Newsletter Blast: Lockdowns Continue To Impact Supply Chains; & the Latest in Brand & Product Experiences
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Welcome to Thursday. Feel free to hit Reply and send us the worst Easter ad you saw over the weekend—and read to the end for our personal favorite.
Shanghai remains under lockdown as the result of spikes in Covid-19 cases over the Easter holiday. Overall, demand on the TPEB trade remains lower than during the prolonged peak season, with exceptions in a few pockets. Ocean carriers continue to assess impacts to bookings and welcome bookings for cargo originating from Southeast Asia due to current constraints and dips in shipment activity ex-China. Severe congestion, equipment imbalances, sliding vessel schedules, port omissions, blank sailings, and increased fuel charges continue to create challenges.
Brand membership…but for sustainability?
BoF has a recent report on brand membership models that's actually quite insightful and well worth the read if you can access beyond the paywall. Yet one thing that had us scratching our head is the belief that sustainability as the real motivation behind said membership models. To wit, in a description about outerwear brand Early Majority: 'When it finally launches to the general public this week, newcomers to the label will face a choice: invest $358 for a lifetime membership or pay a 60 percent premium on the price of its puffers, shells and fleeces. It’s a bold proposition, especially for a company that has just launched. But the strategy reflects renewed interest in membership models as a handful of fashion brands seek to leverage the engagement and data-gathering benefits of well-worn loyalty strategies to not only drive commercial advantage but also solve tricky sustainability challenges.' Smart strategy, for sure, but let's not pretend these are true sustainability plays here.
In today’s edition:
Covid Impact in China - State of Global Supply Chains
Latest Cultural & Marketing News
Latest Happenings at City Global
Navigating Ocean & Air Freights across Asia to North America & Europe
Trending USA-made & Asia-Pacific products that are available for Prototyping Now
The Culture Pulse: The modern misery of young, rich athletes.
BuzzFeed shrinks its newsroom. Is anyone (actually) working 8 hours a day? Why Warhol is everywhere right now. Dogs and workplace happiness. Spider crab cooked over charcoal. No more masks on planes? When restaurants are closed on Mondays. Cartier goes old Hollywood. Undercooked meat at ghost kitchens. Convenience and boredom. To-go cocktails look to make their NYC return. What to do with wild garlic. New changes to Amex Platinum perks. A furniture-making powerhouse in Turkey. The end of work as we know it? On the appeal of Liquid Death. JPMorgan Chase caves on its WFH policy. And why are young athletes so damn miserable?
Hotel life without the hotel
A line of home goods you’d want to steal. NYT
Mexico City and the pitfalls
Of becoming a popular remote work destination. Vox
The best independent coffee shops in the world
A solid round-up here by FT readers. The FT
There’s a Japanese shop
Turning out flawless classic Benz wagons and G-Wagens. The Drive
Customers are told they’re always right
Naturally, they’ve come to believe it. Vox
The Monocle Quality of Life Conference
Will be held in Paris this year. Monocle
What Google search isn’t showing you
The latest cultural banger from Kyle Chayka. New Yorker
The dress shirt makes a post-pandemic return.
In news that should surprise no one, the WSJ reports that dress shirt sales are surging again among the professional set. After two years of t-shirts and sweats, this checks out. Details here: 'Chris Callis, Proper Cloth’s head of design, attributed the growth in its dress-shirt trade to companies’ decisions to summon employees back to their desks. . . . But as Mr. Callis explained, not all men are crying into their desk lunches about the need to dress up again. "We’ve seen a good amount of pent-up energy," he said, adding that many shoppers are saying, "You know, I haven’t worn a dress shirt in two years. Let me get back into those, I’m excited to do this."
