Economy

(Reuters) – Flexport, one of the most valuable logistics startups, is looking to add about 400 engineers to double its technical team by next year, a top company executive told Reuters. The hiring spree, spearheaded by Dave Clark who joined Flexport in September after two decades at Amazon.com (NASDAQ:AMZN), comes at a time when many big tech companies and venture capital-backed startups are either freezing hiring or laying off employees amid economic uncertainty. Clark, former consumer chief at Amazon and now co-chief executive at Flexport, said the firm is taking advantage of its strong balance sheet and the less competitive job market for tech talents. Flexport raised $935 million led by venture capital firms Andreessen Horowitz and MSD Partners earlier this year at a valuation of $8 billion. It expects revenue of close to $5 billion this year.”Recruiting has been very challenging for the last couple of years. And we think this is the exact great opportunity for us to go out and start hiring and give people an opportunity to do a reset in their career,” said Clark. Founded in 2013 by Ryan Petersen, Flexport enables buyers, sellers and their logistics partners to ship, store and trade goods on its digital platform. It has experienced rapid growth amid the pandemic-led global supply-chain disruptions. The expanded team will work on building the core product, and improve the tracking system and add more automation to the platform.Digitization in the freight industry has been under way for years, with capital flooding into freight forwarders like Flexport, but the expense of upgrading legacy databases with digital tracking systems has slowed the transition.Clark said the tech openings, from entry-level to experienced ones, will be across the U.S. with a focus on Bellevue, Washington, a tech town that houses Amazon and Microsoft (NASDAQ:MSFT). Flexport currently has over 3,200 employees across the world, and now has a hybrid work policy, requiring employees to work for two to three days in the office. More

HONG KONG (Reuters) – Hong Kong and Chinese officials on Wednesday touted the city’s connection to the world’s second-largest economy as they looked to restore its reputation as a global financial hub after years of punishing COVID crackdowns.Hong Kong’s status as a premier financial centre has been clouded by strict anti-virus restrictions, anti-government protests in 2019 and China’s imposition of a sweeping national security law on the city a year later.An international business conference on Wednesday was the biggest corporate event in Hong Kong since it shut its borders in 2020 to combat the pandemic. Those measures have badly hit the economy and have resulted in an exodus of talent.”Hong Kong remains the only place in the world where the global advantage and the China advantage come together in a single city,” Hong Kong Chief Executive John Lee told about 250 participants in the Global Financial Leaders’ Investment Summit, organised by the city’s de-facto central bank the Hong Kong Monetary Authority (HKMA).”This unique convergence makes Hong Kong the irreplaceable connection between the mainland and the rest of the world.”Some of the world’s biggest banking bosses, including Goldman Sachs (NYSE:GS)’ David Solomon and Morgan Stanley (NYSE:MS)’s James Gorman, were in Hong Kong for the first time in almost three years for the summit.For foreign financial firms operating in China and Hong Kong, the summit comes as they navigate growing tensions between the United States and China, which have also caught the former British colony in the crosshairs.Two U.S. lawmakers last week urged top American bankers to cancel their attendance, saying participation would contribute to human rights abuses by China’s government. Beijing rejects accusations of rights abuses.In pre-recorded interviews for the summit, China’s top regulatory officials on Wednesday also pledged their support to Hong Kong and said reforms and liberalisation would continue in China to attract foreign investors.China Securities Regulatory Commission vice chairman Fang Xinghai said its opening-up policy has a “firm foundation”, while criticising international media coverage, saying that a lot of reports “really don’t understand China very well”.UBS Group Chairman Colm Kelleher agreed.”Whilst we are all very pro-China, and like vice chairman Fang said we are not reading the American press, we actually buy the story, but it is a bit (of a) waiting for zero-Covid to open up in China and see what will happen,” he said.China is fighting its largest COVID outbreak since the summer as cases again erupt across the country, triggering concerns that Beijing’s heavy-handed response to outbreaks is exacting a growing toll on the world’s second-largest economy.GROWTH OPPORTUNITIES Hong Kong chief Lee said the city would continue working towards lifting COVID-19 restrictions.The city’s economy shrank faster in the third quarter, contracting 4.5% from the same period a year earlier, the third straight quarterly downturn, as geopolitical tensions, China’s slowdown and lingering pandemic worries weighed.Lee said that Hong Kong was working to attract top talent to offset a major brain drain in the past three years due to pandemic rules.Hong Kong has eased COVID curbs in recent weeks, with the city scrapping a hotel quarantine requirement for all visitors in September.The summit saw business leaders gather in a hotel ballroom without facemasks, which are still mandatory outdoors.”It is great for Hong Kong to open up and we are glad to be back,” Anand Selvakesari, CEO of personal banking and wealth management of Citigroup (NYSE:C) told Reuters on the sidelines of the conference.MARKET VOLATILITY Global financial institutions have long flocked to Hong Kong as a springboard into China, looking to tap into its rapidly expanding economy and its trillions of dollars worth of financial markets.Held against the backdrop of heightened market volatility, top bankers at the summit said central banks will get inflation under control, but there will be turbulence in the near-term due to monetary tightening and geopolitical risks.Inflation and a very quick tightening of monetary conditions after over a decade of relatively accommodative monetary policies make the world more volatile, and uncertain, said David Solomon, chief executive officer of Goldman Sachs.It “allows exposures where there’s leverage in the system to be amplified very quickly,” he said, while pointing to the recent markey volatility in the UK as an example of how things could go wrong during a liquidity squeeze.(This story has been refiled to add Hong Kong leader’s first name in paragraph 4) More

