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What I Care About This Week | 2022 Feb 14

motherland monument among green trees on embankment in kiev

Photo by Max Vakhtbovych on

by Franklin J. Parker, CFA

The Summary

The Details

I listened to a very interesting interview with Ryan Peterson, CEO of Flexport, last week on the All In podcast. There were several eye-opening points made about the current and future state of our supply chains, two of which were particularly concerning.

First, and most concerning: ports along the entire west coast of the US, Mexico, and Canada are operated by a single union, the International Longshore and Warehouse Union. As it turns out, their contract expires in July of 2022, and the last time their contract expired, there were severe disruptions to shipping. With ports already overloaded, disruptions this year could be catastrophic. The Wall Street Journal reported back in November that the union appears to be ready to dig in.

Second, the international maritime regulatory body (which sits under the United Nations umbrella) will require every fossil-fueled ship to reduce emissions by 13%, starting in January 2023. Of course, most ships cannot simply flip a switch to make that happen, and many of the technological innovations to reduce emissions have already been brought to bear. The only real way to immediately accomplish this objective is to reduce the speed of the ship, which, in turn, reduces emissions but also reduces the number of trips available within the same period of time.

Both of these points are enough to generate concern that our supply-chain woes have not yet peaked. Investors should keep a close eye on both developments and make provisions accordingly.

Chart of the Week

This week we look at an interesting graphic produced by Reuters detailing current Russian military positions, and possible paths of invasion into Ukraine. I must admit my amateurishness in this area, so I will refrain from commenting on possible motives and objectives of the Russian Federation. In the end, I am left to watch the events unfold along with everyone else, though some risk control here is warranted. War is an unpredictable thing, and with US/NATO troops all around Ukraine the risk of a wider conflict is not zero.

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