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Suez Canal logjam could stretch on for weeks, slam world economy

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The growing traffic snarl in the Suez Canal could take weeks to untangle — and is threatening to wreak havoc on the world economy in the process.

The giant cargo ship that’s wedged across the canal is blocking an estimated $9.5 billion worth of shipments daily. The crisis — now in its third day — could stretch on for weeks, taking a devastating toll on global commerce as it traps shipments of everything from oil to electronics.

At least 150 ships are now stuck behind the Ever Given, a 200,000-ton cargo vessel that ran aground in the narrow channel on Tuesday. International crude prices surged 6 percent the following day — a move some analysts blamed on worries about oil shipments coming out of the Suez.

Meanwhile, logistics experts said the blockage would likely spur delays and added costs as deliveries of crucial goods between Europe and Asia, as deliveries of heavy equipment, clothing and even crucial medical supplies continue to get further backed up.

“We can’t exclude it might take weeks, depending on the situation,” said Peter Berdowski, CEO of Boskalis, told media on Thursday. “It’s an enormous weight on the sand. We might have to work with a combination of reducing the weight by removing containers, oil and water from the ship, tug boats and dredging of sand.”

Built over a decade in opened in 1869, the Suez Canal is an artificial waterway in Egypt that connects the Red Sea to the Mediterranean. Nearly 19,000 vessels passed through it last year carrying 1.2 billion tons of cargo, according to the Suez Canal Authority, the Egyptian state institution that operates the channel.

This handout satellite image shows the Taiwan-owned MV 'Ever Given' (Evergreen) container ship, a 400-meter- (1,300-foot-)long and 59-meter wide vessel, lodged sideways and impeding all traffic across the waterway of Egypt's Suez Canal.
This handout satellite image shows the Taiwan-owned MV ‘Ever Given’ (Evergreen) container ship, a 400-meter- (1,300-foot-)long and 59-meter wide vessel, lodged sideways and impeding all traffic across the waterway of Egypt’s Suez Canal.
CNES/AFP via Getty Images

The Ever Given — a 440 million-pound cargo ship that’s as long as the Empire State Building is tall — was en route from Rotterdam to China when it ran aground Tuesday after high winds turned it sideways, according to shipping data.

The bow of the ship is still lodged deep into one side of the canal, and dredging will be required, the Wall Street Journal reported on Thursday. Workers also will need to take off fuel, ballast water and possibly some of the ship’s cargo. That could require the help of helicopters Officials are hoping a higher-than-normal tide expected over the weekend could help lift the ship free.

The stranded vessel is blocking a route that carries about 13 percent of the world’s trade. On Thursday, the ship’s owner apologized for the mess.

“We are determined to keep on working hard to resolve this situation as soon as possible,” Shoei Kisen Kaisha said in a statement Thursday. “We would like to apologize to all parties affected by this incident, including the ships traveling and planning to travel through Suez Canal.”

The 400-meter, 224,000-ton Ever Given container ship, leased by Taiwan's Evergreen Marine Corp, blocks Egypt's Suez Canal in a BlackSky satellite image.
The 400-meter, 224,000-ton Ever Given container ship, leased by Taiwan’s Evergreen Marine Corp, blocks Egypt’s Suez Canal in a BlackSky satellite image.
via REUTERS

If the logjam can’t be undone, experts say cargo companies will be forced to reroute their shipments around the Cape of Good Hope at the bottom of Africa — a detour that typically adds 14 days and 5,000 nautical miles to the commute.

That could send prices for vital goods including cars, lumber and even critical medical supplies soaring in the coming weeks and months, officials said.

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Tesla more than doubles Q1 sales, delivers 185,000 vehicles

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Tesla says it delivered nearly 185,000 electric vehicles in the first quarter despite a shortage of computer chips that has hit the global auto industry.

The number was more than double the deliveries for the same period last year. And it beat Wall Street estimates of 168,000 for January through March. The company says in a statement that the Model Y small SUV in China has been well received.

Tesla lists no production figures for its older models, the S sedan and X SUV, during the quarter, but it delivered just over 2,000 of them. It says new equipment has been installed at the Fremont, California, factory and production of new versions is in the early stages.

The strong sales are a sign that demand for the company’s relatively expensive vehicles remains strong despite the pandemic. Analysts polled by data provider FactSet estimate that the average selling price of a Tesla is $49,100.

Shares of Tesla are down more than 9 percent so far this year as some of the shine wore off electric vehicle and tech stocks, which had experienced a big runup last year. The stock closed Thursday down just under 1 percent at $661.75. Markets are closed for the Good Friday holiday.

Tesla Model 3s (seen here) and its Model Y accounted for nearly all of Tesla's first-quarter sales.
Tesla Model 3s (seen here) and its Model Y accounted for nearly all of Tesla’s first-quarter sales.
Xinhua News Agency via Getty Images

Tesla sold just under 500,000 vehicles last year, barely missing a target set by CEO Elon Musk. The company hasn’t given much guidance for this year’s sales figures.

Wedbush analyst Dan Ives called the first-quarter numbers a “jaw dropper,” and a huge home run in the eyes of bullish investors. “We believe China and Europe were particularly robust this quarter as the trajectory now puts Musk & Co. to exceed 850k for the year which is well ahead of whisper expectations,” he wrote Friday.