Welcome back. We’ve previously written about the fearsomely difficult problems that the Amazon deforestation crisis presents for investors. As I discussed on the UK’s LBC radio channel, the election defeat of Brazilian president Jair Bolsonaro looks like a welcome piece of good news on that front. Bolsonaro had presided over a culture of impunity surrounding illegal forest clearance, which reached record levels in the first half of this year. But as our colleagues in Brazil have reported, the incoming president Luiz Inácio Lula da Silva faces severe economic challenges and bitter political opposition following his deeply controversial first spell in office. The threat to the world’s biggest rainforest remains desperate.Deforestation will be a key topic of discussion at the COP27 climate conference, which kicks off in Egypt on Sunday. I and other FT colleagues will be there for the duration, and we’ll be serving up a special edition of Moral Money every weekday until November 18, with the latest insights from the ground.If this email was forwarded to you (or you’re reading on the website), just click here to subscribe instantly to Moral Money, in time to get all our daily COP27 bulletins.For today’s edition, Patrick writes about corporate net zero pledges — many made at COP26 last year — and how far away companies are from their goals. And Tamami digs into supply chain data that cast an uncomfortable light on big tech companies’ vaunted green credentials. (Simon Mundy)Promises made, promises broken: companies are missing their net zero targetsAs business and government leaders fly into Sharm el-Sheikh next week for the COP27 climate summit, companies are under scrutiny for net zero carbon emissions pledges from last year’s COP26.Almost all of the companies that have made net zero promises will fail to achieve their goals unless they double the rate of cuts, according to a report published today by consultancy Accenture.Only 8 per cent of companies are on track to achieve their net zero targets for scope 1 and 2 emissions by 2050, the report shows. Even if companies double their rate of progress towards emissions targets, 59 per cent will fail to meet a 2050 deadline.Unsurprisingly, Europe leads the way among companies with net zero targets. Half of all European companies have established targets, with Norway and UK companies leading the pack. Only a third of companies worldwide have made pledges, and in North America the figure looks even more bleak at just 28 per cent.People are getting more sophisticated in identifying companies’ climate risks, said Peter Lacy, Accenture’s global head of sustainability services. And scrutiny of companies’ strategies, their governance and ultimately their capabilities on cutting carbon “will only continue to grow”, he said.Another report from MSCI heaped further gloom on net zero pledges. In an analysis published earlier this week, MSCI said companies have about four years left in their carbon budgets to keep global warming to 1.5C this century. Instead, companies are on track to cause global temperatures to rise 2.9C. Essentially, companies have to set and implement carbon-cutting plans five years at a time, MSCI said. Goals for 2050 are meaningless if companies cannot get emissions down now.Ten companies are responsible for 5.5 per cent of all corporate scope 1 emissions: Saudi Aramco, Coal India and ExxonMobil are the top three emitters, MSCI said.Conversely, Norway’s Equinor, Apple and Holcim of Switzerland are among the big companies that have published the most thorough corporate decarbonisation targets, MSCI said.“Greenhouse gas emissions must peak by 2025 if we are to minimise catastrophic warming,” MSCI said. “The costs of inaction dwarf the costs of lowering emissions now.” (Patrick Temple-West)Supply chains reveal a dirtier picture of Big Tech

