The US government just warned companies that even indirect ties to forced labor in China’s Xinjiang province risks breaking the law

Security guards stand at the gates of what is officially known as a vocational skills education centre in Huocheng County
Security guards stand at the gates of what is officially known as a vocational skills education centre in Huocheng County.

  • The US warned that companies with investment or supply-chain ties to Xinjiang can face legal risks.
  • China has been accused of committing genocide and crimes against humanity in Xinjiang.
  • Major US companies have been accused of sourcing cotton and product components in the region.
  • See more stories on Insider’s business page.

The US on Tuesday cautioned that companies that invest, provide venture capital, or have supply-chain ties to the Xinjiang region of China “run a high risk of violating U.S. law,” due to widespread reports of forced labor and other human rights violations against ethnic minorities in the region.

The US has accused China of committing genocide and crimes against humanity in Xinjiang, citing the arbitrary mass detention of mostly Muslim ethnic groups in the region in what the Chinese government calls “re-education camps.” The government has also forcibly sterilized, tortured, and sexually abused ethnic minority prisoners in these camps, according to former detainees.

Companies who don’t pull out of the region could violate statutes that criminalize benefitting from or importing goods that are the result of forced labor. The advisory also warned US companies against assisting in the development of surveillance tools for Xinjiang or supplying US-made goods to entities that use forced labor.

In 2020, activist groups accused some of the world’s biggest fashion brands – including Nike and H&M – of sourcing cotton from factories that exploit the forced labor of Uyghurs and other ethnic minorities. Over a million ethnic minorities have been detained in Xinjiang, a region that produces a fifth of world’s cotton, and activist groups have called for companies to exit the region to avoid profiting from human rights violations in the area.

Nike stated that it doesn’t source products, textiles and yarn from Xinjiang, and H&M stated that it was concerned about the accusations of forced labor involved in Xinjiang cotton production.

In May, Apple suppliers were linked to forced labor in the Xinjiang region, with reports that thousands of detained Uyghurs were used to manufacture components for Apple devices. Apple previously denied exploiting forced labor in Xinjiang.

In 2020, Apple and Nike, among other companies, also lobbied to weaken the Uyghur Forced Labor Prevention Act that would ban US companies from importing goods made in Xinjiang unless they could prove they weren’t made with forced labor.

According to Reuters, the US may impose additional sanctions on China and may extend a similar business advisory to Hong Kong.

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With prices of used vehicles soaring, now is the best time to sell your car – if you have one you don’t need

first car shopping
  • Prices for used cars and trucks increased 10% in April and 7.3% in May.
  • “If you have a car to sell, there’s never been a better time,” the CEO a car-shopping service said.
  • Getting multiple offers could be worth thousands of dollars on the sale or trade of your old vehicle.
  • See more stories on Insider’s business page.

The used-vehicle market is unusually hot this summer.

Prices for used car and trucks increased 10% in April and 7.3% in May, the highest of any consumer spending category included in the government’s measure of inflation, and some models are going for higher prices now than they sold for new a year ago.

Like the housing market, a lack of supply and a lot of demand is causing prices to soar to new records. Average used-vehicle prices topped $22,500 at the start of May, and are showing no signs of coming down any time soon.

“If you have a car to sell, there’s never been a better time,” said Pat Ryan, the CEO of CoPilot, a personalized car-shopping service. “Dealers will pay incredible prices.”

Of course, there are a few caveats to consider before rushing off to find a buyer, namely whether you need to replace the car, or if you’re trading it in for a new one.

Toby Russell, a co-CEO of the used-vehicle marketplace Shift, told Forbes earlier this month that his company was paying 25% more for vehicles than it did at the start of the year.

“Normally we would lose a little money on that, but we’re making money on these because auction pricing is so intense and high,” he said. “It’s just a total dislocation in the market caused by a surge in demand and lack of supply coming from new cars.”

Ordinarily a year-old trade-in would lose as much as a quarter of its value, but some in-demand trucks and SUVs are being traded back to dealers for more than last-year’s purchase price, a CNN analysis of Edmunds.com data found.

A year-old Dodge Ram 2500 is now worth about $5,200 more than it cost new last year, while a Ford F-250 is worth $3,300 more, CNN found. Other popular models, like Jeep Wranglers and Honda Civics, lost some value, but only a fraction of what normally gets carved off when you drive off the lot.

