A STARTUP BOOM, TECH MELTDOWN, AND THE HOTTEST DAY ON EARTH

07-02-24: “America's startup boom is still going strong. Here's what it means for the economy.” National Public Radio NPR - Greg Rosalsky: “America is experiencing a sustained startup boom. Back in 2020, when the world was navigating the hellscape of the COVID-19 pandemic, economist John Haltiwanger discovered something really strange happening in the U.S. economy: Americans were creating new businesses at a record rate. Haltiwanger is one of the top experts on new business creation in the United States. He even helped the U.S. Census Bureau set up official statistics that track it. A surge in new businesses, Haltiwanger says, tends to be a great sign for job creation, innovation, and productivity growth in the economy. But, up until 2020, the data painted a sort of gloomy picture. And so, in the summer of 2020, when Haltiwanger first saw the data suggesting there was a startup boom, he and his colleagues were gobsmacked. 'At first we thought, 'There's got to be something wrong,' Haltiwanger says. But then the startup boom kept, well, booming. We saw a second surge of new businesses beginning in 2021. So I spoke to Haltiwanger again in June of that year. By then, he was more optimistic that the surge of new businesses was a harbinger of great things to come for the economy. He was particularly struck by the revolutionary changes to business life created by widespread remote work ... But, to be honest, I was still a bit cynical about the boom. Lots of small businesses were devastated by the pandemic and closed up shop. Many people lost their jobs. Maybe a lot of them were creating new businesses in a desperate attempt to pay the bills, to get more federal relief money, or just out of boredom. But we're now well past the pandemic crisis and even the pandemic recovery. It has been almost exactly four years since the startup boom began — and there's still a bonanza of new business creation in the United States. It's harder to be dismissive about it. 'I'd say we're on a new plateau that started in 2021,' Haltiwanger says. Comparing the three years before the onset of the pandemic with the three years after it, the data suggests there are now, on average, almost 60 percent more new businesses being created each year. The boom is real. It's sustained. It's visible in both businesses that are just a single person striking out on their own and, importantly, businesses that are likely to grow and employ people. It's seen in traditionally underrepresented minority communities. And, Haltiwanger says, this boom could be a sign that something fantastic is about to happen to the American economy: a long-awaited boost in productivity growth, which is the magic sauce for making society richer. But what's driving this boom? And how optimistic should we be that it will end up having real benefits for the country? Haltiwanger, focusing on the startup boom, continues to have big questions. Is it just a coincidence that we saw a distinct wave of new tech and AI startups around the same time we saw waves of new businesses created in reaction to the pandemic and the population shift precipitated by remote work? How much of this is just people wanting to be their own boss or achieve a better balance between their personal lives and work? Will the boom finally lead to a long-awaited boost in productivity growth? Haltiwanger says he's also keeping his eye on whether we'll see 'gazelle firms' that run away from the pack and race to transform our economy, as the Googles and Amazons of the world did back in the 1990s.” HPS Analysis: Ever wonder where all those new bike shops came from? Rick Vosper has written about this throughout the pandemic, using data from Christopher Georger and Georger Data Services, that shows little or no attrition from 7,000 brick-and-mortar bike shops in 2019 and 7,000 brick-and-mortar bike shops in 2024, while many bike shops we have known and loved have gone out of business. There is an entrepreneurial spirit in bike shop owners, and during the pandemic, and after, more Americans tapped that spirit to strike out on their own and start their own small businesses. The current situation relative to the cost of business loans and the ability to even get a small business loan will stamp a lot of erstwhile bike shop entrepreneurs out and send them back to the employed masses, but the best business practitioners of the lot will survive and the bicycle business will be better off going forward into the future.

07-02-24: “How E-Bikes Won Over Europe.” Bloomberg: “Battery-powered bicycles now outsell pedal-only ones across several European countries. A transportation researcher explains the policies behind the boom. If you think electric bicycles are a hit in the U.S., check out what’s happening across the Atlantic. Battery-boosted models now comprise a majority of bike sales in several European countries, including Austria, Belgium, Germany and the Netherlands, and they’re rapidly gaining share in others such as France and Switzerland. North Americans vacationing in Europe this summer can expect to see pelotons of e-bikes being used to commute to the office, ferry children to school, or hit the trails. This explosive growth has delighted European policymakers eager to reduce greenhouse gas emissions by replacing car trips (and, better yet, boost public health and free up street space in the process). Countries like Italy and Finland and cities including Paris and London have offered rebates to e-bike buyers, an approach also seen in numerous U.S. states (including Colorado and Connecticut) and cities (like Denver and the District of Columbia). Still, the U.S. has a long way to go before e-bikes become anywhere near as widespread as they are in Europe. Although their U.S. market share is growing, last year electric two-wheelers represented only around 15 percent of total adult bike sales. Since Europe is far ahead in e-bike adoption, its experience offers lessons about how North America could catalyze uptake — as well as advanced warning about headaches that can arise when such vehicles become ubiquitous. Philippe Crist, a dual citizen of France and the U.S., leads micromobility research at the Paris-based International Transport Forum, the transportation arm of the OECD. In May, CityLab contributor David Zipper caught up with Crist at the ITF Summit in Leipzig, Germany, to talk about the benefits and tensions of Europe’s e-bike boom. Their conversation has been edited for clarity and concision." HPS Analysis: I keep saying that the United States isn’t Europe and big European players like Accell Group have not paid attention to the real differences, and ended up exiting the North American bicycle business. This is a great article and I urge our readers to read it carefully. There is a huge amount of detail but there is one piece of advice that stands out. A European bicycle market expert is asked: “What advice would you give to a U.S. mayor who wants to promote e-bike use?” The expert responded: “I’d answer that e-bike adoption isn’t the right goal; increasing biking overall should be the goal. Quality infrastructure, connected networks, and vehicle speed management are all things that enable people to feel more comfortable biking.” The interviewer summarized: “So what’s good for bikes is good for e-bikes?" The European expert responded: “Yes. Exactly.” The simple truth is European countries have embraced bicycles, including e-bikes, as a means of transportation and recreation for generations, going back before World War II, and bicycles and e-bikes have been integrated into mobility and culture with an equal status. European countries also recognize that e-bikes are an integral integration of bicycles. What’s good for bikes is good for e-bikes.  

