Amazon takes on Temu & Shein with new offering 👀 🤯

TRADE NEWS

Global Food Wars Warning 

The world is edging closer to "food wars" as nations face increasing pressures from climate change and restrictive trade policies, Sunny Verghese, CEO of Olam Agri, cautioned at the Redburn Atlantic and Rothschild consumer conference. Verghese warned that the protectionist measures are significantly exacerbating food inflation, creating a severe demand-supply imbalance.

Verghese starkly noted, "We have fought many wars over oil. We will fight bigger wars over food and water." This assertion underlines the growing global tensions as countries scramble to secure food resources amidst escalating climate challenges and geopolitical conflicts. In 2022, following Russia’s invasion of Ukraine, 1,266 non-tariff barriers were established by 154 countries, tightening the global exchange of essential commodities like grains and fertilizers, thus inflating prices and intensifying a global cost-of-living crisis.

Wealthier nations have been building up excess stocks, contributing to the spiraling prices that have deepened food insecurities in poorer regions. This scarcity has been further aggravated by climate impacts on agriculture, leading to sharp increases in prices for key commodities such as cocoa, coffee, and sugar. In response, countries like Indonesia and India have imposed export restrictions to stabilize domestic markets, moves Verghese criticized as counterproductive.

Highlighting the necessity for proactive measures, Verghese urged industry leaders to address climate risks seriously and advocated for governments to implement carbon taxes to mitigate indiscriminate pollution. His comments reflect a pressing call to action as global stability hangs in the balance with the looming threat of food wars. 

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VIDEO OF THE WEEK

How 90% Of The World’s Pure Cinnamon Is Produced In Sri Lanka

Sri Lanka produces about 22 metric tons of Ceylon cinnamon each year, a labor-intensive and costly spice compared to the more common cassia variety. Known as "true" cinnamon, it's ten times more expensive than cassia, which is prevalent due to its easy cultivation in Southeast Asia. Lets explore the production process with one of Sri Lanka's top producers to understand what makes this spice so valuable.

GLOBAL TRADE SNIPPETS

Cargo ship draws Suez Canal blockage comparisons after becoming stuck in Cambridge river. The captain of the 80m-long ship reported the "grounding" and video footage showed the vessel diagonally positioned in the river.

Germany sees company bankruptcies soar. The number of corporate bankruptcies in Germany has risen sharply, continuing an already upward trend. A tough financial climate impacted by global events is believed to have irreparably damaged many firms.

South Korea advances toward becoming fifth largest exporter, surpassing Japan. According to the World Trade Organization (WTO) on June 20, South Korea’s export value in the first quarter (January to March) of this year reached $163.7 billion, positioning it seventh globally, just after Italy, which recorded $168.3 billion and ranked sixth.

Russian oil and gas revenues set to rise 50% YoY in June. While western sanctions aimed at its energy sector continue, the redirection of oil exports to China and India has ensured Russia has been able to maintain revenues and direct funding to the war effort.

Red Sea attacks, US tariffs on China imports choke Asian ports. Congestion across Asian ports have hit levels not seen since the Covid-19 pandemic. Ships with a total capacity of over 2.4 million twenty-foot equivalent container units (TEUs) were waiting at anchorages as of mid-June, with 60% of ships waiting at anchor located in Asia.

TRADE NEWS

Amazon Set to Launch Faster, Cheaper Service to Rival Temu & Shein

Amazon plans to launch a new section on its site dedicated to low-priced fashion and lifestyle items, allowing Chinese sellers to ship directly to U.S. consumers. This move marks Amazon’s most aggressive attempt yet to counter growing competition from e-commerce upstarts Temu and Shein, which both have strong ties to China.

Temu and Shein have been expanding their U.S. presence, attracting American shoppers with their extremely low prices on clothing, electronics, home goods, and more. Amazon's new storefront will feature a range of unbranded items, many priced under $20, including products such as gua sha facial tools, arm weights, and phone cases.

The products will be shipped directly from China to the U.S., with the goal of delivering them within 9 to 11 days. Previously, Chinese sellers utilized Amazon's Fulfillment by Amazon service to store goods in U.S. warehouses before being sent to customers. This new direct shipping method is presented as a cost-saving opportunity for sellers and allows them to test new products through small-batch production, similar to Shein’s on-demand manufacturing.

Maria Boschetti, an Amazon spokesperson, stated, “We are always exploring new ways to work with our selling partners to delight our customers with more selection, lower prices, and greater convenience.” Boschetti did not comment further on the plans, which are set to start accepting products this fall.

Amazon has been making significant efforts to engage sellers in China, recently announcing a new innovation center in Shenzhen and reducing fees for merchants selling low-cost clothing. The growth of items sold by Chinese sellers on Amazon has increased by more than 20% year over year, with a 30% increase in Chinese merchants achieving sales over $10 million. See clip

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SHIPWRECK OF THE WEEK ⚓️☠️ 

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