Indonesia announces palm oil export ban
The world’s top palm oil producer, Indonesia, has revealed plans to ban exports of the most commonly used vegetable oil in a shock move which could further damage global food inflation and supply chains. The country accounts for more than half of the global palm oil supply, so the decision to halt shipments of the commodity is set to cause major disruptions for food producers and governments across the world.
Joko Widodo, Indonesia’s president, has said that the reason behind the decision is to ensure that the availability of cooking oil in the domestic market becomes “abundant and affordable” amid global food supply chain issues due to the war in Ukraine. Alternative vegetable oil prices have already risen because of this announcement, with the price of soybean oil rising by 4.5%.
Global edible oil markets have been damaged by Russia’s invasion of Ukraine, and this announcement will cause more disruptions. “Buyers were banking on palm oil after sunflower oil supplies fell because of the Ukraine war,” a Mumbai-based dealer at a global trading firm said. It seems unlikely that the second largest exporter of the oil, Malaysia, will be able to fill the supply gap as it is experiencing supply chain problems of its own.
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Amazon to invest $1 billion to improve supply chain and logistics innovation
The American multination technology company Amazon has announced that it will be creating a $1 billion venture investment program named the Amazon Industrial Innovation Fund (AIIF). The aim of the program is to support and improve innovation and customer experience in customer fulfillment, supply chains and logistics due to the continuous increase in online shopping.
The fund will invest in companies that improve Amazon’s overall performance, for example increasing delivery speed or enhancing employee experiences. Companies of all stages will be considered, from startups to more established companies who are developing innovative technologies to boost supply chains. The first group of investments will focus on wearable technology to improve safety in fulfillment, with companies such as Modjoul and Vimaan being chosen.
Amazon has previously invested in technologies to support both its customers and employees, such as robotic arms and other cutting-edge inventions. Alex Ceballos Encarnacion, Amazon’s vice president of worldwide corporate development said that Amazon is “excited to help advance these technologies as online shopping becomes even more important to people who are looking for more convenience and time savings.”
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Tesla’s suppliers facing severe cost pressure
Elon Musk, CEO of Tesla, the American electric vehicle and clean energy company has said that the company’s suppliers are facing cost increases of “up to 30%.” In the first quarter of this year, Tesla has reported severe cost pressures, meaning increased supplier costs will be passed onto consumers, however Musk has said that this inflation will not affect deliveries.
Multiple industries are trying to get their hands on rare earth metals needed for production, which are currently in limited supply. Metals including cobalt, nickel and lithium are the most sought after. Tesla’s CFO Zachary Kirkhorn said that the inflationary pressures due to these shortages will not immediately impact production due to already-established long-term contracts with suppliers, but he warned that some contracts are linked to movements in commodity prices.
The lockdowns in the current COVID-19 epicenter of Shanghai have also impacted the company’s success recently, as the shutdown of Tesla’s factory in the city has led to increased lead times and reduced production. Musk has reassured investors that despite the unprecedented situation, the site “is returning to high production levels, as are its suppliers.”
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