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U.S.-China Trade War of 2019 Spills into 2020 for Ports, Shippers and Manufacturers

U.S.-China

U.S.-China Trade War of 2019 Spills into 2020 for Ports, Shippers and Manufacturers

The Jan. 15 signing of a U.S.-China Phase One agreement did spawn a sigh of relief among those troubled by the trade tensions between the two nations. But six days later, a warning came from a couple experts closely watching the unfolding events on behalf of ports, shipping lines and manufacturers. The crux of that warning? Stay tuned.

“This is a truce,” said Phil Levy, chief economist at Flexport, a San Francisco-based freight forwarding and custom brokerage company. “This is not the end of the trade war.”

Levy shared that opinion as he joined his company’s CEO Ryan Peterson in leading a webinar on Jan. 21 that was listened in on electronically by some of their 10,000 clients in more than 200 countries. Those who rely on the company’s expertise in ocean, air, truck and rail freight, drayage & cartage, warehousing, customs brokerage, financing and insurance–all informed and powered by Flexport’s unique software platform—heard Levy say of the U.S.-China trade war: “We haven’t seen a retaliatory escalation of this magnitude in the post-World War II era. … This really was a 2019 story that worsened throughout the year.”

He pointed to a graphic that showed trade between the world’s two biggest economies fell markedly last year, and that no one overseeing trans-Pacific supply chains were immune from economic harm. Many webinar participants could relate as 64 percent of Flexport’s customers rely on the trans-Pacific trade routes, according to Peterson.

Yes, the Phase One deal was a positive first step, but Levy pointed to some examples of lasting victims from the trade war. It exposed the continued “decay,” as the economist put it, of the World Trade Organization (WTO), which is supposed to prevent the escalation of trade disputes. The “keeper of peace” amid trade tensions was largely frozen out of U.S.-China talks and, therefore, silent as events transpired.

A second heavy blow came in December 2019, when the WTO’s appellate body ceased to function, according to Levy, who noted that the formation of the “WTO system was one of core achievements since World War II.”

Peterson found equally worrisome the first-ever disappearance of peak season when it comes to shipping. As many known, imports grow during the fall and really heat up by November’s holiday shopping season. That not happening in 2019, couple with a steady decline is U.S. imports from China after years of solid growth, is a reason for concern, according to the CEO, who maintained, “global trade is down due to tariffs.”

For one thing, not having a peak season to rely on, coupled with steadily declining trade, “from our perspective makes life very hard to plan for,” Peterson said.

He did see on the horizon what many may view as a green lining: lower freight fees and consumer prices. “Lower prices do sound good,” Peterson conceded, “until someone goes bankrupt. We want stability, predictability. Things getting too cheap is unpredictable. You are playing with fire.”

Feel the burn? Peterson called our current “degree of uncertainty relatively unprecedented. We learn about things in a tweet. Was that really implemented or not?” As an example, he cited France proposing a digital tax and President Donald Trump striking back with threats of tariffs on cheese and wine. “Is that policy or not?” Peterson asked rhetorically. “Right now it’s a tweet. It makes it very hard to plan for.”

Levy warned “there is no safe play.” You can withstand the brunt of the tariffs and see what that does to your bottom line, or you can figure out a way to work around them and then have a trade deal come along with no way to return to normal operations quickly enough.

As Peterson pointed out, it’s not just the sting of the tariffs but the amount of paperwork and other adjustments one must handle while trying to remain agile. That time takes away from other things you need to be doing with your business.

Speaking of time away, Levy believes there will be no further movement in deescalating trade tensions between the U.S. and China until after America’s November presidential election. He suspects that China agreed to the Phase One conditions, which were much more weighted against that country than the U.S., “to buy a year of peace.” He added that China could be playing it coy in the weeks ahead as Beijing awaits the outcome that determines whether they will continue to deal with Trump or a new White House occupant. “If Trump loses, it’s likely the trade agreement will change anyway,” Levy said.

In the meantime … uncertainty. Peterson noted that one Flexport client had to close a manufacturing plant due to the tariffs. Levy held onto the hope that an eventual U.S.-China trade deal will be beneficial economically, pointing to markets that opened up with the U.S.-Mexico-Canada Agreement replacing the North American Free Trade Agreement. But you never know, as evidenced by USMCA having also resulted in some restricted trade, particularly in the automobile sector. “That was disappointing,” he admitted.

Don’t be surprised if the pain ultimately spreads, as Levy predicted what will happen after the U.S.-China trade war comes to a head. “There are a lot of signs the president will turn his trade policy focus away from China and toward Europe,” said Levy, who later noted Trump has also begun accusing Vietnam of cheating when it comes to trade.

So what to do about all this?

“My stance is there is nothing more important than agility, the ability to adapt,” Peterson said of dealing with tariffs, real or threatened. “It can mean restructuring a supply chain or seeking exemptions.” Companies that foster a culture with an ability to adapt can look at these challenges, Peterson says, and respond: “Bring it on, bring on the change.”

trade deals

Is It Just a Phase? Redesigning Trade Deals in the Age of Trump.

Comprehensive is Out, “Phased” is In

Within the first few months of the Trump Administration in 2017, the U.S. Trade Representative issued a report identifying intellectual property theft and forced technology transfer as crucial sources of China’s growing technological advantage at the expense of U.S. innovation. Tariffs would be applied until a trade deal to address these practices could be reached.

But expectations had to be reset early in the negotiations – China’s offenses cannot be pinpointed to one set of laws, regulations or practices, and so the complex wiring of China’s national approach cannot be untangled or rewired in one pass, in one agreement, even if China shared that goal. An agreement this ambitious would have to be built in phases.

In presenting the “Phase One” agreement signed between the United States and China on January 15, U.S. Trade Representative Robert Lighthizer said the deal represents “a big step forward in writing the rules we need” to address the anti-competitive aspects of China’s state-run economy. And it is a serious document.

Beyond its detailed provisions, the strategic and commercial impact of the deal will take more time to evaluate. What is clear in the meanwhile, is that this administration has departed from the standard free trade agreement template.

Comprehensive agreements are out. Partial or phased agreements are in.

Something Agreed

It’s common in trade negotiations to whittle down differences, leaving the hardest issues to the end. Early wins keep parties at the table, building a set of outcomes in which the parties become invested and more willing to forge compromises around the remaining difficult issues. One way to avoid settling for deals that leave aside the most meaningful – and often hardest – concessions is to stipulate that “nothing is agreed until everything is agreed.”

For this administration, however, the art of the deal is – quite simply – closing the elements of the deal available. With China, that may be the best and only way for the United States to achieve a deal. And it may very well represent significant progress. At turns, a larger deal looked as if it would collapse under its own political weight in China. Some things agreed is probably a better outcome than nothing agreed.

A Way Out or a Way Forward?

The deal lays down tracks for more detailed intellectual property rights and newer prohibitions on forced technology transfer. Among other commitments, the deal also breaks ground on previously intractable regulatory barriers to selling more U.S. agricultural and food products in China including dairy, poultry, meat, fish, and grains. But it does not address subsidies provided to China’s state-owned enterprises, a complaint shared by all of China’s major trading partners, Having dodged the issue for now, China may have created an advantage by stringing out its commitments over phases.

The Trump administration brought China to the table with billions in tariffs on imported goods. While compelling, it is not a durable approach. The U.S. macroeconomy is withstanding the self-inflicted pain, but tariffs have real and negative effects on U.S. farmers and business owners who will vote in November. Even a temporary tariff détente is a welcome respite, but uncertainty remains. And while we wait to see if the provisions on intellectual property and technology transfer prove fruitful, what of the lost agricultural sales for U.S. farmers and sunk costs for U.S. businesses?

