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INTERMODAL IS HOT: HOW SIX CITIES ARE MEETING LONG-HAUL CHALLENGES

intermodal
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INTERMODAL IS HOT: HOW SIX CITIES ARE MEETING LONG-HAUL CHALLENGES

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How hot is intermodal right now? Total volumes rose 20.4% year-over-year in the second quarter of 2021, according to the Intermodal Association of North America (IANA) Intermodal Quarterly report. 

International containers gained 24.8% from 2020; domestic shipments, 15.7%; and trailers, 18.5%, according to the Calverton, Maryland-based association’s report, which also found that intermodal volumes not only grew for the fourth consecutive quarter in Q2, but the double-digit gain was the largest quarterly increase since Q3 of 2010 as well as the sixth quarter with a double-digit growth rate in the history of the data. 

“What is noteworthy is the breadth of the gains,” said Joni Casey, president and CEO of IANA, before September’s IANA Expo in Long Beach, California, where the Q2 surge was a source of industry optimism. “With one or two exceptions, the three market segments showed positive performance in all of IANA’s 10 regions.”

Trans-Canada led with a 29.6% total growth increase, followed by the Southeast-Southwest at 28.9% and the Midwest-Northwest at 26.6%. The Intra-Southeast likewise posted a 25.9% increase; the South Central-Southwest, 24.5%; and the Midwest-Southwest, 21.8%. The Northeast-Midwest came in at 20.9%.

“Freight volumes are expected to slow but experience steady q/q growth into 2022,” forecasts the 2021 Second Quarter Intermodal Quarterly report. “For 2021 as a whole, truck loadings are forecasted to be 7% higher than 2020 levels.”

Freight demand pressures, the end of consumer stimulus infusions and unemployment supplement and the ongoing surge in small new trucking companies have complicated matters, according to the report. “Intermodal remains highly competitive with trucking due to very high rates and tight driver supply. 

This situation will likely continue at least into early 2022, however, could be affected by a quicker stabilization in the trucking market, as reflected by a peak in truck spot metrics.” 

Managing the ups and downs of intermodal transport is greatly assisted by the IANA, whose roster includes more than 1,000 members from railroads, ocean carriers, ports, intermodal truckers and over-the-road highway carriers, intermodal marketing and logistic companies, and suppliers to the industry. (Learn more at intermodal.org.) But at the hyper-local level, economic development corporations (EDCs) also play a role in keeping freight trains rolling. Below are six cities meeting intermodal challenges with the help of their EDCs.

MILLERSBURG, OREGON

The Albay-Millersburg Economic Development Corporation estimates that 81% of the exported agricultural products from the Mid-Willamette Valley of Southern Oregon are loaded onto ships at the Seattle and Tacoma ports, with the remainder exported from ports in Long Beach (8 percent) and Oakland (3 percent), California. 

Complicating the flow of produce is traffic congestion near Portland, Seattle, Tacoma and farther down Interstate 5 into California.

However, like an oasis of calm sits Millersburg, which allows agricultural producers in the region to consolidate their products efficiently and avoid bumper-to-bumper nightmares altogether. To that end, the Linn Economic Development Group (LEDG), which is an affiliate of the Albay-Millersburg EDC, is constructing the Mid-Willamette Valley Intermodal Center (MWVIC) in Millersburg.

The town of around 2,000 people just happens to be where the Union Pacific Railroad mainline, BNSF’s Portland Western Railroad and I-5 come together. The MWVIC was made possible by passage of the state’s Keep Oregon Moving legislation, which appropriated $25 million toward development.

The intermodal center will include a main office, parking lot, space for about 100 trucks to park overnight, amenities for truck drivers, capabilities to handle domestic and international containers, track space for inbound and outbound trains, a 60,000-square-foot storage warehouse and docks to support reloading and transloading onto rail, with capacity for longer-term storage of product.

Agricultural producers and train operators are not the only beneficiaries of the project. Shippers will now have the option of choosing the best transportation alternative for each individual load. The LEDG estimates that under full utilization, private transportation cost savings will total $2.1 million per year.

But the public should turn out to be the biggest winner. Reducing the number of trucks on the highways would lower maintenance costs, reduce congestion, improve air quality and decrease carbon emissions—while the MWVIC at the same time increases jobs and local spending. 

ALLENTOWN, PENNSYLVANIA

The Norfolk Southern Allentown Rail Yard is among the railroad’s largest facilities, but only a few of the 200 manufacturers in the Pennsylvania town transport goods by rail. The Allentown Economic Development Corporation would like to change that. Saying of the yard “we’re very fortunate to have it,” Scott Unger, executive director of the Allentown EDC, says he and his team are pulling out all the stops to increase rail usage.

Pennsylvania’s Bureau of Rail Freight administers a special grant program called the Rail Freight Assistance Program that provides financial assistance to companies that are interested in bringing a railroad spur directly to their property for freight shipments. The goal of the grant program is to preserve and stimulate economic development through new and expanded rail service.

