Raphael Stevens

The National Retail Federation said Wednesday it expects holiday sales during November and December to rise between 8.5% and 10.5%, for a total of between $843.4 billion and $859 billion of sales.
The retail trade group acknowledged headwinds for retailers, including supply chain disruption and labor shortages.
However, NRF President and CEO Matt Shay said retailers have planned ahead to make sure they have plenty of inventory and consumers have taken cues by starting to shop in October.

Shoppers hold hands at the Willow Grove Park Mall in Willow Grove, Pennsylvania, November 14, 2020.
Mark Makela | Reuters

Retailers will see eager holiday shoppers flock to stores and websites even as some toys, clothes and other gift-giving items remain stuck at congested ports, according to a new forecast that cited rising household incomes and high savings rates for its upbeat outlook.
The National Retail Federation said Wednesday that it expects holiday sales during November and December to rise between 8.5% and 10.5%, for a total of between $843.4 billion and $859 billion of sales. The sales forecast excludes spending at automobile dealers, gasoline stations and restaurants.

That would mark an all-time high for holiday sales growth and top last year’s record. Last year, holiday sales rose 8.2% from 2019 to $777.3 billion, according to the NRF, as consumers cheered themselves up with gift-giving during the pandemic. Holiday retail sales have increased by 4.4% on average over the past five years.
NRF President and CEO Matt Shay said this year, consumers have gotten vaccinated for Covid-19, grown used to navigating life during a pandemic and had extra funds because of stimulus dollars and more time at home. That’s made 2021 a smoother year for retailers than 2020.
He acknowledged supply chain and labor shortages, but said retailers have planned ahead to make sure they have plenty of inventory to sell and shoppers have taken cues by starting to shop in October.
“It’s not as if there are not some headwinds and challenges, and yet in spite of that, we have a great deal of confidence that consumers will continue to power the economy in this last quarter of the year,” he said on a call with reporters.

In some cases, he said, people may have to buy a different item from the one on their wish lists. Still, he said, that won’t tamp down their enthusiasm.

“They are going to affirmatively be out shopping for the holiday season, and they won’t go home empty-handed,” he said. “One way or the other, they will shop, they will purchase and they will find that item.”
He said as consumers feel more comfortable traveling, going out to restaurants and staying at hotels again, they will buy goods that support their busier and more social lives. Plus, he said, international tourists who are fully vaccinated will be able to visit the U.S. starting Nov. 8.
“We think that’s also going to give a jolt to the retail side,” he said.

Rising consumer optimism

Other holiday forecasts have also predicted a significant jump in year-over-year spending. Sales in November and December are expected to grow at least 7% compared with last year, according to separate forecasts from Bain, Deloitte, and Mastercard SpendingPulse.
E-commerce sales are expected to get a lift, too, as more consumers have added curbside pickup and home deliveries to their shopping routines. Online and other nonstore sales, included in NRF’s total, are expected to increase by between 11% and 15% to a total of between $218.3 billion and $226.2 billion. That’s up from $196.7 billion in 2020.
NRF Chief Economist Jack Kleinhenz said he is watching inflation, a factor that’s also causing sales numbers to rise. He said many households have a better balance sheet and have paid down debt during the pandemic, which is allowing them to absorb higher prices.
He said he expects to see gains in the labor market and rising consumer optimism in the coming months as Covid-19 cases recede, booster shots become widely available and children qualify for Covid-19 vaccines. Those factors will influence shoppers’ mindsets as they prepare to celebrate the season, he said.
“Individuals are returning to work,” he said. “There’s a pickup in foot traffic. We’re seeing some spending in some of the service areas. So this is all strong indication for future employment gains and retail spending.”
He said La Nina, a weather pattern that usually brings colder and wetter weather in the northern U.S., generally correlates with stronger retail sales, too.
Shoppers will face different dynamics as retailers struggle to get goods from factories to store shelves because of congestion at ports, rising materials costs and a shortage of truck drivers. That is expected to translate into fewer discounts, longer shipping times and more out-of-stock items.
Retailers including Target, Best Buy, Amazon and Walmart have announced early holiday sales events and have even dangled exclusive access for loyal customers or encouraged shoppers to buy desired items as soon as they see them.

