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France is the Major Market for Premium Vodka from Poland, Purchasing $99M or 62% of Its Total Exports

vodka

France is the Major Market for Premium Vodka from Poland, Purchasing $99M or 62% of Its Total Exports

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

The revenue of the vodka market in Poland amounted to $403M in 2018, lowering by -2.2% 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).

Production in Poland

In 2018, approx. 98M litres of vodka were produced in Poland; therefore, remained relatively stable against the previous year. In general, vodka production, however, continues to indicate a moderate decrease. Vodka production peaked at 109M litres in 2013; however, from 2014 to 2018, production remained at a lower figure.

Exports from Poland

Vodka exports from Poland amounted to 47M litres in 2018, an increase of 4.9% against the previous year. In value terms, exports amounted to $160M (IndexBox estimates).

Exports by Country

France (15M litres), the U.S. (13M litres) and Canada (2M litres) were the main destinations of vodka exports from Poland, with a combined 62% share of total exports. These countries were followed by Hungary, Germany, Bulgaria, Ukraine, the UK, Italy, the Czech Republic, Sweden and Slovakia, which together accounted for a further 24%.

From 2013 to 2018, the most notable rate of growth in terms of exports, amongst the main countries of destination, was attained by Bulgaria, while exports for the other leaders experienced more modest paces of growth.

In value terms, France ($99M) remains the key foreign market for vodka exports from Poland, comprising 62% of total vodka exports. The second position in the ranking was occupied by the U.S. ($21M), with a 13% share of total exports. It was followed by Canada, with a 2.8% share.

From 2013 to 2018, the average annual rate of growth in terms of value to France amounted to +3.6%. Exports to the other major destinations recorded the following average annual rates of exports growth: the U.S. (-9.2% per year) and Canada (-2.5% per year).

Export Prices by Country

The average vodka export price stood at $3.4 per litre in 2018, approximately mirroring the previous year. Over the last five-year period, it increased at an average annual rate of +1.5%. The most prominent rate of growth was recorded in 2014 when the average export price increased by 23% against the previous year. In that year, the average export prices for vodka reached their peak level of $3.8 per litre. From 2015 to 2018, the growth in terms of the average export prices for vodka remained at a somewhat lower figure.

There were significant differences in the average prices for the major foreign markets. In 2018, the country with the highest price was France ($6.8 per litre), while the average price for exports to Ukraine ($0.8 per litre) was amongst the lowest.

From 2013 to 2018, the most notable rate of growth in terms of prices was recorded for supplies to France, while the prices for the other major destinations experienced more modest paces of growth.

Imports into Poland

Vodka imports into Poland amounted to 17M litres in 2018, surging by 2.7% against the previous year. In value terms,  imports stood at $46M (IndexBox estimates) in 2018.

Imports by Country

Finland (7.2M litres), Lithuania (3.6M litres) and Sweden (2.6M litres) were the main suppliers of vodka imports to Poland, with a combined 78% share of total imports. Ukraine, the UK, Russia and Austria lagged somewhat behind, together accounting for a further 16%.

From 2013 to 2018, the most notable rate of growth in terms of imports, amongst the main suppliers, was attained by Austria, while imports for the other leaders experienced more modest paces of growth.

In value terms, Finland ($22M) constituted the largest supplier of vodka to Poland, comprising 47% of total vodka imports. The second position in the ranking was occupied by Lithuania ($8.1M), with a 18% share of total imports. It was followed by Sweden, with a 16% share.

Import Prices by Country

The average vodka import price stood at $2.7 per litre in 2018, surging by 4.1% against the previous year.

There were significant differences in the average prices amongst the major supplying countries. In 2018, the country with the highest price was Austria ($4.4 per litre), while the price for Russia ($1.7 per litre) was amongst the lowest.

From 2013 to 2018, the most notable rate of growth in terms of prices was attained by Ukraine, while the prices for the other major suppliers experienced more modest paces of growth.

Source: IndexBox AI Platform

disinfectants

Global Trade of Disinfectants Has Doubled over the Past Decade

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

Exports 2009-2018

In 2018, approx. 821K tonnes of disinfectants were exported worldwide; picking up by 3.6% against the previous year. Overall, the total exports indicated a resilient expansion from 2009 to 2018: its volume increased at an average annual rate of +8.4% over the last nine years. The trend pattern, however, indicated some noticeable fluctuations being recorded throughout the analyzed period. Based on 2018 figures, disinfectants exports increased by +106.7% against 2009 indices. The growth pace was the most rapid in 2010 with an increase of 14% year-to-year. The global exports peaked in 2018 and are expected to retain its growth in the immediate term.

In value terms, disinfectants exports stood at $2.3B (IndexBox estimates) in 2018.

Exports by Country

In 2018, Belgium (129K tonnes) and Germany (127K tonnes) were the main exporters of disinfectants in the world, together finishing at near 31% of total exports. It was followed by the U.S. (78K tonnes), France (66K tonnes), the UK (46K tonnes), Spain (44K tonnes) and China (43K tonnes), together mixing up a 34% share of total exports. The following exporters – the Netherlands (33K tonnes), Mexico (22K tonnes), Canada (20K tonnes), Argentina (20K tonnes) and the Czech Republic (16K tonnes) – together made up 14% of total exports.

From 2009 to 2018, the most notable rate of growth in terms of exports, amongst the main exporting countries, was attained by Mexico, while exports for the other global leaders experienced more modest paces of growth.

In value terms, the largest disinfectants supplying countries worldwide were Germany ($389M), Belgium ($362M) and the U.S. ($240M), together comprising 43% of global exports. The UK, France, the Netherlands, Spain, China, Mexico, Canada, the Czech Republic and Argentina lagged somewhat behind, together comprising a further 34%.

