Latest news with #ApolloManagement
New York Times
6 days ago
- Business
- New York Times
Why have Nottingham Forest taken out an £80m loan from Apollo Management?
Nottingham Forest have taken a loan of £80million ($108m) with Apollo Management, a global asset management company based in New York. It is the company's first venture into Premier League finance. The three-year loan, which was secured in December 2024, will operate with an interest rate of 8.75 per cent. Advertisement For Forest, £55million of the loan was used to refinance an existing debt with Rights and Media Funding Group (RMF) as a potential cost-saving exercise. It is secured against the entirety of the club and its assets, the most significant of which is the City Ground. It is not an unusual practice for clubs to secure finance in such a manner. In fact, it is a reasonably regular occurrence; fleeting star players aside, a club's most valuable asset tends to be its home, so that's what gets put up as security when large tranches of funding are obtained. But, when it involves a headline figure of such a high number, it might raise some questions among fans. Which The Athletic attempts to answer here… Apollo — or Apollo Global Management — is a global asset management company, headquartered in Midtown Manhattan. Founded in 1990, Apollo had, as of the end of 2024, assets under management of $751billion, ranking them as the 28th largest asset management firm in the world, according to the Sovereign Wealth Fund Institute. Apollo was co-founded by Josh Harris, now a shareholder at Crystal Palace. Harris left Apollo in 2022, though retained a six per cent shareholding in the firm as of April this year. Naturally, the firm's business is widely diversified, with various companies in operation. Of the £80million loaned to Forest last December, £25m is owed to Apollo Debt Solutions (ADS) BDC (the latter standing for 'Business Development Company'), a subsidiary of the Apollo group. Based on filings by Forest's holding company, NF Football Investments, the remaining £55m is held by Apollo Investment Management Europe, a Luxembourg-based entity. While this is Apollo's first known direct foray into football, the Financial Times reported this week that the investment firm is in talks to buy a stake in Atletico Madrid. Advertisement Which isn't to say the firm is not already active in sport. ADS' loan book includes two term loans, totalling $172million, given to Endeavor, owners of World Wrestling Entertainment and the Ultimate Fighting Championship via their ownership of TKO Group. A further $52m was loaned to TKO earlier this year, while there's another $5m due from Delta 2, a Luxembourg-based company that holds debt for Formula One. There's an existing link to football too. Also on ADS' list of investments at the end of March was a £40m loan to Sports Invest Holdings Limited, a business set up last May by prominent football advisor, Kia Joorabchian. Rights and Media Funding Limited is a Macclesfield-based company that lends to the sports and entertainment industries. RMF loaned Forest £55million in two tranches. First, in August 2022, £45m repayable by July 30 2025, bearing interest at 7.5 per cent plus the Bank of England (BOE) base rate (then 1.75 per cent; now 4.25 per cent), then a further £10m in October 2023, again repayable by July 30 2025, this time bearing interest at 6.45 per cent plus the BOE base rate. Both loans have now been repaid in full and were filed as such on January 6 this year. Forest aren't the first club to have received funding from RMF, whose most high-profile lending was to Everton before the club's takeover by The Friedkin Group last December. At one stage, that debt sat at £225m, though it was all repaid following the takeover. As well as Everton, RMF has previously loaned money to West Ham (varying amounts between 2017 and 2020), and a cohort of 11 clubs in Spain. The lender provided €67million in December 2020 in a joint-financing venture that looked to shore up liquidity during the Covid-19 pandemic. In July 2021, RMF loaned Valencia €51m over five years, before organising a separate €20m, over four and a half years, to the Mestalla club in January 2024. Per RMF's balance sheet at the end of June 2024, the company was owed loans in the region of £288million, the vast majority of which looks to have been amounts due from Everton and Forest. Both clubs are now free of debt to RMF. The £80million loaned from Apollo to Forest is senior debt, meaning it takes priority when it comes to repayment; in the unlikely event Forest were heading out of business, Apollo would be at the front of the resultant queue. The loan has a three-year term, due for repayment on December 20 2027, though there is provision for that to be extended a further two years. It incurs 8.75 per cent interest annually or, based on the £80m balance, £7m per year. That was around half Forest's total matchday income in the 2023-24 season (the latest for which we have figures). Advertisement £55m of the Apollo loan has been used to repay the amounts due to RMF. Based on most recent interest rates, those RMF loans were incurring £6.4m in annual interest, so this refinancing — now a common occurrence in football — works out cheaper in a sense; applying the Apollo interest rate to £55m gives an annual charge of £4.8m. Of course, Forest have borrowed above and beyond their previous debt to RMF, taking out a further £25m this time around. It is unclear what the additional funding is to be used for. It is difficult to read too much into the timing of the loan, beyond the fact that the restructuring of the debt should ultimately reduce costs for the club. With those RMF loans due for repayment at the end of July, it makes sense that the club looked elsewhere — successfully — for cheaper financing. The club have declined to comment. Debt has long been a dirty word in football, but it need not be; the only way debt becomes overly problematic is if clubs are unable to service it, or it unduly impacts their ability to spend elsewhere. In that sense, Forest shouldn't have too much new to be concerned about in the immediate future. While their debt burden has increased by £25million, the more favourable rate — and a fixed one at that — means interest costs have only increased by around £0.6m annually. That is, however, simply relative to the club's previous position. £7m in annual interest isn't too bad for a club in the Premier League and the commensurate wealth that brings (The Athletic estimates Forest earned £157.5m in domestic prize money alone last season), but should a bad season result in relegation, interest quickly becomes a much bigger problem. An 8.75 per cent interest rate is hardly cheap, though it's also not as hefty as some other clubs are paying — including Forest's own recent payments to RMF. Rates are high generally and a potential drop into the Championship, deemed a possibility for all but a minority of clubs, makes it difficult to obtain low-rate lending. A positive is that Forest have now locked in the rate on this tranche of funding, so are no longer subject to interest rate swings and have certainty over upcoming payments — though, of course, that could turn to a negative if rates fall in the future. Advertisement Of greater concern is whether Forest have anything to show for it. If the money has only been used to cover ongoing costs, that's much less desirable than pouring it into infrastructure; for example, the imminent works at the City Ground. Debt just to fund existing operations always raises the question of how it will eventually be repaid. Eight Premier League clubs paid more in interest than Forest in 2023-24, some substantially so, but several of those did it to build new or improved facilities. There's also the important point that all of the club being used as security precludes Forest from putting its assets up against any other funding, such as whatever may be required to pay for those City Ground works. That money will, presumably, have to come from the pockets of owner Evangelos Marinakis. The repayment date for the Apollo loan isn't until December 2027, but could be extended to 2029, and it may be that Forest simply refinance again. In the immediate term, the lending doesn't look overly risky or expensive — at least relative to what went before. But finances at Forest, like most clubs outside a handful, will remain reliant on on-field success.
Miami Herald
30-04-2025
- Business
- Miami Herald
Empty ports, empty shelves? Trump tariff battle set to hit home soon
President Donald Trump's tariff onslaught has roiled Washington and Wall Street for nearly a month. If the trade war persists, the next upheaval will hit much closer to home. Since the U.S. raised levies on China to 145% in early April, cargo shipments have plummeted, perhaps by as much as 60%, according to one estimate. That drastic reduction in goods from one of the largest U.S. trading partners hasn't been felt by many Americans yet, but that's about to change. By the middle of May, thousands of companies - big and small - will be needing to replenish inventories. Giant retailers such as Walmart Inc. and Target Corp. told Trump in a meeting last week that shoppers are likely to see empty shelves and higher prices. Torsten Slok, Apollo Management's chief economist, recently warned of looming "COVID-like" shortages and significant layoffs in industries spanning trucking, logistics and retail. While Trump has shown signs in recent days that he's willing to be flexible on the import taxes imposed on China and others, it may be too late to stop a supply shock from reverberating across the U.S. economy that could stretch all the way to Christmas. "The clock is absolutely ticking," said Jim Gerson, president of The Gersons Companies, an 84-year-old supplier of holiday decorations and candles to major U.S. retailers. The company, based in Olathe, Kansas, sources more than half its products from China and currently has about 250 containers waiting to be shipped. "We have to get this worked out," said Gerson, who's part of the third generation from his family to run the company, which generates roughly $100 million in sales a year. "And hopefully very soon." Even when hostilities ease, restarting transpacific trade will bring additional risks. The freight industry has reduced capacity to match weaker demand. That means a surge of orders sparked by a detente between the superpowers will likely overwhelm the network, causing delays and boosting costs. A similar scenario unfolded during the pandemic when container prices quadrupled and a glut of cargo ships jammed up ports. "There will be a surge in ports and consequently for trucks and rail creating delays and bottlenecks," said Lars Jensen, chief executive officer of shipping consultant Vespucci Maritime. "Ports are designed for stable