Besides almost every other Daily Briefing being an essential part to understand the system, this is a third entry on the Hybrid War series . Make no mistake, my posts are usually harder to make sense, and this one will be harder still, because of its complexity, will try my best to simplify.
While working on this next post, and attempting to explain the possible cascade effects of a conflict in Ukraine, we find ourselves already inside it.
Make no mistake, as I previously mentioned, this is a tipping point. For the sake of explaining to all the new subscribers (last time I wrote about this I hate a couple of hundred), what is a tipping point.
In complexity science, and now in many other fields of scientific research, there are many terms, one use for cascade dynamics (an analysis of the cascading effects inside a system, and how “events” related to each other), there is something called a tipping point.
These are often unrelated events, with disproportional effects inside the overall system. A tipping point is the critical point in an evolving situation that leads to a new and irreversible development.
In my first post here, I introduced the Nova Swan concept.
One concerning trend I had been picking up for a few weeks was the consistent (for my brain) mention of the term “demand destruction” in regard to oil, something that literally moves the entire planet, in Cascades Abound I wrote about it.
It’s not something new, both Pakistan and India, in Asia the price is affecting margins, thus creating the potential for this. And now we are presented to this.
In Cascades Abound, there is an article about the missing oil problem, you should read it. And now we have news informing that BP taking a financial hit of as much as $25 billion, and abandon other businesses in Russia, Shell is leaving all its business with Grazprom, Vattenfall will stop buying nuclear fuel from Russia.
If you read a few of my older posts you can quite tell where this cascade of events is going, most of the world will miss 2021 and 2022, as the year nothing happened, and you could afford food, or energy.
This is a Hybrid War post, so here, a Hybrid War tactic masterfully played.
And now to the cascade of issues.
Food and Metal Shipments Are Left Stranded in Ukraine Chaos
Egypt scraps wheat tender, ships waiting to berth can’t dock
Iron ore miner Ferrexpo said Ukraine closed rail transport
Chaos in Commodities as Russia’s War on Ukraine Upends Trade
Black Sea trade stalls even with exemptions from sanctions
International investors start to ditch Russian assets
The turmoil unleashed in commodity markets by Russia’s invasion of Ukraine worsened on Monday as LNG orders were paused, finance for trade in raw materials dried up and Black Sea wheat sales froze.
As tougher U.S. and European sanctions threaten to partly cut Russia off from the global financial system, disruptions to shipments of raw materials from palladium to wheat mounted. Buyers also paused purchases of Russian liquefied natural gas as they awaited clarity on restrictions against banks and companies. The cost of shipping the nation’s raw materials is soaring, while the fallout is reverberating from London to Hong Kong as international investors ditch Russian commodities assets.
As expected by experts, commentators, analyst, anyone with an internet connection and able to connect the dots, conflict in Ukraine is setting off cascade effects already foreseen, and industry-wide constraints. As previous outline, this conflict, even if short in its duration, will affect many countries and industry. Chip/semiconductor manufacturing are now getting slightly desperate for its critical gas resources, demand already kept supplies constrained, now ? Well, you already know. This is the third, and probably last time, in 6 weeks I saw this.
If you want to buy any kinda of electronic, specially expensive, premium ones, do it now.
The problems in Ukraine, considered the breadbasket of the world, go deeper. Extreme weather shift has been impact Ukraine growing importance as a major grain exporter, wheat harvest already expect to fall almost 9% because of the lack of rain, fertilizer and gas prices, which this conflict is already disrupting. The biggest importers of Ukraine and Russia wheat are Egypt, Turkey and Bangladesh, and Egypt is about to experience conflict because of water, its economy won’t hold another civil revolt because of lack of bread.
As I mentioned here, Brazil is expected to have a soy harvest yield of -13%. And to add fuel to the fire.
Ships Sit Empty for Weeks Waiting for Delayed Brazil Soybeans
Following harvest woes and heavy rains that have made it challenging to dry and transport the beans, some boats have now been waiting for more than 40 days for their cargoes. That’s significantly longer than the seven to 15 days that’s typical, resulting in longer lead times, higher premiums and rising costs for buyers.
“The lineup is growing when it should be going down in a clear message that not enough soybeans are making it to the ports,” said Marcos Pepe Bertoni, chief operating officer at Corredor Logistica e Infraestrutura SA at the Tegram grain terminal.
The shipping delays come as bad weather has battered this season’s crops, with heavy rains in Mato Grosso state delaying the harvest even more than anticipated since wet beans need to be dried before being hauled to ports.
Brazil weather related problems is nothing new, last year its corn production and harvest was also affect because of the weather, which in turn affected the timing of planting soy. Already covered, both Canadian and Russian wheat seasons were affected. Another bad year ahead for sugar cane because of Brazil.
Which lead us to…
Nitrogen Fertilizer Jumps by Record on Russian Supply Concerns
Fertilizer prices are skyrocketing on concerns that Russia’s invasion of Ukraine will curtail global supplies.
Prices for the popular nitrogen fertilizer urea in New Orleans surged 29% to $705 per short ton Friday, a record increase in the 45-year existence of the gauge.
Which isn’t new, Russia had already banned the exports until April of 2022, and China banned its Phosphate exports until June this year.