Top suppliers such as Hon Hai, Foxconn’s Taiwan-listed entity received a D+ grade for their decarbonisation efforts from Greenpeace East Asia and Stand.earth © REUTERS

Tech giants, such as Apple and Google, have been leaders in corporate climate action, transitioning their offices and data centres to 100 per cent renewable energy in recent years.Yet, if we shift our focus to scope 3 — the emissions from their supply chains — a different picture emerges.Consumer electronic brand suppliers that manufacture components of cell phones and computers in Asia primarily use electricity generated from coal and other fossil fuels, according to a report recently published by Greenpeace East Asia and environmental advocacy group, Stand.earth.The report investigated decarbonisation efforts by 10 big consumer electronics brands, including Apple, Google and Microsoft, and their 14 largest suppliers. On average, 77 per cent of technology manufacturing emissions were generated from the supply chain.Top suppliers such as Hon Hai, Foxconn’s Taiwan-listed entity, and Korea’s Samsung Electronics both received a D+ grade from Greenpeace East Asia and Stand.earth. Their big clients, on the other hand, received grades in the A range: both Apple and Google obtained an A+ while Microsoft got an A-.The US tech companies’ grades, however, declined significantly once supply chain emissions were considered: Apple scored highest with a B, while Google and Microsoft were rated C-.Tech giants’ supply chains are “extremely polluting”, Xueying Wu, Beijing-based campaigner for Greenpeace East Asia, told Moral Money.Among 14 suppliers analysed, only four achieved a renewable energy usage rate above 10 per cent. The median renewable usage rate was only 5 per cent.It is especially “alarming”, Wu said, that emissions from key semiconductor manufacturers, such as TSMC and SK Hynix, have seen double-digit increases since 2019. Meanwhile, renewable energy usage rates in 2021 stood at just 9 per cent and 4 per cent respectively.Out of 10 big tech companies analysed in the report, only Apple has issued a 100 per cent renewable energy target for its supply chain. The iPhone maker announced last week it would pressure its suppliers to become carbon neutral by 2030 and track yearly progress. Tech giants should provide more support for their suppliers to transition to renewable energy, Wu argued, while she believed a lack of pressure from other stakeholders including investors was “the biggest barrier for electronics suppliers in East Asia to increase their renewable energy procurement”. But some environmental-minded investors have started to take action. Jens Munch Holst, chief executive at AkademikerPension, said the Danish pension fund has been engaging with tech giants to demand emission reduction in their supply chains. “The consumer electronics brands will need to help deliver decarbonisation of their supply chains and they need to do it fast to meet the goals of the Paris Agreement,” he told Moral Money, adding that “renewable energy usage in the supply chain will be key to achieving this”. (Tamami Shimizuishi, Nikkei)Smart readAt last year’s COP26 climate summit, one of the biggest stories was an $8.5bn international support package to help South Africa move away from coal. A year on, things are not going smoothly. Don’t miss this deeply reported read from the FT’s Africa editor David Pilling, featuring interviews with some key figures in South Africa’s energy transition and a visit to the coal heartland of Mpumalanga province. More

