Epoxy
March 8, 2021
Nothing New Here
U.S. retailers see millions in sales delays amid shipping logjam
By Kim Bhasin, Jordyn Holman and Henry Ren Bloomberg Feb. 26, 2021 2:16 PM PT
Overwhelmed U.S. ports, elevated freight costs and accidents that sent goods plunging to the bottom of the ocean are causing headaches for U.S. retailers already reeling from the pandemic.
Corporations of all sizes are reporting logistics struggles, especially on trans-Pacific trade routes. Although they haven’t yet translated into widespread sticker shock for consumers, the ongoing shipping issues threaten to disrupt inventories of appliances, shoes, fitness equipment and more if they persist much longer.
“I don’t think we’re meeting everybody’s expectations today — and, frankly, we’re unlikely to. I doubt if anybody else is either, [if] importing products from Asia,” Crocs Inc. Chief Executive Andrew Rees said on an earnings call this week. “Getting it through Long Beach and other ports, getting shipped to customers, is really challenging right now. And that’s not an issue with production capacity; that’s just logistics.”
The supply strains, compounded by shortages of shipping containers, are starting to hit companies’ operations. Nautilus Inc., whose products include Bowflex fitness machines, said on a call this week that logistics issues delayed the launch of some of its new connected treadmills. Shoemaker Wolverine World Wide Inc. said $20 million in sales would shift from the first to the second quarter because of the backlogs. Steven Madden Ltd. said supply chain disruptions cut the footwear company’s first-quarter sales expectation by $30 million.
Retailers expect the problems to spill into the next quarter, though some say they think the worst is behind them.
Nautilus Chief Financial Officer Aina Konold said the company no longer needs to send purchase orders two or three quarters into the future. “We have gone back to issuing them closer to normal lead times of several weeks,” she said.
Lowe’s Cos. CEO Marvin Ellison said in an interview that appliances, in particular, are still having some challenges, but “we’ll have corrected it” over the next couple of months.
Outside of the usual shipping headaches, Tapestry Inc. brand Kate Spade had the misfortune of being involved in two separate cargo ship incidents in which containers full of goods went overboard in rough seas. CEO Joanne Crevoiserat said earlier this month that the losses will affect the brand’s spring deliveries. Mike George, CEO of QVC and HSN owner Qurate Retail Inc., said he has lost at least one big batch of vacuum cleaners to the ocean.
The logjams come as demand from American companies and consumers has remained strong enough to propel U.S. merchandise imports to a record high in January, even as exports remained sluggish. That divergence led the gap between the two — the goods trade deficit — to increase again and stay close to a record set in November.
All those inbound products are clogging the nation’s biggest ports, from Savannah, Ga., on the East Coast to Los Angeles — the biggest gateway for trade with Asia. The number of container ships waiting to enter the neighboring ports of L.A. and Long Beach stood at 27 late Thursday, with an average wait of more than a week. Parked in San Francisco Bay were about a dozen container vessels waiting to berth at the Port of Oakland, according to satellite tracking.
Economists at the nation’s central bank have taken note of the difficulties, and at least one doesn’t predict an end to them anytime soon. According to a paper published Friday by Julianne Dunn, an economic analyst at the Federal Reserve Bank of Cleveland, “it is likely that supply chain disruptions will continue to evolve for the foreseeable future.”
In the meantime, some companies are paying premiums to send goods by air, substituting products on shelves and trying to renegotiate arrangements with shippers. Steven Madden is shipping some goods by air but is “judicious” about the move, CEO Edward Rosenfeld said, because the cost of air freight is also up more than 100% compared with a year ago.
There’s been little relief recently on ocean freight. The Drewry Hong Kong-Los Angeles container-rate benchmark of spot rates has held steady over the last six weeks, averaging slightly more than $5,900 per 40-foot container — more than quadruple the level of a year earlier.
“The planning ability is absolutely key,” Under Armour Inc. CEO Patrik Frisk said in an interview earlier this month. “Anything you try to do on the fly, so to speak, is going to cost you dearly as it relates to transportation.”
March 8, 2021
Nothing New Here
U.S. retailers see millions in sales delays amid shipping logjam
By Kim Bhasin, Jordyn Holman and Henry Ren Bloomberg Feb. 26, 2021 2:16 PM PT
Overwhelmed U.S. ports, elevated freight costs and accidents that sent goods plunging to the bottom of the ocean are causing headaches for U.S. retailers already reeling from the pandemic.
