As 2012 comes to close, I glanced at all the risks Doe & Ingalls has identified this year. Most have been resolved and officially closed, but two events remain open and are of concern as we go into 2013: the Longshoremen labor negotiations and Mississippi barge traffic.
Longshoremen labor negotiations
On August 22nd, contract negotiations broke down between the International Longshoremen’s Association and East and Gulf Coast waterfront employers after the two sides couldn’t agree on key issues. Under the guidance of federal mediators, negotiations were extended 90 days, which will expire on December 29th. With the deadline about six weeks away there hasn’t been any significant progress. I’m not surprised by this because it’s a very busy time for the industry and they still have time to come to an agreement.
But what is of concern to me are the chemical shipments from Europe, which typically require about 4-6 weeks from dock-to-dock. On top of that, we’re entering the holiday season, which further delays shipping times, so the time to mitigate this risk is now. As a part of our MOR program, we’ve been helping our MOR subscribers navigate through these challenges. And I encourage those who aren’t subscribers to mitigate this risk if their operations will be impacted.
Mississippi barge traffic
2012 has been a very dry year in the Midwest. As a result, the Mississippi River has been reduced to a trickle that even a hurricane couldn’t change. In my last post on the topic, NOAA was predicting a mild El Niño this winter, which would mean a wetter than normal winter in the Midwest. While there’s still an opportunity for an El Niño to emerge, the general feeling is that it has stalled out, and the drought stricken areas of the US are not likely to see significant relief this winter. As far as impact to specialty chemicals, the immediate effect will be on transportation costs, specifically on ethanol and sodium hydroxide. Thinking ahead, a continued droughtwould further impact corn crops and specialty materials derived from corn such as carbohydrates, citric acid and other media components. On this matter, we will just have to wait and see.
Unfortunately, risk mitigation is not an exact science, but with the right tools, you can at least be aware and of situations and to be prepared as much as possible. Subscribing to this blog is one way to stay informed of developments in the specialty chemicals market. Another is by becoming a subscriber to our MOR program. Reach out to me if you’d like more information by sending me an email at at firstname.lastname@example.org.