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4 reasons Americans are still seeing empty shelves and long waits – with Christmas just around the corner

An expert on global supply chains explains why shortages of many products have persisted throughout the pandemic.

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Consumers are still finding bare store shelves. AP Photo/David Zalubowski

Walk into any U.S. store these days and you’re likely to see empty shelves.

Shortages of virtually every type of product – from toilet paper and sneakers to pickup trucks and chicken – are showing up across the country. Looking for a book, bicycle, baby crib or boat? You may have to wait weeks or months longer than usual to get your hands on it.

I recently visited my local ski shop and they had hardly a boot, ski, goggle or pole to speak of – two full months before ski season begins. The owner said he’s normally close to fully stocked around this time of the year.

This may seem a little odd to some Americans given the U.S. has been living with the COVID-19 pandemic for over 19 months. Shouldn’t supply chains stressed by the onset of the pandemic have worked out their kinks by now?

As someone who conducts research and teaches on the topic of global supply chain management, I believe there are four primary – and interrelated – reasons for the continuing crunch. And unfortunately for many, they won’t be resolved by the holidays.

1. Consumer demand soars

When the pandemic first slammed into American shores in March 2020, companies were already preparing for a prolonged recession – and the typical resulting drop in consumer demand.

Retailers and automakers, many of which had to close due to lockdowns, canceled orders from suppliers.

It made sense. By April, the unemployment rate reached 14.8%, its highest level since the Labor Department began collecting this data in 1948. And consumer spending plunged.

But something strange happened by the end of the summer of 2020. After the initial shock, consumer spending began to rebound and was nearing pre-pandemic levels by September, in no small part thanks to the trillions of dollars in aid Congress was showering on the economy and people.

By March 2021, consumers were again spending record amounts of money on everything from new computers and chairs for home offices to bikes and sporting goods as people sought safer ways to get around and entertain themselves. Demand for consumer goods has only climbed since then.

While that’s generally good for businesses and the U.S. economy, the supply chain for most products hasn’t been able to keep up – or even catch up.

2. Missing workers

Even as demand from consumers in the U.S. and elsewhere surges, low vaccination rates at key points in the global supply chain are causing significant production delays.

Less than a third of the global population has been fully vaccinated from COVID-19 – and almost 98% of those people live in wealthier countries.

Low levels of vaccinated workers in important manufacturing hubs such as Vietnam, Malaysia, India and Mexico have caused production delays or reduced capacity.

Vietnam, for example, plays a key role in the apparel and footwear industry, as the second-largest supplier to the U.S. of shoes and clothes following China. Less than 12% of its population is fully vaccinated, and many factories have been shuttered for long periods due to outbreaks and government lockdowns.

Failure to vaccinate more people in developing countries more quickly will likely mean worker shortages will continue to plague supply chains for many months to come.

3. Shipping container shortage

Americans’ insatiable demand for more stuff has another consequence: Empty containers are piling up in the wrong places.

Large steel shipping containers are pivotal to global supply chains. In 2020, the U.S. imported more than US$1 trillion worth of goods from Asian countries. And most of those consumer goods make their way to the U.S. on container ships.

To get a sense of the scale, a single container can hold 400 flat-screen TVs or 2,400 boxes of sneakers.

But many of those containers making their way to the U.S. don’t have a way to get back to Asia. The reasons involve a lack of workers, complicated customs procedures and a host of other problems.

The shortage has driven up the price of containers fourfold over the past year, which in turn is contributing to higher consumer prices.

Cargo ships filled with containers idle in waters off of California on a cloudy day as they await entry to the Port of Los Angeles or Port of Long Beach
Join the queue. Frederic J. Brown/AFP via Getty Images

4. Clogged ports

All these problems are contributing to another challenge: U.S. ports have become extremely backed up with ships waiting to unload their cargo.

A large ship can hold 14,000 to 24,000 containers. That means one ship waiting to make port could hold as much as 5.5 million televisions or 33.6 million sneakers.

