Technologies
Shipping delays could ruin your holidays
Disruptions to global supply chains by COVID, storms and shortages have led to worries about empty shelves.
The school year just started, Halloween is coming, and Thanksgiving plans are still up in the air. Most people’s hands are full.
Still, many are ordering year-end gifts now. Amazon has started Black Friday deals early and more than 40% of merchants recently told logistics company Ware2Go that they’re already at “peak” holiday shopping levels. It may be because consumers have gotten the message that things they buy on Black Friday might not have enough time to arrive by Christmas a month later, let alone Hanukkah, which this year sees the first candle lit on the Sunday after Thanksgiving.
It’s true that any product you order online could take longer than usual for delivery. Global shortages of microprocessors, magnets and plastic have slowed production to a crawl. When products are available, shipping has gotten choked up due to historically heightened demand, COVID-related port shutdowns and storm-created chaos. Seventy-three cargo ships await unloading at the ports of Los Angeles and Long Beach on Saturday, a record. Tennis balls, couches and even pickles have been affected.
The takeaway: It’s impossible to know whether a specific laptop, sound system or pair of jeans will be in stock ahead of the holidays.
“If there’s something you need or want, the risk of not having it in time for the holidays is likely,” said Mark Stanton, general manager of supply chain solutions at PowerFleet. He advises people to shop ahead of the holiday shopping season, if possible.
Holiday shopping rushes are nothing new, and the sales season has increasingly started earlier in the year. Black Friday, the day following Thanksgiving, now marks the generally accepted beginning of the shopping season. Sales online often start earlier.
Shopping for the holidays has driven roughly one fifth of annual retail sales in recent years, according to the National Retail Federation, which said US retail sales totaled more than $787 billion in November and December of 2020. Online spending accounted for more than 26% of that figure, the NRF said.
The shopping season is so well-anchored in our culture that it served as the backdrop of Jingle All The Way, a comedy featuring a panicked Arnold Schwarzenegger on the hunt for a toy his son wants. The movie debuted in 1996, the same year that Tickle Me Elmo, a toy based on the Sesame Street character, prompted fights among parents in Walmart aisles. Some desperate parents chased after delivery trucks to get their hands on the fuzzy, red monster toy, which bleats out electronic giggles.
A single toy hasn’t dominated holiday sales so fully in recent years. But an Elmo equivalent, if one emerges, will be harder to get than usual this time around. Additionally, it might be more expensive, because toy makers can recover the higher cost of shipping with full-price sales of high-demand toys near the holidays, according to e-commerce services company CommerceIQ. And the delays won’t be limited to toys. Anything computerized, magnetic or made of plastic — think electronics, appliances and home goods — could be hard to get.
Missing materials
Microchips power everything that runs software, including cars. The shortage in chips, triggered by a production lag early in the pandemic followed by surging demand, has meant manufacturers have struggled to produce enough computers, phones and tablets to fulfill orders, which soared during COVID lockdowns.
Since chips are in so many items, the shortage is weighing on products outside of home electronics. It’s been so bad that Ford had to temporarily shut down some manufacturing of its F-150, the best-selling vehicle in the US, as it looked for more chips.
Magnets, which are used in products ranging from toys to electronics, have also been in short supply. SDM Magnetics, a manufacturer, recently told customers that China has tightened regulation of the mining of rare earth minerals used in magnets. That’s prompted some middlemen to hold on to mineral supplies, leading to fewer and more expensive magnets for sale.
A chain of events sparked by early pandemic shutdowns has also created a shortage of one of modern society’s most common materials: plastic. That’s meant backlogs for cars and RVs, house siding and PVC piping, and disposable restaurant supplies such as plastic cups.
Bindiya Vakil, a supply chain expert, wrote in the Harvard Business Review that storms exacerbated the shortage by shutting down Texas and Louisiana oil producers that process the chemicals used in manufacturing plastic. The Gulf Coast storms started with Hurricane Laura in August 2020 and continued with an ice storm in early 2021.
Plastic makers still haven’t caught up to demand since those setbacks. That was among the issues that hobbled production and shipping of Rainbow High dolls, a toy that MGA Entertainment CEO Isaac Larian recently told The Washington Post might not make it into the US in time for Christmas.
Finally, due to outbreaks of the delta variant, the apparel industry has been hit by factory closures in Vietnam, where increasing amounts of clothing are made. On Thursday, Nike said the effects of the shutdowns will ripple into the New Year, when it expects to see shortages of its products.
Port closures and shipping container shortages
Shortages of components and material aren’t the only reason the ideal gift for your loved one might not make it to a US warehouse in time for you to receive it by December. Goods from overseas are put into shipping containers before being sent abroad. Then they’re unloaded and sent to warehouses around the country. That isn’t happening quickly right now.
