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For retailers, US-Vietnam trade deal leaves questions
Industry experts on Thursday said that the U.S.-Vietnam trade agreement raises questions for retailers of sportswear and apparel like Nike and Adidas who source their shoes and clothing from factories in Southeast Asia. Donald Trump announced on Wednesday that the U.S. would impose a tariff of 20% on many imports coming from Vietnam. "Transshipping" goods from other countries via Vietnam will be subject to a 40% tax. The garment and shoe industries in Vietnam are heavily dependent on imported yarns, fabrics like polyester, and trims such as buttons and zippers from China. It wasn't immediately clear if such products made in Vietnam with Chinese inputs were subject to the transshipment tax. Transshipment is a term used to describe a product that was primarily made in China and shipped to Vietnam, before being re-labeled and exported under the Vietnam label. In an interview with CNBC on Thursday, U.S. Treasury secretary Scott Bessent said that "a large amount" of the trade coming from Vietnam was transshipment. Sheng Lu is a professor of fashion and clothing studies at the University of Delaware. Lu said that "strictly speaking, transshipment was illegal. However, using foreign components to comply with the rules of origin is a common practice." "Misconducting these two practices will only increase uncertainty and create further supply chain disruption." Vietnam is a popular destination for brands and retailers looking to reduce their dependence on factories in China. However, it has become the target of Trump’s aggressive trade policies. Vietnam is the largest supplier of Adidas products, with 27%, and a major producer of Nike sports shoes. Nike's spokesperson confirmed that the company was still investigating the details of the agreement. Adidas declined to comment. "This new change, and the possibility of this transshipment tax, will cause many importers to seriously question whether Vietnam is a viable alternative." Lila Landis is a customs compliance specialist based in Fort Worth. Landis said that while details have not been confirmed, it is possible for the 40% tariff to be added on top of the China duty applicable to any particular product. This would make the penalty extremely punitive. According to Footwear Distributors and Retailers of America, which called the tariffs unjustified and said that they would hurt American consumers, the U.S. imported more than 274 million pairs of footwear from Vietnam in the past year. Joe Jurken is the managing director of The ABC Group, a supply chain management firm. He said that there was disappointment with the 20% figure for Vietnam. Jurken stated that the announced tariff on Vietnam will help to close the gap between the U.S. and China. The U.S. tariffs are 55% and this may encourage some brands, rather than switching suppliers, which can be costly and time-consuming, to stay with China. Jurken stated that "there is a shortage of capacity in Vietnam due to the lack of factories and an abundance of capacity in China... So, we believe, the Chinese factories will benefit in the short-term." Raymond James analysts say that the 20 percent tariff is still better than the 25-30% tariff rate that the market had feared. The deal announcement could help retailers who were considering Vietnam place orders. Jim Kennemer is the managing director of Cosmo Sourcing. He said that it would be "nearly impossible" to have a supply chain made up of 100% non-Chinese products.
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United and JetBlue ask US not to accept Spirit Airlines' complaint about partnership
United Airlines and JetBlue Airways, a smaller airline, asked the U.S. Transportation Department on Thursday to reject a Spirit Airlines complaint about their proposed partnership. United and JetBlue called the arguments in the complaint about reduced competition "fiction", adding that "Blue Sky" will ensure JetBlue's competitiveness and independence, and allow JetBlue to continue growing and competing as an independent airline. United and JetBlue announced in May that their "Blue Sky", tie-up, would allow United to access some JetBlue slots at New York John F. Kennedy International Airport beginning in 2027. They also said they would exchange flight times at Newark airport. This plan also combines aspects of loyalty programs with booking. Last month, Spirit, a budget carrier, said that the deal would make JetBlue "a de facto vassal to United." JetBlue's non-stop service between Newark, Las Vegas and Los Angeles as well as its expanded service between Newark, Los Angeles and Las Vegas were cited as direct competitors to United's current services on these routes. Spirit Airlines said in a statement last month that the partnership will put pressure on smaller carriers to form similar agreements with large airlines. It did not immediately respond to Thursday's filing. JetBlue and Spirit cancelled a $3.8billion merger agreement in March 2024 after an American judge blocked it on the grounds of anti-competition. JetBlue is seeking new partnerships since a federal court judge ruled that its Northeast Alliance with American Airlines would be blocked in 2023. JetBlue is struggling to achieve sustained profitability following the COVID-19 epidemic. In just two out of nine quarters, it has posted a profit. (Reporting and Editing by Franklin Paul, Cynthia Osterman, and David Shepardson)
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Virgin Music CEOs at Universal take aim at critics of the Downtown Music deal
The Virgin Music Group, a division of Universal Music Group, reacted to critics on Thursday of the $775 million deal that it made with Downtown Music. They said the deal created a company which would provide a variety of services for independent labels. The European Commission will announce its decision on the 22nd of July whether it approves the deal, with or without concessions, or if there are any concerns. Virgin Music is Virgin's global independent music unit. Universal is the largest music company in the world. Downtown is a music publisher with a large number of businesses that assist musicians in collecting royalties. Impala, a group of independent European labels, has criticised the acquisition. They claim that it will further consolidate Universal's position in European music markets as well as strengthen its control over independent labels. Virgin will enhance Downtown Music's businesses FUGA and Curve Royalties as well as CD Baby, Downtown Music Publishing, Songtrust, and Downtown Music Publishing after the acquisition. The two co-CEOs denied that these services would become restricted or closed. Virgin Music Group co-CEOs Nat Pastor & JT Myers wrote to their staff in a Thursday note. They denied what they called suggestions that Universal’s market share has "skyrocketed", since it acquired EMI in 2012. Pastor and Myers stated that the independent sector has seen a substantial increase in its market share, while UMG has not. Also, they rejected the idea that Virgin would use Downtown's customers to give Universal a competitive advantage. "We are proud to report that we have not received a single complaint about misuse of customer information since we started this business," wrote Pastor and Myers. (Reporting and editing by Peter Graff.)