07-03-24: “Trek to begin direct-to-consumer sales through Consumer Choice program.” Bicycle Retailer and Industry News: “Trek Bicycle will join other brands in offering a direct-to-consumer buying option after unveiling its Consumer Choice program that will provide 15 percent to 20 percent margins to the consumer's closest Partner Level retailer. CEO John Burke held a video call with retailers to announce the program on Tuesday. BRAIN obtained a portion of the recording. Trek did not respond to BRAIN for comment Wednesday. 'There's a certain segment of the population who buys online,' Burke told retailers. 'They do not go to stores. They buy online. And, you know, we see it whether it's with Canyon, whether it's with Specialized, whether it's with just about any other brand — Santa Cruz — the list goes on and on. You can buy those brands online. You can't buy Trek online and have it delivered directly to you. So we're going to change that.' Trek began a variation of click-and-collect bike sales, with fulfillment through dealers, in 2015. But this is the first time consumers can have a bike delivered directly to their home without dealer assembly. Trekbikes.com will give a customer the option to select for an additional cost of $50 direct-to-home shipping. Trek ships the nearly fully-assembled bike to the customer with tools and instructions to complete the build. The margin for bikes from $498.99 to $4,998.99 is 20 percent. The margins for bikes $4,999 and above is 15 percent. The margin for all e-bikes is 15 percent. 'Now we also have these long-standing awesome relationships with retailers who have built the Trek brand in their market,' said Burke, who emphasized the best way to buy a Trek is through one of its retailers. 'It's a key to our success. Trek retailers in those markets have had this great relationship with Trek. If we sell a bike direct to a consumer, we're going to make sure that you get compensated for that, and we're going to make sure that that customer is in our ecosystem, and that that customer is in your ecosystem.' A premium home delivery option is offered, which will cost the customer $100 plus $50 for shipping. Trek ships the bike to the retailer from its inventory and processes the transaction. Retailers receive between a 35 percent to 25 percent margin plus a $100 delivery fee. According to Trek, 'Premium home delivery gives you amazing opportunities for hospitality that create lifelong customers.' With in-store pickup for a bike a retailer has in stock, Locally — which processes the sale — is integrated with trekbikes.com, pulling the sale from the retailer's inventory. Trek says it will not double-ship. The retailer receives the regular margin (39 percent to 27 percent), minus a 3.5 percent Locally fee. If the bike is not in stock for in-store pickup, the customer pays $50, and the bike is shipped to the retailer from Trek's inventory and Trek processes the transaction. The retailer receives a margin based on service commission. With Locally integrated, Trek won't ship a bike that a retailer already has in stock.” HPS Analysis: Trek is executing the business strategy that its management feels is best for its future. It is well thought out and offering a direct-to-consumer buying option is just one part of a larger, more detailed business strategy. Every dealer must now examine their business strategy and determine what is best for their business and the future of that business. Every bicycle dealer still has the option to exercise free will and develop and pursue a business strategy that is best for their future. Harley Phillips, a retired bike shop owner and past president of the NBDA, established a business rule over 50 years ago for independent bicycle shops. “Never sell anything in you bike shop for less than your cost of doing business!” There were the exceptions for old inventory that had to get flushed and for sales and promotions – but the basic rule is as sound today as it was back in 1970. Know and understand what your cost of doing business is, and craft your business plan, marketing, and sales strategy to generate a gross, pre-tax margin of profit that exceeds your cost of business sufficient to meet your objectives for your business, and for your brand.

07-09-24: “Bustling Eurobike did not bring the hoped-for market improvement.” BIKE europe: “While the market is cautiously optimistic, the mood among the more than 1,800 exhibiting companies was extremely positive at Eurobike 2024. On Sunday evening, Eurobike 2024 closed the doors after five days packed with innovations, business meetings, networking events, and highly-informative presentations on several stages. All studies indicate a positive development in the long term for the e-bike and eco-mobility sectors. Nevertheless, the highly hoped-for market improvement in the short term is not in sight yet. Despite reports of ongoing high inventories in the market, industry association ZIV presented an optimistic outlook during a market update on Germany. But looking at the hard facts, the German market has remained relatively stable. In the first four months of 2024, e-bikes sales reached 800,000 units, a 1.23 percent decrease on the same period last year. More of a concern is the bicycle segment, where 650,000 units were sold from January to April 2024, a decrease of around 19 percent compared to the previous year. The market conditions in Germany reflect the situation in many other countries for the moment. While the industry still expected the current slump to be over in Q3 or Q4 of this year during Taipei Cycle Show, many industry insiders are now delaying their forecasted market recovery by at least one year. The warehouse clearings take more time than expected throughout the supply chain. 'We never ever want to go back to the high inventory levels we’re facing. So, we first want to clear our warehouse completely, before starting to build up carefully and order new parts and components. If that means a lower product availability for some time we will take that for granted,' one of the vendors told Bike Europe. ESG was less present at Eurobike 2024 compared to Taipei Cycle Show and Eurobike last year. Bosch made big steps forward with their battery recycling project ... Reset of the sector. The industry at a turning point. 'Even if the economic figures are not satisfactory, we are experiencing a reset in the bike sector. The market will grow again and there will be a thriving bike future,' said Manuel Marsilio, managing director of CONEBI, the European industry confederation. While the market is cautiously optimistic, the mood among the more than 1,800 exhibiting companies was extremely positive. Arriving from more than 60 countries, some 35,000 trade visitors came to the business days and more than 33,000 enthusiastic bike fans visited the festival days during the weekend. The non-European participation in the event increased to 35 percent of the trade visitors. According to Eurobike this was more international than ever before. 'The industry is at a turning point. Even if the economic figures are not satisfactory, we are experiencing a reset in the bike sector,' said Manuel Marsilio, managing director of CONEBI, the European industry confederation at the opening of Eurobike. HPS Analysis: First Taipei, followed by Eurobike gave us cautious expectations, and perhaps more wished for than really expected results. Both international industry trade shows were well attended, with record numbers of foreign visitors, but orders were not written, and commitments were slim, pushing the forecast for recovery into 2025. The concept of “reset” is interesting in that it implies a reboot, turning off the power and turning it back on again will “reset” everything, and it can continue as it was. This may be a form of reality for some, but we believe it will not be reality for everyone. We agree that the industry is at a turning point. However, it is not going to be simple reset that appears to be what the industry associations in Europe are telling their members to expect.  

07-11-24: “igus plastic bicycle enters series production in Germany.” BIKE europe: “The former igus:bike, the German plastics specialist, has been renamed RCYL ready for market launch. On display at Eurobike, the bicycle is made from 50 percent recycled fishing nets, and requires zero lubrication for the moving components. RCYL is now entering series production in a new facility in Cologne, with igus aiming to produce 5,000 bicycles by next season. Additionally, the company is expanding its bicycle component business including the first injection-moulded polymer bicycle frame for advanced bikes. 'With the igus:bike, we presented a concept and an idea in 2022. Now, two years later, we have a product ready for series production that we manufacture ourselves,' says the CEO of igus GmbH, Frank Blase. 'We are delighted to fulfill the first 1,200 pre-orders.' With the start of series production, the bike has been given a new name, in addition to technical optimizations which represent the bike's recycled content and the sustainability concept behind it. 'First of all, we are processing the first pre-orders, which can be made via the contact form on our website igus.bike. We are currently considering setting up a dealer network or opening our own stores in major cities. However, there is one important rule: no RCYL bike will be sold without the option of service,' says Sven Terhardt, head of sales and marketing for RCYL. By setting up their own production facility, igus aims to produce 5,000 bikes for the next season. By 2026, the target is set at 10,000. To achieve this, igus is investing in the development and construction of its own roto-moulding systems. In the future, igus wants to provide mobility in German and European cities as well as in the U.S. 'We also want to set up local production facilities for the RCYL bike in countries where a lot of waste is generated. That way, we want to feed the waste directly into a new cycle. We not only want to close the plastics cycle, but also create jobs and mobility in Africa and South America,' explains Terhardt. igus is also working intensively on the RCYL series itself, including an e-bike version. The igus bike will remain an ongoing development project." HPS Analysis: The igus RCYL plastic bicycle, fabricated from 50 percent recycled material represents, in our opinion, a breakthrough to be watched very carefully by the rest of the global bicycle ecosystem. This represents a potential disruption to the traditional supply chains that have evolved over the last three decades. While admittedly the capital investments are different, igus has moved into the proof-of-concept stage that may develop into mass production and distribution. While there have been several attempts at changing the traditional manufacturing methods, none have advanced to the commercial production stage and made the leap to finding consumer acceptance and at least a niche-market that represented an economically viable ecosystem. We now have to wait and watch.

