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Apple Looks Beyond China; Crude’s ‘Shadow Fleet’; Rail’s Transport Cracks
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One analyst says Apple’s long-term goal is to ship 40% to 45% of iPhones from India. PHOTO: VCG/GETTY IMAGES
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China’s tough Covid restrictions are triggering potentially big changes in one of the world’s critical electronics supply chains. Apple has accelerated plans in recent weeks to shift some production outside China, with steps that would likely bring along scores of the suppliers within the complicated network behind the company’s iPhones, tablets and other high-value electronics. The WSJ’s Yang Jie and Aaron Tilley report the company is telling suppliers to plan more actively for assembling Apple products elsewhere in Asia, particularly India and Vietnam, and reduce dependence on Taiwanese assemblers led by Foxconn. Apple is acting after turmoil at its biggest iPhone
manufacturing site, a Foxconn facility in Zhengzhou, China. Analysts say the message to suppliers suggests Apple no longer is comfortable having so much of its business tied up in one place. Any moves by Apple could reach beyond its own supply chain if other companies follow its lead.
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“In the past, people didn’t pay attention to concentration risks. Free trade was the norm and things were very predictable. Now we’ve entered a new world.”
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— Alan Yeung, a former U.S. executive for Foxconn
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Tankers outside the port city of Nakhodka, Russia, in June. PHOTO: TATIANA MEEL/REUTERS
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The turmoil over sanctions against Russia’s energy exports is driving upheaval in global tanker markets. Shipping companies have snapped up dozens of secondhand crude carriers this year, the WSJ’s Joe Wallace, Anna Hirtenstein and Costas Paris report, and are paying record prices for ice-class ships that can navigate frozen seas around Russia’s Baltic ports in winter. The frenzy in a usually quiet corner of the shipping market is splitting the tanker industry in two. One part deals with Western oil companies, banks and insurers. The other is operating what’s known informally in the industry as a “shadow fleet” that trades with Iran, Venezuela, and increasingly with Russia. Moscow faces a stifling of its oil
exports starting today when European and U.S. sanctions start to come into effect. Vessels sailing outside international conventions often turn off transmitters, use decoy signals or take other steps meant to obscure their operations.
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“You're starting a new kind of shipping market, in parallel to the normal compliant market that most of us are operating within.”
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— Lars Barstad, CEO of tanker owner Frontline
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A Norfolk Southern rail yard in Atlanta. PHOTO: DANNY KARNIK/ASSOCIATED PRESS
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The threat of a railroad strike is over but the cracks in U.S. transportation networks aren’t going away. The potential for a walkout this month exposed the vulnerability of U.S. shipping operations, the WSJ’s David Harrison reports, and revealed potential new risks of supply-chain disruptions just as pandemic-era bottlenecks are fading. Even with the dispute resolved, the episode brought about a heightened awareness that supply hiccups could become an ongoing feature of business life in America. Some commodities that provide the feedstock for the country’s industrial production are particularly reliant on rail. Experts say the episode highlighted a distribution network in which businesses have sought to
reduce freight costs by becoming as lean as possible. Balaji Guntur of logistics technology company Hoptek says the lack of slack in the system has made it more difficult to respond to shocks such as a pandemic.
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A solar farm in in Deport, Texas. PHOTO: JORDAN VONDERHAAR FOR THE WALL STREET JOURNAL
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A trade investigation could step up an ongoing shift in solar-cell supply chains. The U.S. found that four top Chinese manufacturers circumvented tariffs by routing some of their operations through Southeast Asia. The WSJ’s Yuka Hayashi reports that the investigation that began in March prompted uncertainty over U.S. solar-parts imports, leading to cancellation of projects and intervention from President Biden to ease pressure on the industry. The preliminary findings are likely to accelerate importers’ race to find alternative sources either domestically or from other places abroad to meet soaring demand for solar panels. The outcome won’t lead to immediate increases in solar tariffs because the president has
suspended duties for two years to give importers time to make adjustments. But the trade group for the U.S. solar industry warns that the probe has touched off supply-chain disruption that won’t be resolved by the time the tariff suspension ends.
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