Also hoping the state incentive program lights a fire under local manufacturers is the R. J. Corman Railroad Co., LLC, which owns 11 Class 3 short line railroads in the Mid-Atlantic and the South, as well as the R. J. Corman Allentown Rail Yard.

“Products that are ideal for transloading include palletized commodities which can be loaded and unloaded in a boxcar,” explained John Gogniat, director of Commercial Development for R. J. Corman. “In addition, products such as lumber or steel that can be unloaded with a forklift are ideal candidates. That said, we are open to entertaining any potential commodity and will develop a mutually desirable solution for its loading and unloading.”

Gogniat notes that Allentown’s strategic location provides access to Philadelphia, Scranton, York, Harrisburg, Wilmington, New York and beyond.

WILKES COUNTY, NORTH CAROLINA

The North Carolina Department of Transportation’s Rail Industrial Access Program also uses state funds to help construct or refurbish railroad spur tracks required by a new or expanding company. Program funding is intended to modernize railroad tracks to ensure effective and efficient freight deliveries.

Many companies taking advantage of the incentive are located in Wilkes County, which was established in 1777 and is still known today as a mecca for outdoor recreation, small-town living . . . and a big business mentality. 

Consider the Yadkin Valley Railroad, which offers Wilkes County businesses rail access to ship their products into the Ronda and Roaring River areas. Operating out of the Winston-Salem area and hauling 11,500 carloads per year with freight, Yadkin joins G&O’s short line railroads, which offer connections to CSX and Norfolk Southern, in figuring into the logistical operations of Charlotte Regional Intermodal Facility.

Wilkes County Economic Development Corporation will point businesses to other local and state incentive programs to improve rail access—dependent on the applicant’s potential to create new jobs and invest capital in the region. The aim is to get companies to locate or expand in North Carolina versus another state.

“The North Carolina Railroad Company partners with the state’s economic development community and railroads on initiatives designed to drive job creation, freight rail use and economic growth,” reads an EDC release. “Through NCRR Invests we evaluate requests for investments to address the freight rail infrastructure needs of companies considering location or expansion in the state.” 

But Wilkes County does not live by rail alone, as the EDC also trumpets a location that is close to major freeways and interstates, two international airports (Charlotte Douglas and Piedmont Triad) and three major East Coast ports (Wilmington, North Carolina; Norfolk, Virginia; and Charleston, South Carolina). 

NEW YORK, NEW YORK

An ambitious program was born out of congestion, pollution and unconnected cargo transportation options in the Big Apple. Freight NYC aims to expand the use of rail and water to move food, building materials and other goods that are normally trucked in from outside the five boroughs.

“Freight NYC will better equip New York City to meet 21st-century demand by modernizing the city’s freight infrastructure, reducing truck traffic and improving air quality, while creating nearly 5,000 good-paying jobs in the process,” says James Patchett, chief executive of the New York Economic Development Corporation. “This plan is a win-win for our environment and economy.”

The city would invest as much as $100 million in the program that would include a 500,000-square-foot distribution center on the site of the Brooklyn Army Terminal, adjacent to the New York New Jersey Rail carfloat hub, as well as a new air cargo center near John F. Kennedy International Airport in Queens.

Private participation in a $20-30 million barge terminal on five acres of land owned by the city in Hunts Point, a major distribution crossroads for produce in the Bronx, is also part of the multimodal plan. 

Small rail freight yards on a line through Brooklyn and Queens, where goods would be transloaded to smaller vehicles for final delivery, is also envisioned.

DECATUR, ILLINOIS

When you think of the granddaddy of rail operations in the Midwest, you think of Chicago. That’s part of . . . heck, the main problem, according to Nicole Bateman, president of the Decatur Economic Development Corporation and executive director of the Midwest Inland Port. The Windy City is not only the nation’s busiest rail freight gateway, it’s the third-largest intermodal container/trailer port in the world, following Singapore and Hong Kong, according to the Illinois Department of Transportation.

What comes to mind when you think about freight, Singapore and Hong Kong? Congestion. As such, shippers on both ends of the supply chain need alternatives to Chicago—which is where Decatur (as Bateman’s fingers cross) comes in. 

Located 160 miles southwest of Chicago, Decatur is now being propped up by its EDC and the Midwest Inland Port as a distribution transportation center, which is fed not only by four railroads but easy access to interstates and airports. The port association is utilizing public-private partnerships to capitalize on Decatur’s geographic location, while the EDC seeks to make the city Illinois’ designated downstate freight transportation hub as a way to relieve rail and highway congestion in Chicago.

Users of the Midwest Inland Port have experienced savings in freight transportation costs and significant reduction in transit times, Bateman recently told American Shipper.

