Good evening from London, where your author is wondering whether he’s left it too late to do his Christmas shopping.
“Logistics manager” must be one of the least-envied jobs in the world at the moment after a torrent of news this week about supply chain bottlenecks and warnings of shortages during the festive season.
Dubai is the latest country to sound the alarm, announcing today that all imports into its international airport would be suspended for six days to clear a backlog of unprocessed cargo.
Ports remain the most visible sign of the crisis. We report today on the waiting game at operations from Los Angeles to Shanghai, with nearly 600 container ships around the world stuck while they wait to be processed thanks to increased demand for consumer products, pandemic-related disruption to schedules and a shortage of dock workers.
Freight costs have rocketed. The average global price of shipping a 40-foot container is now almost $10,000 — three times higher than at the start of the year and 10 times pre-pandemic levels. Because the world has become so reliant on China for manufacturing, the current problems could last two years, according to the chair of DP World, one of the biggest container port operators.
In the US, the problem is most visible at Los Angeles and Long Beach — the entry point for about 40 per cent of all imported goods — where containers stretch out far into the sea. President Joe Biden has got some big companies such as Walmart, UPS and FedEx to extend their working hours, but round-the-clock operations will still need massive co-ordination between the publicly operated ports and private sector groups such as retailers and freight companies. As our Big Read explains, the crisis has also called into question the value of just-in-time supply chains and re-energised arguments for “nearshoring”, or moving more production to closer locations such as Mexico.
The timing for the US economy is disastrous as the country gears up for the long shopping season that traditionally begins after Thanksgiving in late November. One estimate says the crisis could add another $223bn to US retailers’ costs during the holiday season.
Doing anything it takes to save Christmas is also a major driving force behind UK policy aimed at tackling the supply chain crisis, as Tim Harford explores in this FT magazine essay. Some problems, such as the shortage of HGV drivers, have been exacerbated by Brexit. And although the government’s initial stance was that this was entirely unconnected, it now boasts that the shortage is indeed Brexit-related and that this was the plan all along, Tim writes, adding to the feeling of chaos.
The government has scrambled to find remedies, such as today’s announcement of an easing of restrictions on deliveries from foreign drivers, but the impression remains that prime minister Boris Johnson “is betting that if he gives the UK economy a shock, something will turn up — just as when you give your television a thump, it might work better”.
“It is possible that the result of the chaos will be adaptation, innovation and resilience. But in this case, I am suffering from an acute shortage of optimism,” Tim concludes.
Latest news
US consumer sentiment slipped in September, continuing to hover around its lowest levels in years
Denmark became the first European country to offer a third vaccine jab to all adults
The US will ease restrictions on vaccinated foreign nationals from November 8
For up-to-the-minute news visit our live blog
Need to know: the economy
The latest twist in the energy crisis in the UK came with the market exit of CNG Group, a Glencore-backed company that provided wholesale natural gas to utilities, threatening to put even more independent suppliers at risk. Meanwhile, the UK business secretary is pinning some of his hopes on forecasts of a mild winter.
In Europe, the EU is reluctant to make major changes to its 30-year old regulatory regime, despite mounting problems. Here’s an explainer on how the market works and the effect of surging gas prices.
The crisis isn’t all bad news though, especially if you’re a US shale oil boss or betting on Chinese coal futures.
Latest for the UK and Europe
The FT City Network of financial services bosses said the UK lacked a credible economic plan to fix labour shortages, supply chain problems and the surge in energy prices, or ward off a big leap in inflation. The government did however move to prevent a mass cull of pigs because of a shortage of slaughterhouse workers, granting visas to 800 foreign butchers.
Economists have slashed their growth forecasts for Germany this year to 2.4 per cent — down from 3.7 per cent — pointing to supply chain problems. But they have forecast a rise next year to 4.8 per cent — up from 3.9 per cent — after which they predict growth will slow to 1.9 per cent in 2023.
Global latest
President Biden’s $3.5tn spending plan is still struggling to get through Congress — here’s our explainer on where things stand. Minutes from the US Federal Reserve’s latest policy meeting suggest its emergency pandemic measures could begin winding down next month and end by the middle of next year. US retail sales rose 0.7 per cent in September, confounding analysts’ expectations of a 0.2 per cent fall.
Producer prices in China rose 10.7 per cent in September, the biggest rate of increase since 1995. Here are five things to watch when the country’s GDP figures are released on Monday. In the meantime, watch our new video: Is China’s economic model broken?
Need to know: business
Goldman Sachs today became the latest Wall Street bank to announce a stellar set of third-quarter results, breaking its full-year profit record with three months of the year still to run. Driven by a frantic period of dealmaking, earnings per share hit $14.93 on total net income of $5.4bn. Goldman’s results follow strong reports yesterday from Citi and Morgan Stanley and contributed to a rise in share prices in Europe as well as the US.
Taiwan’s TSMC, the world’s largest contract chipmaker, said long-term profit margins could top 50 per cent as customers got used to paying higher prices during the current shortage. The company beat forecasts with reported net income of NT$156.3bn ($5.6bn) in the three months to September 30, as it increased capacity to cater for high demand.
Science round up
Pandemic control: Science reporter Oliver Barnes and chief data reporter John Burn-Murdoch took a deep dive into the imperfect nature of population data, including how this could lead to policy errors and provide fodder for vaccine sceptics. A UK lab analysing PCR test results has been suspended after reports of potentially faulty results.
Vaccines: Advisers to the US Food and Drug Administration have approved Moderna’s vaccine for booster shots for over-65s, those with underlying health conditions and those in risky jobs.
German biotech CureVac has dropped its Covid-19 vaccine after disappointing trial results and will instead focus on a next-generation jab with GlaxoSmithKline.
A Philip Morris-backed group is launching the first plant-based Covid-19 vaccine. It is said to be easier to transport and store than conventional jabs and because plant leaves grow quickly it could shorten the manufacturing process, lowering costs and making it easier to adapt to combat new strains.
The success of mRNA vaccines has opened the way to a new generation of personalised drugs for illnesses such as cancer, as our Big Read explains.
A large French study of more than 22m over-50s has shown vaccines reduced serious forms of Covid-19 by 90 per cent.
Antibodies: AstraZeneca said its antibody cocktail AZD7442 cut the risk of severe disease or death in patients by half. The company has asked the US FDA for approval for the drug, which is administered as an intramuscular injection.
Treatments: Demand is mounting for Merck’s antiviral pill after trials showed it cut hospital admission and death rates by half. The company is seeking authorisation from the US FDA and is licensing the drug to eight generic manufacturers to make cheaper versions, as concerns grow that demand may outstrip supply and deny access to poorer nations.
Get the latest worldwide picture with our vaccine tracker
And finally…
In making the working week more elastic, many employees now find themselves stretched to snapping point, writes How to Spend It editor Jo Ellison. She “read with horror” suggestions that seven-day working weeks may be the answer. “Flexible working is only as flexible as one’s preparedness to bend around another colleague’s need,” she argues.
Do you agree with Jo? Share your thoughts via roadtorecovery@ft.com
Source: Economy - ft.com