Export Prices by Country

In 2018, the average disinfectants export price amounted to $2,780 per tonne, rising by 7.4% against the previous year. In general, the disinfectants export price, however, continues to indicate a slight deduction. The pace of growth appeared the most rapid in 2011 when the average export price increased by 7.8% y-o-y. Over the period under review, the average export prices for disinfectants attained their maximum at $3,113 per tonne in 2009; however, from 2010 to 2018, export prices remained at a lower figure.

Prices varied noticeably by the country of origin; the country with the highest price was the UK ($4,649 per tonne), while Argentina ($1,237 per tonne) was amongst the lowest.

From 2009 to 2018, the most notable rate of growth in terms of prices was attained by Canada, while the other global leaders experienced more modest paces of growth.

Imports 2009-2018

In 2018, approx. 890K tonnes of disinfectants were imported worldwide; surging by 7.7% against the previous year.

In value terms, disinfectants imports stood at $2.5B (IndexBox estimates) in 2018.

Imports by Country

The imports of the three major importers of disinfectants, namely Germany, Belgium and France, represented a quarter of the total imports. It was followed by the UK (40K tonnes), mixing up a 4.5% share of total imports. The following importers – Canada (38K tonnes), the Netherlands (28K tonnes), Austria (23K tonnes), Mexico (23K tonnes), the U.S. (22K tonnes), Poland (21K tonnes), China (20K tonnes) and Spain (20K tonnes) – together made up 22% of total imports.

From 2009 to 2018, the most notable rate of growth in terms of imports, amongst the main importing countries, was attained by China, while imports for the other global leaders experienced more modest paces of growth.

In value terms, Germany ($236M), Belgium ($185M) and China ($144M) were the countries with the highest levels of imports in 2018, together accounting for 23% of global imports.

Import Prices by Country

The average disinfectants import price stood at $2,798 per tonne in 2018, jumping by 5.8% against the previous year. In general, the disinfectants import price, however, continues to indicate a relatively flat trend pattern. The pace of growth was the most pronounced in 2018 when the average import price increased by 5.8% y-o-y. Over the period under review, the average import prices for disinfectants reached their maximum at $2,888 per tonne in 2014; however, from 2015 to 2018, import prices stood at a somewhat lower figure.

Prices varied noticeably by the country of destination; the country with the highest price was China ($7,077 per tonne), while the UK ($1,478 per tonne) was amongst the lowest.

From 2009 to 2018, the most notable rate of growth in terms of prices was attained by Poland, while the other global leaders experienced more modest paces of growth.

Source: IndexBox AI Platform

services

WITH ZOOM, WE ARE ALL TRADING IN SERVICES

New Modes of Living and Working

As we struggle to maintain continuity in our work and school lives during the pandemic, technology has come to our aid.

Those of us who work on teams spread throughout the country or the world have already unlocked the secrets of online collaboration platforms like Slack and Quip. (We use Quip at TradeVistas for project management.) Others are quickly moving to them or discovering functionality they previously overlooked in Microsoft Teams or similar business software.

“Zoom” has become a verb for online video conferencing the way Skype had been for years for international communication. The class I teach at Georgetown is completely online. (We were already extensively using the learning management system called Canvas). The university reported last week they reached a high of 1,459,100 minutes of instruction on Zoom in just one day.

Biggest Week Ever in Business App Downloads

Video conferencing apps Google Hangouts, Houseparty, Microsoft Teams and ZOOM Cloud Meetings saw major jumps in use in the United States and Europe. According to App Annie, during the week of March 15-21 alone, business apps surpassed 62 million downloads worldwide across iOS and Google Play, apparently the biggest week ever.

With the exception of middle and high schoolers hanging out on Houseparty, many of us working online are exchanging professional, technical, business and other commercial services. If your client or customer is overseas, you are likely delivering what’s called a cross-border service. No better time to appreciate this major component of global trade.

The WTO Modes of Services

In the World Trade Organization (WTO), negotiators divided up services trade into four “modes of delivery” related to where the supplier and consumer are located at the time of the transaction. In Mode 1, known as cross-border trade, the parties are in separate countries and the service is most likely provided digitally via email or through an online platform. One example is consulting services – perhaps a report delivered over email.

In Mode 2, known as consumption abroad, the consumer travels to another territory to receive the service. Examples include hospitality services associated with tourism, medical treatment, or a “semester abroad” at a foreign university. Mode 3 involves putting out a shingle to provide services in another country, known as commercial presence. Finally, in Mode 4, the service provider travels to the customer such as a software engineer working on a project overseas on a temporary visa.

Ascendant Modes of Trade in Services

Every day we engage in or benefit from some form of globally traded services, though we rarely think of it. Among the biggest traditional components of global trade in services are transport and travel – including the trains and ships that move cargo, and the planes that move people across international borders for work and tourism. We’ve written before about how important the tourism is to the global economy – global travel exports were worth $1.7 trillion in 2018.

But other less obvious components of globally traded services have grown larger in recent years. According to the WTO’s 2019 World Trade Statistical Review, the “use of intellectual property” as a service exceeded $3.1 trillion in 2018. The most dynamic services sector continues to be telecommunications, computer and information services (or ICTs), which grew more than 15 percent in 2018.

The Multiplier Effect of Digital Technologies

Telecommunications, computer and information services offer multiplier effects – they create efficiencies and infrastructure that enable new products and new services. Financial technologies bring about cashless payment systems, online platforms like Spotify enable music streaming, technologies embedded in your thermostat promote smart energy use through an app on your phone, sensors on machines inform computers when repairs may be needed. Micro-entrepreneurs sell their products globally through Etsy, eBay or Amazon Web Services.

Enterprise software, cloud computing, data processing and analytics services can help make any business more productive and profitable. They are the backbone of production, distribution and marketing of many physically traded goods while facilitating trade with customers anywhere in the world digitally.