flows, not the off-again, on-again volume shifts." The U.S. tariffs on China came at a critical time for the retail industry. March and April is when suppliers start ramping up inventory for the second half of the year to fill orders for back-to-school shopping and Christmas. For many firms, the first holiday goods should be hitting the water bound for the U.S. in roughly two weeks. "We are paralyzed," said Jay Foreman, CEO of toymaker Basic Fun in Boca Raton, Florida, which supplies big retail customers such as Inc. and Walmart. He called the tariffs a "de facto embargo" and said customers have been pausing orders so far, but he expects them to start canceling them if the China tariffs stay at this level for much longer. "There's a couple weeks, then it really starts to hurt," said Foreman, whose company generates about $200 million in sales a year and sources roughly 90% of products from China. "We're in a period where the damage is manageable, but every week the damage level is going to increase." The leading edge of that supply jolt is evident in Asia. There are currently about 40 cargo ships that recently stopped at ports in China and are now bound for the U.S., down by about 40% from early April, according to ship tracking compiled by Bloomberg. Those vessels are carrying about 320,000 containers, according to the data, about a third fewer than just after Trump announced he was raising tariffs on almost all goods from China to 145%. Judah Levine, head of research at cargo booking platform Freightos, said a lot of U.S. importers will be front-loading orders from other American trading partners through the 90-day reprieve on Trump's so-called reciprocal tariffs. That could help cushion any China-centric shock through ports and logistics networks. With Chinese merchandise too pricey, some cargo owners in the U.S. are turning to suppliers in Southeast Asia. Hapag-Lloyd AG, the world's fifth-largest container carrier, said in an emailed statement last week that it's seeing cancellations of about 30% of bookings from China to the U.S. But business is sharply up from exporters in Cambodia, Thailand and Vietnam, the Hamburg, Germany-based company said. However, the whiplash effect on the economy still might be difficult to navigate in the months ahead, Levine said. "It is likely there will be a significant slowdown," he said, and "the restart could cause some congestion, with the strength of the rebound and resulting disruption probably correlated to the length of the pause." With demand for goods from China to the U.S. sinking fast, cargo carriers have slashed capacity to keep ocean freight rates from cratering. In April, there were about 80 canceled sailings from China to the U.S., roughly 60% more than any month during the COVID-19 pandemic, according to figures cited by John McCown, a veteran industry executive. "It's a fair statement to say that the container shipping sector has never faced the sort of macro headwinds that it is now facing," McCown said in a recent research note. The World Trade Organization has warned that goods traded between the U.S. and China could decrease by as much as 80%, backing U.S. Treasury Secretary Scott Bessent's description of the current situation as essentially a trade embargo. The uncertainty is partly why economists say a U.S. recession is almost a coin flip. Forecasters surveyed by Bloomberg expect imports to fall at a 7% annual rate in the second quarter - which would be the biggest drop since the onset of the pandemic. The looming supply shock has prompted economists to revise up their inflation forecasts because it could push prices higher. Executives say price tags on goods from China could double on some items. And that would come at a time when consumer sentiment is deteriorating sharply. If America's trade war with China goes on for a few more weeks, suppliers and retailers will have to make some hard decisions about the second half of the year, including which goods to ship and how much to raise prices. Suppliers are expecting lots of orders to be canceled. That will push retailers to scour the U.S. and other markets for goods to fill their shelves, even if they're from last Christmas. It's also going to be a big financial hit that many companies will likely respond to by cutting costs, including jobs, or taking on pricey debt. The risk is that supply problems morph into a "credit crunch," according to Steven Blitz, TS Lombard's chief U.S. economist. "U.S. firms could find themselves at risk from tariffs, and then the economy more broadly, if these leveraged operations find credit less available because tariffs force them to operate with smaller margins," Blitz wrote in a research note Friday. For Foreman, the past few weeks reminds him of the pandemic, but there are key differences. The COVID lockdown was a shock, but global supply chains bounced back relatively quickly and several sectors, including toys, ended up having record years. This has the potential to be "more treacherous because the longer this goes, the more catastrophic this is," he said. COVID was also littered with lots of unknowns about the virus and how long it would take to rebound. This dilemma could be eased by Trump removing the levies at any time. "The lingering effects could be worse," Foreman said. "But the solution could come much faster." Copyright (C) 2025, Tribune Content Agency, LLC. Portions copyrighted by the respective providers.
