Logistics Report: Volleying Tariffs; Amazon’s Driving Incentive; Combing Out Cashmere
Date: Tuesday, May 14, 2019
Source: The Wall Street Journal
The trading world for importers and exports on both sides of the Pacific Ocean promises to get far more complicated in the coming weeks. China’s retaliatory tariffs on some $60 billion in American imports add new layers of concern for companies just as they are digesting the U.S. levies on $200 billion in Chinese goods, the WSJ’s Chao Deng and Vivian Salama report, and raise the potential for more tariffs from the White House. Beijing and Washington still have time to work out a deal since the latest round of tariff hikes won’t take effect until June 1. But the new round of tit-for-tat levies sent businesses scrambling to make sense of the potential sharp jump in costs, particularly for agriculture exporters. It also triggered a new slide in global markets, including steep declines in shares of transport and logistics carriers that feed off global trade.
Amazon.com Inc. is adding incentives to lure more of its own workers to start local businesses serving its budding in-house package-delivery service. Amazon says it will give its existing employees up to $10,000 each for startup costs and other finanial supportto start their own delivery businesses. The WSJ’s Jennifer Smith and Kimberly Chin write the offer deepens the e-commerce giant’s efforts to expand a logistics networkthat operates independently from the package sectors’ big providers. About 200 small firms have joined the program Amazon launched last year, and the new offer suggests Amazon hasn’t added contractors fast enough to meet its growing shipping demand. Retail rival Walmart Inc. is responding to Amazon’s move by boosting its own shipping speeds, the WSJ’s Sarah Nassauer reports, and this week will start offering free next-day shipping in Phoenix, Las Vegas and Southern California, with more areas to be added later this year.
French oil firm Total SA is diving deeper into natural gas. The company’s deal to buy Anadarko Petroleum Corp.’s assets in Africa cements the French oil major’s position as the world’s second-largest provider of liquefied natural gas, the WSJ’s Neanda Salvaterra reports, and caps a series of deals that highlight the restructuring of global energy markets. Total is among several oil giants are moving into natural gas as growth in oil consumption slows and some forecasters suggest demand could stop growing altogether within the next decade. If the Anadarko sale goes through, Total will inherit projects across Africa containing 1.2 billion barrels of proved and probable natural gas and oil reserves, giving the company a bigger role in LNG trade around the world. Total now has about 10% of the LNG market, second to Royal Dutch Shell, which holds about 20%.
Supply Chain Strategies
The mass production of cashmere may prove the undoing of a fiber once considered a luxury good. Fashion labels that helped drive demand for the material are looking for alternative sources or considering giving it up altogether as they weigh a business that is fueling ecological disaster. The WSJ’s Matthew Dalton reports improved production distribution have helped make the once-scarce fiber cheap enough for mass-market labels, leading to billions of dollars in sales and more business for cashmere-goat herders in China and Mongolia. Those growing herds are chewing through grasslands, turning large swathes into desert. Fast-fashion giant Hennes & Mauritz AB is phasing out cashmere products while others are looking for alternatives. Stronger oversight may be impractical since the complexity of the cashmere supply chain makes it difficult for brands to determine the source of fiber that may pass through numerous middlemen before reaching the market.