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Shanghai’s lockdown – What might it mean for global supply chains?

A prolonged Covid-lockdown of Shanghai could cause longer-than-expected disruption to global supply chains and raise inflationary pressure. As one of China’s…

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A prolonged Covid-lockdown of Shanghai could cause longer-than-expected disruption to global supply chains and raise inflationary pressure. As one of China’s largest hubs, Shanghai’s manufacturing and transport capacity is simply too big to be replaced elsewhere.  

China’s persistent lockdowns and the impact of sanctions on Russia concerning numerous commodities are currently exacerbating supply bottlenecks, heightening the risk that inflation will run higher for longer.

Outbreaks of the Omicron variant has driven China to renew tough restrictions on the movement of millions of people, including lockdowns of major cities. Shanghai, where the clampdown started in late March and is still ongoing, has become the new hotbed of the outbreak, following Shenzhen, which was locked down in mid-March.

Among China’s 100 largest cities, eight – accounting for almost 9% of GDP – were shut down fully or partly by late April. Other cities accounting for a further one-third of GDP were in partial lockdown.

The widening of curbs is intensifying the pandemic-related drag on China’s economic growth and adding to transport and production disruptions, with spillover effects on global supply chains.

Channels of disruption – Threefold

In Shanghai specifically, the lockdown conditions are causing three forms of blockage.

The city is one of China’s most important manufacturing centres, so the current restrictions disrupt movements of product for export.

It is also the world’s largest and busiest port. It handled more than 43.5 million TEUs [1] in 2020, almost 20% more than the world’s second-largest port, Singapore. Within China, Shanghai’s capacity is 1.5 times larger than the second-largest port, Ningbo-Zhoushan (which is the third largest in the world) (see Exhibit 1).

Locking down Shanghai disrupts local and global supplies through the logistics channel, causing delays and stoppages in transport from factories to the port and hampering cargo processing at the port.

Lastly, disruption is also being seen in the intermediate goods channel, as Shanghai is an import centre for many goods and materials used as inputs in the products that China exports.

Feeling Shanghai’s impact

Shanghai’s port accounts for more than 20% of China’s total export shipments and almost 8% of manufactured exports to world markets (see Exhibit 2). Its huge capacity cannot be taken on easily elsewhere in China. Furthermore, when China cannot import intermediate goods, the bottleneck in inputs aggravates the production disruption as producers run out of input inventory.

While there are reports of factories in Shanghai, and other cities, retaining staff at offices overnight to keep business and production going, supply and logistical bottlenecks within China have clearly intensified and had knock on effects.

The pace of growth in volumes of freight traffic in China fell after a brief recovery before the Omicron variant hit. Delays in goods delivery have also increased sharply, with the impact being felt in the US (see Exhibit 3). These signs do not bode well for global supply chains as the lion’s share of Chinese exports produced outside Shanghai goes through its port for onward shipment to world markets.

It is uncertain how long Shanghai’s lockdown will last. If it is prolonged, the shock could worsen the impact of sanctions against Russia in a range of commodity markets, intensifying the supply disruption, deepening global inflation, and potentially leading to more aggressive interest rate policy at the leading central banks.

If higher inflation erodes economic growth significantly, the risk of stagflation could rise, putting global monetary policy and asset markets in a difficult situation, though this is not our base case scenario at present.

Not so bad – Yet

It is too early to draw a pessimistic conclusion. One indicator for global supply chains disruption is the share of containers leaving major US ports empty. This is because during periods when demand for imported goods in America is particularly high (perhaps due to limited supply), it may be far more lucrative for shipping companies to transport goods from Asia to the US than vice versa — meaning shippers are often in such a hurry they skip the loading process in the US in order to return the container to China empty. 

After rising to historical highs across several US ports late last year, a recent industry study shows that the percentage of outbound empty container space started to decline for large ports such as Houston and Savannah despite the Omicron wave and China’s disruption [2].

Furthermore, China’s logistics costs, so far, show no sign of a rising trend.


References

[1] Twenty-foot equivalent unit is a measure of cargo capacity used for container ships and container ports. It is based on the volume of a standard 20-foot-long container that can be easily transferred between ships, lorries and trains.

[2] ‘Tracking Global Supply Chains as China Locks Down’, JPMorgan Global Economic Research Daily Economic Briefing, 3 May 2022, pp. 3-5.

Disclaimer

Please note that articles may contain technical language. For this reason, they may not be suitable for readers without professional investment experience.

Any views expressed here are those of the author as of the date of publication, are based on available information, and are subject to change without notice. Individual portfolio management teams may hold different views and may take different investment decisions for different clients. The views expressed in this podcast do not in any way constitute investment advice.

The value of investments and the income they generate may go down as well as up and it is possible that investors will not recover their initial outlay. Past performance is no guarantee for future returns.