Yahoo
30-04-2025
- Business
- Yahoo
Empty ports, empty shelves? Trump tariff battle set to hit home soon
President Donald Trump's tariff onslaught has roiled Washington and Wall Street for nearly a month. If the trade war persists, the next upheaval will hit much closer to home. Since the U.S. raised levies on China to 145% in early April, cargo shipments have plummeted, perhaps by as much as 60%, according to one estimate. That drastic reduction in goods from one of the largest U.S. trading partners hasn't been felt by many Americans yet, but that's about to change. By the middle of May, thousands of companies — big and small — will be needing to replenish inventories. Giant retailers such as Walmart Inc. and Target Corp. told Trump in a meeting last week that shoppers are likely to see empty shelves and higher prices. Torsten Slok, Apollo Management's chief economist, recently warned of looming 'COVID-like' shortages and significant layoffs in industries spanning trucking, logistics and retail. While Trump has shown signs in recent days that he's willing to be flexible on the import taxes imposed on China and others, it may be too late to stop a supply shock from reverberating across the U.S. economy that could stretch all the way to Christmas. 'The clock is absolutely ticking,' said Jim Gerson, president of The Gersons Companies, an 84-year-old supplier of holiday decorations and candles to major U.S. retailers. The company, based in Olathe, Kansas, sources more than half its products from China and currently has about 250 containers waiting to be shipped. 'We have to get this worked out,' said Gerson, who's part of the third generation from his family to run the company, which generates roughly $100 million in sales a year. 'And hopefully very soon.' Even when hostilities ease, restarting transpacific trade will bring additional risks. The freight industry has reduced capacity to match weaker demand. That means a surge of orders sparked by a detente between the superpowers will likely overwhelm the network, causing delays and boosting costs. A similar scenario unfolded during the pandemic when container prices quadrupled and a glut of cargo ships jammed up ports. 'There will be a surge in ports and consequently for trucks and rail creating delays and bottlenecks,' said Lars Jensen, chief executive officer of shipping consultant Vespucci Maritime. 'Ports are designed for stable flows, not the off-again, on-again volume shifts.' The U.S. tariffs on China came at a critical time for the retail industry. March and April is when suppliers start ramping up inventory for the second half of the year to fill orders for back-to-school shopping and Christmas. For many firms, the first holiday goods should be hitting the water bound for the U.S. in roughly two weeks. 'We are paralyzed,' said Jay Foreman, CEO of toymaker Basic Fun in Boca Raton, Florida, which supplies big retail customers such as Inc. and Walmart. He called the tariffs a 'de facto embargo' and said customers have been pausing orders so far, but he expects them to start canceling them if the China tariffs stay at this level for much longer. 'There's a couple weeks, then it really starts to hurt,' said Foreman, whose company generates about $200 million in sales a year and sources roughly 90% of products from China. 