Eighty percent of all U.S. jobs are in services-providing industries. The definition of a “tradable service” is constantly changing and expanding. In 2018, U.S. exports of ICT services alone were valued at $71.4 billion while service exports enabled by ICTs added another $451.9 billion. The U.S. Bureau of Economic Analysis estimates that services potentially enabled by ICTs accounted for 55 percent of total U.S. services exports. Yet the United States is fourth in globally exported ICT services, narrowly behind China, India and far behind the European Union.

Growth in ICT enabled services

The Doctor Will “See” You Now

The scourge of the COVID-19 pandemic, with its prolonged and widespread “stay at home” restrictions, is forcing all of us to shift or accelerate our digital habits. We have no choice but to buy non-essentials online. Our kids are e-learning. Doctors are seeing patients online when not critical. Graduating students will have virtual commencements. And most of us are forced into video conferencing all…the…time.

And while many people will be binge watching or gaming (WarnerMedia, Disney Plus, Netflix and Hulu all reported 65 and 70 percent jumps in number of streaming hours), some of us are trying to continue working online, despite these bandwidth hogs. Some businesses have no choice but to cope by providing virtual services – tax advisors are using secure document portals and phone consultations while fitness instructors check your form by webcam. These are stopgap measures now that might augment their businesses when things go back to “normal”.

LinkedIn With One Another

Recently, I decided to join a LinkedIn Live presentation by one of my favorite business gurus. I was astounded at the scrolling list of locations from where viewers were joining: United Kingdom, South Africa, Romania, Tunisia, Qatar, Poland, Pakistan, Jamaica, India, Colombia, Sudan, Turkey, Lebanon, Yemen and Afghanistan. On and on it went – I stopped writing them down. Nearly the entire world is experiencing the effects of the pandemic in some way, but through modern telecommunications and information technologies, we stay connected.

Those of us who can provide our global services online are the lucky ones. Our appreciation goes out to those workers who are keeping factories running to make essentials, who drive trucks and who staff pharmacies and grocery stores to ease our ability to work and learn from home, out of harm’s way.

____________________________________________________________

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 fifteen 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.

working from home

New to Working from Home Full-Time? Here’s How to Stay Productive.

As the coronavirus pandemic threatens public health and the U.S. economy, more people are working from home on a regular basis. The move follows social distancing guidelines as an attempt to slow the outbreak, but keeping scattered workforces connected and productive can be challenging for managers and employees.

“This is new terrain for all involved, but employees and their companies can come out of this stronger by learning how to work together even better while they’re physically apart,” says Dr. Jim Guilkey (www.jimguilkey.com), author of M-Pact Learning: The New Competitive Advantage — What All Executives Need To Know.

Optimally, working remotely can sharpen the skills you have and open new avenues of training that broaden skill-sets and increase results. But technology alone can’t smooth the transition to remote working, and both employees and business leaders must learn how to implement new structures and some new or tweaked processes.”

Dr. Guilkey offers tips for both managers and associates to make working from home work out well for their companies:

For employees:

Get started early. “When going to the office, you normally get up and out the door early,” Dr. Guilkey says. “At home, this is more difficult. Get up, take a shower, and get started.”

Create a dedicated work space. People who haven’t worked remotely may need to experiment with different approaches to find what setting works best for them. “Just because you’re not going to the office doesn’t mean you can’t have an office. Dedicate a specific room or surface in your home to work,” Dr. Guilkey says“You should associate your home office with your actual office. This creates the correct mindset for being productive.”

Structure your day like you would in the office. Workers need to adopt exceptional conscientiousness when it comes to dividing their day into intensive work, communications, personal time and family life,” Dr. Guilkey says. “Have an agenda. Schedule meetings and project time and stay on schedule.”

For managers:

Set expectations.“It is vital that employees know what is expected of them,” Dr. Guilkey says. “When will you be available? How long will it take to get back to someone?”

Create a cadence of communication. Without daily face-to-face interaction, there’s more importance on communication. “A rhythm of communication is vital – daily check-ins, weekly one-on-ones, weekly team meetings, etc. ” Dr. Guilkey says.

Take a video-first approach. “Video, with all the current technology, is the most effective means of remote communication,” Dr. Guilkey says. “Invest in reliable tools.”

Maintain company social bonds. One drawback of working remotely is the potential breaking of social bonds that are necessary for productive teamwork. “Video conferencing or a quick Google chat with a colleague is vital to keep relationships strong,” Dr. Guilkey says. “Employees miss face-to-face banter and impromptu discussions in the physical office, so seeing faces on the screen daily is optimal for morale and a sense of normalcy.”

“Employees and employers can take this unprecedented time as a time to improve individually and as a company,” Dr. Guilkey says. “Working from home and working well together can go hand-in-hand when everyone is pulling even harder in the same direction.”

_______________________________________________________________

Jim Guilkey, PhD (http://www.jimguilkey.com) is the author of M-Pact Learning: The New Competitive Advantage — What All Executives Need To Know. He is the president of S4 NetQuest and a nationally recognized expert in instructional design and learning strategy, with extensive experience in leading the design, development, and implementation of innovative, highly effective learning solutions.

Under his leadership, S4 NetQuest has transformed the learning programs for numerous corporations, including Johnson & Johnson, McDonald’s, Merck, Nationwide, Chase Bank, BMW, Cardinal Health, Domino’s, GE Medical, Kaiser Permanente, Yum! Brands, and others. Guilkey is a frequent speaker at national conferences and corporate training meetings. Before co-founding S4 NetQuest, Guilkey served as the assistant director of flight education at The Ohio State University. He received a BS in aviation and an MA and PhD in instructional design and technology from Ohio State.

toilet

TOILET PAPER: A UNIQUELY AMERICAN OBSESSION

The sight of barren grocery store shelves in the first few weeks of the coronavirus crisis sent thousands of shoppers scrambling for basic supplies – including, in the United States, toilet paper. As of April 1, bathroom tissue remained a sought-after commodity nationwide, out of stock at big-box retailers like Costco and Walmart, and even online at Amazon.