Elon Musk talks Twitter, Tesla and how his brain works — live at TED2022
In this unedited conversation with head of TED Chris Anderson, Elon Musk — the head of Tesla, SpaceX, Neuralink and The Boring Company — digs into the recent news around his bid to purchase Twitter and gets honest about the biggest regret of his career, how his brain works, the future he envisions for the world and a lot more. (Recorded at TED2022 on April 14, 2022)
Sara Blakely Teaches Self-Made Entrepreneurship | MasterClass
With just $5,000 and an idea, Spanx founder Sara Blakely went from selling fax machines door-to-door to launching an apparel company that became a global sensation. With Spanx, she not only invented a product that women around the world now love, but she also reinvented an entire product category. By 2012, her bootstrapping had paid off; she became the world’s youngest female self-made billionaire.
Ferrari 296 GTS Debuts at Spring Place Beverly Hills (City Global HQ)
The Ferrari 296 GTS, the evolution of Ferrari’s mid-rear-engined two-seater berlinetta spider concept, is powered by the new 120° V6 engine coupled with a plug-in (PHEV) electric motor that debuted on the 296 GTB, which unleashes a massive 830 cv in total. The car thus redefines the whole concept of fun behind the wheel, guaranteeing pure emotions not just when it is being pushed to its limits, but also in day-to-day driving situations.
Circa 1988. City Global's CEO, Ira Horowitz, pic with his very first MAC.
#ThrowbackThursday
As Shanghai Lockdown Persists, Cargo Backlog and Congestion Builds According to FreightWaves, Shanghai’s lockdown continues to impact supply chains both in China and globally. While the Shanghai port remains operational, the severe shortage of trucking capacity has led to this increased cargo backlog. As the number of cargo vessels waiting to load increases at the Port of Shanghai, diversion of ships is leading to congestion at other Chinese ports.
Concern Grows Over Increasing West Coast Container Dwell Times According to The Loadstar, the increasing container dwell times at Los Angeles and Long Beach have prompted US Secretary of Transportation Pete Buttigieg to call on railways to address delays. At Long Beach, the average box dwell time is at 9 days, up from 3.5 in January, largely due to a lack of rail equipment and shortage of worker capacity.
Factory Output News
Mainland China Shanghai’s Covid situation strikes local factories - affecting vehicle production of big players like Tesla Source
Taiwan chipmakers are dealing with up to 18 months delays for production equipment Source
Vietnam new vehicle sales up by 19% in March Source
Cambodia Council for the Development (CDC) has approved final registration certificates to four non-garment projects totalling $32 million Source
Thailand export forecast to expand by 5% in 2022 Source
Indonesia has shifted its focus to develop downstream activities which involves converting raw materials to finished goods instead of exporting the raw materials Source
Philippines government is seeking EOI from interested parties to construct a renewable energy manufacturing zone Source
Asia → North America (TPEB)
Shanghai remains under lockdown as the result of spikes in Covid-19 cases over the Easter holiday. Overall, demand on the TPEB trade remains lower than during the prolonged peak season, with exceptions in a few pockets. Ocean carriers continue to assess impacts to bookings and welcome bookings for cargo originating from Southeast Asia due to current constraints and dips in shipment activity ex-China. Severe congestion, equipment imbalances, sliding vessel schedules, port omissions, blank sailings, and increased fuel charges continue to create challenges.
Rates: Rate levels remain elevated relative to pre-Covid market with softening in several pockets.
Space: Undercapacity, except in pockets
Capacity/Equipment: Critical/Severe Undercapacity
Recommendation: Book at least 3-4 weeks prior to CRD. Consider premium options. Be flexible in regard to equipment and routings. Check closely with suppliers to understand any Covid-related impacts or changes to production outputs and forecasts.
Asia → Europe (FEWB)
Disruptions continue to dominate the route. COVID cases in China are causing many disruptions on the Asia side. Especially the situation in Shanghai with local lockdowns remaining uncertain. For example, re-opened factories cannot start production due to missing raw materials. The European side is influenced majorly by congestion in the arrival ports, which results in re-routing and further delays of incoming vessels.
Rates: Remain at a high level. The downward trend remains to be slow due to the uncertainty in the market.
Space: Open for FAK cargo due to the uncertainty.
Equipment: Availability improved due to lower exports, but there are no structural changes.
Recommendation: Book at least 2 to 3 weeks before CRD. Plan with congestion that may delay your cargo.