'We're in a period where the damage is manageable, but every week the damage level is going to increase.' The leading edge of that supply jolt is evident in Asia. There are currently about 40 cargo ships that recently stopped at ports in China and are now bound for the U.S., down by about 40% from early April, according to ship tracking compiled by Bloomberg. Those vessels are carrying about 320,000 containers, according to the data, about a third fewer than just after Trump announced he was raising tariffs on almost all goods from China to 145%. Judah Levine, head of research at cargo booking platform Freightos, said a lot of U.S. importers will be front-loading orders from other American trading partners through the 90-day reprieve on Trump's so-called reciprocal tariffs. That could help cushion any China-centric shock through ports and logistics networks. With Chinese merchandise too pricey, some cargo owners in the U.S. are turning to suppliers in Southeast Asia. Hapag-Lloyd AG, the world's fifth-largest container carrier, said in an emailed statement last week that it's seeing cancellations of about 30% of bookings from China to the U.S. But business is sharply up from exporters in Cambodia, Thailand and Vietnam, the Hamburg, Germany-based company said. However, the whiplash effect on the economy still might be difficult to navigate in the months ahead, Levine said. 'It is likely there will be a significant slowdown,' he said, and 'the restart could cause some congestion, with the strength of the rebound and resulting disruption probably correlated to the length of the pause.' With demand for goods from China to the U.S. sinking fast, cargo carriers have slashed capacity to keep ocean freight rates from cratering. In April, there were about 80 canceled sailings from China to the U.S., roughly 60% more than any month during the COVID-19 pandemic, according to figures cited by John McCown, a veteran industry executive. 'It's a fair statement to say that the container shipping sector has never faced the sort of macro headwinds that it is now facing,' McCown said in a recent research note. The World Trade Organization has warned that goods traded between the U.S. and China could decrease by as much as 80%, backing U.S. Treasury Secretary Scott Bessent's description of the current situation as essentially a trade embargo. The uncertainty is partly why economists say a U.S. recession is almost a coin flip. Forecasters surveyed by Bloomberg expect imports to fall at a 7% annual rate in the second quarter — which would be the biggest drop since the onset of the pandemic. The looming supply shock has prompted economists to revise up their inflation forecasts because it could push prices higher. Executives say price tags on goods from China could double on some items. And that would come at a time when consumer sentiment is deteriorating sharply. If America's trade war with China goes on for a few more weeks, suppliers and retailers will have to make some hard decisions about the second half of the year, including which goods to ship and how much to raise prices. Suppliers are expecting lots of orders to be canceled. That will push retailers to scour the U.S. and other markets for goods to fill their shelves, even if they're from last Christmas. It's also going to be a big financial hit that many companies will likely respond to by cutting costs, including jobs, or taking on pricey debt. The risk is that supply problems morph into a 'credit crunch,' according to Steven Blitz, TS Lombard's chief U.S. economist. 'U.S. firms could find themselves at risk from tariffs, and then the economy more broadly, if these leveraged operations find credit less available because tariffs force them to operate with smaller margins,' Blitz wrote in a research note Friday. For Foreman, the past few weeks reminds him of the pandemic, but there are key differences. The COVID lockdown was a shock, but global supply chains bounced back relatively quickly and several sectors, including toys, ended up having record years. This has the potential to be 'more treacherous because the longer this goes, the more catastrophic this is,' he said. COVID was also littered with lots of unknowns about the virus and how long it would take to rebound. This dilemma could be eased by Trump removing the levies at any time. 'The lingering effects could be worse,' Foreman said. 'But the solution could come much faster.'