This sudden scarcity has made toilet paper as valuable as any other paper currency. Neighbors using the NextDoor app are bartering toilet paper for eggs and other household essentials, reports Bloomberg, and a recently viral Tik-Tok video showed a man tipping delivery drivers with rolls of toilet paper instead of cash. There’s even been a wave of toilet-paper-related crime. In North Carolina, for instance, sheriff’s deputies found a stolen tractor-trailer carrying 18,000 pounds of bathroom issue, while in Florida, police arrested a man for stealing 66 rolls from a Marriott hotel. A surging number of price-gouging investigations have also focused on the exploitation of desperate shoppers; some chain stores, for example, have reportedly demanded $10 a roll, along with $26 thermometers and $40 for a single pair of face masks.

Americans, however, might be unique in their fixation on toilet paper, despite reports of toilet paper panic-buying in other parts of the world. Americans are not only the world’s largest producers of toilet paper, they are also its most prolific users. In fact in many places globally, toilet paper – along with basic sanitation – is an unimaginable luxury. Toilet paper shortages, it turns out, are truly a first-world worry.

In global toilet paper usage, Americans are on a roll

According to Tissue World Magazine (yes, there is such a thing), North American consumers used an average of 25 kilograms of toilet paper per person in 2018 – or the equivalent of 144 Charmin Mega-Rolls – far outstripping the average global per capita usage of just 5 kilograms a year. By comparison, consumers in western Europe and Japan used only about 15 kilograms per person, while toilet paper usage is close to negligible in Africa, the Middle East and many parts of Asia.

Who Uses the Most Tissue

The vast bulk of the toilet paper Americans use is domestically produced. According to the market forecasting firm IndexBox, just 7.5 percent of Americans’ bathroom tissue is imported. Even so, the United States is still the world’s largest importer of toilet tissue, accounting for 9.4 percent of global imports, according to MIT Media Lab’s Observatory of Economic Complexity (OEC). China, meanwhile is the world’s largest exporter, followed by Germany, Japan, Poland and Italy. China, does not, however, export much of its toilet paper to the United States; rather, 80 percent of Chinese exports end up in other parts of Asia, Africa and Europe. What toilet paper the United States does import comes primarily from Canada and Mexico.

TP imports

Unlike with other categories of consumer goods, Americans don’t rely on foreign toilet paper because its domestic production is so strong. Among the nation’s top manufacturers are global consumer products giants such as Kimberly-Clark (maker of Cottonelle and Scott); Procter & Gamble (the maker of Charmin and creator of Mr. Whipple); and Koch Industries’ Georgia-Pacific (maker of Quilted Northern and Angel Soft). Clearwater Paper Corporation, which reportedly operates one of the world’s largest toilet paper factories in Lewiston, Idaho, is the nation’s biggest maker of store-brand toilet paper, such as for the grocery chain Kroger and for Costco. (According to the Idaho Statesman, each of the factory’s 1300 workers received 36 free rolls of toilet paper, as well as 24 rolls of paper towels, in what another local news outlet described as a “pandemic bonus.”)

Why the world isn’t flush with toilet paper

Global trade in toilet paper totaled $24.4 billion in 2018 – a relatively small figure compared to other consumer goods such as cosmetics ($44.5 billion), shoes ($99.6 billion) or refrigerators ($43.1 billion). International trade accounts for about 22 percent of global tissue consumption, according to one market analysis.

One reason that toilet paper-dependent countries like the United States rely on domestic production is that it’s the cheapest option. The United States, for instance, has plentiful supplies of both virgin and recycled wood pulp, which are the raw materials for toilet paper. And because of its bulk, toilet paper is also expensive to transport, which means that foreign toilet paper would be more costly by comparison – at least as a finished product. In fact, more than a third of the global trade in toilet paper is in so-called “parent rolls” of tissue – giant rolls that are converted by paper mills into smaller rolls and then packaged into the plastic-wrapped six-packs you would (normally) find on the shelf.

But there are other reasons why there is no vast global market for toilet paper, despite the central role it seemingly plays in Americans’ everyday lives. One is the popularity of bidets in many parts of the industrialized world, including in Europe and especially in Asia. As Tissue World Magazine points out, today’s high-tech bidets are stiff competition for low-tech toilet paper. In Japan, for instance, “high-tech toilets based on water and/or air jetting with several additional functions, including automatic lid opening, music, ozone deodorant systems and urinalysis, seem to have had some negative impact on toilet tissue consumption.” Among the most popular of these luxury bidets is the Washlet “personal cleaning system,” manufactured by Japan’s TOTO. In October 2019, the company celebrated its 50 millionth sale of the Washlet.

Bidets are potentially even catching on in the United States – perhaps in part to the current toilet paper panic as well-heeled consumers look for ways to do without toilet paper altogether. Wired, for example, recently reported a spike in Americans’ interest in bidets, including a deluge of calls to domestic bidet manufacturing startup Tushy. “This could be the tipping point that finally gets Americans to adopt the bidet,” CEO Jason Ojalvo told the magazine.

But perhaps the most significant reason the rest of the world doesn’t share Americans’ attachment to toilet paper is that this most basic of human rights – access to sanitation – does not exist in vast swathes of the globe. Not only is toilet paper unavailable, so are toilets.

A global crisis in sanitation

According to the United Nations, more than half the global population – 4.2 billion people – live without access to “safely managed” sanitation, which the UN defines as access to a “hygienic, private toilet that safely disposes of people’s waste.” As many as 673 million resort to “open defecation,” which contributes enormously to the transmission of disease. More than 2 billion people drink water contaminated by feces, the UN further reports.

One tragic result is that 432,000 people die each year from diarrheal diseases as a result of inadequate sanitation, according to the UN, including 297,000 children under the age of five. According to Rose George, author of The Big Necessity: The Unmentionable World of Human Waste and Why It Matters, diarrhea kills a child every 15 seconds. In contrast, she writes, “Modern sanitation has added 20 years to the average human life.”

