Good day,
Exports from California ports surged in April on trade uncertainty. Outbound container volumes at the ports of L.A. and Long Beach reached 13 month highs, a sign, according to the Wall Street Journal, that shippers want to move good before the gates close.
Loaded container exports from the neighboring ports of Los Angeles and Long Beach jumped 12% year-over-year in April from a year ago to 306,503 20-foot equivalent units, or TEUs, a shipping-industry measure of shipment volume. That made April the biggest month for exports at the largest seaport complex in North America since March 2017.
“Anxiety is driving the export trade,” said Jock O’Connell, an international trade economist based in California. China represents roughly half of the exports that move through Southern California’s ports, O’Connell said.
Did you know?
Home to one of the U.S.’s most fertile farming areas—crop production in the Texas region alone generates about $12 billion in economic activity—observers say the current drought could punish the agricultural sector, affecting everything from cotton to cattle to farming-equipment sales.
Quotable:
“How can we incentivize a company that is treating its employees like crap? It’s not going to fly with me and it shouldn’t fly with you.”
–City Councilman Joe Buscaino on California Cartage in the latest battle over the status of California drayage drivers
In other news:
As Nafta deadline nears, four scenarios that could unfold
Officials have struggled to compromise on major issues in trying to rewrite the North American Free Trade Agreement. (WSJ)
This week in China tech: Facebook loses app dominance, Tencent undercuts Didi, and more
This Week In China Tech focuses on telling you the stories that you won’t find in the Western press and helping you keep tabs on why it all matters. (Forbes)
The rewards of getting returns and reverse logistics right
With at least 30% of products ordered online being returned and shoppers wanting free return shipping, it’s clear that a well-managed returns policy will attract new customers and boost loyalty, but how to achieve it is another matter. (SupplyChain247)
Trucking alliance pushing for hair test while OOIDA says there’s no need
The Alliance for Driver Safety & Security, also known as the Trucking Alliance, plans to promote and support drug testing laws that require all people who apply for a safety-sensitive job in the US trucking industry to verify no opioid addiction or illegal drug use for at least 30 days prior to employment. The group says legislation could be introduced in January 2019. (GoByTruckNews)
Gas prices affecting the trucking industry
Gasoline prices are on the rise, hitting levels most haven’t seen in almost three years. According to AAA, gas prices nationwide are up a nickel in just the last week. (ABC WTXL)
Final Thoughts:
The most remarkable revelation in Forbes’ recent coverage of Tesla, though, hasn’t really been in the headlines—it’s the result of a deep dive into Tesla’s last 10-Q filing, from the first quarter of 2018. Near the end of that document, buried in the Ninth Amendment to the Credit Agreement, which itself is Exhibit 10.3, Tesla says that it’s collateralized its Fremont car factory.
To put Tesla’s mortgaging of its factory in context, reflect on how the company has raised money in the past. It started with selling equity in the form of stock, which is great because while you’re diluting your ownership of the company, you don’t have to make payments. Then, last summer, Tesla issued junk bonds, which have coupons they have to pay, but are still unsecured, meaning there’s no collateral. If Tesla decides not to pay back its bondholders, it can still hold on to its assets. Then Tesla issued asset-backed securities in February, where they essentially securitized their incoming lease payments and sold them off. With the move to collateralize the Fremont factory, Tesla is firmly into secured debt territory. We can infer that Tesla is piling on debt with more and more strings attached because creditors want more collateral backing up the risk they’re taking.
Hammer down everyone!
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