Economy

Elon Musk violated labor laws with a 2018 tweet, ordering Tesla to reinstate the union activist

Elon Musk violated labor laws with a 2018 tweet, ordering Tesla to reinstate the union activist

Bloomberg

The Nimble Fleet outperforms mega cargo ships in the new speed race

(Bloomberg) – For years, shipping containers was hard work. Margins were small, stakes were high and growth prospects swayed with the unexpected tide in global trade. Achieving record profits now is one of the great economic surprises of the epidemic, and the shift over the past year reveals the falsity of a hypothesis voiced loudly by pundits and politicians in recent years that trade between the United States and China, the most vital route to international trade, has been heading relentlessly. To the way of a steady decline. The world wants more from China Inc. Today more than ever, as evidenced by the containers stacked on board a ship stuck in the Suez Canal this week, companies in the United States and Europe are needing them faster than before. The demand is so strong that ocean freight customers are increasingly willing to pay for it as well. At Matson Inc. , A Honolulu-based company with a fleet of smaller, more agile vessels that charge a premium for transportation on much larger ships, the need for express service from Shanghai to Los Angeles has become so great that executives decided to add a second weekly offer last year and make it a permanent one. . “I was getting calls at two in the morning from customers saying, ‘Look, you have to do something, you have to help me,’ ” Matthew Cox, Matson CEO, said in an interview that Matson’s main business is transporting commodities to Hawaii and Guam and ranks outside the largest 20 container lines, but its shares jumped nearly 40% last year and the industry as a whole is better than ever, surpassing $ 200 billion in estimated revenue in 2020. It is envisioned that the biggest players including AP Moller-Maersk A / S are Danish China’s Cosco Shipping Holdings ended a tumultuous year with its most profitable quarter to date. Another $ 1.9 trillion in US fiscal stimulus could keep the good times going in 2021. “We should expect to see that the good times continue in 2021,” said China’s Cosco Shipping. Some of this money will be used to purchase goods that need to be transported. “ However, operating in full force has revealed just how volatile the backbone of the global trade system is when stretched: the crew is overworked, thousands of containers have collapsed at sea on the high seas and the ship blocking the Suez Canal threatens broader economic problems if it causes traffic congestion for more. From a few days read more: The Suez Canal stumbles with a giant ship stuck in the Top Trade Artery driven by a combination of factors. First, governments from Australia to Belgium kept consumers flush with cash and their financial systems liquid. Then Chinese factories and US consumers quickly recovered from the initial shocks of last year They emerged from three years of supply and demand disruptions – a trade war between the United States and China followed by an epidemic – that remains entangled. ”China remains the world’s manufacturing floor, Cox said in early March. “There are real problems and they need to be dealt with, but they don’t change the fact that China has built a very strong network that people will find very difficult to replace in the short term.” For the six decades before Covid- on September 19, American household spending on goods fell proportionally as Americans spent more on services. This trend reverses in 2020, with a $ 523 billion increase in merchandise purchases, according to estimates by McKinsey & Company. “All cargo ships and transportation assets have been depleted to some extent due to the strong trade corridor across the Pacific,” said Ludwig Hausmann, partner in McKinsey’s Munich office. “China is currently unbeatable.” In Washington and in European capitals, politicians have distorted supply chains that extend to state-run economies such as China or Vietnam, but talking to retailers and manufacturers dependent on Asia, it appears that the crisis has strengthened these ties, as a reminder to diversify suppliers and prove that the eulogies to globalization were a precedent. To premature. Shipping and carrying inventory costs have risen, but not enough to avoid new supply risks that range from weather and tariffs to disease. Trade flexibility “Basically companies decided they could manage this and are still pursuing these efficiency gains,” said Robert Copman, chief economist at the Geneva-based World Trade Organization. “This helps explain why trade is so flexible.” Ask Heath Pittman about the crisis and he’ll tell you about the three months he spent in Chicago to ensure the continued movement of freight until shelves remained stocked at Rural King, an Illinois-based chain of about 125 general merchandise stores in a small town in America: Rural King’s International Logistics Manager used 10 times the containers Of 40 feet tall to import lawn mowers from Vietnam in 2020 compared to the previous year. Bateman couldn’t go down in 2021 either, as he imported nearly three times the number of containers mowers last year. An amalgamation facility will open in Vietnam in June, already completing five of them in China, with the aim of ensuring that a sufficient number of products are always available. “That’s a lot of costs for us, and that’s a lot of risk,” said Bateman. “But the overwhelming positives that we get for our customers, we decided that its value is more than the overbought.” Both demand and supply have been a challenge in the past year for Polaris Inc. , The manufacturer of snowmobiles, motorcycles and all-terrain vehicles that is in two steps from the previous coincidence of the pandemic, had already begun consolidating its supplier base a few years ago before rebranding in 2019 to “Think Outside”. Behind nearly 3,600 Polaris dealers, there is a production network that feeds factories in Asia, North America and Europe. Ken Bossel, executive vice president of global operations and engineering, said that making a single Polaris recreational vehicle involved as many as 2,000 parts, a feat when around 10% of suppliers were at any one time subject to some kind of coercion linked to Covid. The Minnesota-based company has modified assembly lines to manufacture products based on available parts. Use more artificial intelligence and digital technology. I dispatched an employee to Los Angeles to conduct a process that’s typically left to logistics providers – container imports flow. “Port congestion is one of the biggest problems in our supply chain today,” Bossil said. Tornadoes have also reached across the Pacific to Europe, where Düsseldorf-based XSTAFF GmbH, a procurement network for retail and wholesale dealers, chartered its own cargo ship in February to help ensure members can import goods from Asia. XSTAFF chairman Bodo Knop said prices for a 40-foot container from China to Europe are hovering around $ 8,000, nearly four times the cost a year ago, and likely to remain above at least $ 5,000 through June. “The demand side is much larger than the supply side,” he said. Such imbalances will eventually settle. While it is unlikely that merchandise trade will return to its peak at the height of globalization a few decades ago – expanding twice as fast as the global economy – Kubman expects the World Trade Organization to return to long-term average global growth 1.4 times. You will continue to fuel that. “A lot of people have experienced for the first time the convenience of clicking a button and having a product appearing at their door,” said Ryan Petersen, founder and CEO of Flexport, a San Francisco-based shipping company. “This is so addicting.” Petersen believes that better technology will help the transformation to more speed and complexity, but he does not expect “major dramatic shifts” in supply chains or production sites. John McCown, founder of Blue Alpha Capital, has seen many shipping booms and crashes. His mentor was Malcolm McLean, a North Carolina trucking manager who pioneered container transportation in the 1950s. If a global shock like a pandemic can catch its prey, then an industry with high fixed costs like huge ships appears to be among the slow-moving buffalo. “What I was thinking was a real bloodbath,” McCown said. Instead, container lines stuck together and did not repeat the price wars that destroyed them in the past. McCown now estimates that the carriers he tracks, whether publicly or privately owned, will show a record net income of $ 8.4 billion in the fourth quarter. He says container services are cheap even at today’s high prices, and he mentions how MacLean was friends with Sam Walton, founder of Walmart, as they both enjoyed quail hunting and McLean once asked the key to a retailer’s success. According to McCawn, Walton replied, “We’re better at moving things.” For more articles like these, please visit us at bloomberg.com. Subscribe now to stay on top of the most trusted business news source. © 2021 Bloomberg LP

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