Business

Supply chain price pressures have healed yet their mark on inflation to endure

Supply chains across the world are healing up almost as fast as they broke down. That doesn’t mean the pressure they’re exerting on inflation will disappear as quickly.

Take the cost of shipping containers. Spot rates from Asia to the US West Coast increased more than 15-fold during the pandemic and have since returned to pre COVID-19 levels as trade between the world’s two largest economies cools from a frenzied pace.

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But the relief is uneven. Short-term prices for containers from Europe to the US East Coast are still more than double what they were in late-2019, according to data from Freightos Ltd.

What’s more, an estimated 70 percentof goods transported in steel boxes on giant ships do so under long-term contracts — not the spot market — and those deals were renegotiated in 2021 and 2022 at much higher rates. Big retailers and manufacturers may not be seeing enough shipping-rate reductions yet to warrant slashing prices further.

“We need to be cautious about the drop in spot prices for containerized freight,” said Jason Miller, an associate professor of supply-chain management at Michigan State University. “Most freight moves under contract prices that are still well above pre COVID-19 levels.”

Such stickiness may help explain why inflation in some regions remains stubbornly high. US producer prices rebounded in January by more than expected, underscoring persistent inflationary pressures, and another closely watched gauge of consumer costs came in hotter than forecast on Friday. In the euro area, underly-ing inflation hit a record in January, revised data showed last week.

Another reason the cost of living is slow to fall: It’s easy to underestimate how long it can take for inflationary trends to work through supply chains. That’s partly because companies don’t like to change their pricing more than a couple of times a year, according to Chris Rogers, head of supply-chain research at S&P Global Market Intelligence.

“Whilst the underlying prices have been coming down, it could take quite a long time for that to feed in,” Rogers said. “We’re still seeing some of the inflationary hangover coming through to prod-uct pricing now and it could take much of the rest of the year for that to flow through to prices, whether it’s producer or consumer.”
“There are also some temporary factors at play now,” Rogers said.
In order to clear backlogs of inventory built up during the pandemic’s surge in consumer demand, many companies cut prices in the second half of last year.

Labor costs

But now many firms are facing enduring increases in one of their biggest costs: labor.

Worker shortages are hitting the supply-chain industries hard, said Nicholas Sly, vice president and economist at the Federal Reserve Bank of Kansas City.

“There are several parts of the logistics sector that are actually quite labor intensive,” Sly said. “Drivers make up a very notable part of this, but warehousing also requires a lot of workers,” he said.

It’s time consuming and costly to train new employees, and that drag on productivity only adds to costs. On top of higher paychecks, other basic costs of business have risen. Long-distance motor carrying is one sector that’s “not anywhere near pre-pandemic levels,” according to Michigan State’s Miller.

Higher costs for diesel, industrial equipment, and major capital expenses like new and used trucks still abound, he said. The cost to make truck trailers and chassis, for instance, remains elevated, according to data compiled by the St. Louis Fed. Driver wages have increased substantially, and so have maintenance charges on all modes of cargo transportation.

“Across the board, you have higher costs, so that’s going to have to translate to higher freight rates,” Miller said. “We may have seen ocean spot rates come back to their pre COVID-19 levels. We’re not seeing that in domestic truck transportation. We’re not seeing that in domestic rail-freight prices, either.”

Nor have storage costs seen any kind of sustained declines.
WarehouseQuote expects warehouse-storage pricing to continue growing this year, owing to industrial real estate rents and labor-cost increases, and as vacancy rates remain below historical av-erages.
Even so, the easing of some supply-chain strains means logistics issues are contributing far less to inflation than services, according to Flexport Inc.’s chief economist, Phil Levy.

In the US, consumer-inflation data earlier this month showed commodities, excluding food and energy, rose 1.4 percent from a year earlier — a rate that should give Federal Reserve officials some comfort that their policy tightening is having an effect, given they target annual inflation of 2 percent, albeit using a separate measure. But services inflation, minus energy services, is running at 7.2 percent.

“What we’ve had is something of a hand-off, where it went from really quick-spiking goods inflation to a big drop in the amount that’s coming from goods,” Levy said. “It’s not every single com-ponent of the supply chain has moved in lockstep, but things have let up quite a bit.”

In the latest wave of earnings reports, US retail chiefs highlighted improvements in logistics pressures, but the price pain isn’t necessarily over.

“While the supply-chain issues have largely abated, prices are still high and there is considerable pressure on the consumer,” Walmart Inc. Chief Financial Officer John David Rainey said on a conference call on Tuesday.

Gina Boswell, the CEO of Bath & Body Works Inc., said she sees economic headwinds from prices continuing for now, though that may change later in 2023.

“We expect that we will continue to see inflationary pressure on our input costs in the first quarter before beginning to see some relief as we move through the year,” she said on a conference call last week.

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Business

Almarai signs multiple agreements to localize jobs through training and recruitment programs

Almarai signed a cooperation memorandum with the Food Industries Polytechnic, the
Transport General Authority, and the Saudi Logistics Academy to localize jobs in the
food and beverages sector through training and rehabilitation programs ending in
employment. This came within the first international conference on the labor market,
organized by the Ministry of Human Resources and Social Development on 13 – 14
December 2023 at the King Abdulaziz Convention Center in Riyadh.

‘These agreements are part of Almarai’s corporate program for the social responsibility
to achieve localization in the food industry sector, which is one of the top priorities of the
comprehensive strategic plans in Almarai, especially since the company is one of the
largest working environments in the kingdom, with more than 9,000 Saudi employees,
including more than 900 Saudi female employees.”Fahad Aldrees, Chief Human
Resources Officer of Almarai, said.