SEGUIN, TEXAS

Talk about strategic locations, Seguin sits alongside Interstate 10 and the banks of the Guadalupe River, with San Antonio a mere 35 minutes to the west, Austin only 55 minutes north and Houston about 2 ½ hours to the east.  

Besides the easy access to I-10, Seguin also connects to State Highway 130, which it bills as “the safe, fast and reliable alternative to congested Interstate 35 in Central Texas.” Two international airports (San Antonio and Austin-Bergstrom) and two deep-water ports (Houston and Corpus Christi) are an hour of so away.

But perhaps the biggest jewel in the close proximity crown is Union Pacific’s San Antonio Intermodal Terminal (SAIT), a $100 million state-of-the-art facility designed to support the growing intermodal volume in southern Texas. The expansive facility is designed to handle 250,000 annual container lifts as it serves markets across South Texas.  

If that hasn’t sold you, allow the Seguin Economic Development Corporation to work its magic. The EDC helps guide businesses through the maze of available loans, grants and tax breaks from the city, county and state. To hear the EDC tell it, finding applicants should be no sweat considering Seguin’s “easy access to four of the United States’ largest consumer markets, allowing manufactures to get their products to millions of consumers, all within a five-hour drive.”

Great Falls Community Podcast cover art featuring Jolene Schalper
Archives, GT Podcasts

GT Podcast – Community Connection Series – Episode 6 – Great Falls, Great Opportunity

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In this episode of our Community Connection podcast, join GSLI’s Eric Kleinsorge as he speaks with Jolene Schalper about the advantages of Great Falls, Montana on both the business side and the quality of life.  Learn about the key advantages and industries that are thriving in Great Falls and why they are proud to call it home!

 

 

 

 

Check out more of our GT Podcast – Community Connection Series here!

Geopolitical
Archives, Commentary, Global Trade Daily

Axis of Innovation: A New School of Geopolitical Economics for the Digital Age

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What a difference a few decades make. Trade ministers from the United States and European Union recently felt compelled to sit down for special high-level ministerial forum in hopes of strengthening their relationship after years of transatlantic tensions on all manner of digital-age economic and trade matters—from digital service taxes to cross-border data flows—which together reflect fundamental differences of geopolitical strategy for the digital economy.

This never would have been necessary in the Cold War, when there was a clear, Manichean struggle between the democratic, market-based West and the authoritarian-communist East. It would have been inconceivable in those days to have such differences “across the pond.” There was strong bipartisan support in the United States—and parallel support in Europe—for a cohesive approach to the geopolitical economy that aimed to attract allies and isolate the Soviet Union and China by supporting Western business interests and spreading democracy around the world.

 


But now, as the Cold War fades into history and as the global economy is increasingly driven by digital and information technologies instead of heavy industry, that consensus view of the geopolitical economy has fractured. The old “free markets and free people” camp has maintained a foothold in the United States, and authoritarian statism is still deeply rooted in the parts of the East, but alongside them there are now other competing visions—including social democratic regulation in Europe and a rising form of digital protectionism in countries such as India, Indonesia, and Vietnam.

If the United States is to effectively advance its interests, which now hinge on spurring faster and deeper digital innovation and transformation, then U.S. policymakers need to recognize this new formation, while embracing a new framework for the geopolitical economy that is better suited to the times: national developmentalism. The overriding priority should be advancing domestic technology competitiveness instead of sacrificing U.S. economic interests on the altar of other foreign policy goals as America often did in the Cold War. Failure to execute this strategic pivot will produce a technologically weaker U.S. economy.

Until recently, America had only one big idea when it came to geopolitical economics, embodied in the neoliberal “Washington consensus.” Policymakers advocated at home and abroad for open markets, deeper trade, limited regulation, budget constraints, the rule of law, and a modest role for government. That approach worked in the Cold War, but there are two problems with it now: First, it ignores the fact that government plays a key role in helping develop and spread digital technologies, as we have seen in the history of the Internet, semiconductors, computing, and technologies like GPS—all of which the federal government spurred. Advancing growth in the era of digital innovation requires more than firms and markets acting on their own. Second, when U.S. policymakers point to the Washington consensus as the only alternative to China’s seemingly successful state-directed model, it gives nations looking to grow their own digital economies a limited choice: Do little and hope markets work things out for the best or be aggressive by copying Beijing’s statist model.

As in the Cold War, some nations today continue to embrace authoritarian statism, but with a digital edge and a more market-friendly veneer. China and Russia are the torchbearers for this formula, with China taking it to the greatest extreme. For China’s central planners, the approach is more than authoritarian; it is deeply mercantilist, seeking not just to build up domestic technology firms by any means necessary, but also to harm foreign competitors—as when Chinese firms coerce their Western counterparts into transferring intellectual property as the price of doing business in China while also enjoying lavish subsidies for “going out” to challenge Western firms for global market share.