And since you need something to transport all goods, here is a good thread on the importance of Ukraine and Russia to air cargo.
There is always a winner is said fights.
Just how extreme is China’s lead in the container port business?
China is the world’s largest exporter of containerized goods, produces eight of every 10 new containers, is the leading builder of container ships and operates the fourth-largest liner company. It should come as no surprise that China overwhelmingly dominates the global container port rankings — and with ocean trade now surging, that its port tally has reached a new peak.
Five years ago, Asia accounted for 78% of volumes at the top 30 ports and China 49% — essentially the same market shares they had last year, despite a trade war, lockdowns and port closures along the way.
China is dominating every possible aspect of every critical industry in the world, the only thing they lack is hold a monopoly of semiconductor manufacturing, which I think they might correct pretty soon.
You know what would give them a even bigger advantage, disrupt its enemies, further fracture their economies ?
Expeditors International Shuts Down Computer Systems After Cyberattack
The logistics giant hasn’t said when it will fully restore operations.
Seattle-based logistics giant Expeditors International of Washington Inc. said it had shut down most of its operating systems in response to a cyberattack disclosed Sunday, raising fears of further stress on already fragile global supply chains.
In a statement published on its website, the freight-forwarding company said it currently has a “limited ability” to conduct operations, including arranging freight shipments and managing customs and distribution activities
This story was buried pretty fast in the media, not out of interest, more like a matter of national security. This isn’t by any means new. And as an opening for the next part of our complexity analysis.
Given that some countries and governments (and its self-proclaimed elites) can’t disrupt trade and life as usual to push their agenda, we enter the season of cyber-attacks.
Ransomware attack hits Nhava Sheva container terminal
A suspected ransomware attack has knocked-out the management information system (MIS) at Jawaharlal Nehru Port Container Terminal (JNPCT), one of five marine facilities in India’s top container gateway of JNPT (Nhava Sheva).
“Effect of cyber attack on Gold Bond will last for weeks,” warns expert
The Gold Bond Group, which operates a cargo and warehouse terminal in the port of Ashdod, informed the stock exchange yesterday that a cyber attack had shut down the company's computers and as a result a large part of its operations had been shut down. According to the announcement, disruptions that started at night were apparently identified as a foreign entity penetrating the systems. According to what is known, this is not a ransomware attack, but a deliberate attempt to disrupt the company's activities and possibly even steal information. The company stressed that they were not required to pay a ransom. The company also said that it is working with the National Cyber Directorate to thwart the incident.
The hackers posted photos from security cameras as well as of the company's alleged internal computer systems. The obvious conclusion is that the intrusion is probably much more severe than the company is trying to present.
So in a matter of days, 2 logistical companies and a port hit by cyberattacks, which will affect the flow of goods in very specific patterns, undetectable for many, but you can easily track down its cascade effects by seeing what type of product/companies they deal with.
UK foreign ministry suffered serious cyber attack earlier this year - documents
That is not the only angle to be played. Now, more than ever the common man has the power to disrupt systems at will, and non-state actor will exploit past grievances to shift specific pieces on the board toward their goals.
An IT tech recently jailed by revenge cyberattack is the best example. In Intelligence, there are numerous steps towards hiring someone, specially spies, one of the main concern usually is “can person X be exploited and how”, debt is usually the easiest tool to leverage and “turn” a spy into your asset. You know what else works 10X better ?
The system itself, creating grievances by bureaucracy and sheer incompetence. It’s not that hard to, hypothetically, convincing an overworked, underpaid worker to, let’s say, steer a ship into a canal, or not do maintenance work in an oil rig…
There are many trends developing right now, and it is about to get complex at breaking neck speed, I recommend the read to keep notes, either on paper (my preferred method) or digitally.
Events this week will set the tone not for the year, but half the decade.
In Food Scarcity and Water wars, besides the massive shortage of Potash about to hit the planet, I mentioned the growing prospect of Water Wars, among the aforementioned, here we see the birth of a potential new one.
Iran-Afghanistan water dispute to test Tehran's ties to Taliban
A dispute over the waters of the Helmand River is a conflict that has been going on for more than a century between Iran and Afghanistan. The Helmand is Afghanistan's longest river; it originates near Kabul in the western Hindu Kush mountain range, flows in a southwesterly direction through desert areas for a total of about 1,100 kilometers before emptying into Lake Hamun on the border with Iran, in whose territory the greater part of the lake is located. Lake Hamun, which has no outlet, is the largest freshwater lake in Iran and is of great importance for the local environment and economy.
Water will drive many of the local conflicts in the coming decade, the other is Resource Nationalism, as nations start getting desperate to keep a lid on the growing discontent of their population. A point I would like to raise, it’s rather ironic that all events that I covered are helping push the agenda of the WEF and the UN. A point to keep in mind.
This entire series marks the death of the old order, and the birth of a chaotic new one.
Beware of the Ides of March.
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One hopes that after the chaos unwinds (and that it does!) that we will realize the inherent fragility of our current "just in time" system, and make it more robust.
Perhaps shipping large quantities of required/unique supplies in container ships is not such a good idea. The same for our reliance on hydrocarbon fuel for trucking, because losing refinery capacity could kill a lot of people...