Most used inventory comes from off-lease models or former rentals, but the pandemic disrupted that flow and in some cases caused it to reverse. When the chip crisis cut the supply of new cars, automakers curbed their fleet sales, forcing rental companies to buy used cars instead.

Ryan said he doesn’t see an end in sight for the lack of supply, which is down roughly 90 percent from normal for price-points below $20,000 – an issue he speculates could be related to buyers using government stimulus money.

“It’s not clear where the supply comes from, because there’s no used car factory you can ramp up and start producing,” he said. “The market could be like this for quite a while.”

So, if you have a car to sell or trade-in, Ryan recommends contacting several dealers to get a few bids. It’s not quick or easy, but it could be highly rewarding.

“We regularly see people who went to go offer their car online, and then they called another dealer and found there were $4,000 or $5,000 differences that were people were offering,” he said.

If you’re considering a trade-in, Ryan suggested that you would get the most bang for your buck swapping an in-demand crossover SUV or pickup truck for a higher-end sedan or compact from a maker that has been less affected by the chip shortage.

“Dealers are thirsting for inventory, there’s no question about it,” he said.

Read the original article on Business Insider

Sustainability isn’t just good business – it’s a huge recruitment tool, these execs say

Insider's Karen Ho interviews Mark Frohnmayer, founder and president of electric-vehicles maker Arcimoto (c) and Are Traasdahl, CEO at Crisp, a food-supply analytics software platform, during an Insider virtual event on June 29, 2021
Insider’s Karen Ho interviews Mark Frohnmayer, founder and president of electric-vehicles maker Arcimoto (c) and Are Traasdahl, CEO at Crisp, a food-supply analytics software platform.

  • Corporations want to be more sustainable, and the pandemic has shown we need to all work together.
  • Competing with tech giants for talent can be hard, but working for a sustainable business is a draw.
  • This was part of Insider’s virtual event “What’s next: CEOs on How Talent Drives Transformation” presented by ProEdge, a PwC Product, on Tuesday.
  • Click here to watch a recording of the full event.

Mark Frohnmayer, founder and president of electric-vehicles maker Arcimoto, believes that the biggest misconception related to sustainability is that people can’t change.

“The other misperception is that we can take our time,” he said during Insider’s recent virtual event “What’s next: CEOs on How Talent Drives Transformation” presented by ProEdge, a PwC Product, which took place June 29.

The panel, titled “Accelerating the green transformation to drive growth and sustainability,” was moderated by Karen Ho, senior reporter for the business of sustainability at Insider, and featured Frohnmayer and Are Traasdahl, CEO at Crisp, a food-supply analytics software platform.

Both speakers agreed that the pandemic has shown how people can come together to tackle a global problem. For Traasdahl, whose company is using data to stop food waste, corporate sustainability is the art of the possible.

“Most people believe that large, small, medium-sized companies do not want to share the data because there can be some competitive information, pricing information,” he said. “They want to share – there just haven’t been any tools in place to share this data.”

Traasdahl is trying to solve the “huge paradox” of a world where 750 million to two billion people live with moderate to severe food insecurity, while nearly one-third of all food produced goes to waste.

“The pandemic forced everybody in this industry to actually start breaking open supply chains that they haven’t touched in 30 years and understanding how they can be much more proactive,” he said.

Frohnmayer said the disruption to supply chains affected Arcimoto’s manufacturing, but he believes the benefits of everyone traveling less during lockdowns are a long-term positive.

“Many areas in the world saw clean skies for the first time in some people’s lives during the beginning of the pandemic as industries shuttered operations,” he said. “What we’re building really is at the confluence of autonomy, lightweight electric platforms, shared mobility, and that’s a really key piece of driving a solution to carbon emissions.”

Competing with giants such as Facebook and Amazon for talent presents its challenges, but working for a sustainable business can be a strong recruiting tool.

“Everybody who joins Crisp feels like they have a connection to the mission that we have as a company,” Traasdahl said. He pointed to an internal survey which showed that 46% of employees have an “idealistic focus” in terms of their career, some three times the market average.

Read the original article on Business Insider

The Fed’s favored inflation gauge is at its highest since 1992, but Goldman Sachs says this ‘one-off inflationary boost’ will soon flip to a ‘one-off disinflationary drag’

Goldman Sachs Logo
  • The core PCE price index, the Federal Reserve’s favorite measure of inflation, rose in May at its fastest since 1992.
  • Goldman Sachs analysts said this “one-off inflationary boost” will over time become a “one-off disinflationary drag” over time.
  • They predict that core PCE inflation will drop to 3% by the end of 2021, and slip further to 2% by December 2022.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

The Federal Reserve’s favored measure of inflation rose at its fastest pace since 1992 last month, driven primarily by price rises in products like cars, chips and furniture, but Goldman Sachs said this rise in inflation is temporary and will reverse itself over time.

