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New shipping legislation targets supply chain bottleneck

Legislation aimed at curbing the power of the container shipping industry, which has seen prices increase tenfold during the pandemic, breezed through the House Monday and could head to the Oval Office for a signature as soon as this week. The administration is hoping the law, which is designed to slash the bargaining power of container shipping companies and their industry alliances, will address a critical bottleneck in global supply chains — an issue economists widely believe is a key factor driving inflation.  

But experts caution that supply chain fixes for inflation can be elusive and that tinkering with the logistical channels that deliver bargain manufactured goods based on cheap labor from Asia can have unexpected consequences. 

Supply chains over the last few decades have been pared down to minimize costs associated with storage, inventory and labor. These “just-in-time” or “lean” supply chains are cost-efficient specifically because they don’t bother developing and maintaining the infrastructure that can accommodate big swings in demand. 

“Because we’ve had reliable and affordable global container shipping, people say, ‘OK, we’ll just build these global supply chains based on lean methodologies, so we’ll just have less inventory, less cash tied up, and we’ll have fewer mistakes in the pipeline,’” Willy C. Shih, a professor of management and operations at the Harvard Business School, said in an interview.  

“The problem with that is, when all that smooth flow of material doesn’t work, then you end up getting caught short, which is what we saw during the pandemic when we had these huge shifts in demand. A lot of the things people wanted weren’t in stock, and everybody was scrambling.” 

As a result, many business operations specialists are now recommending not just increased warehousing but entire structural reforms to their supply chains that include onshoring of component facilities and the development of domestic industry. 

“The rapid decay of a decades-old model of supply chain reliability and efficiency is a key feature of CEO agendas,” management consultant Knut Alicke and others wrote in a May note for McKinsey & Co. “If a crisis on the scale of the pandemic occurs, the absence of a back stock of inventory or materials can seriously threaten supply chains. Many of today’s most pressing supply shortages (semiconductors, for example) occur in supplier sub-tiers where manufacturers have little visibility.” 

“Some potential measures to mitigate risk include finding new suppliers, redesigning networks, resetting inventory targets, keeping safety stocks, and sourcing locally or regionally,” they added. 

But a shift back to more traditional, geographically centered business operations comes with its own set of risks for businesses, as the disappointing earnings of big box stores Target and Walmart recently showed. 

Target fell short on earnings because of excess inventory, announcing last week it’s “planning several actions in the second quarter, including additional markdowns, removing excess inventory and canceling orders,” the company said in a statement. 

“Retail inventories are elevated,” Michael Fiddelke, Target’s chief financial officer, said to The Associated Press last week. “And they certainly are for us, in some of the categories that we misforecast.” 

The effort to avoid forecasting errors like the one made by Target is where the whole idea of just-in-time supply chains comes from, according to Harvard’s Shih.

“One of the reasons we’ve gone to lean production and just-in-time production and minimal inventory is because people have a hard time getting forecasts correct,” he said. “For example, I’ll order all this stuff, and if I have the wrong style shoes or the wrong style garment that doesn’t sell, if I have a lot of inventory in the pipeline coming at me, then I end up marking it down or scrapping it.” 

Lower prices are exactly what policymakers are trying to deliver for consumers, just ones that don’t jostle the expectations of investors.

So while boosted inventory may be a popular concept in supply chain management in the short term, the mark-downs and stockroom purges associated with a well-fortified supply chain may not fundamentally be in line with profit maximization.  

Whether Congress’s new shipping law will bring down prices for consumers, while reassuring big business that container shipping is preferable to pipeline restructuring, will play out over time. But in the near term, it shows just how critical the shipping sector is to the ailing global economy. 

“There are nine major ocean line shipping companies that ship from Asia to the United States. Nine. They formed three consortiums. These companies have raised their prices,” President Biden said Friday, speaking at the Port of Los Angeles. “They raised it by 1,000 percent. That’s why I called on Congress to crack down on the — they’re foreign-owned — the foreign-owned shipping companies that raise their prices while raking in just last year $190 billion in profit, a sevenfold increase in one year, a sevenfold increase, $190 billion.” 

Shipping companies have hit back at the U.S. government, calling representatives’ claims a “mischaracterization.”  

 “We are appalled by the continued mischaracterization of the industry by U.S. government representatives, and concerned about the disconnect between hard data and inflammatory rhetoric,” the World Shipping Council, an industry trade group, said in a Monday statement, following the passage of the bill.  

“The 22 (not nine) international carriers that serve the American people, industry and government on the Asia-United States trade are part of the global supply chain that has built this country. … The increased rate levels we have seen over the past years are a function of demand outstripping supply and landside congestion, exacerbated by pandemic-related disruption,” the group said. 