07-12-24: “NY governor signs into law lithium-ion battery safety legislation.” Bicycle Retailer and Industry News: “New York Gov. Kathy Hochul on Thursday signed into law a legislative package to enhance lithium-ion battery safety standards that includes recognizing EN and UL testing standards. The New York State Senate passed the legislation in late May; it will become law in 90 days. 'As e-bike adoption increases and battery technology continues to develop, I urge New Yorkers to be aware of safety best practices and to use their devices and chargers properly,' Hochul said. 'These laws underscore our commitment to help New Yorkers make educated, safe, smart choices with their purchases of products with lithium-ion batteries and how to best store and use them in order prevent any more tragedies from occurring.' Manufactured and Sale Standards of Lithium-Ion Batteries (S.154F/A.4938-D) would allow manufacturers to use ISO 17025, ISO 17065, or an OSHA-approved nationally recognized testing lab. The New York City Council, facing the rising number of lithium-ion battery fires, passed legislation last year to require UL or similar certification. To be legally sold, rented, or leased in New York City, e-bikes need to meet UL 2849 or similar certification; batteries have to meet UL 2271.

Other bills passed include:

• Legislation S.8743/A.9338 directs the state, in consultation with the Division of Homeland Security and Emergency Services and the New York State Energy Research and Development Authority, to develop and maintain safety resources, information, and protocols in regard to fire hazard prevention relating to, but not limited to, lithium-ion batteries, second-use lithium-ion batteries, bicycles with electric assist as defined in section 102-c of the vehicle and traffic law, mopeds, and micromobility devices.
• Legislation S.8742/A.9337 requires the State Fire Administrator within the Office of Fire Prevention and Control of the Department of Homeland Security and Emergency Services to provide training materials for first responders regarding emergency response to incidents involving lithium-ion batteries.
• Legislation S.7503-B/A.01910-B requires retailers of micromobility devices, bicycles with electric assist and mopeds powered with lithium-ion batteries, and lithium-ion batteries intended for use in such devices or bicycles to provide customers with an operating manual.
• Legislation S.9419/A.7628-A requires police and judicial officers investigating an accident with an e-bike or e-scooter that results in death or injury to make a report to the Department of Motor Vehicles, consistent with current requirements for motor vehicles and motorcycles. This legislation also requires police to investigate such incidents when they are made aware of them.
• Legislation S.7703-B/A.8450-B requires mopeds to be registered by dealers at the point of sale if they are to be used in the state.
• Legislation S.7760-A/A.8102-A requires micromobility devices, mopeds, and bicycles with electric assist to have a red tag attached to the charging cord which states to unplug when not in use.
• Legislation S.7744-D/A.8310-C requires retailers to affix a notice on any bicycles with electric assist and micromobility devices that states to always yield to pedestrians and follow traffic laws. This legislation also authorizes that any retail entity who violates the law may be penalized with a fine of no more than $250 per unit for the first offense and not more than $1,000 for each subsequent offense.

'As the use of these batteries continues to grow, so does the potential for more fires caused by them,' said Division of Homeland Security and Emergency Services Commissioner Jackie Bray. 'New York State Fire has trained nearly 5,000 firefighters statewide on lithium-ion battery emergencies, and we will continue to expand these educational tools that will save lives and property.' In February, Hochul announced the start of a safety campaign to raise awareness of consumer products that use lithium-ion batteries. The campaign includes display, search, and social media ads directed to consumers purchasing lithium-ion battery-powered items like e-bikes and e-scooters.” HPS Analysis: This package of New York State legislation is certainly a big step in the right direction for public awareness, education, and safety. Other States and municipalities are already following the New York State example. While a big step in the right direction, the New York State legislation does contain language, suggested and lobbied for by the bicycle industry trade association that HPS feels will create potential regulatory issues and problems going forward until such time as the Consumer Product Safety Commission promulgates a complete mandatory product safety regulation applicable to mechanical bicycles and low-speed electric bicycles. Specifically recognizing the European or EN standards as equal to the UL voluntary standards is both problematical and a potential safety issue going forward. Also, allowing testing and certification by either an accredited laboratory or a nationally recognized testing laboratory (NRTL) is setting a lower level for safety testing and certification, particularly if the objective is to restrict low-cost, low-quality lithium-ion batteries from entering into commerce. HPS recommended and still recommends testing and certification by NTRL’s only, and we will be happy to explain why as well as explain our position on not recognizing the EN standards.

07-14-24: “These kinds of businesses are driving a surge in U.S. corporate bankruptcies.” CNN Business/Before The Bell: “Small and mid-sized businesses are struggling to survive. Many have already gone underwater this year. There were 346 companies that filed to either liquidate or re-organize through bankruptcy in the first six months of 2024, the highest half-year level since 2010 when 467 filed, according to data from S&P Global Market Intelligence. Just last month, 75 companies filed for bankruptcy, which was the biggest monthly total since early 2020. The majority of businesses that have gone belly up are considered 'consumer discretionary,' a broad category of firms that sell goods or services that people don’t need every day, such as restaurants, clothing stores, and car dealerships. Most of the businesses are also considered small or mid-sized, economists and investors tell CNN. Interest rates are at their highest level in nearly a quarter century, which is squeezing not just for consumers, but also businesses that rely heavily on borrowing to purchase equipment, replenish inventory, meet payroll and/or expand operations, to name a few key reasons. Access to credit is especially crucial for small, private businesses that aren’t able raise money through financial markets. It’s also gotten harder for them to even take out a business loan to begin with these days. A recent Federal Reserve Bank of Kansas City survey of 170 small businesses showed that 'credit standards tightened for the tenth consecutive quarter and credit quality decreased.' 'Small companies are more at risk and more sensitive to higher borrowing costs,' Matt Rowe, head of portfolio management and cross-asset strategies at Nomura Capital Management, told CNN. 'The increase in implied and actual defaults that the S&P report is referencing is largely coming from the smaller cap part of the world.' Consumer demand has also been underwhelming so far this summer, according to the Institute for Supply Management’s latest survey of businesses that sell any kind of service. The latest spending data and comments from retailers in recent months have also demonstrated that U.S. consumers aren’t splurging this summer, unlike last year, and are instead spending more cautiously. That’s troubling because the summertime is a crucial season for many kinds of service-providing businesses." HPS Analysis: Small and mid-size businesses make up the majority of the supply side of the American bicycle industry, including over 90 percent of the specialty bicycle retail channel of trade. Yes, there are more large multi-nationals on the supply side, with the majority privately held and the minority publicly traded companies, and while the industry has seen some high-profile bankruptcies, there is growing concern about the small and mid-size companies and their ability to survive through the rest of 2024. HPS is alerting our clients to the fact that the global economy is now in the most disruptive era since World War II.