This is a model that empowers U.S. adversaries and harms global innovation, because by employing tactics such as massive subsidies, IP theft, and coerced technology transfers, China is empowering its firms to take market share away from more innovative firms in other nations. Moreover, China scoffs at concepts such as freedom and democracy, and in global governance forums, its strategy is to ensure that its formula prevails over the U.S. model of freedom and human rights with private and civil-sector governance.

Meanwhile, where the United States and Europe once were closely aligned on economic and foreign policy, their goals and interests have now diverged. In the EU’s social democratic approach to the digital economy, the government’s main role is to regulate, rather than promote, technology and technology companies (especially U.S. companies) to achieve social policy goals. The EU is doing everything it can, including using carrots and sticks, to bring other nations into its orbit, offering its model as a third-way alternative to Chinese authoritarianism and what it considers to be America’s “cowboy capitalism.” The result is a spread of a digital regulatory system marked by higher taxes, onerous rules, and strict antitrust enforcement, which constrains global innovation and weakens U.S. competitiveness. And unfortunately, many U.S. policymakers, particularly on the left, see this as an appealing alternative to the Washington consensus they believe has been discredited.

But ultimately social-democratic regulation of the digital economy will prove to be a dead end. Even though EU social democrats and their U.S. allies profess to be pro-innovation, the reality is that onerous regulations on privacy, competition, “fairness,” and other areas result in less innovation, slower economic growth, and worse experiences for consumers.

On a separate track are unaligned nations that often charted their own path in the Cold War era. Today, many of them are defaulting toward digital protectionism as a preferred approach. For example, India, Indonesia, and Vietnam, among others, see limiting foreign IT and digital market access as the key to growing their domestic digital economies. To that end, they take measures such as limiting cross-border data flows, favoring domestic digital firms, and otherwise discriminating against foreign technology firms. This, too, will likely prove to be a dead end. Digital protectionism usually doesn’t work, in part because it doesn’t just harm the interests of U.S. firms and others, but often drives up the costs of digital technologies domestically, thereby limiting their use and forgoing the productivity benefits they offer.

Against this backdrop, the United States faces a host of new challenges, but it also has an opportunity to secure a new era of prosperity for itself and others by embracing a national developmentalist model in which government helps coach firms within its borders to compete globally, innovate, and boost productivity. This entails supporting innovation, markets, and business—including big business. But it also recognizes that the state should play a key role in supporting digital innovation in areas like broadband, health care, education, and governance while defending U.S. firms from unfair foreign competition. Among the nations moving toward the national developmentalism model are the Scandinavian bloc, the United Kingdom (as conservatives increasingly move beyond their Thatcherite traditions), Israel, Singapore, and Taiwan. Some U.S. policymakers on both sides of the aisle have begun moving in this direction, too, as evidenced by the Senate’s United States Innovation and Competition Act.

While the doctrine of national developmentalism presents a more realistic picture of the world, recognizing that nations seek competitive advantage in IT and digital industries, it also counsels a “race-to-the-top,” wherein nations support digital innovation with policies related to research and development, worker skills, and digital infrastructure, plus conducive regulatory and tax policies, and government leadership in using the technologies themselves.

The United States should fully embrace this burgeoning national developmentalism at home and work methodically to bring as many other countries as possible into the U.S. national developmentalist orbit—selling it as a compelling and effective alternative to social democratic regulation, protectionism, and authoritarian statism. We are no longer locked in a Manichean struggle; there are now several models on offer. But one is clearly the best.

 _______________________________________________________________________

Robert D. Atkinson (@RobAtkinsonITIF) is president of the Information Technology and Innovation Foundation, the leading think tank for science and technology policy.

on-demand warehousing
Archives, Global Logistics, Global Trade Daily, Warehousing

Short-Term On-Demand Warehousing and How it Can Support Supply Chains

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The Impact of COVID-19 on Supply Chains

Pre-pandemic, the just-in-time (JIT) supply chain model, which minimizes inventory to reduce costs, was the norm. However, this model exposed companies’ vulnerabilities when COVID-19 accelerated change across every supply chain industry vertical – especially warehousing.

The shift to remote work and the exponential rise of e-commerce exposed supply chains to crushing demands and major disruption. Companies didn’t know if their warehouses were going to be empty week to week, or if they were going to be overstocked. Extra industrial space that goes unused is a huge financial strain for a business, but on the other hand, purchasing patterns were so unstable during the pandemic that overflow also became a financial concern.

With changes in consumer preferences, supply chain setbacks, project delays and more as a result of the pandemic, there has never been a greater need for regional space that can be leased on flexible terms. Because of the nature and uncertainty of the economy, many businesses don’t want to commit to a long-term sublease for space, but at the end of the day, they still need a solution. Tenants and landlords also want the opportunity to generate earnings if they have unused space simply racking up their expenses. Short-term, on-demand warehousing has allowed companies of all sizes and industries to make smart decisions about warehouse space and plan more effectively for the future during COVID-19.