Investing in emerging markets, or specialised or restricted sectors is likely to be subject to a higher-than-average volatility due to a high degree of concentration, greater uncertainty because less information is available, there is less liquidity or due to greater sensitivity to changes in market conditions (social, political and economic conditions). Some emerging markets offer less security than the majority of international developed markets. For this reason, services for portfolio transactions, liquidation and conservation on behalf of funds invested in emerging markets may carry greater risk.

Writen by Chi Lo. The post Shanghai’s lockdown – What might it mean for global supply chains? appeared first on Investors' Corner - The official blog of BNP Paribas Asset Management, the sustainable investor for a changing world.

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Aging-US | Time makes histone H3 modifications drift in mouse liver

BUFFALO, NY- June 30, 2022 – A new research paper was published in Aging (Aging-US) on the cover of Volume 14, Issue 12, entitled, “Time makes histone…

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BUFFALO, NY- June 30, 2022 – A new research paper was published in Aging (Aging-US) on the cover of Volume 14, Issue 12, entitled, “Time makes histone H3 modifications drift in mouse liver.”

Credit: Hillje et al.

BUFFALO, NY- June 30, 2022 – A new research paper was published in Aging (Aging-US) on the cover of Volume 14, Issue 12, entitled, “Time makes histone H3 modifications drift in mouse liver.”

Aging is known to involve epigenetic histone modifications, which are associated with transcriptional changes, occurring throughout the entire lifespan of an individual.

“So far, no study discloses any drift of histone marks in mammals which is time-dependent or influenced by pro-longevity caloric restriction treatment.”

To detect the epigenetic drift of time passing, researchers—from Istituto di Ricovero e Cura a Carattere Scientifico, University of Urbino ‘Carlo Bo’, University of Milan, and University of Padua—determined the genome-wide distributions of mono- and tri-methylated lysine 4 and acetylated and tri-methylated lysine 27 of histone H3 in the livers of healthy 3, 6 and 12 months old C57BL/6 mice. 

“In this study, we used chromatin immunoprecipitation sequencing technology to acquire 108 high-resolution profiles of H3K4me3, H3K4me1, H3K27me3 and H3K27ac from the livers of mice aged between 3 months and 12 months and fed 30% caloric restriction diet (CR) or standard diet (SD).”

The comparison of different age profiles of histone H3 marks revealed global redistribution of histone H3 modifications with time, in particular in intergenic regions and near transcription start sites, as well as altered correlation between the profiles of different histone modifications. Moreover, feeding mice with caloric restriction diet, a treatment known to retard aging, reduced the extent of changes occurring during the first year of life in these genomic regions.

“In conclusion, while our data do not establish that the observed changes in H3 modification are causally involved in aging, they indicate age, buffered by caloric restriction, releases the histone H3 marking process of transcriptional suppression in gene desert regions of mouse liver genome most of which remain to be functionally understood.”

DOI: https://doi.org/10.18632/aging.204107 

Corresponding Author: Marco Giorgio – marco.giorgio@unipd.it 

Keywords: epigenetics, aging, histones, ChIP-seq, diet

Sign up for free Altmetric alerts about this article:  https://aging.altmetric.com/details/email_updates?id=10.18632%2Faging.204107

About Aging-US:

Launched in 2009, Aging (Aging-US) publishes papers of general interest and biological significance in all fields of aging research and age-related diseases, including cancer—and now, with a special focus on COVID-19 vulnerability as an age-dependent syndrome. Topics in Aging go beyond traditional gerontology, including, but not limited to, cellular and molecular biology, human age-related diseases, pathology in model organisms, signal transduction pathways (e.g., p53, sirtuins, and PI-3K/AKT/mTOR, among others), and approaches to modulating these signaling pathways.

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Government

FDA asks for COVID boosters to fight Omicron’s BA.4, BA.5 subvariants

The U.S. Food and Drug Administration on Thursday recommended booster doses of COVID-19 vaccines be modified beginning this fall to include components…

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FDA asks for COVID boosters to fight Omicron’s BA.4, BA.5 subvariants

By Michael Erman

June 30 (Reuters) – The U.S. Food and Drug Administration on Thursday recommended booster doses of COVID-19 vaccines be modified beginning this fall to include components tailored to combat the currently dominant Omicron BA.4 and BA.5 subvariants of the coronavirus.

The FDA said manufacturers would not need to change the vaccine for the primary vaccination series, saying the coming year will be “a transitional period when this modified booster vaccine may be introduced.”

FILE PHOTO: Signage is seen outside of the Food and Drug Administration (FDA) headquarters in White Oak, Maryland, U.S., August 29, 2020. REUTERS/Andrew Kelly/File Photo

The new booster shots would be bivalent vaccines, meaning doses would target both the original virus as well as the Omicron subvariants.

