The Amazon generation is driving significant supply chain inefficiency. It used to be that only "high value / pound” products like cameras and electronics went by air. Now, to meet the two-day or next-day delivery schedules demanded by consumers, more products like pet food and clothing are traveling by air. By the end of this year, 40 more 767’s will be moved into freight service. Old planes, parked in the desert are being dusted off for conversion to freight service as cost per kilo has continued to rise. In a two-year period (2016-17), freight costs rose about a third!
Transportation infrastructure makes a big difference to oil prices. In the US, West Texas Intermediate (WTI) at Cushing is the benchmark price. The lack of pipelines and other transportation infrastructure means that Permian Basin crude is selling at a lower price and Western Canada Select is a full $39 cheaper. Investment in pipeline infrastructure is trying to fill the gap, but this is a long lead-time endeavor.
Wall Street Journal headline: “Why Beer Companies Need Joint Ventures” is about how the brewers need to buy into marijuana.