The core Personal Consumption Expenditures price index, which strips out volatile food and energy prices, showed on Friday that personal spending had stagnated and inflation had picked up in May by 3.4% year-over-year.

Hold-ups in the supply chain – for goods such as semiconductors – and in global shipping have helped drive prices for consumer goods above pre-pandemic levels, Goldman Sachs analysts said in a research note Sunday.

On the demand side, coronavirus stimulus checks have pushed up buying of more expensive purchases, they noted. As a result, consumers are paying higher prices for new and used cars, consumer electronics, computer chips, furniture, appliances, and sports equipment.

“Prices in supply-constrained categories are likely to remain firm for at least a couple more months, but should eventually partially revert to pre-pandemic trends,” the analysts wrote. “This means that the current one-off inflationary boost will eventually become a one-off disinflationary drag.”

Goldman Sachs predicts that core PCE inflation will drop to 3% by the end of 2021, and slip further to 2% by December 2022, pulled lower by the falls in those product categories and as the boost from the reopening of the travel sector fades.

The Fed uses core PCE as its primary gauge of inflation, and it has signaled it will let inflation run above 2% for a time to allow the labor market to recover from the impact of the pandemic. It expects any jump in inflation during the recovery will be transitory, and a high rate of year-on-year price growth is seen as stemming from a comparison with levels in the early phases of the pandemic.

The supply and demand pressures will ease at different rates in the affected categories, the Goldman Sachs analysts said. Semiconductors should shake off their recent big price rises by the end of this year as the shortage improves, though the market is likely to stay under pressure until 2023, they forecast. Auto production could start to return to normal as early as the third quarter this year, as plants work through the summer shutdown, the analysts believe.

This return to normal will be brought on by a range of factors, such as growth in production capacity, better usage of current production resources, and an end to the global supply-chain snags.

“In short, the global goods sector is best thought of as facing a number of serious disruptions and challenges as the world economy recovers from the pandemic, not as having been pushed to its productive limits by the current level of demand,” the analysts said.

Read the original article on Business Insider

This is how the shipping crisis ends

Beached Cargo Ship Raises Pollution Fears Off The Devon Coast
The world is in a shipping crisis that’s making everything more expensive.

I have unfortunate news. The world’s shipping crisis that’s making everything more expensive (or just impossible to find) is probably going to ruin your Christmas.

That’s because industry experts and company executives say the shipping crisis will continue through 2022.

It’s good news for ocean shipping magnates. Ocean rates are currently “spiking,” according to Eytan Buchman, the chief marketing officer at global freight booking platform Freightos.com.

The price to send a shipping container from East Asia to the west coast of North America is nearly 1.8 times higher than it was at this time in 2019. To send one to the east coast, it’s 2.1 times more expensive.

rising cost of freight
It’s becoming more and more expensive to move goods from Asia to the US.

But everyone else should prepare for several more months of frustration. We’ve already seen unexpected reverberations from the shipping crisis: skyrocketing freight rates have caused some pet food to vanish from shelves; a semiconductor shortage has idled auto factories; and chlorine shortages are disrupting pooltime dreams.

A quick and zesty explainer on our shipping calamity

Cargo ships move around 80% of global trade by volume. But a variety of factors is complicating the process in which containers full of factory-fresh goods – usually in Asia – are loaded onto ships, traverse the ocean, and are unloaded in, say, the ports of Los Angeles or Newark.

What’s causing our shipping crisis include sweeping trends and more quotidian factors. A decades-long movement in the ship-building industry to make massive ships is clashing with the fact that many of our ports can’t accommodate these behemoths. Since early last year, when consumers worldwide were trapped at home, demand for durable goods skyrocketed – we started buying more stuff because we couldn’t go out to eat or travel.

Amazon France warehouse
This is an Amazon warehouse in France in 2000, back when Jeff Bezos was mostly just a humble bookseller. Ah, the good ol’ days!

