Talking Points
- Japan's ruling party coronated Fumio "safe pair of hands" Kishida
- Research suggested China's population could halve in 45 years
- Foreign fans were barred from the 2022 Beijing Winter Olympics
- The Taliban denied women a path to tertiary education
- France's Nicolas Sarkozy was convicted over illegal campaign financing
- Britney Spears' father was removed as conservator of her $60m estate
- Disgraced rapper R Kelly was found guilty of sex trafficking
- US doctors protested over vaccine inequity at Moderna CEO's home
- The CIA reportedly planned to assassinate Julian Assange
- Facebook paused development of its Instagram kids' product
Dive deeper
It's been a good week to be a logistician and a bad one to be a parcel, container ship, coal importer, or British driver. All across the globe we are starting to see links breaking in the supply chain. This week, we cover three halting routes.
All I want for Christmas
You live in Green Bay, Wisconsin, and your town still hasn't come down from the Bucks winning the NBA Championship in July. This Christmas there is only one thing your child wants: a pair of Giannis-inspired Nike Zoom 'Freak' 3 basketball shoes. The simplicity of visiting an online store to buy them belies the vast operation that your purchase triggers behind the scenes. The harmonious connection of manufacturers, distributors, shipping giants, railways, wholesalers, retailers, and delivery companies. The chain wreathes its way from Bien Hoa, Vietnam to the shores of Lake Michigan. Also hidden from sight is the fact that, right at this moment, that chain is broken at almost every step of the way.
The first problem is simple enough: the shoes aren't being made . As we covered in an earlier edition, all it took was a single Covid case at the factory of a Toyota parts supplier in Vietnam to collapse the number one carmaker's September production by 40%! That episode revealed that just-in-time logistics can in fact sometimes become not-nearly-enough-time-at-all logistics. Now, not to put too fine a point on it, shoes are not cars. But they are still made in factories by subsidiaries and suppliers. And the market dictates that those factories be staffed with the cheapest labour possible. Over a third of Nike apparel is manufactured by a handful of major suppliers in Vietnam. Right now, with the country still slowly coming off a huge Delta outbreak, 80% of those factories are inoperable.
If, by some stroke of luck, your Zoom 'Freak' 3s do get sewn together this month or next, another problem arises: there is a dearth of shipping containers . This is a doozy given that 90% of the world's goods are transported by sea, and 60% of that transport is stowed inside trusty 20ft intermodal containers. Compounding this shortage is the lack of container ships themselves. Covid has massively disrupted shipping conglomerates; demand fell steeply in 2020, only to rocket up to near-record levels this year. Freight prices have correspondingly soared. But let's say there's a Christmas miracle, and your basketball shoes do find stowage on a container ship bound for America, you may still be left empty-handed. Your precious cargo will arrive at the port of Los Angeles or Long Beach. And it will join a queue of dozens of container ships waiting to be unloaded. Nearly half a million containers are in that logjam – a number that grows every day. So no one knows where your Zoom 'Freak' 3s will be on Christmas day. But we know where they won't be - on your feet.
The worries with lorries
Here's another scenario. You live just outside Basingstoke in Southern England. Work is just a short drive into town, but you have a conundrum: there's nothing in the tanks at the fuel station around the corner, and your car is running on fumes. Something is amiss. Britain imports the majority of its crude oil and refined petroleum products from Norway. Drilling platforms in the North Sea extract roughly 2 million barrels a day from the Norwegian shelf. The black stuff is pumped through undersea pipelines to facilities on terra firma, refined – or not, and loaded onto bulk liquid carriers. After a relatively short (but choppy) journey back across the North Sea, a tanker may berth at the terminal in Southampton. The next leg, a trip from storage in Southampton to a fuel station in Basingstoke should be easy peasy; just half an hour up the M3 in good traffic. But perhaps you can see where this is going.
Right now, there aren't anywhere near enough truck drivers in the United Kingdom. Like so many headaches du jour, this one too has its roots in Brexit. Britain, reclaiming some notion of sovereignty, made low-skilled European Union workers expendable. Truck drivers, many from eastern Europe, saw their options evaporate in the remade UK. Limited visa options, growing intolerance, and a falling pound sterling convinced many to return home to places like Poland and Hungary. But the arduous hours and low-pay on offer deterred Britons from taking the very jobs they had voted to evacuate. Now, the government is offering fast-tracked short-term visas for truck drivers to help ease the crisis – but with no assurances on better pay forthcoming, many have simply said "no thank you". So your petrol is sitting in tanks at Southampton port for the foreseeable future, and car transportation across the country is grinding to a halt.
