The $200 Million logistics problem

I don't usually go into something that is not mainstream but this is instructive.  HCSB bank lost $200 Million dollars in one day because it couldn’t move gold from London to New York to address a disparity between the price of gold in London vs. the price in New York.  The reasons highlighted below are the same seen by many logistics managers:
  • Lift capacity – airlines have cut flights
  • Lack of standardization – Gold bars in the US are a different size so gold has to move via Switzerland where it is re-melted
  • Constrained storage capacity…there is 1000 tons of gold stored in the New York area – 66% of it arrived in the last 3 months 
BP PLC is writing down up to $17.5 billion of its assets and potentially leaving some of its oil and gas in the ground.  They project oil to be priced at $55/barrel.  Meanwhile, US shale producers are suffering as banks pull financing.