And shipping containers are also a hot commodity right now. As Chris Stauber, vice president of product at transportation visibility platform FourKites, explained to me, the makers of shipping containers decreased their output in 2019, a slow year for trade, and early 2020, when the coronavirus squeezed industrial production. Now we need more containers than ever, and manufacturers are struggling to catch up with demand.

Labor trends are also making the shipping crisis even more challenging. At the port of Yantian, one of the largest in the world, a coronavirus outbreak stymied work for weeks. Supply Chain Dive reported on Thursday that 67 vessels were waiting to dock there earlier this week. Now resuming normal operations, the port has a massive backlog of 160,000 containers to process.

Thanks to these delays, which cause even more delays down the line, ocean vessels are waiting days at ports around the world just to get unloaded. For example, wait times at Yantian surged from 0.5 days to 16 days this month.

Please stop buying stuff

Of course, one cannot snap their fingers and see smaller ships or much-improved ports within a year (or even several years). New containers or widespread vaccination could ease our shipping crisis a bit quicker, but the timeframe would still be a problem for your Christmas shopping.

Instead, experts point to another factor that untangle the shipping chaos: Less demand.

Retailers’ inventories, which are the goods a business has in its warehouses to restock the shelves, do not match how much consumers are buying right now – even though inventories are back up to pre-pandemic levels. Companies have the same amount of goods in their stockrooms as before the pandemic, but even that isn’t enough to keep up with how much stuff people are buying.

Per the latest monthly US Census Bureau data, all retailers (excluding motor vehicle and part dealers) are seeing an inventory-to-sales ratio of 1.04. In previous years, retailers had a wider margin between their inventories and how much consumers were buying; in April 2017-2019, the ratio hovered around 1.22.

Throughout the next few months, retailers typically stock back up on what they need for the holiday shopping season. In 2019, as Michigan State’s Jason Miller, an associate professor of supply chain management, wrote in an analysis shared in American Shipper, retailers increased inventories by $35.12 billion from April to October. This year, Miller wrote that retailers need to add $65.11 billion to be ready for this year’s peak season – nearly twice as much!

It’s this stock-up that makes experts say that the shipping crisis won’t clean up this year.

As Paul Bingham, director of transportation consulting at IHS Markit told American Shipper, “We’re too far into the year without having recovered (inventories) to get out of this in 2021. We have to look to 2022 for any hope. So many portions of the supply chain are so far behind that it’s not going to happen in the next six months.”

What about next year?

There are plenty of caveats, but the folks who run Big Shipping believe the insanity will slow down by next year.

Forecasters believe folks will buy less stuff as the world re-opens and vaccination rates climb, instead spending their money on services like travel and dining out. This will give importers and exporters a chance to catch up on orders.

This photo taken on August 7, 2018 shows workers unloading bags of chemicals at a port in Zhangjiagang in China's eastern Jiangsu province
A 2018 photo of workers at a port in Eastern China unloading bags of chemicals. Yum!

Lunar New Year, which typically occurs in January or February, should also provide a respite. During that holiday, many factories in Asia shutter as workers travel home to celebrate. Trade volumes fell by one third during the 2020 Lunar New Year in February.

Triton International claims 28% of all leased shipping containers, making them the No. 1 player in the container leasing space. Triton CEO Brian Sondey told investors on an April earnings call that a slowdown in trade volumes is needed to untangle the shipping crisis. He expects that to hit after the Christmas inventory build-up in 2021.

“What we hear is that most customers don’t think these bottlenecks are going to evaporate quickly, but they also don’t think they’re necessarily permanent,” Sodney said.

He added, “I think our general view is it likely continues until trade slows and that – who knows exactly when that’s going to be, but I think probably the betting is sometime end of this year, early next year when maybe the trade world starts to get back towards normal.”

In other words: Once we stop buying so much stuff, we should see the shipping crisis abate. But to prevent another catastrophe, government leaders will have to take the hint and start building better ports.

When do you think the shipping crisis will end? How has the crisis affected your business or in-store experiences? Email rpremack@insider.com.

Read the original article on Business Insider

Chinese authorities reportedly interrogated workers linked to US company Verité, which investigates supply-chain labor abuses in the country

A Uyghur woman holds up a photograph as evidence in a wood paneled room in London
Uyghur teacher Qelbinur Sidik speaks at a hearing in London in June on China’s treatment of Uyghur Muslims.

  • Workers linked to a US company were interrogated by Chinese officials in April, sources told Axios.
  • The workers were linked to nonprofit Verité, which investigates labor abuses in global supply chains.
  • The State Department said it was “deeply concerned” by the reports.
  • See more stories on Insider’s business page.