Global shipping aside, trade between Asia and the U.S. is what keeps so many low-cost goods stocked on U.S. shelves, according to Shih.

“That is really what’s kept inflation in check over the last 20 years, is when we really moved a lot of production to low-cost countries thanks to low-cost container shipping,” Shih said. “So now as people talk about, well it’s time to reshore more, it’s time to move stuff closer, just remember that’s what’s kept inflation in check.”

Source: TEST FEED1

Five takeaways from races in Nevada, South Carolina and Texas

Voters from different sides of the country headed to the polls on Tuesday evening, lending some new insight into what to expect going into the general election in November. 

Former President Trump saw his endorsement put to the test in two key races in South Carolina, while Republicans saw victory in a South Texas congressional district that could bode well for their strategy in the region. 

Meanwhile, progressives saw yet another defeat, this time in Nevada. 

Here are five takeaways from the June 14th primaries.

Trump’s endorsement record takes another hit

Trump saw yet another high-profile defeat on Tuesday after incumbent Rep. Nancy Mace (R-S.C.) won her primary against Trump-backed challenger Katie Arrington. 

The former president made Mace one of his top primary targets earlier this year when he endorsed Arrington in February. The primary divided much of the GOP. While Trump endorsed Arrington, his former ambassador to the United Nations and ex-South Carolina Gov. Nikki Haley (R), as well as his former chief of staff and ex- South Carolina lawmaker Mick Mulvaney, both endorsed Mace. 

While Mace did not vote to impeach the former president after the Jan. 6 attack on the Capitol, she did not object to certifying the 2020 election results and later voted to refer to the Justice Department a criminal contempt case against Trump ally Stephen Bannon that the House select committee investigating the Capitol riot brought. 

Despite not having the former president’s support, Mace tried to tie herself to him while acknowledging her differences with him over Jan. 6. Arrington, on the other hand, made the former president’s endorsement a centerpiece of her campaign. 

But his political influence was on display elsewhere

While Trump’s candidate may have lost in South Carolina’s first congressional district, the former president did get political revenge on Rep. Tom Rice (R-S.C.), who voted to impeach him last year. 

Trump-endorsed challenger Russell Fry defeated the incumbent congressman on Tuesday. Rice’s district was seen as largely more favorable to a Trump-backed candidate than Mace’s. 

Meanwhile, Trump’s pick for Senate in Nevada, Adam Laxalt, also won his primary. Laxalt had big GOP names behind him during the primary in addition to the former president, including Florida Gov. Ron DeSantis (R). Laxalt served as the co-chair of Trump’s reelection campaign in Nevada in 2020. Democrats have seized on his vocal support for Trump’s unproven claims that the 2020 presidential election was stolen from him.

Another Trump-endorsed candidate, Clark County Sheriff Joe Lombardo, appeared poised to defeat a crowded field of GOP candidates in the gubernatorial primary. Lombardo will take on incumbent Gov. Steve Sisolak in November. 

All in all, despite his one high-profile loss, Tuesday night proved that Trump still holds significant political sway in the party.

Alarm bells sound for Democrats in Texas

Republican Mayra Flores’s win in the special election for Texas’ 34th congressional district will likely raise alarm bells for Democrats in the Lone Star State. The GOP has increasingly focused on border districts and the southern part of the state after former President Trump performed well in South Texas during the 2020 presidential election. 

Flores continued that trend on Tuesday, but also played particularly well with Hispanic voters. She carried Cameron County, which President Biden won by 13 points in 2020 and is nearly 90 percent Hispanic. 

Democrats could sense the urgency in the district as the primary approached, with the Democratic Congressional Campaign Committee (DCCC) helping their candidate Dan Sanchez’s campaign fund a $100,000 digital ad buy. Additionally, the House Majority PAC rolled out a $115,000 ad buy against Flores earlier this month. 

House Republicans already have their sights set on the open seat in Texas’ 15th congressional district and incumbent Rep. Henry Cuellar’s (D-Texas) seat in the 28th congressional district. The 15th, 28th and 34th districts are on the National Republican Congressional Campaign Committee’s target list. 

Another disappointing night for progressives

Progressives saw yet more disappointment Tuesday, as Amy Vilela lost to incumbent Democratic Rep. Dina Titus (D) in Nevada’s first congressional. 

Vilela previously served as Sen. Bernie Sanders’s (I-Vt.) co-chair in his 2020 presidential race. Sanders endorsed her last week.

Her loss comes a week after progressives saw losses in San Francisco’s district attorney recall and in New Jersey’s 10th congressional district, where Rep. Donald Payne Jr. survived a progressive primary challenge. 

The last major victory for progressives took place last month when Jamie Mcleod-Skinner defeated incumbent Rep. Kurt Schrader in the Democratic primary for Oregon’s fifth congressional district. Schrader had been endorsed by President Biden.

