Afternoon Coffee: Shippers shift to regional carriers; Homebuilder confidence; Power outages in California; Oracle to buy TikTok?

Shippers are turning to regional carriers to meet the high demand on their supply chains while national carriers have made shipping more expensive, according to Supply Chain Dive.

Convey data found that 17% of retail volume went to regional carriers in the first seven months of 2020, compared to 3.8% for 2019. In July, 24% of volume traveled through regional carriers as shippers aimed to improve their supply chains.

Shipping companies that are struggling financially because of surcharges can find ways to combine shipments and cut costs, according to the article. A strategy could include splitting volume between national and regional carriers. Additionally, FedEx, UPS and USPS have struggled to make shipments on time as demand has increased greatly during the COVID-19 pandemic. Local carriers might help cut costs and speed up shipments.

"This is part of the new normal," Brie Carere, FedEx’s chief marketing officer, said to Supply Chain Dive on an earnings call. "It will not be just for this fiscal year, but I anticipate customers to pay more for pricing in November and December moving forward. And I do think that will be a structural shift in the market."

Construction on new homes surged last month

Construction for new homes surged 22.6% in the U.S. last month as homebuilders ended a lull induced by the coronavirus pandemic, according to the Associated Press. New building projects have now risen for three straight months after plunging in March and April.

The Commerce Department reported new homes were started at an annual pace of nearly 1.5 million in July, the highest since February. Strong demand and limited supply encouraged builders to break ground, according to the article. The announcement was released in tandem with Home Depot’s sales surging 25% in the U.S. as more people turned to the retailer for DIY home projects during the coronavirus, the AP reported. Applications for building permits, which is a good indication for future activity, also jumped 18.8% last month.

“U.S. housing starts blew the roof off of expectations in July …. These are the kinds of gains seen after storms and hurricanes,” Jennifer Lee, a senior economist at BMO Capital Markets, told the Associated Press.

California heat wave creates too much demand on power supply, resulting in temporary outages

A historic heat wave in the U.S. Southwest led to a massive rise in demand for electricity and energy power last weekend. Californians increased their use of electricity so much that the agency overseeing the state’s power grid declared an emergency and shut off power for several hours in some areas to avoid an overload, according to The New York Times.

The California Independent System Operator ordered rotating power outages for two hours on Friday to reduce demand by about 1,000 megawatts. Bloomberg reported 2 million people might have been without power.

However, the heat wave is expected to last through at least Friday, according to The New York Times. It is unclear what this will mean for overload problems in the next few days. The power outages also come as more people are staying home because of rising coronavirus cases in the state.

“Even in cases where facilities haven’t closed, people have to decide, ‘Do I stay home where I may be too hot, or do I go to a public or semipublic building where I may contract the virus?’ That’s a tough dilemma for folks to deal with,” David Hondula, who studies the societal impacts of weather and climate at Arizona State University, told The New York Times.

Oracle in talks to acquire social media app TikTok

Oracle may be looking into options to acquire TikTok’s U.S., Canadian, Australian and New Zealand assets, according to CNBC. Oracle is working with a group of U.S. venture capital firms that already have a stake in TikTok.

For a month, Microsoft has been in talks to buy the operations of TikTok from Chinese company ByteDance. Oracle is traditionally known as an enterprise software giant. This would be the company’s first consumer-facing social media or video business, according to the article.

The talks come weeks after the Trump administration announced an executive order to ban the popular social media app within the U.S. if it's not sold to another company.

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