After five weeks of offering summary and commentary on the impact of the Russian invasion of Ukraine on the global economy an the supply chain , I am going to back off a bit this week, as there wasn’t a lot of news.
Partly on vacation this week, I am just going to highlight some of the top news from the week that was.
Gilmore Says.... |
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Totally switching gears, votes to form a union at an Amazon fulfillment center in Bessemer, Alabama are narrowly trailing opponents.
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The impact of the war on oil prices is again fading. The price for Brent crude was hovering at about $103 per barrel at week’s end, down sharply from $120 a week ago, and up just a bit from $98 at the start of the invasion.
Remember, there were predictions of oil going to $180 or even higher early on in the conflict, which would have a devastating impact on the economy. Is that type of oil price surge simply not going to happen? The only conclusion can be that the total global supply of oil, including Russian exports, have been staying strong.
That said, this week Germany and Austria moved a step closer to natural gas rationing after activating an emergency plan designed to help it cope with any disruption in supplies from Russia.
Amid fears of a looming showdown with Vladimir Putin over gas flows, Germany’s economy minister Robert Habeck warned consumers and businesses to reduce consumption, telling them “every kilowatt hour counts.”
Meanwhile, Russia this week announce that certain countries, meaning those in or aligning with Western Europe, must pay for oil and natural gas with Russian ruples, not US dollars or euros as is almost always the case and is stipulated in the procurement contracts.
With the value of the ruple cratering at the start of the war, the move by Putin is designed to create demand for the Russian currency and reverse at least some of the fall.
In fact, Putin had said Russia would stop shipping energy products at midnight Thursday if the ruple payments were not made, but it appears the supplies have not been halted yet. Officials in Germany, which is very reliant on Russian gas, have called the move “blackmail,” and said they will not change payment currencies.
This could get interesting. The Euro zone has already announced plans to reduce dependence on Russian energy – but such changes will obviously take time.
Meanwhile, in the US the Federal Reserve’s favorite inflation measure jumped in February, rising to its highest annual level since 1982, according to the Commerce Department this week.
Including gas and groceries, the personal consumption expenditures price index measure jumped 6.4%, the fastest pace since January 1982.
This is very bad economic news. Most economists are forecasting significantly reduced economic growth in Q1 and Q2, if not a small contraction, mostly due to the impact of inflation that has now been roaring for a number of months.
Along the same lines, the S&P GSCI, a benchmark tracking the prices of commodities prices from precious metals to livestock, has climbed 29% in the first quarter, notching its biggest gain since 1990.
Totally switching gears, votes to form a union at an Amazon fulfillment center in Bessemer, Alabama are narrowly trailing opponents, the National Labor Relations Board said on Thursday. But the count was far closer than a vote at the same FC in, 2021 when workers rejected the union by a 71% to 29% margin.
In this second vote mandated by the National Labor Relations Board (NLRB) after alleged violation of labor rules by Amazon, the union had 875 yes votes versus 993 no votes, but the more than 400 challenged ballots could affect the outcome. The challenges will be resolved at a labor board hearing in the coming weeks.
But Amazon is also facing a union drive at an FC in Staten Island, New York. At the end of the first day of counting on Thursday, 57%of the ballots supported being represented by Amazon Labor Union, and 43% were opposed. The NLRB said the count should be finished Friday.
Next, UPS said on Friday it was testing a four-wheeled "eQuad" electric cargo bike for deliveries in densely packed urban areas, where bikes have better and easier access.
The parcel giant is piloting about 100 of the new bikes, designed and built by British firm Fernhay, in seven European markets and will also launch trials in the United States and some Asian markets soon.
Finally, US Trade Representative Katherine Tai told Congress that the country must shift its focus to rebuilding domestic manufacturing while reducing dependence on unfriendly countries, such as China and Russia. The remarks indicate that Biden administration trade policies will be combined with industrial policy, with the broader goal of improving supply chain reliability. Tai said the country faces greater “insecurity in terms of our supply chains, and our reliance on partners who we aren’t comfortable relying on.”
Any reaction to this week's supply chain potpourri? Have any of your own? Let us know your thoughts at the Feedback button (email) or section below.
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