A ‘blue wave’ Dem gets one step closer in longshot bid

Back in South Carolina, former Rep. Joe Cunningham (D-S.C.), who was ousted by Mace in 2020, took one step closer to his longshot gubernatorial bid. 

Cunningham defeated state Sen. Mia McLeod (D) in the Democratic gubernatorial primary on Tuesday, teeing up a fight against incumbent Gov. Henry McMaster (R) in November. The former congressman will face an uphill climb against the governor, given the national mood, McMaster’s popularity and the state’s rightward tilt. The nonpartisan Cook Political Report rates the race as “solid Republican.” 

The victory marks a comeback of sorts for Cunningham. He was part of the Democratic “blue wave” in 2018, defeating Arrington in the general election for the first congressional district, before losing to Mace.

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Titus fends off progressive challenger inn Nevada House primary

Incumbent Rep. Dina Titus (D-Nev.) is projected to win her primary for the state’s 1st Congressional District on Tuesday, successfully fending off a progressive challenge from Amy Vilela.

The Associated Press called the race at 1:05 a.m. ET.

Titus’ victory marks yet another loss for progressives, who have fallen short in a number of primary contests this cycle. Vilela served as Sen. Bernie Sanders’ (I-Vt.) co-chair in his 2020 presidential race. Sanders endorsed her last week.

Titus has represented the 1st District, which includes most of Las Vegas and parts of North Las Vegas, since 2013. Republicans consider the seat to be a prime pick-up opportunity, with the National Republican Congressional Campaign Committee (NRCC) including it on its target list.

Titus won her latest reelection bid in 2020 with more than 60 percent of the vote.

Both parties face a tough race in November. The non-partisan Cook Political Report rates the district as a “toss-up,” along with Nevada’s 3rd and 4th congressional districts, Senate race and gubernatorial contest.

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Laxalt wins Nevada GOP Senate primary

Former Nevada Attorney General Adam Laxalt is projected to win the state’s GOP Senate primary on Wednesday, setting up a matchup with Sen. Catherine Cortez-Masto (D-Nev.).

The Associated Press called the race at 1:02 a.m. ET.

Laxalt, who was backed by former President Trump, defeated seven candidates in the primary. He had been widely viewed as the frontrunner, though businessman and retired Army Capt. Sam Brown moved up in polling ahead of Tuesday’s primary, in addition to spending more on television.

But Laxalt had big GOP names behind him in addition to Trump, including Florida Gov. Ron DeSantis (R) and a group aligned with Senate Minority Leader Mitch McConnell (R-Ky.).

Democrats have seized on Laxalt’s vocal support for Trump’s unproven claims the 2020 presidential election was stolen from him.

Laxalt served as the co-chair of Trump’s reelection campaign in Nevada in 2020. He also unsuccessfully ran for governor in 2018, losing to Gov. Steve Sisolak by four points.

The state’s Senate race, along with its gubernatorial contest, is one of the most closely-watched his midterm cycle and both parties will face a tough road. Nevada’s gubernatorial race and Senate race have been labeled as “toss-ups” by the Cook Political Report, as have the House races for the state’s 1st, 3rd, and 4th congressional districts.

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Republican Mayra Flores flips House seat in Texas special election

Republican Mayra Flores on Tuesday was projected to defeat Dan Sanchez (D) in the special election for Texas’ 34th Congressional District, a traditional Democratic stronghold.

The Associated Press called the race at 11:13 p.m. ET.

The seat was made vacant in March when former Democratic Rep. Filemón Vela resigned.

Flores will head to Washington to serve out the remainder of Vela’s term. She will face Democratic Rep. Vicente Gonzalez (D-Texas), who currently represents the 15th Congressional District, for a redrawn 34th Congressional District in November.  

Gonzalez said he would not leave his current seat in the 15th district in the middle of the year.

Flores, who came to the U.S. from Mexico when she was six years old, will become the country’s first Mexican-born congresswoman. The congresswoman-elect has frequently touted her husband’s job as a Border Patrol agent.

Her win will likely further boost Republican optimism about the party’s prospects in southern Texas and along the border. The GOP has been looking to make gains in these areas since former President Trump performed well there in 2020.

Her victory also stands to give the GOP an additional seat in a narrowly divided House and momentum going into November.

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Mace defeats Trump-backed primary challenger in South Carolina

Rep. Nancy Mace (R-S.C.) was projected to have defeated former South Carolina state Rep. Katie Arrington on Tuesday, handing former President Donald Trump his latest high-profile primary loss.

The Associated Press called the race at 11:13 p.m. ET.