The Rise in Popularity of Short-Term Warehousing

The supply chain industry understandably doesn’t want to fix what’s not broken. However, when the COVID crisis hit, many traditional processes and workflows began to fail. This accelerated the need for more innovative solutions and new, tech-based services like Chunker became a mainstream necessity.

Warehouse leasing has long been predicated on long-term commitments and needs. For example, a business would have to commit to a 10-year lease, which meant predicting and planning space needs over the course of a decade. This left a ton of room for error, especially as consumer behavior evolved so quickly.

Short-term, on-demand warehousing supports supply chains in the new era by adding agility and flexibility. Companies no longer need to sign a five-year lease when they only have a five-month problem to solve. By enabling short-term deals, flexible warehousing allows a business to respond faster.

Additionally, companies are able to take advantage of new opportunities and move into new markets faster. Typically, it takes six months to a year to source and secures long-term warehousing space. Through short-term, on-demand warehousing options, a company can now find industrial space in 24 hours and enter a new market, while planning for the long-term. This allows for better market testing, while removing some of the risks that comes with entering a new market.

Looking Ahead: What’s in Store for Warehouse Space and Supply Chains

Where we will see short-term, on-demand warehousing proliferate is in areas such as construction, 5G rollouts, hotel remodels and overflow storage for retail and e-commerce. For instance, construction projects require truckloads of goods to be brought on-site, necessitating a short-term space for materials storage. Flexible warehousing is going to become more and more vital to supply chain resilience in the future, and is less expensive than a traditional brick and mortar.

Short-term, on-demand warehouses are the natural next step in the evolution of commercial real estate and the industrial space in particular. Over the last few years, we have seen the space evolve and adapt to new entrants in the market like on-demand office space, short-term rentals, co-living, pop-up retail and more. As the industry continues to shift and adapt to more on-demand solutions, it will continue to be a go-to resource for people seeking convenience, simplicity and efficiency for finding and leasing warehouse space in the post-pandemic era.

______________________________________________________________

Brad Wright is the CEO of Chunker

SDGs
Archives, Global Trade Daily, International Trade

Pandemic Raises Stakes for Success of the SDGs – with Private Sector Crucial

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In this Decade of Action for the Sustainable Development Goals (SDGs), we hear much about how organizations, countries and individuals are stepping up their efforts to achieve the 2030 Agenda. Despite this, the reality is that the pace of action has not been quick enough and we are already far behind on delivering the Global Goals.

The countless tragic consequences of the COVID-19 pandemic bring an added layer of urgency. Yet, true to human nature, the focus has already shifted to how as a global community we can forge a new way ahead – with the ‘build back better’ mantra being highly relevant from the perspective of progress on the SDGs.

Against this backdrop and with Global Goals Week underway, GRI has analyzed the Voluntary National Reviews (VNRs) presented by countries at this year’s UN High-level Political Forum. Every year since 2016, GRI has reviewed how member states are involving the private sector in the implementation of the SDGs, in particular, to assess progress on SDG 12.6: to encourages companies to adopt sustainable practices and integrate sustainability reporting. With each year seeing a different set of countries submit their VNRs, the analysis varies in terms of the sample of political systems, economies, and geographical representation, providing insights over time to global trends.


 

Mixed messages on private sector engagement

In total, 42 countries carried out VNRs in 2021. Countries with informal, less regulated economies tended to find that they were facing challenges with tracking SDG progress, which have been exacerbated by the pandemic.

Overall, 86% of the analyzed reports recognized the need for private sector investment, which is more than double the level reached in 2020, perhaps triggered by COVID-19, and 85% refer to the contributions of the private sector to the SDGs. Yet less encouragingly, the number of countries consulting the private sector as part of the VNR has fallen to the lowest level since 2016, at 76% (down from 87% in last year).

There are though positive signs of governments and the private sector collaborating more for the SDGs, with 83% referencing public-private partnerships (compared to 54% in 2020). This aligns well with the building back together notion, something GRI discussed at length during our HLPF event – The key role of innovative partnerships and transparency for the SDGs – which we co-hosted with Enel and UNDP Business Call to Action.

Improving alignment of SDG priorities

What our findings show is that there is a clear understanding of the important role the private sector plays in achieving the 2030 Agenda. However, it is not enough that only three-in-four countries engage the private sector in the VNR process. If we are to deliver on the SDGs, we need open collaboration that gets all parties on board – from analyzing the issues, to defining the solutions, to implementation and reporting on the progress.