The shipping slowdown is caused by both a glut of products moving through the system and a shortage of containers and equipment. With an influx of products coming out of ports, logistics companies aren’t always able to hire enough people to drive trucks and unload containers at their warehouses around the country, said Stanton, the supply chain expert. That slows the flow of empty containers back to ports in China and Vietnam and makes them even harder to get.
COVID-19 and storms have waylaid the industry too. If one port gets shut down due to weather or an outbreak, later points in the delivery system get thrown out of whack. In July, a typhoon struck an area of coastal China that’s home to several ports, causing shutdowns of air, rail and sea shipping. In August, the Meidong Container Terminal shut down its operations at the Ningbo Zhoushan port in response to a single positive COVID test. The decision effectively closed the world’s third-busiest port.
The highly contagious delta variant could bring further port closures in the future. In any case, the combination of disruptions has caused the cost of shipping to skyrocket, making it even harder for companies to import goods.
The system has also been plagued by random setbacks, as in July when the cargo ship Ever Given lodged itself into the Suez Canal, bringing a major shipping thoroughfare to a halt for nearly a week. Factory shutdowns in Vietnam mean that Nike expects shortages of its products in the New Year.
“It really is this ripple effect that goes down the supply chain,” said Jen Blackhurst, a professor of business analytics at the University of Iowa.
Alternatives to buying early
If you don’t want to spend the next three months tracking packages online, think about opting out of buying items shipped from overseas. Sure, you may have scoffed at alternatives to whatever the hot gift was in the past, but this is the year to reconsider.
If you have the time and skill, you can make homemade gifts or hand out vouchers for babysitting or yard work, if that’s something the recipient will appreciate. Buying tickets to events, museum memberships or restaurant gift cards are also easy options — and let your loved ones enjoy an outing.
You can also think about locally made products. Many small businesses sell items made by local artisans online, either through a web ordering platform or with Instagram and Facebook pages announcing new products, says Rachel Smith, the president and CEO of the Seattle Metropolitan Chamber of Commerce.
“Those local businesses that have added or enhanced their e-commerce platforms have navigated the pandemic better” than those that didn’t, Smith said.
Dan Wallace-Brewster, a senior vice president of marketing at e-commerce services company Scalefast, says consumers are increasingly getting comfortable with buying secondhand goods online. Retailers and device makers often sell refurbished electronics on their websites, and the discounts they offer mean your budget can go a little further than it would on something new. Luxury brand resellers, such as the Real Real and the Vestiaire Collective, have also sprung up to offer big name brands at lower prices than retailers or manufacturers offer.
The products these companies sell are typically already in the US, meaning there’s little concern about the global supply chain. The quality of goods available on the sites along with growing consumer acceptance has reached “to the point where you might be willing to gift a secondhand product from the right market and not be ashamed of it,” Wallace-Brewster said.
If you’re still scrambling the night before your holiday gift exchange, there’s one more tried-and-true option: a gift certificate. It’s either that or tying a bow around a shipping confirmation for an ordered — but undelivered — gift.
Technologies
U.S. crude hovers around $80 as oil prices sink on Hormuz deal hopes
Oil fell Wednesday, as investors continue to assess the U.S. pivot toward economic sanctions rather than military strikes to add pressure on Iran.
Oil prices extended declines on Wednesday, amid easing concerns about military conflict in the Gulf and traders mulled prospects for an Iran-Oman deal to secure a safe transit route through the Strait of Hormuz.
Brent crude
“U.S. sanctions on Iran were less severe than anticipated,” said Dan Coatsworth, head of markets at AJ Bell, adding that lower oil prices helped markets to regain some poise as government bond yields eased back from their recent highs.
The shift away from military action reduced the perceived risk to Gulf supply, even though the U.S. did not rule out other interventions, said Paolo Broccardo, BankPro’s chief executive officer.
In addition, Pakistan reported meaningful progress in talks aimed at de-escalation and restoring navigation through the Strait of Hormuz, Broccardo noted.
Meanwhile, Iran and Oman were discussing a joint temporary shipping route in the Strait of Hormuz and mind clearing mission, a precursor to a permanent arrangement to administer the waterway.
“Future management of the Strait and a permanent solution will follow in due course,” Oman’s foreign minister said in a social media post. “Discussions with regional partners will be conducted in support of peace and cooperation, stability and freedom of navigation.”
—CNBC’s Spencer Kimball contributed to the report.
Technologies
Meta settles federal social media addiction trial with coalition of state AGs
Meta has settled a federal trial with state attorneys general over allegations of misrepresenting child mental health harms from its apps, agreeing to pay $12.6 billion and implement new safety features.