Unfortunately, just 40 out of 152 countries that have pledged to provide universal sanitation by 2030 are on track to reach this goal, the result of funding shortfalls, increasing water pollution, poor governance and conflict. The current global crisis with COVID-19, certain to ravage the developing world, will set back this progress even more. In fact, the lack of sanitation – including access to clean water for hand hygiene – could accelerate the spread of disease in many parts of the world, adding to the pandemic’s already shocking human toll.

While it’s only a matter of time before U.S. grocery store shelves are stocked again with what Americans consider the most basic of staples, many more nations have far to go before they can experience the luxury of that deprivation.

_________________________________________________________________

Anne Kim is a contributing editor to Washington Monthly and the author of Abandoned: America’s Lost Youth and the Crisis of Disconnection, forthcoming in 2020 from the New Press. Her writings on economic opportunity, social policy, and higher education have appeared in numerous national outlets, including the Washington Monthly, the Washington Post, Governing and Atlantic.com, among others. She is a veteran of the think tanks the Progressive Policy Institute and Third Way as well as of Capitol Hill, where she worked for Rep. Jim Cooper (D-TN). Anne has a law degree from Duke University and a bachelor’s in journalism from the University of Missouri-Columbia.

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

cargo

GLOBAL CARGO IS LEAVING ON A JET PLANE

With the ongoing threat of COVID-19, airlines have seen a precipitous drop in passenger travel and are focused on the possibility of a voluntary or mandated halt to U.S. passenger flights. In response, major carriers are finding ways to keep flying during the global health crisis.

American Airlines and United Airlines, for example, have offered their passenger aircraft for charter cargo flights. Even in normal times, the lower deck of passenger aircraft carries cargo to maximize the utilization of space. With the sharp scale-back in passenger travel, however, the companies are offering dedicated cargo runs to deploy their assets and replace revenue while helping to keep supply chains moving and facilitate the shipment of essential goods.

Attention All Passengers:

Many air travelers don’t realize that it’s not just their own and fellow travelers’ luggage that checked in for their flights. The big passenger airlines generally have a lot of available space in their bellies. With operating costs covered by passenger tickets, the airlines often generate supplemental revenue by carrying packages, freight or mail for the U.S. postal service on board passenger flights.

In turn, cargo shippers secure relatively cheap space and can get goods close to their ultimate destination given the dense network of airports serving passenger flights around the world. Even logistics players like UPS and FedEx partner with passenger airlines, particularly in emerging markets where trade volumes may not justify the deployment of their own regularly-scheduled aircraft. Technology tools enable precise coordination to ensure goods off-loaded from a freighter aircraft make their departure on a passenger aircraft and vice versa.

Cargo split

The trend is taking off. The International Air Transport Association (IATA) has been cited as estimating the split between cargo carried by passenger airlines and freighter aircraft at 60/40 and forecasts that will grow to 70/30 in the coming years.

In 2018, American Airlines moved 2 billion pounds of cargo and raised $1 billion of cargo revenue despite not operating cargo aircraft. Airlines based in Asia such as Korean Air and Cathay Pacific do have freight fleets, but still carry more than half of their cargo in the bellies of passenger aircraft. McKinsey has noted that with the expansion of the major Middle Eastern passenger carriers and new aircraft designs with large belly-cargo configurations, the belly capacity of Middle Eastern carriers flying into Europe in 2016 equaled the capacity of more than 100 weekly Boeing 777 freighter flights.

Open Skies

“Open Skies” agreements governing the transport of people, pallets and packages are designed to enable market forces to guide decision-making about routes, capacity, and pricing. Critically, Open Skies agreements also provide both passenger and cargo flights unlimited market access to partner markets and the right to fly to all intermediate and beyond points. The United States now has Open Skies agreements with over 100 partners around the world, including both bilateral agreements and two multilateral accords. So-called fifth freedom rights – also called beyond rights – are a core element of Open Skies agreements, permitting a carrier to fly to a second country, offload passengers and cargo, pick up new passengers and cargo, and continue on to a third country.

Over 100 Open Skies

While Open Skies agreements provide benefits to both passenger and cargo carriers, cargo carriers to a large extent fly international packages and freight themselves, while passenger carriers utilize codeshare agreements and worldwide alliances. The different business models and complex tie-ups can produce a divergence in interests. A prominent example was the dispute between the “Big Three” U.S. passenger carriers – American, Delta, and United – and the governments of the United Arab Emirates (UAE) and Qatar, who the carriers alleged were providing billions of dollars in subsidies and other benefits to their state-owned carriers: Emirates, Etihad, and Qatar Airways. Among other serious concerns, this raised red flags about subsidized fifth freedom operations (e.g., Newark-Athens-Dubai) and the potential for their expansion, negatively impacting U.S. passenger airline service to the Middle East and India.

U.S. Airlines for Open Skies, a coalition that included FedEx, Atlas Air, the Cargo Airline Association and JetBlue (which has a code-sharing agreement with Emirates), opposed the call of the Big Three for restricted Gulf fifth freedom rights (a violation of the U.S.-UAE and U.S.-Qatar Open Skies agreements if restricted involuntarily). The cargo carriers expressed concern that challenges to the Open Skies accords with Qatar and the UAE put at risk the fifth freedom rights that cargo carriers depend on for their complex global networks. They discounted the view that the U.S. could breach passenger fifth freedom rights without setting a dangerous precedent for the equivalent all-cargo rights.

The dispute was ultimately resolved in 2018 through U.S. government agreements with the Qatar and UAE governments under which the parties acknowledged that government subsidies adversely affect competition and committed to financial transparency and business on commercial terms.

Air Cargo Players

In the Upright Position for Takeoff

As passenger carriers step up to support cargo at this extraordinary time, you may not know that from 1997-2001, UPS also ran passenger operations. For a period of years, the company had contracts with tour companies and cruise lines to offer vacation flights as well as charters for college and pro sports teams, politicians, the press corps and others. In under four hours, a 727-100QC could be ready to carry 113 passengers. See here for the UPS Quick Change process.