07-15-24: “As we suggested last week, it does now appear that the Chinese company XDS has made a significant investment in the Astana cycling team.” THE OUTER LINE AIRmail Weekly Newsletter: “Although no numbers of equity percentage figures were announced, it appears that the company will indeed make a substantial investment in the team, and the arrangement will last for at least a five-year time period. XDS said that it will ensure that the team has 'very enough budget and the best technical support.' According to the team’s press release, 'XDS owns one of the largest bicycle manufacturers in the world, with an annual production capacity of 10 million units. It is the first professional manufacturer in mainland China that integrates design, research and development, production, and sales of cycling products.' It will be interesting to follow how this new collaboration works going forward.” HPS Analysis: XDS is not well known in the global mainstream specialty OEM bicycle supply chains established in Europe and North America, but is well recognized in the full-line sporting goods and mass merchant channels. Founded in 1995, XDS is headquartered in Melbourne, Australia, and claims the world’s largest bicycle manufacturing factory at 3,200,000 square meters in Shenzhen, China with a second factory in Cambodia. XDS manufactures specialty carbon fiber and aluminum bicycles in all categories, including e-bikes for a variety of OEM customers and under its own XDS brand distributed in 50 countries, and claims a network of 5,000 retail dealers in markets outside of Europe and North America. HPS does not yet know the XDS strategy in making a “substantial investment” in the Astana cycling team, but assumes it involves promoting the XDS brand as the bicycle sponsor of a UCI Grand Tour Team that will compete in the Tour de France as early as 2025. Watch XDS as a possible disrupter in the upper-end road category in European and/or North American markets from 2025 forward.

07-16-24: “Car repossessions surge 23 percent as Americans fall behind on payments.” Bloomberg: “High interest rates and tight budgets are making monthly bills unaffordable for a growing number of vehicle owners. Car repossessions rocketed higher in the first half of the year, a sign of rising consumer distress as the U.S. Federal Reserve weighs interest rate cuts. So far in 2024, repos are up 23 percent compared with the same period last year, according to data from Cox Automotive. With high interest rates and inflation hitting household budgets, the spike in seizures provides a window into the average consumer’s financial health at a key time for policymakers. Repos started ticking up last year and have now surpassed pre-pandemic levels, up 14 percent compared to the first half of 2019. 'When you think about the costs for rent and shelter and insurance, all those things hit consumers and they have to choose what they will pay,' said Jeremy Robb, senior director of economic and industry insights at Cox. 'More people are getting behind on payments because everything is more expensive.' Vehicle seizures, which are typically triggered after three months of missed car payments, dropped during the pandemic as lenders became more lenient and stimulus checks boosted borrowers’ finances. And while the rate of inflation has cooled, elevated borrowing costs have pushed monthly car payments to near-record highs, according to auto research firm Edmunds. The average interest rate for a new car is currently 7.3 percent, and for a used car it’s 11.5 percent, Edmunds data show. That means monthly bills are now $739 for a new car and $549 for a used car on average. In June, the percentage of subprime auto borrowers who were at least 60 days late on their bills in June was 5.62 percent, down just slightly from a record in February, according to Fitch Ratings. A Fed rate cut could provide some relief. Traders are anticipating the U.S. central bank will begin lowering its benchmark rate in September, following data showing inflation cooling. That, in turn, could allow borrowers the chance to refinance or enter the market to buy something else. 'I think a lot of consumers are really waiting to see if interest rates come down a little,' Robb said. 'That’s kept a lot of people on the sidelines.' HPS Analysis: What do automobile repossessions have to do with the bicycle business? Good question. It is about the financial health of the American consumer. Automobile repossessions increasing is a sure sign that the consumer is sinking into financial difficulties as interest on loans increases along with the daily cost of living. Consumer shopping and purchases have dropped off at bike shops nationwide, and many Americans are dependent on their automobile to get to a job and make a living, and as a consequence have less expendable money to spend on luxuries, like bicycles. On the other hand, for some consumers a good used bicycle or e-bike represents a low-cost means of transportation to and from a job, and can be a replacement for a repossessed automobile.  

07-16-24: “Ace Hardware reaches 5,000 U.S. locations; will open 200 new stores in 2024.” Chain Store Age CSA: “Ace Hardware has reached a milestone both in its total and year-to-date store counts. The Oak Brook, Ill.-based hardware retailer, which is celebrating its 100th year in business this year, has opened its 100th new store for the calendar year, in Henderson, Nev. Overall, Ace plans to open more than 200 new stores by the end of the year. In the first six months, Ace Hardware opened 111 new stores, a record-breaking feat for the retailer. A new store, Fixit Ace Hardware in Roswell, Ga., is recognized as Ace's 5,000th domestic location. Globally, Ace has opened more than 900 new stores in the past five years, including 203 last year, while disbursing dividends of $357 million and providing a 35 percent return for Ace shareholders in 2023.” HPS Analysis: We highlight Ace Hardware when we have the opportunity because Ace Hardware is the largest retailer-owned hardware cooperative in the world with over 5,800 locally owned and operated hardware stores in approximately 60 countries. Ace and its subsidiaries operate a network of distribution centers in the U.S. and have distribution capabilities in China and Mexico. Ace Hardware retailers do sell bicycles, although it is not a significant part of their overall hardware business. The American bicycle business is in a major disruptive era, and the Ace Hardware retailer-owned cooperative is just one example of what is possible with a viable National Bicycle Dealers Association. Another is ZEG, a purchasing association of over 1,000 bike shops in the Germanic speaking countries of Europe.

07-16-24: “Eurobike design trends: E-bikes are no longer homogeneous.” BIKE europe: “With market challenges currently dominating business strategies, Eurobike was a good opportunity to gauge what product development is still continuing in the bicycle industry. Dutch bicycle designer Peter van der Veer was there to reflect on the latest trends in design and form. A key takeaway was that e-bikes are no longer homogeneous, and that the range per target group and use case is growing. The bicycle industry is facing tough times. Many major brands have opted out of participating in Eurobike this year. For example no Pon group and Accell brands, no Cube, and no Corratec, the racing brand which always cleverly parked a series of unmistakably branded vans right at the entrance. All were absent. Nevertheless, the tradeshow was packed with around 1,800 exhibitors showcasing a huge variety of presentations and a lively test track where visitors tried out the most exotic fat bikes, cargo bikes, and other e-bike models. From sports bike fair to future mobility event. Eurobike has evolved from a sports bike fair to covering all types of bicycles and e-bikes, and becoming the global meeting point for the cycling world. As it transitions to a 'new mobility of the future' event, the organization also now allows brands with only e-scooters such as Egret. This can naturally be categorized under micromobility, but it also opens the door to many other products without pedals, such as skates, skateboards, e-scooters, and more. However, it is clear that e-bikes continue to attract strong interest. There is a rapidly growing market for cargo bikes, longtails, and fat bikes. Product design is receiving increasing attention, and the variety is expanding. E-bikes are no longer homogeneous; there is a growing range for every target group and every use case. For consumers, choosing the right bike is becoming increasingly difficult. Therefore, optimal marketing and communication are becoming increasingly important for successfully launching e-bikes in the market. HPS Analysis: The bicycle business morphing into the micromobility business on the back of e-bikes becoming “homogenous” tracks as the major trends churning in an industry that is going through difficult times because it is in the middle of the most economically disruptive era since World War II. The observation that Eurobike is transitioning from “a sports fair” to a “new mobility of the future event” is also very insightful given all the disruptions both in the bicycle business and the automotive business right now. Product development, design trends and innovation are wrapped up in all of this, with technology, including AI, thrown in for good measure. HPS has believed that electric propulsion will be integrated into bicycle design so that it will be marketed and sold as another feature in some product categories, and as the primary feature in others, with safe, efficient, and environmentally-friendly transportation as the objective of micromobility retailers.