Mace, a first-term House member who defeated former Rep. Joe Cunningham (D-S.C.) in 2020, drew the former president’s ire last year after she criticized him for his role in the Jan. 6, 2021 riot at the U.S. Capitol. 

While she wasn’t among the 10 House Republicans who voted to impeach Trump in the wake of the attack, he still vowed to campaign against her, endorsing Arrington to take her on in the primary.

Unlike many GOP lawmakers who openly criticized Trump after the Capitol riot, Mace sought to cast herself as a believer in the former president’s agenda, while acknowledging her disagreements with Trump’s most ardent supporters over the Jan. 6 attack.

Arrington, meanwhile, placed Trump’s endorsement front-and-center in her campaign and attacked Mace as out of touch with the voters in South Carolina’s 1st congressional district.

Ultimately, Trump’s endorsement was not enough to push Arrington over the finish line. Recent polling showed Mace with a comfortable lead over Arrington, whose loss on Tuesday was only the latest in a growing list of primary failures for the former president as he weighs a potential 2024 White House bid.

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James Patterson apologizes for saying white authors face 'form of racism'

Crime novelist James Patterson issued an apology Tuesday after making a previous claim that older white male writers having difficulties booking work are victims of racism.

In an interview with the U.K.’s Sunday Times published this week, Patterson said the phenomenon of white males not being able to get writing gigs represented “just another form of racism.”

“What’s that all about?” Patterson added, according to the New York Times. “Can you get a job? Yes. Is it harder? Yes. It’s even harder for older writers. You don’t meet many 52-year-old white males.”

The 75-year-old later backtracked his comments in a Facebook post, saying he supports diversity in the writing industry.

“I apologize for saying white male writers having trouble finding work is a form of racism,” he wrote.

Patterson added, “I absolutely do not believe that racism is practiced against white writers. Please know that I strongly support a diversity of voices being heard—in literature, in Hollywood, everywhere.”

In the article from the Times, the longtime writer also condemned his publisher’s 2020 decision to drop Woody Allen’s memoir over sexual assault allegations.

“I hated that,” Patterson said in the piece, according to the Washington Post. “He has the right to tell his own story.”

Patterson’s comments come days after he released his new memoir, “James Patterson by James Patterson.”

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Republican who impeached Trump loses primary in South Carolina

Former state Rep. Russell Fry was projected to have defeated Rep. Tom Rice (R-S.C.) in the GOP primary in South Carolina’s 7th district on Tuesday in a campaign that zeroed in on the five-term incumbent’s vote last year to impeach former President Donald Trump.

The Associated Press called the race at 11:01 p.m. ET.

Rice was one of 10 House Republicans who voted to impeach Trump for his role in the Jan. 6, 2021 riot at the U.S. Capitol.

That vote earned him a spot on the former president’s enemies list, as well as a field of primary challengers. Trump endorsed Fry in the race in February.

Nevertheless, Rice never walked back his past criticism of Trump and defended his impeachment vote. 
Fry, meanwhile, attacked Rice over the impeachment vote and his tenure in the House, arguing that the five-term congressman had lost the trust of voters in South Carolina’s 7th District.

The GOP primary in South Carolina’s 7th District was one of two in the state to serve as a test of Trump’s influence over Republican voters. In the state’s 1st District, Trump sought to oust Rep. Nancy Mace (R-S.C.), who criticized him last year over his role in the Jan. 6 attack.

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Cunningham wins Democratic governor's primary in South Carolina

Former Rep. Joe Cunningham (D-S.C.) was projected to capture the Democratic nomination for South Carolina governor on Tuesday, setting him up for a head-to-head general election fight against Gov. Henry McMaster in November.

NBC News and CNN both called the race for Cunningham after 9 p.m. ET.

Cunningham, who flipped a GOP-held House seat in 2018 only to lose reelection two years later, cast himself throughout his primary campaign as the kind of pragmatic dealmaker that stood a chance at winning statewide in deep-red South Carolina.

He faced four primary challengers in his bid for the Democratic gubernatorial nod, though his main rival was state Sen. Mia McLeod, the first Black female to run for South Carolina governor.

Cunningham leaned on his successful effort to win a Republican-held House seat in 2018 to argue that he’s the candidate with the best shot of ousting McMaster this year. McLeod, meanwhile, cast her campaign as a new direction for the state Democratic Party, arguing that candidates like Cunningham have failed for years to make lasting gains in South Carolina.

Of course, Cunningham still faces an uphill battle in the November general election.

McMaster remains largely popular in South Carolina and the state tilts heavily toward Republicans. At the same time, Democrats nationwide are facing strong political headwinds; President Biden’s approval rating is deep underwater, inflation is at its highest point in decades and the party in power – in this case the Democrats – tends to fare poorly in midterm elections.

Source: TEST FEED1