Air cargo capacity is critical at this time of crisis and the airlines’ role is deemed a critical infrastructure industry by the Centers for Disease Control and Prevention (CDC). American Airlines reports that its recent cargo-only charter carried medical supplies, mail for active U.S. military, and telecommunications equipment and electronics to support people working from home. United’s wide-body charter cargo flights are likewise getting critical goods into the hands of businesses and people in need. Stakeholders across the cargo and passenger industries look forward to a post-pandemic era where all can return to their respective roles in transporting people and cargo globally, described well by United’s slogan “Connecting People. Uniting the World.”

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Leslie Griffin is Principal of Boston-based Allinea LLC. She was previously Senior Vice President for International Public Policy for UPS and is a past president of the Association of Women in International Trade in Washington, D.C.

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

risk

How to Get a Handle on Risk in Uncertain Times: 10 Important Considerations

Risk: It’s the operative word on everyone’s mind right now. Whether it’s COVID-19 or oil prices, supply chain impacts or financial market concerns, understanding the impact of macro and micro-events, assessing their impact and putting in place the right action plans to mitigate that risk as best as possible is the priority task at hand.

Here we’ll examine ten steps to consider to ensure you’re being as thoughtful and rigorous as possible in your response to risk.

1. Take Care of Your PeopleHopefully, this has already been priority number one for your business after the past few weeks. How do we safeguard our people? How do we handle work from home – voluntary versus mandatory? What other flexible resourcing options do we provide – from sick leave to absenteeism considerations? What are the IT implications and subsequent human resource and capacity management concerns we need to consider and fully factor in? Err on the side of caution. Better to be safe than sorry.

2. Analyze Internal Risks – Before you can do that, you need to galvanize the right teams to be able to understand, assess and action against those risks. It’s critical to build the right cross-functional teams to be able to look at, and understand, the relevant issues to consider. This will involve finance, R&D (depending on your business) and marketing and sales. It will also involve teams like quality and sustainability leaders, as there will be implications and follow on ramifications despite your very best efforts.

3. Conduct Scenario Analyses – For critical categories, it’s important to get a handle on what alternative demand/supply options are. What are the pessimistic versus expected versus optimistic cases depending on what happens with the current situation, both in terms of the pandemic but also in terms of current and expected economic conditions? As part of any such assessment, you’ll need to score, assign probabilities and weights and adjust your thinking and actions accordingly.

4. Talk to Customers –This doesn’t tend to be the first thing people think about when it comes to procurement, but understanding the demand side implications for your business will be essential. How will demand be disrupted? Will there be specific products in your portfolio that will be more directly or severely impacted? Will this result in demand cutbacks or surges? Where will you source supply from? Can you cut back supply needs for others? How will buying patterns change – will there be channel shifts from offline to online? How does that play out in terms of critical suppliers and critical buys and requirements in the near to medium terms? Maintaining a dialogue with customers to understand their needs and issues and where all of this plays through for your team is essential.

5. Develop Plans for Strategic Categories –You’ll need to revisit your plans and the related risks around your most critical categories during a time of crisis. Make sure that these plans have been reviewed, the pressure points tested, the risk points analyzed and alternative plans considered. This could mean enhancing inventory levels (and rethinking inventory buffers based on the scenario planning we talked about earlier), assessing implications for delivery performance, gaining a view of multi-tiered supplier performance, increased inbound category visibility and more.

6. Examine Logistics Implications – By the same token, businesses must assess the logistics implications both inbound and outbound, either to make products or to ensure delivery. This has cost and timeline implications. All modes of transportation can be seen to be impacted, not least of which is shipping impacts – especially to and from China, but elsewhere, as well – whether these impacts are halts on movements, ramp downs, or the subsequently phased ramp back up. Or bypassing some of these options and going to airfreight which presents another level of cost to timeline tradeoffs.

7. Assess Liquidity – This will be critical and will call for a stronger partnership and alliance with finance. Looking at cash positions, assessing payables, and of course extending that into receivables, etc. will be essential. Add to this, talk of tightening credit markets and this makes it all the more important. Cash as always will be king if we need to endure near term instabilities, revenue disruptions, supply chain impacts, sourcing problems, and more

8. Assess Supplier Health – Part and parcel to all of this is assessing supplier health and evaluating who will be the most impacted. A clear view of your supplier segments – strategic versus mid-tier versus everyone else – is essential so you can focus your time and analysis accordingly.

For the most strategic suppliers, it’s critical to have a multi-tiered view of their supply base and related dependencies so you can adequately assess their performance and supply chain bottlenecks. This will involve structured risk analyses – looking across multiple variables beyond financials, to operational performance, to industry performance factors, to geographic and locational concerns and more. You’ll also need to identify alternate supply sources to shift production as and where needed, and as quickly as possible. Not all of this can be done at a moment’s notice. Some of it should have been done as part of a prior risk assessment exercise.

9. Think Ahead – Businesses can’t afford to simply think about today. Consider what the next three to six months look like. This is where scenario planning comes into play. It is critical to assess not only how you can react now but also how to prepare for eventualities later, when things are either fully back to normal or in some altered state based on longer-lasting ramifications from the events of today.

10. Work With Facts and Manage Emotion – Fundamentally, the most important thing you can do is to continuously monitor changes in a structured fashion. Have a programmed information collection and analysis mechanism. If we accept that the crisis is still unfolding and that the true impacts from a supply chain disruption perspective may not reveal themselves for months, we need to take tangible steps.  This can be done by establishing a process to monitor other regions outside the infected areas that could be impacted. Are ports outside the infected areas being impacted through disruption or through new regulations to protect against transmission of the virus?  Are suppliers struggling financially without access to the Chinese markets, jeopardizing their viability? Data will be important but data converted to relevant insight for your specific supply chain situation will be essential.

