Logistics Matters…

…far beyond the process of getting soldiers and consumables to a battlefield and to the battlers.

In the aftermath of Germany’s—and much of Europe’s—considered decision to make themselves dependent on Russian natural gas and Russian President Vladimir Putin’s equally considered decision to limit and cut off natural gas supplies to Europe to try to coerce behaviors acceptable to Putin, Germany, et al., are (re)discovering the need for better logistics and logistical execution.  The lessons are available to the US, too, if the government is willing to learn.

Europe’s energy crisis has unleashed a global battle over natural-gas tankers….

And [emphasis added]

European countries ramped up their purchases of liquefied natural gas from the US, Qatar, and other sources this year as Russia cut supplies to the continent. They are competing with peers in South Korea and Japan—where gas demand has surged during a heat wave—for a finite amount of supply ferried by a limited number of vessels.

LNG-capable tankers are long-lead items that take specialized equipment to keep the natural gas cooled and under pressure. They’re also expensive, hence the interest in only limited inventories of such ships—they’re expensive even simply to have, if they’re just sitting around in port unused.

It’s not just the complexity of the ships, though, that contribute to the present long-lead times.

Shipmakers in South Korea, the world’s biggest producer of LNG tankers, don’t have free capacity for new orders until 2027[.]

However, the wonders of Europe have known for some time that they needed more LNG tankers.

LNG and the tankers that carry the fuel were in high demand even before the conflict, as extreme weather curtailed hydropower, and many economies sought to ditch coal to reduce carbon emissions.

The complexity of these logistics is further illustrated by this little fillip: the price of steel is rapidly rising, an accelerated increase driven by demand from a broad reach of needs in addition to simply making boats.

The lessons for the US?

The need for more natural gas (and oil) production, more flexible production, better and expanded distribution grids to refiners, and in the present context, expansion of port facilities able to convert natural gas to liquid natural gas and then to transfer that LNG to LNG-capable tankers.

And maybe build some of our own LNG tankers. And get rid of the Jones Act.

2 thoughts on “Logistics Matters…

  1. Aluminum plants are shutting down in Europe (Slovakia, IIRC) and the western US, due to high energy costs. And the FRG has decided to give coal trains priority on the tracks this winter, over passenger/other freight trains. Which has the people who manage such traffic more than slightly upset.

    As I have said for years, Just in Time assumes a perfect, frictionless universe. Which doesn’t exist.

    • JIT from on-hand inventory, rather than JIT to the assembly line. And that inventory must be kept above a minimum threshold that can continue production through most disruptions.
      Also: we must develop our own supply chains in all Critical Items for our economy and our military, chains running from dirt in the ground to final product. We don’t need the entirety of our supplies to be produced domestically, but we need at least one chain for each Critical Item so we can quickly ramp up in the event of a disruption.
      Logistics is possible only when actual supply is available.
      Eric Hines

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