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General Motors can “absolutely” catch Tesla in U.S. sales of electric vehicles by 2025, CEO and Chair Mary Barra told CNBC on Wednesday.
Barra’s comments come weeks after the automaker said it planned to be the leader in EV sales in the U.S., but the company did not release a time frame for that goal.
After years of Tesla dominating sales of EVs in the U.S., its market share is waning.

DETROIT — General Motors can “absolutely” catch Tesla in U.S. sales of electric vehicles by 2025, CEO and Chair Mary Barra told CNBC on Wednesday.
Barra said an influx of new products, including the soon-to-be-released GMC Hummer pickup and Cadillac Lyriq as well as an upcoming Chevrolet crossover, will help the company beat Tesla. The vehicles are part of GM’s plan to release at least 30 EVs by 2025.

“I am very comfortable, because when people get into these vehicles, they are just wowed,” Barra said during CNBC’s “Squawk Box.” “So we will be rolling them out and we’re going to just keep working until we have No. 1 market share in EVs.”
Barra’s comments come weeks after the automaker said it planned to be the leader in EV sales in the U.S., but the company did not release a time frame for that goal.

After years of Tesla dominating sales of EVs in the U.S., its market share is waning. IHS Markit expects Tesla’s domestic market share of electric vehicles to drop from 79% last year to 56% in 2021. IHS predicts that share will continue to lower, to 20% in 2025, as larger automakers such as GM release an influx of new vehicles.
LMC Automotive expects General Motors to surpass Tesla as the country’s largest EV seller by mid-decade.
GM previously projected its EV revenue to grow from about $10 billion in 2023 to approximately $90 billion annually by 2030 as the company launches new models.
Tesla did not immediately respond to a request for comment.

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“Deal sets a solid timeline for the launch of the first zero emission commercial passenger flights between the UK and the Netherlands,” aviation firm ZeroAvia says.
The aviation sector faces a number of challenges when it comes to reducing its environmental footprint.

A sign for arrivals at Rotterdam The Hague Airport in the Netherlands.
GAPS | iStock | Getty Images

Plans to operate commercial hydrogen-electric flights between London and Rotterdam have been announced, with those behind the project hoping it will take to the skies in 2024.
In a statement Wednesday, aviation firm ZeroAvia said it was developing a 19-seater aircraft that would “fly entirely on hydrogen.”

A partnership between ZeroAvia, airport company Royal Schiphol Group, Rotterdam The Hague Innovation Airport Foundation and Rotterdam the Hague Airport has been established to work on the initiative. 
“The deal sets a solid timeline for the launch of the first zero emission commercial passenger flights between the UK and the Netherlands, and potentially the first international commercial operation in the world,” ZeroAvia said.
The company added that both itself and Royal Schiphol Group were in what it described as “advanced partnership talks with airlines to agree on an operator for the planned route.”

Read more about clean energy from CNBC Pro

According to the International Energy Agency, carbon dioxide emissions from aviation “have risen rapidly over the past two decades,” hitting almost 1 metric gigaton in 2019. This, it notes, equates to “about 2.8% of global CO2 emissions from fossil fuel combustion.”
Elsewhere, the World Wildlife Fund describes aviation as “one of the fastest-growing sources of the greenhouse gas emissions driving global climate change.” It adds that air travel is the most carbon-intensive activity an individual can do.

ZeroAvia’s research and development is centered around powering electric motors utilizing hydrogen fuel cells. In September 2020, a six-seater hydrogen fuel cell plane from the company completed its maiden flight.
The same month also saw Airbus release details of three hydrogen-fueled concept planes, with the European aerospace giant claiming they could enter service by the year 2035.
While there is excitement in some quarters about the potential of hydrogen-powered flight, the aviation sector faces a number of challenges when it comes to reducing its environmental footprint.

