Thank you YW for the enlightening article on the sustainability and clothes production. The trend towards affordability and disposability seems to be a phenomenon not confined solely in clothes manufacturing but applied across industries, making your analysis a relevant and an extremely engaging read. Inditex’ initiatives to enhance the traceability of products in the supply chain seems particularly appropriate and an attractive solution to the customers with increasing awareness of the sustainability issues, and such engagements shall not be discounted. Meanwhile, as you highlight at the first paragraph, the industry has a serious and fundamental problem with high rate of disposing, which requires to be re-addressed. According to these sources, textile recycling accounts for a fraction of disposed clothes (https://www.thebalance.com/textile-recycling-facts-and-figures-2878122) and while Inditex’ initiatives may raise the awareness of the issue at hand, a more fundamental approach in the change of product durability and re-usability seems to be required to address the fundamental problems, living in the era of disposal products. Companies such as Uniqlo are tackling this challenge by direct reusage of unsellable and returned products (http://www.uniqlo.com/en/sustainability/refugees/recycle/), which seems as an efficient approach, bypassing the recycle-yield problem. Additional initiatives in these direction would further strengthen Inditex’ case.
Thank you for this fascinating analysis of Cargill’s initiatives to combat climate change, including the company’s deep driven target to reduce GHS intensity by 5%, as well as implementing change measures across the supply chain to enhance sustainability in food production. Cargill’s actions are encouraging especially in light of the recent drawbacks in the consolidated efforts by the global community to tackle the challenges related to climate change. While I am fully supportive of Cargill’s initiatives, their case would strengthen if they were to provide the estimate of the impact that the company’s initiative will cause to the global emissions levels, and how much impact they would ultimately have. One excellent case I would like to share is Google X’ negative carbon projects which focuses on harvesting specific types of plants that, through photosynthesis, captures up to 10 times the CO2 ordinary plants, while utilizing the remains of the ‘carbon-negative’ plants as bio-fuel to generate electricity. (https://www.youtube.com/watch?v=zkYVlZ9v_0o) While the viability of such project could be debated, the project clearly lays out an ecosystem of production/emissions cycle, and one could grasp the potential net impact of the project to the greater ecosystem – namely the earth. Another aspect that I wish to highlight is the effect of rising sea levels and the potential impact it would cause to the farming practice across the world. Farming, by its core requirement, is often carried out close to water source, and as sea levels continue to rise, it could force a significant proportion of global farming population out from their homes, fundamentally shifting the landscape of farming. (http://www.eco-business.com/news/climate-change-will-force-mass-migration-of-1-billion-by-2100/)
Thank you for the fascinating analysis of the potential application of smart-contract in the energy/commodity trading sphere. I fully agree with you that the current contracting system is extremely inefficient – processes that are required to open a single Letter of Credit is overwhelming. It is encouraging to know that major trading houses such as Mercuria or Trafigura are starting to provide a platform to ease this transaction, which would benefit the industry as a whole. An interesting angle on this topic would be what would the banks do in reaction to this transition. Banks’ strong balance sheets have long allowed them to act as a key provider of trust, allowing many to transact in this risky sector. However, a well established blockchain system could replace the issuance of trust by system itself – how will the banks fit in this picture? One clear function that banks still hold is the document verification process, where they carry out human-eye checks and double-checks of documentation and assure safe release of funds. However, to take a step further in your analysis, the recent growth of document verification technology could replace this function that traditionally belonged to the banks. Taking even a step further, once the blockchain system is established, would there be even role for the trading houses? Information arbitrage has long been one of the key source of competitiveness for trading houses – blockchain technology is the complete opposite. Your analysis opens many stimulating ideas and debates.
An insightful, informative and important read. The subject matter is extremely engaging, addressing an interesting dynamics within a traditional UK auto-brand, owned by a German manufacturer, which has a global and diversified operation. As you rightly highlight, the supply chain of car manufacturing is complex, spread out across continents and connected by intricate web of delivery operations. I was surprised to read about the trend of increased local supply of parts in the car industry (up to 44% in the UK), while I believe that the raw materials of these parts would be mostly imported (even at raw steel level, I understand Port Talbot is the only remaining blast furnace that is operating 0in the UK). I believe that the contents of the 2017 budget released by the Treasury this week may serve as an addition to the discussion. Interestingly, there was a clear mention of the electric vehicle (as one of 25 key topics), which I believe is addressing the Mini-production: “An extra £100 million will go towards helping people buy battery electric cars. The government will also make sure all new homes are built with the right cables for electric car charge points.” On the other hand, the devil is in the detail, and the government has (subtly) inserted an extremely grim forecast of declining revenue (table 1.2 – staggering GBP 20.6 billion downward forecast of revenue by 2021!). While BMW may be ‘waiting’, has the government already moved on to a state of no-deal with EU and retreat to WTO tariffs? Troubling signs to any UK based manufacturer. (https://www.gov.uk/government/publications/autumn-budget-2017-documents/autumn-budget-2017#annex-a-financing)
A fascinating read. Digitization of music industry is a much discussed topic however the associated ‘bottlenecks’ in terms of storage and bandwidth which affect the quality of music, thus affect the heart of music, is oddly not an often highlighted subject. SM Entertainment’s initiatives to differentiate itself from the existing music distributors (e.g. Apple, Spotify) by providing higher quality of sound through both hardware and software seems like an effective idea, explaining the company’s explosive successes since its launch. While being a music lover and a supporter of this concept, in order to provide a deliberately critical eye on the company’s strategy, I would like to hypothesis that given the fixed capacity of data transfer, consumer would have to prioritize various conflicting factors, such as price, quality, speed and adaptability & capacity of peripheral devices (home wifi, etc). SM Entertainment’s product and services would attract those who put clear priority on the sound quality, however other mass consumers would consider the balance of these conflicting dynamics and may simply conclude that the existing services are sufficient to satisfy their daily needs. CNBC did a fascinating analysis on the public’s (actual) perception of ‘quality’ vs ‘non-quality’ sound system – I attach the link herewith (https://www.cnbc.com/2016/08/05/details-of-cnbcs-music-streaming-test-how-it-worked.html).
A very insightful analysis on this fascinating topic. Jones Act was one of the strangest regulations I have encountered in international trade, and as you rightly highlighted, it creates significant distortion in charter market, ultimately pushing the burden of higher costs to the US companies. One bizarre case I have encountered was shipping of US raw materials from US mainland to Hawaii, where US suppliers are restricted to use US flag vessels which were (i) highly limited in availability, and (ii) priced exponentially higher than the international rate. The distortion was so significant that the supplier was simply unable to ship their product to Hawaii most of the time, while the supplier’s product and price would otherwise be most competitive in the international market (the buyer often ended up buying Indonesian material). I would like to highlight that while I am not familiar with SEACOR’s exact portfolio of vessels, freight market in general is under significant cost pressure, and the international freight giants have been operating at loss for significant period of time (bankruptcy of Hanjin was a particularly dramatic event). In the last decade, shipping companies have gone through restructuring, consolidation and many other forms of cost cutting, therefore I imagine that it would be extremely difficult for SEACOR to be competitive overnight in spite of various measures of innovation. On the other hand, shipping market is cyclical, and recent downturn has drastically reduced the number of vessels under construction, therefore it may be possible for US regulators to time easing of regulations so the domestic carriers will be exposed to less competitive landscape (for dry bulk vessels, 2019 – 20 is generally thought to be a good turning point).