07-17-24: “Global supply chains disrupted by ongoing Red Sea crisis, warns Maersk.” gCAPTAIN: “The fallout from the Red Sea crisis continues to cascade globally, creating significant challenges for supply chains, according to a recent market update from Maersk. Since December 2023, Iranian-backed Houthi drone and missile attacks on shipping have caused widespread industry disruptions, forcing vessels to divert around the Cape of Good Hope and extending shipping routes. Maersk CEO Vincent Clerc highlighted that the next few months will be particularly challenging for carriers and businesses as the Red Sea situation continues into the third quarter of 2024. Speaking at an online event with customers, Clerc acknowledged the difficulties faced by logistics and supply chains due to the ongoing attacks in the Red Sea and Gulf of Aden. Maersk ships continue to navigate around Africa via the Cape of Good Hope, adding strain to an already pressured system. 'We are faced with these challenges together and need to stay close as we handle the new circumstances unfolding before us,' Clerc said. 'These disruptions and their impact on your business are not taken lightly by anyone at Maersk. We understand the pressure you are under.' Clerc described the 'massive impacts' since the crisis began, noting that extending rotations to travel the longer route around Africa requires two to three ships, depending on the trade route. Limited availability of additional capacity has compounded the issue, even as demand for container transport remains strong. 'All ships that can sail and those previously underutilized in other parts of the world have been redeployed to address the problem,' Clerc explained. 'While this has alleviated part of the issue, significant challenges remain across the industry, including for Maersk. We expect to see missing positions or ships of different sizes than usual, reducing our capacity to meet demand.' Asian exports are more affected than imports due to the region’s role as a major global exporter, particularly from China. Disruptions in the Red Sea have not only impacted Far East-Europe routes via the Suez Canal, but have extended to the entire ocean network. The Oceania network, for example, faces congestion in Southeast Asian hubs crucial for connecting cargo to Maersk’s global network, leading to delays and bottlenecks.” HPS Analysis: Let me be clear – I trust the CEO of Maersk and all of his peers as far as I can pick them up and throw them. With that said, the CEO at Maersk is issuing a warning of what is to come because of a whole new and different set of disruptions to the global transportation network. The fact that Mr. Clerc and his fellows are raising their profit projections because they see an opportunity to jack up ocean freight rates to take full advantage of the circumstances is an inevitable result of disruptions that the ocean shipping companies like Maersk have limited control over. We mentioned this last month and there is a global shortage of containers, because container ships are backed up at European ports, with some congestion spilling over into North America. Because of demand, the ocean carriers like Maersk are reluctant to take on too many empty containers, and there is a limited supply because the major supplier in China cut back on production of containers when shipments from China slowed down. The much longer ocean voyage around the Horn of Africa to Europe, bypassing the Red Sea and the Suez Canal, has added weeks to transit schedules, and weather has become a factor as well. The cost to ship 20, 40 and high-capacity containers from China and elsewhere in Asia has increased dramatically, even though the transit times from China, Taiwan, Vietnam, and Cambodia have remained stable. This increased cost will be passed on to bike shops and other retailers as increased costs, and will end up being passed on to American consumers.

07-17-24: “Consumers oppose dynamic pricing unless...” Chain Store Age CSA: “A sizable number of consumers are opposed to dynamic pricing, and will stop shopping at businesses that use it. A new survey from NerdWallet conducted by The Harris Poll found that more than a fifth (22 percent) of Americans say they would not spend money at a business that uses dynamic pricing. That number is higher among Gen Xers (29 percent) and Baby Boomers (26 percent). 'Dynamic pricing refers to the practice of businesses adjusting prices up or down to account for supply and demand factors. It’s relatively common and growing in popularity,' wrote NerdWallet’s Joe Yerardi in a blog post about the findings. 'In fact, you’re likely patronizing businesses that use dynamic pricing regardless of where prices stand. However, a similar number (25 percent) of Americans say they would only spend money at a business that uses dynamic pricing when prices are down, giving them better deals on items. Younger generations (39 percent of Gen Z and 28 percent of millennials) were more likely to report their willingness to do so compared to older consumers (21 percent of Gen X and 20 percent of Baby Boomers). Yerardi noted that consumers are already used to dynamic pricing they may not be aware of, including when booking vacation dates at a cheaper time and going to a cocktail place for 'happy hour' deals. 'What’s more, you altered your behavior as a consumer in response to the lower price, which is exactly how dynamic pricing is supposed to work,' he added. The NerdWallet survey was conducted online April 15-17, 2024, by The Harris Poll and featured 2,082 U.S. adults. HPS Analysis: Dynamic pricing is defined as: "The practice of varying the price for a product or service to reflect changing market conditions, in particular the charging of a higher price at a time of greater demand." I think dynamic pricing was employed by every step in all bicycle and e-bike channels of trade from when it could be instituted in 2020-2021, until the discounting and sale pricing started in 2023. Primarily because of the discounting and sale pricing it will be impossible to employ dynamic pricing in the bicycle business for some time to come. The problem is the increased cost of Section 301 punitive tariffs and increased shipping costs that have not value-added, but have to be passed on, or the importers, wholesalers, and retailers are going to eat the increased costs and take the loss in profits because consumers are going to push back and refuse to pay, even if it is a surcharge, resulting in a lost sale and consumers going down market if they purchase. For bike shops this calls into play the marketing and sale of previously-owned bicycles, e-bikes, and other accessories like car racks and bike trailers. While this will further slow the sale of new product, it will add to bike shop revenue and profitability.

07-17-24: “Dockworkers, ports in a standoff as strike threats grow louder. The Wall Street Journal: “With no negotiations scheduled, the Sept. 30 expiration of a contract at East Coast and Gulf Coast seaports is nearing. An October walkout of dockworkers would hit some of the country’s biggest ports, including New York and New Jersey, Virginia, and Savannah, Ga., at the busiest time of year for shipping, when retailers are bringing in holiday-season goods. The U.S. is facing potential disruptions at major seaports for the second time in as many years. Harold Daggett, the head of the union that represents dockworkers at East Coast and Gulf Coast ports, is warning that time is running out to secure a new longshore labor deal before the current multiyear contract expires Sept. 30. and that a strike 'is becoming more likely.' The International Longshoremen’s Association, which represents about 45,000 workers at ports from Maine to Texas, abruptly withdrew from the talks in June just as they were set to begin, citing a dispute over the use of automation. No new negotiations have been set. Shipping industry executives, who have grown used to Daggett’s bellicose rhetoric, until recently believed the strike warnings he started making last year were a negotiating tactic. But some executives are beginning to speak of how long a strike could last rather than if it will happen.” HPS Analysis: When dockworkers on the West Coast agreed to their contract last year we thought the Gulf and East Coast dockworkers would follow, and there would be no possibility of a work stoppage for several years. How wrong we were. The Gulf and East Coast dockworker's contract expires September 30, the two sides are not talking and are not scheduled to meet before the contract expires, and the dockworker's union has told the Biden Administration to stay away. Neither the ports nor the union seem at all interested in going back to the negotiating table. It will be up to the Department of Labor to intervene and get contract talks started to avoid a port shutdown at Gulf and East Coast ports at the beginning of the year-end shipping season for retailers. Most bicycles and e-bikes come into the U.S. through West Coast ports, but there will still be a disruption to a portion of the supply chain if contract negotiations are not scheduled before the end of the third quarter. It is always something.