Right now, more than 60 container ships are anchored in the ocean off the Ports of Los Angeles and Long Beach, unable to unload their stuff. Ports are also clogged in New York, New Jersey and other locations globally.

Normally, there is no wait for these ships to dock and unload their cargo. But the record demand for imports and shortages of truckers, containers and other equipment has caused substantial delays.

No end in sight

Before COVID-19, global supply chains worked pretty efficiently to move products all around the world. Companies utilized a just-in-time philosophy that minimized waste, inventories and expenses.

The cost of that, of course, is that even small problems like a hurricane or a factory fire can cause disruptions. And the pandemic has caused a meltdown.

[Over 110,000 readers rely on The Conversation’s newsletter to understand the world. Sign up today.]

While I don’t expect a resolution to most of these problems until the pandemic ends, a few things could relieve some of the pressure, such as a shift away from consumer spending on goods to services and increased global vaccination rates.

But the difficult reality is American consumers should expect bare shelves, delays and other problems well into 2022.

Kevin Ketels does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.

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International

Visualizing The World’s Biggest Real Estate Bubbles In 2021

Visualizing The World’s Biggest Real Estate Bubbles In 2021

Identifying real estate bubbles is a tricky business. After all, as Visual Capitalist’s Nick Routley notes, even though many of us “know a bubble when we see it”, we don’t…

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Visualizing The World's Biggest Real Estate Bubbles In 2021

Identifying real estate bubbles is a tricky business. After all, as Visual Capitalist's Nick Routley notes, even though many of us “know a bubble when we see it”, we don’t have tangible proof of a bubble until it actually bursts.

And by then, it’s too late.

The map above, based on data from the Real Estate Bubble Index by UBS, serves as an early warning system, evaluating 25 global cities and scoring them based on their bubble risk.

Reading the Signs

Bubbles are hard to distinguish in real-time as investors must judge whether a market’s pricing accurately reflects what will happen in the future. Even so, there are some signs to watch out for.

As one example, a decoupling of prices from local incomes and rents is a common red flag. As well, imbalances in the real economy, such as excessive construction activity and lending can signal a bubble in the making.

With this in mind, which global markets are exhibiting the most bubble risk?

The Geography of Real Estate Bubbles

Europe is home to a number of cities that have extreme bubble risk, with Frankfurt topping the list this year. Germany’s financial hub has seen real home prices rise by 10% per year on average since 2016—the highest rate of all cities evaluated.

Two Canadian cities also find themselves in bubble territory: Toronto and Vancouver. In the former, nearly 30% of purchases in 2021 went to buyers with multiple properties, showing that real estate investment is alive and well. Despite efforts to cool down these hot urban markets, Canadian markets have rebounded and continued their march upward. In fact, over the past three decades, residential home prices in Canada grew at the fastest rates in the G7.

Despite civil unrest and unease over new policies, Hong Kong still has the second highest score in this index. Meanwhile, Dubai is listed as “undervalued” and is the only city in the index with a negative score. Residential prices have trended down for the past six years and are now down nearly 40% from 2014 levels.

Note: The Real Estate Bubble Index does not currently include cities in Mainland China.

Trending Ever Upward

Overheated markets are nothing new, though the COVID-19 pandemic has changed the dynamic of real estate markets.

For years, house price appreciation in city centers was all but guaranteed as construction boomed and people were eager to live an urban lifestyle. Remote work options and office downsizing is changing the value equation for many, and as a result, housing prices in non-urban areas increased faster than in cities for the first time since the 1990s.

Even so, these changing priorities haven’t deflated the real estate market in the world’s global cities. Below are growth rates for 2021 so far, and how that compares to the last five years.

Overall, prices have been trending upward almost everywhere. All but four of the cities above—Milan, Paris, New York, and San Francisco—have had positive growth year-on-year.

Even as real estate bubbles continue to grow, there is an element of uncertainty. Debt-to-income ratios continue to rise, and lending standards, which were relaxed during the pandemic, are tightening once again. Add in the societal shifts occurring right now, and predicting the future of these markets becomes more difficult.