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Spain adds Wizz air to its probe of low-cost airlines over cabin baggage fees
Wizz Air, a low-cost airline in Europe, confirmed Thursday that the Spanish Ministry of Consumer Affairs was investigating it for practices like charging extra for larger cabin luggage. Five other airlines have already been fined a total of 179 million Euros ($211 million) by the ministry. The Spanish court suspended fines for three airlines, Ryanair, Norwegian Air, and IAG's Vueling. This was done while the case is being reviewed by the courts following legal challenges brought forth by these carriers. EasyJet and Volotea, a privately-owned airline, were also fined. According to the ministry, it could take several months for the latest case to be resolved. Wizz Air's spokesperson confirmed that the airline is the subject of an investigation, but declined to elaborate. Instead, the spokesperson referred to a statement regarding a larger European Parliament initiative to stop airlines from charging for hand baggage. A rule like this would limit the current freedom of business and choice for customers, and make flying more expensive. The Spanish Ministry has stated that the airlines have violated their customers' rights when they charge for larger carry-on luggage, seat selection, and printing of boarding passes. They also claim to have done so by refusing cash payment at check-in, or on board purchases. During the legal proceedings, it was allowed for the five airlines that were already under investigation to continue charging passengers for larger bags and seats. Ryanair and the industry group ALA say the fines are unjustified as these practices are widespread in the European Union. Reporting by Corinn Pons and Sarah Young. Editing by Susan Fenton, Lisa Shumaker.
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Lula visits Cristina Kirchner, former Argentina President Cristina Kirchner under house arrest
Luiz Inacio Lula Da Silva, Brazil's President, visited Cristina Fernandez de Kirchner in her apartment in Buenos Aires on Thursday after participating in Mercosur talks. She is currently serving a six year sentence for corruption. Lula, a leader of the left, did not have a private meeting with Javier Milei. Milei is a libertarian right-wing president who has called Lula a "communist." and "corrupt." During Lula's visit to Argentina and the Mercosur trade summit, Brazil assumed the rotating presidency. Milei had taken office after Milei was elected. Kirchner served as president of Argentina between 2007 and 2015, but began her sentence last month for taking part in a fraud scam that diverted public road projects to an ally during the time she was president. The Supreme Court of Argentina upheld the sentence in June, and Fernandez is also barred from holding any office. Supporters of Kirchner have rallied in recent days outside her apartment to try and catch a glimpse when the prominent opposition leader appears on her balcony. Lula, like Kirchner, said that the corruption conviction he received in 2017, for which he spent 19 months in jail, was a result of political persecution. Lula stated on the social media website X, that he had called Kirchner and expressed his support. He also spoke with her about the importance of "staying strong in this difficult time." Lucila Sigal reported. (Writing by Leila Mill; editing by Aurora Ellis.