The Star
29-04-2025
- Business
- The Star
Tariffs set to unleash supply shock on economy
PRESIDENT Donald Trump's tariff onslaught has roiled Washington and Wall Street for nearly a month. If the trade war persists, the next upheaval will hit much closer to home. Since the United States raised levies on China to 145% in early April, cargo shipments have plummeted, perhaps by as much as 60%, according to one estimate. That drastic reduction in goods from one of the largest US trading partners hasn't been felt by many Americans yet, but that's about to change. By the middle of May, thousands of companies – big and small – will be needing to replenish inventories. Giant retailers such as Walmart Inc and Target Corp told Trump in a meeting last week that shoppers are likely to see empty shelves and higher prices. Torsten Slok, Apollo Management's chief economist, recently warned of looming 'Covid-like' shortages and significant layoffs in industries spanning trucking, logistics and retail. While Trump has shown signs in recent days that he's willing to be flexible on the import taxes imposed on China and others, it may be too late to stop a supply shock from reverberating across the United States economy that could stretch all the way to Christmas. 'The clock is absolutely ticking,' said Jim Gerson, president of The Gersons Companies, an 84-year-old supplier of holiday decorations and candles to major US retailers. The company, based in Olathe, Kansas, sources more than half its products from China and currently has about 250 containers waiting to be shipped. 'We have to get this worked out,' said Gerson, who's part of the third generation from his family to run the company, which generates roughly US$100mil in sales a year. 'And hopefully very soon.' Even when hostilities ease, restarting transpacific trade will bring additional risks. The freight industry has reduced capacity to match weaker demand. That means a surge of orders sparked by a detente between the superpowers will likely overwhelm the network, causing delays and boosting costs. A similar scenario unfolded during the pandemic when container prices quadrupled and a glut of cargo ships jammed up ports. 'There will be a surge in ports and consequently for trucks and rail creating delays and bottlenecks,' said Lars Jensen, chief executive officer of shipping consultant Vespucci Maritime. 'Ports are designed for stable flows, not the off-again, on-again volume shifts.' The United States tariffs on China came at a critical time for the retail industry. March and April is when suppliers start ramping up inventory for the second half the year to fill orders for back-to-school shopping and Christmas. For many firms, the first holiday goods should be hitting the water bound for the United States in roughly two weeks. 'We are paralysed,' said Jay Foreman, CEO of toymaker Basic Fun in Boca Raton, Florida, which supplies big retail customers such as Inc and Walmart. He called the tariffs a 'de facto embargo' and said customers have been pausing orders so far, but he expects them to start cancelling them if the China tariffs stay at this level for much longer. 'There's a couple weeks, then it really starts to hurt,' said Foreman, whose company generates about US$200mil million in sales a year and sources roughly 90% of products from China. 'We're in a period where the damage is manageable, but every week the damage level is going to increase.' Supply shock The leading edge of that supply jolt is evident in Asia. There are currently about 40 cargo ships that recently stopped at ports in China and are now bound for the United States, down by about 40% from early April, according to ship tracking compiled by Bloomberg. Those vessels are carrying about 320,000 containers, according to the data, about a third fewer than just after Trump announced he was raising tariffs on almost all goods from China to 145%. Judah Levine, head of research at cargo booking platform Freightos, said a lot of US importers will be front-loading orders from other American trading partners through the 90-day reprieve on Trump's so-called reciprocal tariffs. That could help cushion any China-centric shock through ports and logistics networks. With Chinese merchandise too pricey, some cargo owners in the United States are turning to suppliers in South-East Asia. Hapag-Lloyd AG, the world's fifth-largest container carrier, said in an emailed statement last week that it's seeing cancellations of about 30% of bookings from China to the United States. But business is sharply up from exporters in Cambodia, Thailand and Vietnam, the Hamburg, Germany-based company said. However, the whiplash effect on the economy still might be difficult to navigate in the months ahead, Levine said. 'It is likely there will be a significant slowdown,' he said, and 'the restart could cause some congestion, with the strength of the rebound and resulting disruption probably correlated to the length of the pause.' With demand for goods from China to the United States sinking fast, cargo carriers have slashed capacity to keep ocean freight rates from cratering. In April, there were about 80 cancelled sailings from China to the United States, roughly 60% more than any month during the Covid pandemic, according to figures cited by John McCown, a veteran industry executive. 