This gulf between expectation and reality is helpfully embodied by one man. As a Brexiteer, Boris Johnson had insisted Britain would barely notice the transition. As Prime Minister, he's conceded that the gruelling fuel shortages will persist into 2022. Yes, panic-buying has exacerbated shortages and queues , but if a rush on goods wasn't factored into policy settings nearly two years into this pandemic, someone was clearly not paying attention.
From Newcastle to Hangzhou
Lastly, to China . Your apartment in Hangzhou is on the banks of the Qiantang. It's hot – 32°C today. But you know this won't last. Winter is fast approaching, and the temperature will plummet to single digits in a matter of months. There's a growing risk that when you flick the switch on the electric space heater no electricity will flow . The supply chain that is fraying starts with coal mines in Australia and Indonesia, and ends with the pinging of your microwave.
China mines half the coal in the world but it also happens to be the largest consumer of it. In happier days, China bought billions of dollars of metallurgical (or coking) and thermal coal from Australia. But an ongoing diplomatic row prompted China to cut off its own major supplier. Beijing tapped South African mines and European spot markets, and doubled down on imports from Southeast Asia. But there's not enough going around. Right now inventories are down by a third at six of China's largest energy producers. A spot market that seemed overpriced earlier in the year has only climbed, but necessity is forcing the hands of China's coal importers. The only problem is there is stiff competition . As we covered last week, Europe's summer of underperforming renewables has also put gas and coal in high demand.
The costs for what is secured, then, rises exponentially. Importers pass the costs on to coal power plants – companies that have received strict instructions from Beijing that rolling blackouts this winter won't be tolerated. And so prices keep climbing as the whales of Chinese manufacturing outbid the minnows. Production slows in every energy-intensive industry. Three provinces have been ordered to slow production to ease the power crunch.
Worldlywise
Fighting over the bill
Late in the week, the United States legislature just scraped over the line in negotiations with itself to ensure the continued functioning of the entire US government. The midnight chime on Thursday ushered in the new budgetary fiscal year. It was only hours before that point that both houses managed to pass a band-aid 9-week spending bill . Without it, the money faucet in Washington would have run dry. If this sounds familiar it's because the authorisation for spending bills has become high political theatre in Washington. The threat of cutting off pay cheques to soldiers, the elderly, and bureaucrats is now part-and-parcel of the perennial partisan duel. In staving off a government shutdown, lawmakers have once again kicked the can down the road on the spectre of national debt default. But it's a short kick – they've got 20 days until that debt crisis is realised.
For Nancy Pelosi, this is just one challenge among many. Right now the Democrat Majority House Leader is trying to herd two major items through Congress. The first is a $1.5tn infrastructure bill. The second is a $3.5tn social security and health framework. Both are key priorities for the Biden White House. They weren't intended to be contingent on one another, but the vagaries of political life are what they are. Here's the rub: House progressives won't vote for the infrastructure bill until the welfare framework (not a bill as such, but a detailed outline) is passed. Meanwhile Senate centrists are pushing back on the multi-billion dollar price-tag. In the framework is a full costing for Biden's climate change, healthcare, and social safety net plans. There a $2tn gap between the parties – regular Democrat antagonist, Senator Joe Manchin of West Virginia, has drawn the line at a $1.5tn broader framework. Keep in mind Biden first proposed a $6tn package!
A bloodbath behind bars
On Wednesday, a brutal fight between prison gangs left 116 dead and 80 injured in an Ecuadoran jail. Pavilion 9 and 10 of the Litoral penitentiary in Guayaquil were the scenes of unbelievable violence – beheadings, shootings, and bombings. In a reversal, the prisoners used higher-calibre weapons on each other than the prison guards themselves could have mustered. The authorities could do little else than wait for the violence to subside. The Litoral penitentiary was only retaken late on Wednesday by a combined police and military operation that was backed with tanks.