At least seven people working in partnership with a US labor-rights company were interrogated for several days by Chinese officials, Axios reported.

Chinese authorities questioned people working on behalf of Verité in April, Axios reported, citing several unnamed sources familiar with the matter. Verité is a Massachusetts-based nonprofit that investigates possible labor abuses in supply chains.

The US State Department was “deeply concerned by reports that supply-chain auditors have been detained, threatened, harassed and subjected to constant surveillance while conducting their vital work in China,” a spokesperson told Axios.

It is not clear whether the people were Verité employees or contractors, or which company’s supply chain they were investigating.

Since 2016, China has detained about 1 million Uyghurs in their homeland of Xinjiang in hundreds of prison camps. It claims they are a terror threat. The US government has criticized China for its suspected use of forced labor of Uyghur Muslims in Xinjiang, and human-rights groups accuse China of committing “crimes against humanity.” The Chinese government has denied that it uses forced labor in Xinjiang.

Chinese consumers threatened to boycott major clothing brands, including H&M and Nike, after the companies said they would not use cotton produced in Xinjiang.

It is not clear whether the workers were investigating Xinjiang-linked supply chains.

Verité aims to “empower workers to advocate for their rights,” according to its website. It lists Nestlé, Asos, and Disney among its partners and clients.

Verité did not immediately respond to Insider’s request for comment.

Read the original article on Business Insider

With used vehicle prices soaring, now is the best time to sell your car – if you have one you don’t need

first car shopping
  • Used car and truck prices increased 10 percent in April and 7.3 percent in May.
  • “If you have a car to sell, there’s never been a better time,” the CEO a car-shopping service said.
  • Getting multiple offers could be worth thousands of dollars on the sale or trade of your old vehicle.
  • See more stories on Insider’s business page.

The used vehicle market is unusually hot going into the summer.

Used car and truck prices increased 10 percent in April and 7.3 percent in May, the highest of any consumer spending category included in the government’s measure of inflation.

Like the housing market, a lack of supply and a lot of demand is causing prices to soar to new records. Average used-vehicle prices topped $22,500 at the start of May, and are showing no signs of coming down any time soon.

“If you have a car to sell, there’s never been a better time,” said Pat Ryan, the CEO of CoPilot, a personalized car-shopping service. “Dealers will pay incredible prices.”

Of course, there are a few caveats to consider before rushing off to find a buyer, namely whether you need to replace the car, or if you’re trading it in for a new one.

Toby Russell, a co-CEO of the used-vehicle marketplace Shift, told Forbes earlier this month that his company was paying 25% more for vehicles than it did at the start of the year..

“Normally we would lose a little money on that, but we’re making money on these because auction pricing is so intense and high,” he said. “It’s just a total dislocation in the market caused by a surge in demand and lack of supply coming from new cars.”

Most used inventory comes from off-lease models or former rentals, but the pandemic disrupted that flow and in some cases caused it to reverse. When the chip crisis cut the supply of new cars, automakers curbed their fleet sales, forcing rental companies to buy used cars instead.

Ryan said he doesn’t see an end in sight for the lack of supply, which is down roughly 90 percent from normal for price-points below $20,000 – an issue he speculates could be related to buyers using government stimulus money.

“It’s not clear where the supply comes from, because there’s no used car factory you can ramp up and start producing,” he said. “The market could be like this for quite a while.”

So, if you have a car to sell or trade-in, Ryan recommends contacting several dealers to get a few bids. It’s not quick or easy, but it could be highly rewarding.

“We regularly see people who went to go offer their car online, and then they called another dealer and found there were $4,000 or $5,000 differences that were people were offering,” he said.

If you’re considering a trade-in, Ryan suggested that you would get the most bang for your buck swapping an in-demand crossover SUV or pickup truck for a higher-end sedan or compact from a maker that has been less affected by the chip shortage.

“Dealers are thirsting for inventory, there’s no question about it,” he said.

Read the original article on Business Insider

Starbucks memo lists 25 items that could disappear from some stores as the chain struggles to fix supply chain issues

Starbucks cup barista
  • Starbucks memo says it will stop ordering 25 menu items and ingredients due to supply issues.
  • Starbucks says it is experiencing temporary shortages and is apologizing to customers.
  • Supply chain disruptions have led to shortages and long waits across retail.
  • See more stories on Insider’s business page.