In the short term, we may see what UBS calls “the era of urban outperformance” come to an end.

Tyler Durden Sat, 10/23/2021 - 22:00

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Government

The return of text is inevitable

Welcome to Startups Weekly, a fresh human-first take on this week’s startup news and trends. To get this in your inbox, subscribe here. On Equity this week, we discussed the value of the written word. You can imagine that the resulting argument is inheren

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Welcome to Startups Weekly, a fresh human-first take on this week’s startup news and trends. To get this in your inbox, subscribe here.

On Equity this week, we discussed the value of the written word. You can imagine that the resulting argument is inherently biased, considering we are three journalists who have bet our livelihoods on ink; but, I promise, there’s more nuance here beyond how important a lede is.

We recently published a recent deep dive on Automattic, the commercial media company behind the WordPress publishing platform. Founded in 2005, Automattic is one of the few companies that has been able to evolve and expand its way through a graveyard of media sites. Valued at $7.5 billion, it has also convinced investors of the financial promise of its vision.

I was most struck by how text has shaped Automattic’s hiring process: The company offers a purely written interview, where potential new hires never need to reveal their face or voice to anyone through the recruitment funnel. It takes away the inherent bias that comes with a Zoom interview, which, at its core, is just a digital version of a face-to-face interview. Monica Ohara, chief marketing officer of WordPress.com, explained more about her thinking:

“You normally think you’ve got to talk to them; see them on video. With text only, you remove all this bias and focus on the content of what they’re saying, and also test for a style of communication that’s really important in a distributed team.

“In Silicon Valley, everyone is competing for the same people that would add diversity to your pool. Which is great for those people, but what about all the others who don’t have those opportunities because of where they were born or live? For me, I was born in the Philippines and if I hadn’t had the luck to move here, I’d be living a different life.”

Rethinking the value of text, the same way we rethink how many synchronous meetings should be on our calendar, feels like the natural next step for companies figuring out how to scale distributed work. Even in a world seemingly ruled by short-form video, words — and sound — seem to matter in a way that other formats never will.

In the rest of this newsletter, we’ll talk about PayPal’s reported new friend, the Chinese venture capital market and not at all about Facebook’s impending new rebrand. 

PayPal picks Pinterest

Image Credits: TechCrunch

We rushed to Twitter Spaces this week after rumors came out that PayPal may be buying Pinterest for a reported $45 billion. The fintech giant has been on an acquisition spree of sorts, but scooping up a social, photo-sharing platform may signal its hungry to own the content — not just the customer.

Here’s what to know: This feels nostalgic. PayPal potentially joining forces with a more content-focused e-commerce business comes more than a half-decade after it divorced from eBay. But, as Finix Chief Growth Officer Jareau Wadé pointed out, Pinterest is not a shopping destination like eBay — it’s a place where shopping begins for nearly 450 million users.

In a Substack post, Wadé makes the following argument to describe why PayPal may buy Pinterest:

At its core, Pinterest is more like Google than eBay. It’s a search engine that conducts over 5 billion searches per month for fuzzy, hard-to-describe ideas where pictures, rather than words, are often the best place to start. It also has a growing ads business that produced $613 million last quarter, up 125% YoY. With Pinterest, PayPal would be buying the top of the funnel — the awareness and interest stages — for millions of websites on the internet. PayPal would provide Pinterest with the bottom of the funnel, allowing them to see the purchases that result from shopping that began on Pinterest.

Imagine if PayPal could use their core product and the commerce assets they’ve acquired over the past five years to build a deconstructed sales funnel, not just for one website, but for the whole internet.

Put a pin in it:

China is thriving

Flag of China with pile of bitcoin

Image Credits: TechCrunch

Data from CB Insights shows us that, aside from a single outsized 2018 round, China’s third quarter of 2021 was the best three-month period for Chinese startups ever — both in deal value and deal count.

