Supply lines in America

Podcast episode 101420

Hello my fellow Americans and welcome to my show. I am the Alaskan Outlaw, and today I will be your host in a thought process about where we get our stuff. If you’re thinking about going stir crazy between the pandemic, racial unrest, the political circus, and the forest fires burning down everything else, you my friend are not alone. Thinking about the impact that these major events have on our lives reminds me that I live in one the most seismic areas in the world. So, today’s topic is near and dear to my heart living here in Alaska. Although, don’t let me mislead you, I live in the largest city in Alaska, so my survival instincts get me as far as Safeway, or Costco, while maneuvering through rush hour traffic with, among other things, moose. It’s my life. Now, I’m not super knowledgeable in merchandise logistics, but I’ve spent a bit of time depending on, or initiating the process of, shipping. In addition, I’ve extensively studied the FEMA management techniques, while deployed extensively for the logistics involved in disaster recovery and emergency response.

Trucks, trains, boats and planes, and now, in certain parts of the country, drones. These are the cogs of a supply chain that spans the globe moving products from the manufacturer, through the distributor, through the retail outlet, to us, the consumer, every minute of every day. Billions of miles are logged everyday in the 24 hour a day, worldwide industry. Today, I’d like to dive a little deeper into the shipping industry and talk about the fragility of the supply lines. I’d like us to have this discussion before the next incident occurs.

Let’s take just a second to define the size of the animal we’re talking about here today. The shipping industry as a whole is measured (primarily) in millions of tons of goods and products. In 2012 alone, there was 16,896 million tons of product moved throughout the United States (including those products imported and exported to/from the US). By 2045, they (the DOT) expects to move 25,346 million tons of products and goods, with almost 10% being imported to the country. At the same time exporting 10% out. To fully define this industry I took the liberty of outlining the sources… and this will be important further down our conversation. In the DOT report I got, the latest data is from 2015:

• Truck (10,776) [59.9%]
• Rail (1,602) [8.9%]
• Water (by Sea) (884) [4.9%]
• Air + Air & truck (10) [.00055%]
• Multiple modes & mail (1,346) [7.4%]
• Pipeline (3,326) [18.5%]
• Other & unknown (33) [.0018%]

Today we’ll discuss all the parts of “a” supply line. Ambulances need supplies, so do doctors, and so do electrical substations. If you don’t make it yourself, it has a supply chain attached to it, even the supply chain has a supply chain. Any service, or product sold all fall under some supply chains, and with the fragility of the “just-in-time” inventory process, America’s supply chains become more, and more, critical, and more dangerously, single threaded. For those of you who are still rather new to the “preppers” subculture, let us take a journey to discover why we do what we do when it comes to our supply chains.

But before anyone panics, or increases their blood pressure over a possible break in the supply lines to your location, let me assure you, that there is plenty of redundancy (most of the time) ensuring that your products will be at your market when you go there. However, we need to be cognizant of all the methods into our local markets so that we can be better prepared in case of a cataclysmic event, or disaster.

So, in the understanding of the whole picture, we can start at a higher level in mapping out the whole process, then drill down to arriving at your store, and finally your commitment to this process by heading down to the store, or out on the internet.

In this thread, the first dot on our timeline is the actual manufacturer themselves. Regardless where they are, they have the same issue as anyone else. Disruptions can be caused by naturally, or man-made, up to including sabotage or terrorism. There could also arise a materials shortage, limiting production to what material is on-hand. The scope of the interruption is dependent on the continuity plans the company has in place. Many companies have spread out their operations to multiple locations to minimize this type of impact.

Secondly, we have the movement between the plant, and the actual shipping location. While this may be a very short distance, we need to understand the product is now outside the original factory, but has yet to arrive at the location that will ship the item.

Arrival at the shipping location. Whether that be a pier, airport, or trucking/train depot, this is the interface with the shipping industry. Shipping locations include both inbound traffic by the millions of tons, every year. This is controlled chaos is really where there lies danger around every corner. In much the same way the other segments have displayed, there are millions of things that can create an interruption at this point of the process.

In transit. Yay, underway! But are we safe? No, not really, time and time again we see where ships and planes are hijacked, and trucks stopped by protesters, or stolen. So, just because the shipment left port doesn’t mean we’re home safe, Mother Nature still needs to lend a hand and keep things moderate until it reaches its destination.

Arrival at the demarcation point. Whew! We either survived an ocean voyage, or a long flight, or a really long train or truck ride. You arrived in port, or the airport to offload the shipment from the other side of this trip.