Corporations of all sizes are reporting logistics struggles, especially on trans-Pacific trade routes. Although they haven’t yet translated into widespread sticker shock for consumers, the ongoing shipping issues threaten to disrupt inventories of appliances, shoes, fitness equipment and more if they persist much longer.
“I don’t think we’re meeting everybody’s expectations today — and, frankly, we’re unlikely to. I doubt if anybody else is either, [if] importing products from Asia,” Crocs Inc. Chief Executive Andrew Rees said on an earnings call this week. “Getting it through Long Beach and other ports, getting shipped to customers, is really challenging right now. And that’s not an issue with production capacity; that’s just logistics.”
The supply strains, compounded by shortages of shipping containers, are starting to hit companies’ operations. Nautilus Inc., whose products include Bowflex fitness machines, said on a call this week that logistics issues delayed the launch of some of its new connected treadmills. Shoemaker Wolverine World Wide Inc. said $20 million in sales would shift from the first to the second quarter because of the backlogs. Steven Madden Ltd. said supply chain disruptions cut the footwear company’s first-quarter sales expectation by $30 million.
Retailers expect the problems to spill into the next quarter, though some say they think the worst is behind them.
Nautilus Chief Financial Officer Aina Konold said the company no longer needs to send purchase orders two or three quarters into the future. “We have gone back to issuing them closer to normal lead times of several weeks,” she said.
Lowe’s Cos. CEO Marvin Ellison said in an interview that appliances, in particular, are still having some challenges, but “we’ll have corrected it” over the next couple of months.
Outside of the usual shipping headaches, Tapestry Inc. brand Kate Spade had the misfortune of being involved in two separate cargo ship incidents in which containers full of goods went overboard in rough seas. CEO Joanne Crevoiserat said earlier this month that the losses will affect the brand’s spring deliveries. Mike George, CEO of QVC and HSN owner Qurate Retail Inc., said he has lost at least one big batch of vacuum cleaners to the ocean.
The logjams come as demand from American companies and consumers has remained strong enough to propel U.S. merchandise imports to a record high in January, even as exports remained sluggish. That divergence led the gap between the two — the goods trade deficit — to increase again and stay close to a record set in November.
All those inbound products are clogging the nation’s biggest ports, from Savannah, Ga., on the East Coast to Los Angeles — the biggest gateway for trade with Asia. The number of container ships waiting to enter the neighboring ports of L.A. and Long Beach stood at 27 late Thursday, with an average wait of more than a week. Parked in San Francisco Bay were about a dozen container vessels waiting to berth at the Port of Oakland, according to satellite tracking.
Economists at the nation’s central bank have taken note of the difficulties, and at least one doesn’t predict an end to them anytime soon. According to a paper published Friday by Julianne Dunn, an economic analyst at the Federal Reserve Bank of Cleveland, “it is likely that supply chain disruptions will continue to evolve for the foreseeable future.”
In the meantime, some companies are paying premiums to send goods by air, substituting products on shelves and trying to renegotiate arrangements with shippers. Steven Madden is shipping some goods by air but is “judicious” about the move, CEO Edward Rosenfeld said, because the cost of air freight is also up more than 100% compared with a year ago.
There’s been little relief recently on ocean freight. The Drewry Hong Kong-Los Angeles container-rate benchmark of spot rates has held steady over the last six weeks, averaging slightly more than $5,900 per 40-foot container — more than quadruple the level of a year earlier.
“The planning ability is absolutely key,” Under Armour Inc. CEO Patrik Frisk said in an interview earlier this month. “Anything you try to do on the fly, so to speak, is going to cost you dearly as it relates to transportation.”
March 8, 2021
DuPont Acquisition
DuPont to buy Laird Performance for $2.3 bln in electronics materials push
March 8 (Reuters) – DuPont said on Monday it would buy Laird Performance Materials for $2.3 billion from private equity firm Advent International, as it looks to expand its portfolio of advanced electronic materials that is used in areas such as smart and autonomous vehicles and fifth generation telecommunications.
Rapidly increasing demand for these materials also used in high-performance computing, artificial intelligence, and internet of things has led to electronics becoming a key growth area for DuPont.
The company last month forecast full-year profit and revenue above Wall Street expectations on the back of robust demand from chip companies and smartphone makers launching 5G handsets.
Sales in DuPont’s electronics and imaging business, which account for about 20% of total revenue, rose 9% to $1.02 billion in the fourth quarter from a year earlier.
The company, once part of the erstwhile chemical giant DowDuPont, said in February it plans to spend up to $2.5 billion of its $5 billion to $6 billion expected cash on mergers and acquisitions.