Mexican drug cartels, which operate at a scarcely believable scale, use proxies in the prisons to bump rivals off. Both the old-hand Sinaloa Cartel and the brutal Jalisco Next Generation Cartel feature heavily in the Ecuadoran prison system, as do the Colombians. A perpetual war over supply routes (there they are again) means there is no shortage of weapons or targets. These facilities, ostensibly places to punish and rehabilitate those who've committed crimes, have been transformed into a critical arena where international criminal enterprises operate with impunity. One former prison official said that they face "a threat with power equal to or greater than the state itself".
These riots – battles, really – are intensifying across Ecuador, where powerful prison forces are jostling for control. 79 were killed in multiple incidents in February. In July, 100 died in simultaneous attacks in three prisons. A state of emergency was called, though it clearly hasn't had the desired impact. President Guillermo Lasso has just called another state of emergency. It may as well be a perpetual one – Ecuador's geography and coastline make it a crucial cog in the regional drug trade.
The best of times
Ancient rainforest returned to an ancient people
One of the world’s oldest rainforests has been returned to its traditional owners in Queensland, Australia. The handover is part of a deal between the Queensland government and the Eastern Kuku Yalanji people . The deal means 395,000 acres of land will now be managed by the Eastern Kuku Yalanji people, one of the world’s oldest living cultures. Within that area is a number of national parks, including the Daintree, a rainforest that's over 130 million years old.
Resupply from the sky
A week of flooding in 30 of Thailand’s provinces has prevented countless people from accessing essential supplies. More than 200,000 homes have been affected, with thousands displaced, seven dead, and one woman missing. To help people survive, a team of 15 have taken to the skies with powered paragliders to provide food, water, and medical items. The advantage of height also allows the paramotoring enthusiasts to guide emergency services on the ground towards those who need help most.
The worst of times
Abuse in the midst of a crisis
83 aid workers sent to help the Congo’s Ebola crisis have been accused of sexual abuse and exploitation. A report commissioned by the global health authority said that 21 of those workers were employed by the World Health Organisation . The investigation was triggered by 50 women who accused aid workers of demanding sex in exchange for jobs between 2018 and 2020. As a result of the rapes, 29 women became pregnant, some of which were forced into abortions by their abusers.
Paraguay's lifeline dries up
A historic drought is depleting Paraguay’s rivers, pushing the country to the brink. The Paraná River has reached its lowest level in 77 years , while the Paraguay River is at its lowest ever. As a completely landlocked nation, the country relies on its waterways for environmental, social, and economic needs. Some 96% of the country’s international imports and exports, including the soybean trade the country’s economy relies upon, are transported via boat. But with no rain forecast for months and La Niña looming, there’s no end in sight.
Weekend Reading
The image
The quote
"Terrible and will almost certainly throw itself down a flight of stairs"
– An appraisal of Astro ; Amazon's Alexa-enabled, two-wheeled robot that will follow you around the house. Unfortunately that review came from a developer who actually worked on the project.
The numbers
1,019 fragments of cassowary eggshells
- Our ancestors first reached New Guinea 42,000 years ago. It was assumed they gave the fearsome cassowary – the world's deadliest bird – a wide berth. But a recent excavation in the eastern highlands unearthed a trove of cassowary eggshell fragments, some of which suggest these striking birds were reared from hatching around 10,000 years ago. If true, it is the earliest known example of avian domestication.
1 in 8 humans alive today
- Just four years after launching, ByteDance's runaway success, TikTok, has now exceeded one billion active users. It's all the more stunning that these user numbers do not include China (where ByteDance operates a subtly different clone, Douyin) and India (where TikTok is banned).
The headline
"Danish Artist Takes Museum's Money and Runs, Calls It Artwork" – Bloomberg . Vincent van Gone
The special mention
A curious special mention this week goes to Sacoglossa sea slugs . When these unlikely creatures feast, they actually absorb the ability to photosynthesise from their meal – algae. After the snack, they can make like a tree and simply fill up on sunlight.
A few choice long-reads
- In an earlier era, Jimmy Filler's long streak of insider trading would have raised eyebrows. Not anymore, apparently, because everyone is doing it. Exceptional writing from Businessweek.
- A must-read for the meat-haters. 'Low pay, long hours, broken dreams: working at Europe's biggest meat exporter'. Compelling writing from The Guardian.
- This, from the Los Angeles Times, is commentary played with a straight bat. We all know the lab-leak theory is baloney. So why does the press keep pushing it?
Tom Wharton @trwinwriting