As part of the deal (a part that gets phased out), China committed to shop for $200 billion in American goods and services over the next two years, including more than $77 billion in manufactured goods, $52 billion in energy products, $32 billion in agricultural goods and $40 billion in services. If fulfilled, the purchases in Phase One would appear to solve the problem of waning U.S. exports to China, but that was a problem of our own making so the administration might only merit partial credit for this part of the deal.

Journey of a Thousand Miles

Of course, the Trump administration’s phased and partial approach to reaching trade deals may simply stem from impatience or a focus on the transactional – comprehensive deals take too long to complete. But the approach may also make sense if these deals are stepping-stones in a bigger, longer game.

In a June 2018 report, the White House offered a taxonomy of 30 different ways the Chinese government acquires American technologies and intellectual property, including through U.S. exports of dual-use technologies, Chinese investments in the United States, and the extraction of competitive information through research arms of universities and companies in the United States.

Ambitious as it is, the administration is not limiting itself to the new Economic and Trade Agreement to solve all the problems it identified. The Department of Justice has initiated intellectual property theft cases, the Department of Commerce is expanding controls over the export of dual-use technologies, and the Treasury Department oversees a process to tighten reviews of proposed inward investments.

A Chinese proverb says that “a journey of a thousand miles begins with a single step.” Concerns the administration will not limit or end its quest with Phase One were evident in the letter from President Xi read aloud at the signing which urged continued engagement to avoid further “discriminatory restrictions” on China’s economic activity in the United States.

Just a Phase?

Beyond engagement with China, the administration has nearly consistently favored partial deals, with the U.S.-Mexico-Canada agreement (USMCA) the exception. NAFTA needed to be modernized. Our economies have changed too much for the deal to keep pace without some upgrades. Could the modifications have been achieved without replacing the deal? Probably, but perhaps not politically, or it might have been done years sooner. NAFTA’s facelift as USMCA offered a chance for the administration to fashion provisions it intends for broader application, such as those on currency and state-owned enterprises. Though it replaced NAFTA, USMCA changes constitute a partial re-negotiation.

With Japan, the administration set much narrower parameters, hiving off-market access and digital trade as an initial set of deliverables. Last September, President Trump finalized a partial trade deal with Prime Minister Abe that went into effect on January 1. Limited in scope, it encompasses two separate agreements that only cover market access for certain agriculture and industrial goods and digital trade.

The White House characterized the partial deal as a set of “early achievements,” with follow-on negotiations on trade in services, investment and other issues to commerce around April this year. But crucially, the partial deal enabled the United States to avoid addressing its own tariffs on autos and auto parts, which comprise nearly 40 percent of Japan’s merchandise exports to the United States, while securing access to Japan’s market for U.S. agricultural exports.

The United States also restarted talks in 2018 on a partial trade agreement with the European Union that is stalemated over whether to include agriculture.

Walking Alone?

Preferential market access deals are an exception to WTO commitments. WTO members have agreed that free trade agreements outside the WTO should cover “substantially all trade” among the parties and that staging of tariff reductions are part of interim arrangements, not an end state. But with comprehensive negotiations stalled in the WTO itself, members are trying new negotiating approaches such as focusing on single sectors, like information technologies.

Although there was little mention of state-owned enterprises and subsidies in the U.S.-China Phase One deal, something important happened on the margins of that ceremony that received little attention: The trade ministers of Japan, the United States and European Union released a joint statement proposing ways to strengthen the WTO’s provisions on industrial subsides, which they called “insufficient to tackle market and trade distorting subsidization existing in certain jurisdictions,” a reference to China. The statement proposed elements of new core disciplines – a first phase if you will in launching more formal negotiations among WTO members.

The deal signed with China this week envisions reforms to China’s laws, regulations and policies as they apply to any foreign company operating in China, not just the American ones. Perhaps our trading partners see it (only partially) as a go-it-alone strategy and partially as a way to create a corps of provisions that can be migrated to the WTO.

Phase One trade deal - foundation for future US-China trade relations?

Construction Phases: Trump’s Real Estate Mindset

How is the real estate business like trade policy? It isn’t, except in the mind of Donald Trump. Buildings can be demolished or imploded in seconds. A giant hole is dug before its replacement is built. The builder then pours the concrete foundation constructs the frame long before wiring the interior and installing the finishes.

Maybe a phased trade deal represents the opportunity to reset the footing and frame out a solid structure for the future of US-China trade relations – and the finishing touches will come later.

Access the full agreement.

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Andrea Durkin is the Editor-in-Chief of TradeVistas and Founder of Sparkplug, LLC. Ms. Durkin previously served as a U.S. Government trade negotiator and has proudly taught international trade policy and negotiations for the last fourteen years as an Adjunct Professor at Georgetown University’s Master of Science in Foreign Service program.

This article originally appeared on TradeVistas.org. Republished with permission.
pear

Global Pear Market – Russia, Indonesia, and Germany Are the Largest Importers in the World

IndexBox has just published a new report: ‘World – Pears – Market Analysis, Forecast, Size, Trends and Insights’. Here is a summary of the report’s key findings.

The global pear market revenue amounted to $27.3B in 2018, increasing by 4.7% against the previous year. This figure reflects the total revenues of producers and importers (excluding logistics costs, retail marketing costs, and retailers’ margins, which will be included in the final consumer price). The market value increased at an average annual rate of +2.7% over the period from 2008 to 2018; the trend pattern indicated some noticeable fluctuations being recorded in certain years. The pace of growth appeared the most rapid in 2013 with an increase of 14% year-to-year. Over the period under review, the global pear market attained its maximum level at $30.8B in 2014; however, from 2015 to 2018, consumption failed to regain its momentum.

Consumption By Country

The country with the largest volume of pear consumption was China (16M tonnes), accounting for 66% of total consumption. Moreover, pear consumption in China exceeded the figures recorded by the world’s second-largest consumer, Italy (689K tonnes), more than tenfold. The U.S. (658K tonnes) ranked third in terms of total consumption with a 2.7% share.

From 2008 to 2018, the average annual rate of growth in terms of volume in China stood at +2.1%. The remaining consuming countries recorded the following average annual rates of consumption growth: Italy (+0.2% per year) and the U.S. (+0.9% per year).

In value terms, China ($17.5B) led the market, alone. The second position in the ranking was occupied by Italy ($887M). It was followed by the U.S..

The countries with the highest levels of pear per capita consumption in 2018 were Argentina (14,247 kg per 1000 persons), Italy (11,598 kg per 1000 persons) and China (11,233 kg per 1000 persons).

From 2008 to 2018, the most notable rate of growth in terms of pear per capita consumption, amongst the main consuming countries, was attained by Argentina, while the other global leaders experienced more modest paces of growth.

Market Forecast 2019-2025

Driven by increasing demand for pear worldwide, the market is expected to continue an upward consumption trend over the next seven years. Market performance is forecast to retain its current trend pattern, expanding with an anticipated CAGR of +1.9% for the seven-year period from 2018 to 2025, which is projected to bring the market volume to 28M tonnes by the end of 2025.

Production 2007-2018

In 2018, the global pear production stood at 25M tonnes, surging by 1.8% against the previous year. The total output volume increased at an average annual rate of +1.5% over the period from 2008 to 2018; the trend pattern remained relatively stable, with only minor fluctuations being observed throughout the analyzed period. The pace of growth was the most pronounced in 2011 when production volume increased by 6.2% year-to-year. The global pear production peaked at 26M tonnes in 2014; however, from 2015 to 2018, production stood at a somewhat lower figure. The general positive trend in terms of pear output was largely conditioned by a mild increase of the harvested area and measured growth in yield figures.