More from CNBC Climate:

In an interview during CNBC’s Sustainable Future Forum last week, Ryanair CEO Michael O’Leary was cautious when it came to the outlook for new and emerging technologies in the sector.
“I think … we should be honest again,” he said. “Certainly, for the next decade … I don’t think you’re going to see any — there’s no technology out there that’s going to replace … carbon, jet aviation.”
“I don’t see the arrival of … hydrogen fuels, I don’t see the arrival of sustainable fuels, I don’t see the arrival of electric propulsion systems, certainly not before 2030,” he continued.
“So it will certainly be after my career in the airline industry is finished … but I hope it will get here before the end of our mortal lives.” More

Top executives from Flock Freight and Lineage Logistics, two key players in the global supply chain focused on trucking and cold storage, expect the current supply chain issues to last at least another six to nine months.
But both companies, which have recently raised large rounds of funding from investors, say problems won’t end for global transportation: it has long been an inefficient industry that needs to innovate, and as part of that, focus on climate change.

The global supply chain crisis is not going to end any time soon, according to top executives at key companies in the trucking and cold storage sectors, but thinking about the shipping situation as a one-time event caused by the pandemic misses a larger problem. A real fix requires understanding that the global supply chain has long been inefficient and requires a better model — one which incorporates climate change as a critical risk and business mission — and that will take years to build.
How inefficient is logistics? Oren Zaslansky, founder and CEO of Flock Freight, which creates algorithms to maximize trucking loads, recently told the CNBC Disruptor 50 Summit that as ports across the U.S. deal with long wait times for vessels, and there are not enough trucks for the loads that are coming off the cargo ships, the loads that do finally hit the road as “full” often do so with plenty of empty space inside the freight truck’s trailer.

Right now, there may be 10 truck loads ready to go but only one driver is available, and one-third of those trucks loads aren’t close to full. That means the customer is “paying to ship air,” Zaslansky said, and that is nothing new in the sector.
Flock Freight’s business model is bridging the gap between the 60%-70% that has commonly been defined as “full” in the freight trucking business, and by using proprietary algorithms getting trucks to 100% full through the concept of shared truckloads (think Airbnb for trucking). That can help to solve the truck driver shortage, but Flock Freight sees the supply chain in much bigger terms. All that air being shipped also is generating unnecessary greenhouse gases. That amounts to a lot of empty space needlessly adding to the planet’s climate change challenge from a trillion-dollar-plus freight sector. Flock Freight estimates its shared truckload solution cuts “less than truckload” freight carbon emissions by up to 40%.

In 2021, Flock Freight plans to reach net neutrality in shared truckloads through the purchase of carbon offsets, but the company’s CEO says building a sustainable freight model is the bigger goal.
vitpho | iStock | Getty Images

Flock Freight is the freight industry’s first company to make it through the B Corporation certification process, which required overcoming some preconceptions about what it does. When Flock Freight first applied to become a B Corporation — companies with business models designed to balance purpose and profits, and which are continually assessed on metrics related to workers, customers, community, governance and the environment — the logistics start-up was denied.
“You’re the bad guy, creating the greenhouse gasses and burning fossil fuels. Why would you apply?” Zaslansky recalled the reviewers as saying.
Flock Freight persisted, explaining its model of using algorithms to make trucking more efficient, and when Zaslansky needed to, making the case for trucking as a key to sustainability in simpler terms: “I think you guys like eating, so let’s be real.”

The company became a certified B Corp. in June 2020.
Zaslansky, who has been in trucking for much of his adult life, said while there has been a lot of focus on trucker shortages and the supply chain struggles, these are not new phenomena to those familiar with the industry. The long-standing problems which have reached a point where there are as many as one million too few truckers on the road, have just entered a phase of “extreme volatility.”
The underlying problems that lead to air being shipped will still need to be solved after this acute global shipping crisis has passed. “What we haven’t figured out in the last 18 months is getting those things to line up in time and space,” Zaslansky said.