Here’s what to know: We’re surprised, too. On Equity, we discussed how the growth of China’s venture capital market contrasts in sentiment with the region’s government restrictions. It seems that regulatory impact hasn’t stopped all companies from raising, and growing, their businesses there.

Internationally speaking:

Around TC

TC Sessions: SaaS 2021 is next week! My colleagues have put together an amazing show about the sector that seemingly can’t stop attracting millions from investors. We’ll see what stopped eating the world, how hunger is turning into innovation and definitely hit a few SaaSy notes through panels with experts.

Check out the event agenda, buy your pass and come hang with us on October 27.

Across the week

Seen on TechCrunch

A massive ‘stalkerware’ leak puts the phone data of thousands at risk

What do people want in a co-founder? YC has some answers

Station F adds an online program to educate the next generation of entrepreneurs

Trump to launch his own social media platform, calling it TRUTH Social

Seen on TechCrunch+

Mission-driven ventures are growing fast during the pandemic

Dear Sophie: Any suggestions for recruiting international tech talent?

Lessons from founders raising their first round in a bull market

Udemy targets valuation of $4B in major edtech IPO

Talk soon,

N 

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Economics

DAX index forecast ahead of the ECB meeting

European stocks rose on Friday on a surge in technology stocks; still, rising inflation became a concern for investors. European inflation was confirmed at 3.4% YoY in September, and concerns grew that the European Central Bank could change its monetary..

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European stocks rose on Friday on a surge in technology stocks; still, rising inflation became a concern for investors. European inflation was confirmed at 3.4% YoY in September, and concerns grew that the European Central Bank could change its monetary policy.

European Central Bank President Christine Lagarde said that ECB would maintain its accommodative policy for as long as necessary, but this could change soon. Germany’s DAX index has advanced again above 15,500 points, but it is still trading below its recent highs.

Germany’s recovery from the pandemic has been strong so far, and the country will release the preliminary estimates of its October Inflation data and its Q3 GDP next week.

Results from many big companies provided a strong start to third-quarter earnings, and investors’ focus will remain on the third-quarter earnings season because many companies have yet to publish their reports.

Next week, Deutsche Bank, Volkswagen,  Linde, MTU Aero Engines, and Daimler are among the companies scheduled to report quarterly results.

According to the German Economic Ministry, the outlook for the industry remains positive, but the world’s supply chains crisis represents a serious problem for Germany because of its dependence on exports.

The German economy is particularly vulnerable to shortages of key parts and raw materials, and more than 40% of companies reported they had lost sales because of supply problems.

Many big companies scaled back production of some of their most profitable models, while Opel announced last month that it would shut down a factory in Eisenach until the beginning of 2022.

It is important to say that nearly half of Germany’s economic output depends on exports of cars, machine tools, and other goods, while the semiconductor shortage throttling global car production suggests more pain for the automotive industry.

Despite this, the German Economic Ministry reported that it expected this effect to be temporary while the German central bank expects that the German economy could grow 3.7% this year. The German Economic Ministry added:

Healthy order books give us reason to expect strong recovery impulses from industry, and thanks to that strong overall economic growth

The European Central Bank recently reported that exports from Eurozone would have been at least 7% higher in the first half of the year if not for supply bottlenecks. The European Central Bank will announce its decision on monetary policy next Thursday, which could significantly influence on DAX index in the near term.

15,000 points represent support

Data source: tradingview.com

DAX index has advanced again above 15,500 points, and if the price jumps above 15,800 points, the next target could be at 16,000 points.

On the other side, if the price falls below strong support that stands at 15,000 points, it would be a strong “sell” signal, and the next target could be around 14,500 points.

Summary

The European Central Bank will announce its decision on monetary policy next Thursday, which could significantly influence on DAX index in the near term. DAX index has advanced again above 15,500 points, and if the price jumps above 15,800 points, the next target could be at 16,000 points.

The post DAX index forecast ahead of the ECB meeting appeared first on Invezz.

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