Government and business interests are naturally not always fully aligned. The role of the private sector for SDG 4 – Quality Education, SDG 5 – Gender Equality and SDG 7 – Affordable and Clean Energy, was most often mentioned in VNRs. Yet, as revealed in the 2020 KPMG Survey of Sustainability Reporting, the most prioritized SDGs by the private sector are SDG 8 – Decent Work and Economic Growth, SDG 13 – Climate Action and SDG 12 – Responsible Consumption & Production. What this indicates is that there can be a disconnect between SDGs priorities and ownership, illustrating how important it is for all stakeholders to engage and align, in order to achieve impact and progress.

Examples to learn from

We see a number of innovative digital initiatives in this space, as identified through the VNRs, that can serve as inspiration for others. For example, the success of the SDG Corporate Tracker in Colombia, a platform now used by 480 businesses in the country that is standardizing SDG-related data collection on the role of the private sector. The Initiative 2030 platform, meanwhile, which is aligned with the GRI Standards, makes it easier for companies to assess how they are contributing to the SDGs, driving SDGs participation within Cypriot society through the involvement of all stakeholders.

Simultaneously, the analysis found new or increased regulations for disclosure of non-financial information – as adopted in Indonesia and Sweden, as well as stock exchanges in Malaysia, Thailand, and Zimbabwe – which is driving an increase in private sector sustainability reporting.

Emerging significance of tax transparency

As a new element of the analysis, in 2021 we saw 29% of VNRs reference corporate taxation and tax reporting. Strong and effective tax systems are necessary to generate the resources needed to meet the SDGs and promote inclusive economic growth yet, as discussed in the opening episode of our new podcast series SDGs: The Rising Tide, it remains a significant challenge.

A fair taxation system is key to achieving the 2030 agenda, and we look forward to tracking the progress on how this will be reflected in VNRs in the coming years. GRI 207: Tax 2019 – the first and only global standard for comprehensive tax reporting at the country-by-country level – will play an important role in facilitating the regional and global conversations on fair tax policies. After all, ensuring finance for sustainable development is a cornerstone for fulfilling the SDGs.

Stepping up the momentum

Through the 2030 Agenda, world leaders have called on businesses to apply their creativity and innovation to solving sustainable development challenges. Yet we also need businesses to be transparent in how they maximize their positive impact on the SDGs. That is why governments must ensure they are bringing companies, and other stakeholders, into the operations room when it comes to developing and implementing their SDGs plans as well as reviewing progress.

Looking ahead, GRI will follow with keen interest the role played by the COVID-19 response in the next VNRs. Will recognition of sustainability challenges see the number of reports by countries – and engagement of the private sector – increase? And will we, years from now, be able to say that the pandemic instigated greater action and collaboration in support of the SDGs? On both these counts, there are opportunities within the adversity that can and must be seized.

When you view the SDGs as the roadmap to a better world – one without poverty or hunger, with gender equality achieved, fair economic growth and the environment protected – participation in their success should not be a hard sell for anyone, be it governments, business or citizens alike. Inclusion and partnerships, at all levels, will be the key to their successful fulfillment. Let’s stay positive that together we can reach that sustainable future.

___________________________________________________________________________

ABOUT THE AUTHOR

Tina Nybo Jensen is International Policy Manager at GRI. She leads on the development, management and implementation of GRI’s Sustainable Development Program, with a special focus on the SDGs and engagement with multilateral organizations. She joined GRI in 2014 and has previously worked with the GRI Community, report services and governance relations.

Prior to GRI, Tina worked for the Danish Red Cross Youth in Jordan and the Westbank, and at the Danish Embassy in Thailand. She holds Master’s Degrees in Development & International Relations (Aalborg University, Denmark), and Political Science with Specialisation in Environmental Governance & International Relations (Vrije University Amsterdam, the Netherlands).

ABOUT GRI

Global Reporting Initiative (GRI) is the independent, international organization that helps businesses and other organizations take responsibility for their impacts, by providing the global common language to report those impacts. The GRI Standards are developed through a multi-stakeholder process and provided as a free public good.

transportation
Archives, Global Trade Daily, Site Selection, State Spotlight

7 STATES WITH COMPREHENSIVE FACILITIES FOR THE MULTIMODAL TRANSPORTATION OF GOODS

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Thankfully, with COVID-19 vaccination programs in full swing, it appears that we are emerging out of the worst of the pandemic which has blighted the lives of so many people and caused so much devastation to businesses across all industries. 

Major parts of the U.S. economy, quite literally, were brought to a standstill with enforced closures and restrictions on the movement of people.

However, despite the disruption caused by the coronavirus pandemic, goods were still shifted in enormous volume during the course of 2020, the value of such activity in the U.S. and Canada estimated to have surpassed $6.8 billion. 

This figure should steadily rise given how increasingly dependent intermodal transport activity is on the consumer economy’s demand. It is also supported by well-developed hubs across all states that help to facilitate the movement of goods as seamlessly as possible. 

Here, we take a look at just some of the U.S. states with the most favorable logistics infrastructure. 