The Model 3 small car and the Model Y accounted for nearly all of the Palo Alto, California, company’s first-quarter sales. Tesla said it sold 182,780 of both models combined.

Ives wrote that analysts expected more than 12,000 sales of Models S and X, with the miss driven by the chip shortage.

The strong sales came even though the company shut down much of its Fremont production for several weeks in late February and early March. It did not say why, but it’s likely that the company ran short of computer chips.

President Joe Biden’s announcement this week of $174 billion in spending on electric vehicle incentives and charging stations, and rising global demand for electric vehicles should shift sentiment toward Tesla stock, Ives wrote.

“It’s been a brutal sell-off for Tesla and EVs, but we believe that will now be in the rearview mirror,” he wrote.

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55 firms paid no federal income tax last year, report finds

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Dozens of America’s biggest companies paid no federal income taxes last year thanks to a range of tax breaks — including some brand-new ones, a new report says.

The 55 corporations avoided a total of $8.5 billion in taxes on more than $40 billion in pre-tax profits in their most recent fiscal year, according to the Friday report from the Institute on Taxation and Economic Policy.

In fact, 52 of those firms — including household names such as Nike, FedEx and Dish Network — ended up pocketing federal tax rebates worth a collective $3.5 billion, the left-leaning think tank’s analysis found.

And 26 of them haven’t paid a penny in federal income tax in the three years since the Tax Cuts and Jobs Act reform bill was signed into law in 2017, the report says. That group includes shipping giant FedEx and power company Duke Energy, which reported nearly $15 billion in pre-tax income for those three years, according to the findings.

Nike sneakers
Nike is among dozens of major corporations reported to be paying little to no federal income taxes.
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“Duke Energy fully complies with federal and state tax laws as part of our efforts to make investments that will benefit our customers and communities,” company spokesperson Catherine Butler said, adding that Duke paid more than $2 billion in annual state and local taxes in 2020.

Major companies have used loopholes in federal tax law to help their bottom line for decades, the think tank’s researchers note. But they got a fresh boon from the CARES Act, the $2.2 trillion stimulus bill that aimed to help businesses weather the COVID-19 pandemic.

Big firms were able to take advantage of a provision in the bill to use losses they racked up in 2018 or 2019 to offset profits from previous years, which slashed some of their 2020 tax bills to less than zero, according to the report. That measure accounted for at least $500 million of the 55 giants’ tax breaks, the report says.

FedEx stood by the CARES Act tax breaks, saying the law helped it and other companies “navigate a rapidly changing economy and marketplace while continuing to invest in capital, hire team members, and fund employee pension plans.”

FedEx truck
FedEx is said to be among major firms pocketing federal tax rebates while avoiding federal income taxes.
Alamy Stock Photo

But many companies also used more established methods for giving themselves tax discounts.

Those include write-offs for paying executives in stock, which were used by more than a dozen companies, while at least half a dozen took federal research and experimentation credits, the report says.

The list included some companies hit hard by the pandemic, including crafts retailer Michaels, as well as companies that thrived despite the lockdowns, like Salesforce.com, the cloud computing company that announced record 2020 earnings in February.

Salesforce logo
Salesforce is reported to be among thriving firms able to take advantage of numerous write-offs.
Getty Images

By reining in tax breaks like those, “or by re-introducing some form of a ‘minimum tax’ requiring profitable companies to pay at least some tax in any profitable year, Congress and President Biden could take a major step toward a fairer and more sustainable tax system,” authors Matthew Gardner and Steve Wamhoff wrote in the report.

Salesforce, Michaels, Nike and Dish Network did not immediately respond to requests for comment.

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China admonishes H&M over ‘problematic’ map on website

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Swedish retailer H&M continues to clash with Beijing, this time over how it has portrayed the region geographically.

Chinese officials admonished H&M Friday over a “problematic” map on the company’s website in the latest sign of escalating tensions after the Swedish retailer criticized China’s controversial cotton-picking region.

Shanghai government regulators summoned H&M managers to a meeting after internet users complained about the map, officials said on social media.

Chinese officials did not provide any detail about the alleged offense, which they said H&M managers quickly corrected.

But H&M got in trouble with China in 2018 for listing Taiwan as a country on the Taiwanese version of its website. China claims the democratic island country is part of its territory.

H&M was told to “bolster its awareness of the national territory, and really ensure the standardized use of the Chinese map,” the Cyberspace Administration of China’s Shanghai arm said in a post on the WeChat social network, according to The Wall Street Journal.

H&M did not immediately respond to a request for comment Friday.

The map flap is just the latest headache H&M has faced in China, the fast-fashion retailer’s top clothing supplier and its fourth-largest market by sales.

The company was hit with boycott threats last week and had its products pulled from Chinese e-commerce platforms over a statement it made last year saying it does not source cotton from the Xinjiang region, where Beijing has been accused of forced labor practices against Uyghur Muslims.

H&M tried to tamp down the backlash Wednesday with a new statement saying it’s “dedicated to regaining the trust and confidence” of its customers, colleagues and business partners in China, where its store locations were reportedly scrubbed from digital maps last week.

The company said it wants to be “a responsible buyer, in China and elsewhere,” but did not mention Xinjiang specifically.

With Post wires

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