07-17-24: “U.S. online retail sales to reach $1.2 trillion this year: report.” RETAILDIVE: “E-commerce is 'maturing' and returning to 'pre-pandemic normalcy' as it continues to capture market share, according to FTI Consulting. FTI Consulting research has charted the continued e-commerce growth in the years following the beginning of the COVID-19 pandemic. In 2022, the firm predicted that e-commerce sales would exceed $1.07 trillion, a milestone it had previously projected would occur in 2025. The following year, its research estimated that online retail sales would reach $1.14 trillion, a 10 percent jump from 2022. E-commerce market share of total retail sales is expected to plateau to around 35 percent in the next decade, according to the report. However, several product categories have already reached that plateau including toy and hobby, office supply, consumer electronics, music and videos, books and magazines, computer hardware and software, home furnishings, and sporting goods. 'E-commerce in the U.S. is in a maturing phase as it returns to pre-pandemic normalcy, but it continues to capture market share, primarily from store-based retailers,' J.D. Wichser, senior managing director and leader of the retail and consumer products practice at FTI Consulting, said in a statement. 'As the retail landscape evolves, it is critical for businesses to turn their strategies toward omnichannel integration and technological innovation while adapting to shifting consumer demands to maintain a competitive edge in a crowded field.' The U.S. retail industry is already responding to some market changes by shifting stores to fulfillment centers, closing underperforming locations, using AI, reducing labor, and blending an online and offline customer experience, per the report. Other research suggests that e-commerce sales will rise in the coming years. A June Forrester report projects that U.S. online retail sales will reach $1.6 trillion by 2028 and will comprise 28 percent of total U.S. retail sales. HPS Analysis: In the video announcement of Trek’s direct-to-consumer sales through the Consumer Choice program, John Burke mentioned some consumers being more comfortable shopping online, and it has also become obvious that more consumers are doing their research online and coming to a brick-n-mortar retail store to talk to an 'expert' about their choice, and to see and touch the product up front and personal. In the case of a bicycle or e-bike, there is the opportunity to get a proper fit and take a test ride, in addition to the advice from an expert. If they have not already done so, HPS advises bike shops to consult with one of the NBDA associate members that specializes in omnichannel, commerce-enabled websites for bike shops, including adding supplier inventory to the shop's inventory to create a “long-shelf” for consumer shopping for products. A professional, commerce-enabled website is an essential component of bike shop marketing and sales strategy, and if not already included, needs to be a part of business planning going forward. Budget may require starting slower, but the important thing is to understand that online shopping is a growing consumer trend and it has become a part of shopping habits, and bike shops need to be available to the consumers in their community 24-7.

07-19-24: “From ATMs to flights, epic IT crash leaves trail of destruction.” Bloomberg: “In what will go down as the most spectacular IT failure the world has ever seen, a botched software update from cybersecurity firm CrowdStrike Holdings Inc. crashed countless Microsoft Windows computer systems around the world on Friday. Microsoft Corp. and CrowdStrike have rolled out fixes, and systems are gradually being restored. But for several hours, bankers in Hong Kong, doctors in the UK, and emergency responders in New Hampshire found themselves locked out of programs critical to keeping their operations afloat. Some businesses are facing the prospect of continued disruptions as the restoration process is, in some cases, requiring tech workers to manually reboot systems and remove faulty files. 'This is unprecedented,' said Alan Woodward, professor of cybersecurity at Surrey University. 'The economic impact is going to be huge.' The catastrophic failure underscores an increasingly dire threat to global supply chains: The IT systems of some of the world’s biggest and most critical industries have grown heavily dependent on a handful of relatively obscure software vendors, which are now emerging as single points of failure. In recent months, hackers have exploited this phenomenon, targeting vendors to bring down entire sectors and governments. Adding to the disruption, Microsoft experienced a separate and apparently unrelated problem with its Azure cloud service on Thursday that lasted for several hours. On Friday afternoon, the company said in a post on X that all Microsoft 365 apps and services had been restored. By Friday morning in New York, many systems were coming back online. Shares of CrowdStrike dropped 11 percent to $304.96 in New York trading, wiping out more than $9 billion in market value. It was their biggest single-day decline since November 2022. Microsoft shares fell less than 1 percent to $437.11. ;This will be the largest IT outage in history,' said Troy Hunt, an Australian security consultant and creator of the hack-checking website Have I Been Pwned. 'We’re really only starting to see the tip of the iceberg.' HPS Analysis: Disruptions affecting the risk profile of a company or brand can include Black Swan events, like this – “… the largest IT outage in history” that didn’t have a significant impact on the global bicycle or micromobility industry or business, but did have a major impact on the travel industry and airlines. Forecasters cannot predict specific Black Swan disruptions and all they can do is counsel planning for more frequent Black Swan events in business planning.

07-19-24: “PeopleForBikes leads New York e-mobility battery safety legislation – seven new favorable e-bike bills signed into law.” Bicycle Retailer and Industry News: “On July 11, New York Governor Kathy Hochul signed seven bills from a slate of micromobility safety legislation passed by the New York Senate and Assembly. PeopleForBikes commends the state of New York for effectively responding to the challenges that untested, uncertified, and unsafe lithium-ion batteries for electric micromobility products pose to consumers and first responders. The most important bill for the bicycle industry — the Batteries for Micromobility Devices, Bicycles With Electric Assist, and Limited Use Motorcycles Act (S154F/A4938D) — will establish the nation’s first statewide standards for the manufacture and sale of lithium-ion batteries for electric bicycles and other mobility devices. The bill was sponsored by Senator Liz Krueger and Assemblyman Jeffrey Dinowitz from New York City. A critical aspect of this legislation, which PeopleForBikes influenced through ten rounds of amendments in both the Senate and Assembly over the last 18 months, is the recognition of all battery regulations referenced under both the European (EN 15194) and American (UL 2849) standards for electric bicycles and drive systems. With respect to acceptable testing laboratories, the new law allows manufacturers to use testing labs accredited to ISO 17025, ISO 17065, or an OSHA-approved nationally recognized testing lab (NRTL). The New York City Council and Department of Consumer and Worker Protection previously adopted the same approach to laboratory accreditation at the suggestion of PeopleForBikes. The statewide testing requirements under S154F/A4938D will go into effect in 90 days (October 9, 2024). The new law was specifically crafted to allow reputable manufacturers of safe, high-quality electric bicycles to continue selling their products in New York while also preventing the sale of uncertified, low-quality batteries used in some e-mobility devices that have been linked to a recent and tragic increase in fires in New York City and elsewhere. Importantly, the inclusion of the EN 15194 battery standard will also ensure that a broad array of electric bicycles and replacement batteries for existing electric bicycles will continue to be available. 'Our PeopleForBikes staff team spent thousands of legislative, legal, and lobby hours in the last few years working with key leaders and stakeholders in New York. We had a heavy hand in crafting these positive outcomes and are pleased to see this package of bills become law,' said Jenn Dice, PeopleForBikes’ president and CEO. 'This plainly demonstrates the power of a trade association like PeopleForBikes. With industry experts working alongside our talented team to deliver positive results, we are stronger together.' HPS Analysis: Back in the day when I was a registered lobbyist for the Schwinn Bicycle Company, we weren’t quite as upfront with our public relations, but we did use the trade press to sell our lobbying positions to the rest of the industry. HPS has been public about its opposition to recognizing EN 15194, a European standard, as equal to UL 2849, the voluntary, third-party standard, or EN 15194 being recognized under U.S. law. There are several positions relative to lithium-ion batteries and e-bikes that, in our opinion as members of PeopleForBikes (PFB), will not provide the best level of safety to either bike shops or consumers. We understand that PFB is not interested in the opinion of small, although knowledgeable members. We also understand that dollars and size of membership matter more, from a lobbying standpoint, than paying the price for achieving the harder objective of doing the right thing. The additional problem is kicking the can down the road in the hope that the political component of the risk profile will prove you right.  