In value terms, pear production amounted to $27.7B in 2018 estimated in export prices. The total output value increased at an average annual rate of +3.1% over the period from 2008 to 2018; the trend pattern indicated some noticeable fluctuations being recorded over the period under review. The most prominent rate of growth was recorded in 2013 with an increase of 16% against the previous year. The global pear production peaked at $31.3B in 2014; however, from 2015 to 2018, production stood at a somewhat lower figure.

Production By Country

China (17M tonnes) remains the largest pear producing country worldwide, comprising approx. 68% of total production. Moreover, pear production in China exceeded the figures recorded by the world’s second-largest producer, Argentina (954K tonnes), more than tenfold. Italy (767K tonnes) ranked third in terms of total production with a 3.1% share.

In China, pear production increased at an average annual rate of +2.2% over the period from 2008-2018. The remaining producing countries recorded the following average annual rates of production growth: Argentina (+2.6% per year) and Italy (-0.0% per year).

Harvested Area 2007-2018

In 2018, the global pear harvested area stood at 1.4M ha, approximately mirroring the previous year. Overall, the pear harvested area continues to indicate a slight contraction. The most prominent rate of growth was recorded in 2011 with an increase of 2% against the previous year. The global pear harvested area peaked at 1.6M ha in 2013; however, from 2014 to 2018, harvested area stood at a somewhat lower figure.

Yield 2007-2018

Global average pear yield amounted to 18 tonne per ha in 2018, going up by 2.8% against the previous year. The yield figure increased at an average annual rate of +2.8% over the period from 2008 to 2018; the trend pattern remained consistent, with only minor fluctuations being recorded throughout the analyzed period. The growth pace was the most rapid in 2017 with an increase of 7.2% against the previous year. The global pear yield peaked in 2018 and is likely to continue its growth in the near future.

Exports 2007-2018

Global exports amounted to 2.8M tonnes in 2018, jumping by 4.6% against the previous year. Overall, pear exports, however, continue to indicate a relatively flat trend pattern. The most prominent rate of growth was recorded in 2014 when exports increased by 5.7% y-o-y. The global exports peaked at 2.8M tonnes in 2008; however, from 2009 to 2018, exports stood at a somewhat lower figure.

In value terms, pear exports stood at $2.7B (IndexBox estimates) in 2018. Overall, pear exports, however, continue to indicate a relatively flat trend pattern. The most prominent rate of growth was recorded in 2013 when exports increased by 11% year-to-year. In that year, global pear exports reached their peak of $2.8B. From 2014 to 2018, the growth of global pear exports failed to regain its momentum.

Exports by Country

In 2018, China (544K tonnes), distantly followed by the Netherlands (337K tonnes), Argentina (317K tonnes), South Africa (302K tonnes), Belgium (288K tonnes), Italy (158K tonnes), Chile (156K tonnes), Spain (145K tonnes) and the U.S. (132K tonnes) represented the major exporters of pears, together achieving 86% of total exports.

From 2008 to 2018, the most notable rate of growth in terms of exports, amongst the main exporting countries, was attained by South Africa, while the other global leaders experienced more modest paces of growth.

In value terms, China ($602M), the Netherlands ($381M) and Argentina ($294M) were the countries with the highest levels of exports in 2018, with a combined 48% share of global exports.

China experienced the highest rates of growth with regard to exports, in terms of the main exporting countries over the last decade, while the other global leaders experienced mixed trends in the exports figures.

Export Prices by Country

In 2018, the average pear export price amounted to $962 per tonne, approximately reflecting the previous year. Over the period under review, the pear export price continues to indicate a relatively flat trend pattern. The growth pace was the most rapid in 2013 an increase of 15% y-o-y. In that year, the average export prices for pears reached their peak level of $1,127 per tonne. From 2014 to 2018, the growth in terms of the average export prices for pears failed to regain its momentum.

There were significant differences in the average prices amongst the major exporting countries. In 2018, the country with the highest price was Italy ($1,299 per tonne), while South Africa ($636 per tonne) was amongst the lowest.

From 2008 to 2018, the most notable rate of growth in terms of prices was attained by China, while the other global leaders experienced more modest paces of growth.

Imports 2007-2018

Global imports amounted to 2.7M tonnes in 2018, rising by 3% against the previous year. In general, pear imports, however, continue to indicate a mild contraction. The pace of growth appeared the most rapid in 2017 with an increase of 7.3% year-to-year. Over the period under review, global pear imports reached their peak figure at 3.1M tonnes in 2008; however, from 2009 to 2018, imports failed to regain their momentum.

In value terms, pear imports amounted to $2.7B (IndexBox estimates) in 2018. Over the period under review, pear imports, however, continue to indicate a measured drop. The growth pace was the most rapid in 2017 with an increase of 13% y-o-y. Over the period under review, global pear imports attained their peak figure at $3.3B in 2008; however, from 2009 to 2018, imports failed to regain their momentum.

Imports by Country

The countries with the highest levels of pear imports in 2018 were Russia (271K tonnes), Indonesia (187K tonnes), Germany (185K tonnes), Brazil (158K tonnes), the UK (138K tonnes), the Netherlands (129K tonnes), the U.S. (123K tonnes), France (116K tonnes), Viet Nam (100K tonnes), Belarus (83K tonnes), China, Hong Kong SAR (82K tonnes) and Italy (80K tonnes), together accounting for 61% of total import.

From 2008 to 2018, the most notable rate of growth in terms of imports, amongst the main importing countries, was attained by Belarus, while the other global leaders experienced more modest paces of growth.

In value terms, Germany ($244M), Russia ($202M) and Indonesia ($147M) were the countries with the highest levels of imports in 2018, together accounting for 22% of global imports. Brazil, Viet Nam, the U.S., the UK, the Netherlands, France, Italy, Belarus and China, Hong Kong SAR lagged somewhat behind, together accounting for a further 37%.

Belarus recorded the highest rates of growth with regard to imports, in terms of the main importing countries over the last decade, while the other global leaders experienced more modest paces of growth.

Import Prices by Country

In 2018, the average pear import price amounted to $994 per tonne, stabilizing at the previous year. Overall, the pear import price, however, continues to indicate a relatively flat trend pattern. The most prominent rate of growth was recorded in 2013 an increase of 7.4% against the previous year. In that year, the average import prices for pears attained their peak level of $1,108 per tonne. From 2014 to 2018, the growth in terms of the average import prices for pears remained at a lower figure.

Prices varied noticeably by the country of destination; the country with the highest price was Viet Nam ($1,414 per tonne), while China, Hong Kong SAR ($577 per tonne) was amongst the lowest.

From 2008 to 2018, the most notable rate of growth in terms of prices was attained by Viet Nam, while the other global leaders experienced more modest paces of growth.

Source: IndexBox AI Platform

silk road

Can the New Silk Road Compete with the Maritime Silk Road?

China’s president Xi Jinping refers the Belt and Road Initiative, aka the New Silk Road, as the “Project of the Century” and according to a recent Bloomberg article, Morgan Stanley anticipates Chinese investments will total 1.3 trillion US dollars by 2027. In addition, more than 150 countries and international organizations have committed to invest in the project as well with infrastructure enhancements, such as roadways and power plants. But will this New Silk Road ever really compete with the firmly established Maritime Silk Road?

Following is a comprehensive analysis by Bernhard Simon, CEO of Dachser, an international logistics solutions provider, Mr. Simon outlines the benefits and challenges associated with the New Silk Road as well as its position as a potential competitor to the Maritime Silk Road.

