Why is logistics brutal?

Alright so today we’ve got:

• Companies now find that logistics is a tough nut to crack.

• AI chip makers just found a new player in the market.

• A former paper company is one the largest Lithium producers.

  Let’s do a scan.

The Big Picture

Companies that expanded their logistics and fulfillment services during the boom in online sales driven by the COVID-19 pandemic are now scaling back those efforts. Shopify, American Eagle Outfitters, and Blue Apron initially ramped up their logistics operations to disrupt Amazon's massive distribution network. Amazon’s rising logistics costs are a testament to this.

Over a period of time, the companies found that providing regular, reliable home deliveries is more challenging than anticipated. As the urgency to overcome supply-chain disruptions diminishes, these businesses are paying more attention to the impact of their logistics operations on their bottom lines.

American Eagle, for example, established a logistics subsidiary called Quiet Platforms and spent hundreds of millions on scaling their operations. While these efforts reduced delivery costs for American Eagle's own brands, they did not meet third-party service expectations, leading to cutbacks.

Shopify spent billions on its own fulfillment operation, only to sell it to Flexport, a freight forwarder, as e-commerce growth slows down. Shopify is now focusing on its core business of selling e-commerce tools to retailers.

Sector Sweep

Tech

• San Francisco-based startup Etched, is announcing its AI chip which is expected to be more specialized, power efficient for running AI models.

• Apple is the latest among certain employers who have banned the use of ChatGPT, with concerns that employees could release confidential data. JP Morgan and Verizon have taken a similar stance earlier this year.

• Applied Materials is investing in a $4 billion chip manufacturing facility in California.

• Uber’s revenue for the last 3 months grew 29% as their stock went up 17% over the last 12 months. Uber said their delivery business went up as advertisers for Uber Eats increased to 705 YOY.

• Uniqlo the clothing apparel company, has implemented automated checkout in its 5th Avenue store. Customers can checkout by placing their checkout bags in the bin.

Energy

• Amy Francetic, the cofounder of Buoyant Ventures, now has a portfolio of startups using AI for climate technology. From AI drones, to efficiently manage solar farms, to using cameras to optimize the growth of fish.

Health

• Medicare plans to widen the coverage of Alzheimer's drugs which could win full approval this year.

• Chains like Safeway and Supervalu could be sued as they overcharged the government for Medicare reimbursement while selling drugs to customers at discounted rates.

Manufacturing

• Albemarle, which started off in 1887 as a paper mill producer is now the largest Lithium producer with a market cap of $23 billion just behind Chile’s SQM and China’s Ganfeng Lithium.

Small Business

• In the aftermath of bank collapses, lending standards to small businesses are getting tighter. Businesses report stricter terms, higher borrowing costs, and longer wait times from bankers. The median small business term loan rate is now at about 7.4%.

That’s all for today folks. Do keep a lookout for our weekly email about stock deep dives and personal finance strategies this Saturday.

BTW, do tell us how we did. Just hit us with a reply.

Cheers!

Memetic Universe

That escalated quickly.

Perfectly normal.