Billions invested in rewriting rules of logistics

Billions are being invested in getting the empty space out of the logistics economy in the years ahead.
Flock Freight just completed a $215 million Series D funding round led by Softbank’s Vision Fund 2, a deal that reflects rapid growth during the logistics upheaval of the pandemic economy and pushed its valuation by private investors above $1 billion.
The company has grown about 13x to 14x since January 2020, as the volatility in the supply chain produced an opportunity for Flock Freight, which ranked No. 42 on the 2021 CNBC Disruptor 50 list. “We have no expectation of that slowing down,” Zaslansky said of the recent growth.
Softbank had led a previous round of investment in the company less than a year ago and at that time Flock Freight had to provide growth projections. When a private company seeks money from Softbank, providing them with “big numbers” is part of the test, he said, and Flock Freight “exceeded those. We went well beyond all the projections we gave them.”
It is not alone among start-ups seeking better ways to manage trucks on the road. Former Amazon executives started Convoy, which ranked No. 12 on the 2021 Disruptor 50 list. Convoy has estimated that 80% of every freight dollar is spent on trucking, and 35% of miles traveled are “wasted,” or 72 million metric tons of CO2 equivalent emissions.
There is also Uber Freight, Next Freight and KeepTruckin, all offering new freight models with various approaches to the long-standing issues, but trucking is not the only chokepoint in logistics that is attracting increased investment.

How refrigerated railcars factor in climate

Lineage Logistics, the largest cold storage company in the world — and responsible for the preservation of the food supply chain for many of the largest food companies in the world, including Hostess and Blue Diamond — has been raising a lot of money, too, close to $5 billion in the past 12 months as it aggressively acquires companies to add to its global cold storage network.
Kevin Marchetti, co-executive chairman of Lineage Logistics and co-founder of private equity firm Bay Grove, said its funding over the past year is higher than all but one real estate investment trust, and all but four other private companies, as it has purchased 50 companies and entered 15 new markets.
Lineage Logistics ranked No. 17 on the 2021 CNBC Disruptor 50 list.
Marchetti said at the CNBC Disruptor 50 Summit that the issues now occurring across the largest ports in the U.S., from the West Coast to the Gulf and East Coasts, as well as in Asia, reinforce why it is so important to eliminate waste and be more efficient with supply chains.
Lineage is not only in the warehouse and trucking links in the supply chain, but through a $500 million acquisition has now become the largest owner of refrigerated railcars in the U.S. That can have an advantage over trucking as four truckloads can be fit in one railcar, leading to a lower carbon footprint, and also helping alleviate the trucker shortage.
Neither logistics executive expects the supply chain to right itself too soon. Marchetti said the restocking of the economy as demand booms post-Covid peak, and the holiday push at the same time, “have been crazy.” He thinks the problems can be worked through, but will take six to nine months.
That view is shared by Zaslansky, who said the supply chain issues will probably last until the second quarter of next year. Until then, it “will be the Wild West,” he said. “It keeps bullwhipping. … Just bullwhipping all over and it will take at least six months,” he added, and there is always the potential for the pandemic or natural disasters pushing out that forecast.
“We’re literally living in a shipping Armageddon,” Uber Freight’s chief Lior Ron recently told CNBC’s Jim Cramer on “Mad Money.”
Economists have recently said the issues will last “well into 2022” and “will get worse before they get better.”
Zaslansky is fueled less by the short-term issues than remaking the supply chain to be more durable for the long term. In trucking, and for global logistics, he said that means changing the rules of the game. Instead of “iterative” change in the traditional supply chain model and modest efficiency improvements, “we will write entirely new rules,” he said.
As a B Corporation, a big part of the new rules for Flock Freight are based on building a sustainable business. The most simple ways of doing things in trucking need to be rethought, such as truckers idling in their vehicles powered by diesel while recharging their devices at rest stops.
Flock Freight has a partnership with Carbonfund.org through which it has agreed to offset 100% of carbon emissions of its shared shipping service through carbon offsets, paying the cost for shippers. The logistics company reduced 4,127 metric tons in carbon emissions in 2020 and this year will use the offsets to reach net neutrality in shared truckloads — offsetting 20,000 metric tons in carbon emissions.
But as the only certified B Corporation in the freight sector, building a more sustainable supply chain is the big business aim. Maintaining the company’s B Corp. certification not only “keeps them honest,” but has also “spawned other products” that have largely contributed to Flock Freight’s recent growth. And to remain a B Corp., “We have to be able to prove it with data on sustainability and growth,” Zaslansky said.  More

Deliveries of Boeing’s 787 Dreamliner have been suspended for much of the past year as it addresses several manufacturing flaws.
The issues come as the aerospace giant is trying to regain its footing from the pandemic and extended grounding of the 737 Max, which was lifted last November.
Boeing executives will detail results on a 10:30 a.m. ET call.