Over the last few years, the more I hear and read about the New Silk Road, the more grand the expectations.  Politically speaking, the trade corridors between China and Europe, as well as Africa, seem to be China’s key to becoming a leading global power in the 21st century. Logistically speaking, it would seem that infrastructures and networks are emerging on an entirely new scale, taking a gigantic economic area—often described as representing 60 percent of the world’s population and 35 percent of the global economy—to the next level. The New Silk Road could be a kind of high-speed internet for the transport of physical goods.

As with most narratives, it is worth taking a critical look at the facts. I would like to do this now for certain logistical aspects of the Belt and Road Initiative (BRI), as the New Silk Road is officially known.

First, let’s consider the overland connection between China and Europe: the possibility of bringing Chinese consumer goods to us on the east-west route via rail. This transcontinental route was not the brainchild of China’s President Xi Jinping, who made the BRI a national doctrine in 2013.

In fact, goods have been rolling along the Trans-Siberian route from China to Europe since 1973 (with some interruptions due to the Cold War). Today, there are two routes out of northern China, which head via Mongolia, Kazakhstan and Russia to terminal stations such as Duisburg’s Inner Harbor or Hamburg. China’s western region, home to the megacity of Chongqing and its 30 million people, is also connected to the northern routes. This route allows cargo from the west to no longer need to be transported the many miles to China’s coasts.

 High Costs of Rail Freight vs. Ocean Freight

How significant are these rail links for logistics between Asia and Europe? In 2017, 2,400 trains moved about 145,000 standard containers between China and Central Europe. This corresponds roughly to the cargo of seven large container ships. The International Union of Railways (UIC) expects this to grow to 670,000 standard containers—equivalent to 33 container ships—in ten years’ time. Despite this forecast growth, the existing rail links between China and Europe are likely to remain logistical mini-niches. Steve Saxon, a logistics expert from McKinsey in Shanghai, summarizes it nicely: “Compared to sea freight, the volume of goods transported to Europe overland will always remain small.”

This is primarily a matter of cost. Transporting a standard container between Shanghai and Duisburg by rail costs between $4,500 USD and $6,700 USD; compare that to the cost of sending a similar container from Shanghai to Hamburg by ship: currently around $1,700 USD. This difference is simply too great for railway transport to be truly competitive against ocean transport, even though they move the cargo at about twice the speed. Efficiency improvements will not have a big enough impact to shift from ocean transport to rail.

Another factor is that at the moment, China heavily subsidizes these international rail connections. Once that support ends in 2021, competitiveness will erode further. It is not clear whether rail transport will be self-sustaining without subsidies.

Also, in most cases, anyone needing a shipment quickly and flexibly typically sends it via air freight, even if this option costs around 80 percent more than via railway. Thus, freight transport by rail is (and will remain) caught between economic (by ocean) and fast (by air).

Would adding more train routes change the situation?

China is planning an additional railway line in its southern region, which will move cargo to Europe via Central Asian countries, as well as Iran, and Turkey, bypassing Russia entirely. Indeed, a railway line has connected China with Iran since 2018. This route is, geographically speaking, very similar to the “old” Silk Road, a trade route for camel caravans that crossed Central Asia on its way to the eastern Mediterranean. If this railway line is completed one day, it will raise a number of questions from a European perspective: How can safety, punctuality, and reliability be guaranteed? How can delays caused by customs clearance be minimized? What effect will international sanctions have, for example, on transit through Iran? How can the misuse of containers for smuggling immigrants be avoided? In other words, many issues need to be addressed before a railway corridor south of Russia can be established.

There are two more routes in China’s BRI strategy. One is in Southeast Asia: a 2,400-mile railway line from Kunming to Singapore plus a branch to Calcutta. The other is a rail line that starts in China’s far west, then runs through Pakistan to the port of Gwadar on the Arabian Sea. Crossing over various passes in Central Asia, this technically challenging project is expected to cost $62 billion USD. However, both routes have only a very indirect connection to freight traffic between China and Europe.

So the situation will remain much the same into the future–some 90 percent of world trade will go by ship. Rail transport via the New Silk Road will not change this. If all this freight suddenly started rolling along the Silk Road, the route would be like an endless conveyor belt loop—the idea is completely absurd.

And what about the Maritime Silk Road?

More important than Eurasian railway routes is the so-called Maritime Silk Road, i.e., the transport of cargo from China to Europe by sea. As soon as Portuguese sailors opened up China for trade by sea in 1514, the old Silk Road began to fade from memory.

Today, more than 50 percent of global trade takes place on the Maritime Silk Road between China/East Asia and Europe. The world’s largest container ports are on this route: Shanghai, Singapore, Shenzhen, Ningbo-Zhoushan, Busan, and Hong Kong. The development of the Maritime Silk Road needed no Chinese master plan; logistics infrastructure arises wherever corresponding investments pay off.

China has numerous plans for these established shipping routes, including port expansions. Its shareholdings in around 80 port companies—including Piraeus and more recently Genoa and Trieste—support its plans and ensure investments. Why should we take issue with China for pursuing these goals leveraging its position as a leading global economic power? It is not the first country to promote its economic interests with direct investments and financing. Europe, too, should pursue a strategy of developing an enhanced infrastructure to transport freight to and from China/Southeast Asia in order to ensure a reciprocal exchange.

And China’s plan to step up the use of the maritime corridor through the Suez Canal, which shortens transport between China and Central Europe by at least four days compared to the route around Africa, is reasonable and less complicated. The Frenchman Ferdinand de Lesseps completed the Suez Canal in 1869 with precisely this goal in mind.

Conclusion

Nobody denies that the diverse projects of the New Silk Road hold great economic potential; that they would improve the network of connections between Asia and Europe; and that Beijing has a geopolitical interest in pursuing them. China is creating an enhanced infrastructure that will benefit all participants in the global economy. Nevertheless, it would be advisable to evaluate the logistical opportunities with the necessary dose of reality. I would caution against being dazzled by the beautiful visions and the fascinating narrative as it could cloud your vision and lead to using poor judgment and making risky investments.

 

Bernhard Simon is the CEO of Dachser Logistics
trends

Global Shipping Trends: What to Expect in 2020

Now that the fireworks are over and New Year’s resolutions are set, it’s time to prepare for global shipping in 2020. And that means looking at ongoing trends and changing regulations. One thing’s for sure, freight forwarding never has a dull moment.

Recapping 2019’s top global shipping disruptors

Before we jump into expectations for this year, let’s set the stage by looking at some of the top events in 2019 that may have affected global shipping strategies around the world.

Geopolitical uncertainties

From the ongoing Brexit discussion to the China-U.S. trade war and the trade conflict between Japan and Korea, these and other disruptions caused serious challenges to the transportation industry.

Preparation for International Maritime Organization (IMO) 2020

While the latest revisions didn’t go into effect until January 1, 2020, preparation for the changing IMO requirements was well underway in 2019. The requirement to reduce sulphur oxide emissions from 3.5% to 0.5% was a drastic change that will likely continue to affect shipping costs and capacity availability.

E-commerce expectations

With the growth of e-commerce and high-tech products flooding our markets, air freight is a go-to mode of transportation for many shippers—any time of year.

To best understand how these and other mode-specific changes will affect your 2020 shipping year, let’s break them down by service.

Ocean service in 2020

In the past, ocean shipping followed the basic law of supply and demand. When demand increased, rates went up. When demand decreased, rates dropped. This often occurred regardless of carrier profitability. But that is changing, which could reshape expectations for 2020.