The decision follows a recommendation by the agency’s outside advisers to change the design of the shots this fall in order to combat more prevalent versions of the coronavirus. read more

BA.4 and BA.5 are now estimated to account for more than 50% of U.S. infections, according the U.S. Centers for Disease Control and Prevention, and have also become dominant elsewhere.

The FDA said in a statement on Thursday that it hoped the modified vaccines could be used in early to mid-fall.

Pfizer Inc (PFE.N) with partner BioNTech SE (22UAy.DE) and Moderna Inc (MRNA.O) have been testing versions of their vaccines modified to combat the BA.1 Omicron variant that caused the massive surge in cases last winter.

Although they have said those vaccines worked against BA.1 and the more recently circulating variants, they did see a lower immune response against BA.4 and BA.5.

The companies had already been manufacturing their BA.1 vaccines, and said on Tuesday that swapping to a BA.4/BA.5 version could slow the rollout.

Pfizer/BioNTech, which on Wednesday announced a $3.2 billion contract to supply more COVID vaccine doses to the United States, said they would have a substantial amount of BA.4/BA.5 vaccine ready for distribution by the first week of October. read more

Moderna said it would be late October or early November before it would have the newly modified vaccine ready.

Reporting by Michael Erman in New Jersey and Leroy Leo in Bengaluru; Editing by Jonathan Oatis and Bill Berkrot

Our Standards: The Thomson Reuters Trust Principles.

Source: Reuters

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Marketing automation startup Retail Rocket nabs $24M for expansion

Retail Rocket, a retention management platform for brands, today announced that it raised $24 million in a Series A round led by Cyprus-based private equity…

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Retail Rocket, a retention management platform for brands, today announced that it raised $24 million in a Series A round led by Cyprus-based private equity fund Flintera. In addition to the fundraising, Retail Rocket revealed that it acquired SailPlay, a startup developing software to help retailers build loyalty programs and send mass message campaigns.

New York-based SailPlay had raised $3.3 million prior to the acquisition. Founded in 2013 by Leonid Shangin and Yakov Filippenko, the company offered services to collect customer data and leverage it to create games, texts, and tasks designed to encourage repeat business.

As for Retail Rocket, it launched in 2012 headed by Moscow Business School of Management classmates, Nick Khlebinsky and Andrey Chizh, who’d attempted but failed to gain traction with several startups. The learnings from their previous efforts were the springboard for Retail Rocket, which after multiple pivots eventually grew its customer base to over 1,000 companies including Nintendo, Puma, and Decathlon.

“The digital marketing world is growing very fast and the demand for highly-skilled professionals is constantly increasing,” CEO Khlebinsky said. “The complexity of digital marketing tools is booming too — just several years ago we couldn’t imagine the technologies we use today.”

According to Khlebinsky, Retail Rocket uses a mathematical model to segment first-time buyers of a company’s product. By analyzing their actions — for example, the links they click on — the platform attempts to figure out their wants and preferences.

Image Credits: Retail Rocket

Retail Rocket also offers tools for campaign management like email marketing and web-based push notifications, as well as an engine that attempts to identify the best timing and communication channel (e.g., SMS) to make personalized offers. The goal is to create a “system of loyalty and retention management” for both online and offline customers, Khlebinsky said, that ultimately boosts business.

“We work with ecommerce on a performance-based pricing model,” Khlebinsky explained. “In most countries, the pandemic lockdowns spiked online sales, thus we experienced a temporary revenue increase. After the lockdown ended, there was a decrease, but to levels exceeding the pre-lockdown months, because a lot of people were forced to change their buying habits towards online shoppings.”

Absent independent reviews of Retail Rocket’s platform, it’s unclear whether its approach might beat out rivals like SalesForce, SAP, Bloomreach, and Dynamic Yield. But the promise of software that predictably drives repeat business is alluring. According to HubSpot, a mere 5% increase in customer retention can boost profits by 25% to 95%.

Retail Rocket has around 150 employees spread across offices in the Netherlands, Germany, Spain, Italy, and Chile, and it plans to double down on mergers and purchases in the coming months. Sources close to the company tell TechCrunch that Retail Rocket has $50 million set aside for acquisitions alone.

“Retail Rocket popped on our radars thanks to their international expansion and ability to set up sales teams in Europe and Latin America,” Flintera partner Sergey Vasin said in a statement. “We were impressed with the company’s results given the limited amount of investment they raised. The company was bootstrapping its growth after the seed round. Despite that, the efficiency of Retail Rocket products surpasses those of international competitors. We expect that the global e-commerce market will continue its growth at more than 10% per annum, with Latin America leading the race.”

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