Many Starbucks stores are facing shortages of vital products, and the issues could be getting worse.

Starbucks is putting orders for at least 25 items on “temporary hold” as of June 4 due to supply chain issues, according to an internal company update viewed by Insider.

“Starbucks will put a temporary hold on production until supply chain issues are resolved,” the posting says. The list, confirmed by three Starbucks employees in Arizona, Georgia, and Oregon, includes popular items like hazelnut syrup, toffee nut syrup, chai tea bags, green iced tea, and other products.

Starbucks declined to comment on the memo. The company has previously said ongoing product shortages are localized and not nationwide.

No shortage of issues

Customers have been complaining online for weeks about shortages of their favorite items, from oat milk to drink syrups and baked goods.

Starbucks workers say the lengthy shortages are making their jobs harder.

“There is a company-wide shortage of so many things,” a shift supervisor in Pennsylvania whose identity was confirmed by Insider said, noting one big shortage at their store was caramel drizzle.

Read more: Food, beverage, and personal care companies all boomed during the pandemic. The 10 startups pulling in the most investor cash include an eco-friendly cleaning company with unicorn status and a farming startup backed by Jeff Bezos.

“We are constantly running out of food,” and customers sometimes get angry with employees over these shortages, the employee said. “It is out of our control. We try to tell them the company cannot keep up with demand … They end up getting mad and most of the time they just drive away. We try to explain there are shortages but they do not care.”

Starbucks confirmed that stores are dealing with shortages of different products, and said the specifics vary by location. The company said there’s no single item that is out across the board at all stores.

“We are experiencing temporary supply shortages of some of our products. Specific items will vary by market and store, and some stores will experience outages of various items at the same time. We apologize for the inconvenience, and are working quickly and closely with our supply chain vendors to restock items as soon as possible,” a spokesperson told Insider in a phone call.

Starbucks shortage sign

Some stores have displayed signs that say “we are currently experiencing temporary outages of some of our food and beverage items.” These signs were officially distributed from Starbucks corporate to individual stores, the spokesperson confirmed. The Pennsylvania employee also shared an update about a potential straw shortage coming soon.

A global problem

The shortages have been an ongoing problem for Starbucks this year. In April, Insider reported a widespread oat milk shortage impacting Starbucks just a month after it was introduced at the chain. Workers at locations across the US told Insider about other shortages in April, including cups, flavored syrups, and baked goods.

Shortages and price hikes are affecting the entire retail sector. Bikes, cars, meat, cheese, and even ketchup are all becoming more expensive, in part thanks to disruptions to the global supply chain from COVID-19, plus a shipping container shortage and port congestion. These factors created what experts called a “perfect storm” in global transportation.

Starbucks says it cannot predict when products will be restocked, although everything on menus is slated to be refilled with no permanent cancellations.

Do you have a story to share about a retail or restaurant chain? Email this reporter at mmeisenzahl@businessinsider.com.

Read the original article on Business Insider

Elon Musk says Tesla prices are increasing because of supply chain disruptions across the auto industry

Tesla Model Y.
Tesla Model Y.

  • The prices of some Tesla models are going up because of the supply chain issues, CEO Elon Musk said.
  • Tesla earlier this month boosted prices on its Model 3 and Model Y.
  • The global auto industry has been hit hard by supply chain issues, notably a shortage of computer chips.
  • See more stories on Insider’s business page.

Prices on some Tesla models are increasing due to global supply chain disruptions in the auto industry, particularly with raw materials, Elon Musk said on Twitter Monday.

Musk’s explanation came in response to a Twitter user who said he didn’t like the “direction” the company was going in by “raising prices of vehicles but removing features like lumbar for the Model Y.”

The Tesla and SpaceX CEO responded: “Prices increasing due to major supply chain price pressure industry-wide. Raw materials especially.”

Tesla earlier this month boosted prices on its Model 3 and Model Y, Electrek reported. It was the fifth price increase on the models in a matter of months.

The global auto industry has been hit hard by supply chain issues, notably a shortage of computer chips, due to the COVID-19 pandemic.

The semiconductor shortage is expected to cost the global automotive industry $110 billion in 2021. Carmakers including Ford and GM have cut their earnings expectations by billions of dollars.