It had then said that it was working on two targets, adding it was more biased toward the electronics sector and to the electric vehicle space on the automotive side.
The industrial materials maker said it expects to realize about $60 million in pre-tax run-rate cost synergies by the end of 2024 with the majority realized in the first 18 months after the deal closes, which is expected in the third quarter of 2021.
The estimated one-time cost to achieve these synergies is about $40 million and DuPont expects the deal to be accretive to its operating core earnings margins, free cash flow, and adjusted earnings per share within the first 12 months.
DuPont also said on Monday it approved a new $1.5 billion share buyback program. (Reporting by Arathy S Nair in Bengaluru; Editing by Shailesh Kuber)
March 8, 2021
DuPont Acquisition
DuPont to buy Laird Performance for $2.3 bln in electronics materials push
March 8 (Reuters) – DuPont said on Monday it would buy Laird Performance Materials for $2.3 billion from private equity firm Advent International, as it looks to expand its portfolio of advanced electronic materials that is used in areas such as smart and autonomous vehicles and fifth generation telecommunications.
Rapidly increasing demand for these materials also used in high-performance computing, artificial intelligence, and internet of things has led to electronics becoming a key growth area for DuPont.
The company last month forecast full-year profit and revenue above Wall Street expectations on the back of robust demand from chip companies and smartphone makers launching 5G handsets.
Sales in DuPont’s electronics and imaging business, which account for about 20% of total revenue, rose 9% to $1.02 billion in the fourth quarter from a year earlier.
The company, once part of the erstwhile chemical giant DowDuPont, said in February it plans to spend up to $2.5 billion of its $5 billion to $6 billion expected cash on mergers and acquisitions.
It had then said that it was working on two targets, adding it was more biased toward the electronics sector and to the electric vehicle space on the automotive side.
The industrial materials maker said it expects to realize about $60 million in pre-tax run-rate cost synergies by the end of 2024 with the majority realized in the first 18 months after the deal closes, which is expected in the third quarter of 2021.
The estimated one-time cost to achieve these synergies is about $40 million and DuPont expects the deal to be accretive to its operating core earnings margins, free cash flow, and adjusted earnings per share within the first 12 months.
DuPont also said on Monday it approved a new $1.5 billion share buyback program. (Reporting by Arathy S Nair in Bengaluru; Editing by Shailesh Kuber)
March 7, 2021
Container Ship Values
Red-Hot Freight Market Sends Used Container-Ship Values Soaring
by Tyler DurdenSaturday, Mar 06, 2021 – 17:00
No one predicted that the global shipping container industry would be on fire in the last couple of quarters, considering China’s robust economic rebound following the virus-induced downturn. Container rates have soared since last spring as there are few signs of immediate cooling.
Container shipowners are capitalizing on the red hot ocean freight market by flipping older ships. Monaco-based International Maritime Enterprises sold its container ship Crete I for $46 million, more than four times its 2016 value ($11 million), according to Bloomberg, citing a new industry report via TradeWinds.
The market for second-hand ships is soaring as the sale of new vessels has sunk in the last couple of years. A typical container ship takes more than one year to build – so boosting new ship supply cannot be readily done – hence why demand increase and value explosions are being observed on the secondary markets.
Clarkson Research Services Ltd. said a 10-year-old container ship with the capacity to haul 6,600 steel boxes fetches about $41 million today – that’s a considerable jump from its $9.5 million value back in 2016.Source: Bloomberg
“The recent price increases have happened far more quickly than previous sales and purchase cycles,” said Stephen Gordon, managing director at Clarkson Research. “Recent prices trends for 10-year-old vessels have more than doubled in less than six months, whereas in 2016-17 and 2004-2005 it took nearly 18 months for similar percentage price increases.”
“February was the second-highest activity on record for transactions measured in ship container capacity,” Gordon said.
Time charter rates for a 6,800-box container ship have erupted. Source: Bloomberg
Container shipping data from Freightos and Harper Petersen & Co show container rates have been surging since April-June of 2020.Source: Reuters
Demand for freight containers and the heavy flows from China to the US East/West Coast has resulted in a shipping container shortage in Asia.
In September, we first noted that demand for ocean freight out of China was “leading to equipment shortages in Asia.”
“The surge in volumes is leading to equipment shortages in Asia. Some shippers are paying premiums on top of spiking rates to guarantee containers and space. The imbalance is also putting pressure on overwhelmed US ports and importers to process and return empty containers quickly.”
https://www.zerohedge.com/markets/red-hot-freight-market-sends-used-container-ship-values-soaring
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