HONG KONG (Reuters) – Central banks will get inflation under control, but there will be turbulence in the near-term due to monetary tightening and geopolitical risks, top bankers said at a summit in Hong Kong on Wednesday. Morgan Stanley (NYSE:MS) CEO James Gorman said his gut feeling was that central banks would manage to curb price rises but investors would need to get used to higher inflation — of around 4% versus 1-2% before “this crisis”.”It’s a painful transition, but not an unexpected transition,” said Gorman, also the bank’s chairman, at the Global Financial Leaders’ Investment Summit.It was Hong Kong’s biggest corporate event since it shut its borders in 2020 and introduced restrictions to combat COVID-19.Major central banks have embarked on some of the most aggressive round of rate rises in decades in a bid to curb red-hot inflation, risking a downturn in the global economy.Inflation and “very quick” monetary tightening after over a decade of relatively accommodative policies are making the world more volatile and uncertain, said Goldman Sachs (NYSE:GS) CEO David Solomon. “(It) allows exposures where there’s leverage in the system to be amplified very quickly,” he said, pointing to the situation in Britain, where former British Prime Minister Liz Truss’s mini-budget triggered a slump in gilts and liquidity crunch in pension funds in September and early October.If central banks find a way to tame inflation meaningfully and in a balanced way, it will “increase the chance of a soft landing” for their economies, Solomon said. Their comments come hours before the U.S. Federal Reserve is widely expected to deliver its fourth consecutive 75-basis-point interest rate hike. Investors are looking to see whether the central bank could signal a slowdown in the pace of monetary tightening, even as consumer price inflation is running above 8%.Bankers at the conference also worried about geopolitical risks. Those have been growing as the Russia-Ukraine war escalates and tensions between China and the United States intensify.”If I had one or two concerns, the spreading of geopolitical tension would be one,” said Liu Jin, President of Bank of China, without elaborating further. Michael Chae, Blackstone (NYSE:BX)’s chief financial officer, also highlighted “rising tensions around the world” and the threat they pose to stability.Monetary and geopolitical uncertainties have put investors on the sidelines, said UBS Group Chairman Colm Kelleher, pointing to the “record levels of cash” in global wealth management accounts as evidence that people are holding on to their money.”Clients are clearly on the sidelines, as you’ve had over the last nine months pretty dire returns in equities and fixed income, and commodities, except for selective spots,” he said. More

Aston Martin blamed supply chain woes as it cut sales and profit forecasts for the year, after debt payments and costs from unfinished vehicles more than doubled losses in the third quarter. The luxury sports car maker had expected to sell 6,600 cars in the year and increase its adjusted profit margin by 350 to 450 basis points.On Wednesday it said it would only sell 6,200 to 6,600 cars, and margins would increase by 100 to 300 basis points during the year.The carmaker’s shares dropped more than 13 per cent in early London trading on Wednesday. They have had more than 80 per cent of their value wiped off this year.Revenues in the third quarter rose a third to £315.5mn as average prices increased by 28 per cent to £189,000. But pre-tax losses mounted, rising to £225.9mn, from £97.9mn in the same quarter a year earlier, after costs for new investments and a non-cash revaluation of some of its debt that is priced in US dollars.Aston took a £245mn accounting hit on the value of its debt because of the falling pound in the first nine months of the year, and paid out £65mn in debt interest payments. The company raised £654mn through a funding deal that included a heavily discounted rights issue, and by bringing in Saudi Arabia’s Public Investment Fund as a shareholder to shore up its finances and help it pay down some of its debt. In October the company bought back about $200mn of its bonds, which chief financial officer Doug Lafferty said would lead to “quite significant interest savings”. Aston said it had 400 unfinished vehicles that were waiting on parts, costing it £106mn in inventory costs, at the end of September. This echoes a problem the company faced in the previous quarter, when it said it had 350 models waiting for parts. Chief executive Amedeo Felisa said the company was putting “pressure and attention” on fixing its supply issues, and had embedded staff at supplier companies in order to rebuild the relationship and avoid future snares.“This will for sure help us not to have the same problem in the future,” he said. During the quarter the carmaker wrote off £71mn from past investments into its current line-up of cars and spent £213mn on the upcoming sports car range that is due to come out next year.“Over the last two quarters we have encountered specific supply chain challenges that have delayed our ability to meet customer demand,” said chair Lawrence Stroll. The “headwinds” are improving in the fourth quarter but have “modestly” hit the company’s full-year guidance, he said, adding that the medium and long-term outlook was “robust”. More