Illinois

The midwestern state is extremely well served by an array of transport hubs, the most significant being situated in and around its primary city of Chicago. 

Staggeringly, around a quarter of all rail freight calls into the city either as a final destination or stop on a journey to another terminus. Meanwhile, O’Hare International Airport processes around 2 million metric tons of cargo at a value of approximately $200 billion every year.

The state is also indebted to what is North America’s largest inland port in the form of CenterPoint Intermodal Center. Situated in the Joilet and Elwood area, around 40 miles southwest of Chicago, it is a 6,400-acre master-planned intermodal development that sees 3 million TEUs pass through it every year. It is currently home to more than 30 tenant companies that, between them, occupy more than 14 million square feet of space.

CenterPoint Intermodal Center is also built with heavyweight roads able to withstand massive pressure and contains several other useful features such as water and utility systems, public bus service connections, no restrictions on trailer parking ratios and 24/7 on-site fire and police protection.  

The site contains a massive 785-acre Union Pacific Railroad complex just south of Joliet, while another enormous rail complex measuring 770 acres that is operated by BNSF lies farther to the southwest.

When all of this is taken into consideration, CenterPoint can rightly be referred to as Illinois’ intermodal epicenter.  

The state is also making waves in the port scene, with officials recently announcing a $110 million fund to modernize public ports across the territory. Illinois is home to a network of waterways that includes 19 public port districts and more than 400 private terminals along the Illinois, Kaskaskia, Ohio and Mississippi rivers.

Texas

The Lone Star State is also no stranger to port-based trade. 

Texas has no fewer than 11 deep-draft ports, eight shallow-draft ports and two recreational ports that combine to make a critical contribution to the economic growth of the state, and represent key components of the region’s transportation system. 

The southern state’s ports are backed up by some of the country’s largest interstate highways and an enormous network of railroads. 

According to figures released by the Association of American Railroads, Texas received 208.1 million tons of rail freight in 2019, the most of any state. To put that in context, Illinois, the second-ranked state, received 107.4 million terminated rail tons. Texas also, unsurprisingly, has by far the largest network of rail infrastructure in terms of outright length, measuring at 10,460 miles compared to second-placed Illinois, which has 6,883 miles of track.   

Over in Dallas, a fairly recent addition to the city’s intermodal transport infrastructure (opening in 2015) is the Wylie Intermodal Terminal. It is a $64 million development owned by Kansas City Southern Railway (KCS), and is set to capitalize on significant opportunities in cross-border activity with Mexico. 

Wylie itself is a city and northeastern suburb of Dallas, with the KCS terminal sprawling across 500 acres of land and servicing 12 gulf ports and one Pacific Ocean port, as well as more than 140 transload centers and 11 intermodal ramps. KCS also provides 181 interchange points with other railroads, including all U.S. and Mexico Class 1 railroads.

Michigan

In a typical year, one without the disruptions caused by the pandemic, U.S. freight railroads move around 1.7 billion tons across nearly 140,000 miles of privately-owned infrastructure that run through 49 states.

Michigan is home to 28 such railroads and ranks 14th in terms of total rail miles, with 3,465 miles of track at its disposal. In 2019, it received 31.4 million tons of rail-based cargo and sent 21.2 million tons on its way to other parts of the country or abroad. 

The Detroit region offers extensive logistics options for businesses, including world-leading warehousing and what is often cited as the nation’s best undergraduate and graduate supply chain and logistics university courses.

Furthermore, the region’s strategic location on the Canadian border grants prime access to the wider U.S. and Canadian markets, with more than 47 million people within just a five-hour drive.

Detroit also contains more than 2,000 miles of interstates and highways, four Class 1 railroads, seven cargo ports and 15 airports. In total, the region moves $44 billion of goods evert year. 

According to the Michigan Freight Plan devised in 2017, the state has “an extensive transportation infrastructure system that supports more than $862 billion in economic activity on an annual basis, from ports to rail and highways to runways.”

California 

Over on the West Coast, California boasts some of the most comprehensive logistics infrastructure in the country, especially when it comes to ports and railroads. 

Indeed, California is the third most popular destination for rail freight in the United States, receiving 94.9 million tons in 2019 – the state is also fifth in terms of total tail miles, with 4,971 miles of track spanning over two Class 1 railroads and 26 short-line railroads.  

Los Angeles is home to the West Coast’s busiest seafaring trade hub thanks to the adjoining ports of Los Angeles and Long Beach. In total, California has one private and 11 public deep seaports and numerous private port and terminal facilities. These handle more than 40% of the total containerized cargo entering the U.S., and almost a third of the nation’s exports. 

Such formidable infrastructure is even further bolstered by 5,800 commercial miles of high traffic volume interstate and state highways, and 12 airports with major cargo facilities. 

All of this combines to present California as one of America’s most extensive, complex and interconnected freight hubs, a system which, according to the Californian government, employs 5 million people. 