Indian Subcontinent → North America
Ongoing political uncertainty and Covid related delays continue to affect the ISC region. Rising political tensions in Sri Lanka and Pakistan are causing concern for local shippers. Sri Lanka has implemented measures to ration fuel which is having a direct impact on heavy equipment and trucking capacity. Local rate increases and delays are to be expected. Ongoing Covid-19 shutdowns in China will negatively impact empty equipment supply in the ISC region, as China remains a key source for equipment repositioning.
Rates: Sustained at high levels for 2H April.
Space: To the USWC will remain a challenge for 2022. Port omissions on services to the USWC continue to cut capacity out of the Indian sub-continent. Space to the USEC has opened up due to ease in demand after mid-April public holidays. However, ongoing USEC congestion at main ports of discharge such as Savannah and Charleston will continue to create schedule delays in the return trips back to the ISC region. These delays often result in port of loading omissions and blank sailings.
Equipment: Deficits are being reported across many ports in India. Most affected are the S/SE ports, Kolkata, and Inland container depots in North India.
Recommendation: Load via wet port and avoid Inland container depots when possible. ICDs are a chokepoint for containers which often leads to delays in SO release. Booking on some premium services will give you priority on equipment.
Asia
N.China: Shanghai continues to see over 20,000 Covid cases reported daily. The local government has set a target to stop the spread of the virus outside of quarantined areas by Wednesday, allowing the city to further ease its lockdown amid the public’s frustration. Nearby cities such as Suzhou, Wuxi, Kunshan, etc. are still in partial or full lockdown with very limited trucking capacity available. The central government is also assisting companies in key industries resume production with the goal of stabilizing China’s supply chains during virus outbreaks. This will take some time to implement as a shortage of raw materials also presents a challenge in resuming production and trucking capacity is still limited. Flight capacity continues to be greatly reduced during this period and ad-hoc cancellation is expected if demand is low. Market rates maintain at relatively high levels due to the ongoing supply chain disruptions.
S. China: Ex-Hong Kong flight frequency has still not recovered due to the Covid situation and war conflict, however, demand is improving since lockdown measures were lifted in Shenzhen. Cross-border trucking capacity is still very limited (around 20% of the original capacity). Ex-Shenzhen market demand is improving but is highly affected by cross-border trucking capacity. Some shipments from Shanghai are also being re-routed to Shenzhen and air freight rates have increased compared to the week prior.
Taiwan: The market is fairly stable this week. Another fuel increase went into effect starting from 4/16. Covid cases have been increasing significantly since week 15, however capacity and air operations remain normal. Some factories have seen outbreaks of Covid and are reducing production operations due to quarantine measures. As we approach the end of the month we typically see a short peak before the Labor Day Holiday, but due to the current Covid situation the market conditions for the second half of April remain uncertain.
Korea: The TPEB market is strong ex-Korea as demand is high to both the US west and east coasts. The FEWB market remains relatively stable.
SE Asia: Demand ex-Thailand is soft after the long holiday and capacity is open. The market ex-Malaysia is also soft as a result of Ramadan, the recent Songkran Festival holiday in Thailand, and the ongoing lockdowns in China. FEWB capacity has increased as Malaysia opened its borders this month. Demand ex-Vietnam continues to be weak, especially for ex-SGN where rates have dropped slightly.
Europe
The upcoming season change means that we are seeing higher demand this week an increase in air freight requests for inventory to be stocked for Summer. Advice still remains that smaller batches in multiple shipments could be a viable solution for inventory to be restocked in a timely manner.
Market is at a stable high in terms of rates. Drivers of the slight increases we see this week comes from fuel surcharge increases from the still record high jet fuel prices.
Freighter capacity is heavily reduced and booking to uplift window is approx 10-14 days. This is expected to continue through the end of April. Deferred routings are still providing a viable routing option if already tight lead times can take it. We also see cheaper options on the market to secondary hubs where airlines have regular passenger flights.
Less congestion at EU terminals, though high volumes, therefore a potential increased transit time.