Global trade is likely to slow this year as western economies tip into recession, according to the chief executive of the world’s second-largest container shipping group AP Møller-Maersk.Søren Skou, head of the Danish group, told the Financial Times that after years of bumper profits, the bellwether of global trade is expecting earnings, demand and shipping freight rates to shrink because of falls in consumer confidence and consumption.“We see a recession looming . . . On the one hand, we have never delivered such a great result financially, but every indicator we are looking at is flashing dark red. Clearly, we expect a slowdown, we expect lower earnings going forward,” Skou said.Maersk reported its 16th consecutive quarter of year-on-year earnings growth in the third quarter on Wednesday, beating analysts’ forecasts with underlying operating profit up 60 per cent to $10.9bn.Skou said freight rates had started to normalise and that supply chain bottlenecks — caused by a surge in demand after the first wave of the pandemic — were easing.Shares in Maersk fell by 5 per cent on Wednesday morning as investors worried about the outlook.Maersk has ordered relatively few new ships during the boom times of the past two years but other lines have expanded their capacity far more, leading to concerns those vessels will arrive as the industry faces a slowdown.Skou said 2023 would either present the “final proof” of his longstanding argument that the shipping industry had become more rational due to consolidation or would show it remained prone to poor decisions. Shipping companies, most of them privately owned unlike listed Maersk, have traditionally gone through big boom to bust cycles.

Skou said Maersk was prepared to idle ships in a slowdown. “We are ready for this,” he added.Maersk now expects global container demand — a proxy for trade growth as most cross-border freight is transported by sea — to contract by 2-4 per cent this year, against its previous estimate of growth of plus 1 per cent to minus 1 per cent.The Danish group is better insulated if there is a slowdown in its shipping business from its logistics business, which now has annual revenues of about $17bn after a series of acquisitions. Skou said the business would be as big as its shipping business by the middle of the decade and that Maersk was looking for further acquisitions.Maersk and other shipping groups making bumper profits are facing growing political pressure to pay more tax as they are currently taxed based on tonnage rather than earnings, leading to small bills at present.Skou said he hoped any tax changes would be done globally rather than nationally to ensure a “level-playing field” for all shipping companies. More

The central bank is expected to raise rates three-quarters of a point today, but what it says about its next steps will be even more important.The Federal Reserve is expected to continue its fight against the fastest inflation in 40 years on Wednesday by raising rates three-quarters of a percentage point for the fourth time in a row. What officials signal about the central bank’s future plans is likely to be even more important.Jerome H. Powell, the Fed chair, and his colleagues have been rapidly increasing interest rates this year to try to wrestle inflation lower. Rates, which were near zero as recently as March, are expected to stand around 3.9 percent after this meeting.Wednesday’s move would be the sixth consecutive rate increase by the Fed. The last time it moved this quickly was during the 1980s, when inflation peaked at 14 percent and interest rates rose to nearly 20 percent. Fed officials have suggested that at some point it will be appropriate to dial back their increases to allow the full economic effect of these rapid moves to play out. The question now is when that slowdown might happen.The Fed’s most recent economic projections, released in September, suggested that it could begin next month. But prices have remained uncomfortably high since those estimates were published. That could make it difficult for Mr. Powell and his colleagues to explain why backing down in December makes sense — even if they think it still does.Officials do not want investors to conclude that the Fed is easing up on its inflation fight, because market conditions could become more friendly to lending and economic growth as a result. That would be the opposite of what central bankers are aiming for: They are trying to slow conditions down so companies will lose their ability to charge more.“There are good reasons to believe that the Fed should pause relatively soon,” Tiffany Wilding, a U.S. economist at PIMCO. “There are going to be communication challenges to manage with this.”It’s a challenge that could be on full display when the Fed releases its rate decision at 2 p.m. and Mr. Powell holds his news conference at 2:30 p.m.Inflation F.A.Q.Card 1 of 5What is inflation? More

