Will shuffling aluminum ingots between warehouses increase commodity prices ?

Posted on July 21, 2013 by aviyer2010

An article in the New York Times (July 21, 2013) claims that commodity traders, who have purchased large stocks of aluminum ingots, but are required to ship out from warehouses at a rate of 3,000 tons. But these traders are claimed to own several warehouses in Detroit and ship between these warehouses while maintaining their hold on inventories, thus reducing the amount available quickly and, given storage charges permitted, increasing the price by 0.1 cent per aluminum can or $5 billion over three years. The article claims that delays in shipment, and thus storage chargers, have increased from 1.5 months to 16 months. What metrics should the London Metals Exchange be required to impose to prevent such price changes due to delays ? Should the premiums that are charged for all aluminum sold on the spot market be permitted to be based on delays in Detroit even if the metal does not pass through those warehouses, as is the case currently ?

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Inconsistent responses across governments to the Dreamliner beacon fire

Posted on July 20, 2013 by aviyer2010

An article in the New York Times (July 20, 2013) describes inconsistencies between the British aerospace authority’s proposal to request that beacon batteries be disabled vs the US FAA’s plan to inspect these batteries vs the Japanese authorities plans to waive (temporarily) the requirement for airplanes to have beacon transmitters. All this is in response to the fire on an Ethiopian Airlines 787 Dreamliner caused, apparently, by a beacon transmitter’s battery. Given these different directives, how should airplanes that fly international routes operate their equipment to comply ? What is the jurisdiction of these different authorities when airplanes takeoff from one authority’s country and land in another ? Should the IATA demand that the different aerospace authorities coordinate their decisions to provide consistent proposals or should that be the role of the airplane manufacturer to enable such coordination ?

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Will the US govt proposal to the Bangladesh govt improve garment factory conditions

Posted on July 20, 2013 by aviyer2010

An article in the New York Times (July 20, 2013) describes a proposal by the US govt to Bangladesh for the country to regain its suspended trade privileges with the US. The plan includes creation of a public database of all garment factories, public reporting of violations, inspector names, penalties assessed and corrective action. It requires easing constraints on union formation and a hotline for anonymous reporting of code violations. It also requires the Bangladesh govt to impose greater penalties on garment manufacturers who violate safety or labor laws including suspension of their export privileges. Will such a system reduce costs or risk for US and European retailers who manufacture in Bangladesh ? Will such steps make manufacturing in Bangladesh uncompetitive with other global choices ? Given such steps planned to be taken by Bangladesh, should US and European retailers be required to commit to maintain a certain manufacturing volume (e.g., the current level) if the country complies with US demands ?

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Tracking retail customer movements using their cell phones – a prerogative or intrusive ?

Posted on July 18, 2013 by aviyer2010

An article in the New York Times (July 14, 2013) describes an experiment at Nordstrom, after informaring customers, that tracked customers “using the wi-fi signals from their smartphones”. But the cell phones unique signature also permits tracking customer repeat trips, time spent in the store, items purchased etc. But online stores have always stored customer clicks, browsing time, purchased vs considered goods etc. Is the customer tracking in a physical store similar to online tracking of customer choices and therefore a retailer prerogative ? Should the customer be alerted whenever she is being tracked, with approval sought and an incentive provided, for continued tracking ? Should stores send coupons to customers based on their observed shopping interests to increase their reason to shop ? Are there privacy issues that are relevant or is the store a domain that should be permitted to be under retailer control ?

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Paying Auditors to audit pollution compliance inspections

Posted on July 18, 2013 by aviyer2010

An article in the Wall Street Journal (July 18, 2013) describes an experiment in Gujarat, India, to increase the correctness of the pollution readings by auditors. In the past, most pollution audits claimed compliance. But two experiments were conducted – the first one randomly checked audits but offered a higher rate for audits that were correct in their assessments of compliance. The second experiment paid a bonus if readings were accurate if checked randomly. The impact – both an increase in detection of polluters, as well as an increase in accuracy. Can ideas from this experiment be used to check garment manufacturers in Bangladesh ? Given that better readings also caused an increase in investments in pollution control equipment, does this suggest that improving audit correctness can improve global pollution levels ? How important is a sustained pollution control focus by local governments an ingredient for success of such approaches ?