Carriers controlling capacity

Today’s ocean carriers are quick to withdraw capacity when demand changes. By adjusting the amount of equipment available, ocean carriers are better able to ensure demand remains tight enough to protect their profits. This is a successful technique because there are fewer ocean carriers than in the past, allowing for a quicker reaction when supply and demand shifts.

Increasing carrier costs

While ocean carriers can control capacity to help ensure rates remain compensatory, we can still expect some level of imbalance due to the IMO 2020 mandate, which increases carrier costs.

Driver and drayage capacity shortages

California Assembly Bill 5 (AB-5) went in effect on January 1, 2020, which limits the use of classifying workers as independent contractors rather than employees by companies in the state. This may affect the availability of the number of dray carriers in the busiest ports. This, in turn, can drive drayage costs up.

Air service in 2020

Last July, we posted about ongoing uncertainty in the air freight market. The good news is that air freight service has stabilized a bit since then. While we’re predicting a somewhat stable air freight market for the year, this could obviously change if there is some catalyst that changes the speed products need to come to market.

Stable demand expectations

We expect demand for air freight to remain stable for the time being. Many organizations continue to focus on managing expenses and are looking for cost-effective, efficient options for delivering on short timelines without breaking the budget.

Capacity to hold steady

Capacity will also likely remain stable. Most new capacity is coming in the form of lower deck. Pure freighter capacity will continue to move based on market yields that make sense from a carrier standpoint. There may be some capacity growth in off-market locations, based on passenger demand.

Customs compliance in 2020

It’s always smart to have a customs compliance program that aligns with your business goals, which is especially true this year. Customs and Border Patrol (CBP) has several customs changes slated to take place in 2020, and now’s the time to prepare. If you haven’t reviewed your customs program recently, our customs compliance checklist may help.

CBP moving away from ITRAC data

According to CBP, they will be eliminating Importer Trade Activity (ITRAC) reports in favor of the Automated Commercial Environment (ACE) system. If you don’t already have an ACE portal account, now is the time to get one to ensure all your customs data is available to you when you need it most.

CBP’s continued focus on compliance and enforcement

CBP will continue to scrutinize tariff classification and valuation in an increasing post-summary environment. As the United States Trade Representative (USTR) continues to provide exclusions, many importers will depend on brokers to submit refund requests via post summary corrections (PSCs) or protests. CBP often requires additional data and/or documentation to ensure that tariff classifications and valuations are correct. It is imperative that you maintain a high degree of confidence in your compliance program and can substantiate any post summary claims with CBP.

Increasing Importer Security Filing (ISF) penalties

Throughout 2019 we saw CBP issuing more ISF penalties for inaccurate and/or untimely submissions. This will likely continue and could become a growing issue in 2020.

Disruptors affecting the industry in 2020

While certain trends and regulations only directly affect a single mode or service, there are still plenty that affect freight forwarding in general. Looking at 2020, it’s probably safe to say that the following disruptors will continue to affect the year ahead.

Broadening of sourcing locations

While there may be an end in sight to some of the trade war uncertainties, the initiative to broaden sourcing locations beyond China will likely continue. Southeast Asia has already seen clear benefits of this and will likely continue to see manufacturing growth in 2020.

Switching sourcing strategies can also bring risks, including capacity availability, infrastructure support, and geopolitical stability. While China will continue to be the largest exporter into the United States, we simply cannot deny the trends that continue to show volume shrinkage from China.

Accelerated evolution of technology

Significant investment in technology and transportation platforms continues to accelerate across the industry. Beyond private equity groups, well-respected and established providers like C.H. Robinson are making investments that will reshape logistics. These growing technological investments will continue to create value across the supply chain.

While this opens new options for shippers and carriers alike, you may likely need to spend more time researching which technology option is the best fit for your own organization. After all, the right technology offers tailored, market-leading solutions that work for supply chain professionals and drive supply chain outcomes.

Prepare for the year ahead

Overall, 2020 will be a great year for strategizing. Continuous improvement efforts—including a close look at service levels and mode choices—will help reach your short- and long-term supply chain goals.

Looking for a provider that can help in the coming year? C.H. Robinson has a global suite of services backed by technology and people you can rely on that will make 2020 preparations smooth and effective. Connect with an expert today.

Global Wine Market 2019 – Spain Retains Leadership in Exports Amid Buoyant Market Growth

IndexBox has just published a new report: ‘World – Wine – Market Analysis, Forecast, Size, Trends and Insights’. Here is a summary of the report’s key findings.

The global wine market revenue amounted to $130.3B in 2018, going down by -3.3% against the previous year. This figure reflects the total revenues of producers and importers (excluding logistics costs, retail marketing costs, and retailers’ margins, which will be included in the final consumer price). The market value increased at an average annual rate of +1.4% from 2007 to 2018; the trend pattern remained consistent, with somewhat noticeable fluctuations being recorded throughout the analyzed period. The pace of growth appeared the most rapid in 2010, when the market value increased by 11% y-o-y. Global wine consumption peaked at $134.7B in 2017, and then declined slightly in the following year.

Production 2007-2018

Global wine production totaled 32B litres in 2018, surging by 2.3% against the previous year. The total output volume increased at an average annual rate of +1.4% over the period from 2007 to 2018; the trend pattern remained consistent, with only minor fluctuations being observed in certain years.

Exports 2007-2018

In 2018, the global exports of wine totaled 11B litres, going down by -4.5% against the previous year. The total export volume increased at an average annual rate of +2.1% from 2007 to 2018; the trend pattern remained relatively stable, with only minor fluctuations in certain years. In value terms, wine exports amounted to $35.5B (IndexBox estimates) in 2018.

Exports by Country

In 2018, Italy (2B litres), France (1.9B litres) and Spain (1.7B litres) represented the main exporters of wine in the world, achieving 52% of total export. Australia (815M litres) held a 7.7% share (based on tonnes) of total exports, which put it in second place, followed by Chile (6.2%). South Africa (442M litres), Germany (383M litres), the U.S. (351M litres), New Zealand (319M litres), Portugal (303M litres), Argentina (271M litres) and China (244M litres) occupied a relatively small share of total exports.

From 2007 to 2018, the most notable rate of growth in terms of exports, amongst the main exporting countries, was attained by China, while the other global leaders experienced more modest paces of growth.

In value terms, the largest wine markets worldwide were France ($11B), Italy ($7.3B) and Spain ($3.2B), with a combined 61% share of global exports. Australia, Chile, the U.S., New Zealand, Germany, Portugal, Argentina, South Africa and China lagged somewhat behind, together comprising a further 30%.

Export Prices by Country

In 2018, the average wine export price amounted to $3,332 per thousand litres, rising by 7.8% against the previous year. Overall, the wine export price continues to indicate a relatively flat trend pattern. There were significant differences in the average export prices amongst the major exporting countries. In 2018, the country with the highest export price was France ($5,740 per thousand litres), while China ($1,464 per thousand litres) was amongst the lowest.

From 2007 to 2018, the most notable rate of growth in terms of export prices was attained by the U.S., while the other global leaders experienced more modest paces of growth.

Imports 2007-2018

In 2018, approx. 9.4B litres of wine were imported worldwide; going down by -20.1% against the previous year. The total import volume increased at an average annual rate of +1.2% from 2007 to 2018; however, the trend pattern indicated some noticeable fluctuations being recorded in certain years. In value terms, wine imports amounted to $33.7B (IndexBox estimates) in 2018.

