Afternoon Coffee: GM faces semiconductor shortage, cuts production at some plants; Container shipping costs from China grow exponentially; Uber Eats launches prescription delivery

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General Motors said it will extend production cuts at three of its North American plants until at least mid-March because of a semiconductor chip shortage around the world, according to Reuters.

The company also said vehicles at two other factories will be only partially built in the meantime. GM did not disclose the impact on its volumes or indicate which supplier and vehicle parts were affected by the shortage.

The company did say that it will focus on keeping production running at plants manufacturing the highest profit vehicles: full-size pickup trucks and SUVs, Reuters said. It aims to make up as much lost production as possible once the shortage eases.

“Semiconductor supply remains an issue that is facing the entire industry,” GM spokesman David Barnas told Reuters. “GM’s plan is to leverage every available semiconductor to build and ship our most popular and in-demand products.”

A recent Spend Matters article said the shortages could last through June.

Container shipping costs grow exponentially during Covid-19 disruption

The cost of container shipping, monitored by the Freightos Baltic Global Container Index (FBX), has almost quadrupled for the China-Europe route since early November, according to the website Hellenic Shipping News.

The cost stood at $7,827 on Friday. Meanwhile, the FBX reading for manufactured goods from China bound to the United States nearly tripled since late May to $4,286. The strong demand for Chinese exports and a shortage of vessels boosted maritime container freight shipping during the Covid-19 pandemic.

Meanwhile, shifting consumer demands for China’s manufactured products also shot costs higher, the article said.

“First, demand of medical goods produced in China have been strongly rising. Second, and probably more important, consumers have been re-allocating their demand,” Andreas Rees, a UniCredit Bank economist, told Hellenic Shipping News.

“Instead of going to restaurants and traveling, they have been demanding more durable goods such as electronic equipment, furniture, etc. to have a nice home. And many of these goods are produced in China.”

Uber Eats will begin delivering prescriptions in New York City

Uber Technologies Inc. recently announced plans to grow its on-demand prescription delivery service in New York City, fueled by a partnership with Nimble, according to the website PYMNTS.com.

Nimble is a prescription delivery service that links neighborhood pharmacies with consumers looking for delivery. Users will be able to transfer current prescriptions or have new prescriptions filled from neighborhood pharmacies and have them delivered at their door, the article said.

Nimble Founder and CEO Talha Sattar said customers desired a quicker, simpler and more secure way of getting medications in the last year.

“At Uber, we’re hard at work making Uber Eats your go-to destination for much more than food from your favorite restaurant, corner store or grocer,” Kiran Vinta, Uber’s US General Manager for New Verticals, said in the announcement. “We’re one step closer to delivering that reality to our consumers everywhere with the launch of on-demand prescription delivery in the US, powered by our partner Nimble.”

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