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“Worse than the Suez Canal”: Global supply chain nightmare | ticker VIEWS

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The current disruption to cargo has surpassed March’s Suez Canal disaster. What does this mean for the shipping industry, businesses and consumers?

Well, be prepared for weeks on end of delays – and that’s just the beginning of this supply chain nightmare.

“WORSE THAN THE SUEZ CANAL’

Amazon Prime Day is coming up next week and it’s the biggest day of the year for the online retail giant.

As consumers increasingly turn to online retail, are freighting companies keeping up with demand?

Why are freight companies under stress?

In the wake of one of China’s busiest shipping ports closing down last month due to a COVID-outbreak, freighting companies find themselves at breaking point.

With the industry just getting back on its feet following the Suez Canal blockage, experts are concerned that this latest delay will have even more significant consequences.

China’s Yantian Port says it will be back to normal by late June, but it may be months before the cargo backlog clears and the global ripple effects subdue.

AP Moller MARSK is the world’s number one container carrier and says “the trend is concerning, and unceasing congestion is becoming a worrying problem.”

Ocean strategy company Flexport also shares these concerns, believing the congestion will take six to eight weeks to settle.

This is of particular concern because it extends disruptions into the peak Christmas and holiday seasons, as retailers and importers ramp up their shipments.

Maritime expert Alison Cusack says the knock-on effects from this delay are enormous and consumers will feel the pinch.

When will we see the shipping sector return to normal?

Well, don’t hold you breath. Cusack says at least 2022… “If we’re lucky”

What does increased cost of cargo mean for me?

Experts are warning that consumers may begin to feel the pinch from rising shipping costs, as the price of transporting goods by sea skyrockets.

Recetn figures show the transportation of a 40-foot steel container ship between Shanghai and Rotterdam now costs over $10,000, that’s a huge 547 percent increase on the average price.

Around 80 percent of the world’s goods are transported by ships, meaning the costs will be largely unavoidable for both consumers and businesses

Toy importer, Gary Grant says “during 40 years in toy retailing he has never known such challenging conditions from the point of view of pricing.”

It’s believed the rise in costs is associated with a number of factors, from soaring demand to a shortage of containers, busy ports and a limited workforce.

The disruption to the shipping industry could lead to shortages in the lead up to Christmas.

An outbreak of Covid-19 in a province in southern China is causing congestion at the region’s ports.

Shipments have now been delayed… adding to the tensions within global supply chains, the knock-on effects could take many months to resolve.

This is the latest in a series of severe setbacks for the industry and experts says that problems in just one region can have ripple effects around the world for several months.

The cost of cargo mishaps on the environment

Two weeks ago, a chemical-laden cargo ship sunk off the coast of Sri Lanka amid fears of a major environmental disaster.

Hundreds of tonnes of engine oil possibly leaked into the sea, with a devastating impact on marine life.

Sri Lankan and India worked together to put out the fire and prevent the ship from breaking up and sinking.

X-Press Shipping – the Singapore based company which owns the vessel – confirmed the crew had been aware of the leak, but say they were denied permission by both Qatar and India to leave the ship there before the fire broke out.

The fact that Sri Lanka allowed the vessel to enter the country’s waters after it was rejected by two other nations has led to widespread public anger.

Business

Big tech stocks tumble amid market uncertainty

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Big tech companies are struggling in the markets this quarter as interest rates rise to battle inflation

Russia’s invasion of Ukraine has devalued tech stocks causing further supply chain disruptions and sending the broad S&P 500 index down about 5 per cent.

Rising interest rates triggered more severe plummets with the S&P dropping another 16 per cent and the Nasdaq Composite index by 22 per cent.

Tesla’s stock took a huge hit sinking to nearly 38 per cent its largest decline since 2010.

Amazon saw similar results falling by 35 per cent the most in over 20 years.

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Business

Google to pay millions to app developers

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App developers are accusing Google of tempting users into making in-app purchases.

The lawsuit relates to money that was made by app creators for Android smartphones.

The lawsuit was filed in a San Francisco court, where the 48,000 app developers are believed to have been affected.

“Following our win against Apple for similar conduct, we think this pair of settlements sends a strong message to big tech: the law is watching, and even the most powerful companies in the world are accountable when they stifle competition.”

Steve Berman, ATTORNEY FOR the Android developers.

Google says the settlement’s funds will support developers who have made less than USD $2 million in revenue between 2016 and 2021.

“A vast majority of U.S. developers who earned revenue through Google Play will be eligible to receive money from this fund, if they choose,” the company says.

Google says it will charge developers a 15 per cent commission on their first million in revenue.

The court is yet to approve the proposed settlement.

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Business

Tesla deliveries expected to fall – here’s why

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Tesla deliveries are expected to drop significantly in the second quarter, as prolonged Covid lockdowns in China and supply chain issues take their toll

The company is also struggling to ramp up its new factories, with Tesla boss Elon Musk seemingly distracted by his very public pursuit of Twitter.

Tesla has been plagued by production glitches in China and slow output growth at new factories in both Texas and Berlin.

Experts predict deliveries will slump to just over 295,000 vehicles for the second quarter.

This would be down from the company’s record of 310,000 in the preceding quarter, marking Tesla’s first quarter-on-quarter decline since 2020.

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