Imports by Country

The countries with the highest levels of wine imports in 2018 were the UK (1.3B litres), the U.S. (1.2B litres), Germany (1B litres) and China (681M litres), together amounting to 44% of total import. Canada (409M litres), the Netherlands (382M litres), Belgium (327M litres), China, Hong Kong SAR (300M litres), Japan (290M litres), Russia (278M litres), France (244M litres) and Sweden (209M litres) followed a long way behind the leaders.

From 2007 to 2018, the most notable rate of growth in terms of imports, amongst the main importing countries, was attained by China, Hong Kong SAR, while the other global leaders experienced more modest paces of growth.

In value terms, the largest wine importing markets worldwide were the U.S. ($5.4B), the UK ($4B) and Germany ($2.7B), together accounting for 36% of global imports. These countries were followed by China, Canada, Japan, China, Hong Kong SAR, the Netherlands, Belgium, France, Russia and Sweden, which together accounted for a further 36%.

Import Prices by Country

In 2018, the average wine import price amounted to $3,589 per thousand litres, rising by 18% against the previous year. Over the period under review, the wine import price continues to indicate a relatively flat trend pattern. There were significant differences in the average import prices amongst the major importing countries. In 2018, the country with the highest import price was Japan ($5,777 per thousand litres), while Russia ($2,497 per thousand litres) was amongst the lowest.

From 2007 to 2018, the most notable rate of growth in terms of import prices was attained by France, while the other global leaders experienced more modest paces of growth.

Source: IndexBox AI Platform

Report: Seafood Product Market in the USA

IndexBox has just published a new report, the U.S. Seafood Product Market. Analysis And Forecast to 2025. Here is a summary of the report’s key findings.

The revenue of the seafood product market in the U.S. amounted to $16B in 2018, growing by 7.8% against the previous year. This figure reflects the total revenues of producers and importers (excluding logistics costs, retail marketing costs, and retailers’ margins, which will be included in the final consumer price).

The market value increased at an average annual rate of +5.7% over the period from 2013 to 2018; the trend pattern remained relatively stable, with somewhat noticeable fluctuations being observed in certain years. The most prominent rate of growth was recorded in 2015, when the market value increased by 8.5% y-o-y. Over the period under review, the seafood product market attained its peak figure level in 2018, and is likely to see steady growth in the immediate term.

Seafood Product Production in the USA

In value terms, seafood product production stood at $14.2B in 2018. The total output value increased at an average annual rate of +5.7% from 2013 to 2018; the trend pattern remained relatively stable, with only minor fluctuations being observed throughout the analyzed period. The pace of growth appeared the most rapid in 2014, when it surged by 9.8% year-to-year.

Seafood Product Exports

Exports from the USA

In 2018, seafood product exports from the U.S. stood at 13K tonnes, surging by 9.4% against the previous year. In general, seafood product exports continue to indicate an abrupt contraction.

In value terms, seafood product exports amounted to $78M (IndexBox estimates) in 2018.

Exports by Country

The UK (4.9K tonnes), Australia (4.6K tonnes) and the Netherlands (1.3K tonnes) were the main destinations of seafood product exports from the U.S., together comprising 81% of total exports. New Zealand, Japan and China lagged somewhat behind, together comprising a further 9.4%.

From 2013 to 2018, the most notable rate of growth in terms of exports, amongst the main countries of destination, was attained by Japan (+2.4% per year), while the other leaders experienced a decline.

In value terms, the largest markets for seafood product exported from the U.S. were the UK ($28M), Australia ($26M) and the Netherlands ($6.6M), with a combined 78% share of total exports. Japan, New Zealand and China lagged somewhat behind, together comprising a further 9.3%.

Export Prices by Country

In 2018, the average seafood product export price amounted to $5.8 per kg, surging by 19% against the previous year. Over the period from 2013 to 2018, it increased at an average annual rate of +5.2%.

Export prices varied noticeably by the country of origin; the country with the highest export price was Japan ($9 per kg), while the average price for exports to China ($2.9 per kg) was amongst the lowest.

From 2013 to 2018, the most notable rate of growth in terms of export prices was recorded for supplies to New Zealand (+8.3% per year), while the export prices for the other major destinations experienced more modest paces of growth.

Seafood Product Imports

Imports into the USA

In 2018, approx. 334K tonnes of seafood product were imported into the U.S.; rising by 4.3% against the previous year.

In value terms, seafood product imports stood at $1.5B (IndexBox estimates) in 2018.

Imports by Country

In 2018, Thailand (124K tonnes) constituted the largest seafood product supplier to the U.S., accounting for a 37% share of total imports. Moreover, seafood product imports from Thailand exceeded the figures recorded by the second largest supplier, China (54K tonnes), twofold. The third position in this ranking was occupied by Ecuador (33K tonnes), with a 9.9% share.

From 2013 to 2018, the average annual growth rate of volume from Thailand stood at -1.6%. The remaining supplying countries recorded the following average annual rates of imports growth: China (+0.4% per year) and Ecuador (+5.2% per year).

In value terms, Thailand ($508M) constituted the largest supplier of seafood product to the U.S., comprising 34% of total seafood product imports. The second position in the ranking was occupied by China ($183M), with a 12% share of total imports. It was followed by Ecuador, with a 9.7% share.

Import Prices by Country

In 2018, the average seafood product import price amounted to $4.5 per kg, rising by 6.1% against the previous year. In general, the seafood product import price continues to indicate a relatively flat trend pattern.

Import prices varied noticeably by the country of origin; the country with the highest import price was Fiji ($6.3 per kg), while the price for China ($3.4 per kg) was amongst the lowest.

From 2013 to 2018, the most notable rate of growth in terms of import prices was attained by Senegal (+15.3% per year), while the import prices for the other major suppliers experienced more modest paces of growth.

Companies Mentioned in the Report

Trident Seafoods Corporation, Gorton’s Inc., Bee Bumble Foods, Icicle Seafoods, Tampa Maid Foods, Blount Fine Foods, Omega Protein Corporation, Peter Pan Seafoods, Orca Bay Seafoods, Tampa Bay Fisheries, Sea Watch International, Trans-Ocean Products, Consolidated Catfish Companies, High Liner Foods (usa), The Harris Soup Company, Kanaway Seafoods, Fisherman’s Pride Processors, Copper River Seafoods, State Fish Co., America’s Catch, North Coast Sea-Foods, Heartland Catfish Company, North Pacific Seafoods, Ocean Beauty Seafoods, California Shellfish Company, Thai Union International

Source: IndexBox AI Platform

fuel cell

Nuvera Breaks Ground on Automated Fuel Cell Production Facility in China

Nuvera Fuel Cells, LLC, a provider of fuel cell power solutions for motive applications, is pleased to announce construction of a fuel cell stack production line in the Hangzhou district government of Fuyang, China. A ground-breaking ceremony was held on Dec. 17, 2019 attended by Lucien Robroek, CEO and Jon Taylor, President of Nuvera, along with Fuyang government officials.

In December 2018, Nuvera signed a cooperation agreement with the Fuyang government, located in Zhejiang province, to enable the local manufacture of Nuvera® fuel cell stacks. The agreement provided incentives to Nuvera for the establishment of its production facility. The fuel cells will power zero-emissions, heavy-duty vehicles such as delivery vans and transit buses.

“China is leading the world in the adoption of fuel cell electric vehicles, and we are excited to be at ground zero of this transformation,” said Lucien Robroek. “The new manufacturing site establishes Nuvera as a major fuel cell provider both in China and in the entire Asian region.”