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UPS offers voluntary buyout packages for its US drivers
UPS, the parcel giant, announced on Thursday that it would offer voluntary buyouts for its full-time U.S. driver as part of its largest network reconfiguration ever. This includes a massive overhaul which will result in 20,000 job cuts and the closure of 73 facilities. In April, the Atlanta-based firm announced a plan to reconfigure its network in response to a decrease in deliveries from Amazon.com and in response President Donald Trump’s tariffs. In a press release, the company stated that this buyout package was in addition to retirement benefits like pensions and healthcare. The Teamsters union which represents approximately 330,000 UPS workers was the first to announce buyout plans. They called them "illegal violations" of the National Contract, where UPS had committed itself to creating 22,500 new jobs. Sean O'Brien is the general president of the union. He said: "Our members can't be bought and we won't allow them to sell out." They must honor their commitments. "They must keep their promises." UPS has stated that it will adhere to its contract with union. (Reporting and editing by Shreya biswas in Bengaluru, Abhinav parmar in Bengaluru)
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Royal Mail strikes three-year wage deal with union
International Distribution Services announced on Thursday that Royal Mail and Communication Workers Union (CWU), had reached an agreement on a pay deal for three years. Royal Mail has been struggling with strikes by workers, competition, and a loss of market share. CWU (the largest union in the UK Royal Mail) has been on strike multiple times between 2022 and 2023. Both workers and businesses are struggling with the rising inflation. IDS reported that the CWU would issue a ballot in which it will recommend accepting and approving an agreement containing a basic pay increase over a period of three years, consisting of a 4.2% rise in 2025 and a 2% raise in 2026, linked to inflation. If the ballot results in a yes, then the increase is retroactively applied to 1 April 2025. IDS has agreed to be taken over by Kretinsky, a Czech billionaire in May 2024. The deal was finalized in December, after Britain obtained commitments from Kretinsky that he would protect the company's more than 500 years of history and the futures of thousands of employees and customers. EP Group announced that Kretinsky would become chairman of Royal Mail in late June. The CWU didn't immediately respond to a comment request. (Reporting by Chandini Monnappa in Bengaluru; Editing by Shreya Biswas)
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After accident, freight shipping on the Mosel River in Germany is blocked
Authorities in West Germany said that freight shipping on the Mosel River has been halted after a passenger vessel damaged a lock. The Moselle, also known as the Moselle River in France, is a major transit route between Germany and France for grains and rapeseed. A police spokesperson confirmed that the transit was stopped after an accident damaged a lock on Wednesday between Koblenz-Trier. The spokesperson stated that vessels cannot pass through the Sankt Aldegund Lock in either direction. WSA, the river navigation authority, said that technical experts were inspecting the lock on Thursday. It was not possible to comment yet on the extent of the damage or how long it will affect shipping. In a press release, German Federal Transport Minister Patrick Schnieder announced that he would visit the accident scene later on Thursday. Schnieder stated, "I will do all I can to restore the lock's operation as quickly as possible." After an accident damaged a Mueden lock, south of Koblenz in December, the river was closed for inland waterways traffic. It reopened only in February, after extensive repairs. WSA's Eric Oehlmann stated that initial indications indicate the concrete structure of the lock and its drive mechanism was not damaged by the accident. He said that technicians are assessing if it is possible to resume a limited lock operation for waiting vessels to pass. Oehlmann stated that "if not, we'll find another solution. For example, emergency locks with temporary barriers to control water have proven effective." During the winter shutdown, a temporary lock allowed ships to pass. Oehlmann stated that "despite the accident, shipping on the Moselle won't come to a standstill completely." (Reporting and editing by Jane Merriman, Gus Trompiz).
Russian missile strike on Odesa port infrastructure kills two, Kyiv says
Ukrainian officials reported on Thursday that a Russian airstrike in Odesa, a southern Black Sea port, on Wednesday killed two people, and injured six others, including two foreigners.
Odesa is the hub of Ukraine's seaports, and 90% of its exports to foreign markets are sent through it. This includes millions of tonnes each of metals and grain.
"Today an Iskander rocket hit one of the docks at the Odesa port." On Telegram, Oleksiy Kuleba, the deputy prime minister of Ukraine, said that people were unloading metals from a foreign ship flying the flags of Sao Tome and Principe at the time.
He said that berthing facilities, such as those for bulk carriers, cranes at ports, cars, and warehouses, had been damaged.
Kuleba confirmed that two people had been killed, a docker mechanic and a driver of a truck. Six other people, including two Syrians and crew members of a civilian vessel were also injured.
Andrii Sybiha, Ukrainian Foreign Minister, said on Telegram that "this is not an isolated event; it is rather part of Russia’s targeted campaign against Ukraine’s economy and agricultural sector, as well global food security, and freedom of navigation."
Russia has been attacking Ukrainian port infrastructure regularly and intensified its strikes since Ukraine began exporting through the maritime corridor on the Black Sea's western coast. Moscow claims its attacks aim to impede Ukraine's military efforts.
Ukraine has created a Black Sea shipping corridor following the collapse in 2023 of the U.N.-backed Black Sea Grain Export Initiative, which included Russia and ensured safe passage for grain ships.
Odesa has exported 101 million tonnes, including 78.5 millions tonnes of grain. (Reporting and editing by Alex Richardson, Philippa Fletcher and Philippa Richardson; Pavel Polityuk and Dan Peleschuk)
(source: Reuters)