#weaksignals: Panama lock-out, Lithium as the new oil, Nvidia’s gold-rush shovel-store

We’re in a weird phase at the moment, where things simultaneously seem to be moving very fast and not changing at all. So I figure it’s high time I screwed on my Grown-up Foresight Practitioner hat and started a more public practice of looking at (and interpreting) potential weak signals.

First up, drought in Central America is making the Panama canal unreliable and thus increasingly expensive—not just in terms of the base cost to ship a container through the thing, but also in terms of the cost of insuring that shipment against delays.

This ain’t just about tchotchkes from China, though:

Industry executives said tankers carrying liquid gas were more likely to be disrupted, as container carriers often book access to the canal months in advance.

Michael Aldwell, an executive in the sea logistics business at Kuehne+Nagel, said the freight forwarder had advised customers that containers travelling between Asia and the US could be diverted to the Suez Canal if necessary, although experts say this could add a week to journey times.

The prospect of further delays could also affect time-sensitive food deliveries from the South American west coast to Europe. Food and drink made up 77 per cent of container shipments between these regions last year, according to MDS Transmodal.

“If shipping lines have to find a different way of moving fruit and veg, that will cost money,” said Antonella Teodoro, a consultant at MDS Transmodal. “[This] definitely doesn’t help food inflation.”

It’s not just Panama, either; the Suez is also very much threatened by climate change, which means it needs to be dredged repeatedly, but it’s also an engine of ecological disruption in the Mediterranean. Decarbonising cargo ships themselves would be a good thing (though it’s way behind where it should be, and so far mostly based on the smoke and mirrors of “carbon neutral fuels”). But we should get wise to the risks of tinkering with the interfaces while assuming the infrastructural imperatives are just fine.

On which note…

… it’ll not exactly be news to anyone paying attention that the global battery market is becoming hotly contested; it’s not the only factor, but it has a lot to do with the positioning of China as an existential rival to the West, and perhaps particularly to the US.

That’s not the only rivalry in play, though: there’s also the contest between two different “chemistries”:

The battle between the cathode chemistries will exert huge influence over global supply and demand of lithium, nickel, cobalt and manganese, aiding or thwarting supplier nations such as Indonesia, the Democratic Republic of Congo and Chile.

Meanwhile, the choices of consumers, politicians and carmakers will play a crucial role in either cementing China’s grip over the global electric vehicle market or loosening it and risking a slower, more costly energy transition.

Anyone want to bet on whether this decision is made on the scientific merits, or on some economised perception of justice? The martial language already in play is really not encouraging on that front. Whichever chemistry wins, the planetary ecosystem loses; mining for these substances can in theory be done in ways that minimise ecological damage, but when volume and market price are in the driving seat, anything that can be externalised off the balance sheet probably will be.

It’s that thirst for volume that’s really worth watching, because I think we’re seeing here the first stirrings of a realisation in global industry that there’s a new imperative-resource combo on which perpetual growth might be based. It don’t mean a thing if it ain’t got that swing scale, after all… and numbers like this are the sort to make investors salivate:

“You’re talking about building infrastructure for an industry that needs to grow 10 times in the next few years,” said Michael Finelli, president of growth initiatives at Solvay, a battery component supplier. “While a battery is just a storage device, it’s a critical component of the energy transition . . . These things are considered items of national security now. You don’t want to be reliant on another country.”

But again, the rhetoric is as important as the quantified stuff being discussed—and that we’re already framing access to personal vehicles (of an absurdly and pointlessly bloated size and weight) as an issue of national security should not be considered a positive sign, given the wasteful stupidities that have been commissioned in the name of “national security” over the past couple of decades.

Again, reducing the impact of individual vehicles—one of the dominant interfaces to the infrastructural system of roads—is a thing that needs doing. But it’s a supply-side solution aimed at maintaining (and likely expanding) the underlying infrastructural demand for personal mobility…and that hunger for energy and convenience is the real problem, because it means we’ll likely end up in a situation where lithium becomes the focus of an extractivism not dissimilar to that of oil in the current paradigm.

EVs as a like-for-like replacement for ICE vehicles is kicking the can down the road: a classic plus ça change. EVs as the foundation of a new generation of long-haul and local mass-transit is a much better option… but it doesn’t sustain the prestige and profit of the automotive manufacturing industry, does it?

Talking of gold-rush vibes, things are looking pretty peaky when it comes to Nvidia’s share price right now; this guy’s made a chart that compares the rise of that price to current peak with the similar rise of Cisco’s in the late 90s and very early 00s.

It is scary because the stories driving the two stocks at the two time periods depicted are remarkably similar. Cisco was pitched as the crucial infrastructure provider for the internet revolution — whatever the internet became, we were told at the end of the last century, it would use Cisco switches and routers to become it. Nvidia is pitched as the crucial infrastructure provider for the artificial intelligence revolution — whatever AI becomes, we are told, it will use Nvidia chips to become it.

That’s interesting—and alarming, in some respects—in its own right. But I’m more interested in doubling down on the “shovels in a gold-rush” metaphor. Recall that the crypto-mining boom also did strange things to the cost and availability of high-power GPUs, to the extent that gamers were getting quite cranky at the inflation of the price of a decent gaming rig. The financial wisdom of selling shovels to prospectors is so well established that even a business rube like me understands it; it is hard not to conclude that plenty of more savvy operators are very aware of it, and are acting on that knowledge in the obvious way.

So the second-order implication here is that the current mania for “AI”—which I will continue to put in scare quotes in perpetuity, until a genuine silicon god turns up and demands that I stop—is a gold-rush without any gold. Much like the obvious-in-hindsight pump’n’dump grifts of cryptocurrencies and “the metaverse” before it, I suspect that, a few years down the line, this supposedly radical new technology which is supposedly destined to change everything forever will in fact have left very little substantive mark anywhere other than various balance sheets.

(Well, it may also render our prevailing conception of the internet non-functional too, but that seems to already have been “priced in” by the big players; searching on the pertinent keywords around this issue already produces pages and pages of “here’s how to use AI to make ads and/or content”, which feels a bit like turkeys forming a high-ticket consultancy for the promotion of Christmas and Thanksgiving.)

In sum, my position is that all the energy in the discourse around “AI” is directed much less to changing the world or the way business is done, and far more to determining who is holding the biggest stake when the rush to cash out begins. Business as usual, in other words, but with a fresh new gimmick.

Well, this was fun—as indicated, perhaps, by it having turned out a lot longer than I had initially planned it to be. It’s too involved a thing to do every day, so perhaps I’ll look at setting up a weekly cycle of collection and analysis. If you’ve any suggestions for what you’d like to see (or even tips on specific stories), get in touch; all such write-ins will be credited to their providers, with linkbacks, unless anonymity is preferred.



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