An employee works on the tail of a Boeing Co. Dreamliner 787 plane on the production line at the company’s final assembly facility in North Charleston, South Carolina.
Travis Dove | Bloomberg | Getty Images

Boeing on Wednesday said flaws in its 787 Dreamliners would generate $1 billion in abnormal costs and that it cut production to about two of the planes a month as it struggles to address quality issues. Those problems led it to suspend deliveries for most of the past year.
The manufacturer wrote down $183 million of that amount in the third quarter.

Sales improved, however, thanks to higher aircraft sales and deliveries. Boeing said its revenue rose to $15.28 billion in the third quarter, up 8% from $14.14 billion a year ago. That was below the $16.3 billion analysts forecast. The company reported a $132 million net loss for the quarter though it was narrower than the $466 million it lost a year earlier. On an adjusted basis, Boeing lost 60 cents per share, more than the 20 cents analysts expected.
“Our commercial market is showing improved signs of recovery with vaccine distribution and border protocols beginning to open,” CEO Dave Calhoun said in a staff note after results were released. “As demand returns, supply chain capacity and global trade will be key drivers of our industry and the global economy’s recovery.”
Boeing’s operating cash flow improved to negative $262 million compared with $4.8 billion a year earlier. The company’s shares were up 2% in premarket trading.
Here’s how the company performed compared with analysts’ estimates complied by Refinitiv:

Adjusted results: A loss of 60 cents a share vs an expected loss of 20 cents a share.
Revenue: $15.28 billion vs. $16.3 billion, expected.

Boeing first disclosed quality issues with seams on the fuselages of some of its 787s last year. The problems resulted in inspections that prompted Boeing to suspend deliveries of the planes to airline customers, depriving the company of cash.

Deliveries resumed briefly this year but were halted again in May for more inspections. Boeing has about 100 of the planes in inventory, analysts estimate. The company has repeatedly brought down the production rate for the jetliners. Over the summer, Boeing said it was producing fewer than five 787s a month.
“The company expects to continue at this rate until deliveries resume and then return to five per month over time,” it said in a release.
Boeing has been mired in back-to-back crises since the first of two deadly crashes of its 737 Max three years ago. While it grappled with a 20-month grounding of the planes, the coronavirus pandemic decimated travel and aircraft demand.
The company delivered 62 737s in the quarter, the most since the first quarter of 2019, Calhoun said. It is making 19 Max planes a month, up from 16 in July. It stuck with a forecast to ramp up output to 31 a month in early 2022.
The company’s shares had lost 2% so far this year through Tuesday’s close, compared with a 22% gain in the S&P 500.
Boeing executives will face analyst questions on a 10:30 a.m. ET call Wednesday.

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McDonald’s has entered a strategic partnership with IBM to help the fast-food chain automate its drive-thru lanes.
As part of the deal, IBM will acquire McD Tech Labs, which was formerly known as Apprente before McDonald’s bought the tech company in 2019.
Financial terms of the deal were not disclosed.

Vehicles sit in drive-thru lanes at a McDonald’s Corp. restaurant in Princeton, Illinois.
Daniel Acker | Bloomberg | Getty Images

McDonald’s said Wednesday it has entered a strategic partnership with IBM to develop artificial intelligence technology that will help the fast-food chain automate its drive-thru lanes.
As part of the deal, IBM will acquire McD Tech Labs, which was formerly known as Apprente before McDonald’s bought the tech company in 2019. McDonald’s didn’t disclose financial terms for either transaction.