Tesla has not been immune to the impacts of the shortage. Last month, during the electric car company’s earnings call, Musk said supply chain issues were causing “insane difficulties” and the chip shortage had impacted Tesla’s manufacturing goals. Musk recently tweeted that the delivery date for Tesla’s Model S Plaid, the carmaker’s quickest vehicle, was pushed back by one week to June 10.

Tesla is now in talks to pay supplies upfront for computer chips, the Financial Times reported. Musk has also shown interest in vertical integration. Last year, the company announced plans to make its own battery cells and even bought land in Nevada to mine for its own battery-grade lithium.

Read the original article on Business Insider

A bad hurricane season could be the next headache for businesses already facing a supply shortage

iota monday morn
Satellite imagery captures Hurricane Iota bearing down on Nicaragua as a Category 5 hurricane on November 16, 2020. NOAA/NASA

  • It will be another active year for hurricanes following 2020’s record-breaking season.
  • The storms could cause problems for already struggling supply chains like lumber, oil, and pork.
  • “It’s a significant risk that all businesses need to be thinking about right now,” said AccuWeather.
  • See more stories on Insider’s business page.

A bad Atlantic hurricane season may be the next disruption to the supply chain.

“It looks like another active year,” said AccuWeather Chief Meteorologist Jonathan Porter, “which is not good news.”

Items from lumber and housing supplies, to toilet paper and tampons, to gas and plastics, to pork and chicken, have been plagued by shortages caused by a sting of factors: Supply chains snarled in the coronavirus pandemic, backed-up ports, reverberations from the February Texas freeze, the Suez Canal blockage, worker scarcity, and the temporary shutdown of a vital oil pipeline, among other issues.

Though meteorologists aren’t predicting the Atlantic hurricane season, which runs from June through November, will be as record-breaking as 2020, they’re saying the number of named storms and hurricanes will be higher than in a normal year.

DTN, a Minnesota-based analytics firm, is predicting 20 named storms, compared to the annual average of 12. Of those, nine will be hurricanes, and four will be major hurricanes of category 3 or stronger. AccuWeather had similar predictions of 16 to 20 named storms, seven to 10 becoming hurricanes, and three to five to becoming major hurricanes.

The economic impact from last year’s hurricane season, which had six category 3 or higher storms, was about $60 to $65 billion in damage and losses, according to AccuWeather.

“The combination of another enhanced hurricane season and the threat of landfall across a big section of the East Coast of the US this year will be disruptive to the supply chain,” said Renny Vandewege, a leading weather expert at DTN.

Read more: Morgan Stanley says the stock market is flashing early warning signs of weakness as businesses face supply shortages. It recommends investors make these 4 trades to avoid the risks ahead.

Vandewege said the storms are more likely to favor the East Coast this year, compared to 2020, when the Gulf Coast felt a heavier impact.

The storms could “disrupt really anything that’s being imported in,” Vandewege said.

“We’re already having a months-long backup at the Port of Los Angeles, and then if we had also the same thing on the East Coast for an extended period of time, it could phenomenally exacerbate product shortages,” said Chris Wolfe, chief executive officer of logistics company PowerFleet.

Storms affect a state’s big industries, too. Along the Texas gulf coast, hurricanes can have an impact on the chemical and the oil and gas industries. A storm there could echo issues that arose from the Texas freeze in February and the six-day Colonial Pipeline shutdown that caused gas prices to surge and prompted some East Coast residents to panic-buy gas.

The forestry industry could be “deeply impacted” as well, Vandewege said. “There’s been shortage on building materials, and that could be enhanced even more if we’re seeing key manufacturing areas shut down around Louisiana and Alabama” because of a hurricane.

Pork, which is heavily produced in North Carolina and other southern states, has faced shortages in the past year, as well, thanks to the pandemic.

When hurricanes, like Florence in 2018, have struck the state in the past, thousands of hogs died. Other livestock and agriculture are also at risk when hurricanes hit.

“There’s huge pork production, chicken production, all the way through the South,” Wolfe said, so storms “could dirsupt food supplies.”

Porter from AccuWeather also noted that the West Coast could see another damaging wild fire season, and he said companies have to prepare ahead of time. “It’s a significant risk that all businesses need to be thinking about right now,” he said. “What’s their vulnerabilities and plan to mitigate.”

Climate change and extreme weather events topped the World Economic Forum’s list of biggest global risks in 2020. That was no surprise to Porter, who said, “people are getting negatively impacted almost on a daily basis by weather events. He said for businesses, the supply chain is a “major component” of that.

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