'It's a fair statement to say that the container shipping sector has never faced the sort of macro headwinds that it is now facing,' McCown said in a recent research note. The World Trade Organisation has warned that goods traded between the United States and China could decrease by as much as 80%, backing US Treasury Secretary Scott Bessent's description of the current situation as essentially a trade embargo. The uncertainty is partly why economists say a US recession is almost a coin flip. Forecasters surveyed by Bloomberg expect imports to fall at a 7% annual rate in the second quarter – which would be the biggest drop since the onset of the pandemic. The looming supply shock has prompted economists to revise up their inflation forecasts because it could push prices higher. Executives say price tags on goods from China could double on some items. And that would come at a time when consumer sentiment is deteriorating sharply. Tough calls If America's trade war with China goes on for a few more weeks, suppliers and retailers will have to make some hard decisions about the second half of the year, including which goods to ship and how much to raise prices. Suppliers are expecting lots of orders to be cancelled. That will push retailers to scour the United States and other markets for goods to fill their shelves, even if they're from last Christmas. It's also going to be a big financial hit that many companies will likely respond to by cutting costs, including jobs, or taking on pricey debt. For Foreman, the past few weeks reminds him of the pandemic, but there are key differences. The Covid lockdown was a shock, but global supply chains bounced back relatively quickly and several sectors, including toys, ended up having record years. This has the potential to be 'more treacherous because the longer this goes, the more catastrophic this is,' he said. Covid was also littered with lots of unknowns about the virus and how long it would take to rebound. This dilemma could be eased by Trump removing the levies at any time. 'The lingering effects could be worse,' Foreman said. 'But the solution could come much faster.' — Bloomberg Matt Townsend, James Mayger and Augusta Saraiva write for Bloomberg. The views expressed here are the writers' own
Business Mayor
28-04-2025
- Business
- Business Mayor
Empty Retail Shelves Could Disrupt Back-To-School And Holiday Shopping
Inbound cargo shipments from China have plummeted since early April, just as retailers and their wholesale partners need to bring in inventory for the critical back-to-school through holiday shopping season, according to Bloomberg. Each passing week of reduced shipments from China increases the prospects of 'Covid-like' shortages … More later in the year, Apollo Management economist Torsten Slok warned. (Photo by Bob Riha, Jr./Getty Images) Getty Images Key Facts The number of U.S.-bound cargo ships from China are down about 40% from earlier this month and they are carrying about one-third fewer containers since President Trump announced 145% tariffs on Chinese imports. John D. McCown, non-resident senior fellow at the Center for Maritime Strategy, reported that cargo carriers canceled 80 sailings from China to the U.S. in April, roughly 60% more than in any month during the Covid pandemic. Even if what Treasury Secretary Scott Bessent called a 'trade embargo' is resolved quickly – highly unlikely given current tensions – retailers are still looking at the possibility of critical inventory shortages for the second half of the year. Key Background In any normal year, retailers and wholesalers start to receive inventory for the back-to-school through holiday shopping season by mid-May through early June. While shoppers have yet to experience empty shelves because retailers pulled forward merchandise orders earlier this year, each passing week of reduced shipments increases the prospects of 'Covid-like' shortages later in the year, Apollo Management economist Torsten Slok warned. Last week, the CEOs of Walmart, Target, and Home Depot met with President Trump at the White House to tell him much the same thing. Crucial Quote 'It's a fair statement to say that the container shipping sector has never faced the sort of macro headwinds that it is now facing,' McCown said in a research note. No Quick Fix If and when trade issues are resolved, it could overwhelm the retail supply chain system. It takes about 20 to 40 days for container ships to reach the U.S. from China, then up to ten days of transit time for goods to move from the ports to cities. What To Watch For The longer the China-U.S. trade impasse lasts, the worse the disruption will be. 'Expect ships to sit offshore, orders to be canceled, and well-run generational retailers to file for bankruptcy,' Apollo Management's Slok wrote in a research note. By the end of May, he said domestic freight demand will 'come to a halt,' followed by significant layoffs in the trucking, logistics and retail industries in early June. Ultimately, it could lead to what he called a 'voluntary trade reset recession.' Further Reading Trump China Tariffs Set To Unleash Supply Jolt On US Economy (Bloomberg, 4/28/2025) Trump Trade War Update: Firm Predicts 'Empty Shelves' And Recession By June (Investor's Business Daily, 4/28/2025) Empty Shelves Are Coming, Apollo Economist Says — And So Is A 'Voluntary' Recession (Quartz, 4/28/2025)