“In my mind, IBM is the ideal partner for McDonald’s given their expertise in building AI-powered customer care solutions and voice recognition,” McDonald’s CEO Chris Kempczinski said on the earnings call with analysts Wednesday.
The Apprente technology uses AI to understand drive-thru orders. This summer, McDonald’s tested the tech in a handful of Chicago restaurants. Kempczinski said that the test showed “substantial benefits” to customers and employees.
In June, at the same conference where he disclosed the Chicago test, Kempczinski shared McDonald’s strategy for tech acquisitions.
“If we do acquisitions, it will be for a short period of time, bring it in house, jumpstart it, turbo it and then spin it back out and find a partner that will work and scale it for us,” he said.
CFO Kevin Ozan said that less than 100 employees will leave McDonald’s to work for IBM.

“It isn’t a big financial statement impact, plus or minus, I’ll say, going forward from that,” Ozan said.
Shares of McDonald’s rose 2% in premarket trading Wednesday after the company released its third-quarter results. The fast-food chain’s earnings and revenue topped estimates as its international markets bounced back.

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Rent the Runway shares are expected to begin trading Wednesday on Nasdaq under the ticker symbol RENT.
On Tuesday, the company said it sold 17 million shares for $21 each, after marketing 15 million shares for between $18 and $21.
Rent the Runway CEO Jennifer Hyman said the fashion rental business doesn’t need to depend on women returning to offices to be successful.

As Rent the Runway prepares for its market debut Wednesday, the company said the growth of its fashion rental business isn’t entirely dependent on women returning to offices.
“Women did not have to return to the office to return to Rent the Runway,” said CEO Jennifer Hyman on CNBC’s “Squawk Box.”

Ninety percent of the company’s customers continue to work from home, according to Hyman, but subscriber levels are rising.
“And so as women do return to an office, even if it’s just a few days a week, or return to a party, that’s just continued upside for the business,” Hyman said.

Jennifer Hyman, Rent the Runway 
Scott Mlyn | CNBC

Rent the Runway’s stock is expected to begin trading Wednesday on Nasdaq under the ticker symbol RENT.
On Tuesday, the company’s initial public offering priced at the top of its expected range. It sold 17 million shares for $21 each, after marketing 15 million shares for between $18 and $21. That gives the company a market value of $1.3 billion, based on shares outstanding. Accounting for employee stock options and similar holdings, Rent the Runway’s fully diluted value would be roughly $1.5 billion.
Last year, the company’s valuation shrank to roughly $750 million as the pandemic weighed on Rent the Runway’s ability to attract users. In 2020, the company’s active subscriber count fell to about 55,000, from more than 133,000 a year earlier. Revenue tumbled 39% to $157.5 million. While its net loss widened to $171.1 million from $153.9 million in 2019.

But a return to social events such as weddings and birthday celebrations is helping Rent the Runway rebound. It counted nearly 98,000 active subscribers in the six months ended July 31, up from roughly 54,000 in the same period of 2020. By September, active subscribers grew to 112,000, according to its latest securities filing.
Rent the Runway, which describes itself as a “closet in the cloud,” had to get creative to stay afloat during the pandemic. It shuttered its stores and overhauled its subscription plans, sunsetting an unlimited option. It also entered the resale market, allowing consumers to shop without a membership.
“It’s an incredible new customer funnel into subscription,” Hyman said about the resale option. “It’s exactly how we look at our special events rental business. … It’s a way to introduce a new customer to how valuable our assortment is and to how easy it is to come to Rent the Runway.”
According to Hyman, the health crisis ultimately helped make its business stronger.
“If anything, this pandemic pushed us even more as consumers into sharing models and into valuing experiences over ownership,” Hyman said.
Rent the Runway’s listing follows the public debut of glasses maker Warby Parker and comes ahead of sneaker retailer Allbirds’ anticipated IPO. There has been a wave of trendy, venture-backed retailers testing investors’ appetite on Wall Street.
The IPO will offer Wall Street another barometer to gauge investors’ appetite for the clothing rental business, too. Rent the Runway joins other publicly listed companies Poshmark and ThredUp, both of which sell secondhand clothing and other wares.
Founded in 2008 by Hyman and Jenny Fleiss, Rent the Runway is an online platform that offers users multiple subscription options to rent clothing and accessories from designer brands. For example, a subscriber could rent eight items per month at a monthly rate of $99 for the first two months and then $135 for each month thereafter.
Rent the Runway is a CNBC Disruptor 50 company.
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