronavirus or to trucking, a new kind of panic buying is taking hold in some areas of the US...
The Colonial Pipeline shuttered May 7 following a cyberextortion attack. It is neither a train nor a truck nor a plane, but it is a vital part of America’s logistics infrastructure.
The pipeline supplies some 45% of the Eastern Seaboard’s fuel. The temporary shuttering of this major artery threatens not only passenger cars and big rigs, but the major airports in cities like Atlanta, Charlotte, and New York. Bloomberg called it “the most important conduit for distributing gasoline, diesel and jet fuel in the U.S.”
Should the Colonial Pipeline re-open by the end of this week, as its operators predicted on Monday, we should see only short-term gas shortages, wrote commodities guru John Kingston wrote on FreightWaves. In the meantime, Americans are seeing what happens when the supply chain that’s supposed to keep us all fed, clothed and housed loses a major chair leg for a few days.
The contingency plan…
Without the Colonial Pipeline, our trusty truckers are stepping in to move gas. The Biden administration suspended the hours-of-service law that restricts how much a truck driver can work in a given day or week — as long as they’re hauling petroleum products in one of 18 states. (Last year, when coronavirus-triggered panic buyers emptied big box stores, the Trump administration suspended the hours-of-service law nationwide for truckers hauling certain consumer or medical goods.)
As of last night, truck drivers in some states will be able to exceed federal weight restrictions if they’re hauling petroleum.
The Biden administration may possibly go one step further and temporarily lift a 101-year-old law that governs what kind of ships can move oil on our fair waterways. The Jones Act allows only boats that are built, owned, and staffed by Americans.
These are fairly common reactions from the Department of Transportation on how to temporarily ease a supply chain crunch. (Though, usually, these responses are only needed for weather-related disruptions.)
… with a few problems
Truck drivers need petroleum to move your petroleum. And just like you, they may be running out of places to buy more fuel… and that fuel is getting more expensive.
Three major diesel suppliers in the Southeast are already reporting fuel shortages, FreightWaves’ Kingston wrote on Wednesday. Of its 750 outlets, Racetrac said 65 are out of diesel. Dozens of Love’s outlets are “at risk” of fuel shortages. Pilot Flying J listed several stations out of diesel, gasoline, or both.
Then there’s the cost of diesel.
A single truck trip may cost a truck driver hundreds or even thousands of dollars in fuel prices. Pricier fuel means for many truck drivers that their take-home wages are that much lower. (Some truckers actually make money off higher gas prices, a weird dynamic I wrote about last year.)
Wholesale diesel prices in Atlanta are up around 8.5% from early last week to Wednesday, per FreightWaves SONAR data. As of Wednesday, we’ve seen just a 3% week-over-week bump in what diesel actually costs customers in Georgia, per AAA — but it’s still an important data point to keep an eye on.
(Speaking of truck driver strikes and fuel prices, check out this excellent History.com article on a 1973-74 truck driver protest sparked by rising diesel prices. The strike led to nationwide food shortages and even several deaths.)
And then there’s the fact that more oil tank truckers are just not in the workforce right now.
Around 20-25% of tank trucks are parked right now, the National Tank Truck Carriers trade group told CNN Business last month. That’s up from 10% of trucks parked in 2019.
Long-time readers of Modes/my trucking coverage at Business Insider will know that the trucking industry often speaks of a so-called “truck driver shortage.” Economists and drivers alike say the industry’s decline in pay and working conditions is what’s sparked the waning interest in trucking.
The moral of the story
Buying things is something we take for granted. Obviously! But that simple act actually rests on a sometimes-precarious network of, say, pipes that can be paralyzed by random Russian hackers, planes that have to reroute for lack of fuel, or trucks that can be too expensive for workers to operate.
The shakiness of this network is a little scary and totally unpredictable. I’m thinking about the text I sent to a friend in the logistics start-up world last January saying that I didn’t think this virus would really be such a big deal (ha ha ha), or about the fact that I spent several hundred words in an early March 2020 edition of Modes talking about… refrigerated train cars?
Even the wisest of folks can’t predict the next few months of freight… let alone me! All anyone can do is keep informed, hope for the best, and prepare for the worst. For that reason, I take comfort in the fallbacks that people much smarter than I have designed — and I hope that this is my last newsletter about the pipeline.
Are you struggling with an oil shortage in your community? Do you think this ransomware attack will be impacting us for weeks ahead? Are you a fuel trucker with an opinion on all this? (Also, do you need any coffee?! Thanks for all that you’re doing this week!)
Leave a comment or email me at rpremack@businessinsider.com.
Thanks for reading and see you next Wednesday!