07-22-24: “Gillibrand, Adams push to accelerate e-bike battery safety measures after tragedies.” THE CITY: “U.S. Senate bill to create a national lithium-ion battery standard is still stalled despite deaths and destruction caused by unregulated devices. Meanwhile, the mayor is rolling out street charging stations. Mayor Eric Adams spoke at Cooper Square about the New York City Safe Charging Accelerator, July 22, 2024. Speaking near the scene of a fire earlier this year that displaced dozens of Sunset Park residents, public officials gathered Monday to call attention to the deadly risks of lithium-ion batteries used in e-bikes and urge passage of a federal bill that would set a single national safety standard.'You deserve to trust your bike, your e-bike and scooter won’t catch fire,' said U.S. Sen. Kirsten Gillibrand (D-N.Y.), who joined state Sen. Iwen Chu (D-Brooklyn) and outgoing Fire Commissioner Laura Kavanagh at the headquarters of the Chinese-American Planning Council, a local nonprofit group. Noting that the batteries have become a leading cause of deadly and destructive fires in New York City, she added: 'Everyone here deserves to feel safe.' Last year 18 people died in lithium-ion battery fires, according to the FDNY. While a version of the Setting Consumer Standards for Lithium-Ion Batteries Act sponsored by Ritchie Torres (D-NY) passed the House in May, the Senate version sponsored by Gillibrand has remained bottled up in a committee. The senator spoke just after Mayor Eric Adams pledged a multi-agency city effort to help stem the use of illegally modified and uncertified lithium-ion batteries, including a battery swap program and sidewalk hubs to store and charge lithium-ion batteries. While noting local progress, including a decline so far this year in deaths and injuries, Kavanagh stressed that such local efforts are hamstrung by a lack of federal regulations.” HPS Analysis: The Senate bill sponsored by New York Senator Gillibrand is S1008 and the House version has already passed. This Federal legislation requires the Consumer Product Safety Commission (CPSC) to promulgate a lithium-ion battery standard for micromobility devices, like e-bikes, one year after signed into law. This will effectively fast-track that portion of the e-bike standard that CPSC is currently working on, and have it finalized and promulgated as a mandatory federal standard about a year before promulgation of a complete mandatory federal standard for e-bikes now time-lined for the end of 2025. This is something we agree PeopleForBikes should be proactively lobbying for.

07-23-24: “New wave of M&A deals coming in bicycle industry, study predicts.” BIKE europe: “'With financial investors needing to divest more mature assets within the next couple of years, it becomes increasingly clear that the bike market will see a corresponding rise in M&A activity starting in 2026 to 2027,' the Houlihan Lokey report concludes. 'The bicycle industry can expect a gradual recovery with significant upside in the medium to long term, with 2026 and 2027 marking pivotal years for increased mergers and acquisitions and investment opportunities.' This is the conclusion of a new report led by global investment bank Houlihan Lokey. In contrast to the current market conditions, the study indicates that another boom period for the industry is also possible before the end of the decade. As the bicycle industry works through excess inventory issues and the unknowns of a global supply chain, a key question for potential investors now is how the bike industry will evolve in the years ahead and which insights will be essential for making sound future investment decisions. To answer these questions, Houlihan Lokey Inc., and Kearney, a global management consultancy collected public data and carried out surveys with more than 30 industry executives and over 10 industry-relevant financial investors, to explore potential future trends of what might be ahead for investors. Their findings were revealed in the recently published report ‘From boom to bust – and back again? Why the bike industry is ripe for a new wave of M&A deals.’ Macroeconomic softening, geopolitical tensions, the bullwhip effect, and reduced investor interest were all contributing factors to this cooling in M&A’s in the bike industry, the research reveals. While all types of financial investors showed increased interest in the bike industry after the start of the pandemic, this dropped in 2023, with venture capital (VC) firms seeing a decline of 25 percent and private equity (PE) and family office (FO) firms experiencing a sharper drop of 50 percent. 'This fell in line with a global downward trend in PE activity, which saw deal value, exit value, and private capital fundraising all decrease significantly,' the report states. Looking ahead, 81 percent of the experts surveyed said that they expect more M&A’s across the bicycle industry going forward. 'The good news for bike firms is that we expect financial investor interest to rebound relatively soon. For one thing, buyout funds are sitting on record reserve levels, with much of the funding having been waiting in the wings for several years. This means that those funds will be feeling the pressure to start investing again,' the report states. 'We will see more exits from 2026 onward as mature assets are divested ... As the bike industry recovers and professionalizes, creating higher EBITDA margins and healthier cash flows, it will also become more attractive to PE firms again. Additionally, as those who invested heavily in the market during the pandemic get to the end of their investment cycles, which typically last three to six years, we will see more exits from 2026 onward as mature assets are divested, triggering a significant increase in M&A activity.” HPS Analysis: HPS has not yet read the Houlihan Lokey report, but we have already seen the announced formation of M&A funds and partnerships focused on small-cap acquisitions between US$1 million and US$5 million. Based on this Bike europe article, we are sure we see more of this activity, along with mergers and the sale of brands and companies purchased by VC during the pandemic that, as the article states, are now ready to cash out. Some of the acquisitions made during the pandemic were made when dynamic pricing increased gross sales and profits and accordingly the net worth of acquired brands and companies. That dynamic pricing is a thing of the past, and inventory and slow sales have greatly reduced both gross sales and profits, and accordingly the net worth of the brands and companies that are becoming available. Some of the activity we are seeing is in the formation of so-called bottom-feeders. In any case, HPS agrees that the global M&A activity is about to increase, perhaps significantly.