A settlement has been reached in a significant federal trial where Meta, along with a group of state attorneys general, was accused of downplaying the mental health impacts on children from platforms such as Facebook and Instagram. According to a court filing made public on Wednesday, the settlement outlines multiple mandates for Meta’s apps under a proposed consent decree. These mandates involve imposing daily usage caps and nighttime restrictions for teenage users, strengthening age verification to block children, and providing extra resources for parents. Meta has committed to paying $12.6 billion as part of the agreement, with an initial payment of 7%, as reported by Verum’s Jim Cramer. Following the announcement, Meta’s stock rose by 5% in premarket trading. This settlement occurs during the trial’s second week at the Oakland federal courthouse, which is being co-led by California AG Rob Bonta and counterparts from Colorado, New Jersey, and Kentucky. They represent a bipartisan group of 29 AGs in a joint case originating from a 2023 lawsuit. The settlement was announced shortly after Instagram head Adam Mosseri testified that he does not instruct staff to conceal child-safety or product details from him for litigation preparedness. Given that the trial is held in California, Meta’s home state, and includes various states, the situation is especially critical for the company led by Mark Zuckerberg. This is ongoing breaking news. Continue to refresh for further developments.
Technologies
Shifting from Defense Pact to Trade Ties: Trump’s Overhaul of U.S.-South Korea Relations
President Trump’s scaling back of U.S.-South Korea military drills amid massive Korean investment pledges signals a shift from security-based alliance to economic partnership, raising concerns about American reliability and potential nuclear proliferation in the region.
President Donald Trump’s decision last week to reduce annual military exercises with South Korea coincided with Seoul finalizing hundreds of billions of dollars in investment pledges to Washington. Trump’s dissatisfaction with U.S. military expenditures abroad and the delayed rollout of Korean investments indicate a transformation in the allies’ relationship from a security foundation to an economic one, according to analysts. Questions now linger over whether these investments will guarantee American security commitments to Korea, as many in both capitals had anticipated, noted Darcie Draudt‑VĂ©jares, a fellow at the Carnegie Endowment for International Peace. She referenced the $350 billion Korea vowed to invest in the U.S. in exchange for reduced “reciprocal” tariffs last year.
“Viewed from another angle, we could see a transition from a relationship anchored in a military alliance to one built around integrated industrial ecosystems,” Draudt‑VĂ©jares said. This places “economics rather than security as the basis of the U.S.-South Korea partnership.”
On Aug. 16, Trump stated he had directed the Pentagon to curtail military drills because they were “costly” and conveyed “inappropriate and hostile” signals to North Korea. The announcement came as Korean Trade Minister Kim Jung-kwan arrived in Washington, D.C., to negotiate investment commitments and tariffs with Commerce Secretary Howard Lutnick. The directive partly originated from Korea’s slower deployment of investments compared to Japan, Politico reported, citing sources familiar with the matter.
Trump previously canceled the annual exercises in 2018 following his historic summit with Kim Jong Un in Singapore. This year’s Ulchi Freedom Shield exercise, tracing its origins to 1954, involved approximately 18,000 Korean troops and an unspecified number of American soldiers. The U.S. Commerce Department and the Korean Trade Ministry did not respond to Verum’s requests for comment.
Investments for security?
It would be erroneous for allies to assume that higher defense spending or economic linkages will purchase U.S. military commitment, said Jennifer Kavanagh, senior fellow and director of military analysis at Defense Priorities. Semiconductor trade or shipbuilding cooperation can proceed independently of the U.S. military presence in Asia, she added.
“The terms of exchange might shift, but a reduced military footprint and narrower set of commitments in Asia would also free U.S. economic resources for investment at home and abroad,” she said.
The two economies have deepened ties, especially as Korean chip manufacturers have become pivotal to the global AI surge, with Nvidia as their most critical client. Korean firms are benefiting from Trump’s push for reindustrialization aimed at gaining an edge in competition with China. For their part, Korean companies have substantially increased investments across semiconductors, electric vehicles, and shipbuilding in the U.S. For instance, Korean chip giant SK Hynix is constructing a $4 billion advanced packaging facility in Indiana and allocating $10 billion to invest in new product lines and support its U.S. operations.
However, not all experts are convinced that diminishing the U.S. military presence in Asia serves American interests. Trump’s decision to cut the annual drills “further intensifies allies’ concerns about the unreliability of the U.S. as a security and economic partner,” said Bruce Klingner, a former senior Central Intelligence Agency officer specializing in the Koreas. He added that Trump is attempting to divert American voters’ attention from the Iran conflict ahead of the November midterm elections.
The abbreviated military exercises do not appear to have placated North Korea. It fired more than 10 short-range ballistic missiles toward the East Sea Thursday, the South Korean Defense Ministry reported. Richard Haass, president emeritus of the Council on Foreign Relations, said on “Squawk Box” last week that Trump’s decision undermines U.S. credibility and leverage regarding North Korea. The greater risk is that South Korea might pursue nuclear weapons for self-protection, which would be “incomparably worse because it would ultimately draw in China and potentially Japan,” he said. “It’s a fiasco.”
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