The combined market for fuel cell forklifts, passenger vehicles and commercial vehicles in China is expected to reach nearly 50,000 units per year in 2025 and 400,000 units per year by 2030, according to information provided by customers in China. The Nuvera site incorporates equipment for the automated manufacture of up to 5,000 fuel cell stacks per year for vehicle applications. Additional capacity can be added as demand requires.

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ABOUT NUVERA FUEL CELLS, LLC

Nuvera Fuel Cells, LLC is a manufacturer of heavy-duty, zero-emission engines for mobility applications. With facilities located in the U.S. and Europe, Nuvera provides clean, safe, and efficient products designed to meet the rigorous needs of industrial vehicles and other transportation markets.

Nuvera is a subsidiary of Hyster-Yale Group, Inc., which designs, engineers, manufactures, sells, and services a comprehensive line of lift trucks and aftermarket parts marketed globally primarily under the Hyster® and Yale® brand names. Hyster-Yale Group is a wholly owned subsidiary of Hyster-Yale Materials Handling, Inc. (NYSE:HY). Hyster-Yale Materials Handling, Inc. and its subsidiaries, headquartered in Cleveland, Ohio, employ approximately 7,800 people worldwide.

textile

Textile Hosepiping and Tubing Market in Poland Is Estimated at $9.1M in 2018

IndexBox has just published a new report: ‘Poland – Textile Hosepiping And Similar Textile Tubing – Market Analysis, Forecast, Size, Trends And Insights’. Here is a summary of the report’s key findings.

The revenue of the textile tubing market in Poland amounted to $9.1M in 2018, declining by -11.2% against the previous year. This figure reflects the total revenues of producers and importers (excluding logistics costs, retail marketing costs, and retailers’ margins, which will be included in the final consumer price). Over the period under review, textile tubing consumption, however, continues to indicate a pronounced decline. The pace of growth appeared the most rapid in 2010 with an increase of 27% against the previous year. In that year, the textile tubing market attained its peak level of $14M. From 2011 to 2018, the growth of the textile tubing market remained at a somewhat lower figure.

Market Forecast 2019-2025 in Poland

Driven by increasing demand for textile tubing in Poland, the market is expected to continue an upward consumption trend over the next seven-year period. Market performance is forecast to decelerate, expanding with an anticipated CAGR of +1.7% for the seven-year period from 2018 to 2025, which is projected to bring the market volume to 2.4K tonnes by the end of 2025.

Production in Poland

In 2018, the textile tubing production in Poland totaled 1.7K tonnes, approximately mirroring the previous year. Over the period under review, the total output indicated measured growth from 2007 to 2018: its volume increased at an average annual rate of +2.7% over the last eleven years. The trend pattern, however, indicated some noticeable fluctuations being recorded throughout the analyzed period. Based on 2018 figures, textile tubing production decreased by -3.1% against 2015 indices. The pace of growth appeared the most rapid in 2015 with an increase of 45% year-to-year. In that year, textile tubing production attained its peak volume of 1.7K tonnes. From 2016 to 2018, textile tubing production growth remained at a somewhat lower figure.

In value terms, textile tubing production amounted to $6.5M in 2018 estimated in export prices. Overall, textile tubing production continues to indicate a deep downturn. The most prominent rate of growth was recorded in 2015 with an increase of 32% y-o-y. Over the period under review, textile tubing production reached its maximum level at $11M in 2007; however, from 2008 to 2018, production remained at a lower figure.

Exports from Poland

In 2018, the exports of textile hosepiping and similar textile tubing from Poland totaled 502 tonnes, going up by 75% against the previous year. Overall, textile tubing exports continue to indicate a buoyant increase. The growth pace was the most rapid in 2015 with an increase of 210% year-to-year. Exports peaked in 2018 and are likely to see steady growth in the immediate term.

In value terms, textile tubing exports amounted to $3.3M (IndexBox estimates) in 2018. Over the period under review, textile tubing exports continue to indicate a prominent expansion. The growth pace was the most rapid in 2015 when exports increased by 140% y-o-y. Exports peaked in 2018 and are expected to retain its growth in the near future.

Exports by Country

Italy (88 tonnes), Hungary (72 tonnes) and the Czech Republic (49 tonnes) were the main destinations of textile tubing exports from Poland, with a combined 42% share of total exports. Slovakia, Croatia, Germany, Slovenia, Romania, Ukraine, the UK, Bulgaria and Lithuania lagged somewhat behind, together accounting for a further 42%.

From 2007 to 2018, the most notable rate of growth in terms of exports, amongst the main countries of destination, was attained by Croatia (+78.2% per year), while the other leaders experienced more modest paces of growth.

In value terms, the largest markets for textile tubing exported from Poland were Hungary ($366K), the UK ($334K) and the Czech Republic ($332K), with a combined 32% share of total exports. These countries were followed by Ukraine, Slovakia, Italy, Croatia, Germany, Slovenia, Romania, Bulgaria and Lithuania, which together accounted for a further 46%.

Among the main countries of destination, Croatia (+66.1% per year) experienced the highest rates of growth with regard to exports, over the last eleven-year period, while the other leaders experienced more modest paces of growth.

Export Prices by Country

In 2018, the average textile tubing export price amounted to $6,527 per tonne, jumping by 23% against the previous year. Overall, the textile tubing export price, however, continues to indicate a slight shrinkage. The most prominent rate of growth was recorded in 2018 an increase of 23% against the previous year. Over the period under review, the average export prices for textile hosepiping and similar textile tubing reached their maximum at $7,957 per tonne in 2011; however, from 2012 to 2018, export prices stood at a somewhat lower figure.

Prices varied noticeably by the country of destination; the country with the highest price was the UK ($22,492 per tonne), while the average price for exports to Italy ($2,554 per tonne) was amongst the lowest.

From 2007 to 2018, the most notable rate of growth in terms of prices was recorded for supplies to Slovakia, while the prices for the other major destinations experienced mixed trend patterns.

Imports into Poland

Textile tubing imports into Poland totaled 941 tonnes in 2018, increasing by 4.3% against the previous year. Overall, the total imports indicated a remarkable increase from 2007 to 2018: its volume increased at an average annual rate of +4.3% over the last eleven years. The trend pattern, however, indicated some noticeable fluctuations being recorded throughout the analyzed period. Based on 2018 figures, textile tubing imports increased by +38.5% against 2016 indices. The pace of growth was the most pronounced in 2010 with an increase of 55% against the previous year. Imports peaked in 2018 and are expected to retain its growth in the near future.

In value terms, textile tubing imports stood at $3.8M (IndexBox estimates) in 2018. Over the period under review, textile tubing imports continue to indicate a relatively flat trend pattern. The pace of growth appeared the most rapid in 2017 when imports increased by 39% y-o-y. Over the period under review, textile tubing imports reached their peak figure in 2018 and are likely to continue its growth in the immediate term.

Imports by Country

In 2018, China (631 tonnes) constituted the largest textile tubing supplier to Poland, with a 67% share of total imports. Moreover, textile tubing imports from China exceeded the figures recorded by the second-largest supplier, Germany (152 tonnes), fourfold. The third position in this ranking was occupied by Croatia (54 tonnes), with a 5.8% share.

From 2007 to 2018, the average annual rate of growth in terms of volume from China amounted to +5.3%. The remaining supplying countries recorded the following average annual rates of imports growth: Germany (+3.3% per year) and Croatia (+7.8% per year).

In value terms, the largest textile tubing suppliers to Poland were China ($1.5M), Germany ($1.3M) and the Czech Republic ($302K), with a combined 81% share of total imports.

In terms of the main suppliers, the Czech Republic recorded the highest rates of growth with regard to imports, over the last eleven-year period, while the other leaders experienced more modest paces of growth.