07-24-24: “Monday breaks the record for the hottest day ever on earth!” Associated Press: “Monday was the hottest day ever globally, beating a record set the day before, as countries around the world from Japan to Bolivia to the United States continue to feel the heat, according to the European climate change service. Provisional satellite data published by Copernicus on Wednesday shows that Monday was 0.06 degrees Celsius (0.1 degrees Fahrenheit) hotter than Sunday. Climate scientists say it’s plausible that this is the warmest it has been in 120,000 years because of human-caused climate change. While scientists cannot be certain that Monday was the very hottest day throughout that period, average temperatures have not been this high since long before humans developed agriculture. But it’s a difficult determination to make, said University of Pennsylvania climate scientist Michael Mann, because data from tree rings, corals, and ice cores don’t go back that far. The temperature rise in recent decades is in line with what climate scientists projected would happen if humans kept burning fossil fuels at an increasing rate. 'We are in an age where weather and climate records are frequently stretched beyond our tolerance levels, resulting in insurmountable loss of lives and livelihoods,' Roxy Mathew Koll, a climate scientist at the Indian Institute of Tropical Meteorology.'Deaths from high temperatures show how catastrophic it is not to take stronger action on cutting CO2,' which is the main heat-trapping gas, Cornell University climate scientist Natalie Mahowald said in an email. Copernicus’ preliminary data shows the global average temperature Monday was 17.15 degrees Celsius (62.87 degrees Fahrenheit). The previous record before this week was set just a year ago. Before last year, the previous recorded hottest day was in 2016 when average temperatures were at 16.8 degrees Celsius (62.24 degrees Fahrenheit). While 2024 has been extremely warm, what kicked this week into new territory was a warmer-than-usual Antarctic winter, according to Copernicus. The same thing happened on the southern continent last year when the record was set in early July. HPS Analysis: Environmental risk has melded with geopolitical risk to create the most economically disruptive era since World War II. The end result is a risk profile that requires integrating all these factors, including the geographic regions where weather and temperature will affect manufacturing and supply chains and consumer recreation and sports activity. Forecasters now must have reliable sources of data and information about weather, temperature, and humidity patterns both short-term and long-term to advise the risk profile of companies and brands both internationally and domestically.

07-24-24: “Micromobility ridership up 16 percent in U.S. cities in 2023.” SMARTCITIESDIVE: “Even as shared bike and scooter rides continue to grow, affordability and limited city resources threaten future success, according to a National Association of City Transportation Officials report. The NACTO report highlights sharply rising costs for users of bike-share systems in the U.S. From 2019 to 2023, the cost for an annual pass rose 32 percent in Chicago, 30 percent in Boston, and 21 percent in New York City. New Yorkers must pay over $200 for an annual pass. Riders also pay sales tax on each bike-share trip in many cities, unlike public transportation fares. As a result, 'Bike share prices are now significantly higher than other public transportation options, especially for those taking pay-as-you-go trips,' the report says. Electric bikes have largely taken over as the preferred mode in cities where both shared pedal and e-bikes are available. In Los Angeles, eight times as many trips took place on e-bikes than pedal bikes in September 2023; in New York City, four times as many e-bikes were ridden. One-third of total available station-based bikes in the U.S. in 2023 were e-bikes, but they accounted for 46 percent of trips. The NACTO report says that 'e-bikes are used significantly more than pedal bikes in systems that offer both' in terms of the average number of trips taken per device per day. According to NACTO, cities in the U.S. and Canada will tally 1 billion combined trips in the coming year. But to continue the success of shared micromobility, the report recommends that cities consider public ownership and public subsidies to make these services more affordable; eliminate the sales tax on shared bike and scooter rides; build protected bike lane networks, and put micromobility devices and stations closer to homes and popular destinations. HPS Analysis: A positive in the micromobility mix and future is the rebound and growth of bike and scooter ride-share as a form of public transit, along with busses, trains, and other forms of public transit. Electric bikes and scooters have become omnipresent, and providers are quickly learning to adapt and provide safer, convenient, and cost-effective battery charging and replacement that can be translated to safer lithium-ion battery management for public housing, multiple-use buildings, apartment buildings, and condominiums. Overall, getting more people on more micromobility devices more often is promoting private ownership and contributes to safer riding for everyone.

07-25-24: “The auto industry is in turmoil.” Bloomberg Hyperdrive: “'The auto industry is in turmoil,' Stellantis CEO Carlos Tavares said to begin his interview Thursday with Bloomberg Television. 'Looking at the results, everybody is going in the same direction.' That direction is, indeed, almost universally down. Consider these four major carmakers that have reported earnings in roughly the last 24 hours:

• Renault posted a 35 percent decline in net income for the first half of the year, sending its stock plunging the most intraday in almost 2 ½ years.
• Ford — which many investors believed would beat analyst estimates, raise guidance, and return more cash to capital — went 0-for-3 on those expectations. The shares plummeted as much as 18 percent.
• Nissan reported a surprise drop in quarterly profit, missing the lowest analyst estimate, and slashed its forecast for operating profit this year. Its stock fell to a 15-month low.
• Stellantis trailed expectations for net income (down 48 percent from a year ago), industrial free cash flow (negative €392 million; the average estimate was for positive €1.78 billion), and net revenue (down 14 percent). Its shares dropped the most intraday in Paris since the company’s early 2021 formation.

Hats off to Hyundai for the narrative violation. Operating profit for the three months that ended in June was 4.3 trillion won ($3 billion), narrowly beating estimates on the back of strong hybrid vehicle sales. These results follow another disappointing showing from Tesla, and a beat-and-raise by General Motors that wasn’t enough to spare its shares from falling 6.4 percent, the stock’s worst day since December 2022. Porsche also cut its outlook for the year and took its biggest intraday drubbing since its September 2022 initial public offering. So … it’s been a brutal week. What’s it all mean for the future of the industry? Renault CEO Luca de Meo drew a distinction between his company’s plans and his competitors’, saying the French automaker won’t pull back on EVs. That said, the president of the European Automobile Manufacturers’ Association told Les Echos that Brussels will need to budge on its goal for all new vehicles sold to be zero-emission by 2035. 'We need more flexibility in the schedule,' de Meo told the newspaper in an interview published this week." HPS Analysis: The transition to electric or any combination of electric and hybrid is going to be messy and it is, as we have already seen, going to get caught up in the politics of countries, like the U.S. and economic regions like the European Union and China. The integration of micromobility into mobility is also going to be messy. Remember when a folding electric bicycle was automatically available, at the push of a button, from the trunk of a Mercedes luxury car? This has been one of the most interesting months in my lifetime, and readers have noticed that throughout this newsletter the point that we are now in the most economically disruptive era since World War II has been made numerous times. This article is proof. Not only is the global bicycle industry in turmoil, so is the automobile industry. A good friend and confidante who lives and works in the bicycle business in Europe has consistently warned about the automobile industry taking over the bicycle industry. I have been tentative in agreeing with him until the risk profile expanded to include environmental and geopolitical risk, and we experienced this extraordinary, seminal month of July 2024. A good friend from my Schwinn days who passed too early, pounded into my head that: “Every good and worthwhile thing, is from moment to moment on the razer's edge of danger, and must be fought for!” That is the only thing I am sure about the future because whatever it is, will be totally different from what has gone before. Welcome to the journey.

Contact Jay Townley: jay@humanpoweredsolutions.com