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About the author

Omer Abdullah is Co-founder and Managing Director of The Smart Cube and is responsible for managing the company’s Americas business.Omer has more than 25 years of management consulting, global corporate and industry experience across North America, Europe and Asia.

 Prior roles include A.T. Kearney (North America), Warner Lambert (USA) and The Perrier Group (Asia-Pacific). Omer has an MBA from the University of Michigan at Ann Arbor, USA and a BBA from the University of East Asia.

industry

Coronavirus: Five Severe Hits to the Automotive Industry

As the coronavirus pandemic is engulfing the world, it is adversely affecting the very structure of our society across the globe in a hitherto unprecedented way. The countries and international organizations around the world are trying hard to halt the progress of this pandemic. The people with infection need urgent medical care, and the people who do not have infection yet are isolating in their own homes.

The risk of infection is making it mandatory to stop all the activities of every industry and economic activity in our society to minimize the transmission of the virus. However, with no vaccine or cure in sight, it can be a long battle before normalcy is restorable.

 According to experts, more people are likely to stay at home in light of the COVID-19 pandemic, which will reduce the demand for cars. Automakers have yet to see the impact of the pandemic and the real impact may only come out in the coming months. Here are the five most severe impacts of the coronavirus on the car industry.

1. Lockdowns and Curfews

Several governments across the world are imposing lockdowns and curfews in the respective countries to try and limit the spread of the virus among the population. The mode of transmission of the coronavirus is from one person to another. Since the coronavirus is highly infectious, there is a need for people to keep their distance from each other.

The places that people tend to crowd are extremely susceptible to be hotspots of transmission of the disease to many other people. Hence the doctors around the world are advising the population to follow the norms of social distancing. Cleaning your hands regularly with sanitizers or soaps to prevent the transmission of the virus is a crucial prevention method.

People do not want to go out shopping and in the U.S., the places with the maximum reports of coronavirus are already witnessing a drop in demand. Since the lockdowns are affecting the general way of life of people and there is no need for people to purchase a car in these times, it is leading to a natural decline in demand for cars and bikes such as the Yamaha wr250r.

2. Economic Slowdown

The countries across the world are facing a crisis, and the panic is causing an economic slowdown across the world. The slowdown is also causing the stock markets around the world to take a hit. Economic slowdowns always adversely affect the car industry as people tend to find a decrease in wealth for making such purchases. Even if the world recovers from the coronavirus pandemic, the economic impact is bound to cause ripples for months to come.

Although the long term effects of the pandemic are still unclear, car manufacturers are expecting only a delay in the purchases against people refraining from making the purchase. The reason for this expectation is that the people buy cars only due to their need for a car and not on a whim and hence can not postpone their purchase indefinitely.

3. Closing Down of Factories

In order to stop the spread of the virus and curb the transmission, the various countries are shutting down the factories operating in their state. Since there is a need for workers to be present and working in factories for ensuring smooth and continuous production of cars, manufacturing is not going on. China is a major hub of car manufacturing, and as the disease originates from the country, many plants are shut down.

Many workers come in close contact in manufacturing plants, and hence they can act as hubs of disease transmission. Only the essential services are operational for limiting close human interaction and slowing down transmission. This is slowing down the manufacturing of cars around the world.

4. Need for Medical Equipment

Due to the sudden onslaught of the coronavirus pandemic, there is a sudden surge in demand for emergency medical equipment and protective gear. Many factories are also now producing face masks and ventilators as they are in acute shortage and are currently in high demand. Since the repurposing of factories is taking place, car manufacturing is coming to a standstill.

The manufacturers are not able to use their production line for the manufacture of cars. Hence, they can easily repurpose their plants to make the medical necessities by making slight modifications to the production line. They will need an expert to monitor and guide the production as the ventilators are complex machines. Manufacturers are working closely with government officials and health authorities for the production of ventilators.

5. Slow Down of International Trade

Due to the effect of globalization, every industry sources their raw materials and individual parts in different countries throughout the world for keeping the manufacturing cost low. Since some countries are stopping the production of materials due to the coronavirus, manufacturing plants all over the world are facing acute shortages.

The manufacturing plants of cars in other countries are also facing a shortage of parts and raw materials due to international trade restrictions in light of the current situation. This leads to the slow down or temporary stopping of the manufacturing process of cars around the world.

Conclusion

The virus is already present in every inhabitable continent throughout the world and almost every country is seeing a rapid spread of the disease amongst its population. As so, every country is imposing restrictions on the people venturing outside their homes for work and other needs to limit the spread of the pandemic.

The automobile industry is responding to the calls from the government to aid in manufacturing the face masks and ventilators in these trying times. The global economy is suffering and approaching a standstill due to the coronavirus pandemic and the automobile industry is also undergoing a crisis. As a responsible citizen, you must adhere to the regulations for curbing the spread of the disease and get back to normalcy in the fastest possible time.

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Reference Links –

https://www.benzinga.com/news/20/03/15525971/coronavirus-another-severe-hit-to-the-automotive-industry

https://finance.yahoo.com/news/coronavirus-another-severe-hit-automotive-135056364.html

https://economictimes.indiatimes.com/industry/auto/auto-news/auto-industry-stares-at-2-bn-loss-as-factories-and-dealers-shut-shop-to-stem-covid-19-contagion/articleshow/74782274.cms?from=mdr

https://www.sme.org/technologies/articles/2020/march/coronavirus-impact-on-auto-industry-may-accelerate/

https://www.acea.be/press-releases/article/coronavirus-eu-auto-industry-faces-unprecedented-crisis

https://www.bbc.com/news/business-51956880

https://www.autocarindia.com/industry/how-coronavirus-has-hit-the-global-auto-industry-a-timeline-416615

https://www.just-auto.com/news/updated-daily-automotive-coronavirus-briefing-free-to-read_id194210.aspx

https://www.wsj.com/articles/coronavirus-threatens-auto-industrys-record-run-of-robust-sales-11584532801

High Authority Links –

https://www.theglobeandmail.com/drive/mobility/article-how-will-coronavirus-affect-the-auto-industry-in-the-coming-months/

https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/auto-industry-still-awaits-full-force-of-coronavirus-outbreak-57494206
disruptions

How Companies can Rethink Supply Chains to Deal with Disruptions

The coronavirus has disrupted U.S. companies in many ways, and nearly three-fourths of them have seen their supply chain significantly affected.