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The US alliance vs the European accord’s plans for Bangladesh garment factories

Posted on July 18, 2013 by aviyer2010

An article in the New York Times (July 14,2013) describes plans by an alliance of the US retailers to offer shared inspection reports of over 500 factories in Bangladesh, loans from a pool of $100 million to factory owners to improve their plants, but the option to cancel orders to factories that do not comply. The European accord plans to fund the remediation of factories that do not comply. US retailers claim that the European accord would expose them to unlimited liability in the US because the US legal environment is different from Europe. But the European proponents claim that voluntary changes as envisaged in the US plan would not be feasible. Should garment manufacturers in Bangladesh be required to take responsibility of their factories and make business decisions regarding compliance ? Or should importers be required to invest in improving factories, thus absorb the costs of compliance ? Will the best way to improve Bangladesh factories be global competition from countries like Cambodia and Vietnam that offer factories with compliance to importer’s requirements?

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On to the next legal round regarding Apple’s role in ebook pricing

Posted on July 18, 2013 by aviyer2010

An article in the New York Times (July 10,2013) describes the judge’s ruling that Apple coordinated with competing publishers to increase ebook prices. Apple is said to have offered publishers an agency pricing scheme by which it would be paid 30% of the selling price in return for publishers getting to set ebook retail prices, along with a commitment that Apple would get the best selling price (called the most favored nation price). This was in contrast with Amazon’s standard $9.99 pricing, which publishers considered too low. The government claims that Apple’s demand for most favored nation pricing decreased competition and increased consumer prices. Publishers claim that Amazon used its monopolistic hold over ebook sales to push their margins too low, while Apple enabled more reasonable and flexible margins. Does the government’s argument that favors Amazon’s pricing enable variety and consumer choice of books in the long run if publisher and author margins get too low? Does most favored nation pricing increase retail prices or segment markets by book or author genre? Will this ruling, which will effectively reduce information sharing about deals signed by publishers, improve the retail supply chains for consumers ?

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The Thai mountain of rice inventory and global supply chain worries

Posted on July 18, 2013 by aviyer2010

An article in the Financial Times (July 18, 2013) describes the impact of the 50% price premium offered by the Thai government to rice farmers that last few years, leading to a drop in Thai rice exports and a surge in government inventories. The current level of Thai rice inventories can cover 50% of global rice imports. Now rice markets are nervous that Thai rice will flood the market and result in significant price drops, thus impacting farmers in India and Vietnam. But producers who use rice as input will also see an impact of this flood of product. How should Thailand manage its inventory to prevent such market meltdowns while achieving its goals ? Should farmers in Thailand be paid to stop growing rice for next year in an attempt to prevent burgeoning inventories ? Should alternate uses of rice for sustainable products such as paper or other be encouraged as a way to manage this problem ?

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Can electric-assisted tricycles use for local deliveries become economical ?

Posted on July 7, 2013 by aviyer2010

An article in the New York Times (July 7,2013) describes a company, B-Line Sustainable Urban Delivery, that uses electric-assisted tricycles to make local deliveries hauled in a 60 cubic foot cargo box. The company coordinates deliveries in a local area around Portland and delivers baked products, coffee, office supplies etc. The space on the side of the containers is used for advertisements and works to make the service more affordable. But even after all the associated benefits, many companies justify its use as enabling customers to feel good, enabling companies to justify being green because the service is more expensive than conventional delivery. Given the lower environmental footprint, should such services be provided additional subsidies by local governments to encourage their use ? Should equipment cost or driver income be provided preferential treatment to encourage such industries ? Will the cost of such deliveries decrease as volumes increase and empty miles traveled get reduced ?

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Competition and monitoring challenges of apparel manufacturing in Cambodia

Posted on July 6, 2013 by aviyer2010

An article in the Wall Street Journal (July 6, 2013) describes the evolution of the role of “Better Factories Cambodia” and its monitoring of working conditions in Cambodia’s apparel factories. Though initially focused on public release of its reports, the demise of the Multi-Fiber Agreement in 2005 and global competition meant less leverage for the US and increased global competition faced by Cambodian manufacturers. The result has been that reports are submitted by manufacturers as confidential documents, and these have to be purchased by interested retailers. This lack of transparency has also affected wage rates, overtime rules and work environment as manufacturers compete globally to win orders. How should the International Labor Organization and retailers organize the monitoring of Cambodian factories to ensure compliance with agreed upon laws ? How should employees be given a chance to share their information without suffering consequences ? Can technology enable consumers to be assured that their clothing is manufactured in an humane environment ?

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