LOGISTICS

Airline Industry Faces Cargo Shorts

If you've been seeing a lot more of those weird-looking planes with big foreheads and no windows at the airport, that's because demand for airplane cargo space is sky-high.

It starts with vaccines 

According to the International Air Transportation Association (IATA), providing a single dose to the world's 7.8 billion people would require 8,000 fully filled 747 cargo planes, which...is a problem considering there are fewer than one thousand 747 freighters on the planet, according to the IATA's head of cargo Glyn Hughes.

Plus, vaccines are fragile. They don't care much about legroom, but the majority of vaccines in development need to be kept at a constant, near-freezing temperature to prevent spoiling. UPS and Lufthansa have been building massive "freezer farms" to prepare, though experts in the pharma industry still expect up to a 20% spoilage rate. 

Santa might be late, too

The soon-to-be-released iPhones, Sony's new PlayStation 5, and Amazon's Prime Day items are all set to be shipped via cargo planes in the coming holiday shopping period. "We're planning for the mother of all peaks," the president of FedEx’s express division told investors in September.

• Many commercial airlines have retrofitted aircraft to 1) meet cargo demand and 2) keep their businesses afloat during a period of historically low passenger traffic. 
• Still, it was new territory for many legacy carriers. American Airlines was flying nearly 140 all-cargo trips per week early in the pandemic, after flying zero such trips in the past three decades. 

Bottom line: This isn’t the cargo industry's first mile-high rodeo—shipping pharma products has been a fast-growing and profitable line of business for carriers over the past 10 years. But the busy holiday season + vaccine distribution + fewer flights will push it to the limit. 

ENERGY

Oil and Gas Jobs Right Now

With oil demand and prices collapsing this year, U.S. oil and gas companies shed 107,000 jobs between March and August, the "fastest rate of layoffs in the industry's history," according to a Deloitte report released yesterday. Drilling deeper:

• If prices remain around $45/barrel, Deloitte forecasts that 30% of jobs will be recovered by 2021. 
• In the worst-case scenario, where prices fall to $35/barrel, only 3% will. 

Layoffs will disproportionately hurt states like Texas and North Dakota, where fossil fuel companies have been major employers for decades. And even if the industry does recover, those same jobs won't necessarily return. 

• Under pressure to digitize, producers are expected to phase out more low-skilled work in favor of data, IT, and remote operations positions. 
• "What we are seeing here is the reset button being pressed," Deloitte's vice-chairman of oil and gas told the FT.  

Sign of the times: The value of ExxonMobil, once the world's largest public company, has dropped over 50% this year. Last week, it was briefly passed in market cap by wind and solar generator NextEra.

COVID

The Course of Reopening Never Did Run Smooth

In the spring, we were warned by health experts that the reopening of the economy might, at times, require businesses to close again as outbreaks cropped up. We’re seeing that in action now. 

In New York City…following local Covid-19 outbreaks, the state is temporarily shifting in-person schooling to fully remote in nine ZIP codes. Mayor Bill de Blasio plans on reimposing restrictions on indoor dining and nonessential businesses in those neighborhoods as well. 

In Paris...French authorities ordered bars to close for at least the next two weeks to combat a new wave of cases. 

In Hollywood...Cineworld, the No. 2 cinema chain globally, said it will temporarily close its theaters in the U.S. and the UK this week after the latest James Bond film was delayed until April 2021. Shares in theater chains were hammered yesterday. 

Bottom line: Business can go into hibernation and still survive. Cineworld CEO Mooky Greidinger told Sky News, “From a liquidity point of view, we were bleeding much bigger amounts when we are open than when we were closed.”

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PAYMENTS

+s + +

In the off chance you don't speak emoji, payments app Venmo dropped its first credit card yesterday. While only available to "select customers" for now, Venmo will widen the rollout in coming months. 

The details 

Users get a Visa-branded physical card with pandemic-friendly tap-to-pay features, but the credit card is focused on a mobile-first experience and managed through Venmo's main app.  

• Rewards: Instead of pre-selecting where you earn rewards, Venmo has taken a more personalized approach, offering 3% cash back on your top spending category, 2% on your second-highest category, and 1% on everything else.
• Fees: There are no annual fees, but users have to pay for cash advances and late payments. 

This isn't Venmo's first payment card. In 2018, the PayPal-owned app released a Mastercard debit card with retailer-specific rewards. 

Bottom line: Like the Apple Card released last year, Venmo is offering its 60 million active users a modernized card they can manage through the devices they're already spending time on. 

FAST FOOD

Ronald's in the Hot Seat

Kids just aren't that impressed with a standard Happy Meal anymore. So McDonald's upped the ante, announcing a partnership with reggaeton powerhouse J Balvin yesterday to follow up on the massive success of its Travis Scott menu items.

The backstory: Travis Scott and J Balvin are two of the biggest names in the music industry. They are also self-professed McDonald's enthusiasts with specific go-to orders the chain leveraged for limited-time menu combos. 

• J Balvin's combo includes a Big Mac (no pickles), medium fries with ketchup, and an Oreo McFlurry.
• Scott's meal featured a quarter-pounder with cheese, lettuce, and bacon; fries with barbecue sauce; and a Sprite with extra ice...all for $6. 

It was a hit. An analyst covering McDonald's reported that September same-store sales got a "significant boost" the week of the Travis Scott release. At one point, locations were scrambling for ingredients.

Zoom out: The Travis Scott collab was the Golden Arches' first celebrity partnership since releasing the "McJordan Special" with MJ back in 1992. We'll find out whether the social buzz translated to meaningful sales gains when McDonald's reports Q3 financials later this month.

WHAT ELSE IS BREWING

• Dune is the latest blockbuster being delayed to 2021. It'll arrive in theaters next October, according to reports.
• Bristol-Myers Squibb agreed to buy the heart drug maker MyoKardia for $13 billion.
• The CDC changed its Covid-19 guidance to reflect that the virus can be spread through airborne particles and between people more than six feet apart.
• Slack suffered a partial outage yesterday, making writing this newsletter a bit tougher than usual.
• Spotify CEO Daniel Ek is not your typical business leader, as you'll see in this recent interview.

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BREW'S BETS

What time is it in Moscow? No clue. That’s why we need to use this clock, which makes it easy (and fun) to find the time anywhere in the world.

Tech Tip Tuesday: Spotify listeners can now search the platform using song lyrics. Here are 10 other Spotify tricks, plus a list of radio stations from around the world you can listen to online. 

Podcast rec: Investopedia’s podcast sums up the biggest business and economic stories using expert analysis, interviews, and educational breakdowns. In other words, it’s a great podcast for making you sound informed in meetings. Listen up. 

What’s the meaning of swimming pools in movies? Well, there’s a video that explains it.

NOBEL TRIVIA

The Nobel Prizes are being handed out over the next several days; here are two questions testing your knowledge of the most redoubtable of awards. 

1. Who is the youngest Nobel Prize winner? 
2. Which family has the most Nobel Prizes?

NOBEL TRIVIA ANSWER

1. Malala Yousafzai won the Nobel Peace Prize in 2014 at the age of 17.

2. The Curie family