Kyiv hopes Russia will within days resume its participation in an agreement that allowed shipments of Ukrainian grain through the Black Sea to help alleviate a global food crisis.Talks between the UN, Turkey and Russia on Moscow’s return to the so-called Black Sea grain initiative are continuing following Moscow’s withdrawal from the deal last Saturday. “We expect to receive an answer within a few days, maximum,” Yuriy Vaskov, Ukraine’s deputy infrastructure minister, said in an interview.The agreement was brokered in July by the UN and Ankara to end Russia’s blockade of Ukraine’s ports following Moscow’s full-scale invasion of its neighbour in February. Since then more than 9mn tonnes of grain have passed through Ukraine’s Black Sea ports. Ukraine is one of the world’s leading suppliers of grain and other agricultural products. Food security experts have warned that shortages triggered by the war will lead to further price rises, with serious consequences for poor countries already facing a crisis caused by the impact of climate change and the Covid-19 pandemic. Vaskov said 15 vessels carrying grain had sailed from Ukrainian ports since Monday despite Russia’s suspension of its participation in the Black Sea deal. But he said Moscow’s swift return was crucial to addressing the security concerns of insurers, which have warned that without it they would be unable to offer risk coverage for vessels transporting grain through the war zone.Ukrainian president Volodymyr Zelenskyy thanked the UN and Turkey for preventing “Russian efforts to destroy the grain agreement”, but he also called for further action to provide “reliable and long-term protection” to his country’s right to export commodities.“Russia should clearly know that it will receive a tough response from the world to any steps that disrupt our food exports,” Zelenskyy said in his overnight video address. “This is literally a matter of life for tens of millions of people.”Dmitry Peskov, spokesman of Russian president Vladimir Putin, said on Monday that continued Black Sea grain shipments without Moscow’s backing would be “much more risky, dangerous and unguaranteed”. However, Russia has not threatened to attack such vessels. Shipments departing this week remain covered as insurance quotes are valid for seven days, but Russia’s return to the initiative was “necessary for the market”, Vaskov said.Agriculture exports are a top source of foreign currency inflows for Ukraine, which has relied heavily on foreign bailouts to finance its budget. Also at stake is the ability of Ukrainian farmers to finance future harvests. Kyiv-based investment bank Dragon Capital said in a note to investors this week that “a prolonged disruption in seaborne exports would adversely affect 2023 plantings”.

This week’s shipments were flowing efficiently, and inspections of vessels by Ukrainian, UN and Turkish personnel were conducted “four times faster” without Russia, Vaskov said. The ships are inspected near Istanbul before entering the Black Sea en route to picking up grain at Ukrainian ports and again after leaving the waterway.According to Vaskov, Russian inspectors had in previous months dragged out the inspection process, triggering long queues and leaving Ukrainian ports operating at 30 per cent of capacity. Ukraine could “export 6mn or even 7mn tonnes per month” under the agreement if the process were allowed to run smoothly, he said. “We will work efficiently to provide world food security.” A swift resolution was crucial, he added, pointing to a backlog of more than 100 incoming vessels awaiting inspection west of the Bosphorus strait. Ukraine had received information that some grain exporters, which hire the cargo ships, had cancelled charters. “Maybe it’s connected with insurance or maybe it’s [the] delays, because some of them are waiting for two weeks or more for inspections,” Vaskov said. The UN said late on Tuesday that no vessels would move through the Black Sea corridor on Wednesday. Ukrainian officials said the decision was technical, with no politics or security factors involved.Oleksandr Kubrakov, Ukraine’s infrastructure minister, and Amir Abdulla, UN co-ordinator for the Black Sea grain initiative, in separate comments on Twitter said grain vessels would resume departures from Ukrainian ports on Thursday.“On November 3, eight vessels with agricultural products are expected to pass through the grain corridor. We got confirmation from UN,” Kubrakov said. More