The Friday Report: June 28th, 2019

Apple and Nintendo Prep to Shift Production Out of China

In preparation for the upcoming potential fourth round of Chinese tariffs, both Apple and Nintendo announced plans to move some production out of China to Southeast Asia.  The pending round of tariffs may potentially impact tech companies that are dependent upon cheap manufacturing as well as the raw materials, components and hardware from China.  While the bulk of its manufacturing is still in China, Nintendo has already begun production in Southeast Asia.

Apple has calculated that it would need to increase prices roughly 14 percent to “absorb the impact of the 25% tariff and keep margins constant for all players in the supply chain” according to a note from J.P. Morgan to its clients.  This would increase the price of an iPhone Xs from $1000 to $1142, as an example.  It seems unlikely that Apple would pass along the full cost to consumers

Starbucks and Dunkin’ Try Out Reusable Cups

In light of the fact that customers are willing to pay more money for sustainable packaging, Starbucks is trying out a new free reusable cup at its London Gatwick airport locations.  Starbucks customers would be able to receive a free reusable cup or pay a six cent surcharge for a regular disposable cup.  The trial will monitor the number of returned cups and evaluate different collection points to maximize the number of returns.  If only 250 customers select the returnable cup, it could result in the savings of over 7,000 disposable cups during the one month trial.

Starbucks recently secured a $1 billion sustainability bond and plans to use clean energy to power 3,000 store locations by 2021.  It has also launched a $1.3 million “Cup Fund” to expand and enhance paper cup recycling programs across the U.K.  In the United States, Starbucks is running a pilot for a recyclable, compostable cup in major cities in addition to offering strawless plastic lids in its stores across Canada and America this year.

Dunkin plans to eliminate polystyrene foam cups from all of its 9,000 stores by the end of this year and will substitute double-walled paper cups made from certified sustainable materials.

U.S. DOT Announces $600 M in Port and Rail Grants

In mid-June, the U.S. Department of Transportation announced over $600 million in grants designed to improve infrastructure, safety, efficiency and technology at American ports and rail hubs.  The $292.7 million funding grants for the 2019 Port Infrastructure Development Program include $92.7 million of funding specifically for the 15 busiest American ports based on 2016 volume including the Ports of:

• Everglades
• San Juan
• Honolulu

The $326 million dollar grant for the Consolidated Rail Infrastructure and Safety Improvement Program focuses on a broad range of projects across inner-city rail, major freight corridors, safety improvements.  It also includes reactivating old lines across the United States, especially at rail hubs in Florida, Louisiana, California and the Midwest.