He added that the agreements signed to train and qualify young people are part of the
integrated initiatives and training and rehabilitation programs for national human
resources in Almarai. He pointed out that the company provided about half a million
employee training hours during 2022, raising its retention rate to 90% during 2022.

It is worth mentioning that Almarai is the world’s largest vertically integrated dairy
company, and the largest food and beverage producer and distributor in the Middle
East. Almarai was ranked among LinkedIn’s top 15 Saudi companies for professional
career development for 2022.

Business

SEBA Bank rebrands to AMINA Bank and continues to write its success story

a fully licensed Swiss crypto bank, announced today its new brand identity: AMINA Bank AG. The group operates
globally from its regulated hubs in Zug, Abu Dhabi and Hong Kong, offering its clients traditional and crypto banking services.
SEBA Bank made history in 2019 by becoming one of the first FINMA-regulated institutions to provide crypto banking services. This rebrand marks a new chapter for the company, which has proudly been in operation for more than four years. AMINA Bank is inspired by the same trailblazing ambition to lead the way for its clients and to write its own future as a Swiss-
regulated crypto bank offering services to its traditional and crypto savvy clients around the globe. The name ‘AMINA’ stems from the term ‘transAMINAtion’, meaning transference of one compound to another. AMINA is a brand driven by perpetual change, bringing together the various ‘compounds’ of traditional, digital, and crypto banking to unlock new potential and
growth for our clients. This vision of change represents the transformation of our clients’ financial future. Franz Bergmueller, CEO of AMINA, said: “We are delighted to introduce the world to our new brand identity. While we say goodbye to the SEBA name, we remain forever proud of the achievements made by the group under the former brand. “Our brand signifies a new era in the company’s growth and strategy; we are a key player in crypto banking and are here to define the future of finance. With our client-focused approach, our years of traversing traditional and crypto finance, we offer a platform for investors to build
wealth safely and under the highest regulatory standards.” “We are grateful to be encouraged by our supportive and committed investors who have been very helpful, supporting the growth of the company. We thank our employees in all the regions
for their dedication and client focus. As we look forward to 2024, our ambition is to accelerate the growth of our strategic hubs in Switzerland, Hong Kong, and Abu Dhabi, and to continue our global expansion, building on all the successes we have laid down over the past years.” Current clients of AMINA Bank (formerly SEBA Bank) will be unaffected by the rebrand other than encountering the new name; all operations will be business as usual across the board. The branch office based in Abu Dhabi and the subsidiaries in Hong Kong and Singapore will subsequently apply for a name change to align with the head office in Zug.

Business

Uptime Appoints Mustapha Louni Chief Business Officer

Uptime Institute is pleased to announce the appointment of Mustapha Louni to the position of Chief Business Officer, a role specifically created to drive strategic leadership and client success. In this new role, Mr. Louni will assume responsibility for the global Uptime sales and marketing organizations and drive overall business value for all Uptime clients. He will retain his existing responsibilities overseeing operations in the Middle East, India, Africa, and the Asia Pacific regions. In this elevated capacity, Mr. Louni is poised to play a pivotal role in driving Uptime’s next phase of global expansion through strategic initiatives to enhance market awareness of the dramatically expanding global service lines and delivery capabilities of Uptime that uniquely support the global data center industry in its pursuit of ever higher performance through elevated availability, resiliency, sustainability, and cyber-security of digital infrastructure. Louni’s appointment renews and expands Uptime

Institute 39;s 30-year commitment to advancing excellence in the data center sector on a global scale. “Today we are experiencing the next phase of the one-time, planetary transformation from analog to digital. This unprecedented, once-in-a-generation growth in data center demand is primarily driven by continuing cloud adoption, the new promise of AI, and the demonstrable fact
that hybrid digital infrastructure is here to stay for the foreseeable future,” said Martin McCarthy, CEO, Uptime Institute. “These complex and nuanced market demands require a visionary talent like Mustapha Louni. He is someone who cannot only deftly manage specific aspects of the business but also remain ahead of accelerating changes and trends. He continues to earn client
trust and respect by timely delivery on demanding commitments while he also inspires and energizes colleagues and clients alike. I am delighted to announce Mr. Louni’s new position and know that he will continue to expand the impact that he has already brought to Uptime since his arrival.” In 2014, Mr. Louni joined the Uptime organization in the United Arab Emirates, leveraging his extensive experience from roles at Panduit and Schneider Electric in Paris and Dubai. As the company’s first commercial resource in the Middle East and Africa region, Mr. Louni played a pivotal role in expanding Uptime’s presence. Within a year, he successfully established what became and remains Uptime’s fastest growing regional office. Under his leadership, Uptime has
extended his impressive trajectory of growth in MEA to the Asia-Pacific regions, augmenting the Uptime workforce with dedicated team members spanning more than a dozen countries across these regions. A new Uptime office has been inaugurated in Riyadh, Kingdom of Saudi Arabia (KSA) this year, further fortifying the company’s ability to meet its commitment to sustained
growth and excellence and serve clients in critical, accelerating markets for digital infrastructure.

Uptime Institute began development of its proprietary and now globally recognized Tier Standards and its Tier Certifications 30 years ago to ensure that the mission critical computing needs of all organizations could be met with confidence and understood by executive management. Since that time, Uptime Tier Certification as well as other Uptime offerings including assessments and awards in digital infrastructure for ensuring business performance in areas of management and operations, risk and resilience, sustainability, and more recently cyber- security have gained global adoption. Uptime’s expanding success is based on delivering a
unique business service that is based upon unparalleled engineering excellence and technical mastery, while remaining vendor independent and technology agnostic.