Import Prices by Country

The average textile tubing import price stood at $4,046 per tonne in 2018, reducing by -3.6% against the previous year. Over the period under review, the textile tubing import price continues to indicate a significant slump. The pace of growth was the most pronounced in 2011 when the average import price increased by 32% year-to-year. Over the period under review, the average import prices for textile hosepiping and similar textile tubing reached their maximum at $7,512 per tonne in 2008; however, from 2009 to 2018, import prices failed to regain their momentum.

Prices varied noticeably by the country of origin; the country with the highest price was Germany ($8,598 per tonne), while the price for China ($2,355 per tonne) was amongst the lowest.

From 2007 to 2018, the most notable rate of growth in terms of prices was attained by the Czech Republic, while the prices for the other major suppliers experienced a decline.

Source: IndexBox AI Platform

shopping

American and Chinese Consumers are Shopping Like There’s No Trade War

What Trade War?

If shoppers are worried about the U.S.-China trade war, it’s not showing up yet in measures of their buying confidence or holiday retail sales.

We are more than a year into dueling tariffs between the United States and China, and we know that tariffs add costs to supply chains, but how much of those costs are passed on the consumer depends on decisions by manufacturers, buyers and retailers as well as the “import-intensity” of the products we buy.

So far, if prices have risen on consumer products, it’s not dampening American appetites to buy. And Chinese consumers don’t rely to a great degree on imports in general, so China’s retaliatory tariffs on U.S. imports don’t appear to be the biggest factor in their personal spending either.

Spending and the U.S. Economy

At the end of the third quarter, the Bureau of Economic Analysis reported that U.S. consumer spending was on track for $14.67 trillion this year, reaching an all-time high.

Personal expenditures make up 68 percent of the U.S. economy, and it’s consumer spending that’s keeping growth of our economy from slowing further. (By comparison, our “negative net exports” or total exports minus total imports, comprise five percent of U.S. GDP.)

Two-thirds of spending is on services such as housing and health care, which are largely impervious to the trade war. The remaining third is spent on non-durable goods such as clothing and groceries, and on durable goods such as cars and appliances.

Brimming with Confidence

The Conference Board’s Consumer Confidence Index is a monthly report on consumer attitudes and buying intentions. Despite analysts’ expectations that concerns related to trade disputes would cause U.S. consumers to become cautious, the index shows a trend of rising consumer confidence since 2009.

Breaking Records Online

Retail sales figures tell us whether that confidence is translating into spending. Indeed, American consumers are still filling their real and virtual shopping carts to the brim.

According to the National Retail Federation (NRF), more than 165 million people were expected to shop over the five-day Thanksgiving holiday weekend. Online sales for last holiday weekend are already being reported and appear to be breaking records.

Americans spent $7.4 billion online on Black Friday, up 19.6 percent from last year. We spent another $3.6 billion on Small Business Saturday, up 18 percent from last year. And while surfing from our desks at work, Americans spent $9.2 billon on Cyber Monday, up 16.9 percent from last year. More than half of Americans surveyed by NRF said they start their holiday shopping the first week of November. Online sales for November came in at a whopping $72.1 billion.

Chinese Consumers Outspent Us All

Cyber Monday is so successful in driving online sales in the United States that Canada, the UK and Germany have all adopted Cyber Monday to kick off their holiday shopping seasons. Australia launched “Click Frenzy” day. The Netherlands’ equivalent is linked to the December 5 Sinterklaas holiday.

But hands down, the world’s largest 24-hour online shopping day goes to China’s Singles Day held on November 11 annually. This year, Chinese online shoppers bought $38.3 billion on Singles Day alone. Think of it this way – that’s more than $1 billion every hour.

This is not a one-day phenomenon. If you were to overlay China’s consumer confidence index with that of the United States, they would look similar. Despite being slightly lower for China and with a dip in 2016 that we didn’t see in the United States, consumer confidence rose between 2014 and remained high in 2019, trade war notwithstanding. In mid-2019, retail spending in China surpassed retail spending in the United States for this first time.

Retail Spending in China Exceeds US

Beyond the Tariff Headlines

Financial analysts are watching China’s consumer spending carefully amidst the trade war. Many said this summer’s drop in car purchases was a harbinger that shoppers are growing wary, but the slowdown also coincided with the end of big discounts. Others say retail sales actually underestimate the strength of China’s overall consumer spending because those numbers offer just a partial picture of personal spending on goods and services, which include large expenditures on healthcare, education and leisure activities.

For this reason, some prominent Chinese investors are nonplussed by the Trump Administration’s tariffs. They look at a decline in certain manufacturing and exports as a structural shift in China’s economy – an “economic rebalancing” – that began long before the current trade war. In their view, household consumption will drive most of China’s future economic growth, and China’s consumer spending is not very dependent on imports.

According to World Bank data, consumer imports comprise just 13 percent of China’s overall imports. Most of the large multinational consumer goods companies now produce in China for the Chinese consumer. According to McKinsey analysis, across key consumer categories including personal digital devices and personal care products, Chinese brands have become credible competitors to foreign brands, acquiring greater market share – and shielding Chinese consumers from tariffs on U.S. imports.

Consumer Spending to Play Bigger Role in China’s Growth

Consumption is playing a much larger role in China’s economic growth than just a few years ago. In 2011, consumer spending accounted for less than 50 percent of China’s GDP growth. Last year, it accounted for 76 percent of GDP growth, outpacing both manufacturing investment and exports.

In fact, China’s total exports of goods and services as a percentage of GDP has dropped from a high of 36 percent in 2006 to 19.5 percent in 2018, with exports to the United States at just four percent.

That why China’s central bank is also monitoring consumer sentiment. In recently released results from its biennial survey of 18,600 residents in 31 provinces, nearly 80 percent of respondents expressed caution about spending and a preference for saving.

China’s politburo has directed the government to focus on turning up the tap of consumer spending by China’s growing urban middle class and to kick-start spending in rural areas. The government already cut personal income taxes and began offering subsidies for large ticket energy-saving home appliances and energy efficient vehicles. The government is expected to announce more measures in the coming months designed to goose household spending.

WB Chart Title China Exports as % of GDP

Business is Ill at Ease

Economists worry the trade war is causing a drag on economic growth, not just in the United States and China but globally. Businesses say the trade war with its escalating tariffs is a “wild card” in their planning. Uncertainty is causing them to hold back on capital expenditures.

It’s looking less likely the United States and China will agree to a “Phase 1” trade deal by the end of the year, but even if they do, the partial deal may not be enough to restore business confidence. If businesses continue to hold back on investments and reduce inventories, it could start to negatively impact jobs and incomes. This may be particularly true in China where a larger portion of the population is dependent on manufacturing jobs.

Consumers Keep Calm and Shop On

Meanwhile, holiday shopping is in full swing. Some holiday merchandise is already subject to tariffs on Chinese imports, but the tariffs the United States plans to impose on December 15 will affect many more consumer products. If imposed, buyers and retailers will have to decide how much cost to pass on to their suppliers and consumers in the coming year.

For now, shoppers are keeping calm and shopping on with resilience. But as a last line of defense against slowing growth, their confidence can be fragile. Where the trade war is concerned, buyer beware.

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Andrea Durkin is the Editor-in-Chief of TradeVistas and Founder of Sparkplug, LLC. Ms. Durkin previously served as a U.S. Government trade negotiator and has proudly taught international trade policy and negotiations for the last fourteen years as an Adjunct Professor at Georgetown University’s Master of Science in Foreign Service program.

This article originally appeared on TradeVistas.org. Republished with permission.