Movement between the shipping demarcation point and the distributor. So now we’re in the general location of the retail outlet. From here we’ll be rearranged onto smaller trucks and moved to the distribution point.

Arrival at the distribution point.

Two possibilities:

1. Storage of the products. While very limited during this date and age, the warehouses (as small as they might be) are local to the individual communities, and are managed by the retail outlets that have the need.
2. Continued movement of the product to either a warehouse, or a retail outlet, or directly to a customer.

Arrival at the warehouse. With the rising costs of floor space, we have seen these shrink from months of storage, to weeks, or even days. A little management used to keep these warehouses full of a multitude of products, many times serving several outlets. Especially during this downturn in the economy many stores, the ones that actually have this floor space, are surviving off them, trying not to order anything more than they have to. Warehouses, as mentioned, are getting more and more expensive, especially when additional services are necessary to keep the structure safe and secure.

Arrival at the retail outlet. We’ve made the travel from manufacturer across the globe to arrive here in the local retail outlet. However, with the riots and looting going on, we’re not done with this journey.

Arrival at your Post Office, or your door.

This is the process of moving products from origin to consumption. As identified in each section there are substantial opportunities for the whole system to come to a grinding halt. Much like each section defined before, the system manipulated each segment in an effort to reduce cost. They do this by ordering 5000 instead of the one you wanted, because the bulk shipping will be more cost effective. They may also employ multiple distribution points, further eliminating shipping costs. In the recent past, the idea was to decrease the shipping costs enough to offer a larger profit margin. However, the world of 2020 may be changing that to reduce the cost of products enough to entice customers to buy their products from your store instead.

Over the last decade and a half, those “Just-in-time” inventory systems have wreaked havoc of the supply chain. The downside with these systems are that they are a lot more fragile than the old “store and forward” methodology of the previous centuries, or possibly local manufacturing. Because the inventory is last minute, failures are much more affected by cataclysmic local disasters. Because the stores retain much less stock on hand (at their facility) which means “binge buying” before or during an event quickly empties the store’s shelves, with very little hope of a restock.

So, let’s look at the fragility of the system. Where can things go wrong. With the cost of warehouse floor space at a premium in most cities and towns, the reality of more stores scaling down their local stores inventory, thereby edging themselves closer to failing their customers during a sizable event. This is the fragility of the modern retail model, although here in Alaska, we might have a pretty good handle on this.

During the earthquake the shook Alaska in November of 2018, we witnessed shoppers binge buying a multitude of products. The “run” on local stores drained their resources, causing some to fail at providing many different products to customers. We witnessed it again when the pending lockdown of March 2020 due to the pandemic. In the same way, binge buying led to the rationing of several products to the general products. These were prime indicators of the just-in-time system failing our communities, and society alike.

If, we were to experience, a real zombie apocalypse, social collapse, or civil war, we can safely assume that most, if not all supply chains would be broken for an extended amount of time. Even during natural disasters there can be a multi-month supply interruption, so simply multiply that by factors of ten for each five days spent in a longer-term events. That is a matter of fact. No fear mongering, or exaggeration, just the reality of what a low stock on-hand will do to a community in fairly short order. Are you ready? As we witnessed, the binge purchases of community members quickly depleted the store shelves leaving the remainder of that community without some basic commodities, in some places we watched as individuals became physical in an attempt to secure certain products. This means that this is the exact behavior we can expect should any of the situations listed above actually happen. So, while FEMA recommends having several weeks of these types of products “on-hand”, you may want to think about what happens after this runs out.

One of the big ticket thoughts I had as Alaska (particularly Anchorage) battened down the hatches for the initial quarantine was, what are my priorities? This realization became my thought process for preparing my household for the future, whatever happens. Looking at our storage, security, and other necessities, particularly as we here in Alaska prepare for the colder temperatures of winter. Going back to our podcast of September 30th, where we talked about the five essentials necessary for survival.

1. Clean, breathable air (which includes filtering for both humans and canines).
2. Shelter, protection against the elements (which will include temperature control)
3. Clean, drinkable water (for both human and canines).
4. Food, and potential to secure additional food stuffs as may be necessary.

For those of us who have lived our whole lives in the urban jungle, there are skills that will be necessary should the world experience a societal implosion to ensure we can keep those four bases covered. Now is the time to invest in those skills.

As always, it has been a blessing to be here with you all today. I sincerely appreciate you offering your time to me to, hopefully, enlighten you with my experiences and provide you with hope that you and your family will survive whatever life throws at you. Remember to stay safe, and keep hope that tomorrow will be better. Thank you all. Peace.