While China has begun slowly reopening as the number of coronavirus cases there decreased in recent weeks, reports of the illness shot up in other countries, and the epicenter of the pandemic shifted to Europe and then the U.S. Thus, multiple supply chains have been compromised as the outbreak spreads, and there’s no telling when those links in the various chains will operate at normal capacity.

“There are waves of effects coming even if Chinese manufacturing gets back to full-go,” says Hitendra Chaturvedi, a professor at the Supply Chain Department of W.P. Carey School of Business at Arizona State University and an expert on global supply chain sustainability and strategy.“As the coronavirus has spread globally, drops in different trading partners’ ability to supply is felt everywhere.

“What this is showing, especially in the U.S., is we need to reassess supply chain strategy and make it stronger to withstand unforeseen, major disruptions.” Chaturvedi outlines some possible outcomes in U.S. supply chain strategy as a result of the coronavirus:

Learning that cost is not the only consideration. Chaturvedi says that when companies in the future plan their overall global supply chain strategy, they may decide that paying more to establish a more resilient and flexible process would be worth it by reducing risk. “Companies typically find the lowest-cost supplier, but if you have a single source, you’re vulnerable, and that’s what’s happening now,” Chaturvedi says. “This will move companies more toward mitigating risk. That requires making investments. They could stabilize their supply chains by enlisting alternative suppliers, boosting inventories or investing in more diverse ways of distribution.”

Localizing more manufacturing and transporting. “Dependence on China for their manufacturing has put small and midsize businesses in jeopardy,” Chaturvedi says. “The pandemic exposes the vulnerability of companies that rely heavily on a limited number of trading partners. What will result is businesses will look to restructure their global supply chains, and some companies will look at localizing more than they would have in the past. A shift in that direction had already started during the U.S.-China tariff fight.”

Planning for future disruptions. Another result of the pandemic’s impact on supply chains is it will compel companies to anticipate disruptions in the future and build in quick responses to their supply chain. This involves a process called mapping, in which companies engage suppliers in order to better understand their sites and processes. “It’s imperative for businesses running a global supply chain to be in the know about news that could cause disruptions,” Chaturvedi says. “You have to be proactive and not reactive. Knowing where the disruption will come from and how that will impact their products allows companies to lead time and the ability to create a mitigation strategy.”

Utilizing technology. Chaturvedi expects to see a rise in the use of AI, chatbots, the internet of things, and robotic process automation to facilitate supply chains. “This will be done not only as a pretext to bring manufacturing jobs back from China,” Chaturvedi says, “but also for purely selfish reasons because bots do not get sick.”

“The impact of the coronavirus pandemic on supply chains has given new meaning to the word ‘disruption,” Chaturvedi says. “We’ve never seen anything quite like this, and businesses can learn a lot from it that will help their supply chain process in the future.”

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Hitendra Chaturvedi  (www.wpcarey.asu.edu/people/profile/3541031) spent over 30 years in progressive technology leadership positions with Microsoft, Newgistics, E&Y e-Business and A.T. Kearney. Chaturvedi also built a $100 million software company in India, GreenDust, where he implemented proprietary reverse logistics software at Amazon, Flipkart (Walmart), Samsung, Panasonic and Whirlpool. A computer engineer with a master’s degree from Louisiana State University and an MBA from Southern Methodist University, Chaturvedi has been widely covered in the media and is a subject matter expert on global supply chain strategy, sustainability in supply chain, reverse logistics, ecommerce, artificial intelligence and machine learning. Now a professor at Arizona State University, Chaturvedi has been a visiting professor at Southern Methodist University, University of Texas-Dallas, Penn State and Purdue.

customs

Customs Changes Course: No Longer Accepting Requests to Defer Duty Payments

On Friday, March 20, 2020, Customs announced that it was accepting requests for short-term relief from payment of estimated duties, taxes and fees due to the COVID-19 emergency, as discussed here.

Nevertheless, on March 26, 2020, Customs issued “Additional Guidance for Entry Summary Payments Impacted by COVID-19” that revised the information and policy in the earlier announcement. In its “Additional Guidance” Customs stated that it was no longer accepting requests for additional days for payment of estimated duties, taxes, and fees, but commented that CBP retains the right to allow additional days for payment in narrow circumstances, such as physical inability to file entry or payments, based on technology outages or port closures.

Single payments, daily and periodic monthly statement payments of estimated duties, taxes and fees that should have been tendered from 3/20/2020 through 3/26/2020, payment must be initiated by 3/27/2020. Trade members who did not pay Customs for estimated duties, taxes and fees from 3/20/2020 through 3/26/2020 must initiate payment by 3/27/2020.

Separate from reversing its policy on a limited number of “additional days” for duty relief, we also reported that CBP was considering a more extended 90-day tariff relief plan. Recent reporting, though, indicates that this 90-day tariff relief plan has been shelved. We understand that a number of senior administration officials (including Treasury Secretary Mnuchin and economic adviser Larry Kudlow) were in favor of granting the relief, but were outweighed by others within the Administration (Peter Navarro) as well as influential individuals in the private sector aligned with more protectionist policies.

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Robert Stang is a Washington, D.C.-based partner with the law firm Husch Blackwell LLP. He leads the firm’s Customs group.

 Julia Banegas is an attorney in Husch Blackwell LLP’s Washington, D.C. office.