Washington 

In the Pacific Northwest, Washington boasts an extraordinary number of ports–some 75 that are found in 33 of the region’s 39 counties. These are supported by 465 miles of navigable waterways for barge traffic on the Columbia and Snake rivers.   

For companies needing logistics infrastructure for accessing the Pacific sea lanes, Washington represents the prudent choice, with many of the 75 ports a day’s sail closer to Asian markets than any others on the West Coast. 

Washington also has the second-largest concentration of distribution centers on the Left Coast, well supplied by 30 railroads (including the Union Pacific and BNSF) which, between them, account for 2,891 miles of track. This allows the state to rank seventh in the U.S. in terms of rail cargo received (65.8 million tons a year). 

Washington’s roads network is also well developed, with 7,000 miles of state highways and more than 39,000 miles of country roads that help reach the most remote parts of the region. In terms of air transportation, Seattle-Tacoma International Airport is the state’s largest international airport and the ninth busiest in the country.

Much of this infrastructure has been subject to improvements and expansions as part of the $70 billion Connecting Washington program, a bill voted for in 2015 that supports several major projects on the state’s roads, railways, ferry terminals and more.

Pennsylvania 

The Keystone State boasts of 61 railroads in operation, the most of any state in the country. These transport around 150 million tons of freight in and out of the region annually. 

The railroads feed a host of other important logistics infrastructure hubs, which include international airports at Erie, Harrisburg, the Lehigh Valley, Philadelphia, Pittsburgh and Wilkes-Barre/Scranton. Along with nine other scheduled-service, domestic passenger airports, they move 560,000 tons of material every year. 

Pennsylvania’s three major ports are also extremely successful, exploiting their strategic position between the northeast and Mid-Atlantic and providing deep water, inland and Great Lakes access for convenient international importing and exporting. Indeed, the state’s foreign trade zone program has levelled the playing field and boosts U.S. competitiveness by reducing operational costs for businesses. 

Joining all the logistical dots are more than 120,000 miles of state and local highways which, along with airports and railroads, are part of the Act 89 transportation plan–a commitment to improve numerous transit passages and hubs to the tune of more than $60 billion. 

Wyoming 

Our final stop is landlocked Wyoming, nestled in the Mountain West subregion of the western United States.

Despite being home to just six railroads spanning 1,877 miles, it tops the charts on originated rail tons by a long way. In 2019, 273.2 million tons of goods were sent from the state, more than double that of Illinois in second (125.9 tons). 

Wyoming’s location means it relies heavily on road transportation to move goods from points A to B and onwards to other parts of the country. Here, it is well catered for, with Wyoming motorists collectively traveling 10.2 billion miles annually and moving a large proportion of the $66 billion of commodities shipped to and from the state each year. 

The design, construction and maintenance of transportation infrastructure supports around 13,000 full-time jobs across all sectors of the economy, including tourism, retail, agriculture and manufacturing. 

Wyoming’s airports also play an important supporting role. There are nine in total, the most significant being Jackson Hole Airport, located in the spectacular Grand Teton National Park. 

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Archives, Global Trade Daily, International Trade

Troubles to Come: Glimpsing the Post-Pandemic Landscape for International Business Disputes

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Some eighteen months into the Covid-19 pandemic, the world continues to grapple with the immediate effects. Even in parts of the world that have achieved meaningful levels of vaccination, the rise of the Delta variant has lengthened both the pandemic itself, and the governmental countermeasures that result, and the parts of the world whose populations remain largely unvaccinated are still dealing with the first-order health and economic effects of the event.

The fact that the pandemic continues to have these effects, and is likely to continue well into 2022, counsels humility as we strive to discern the path forward for business. In the weeks after the onset of the pandemic, for instance, much of the international business world anticipated a wave of very substantial legal disputes arising out of the application of the law of force majeure to the event. But businesses proved to be adept at managing their way through those challenges, without allowing them to devolve into legal disputes and broken relationships. Thus, while there was a meaningful ripple of force majeure lawsuits and arbitrations, the expected wave did not materialize. It is certainly a cliché at this point, but as we endeavor to look forward, the one thing we can be certain of is that we will face further uncertainty.

Nevertheless, the future landscape for international business disputes, in litigation and arbitration, is starting to emerge, and we can venture some observations about what is already happening and some educated thinking about what is likely to follow. One thing stands out: The volume of international business disputes worldwide jumped in 2020. There are no official statistics for international lawsuits in US courts, but the leading arbitration institutions worldwide do publish statistics, and those show that the number of disputes committed to international arbitration in 2020 was up by 10%, which is well above the pre-pandemic trendline. Given that the pandemic likely stressed middle-market international businesses at least as much as it did larger companies, and that middle-market businesses are less likely to have arbitration clauses in place, it’s a fair bet that litigation of cross-border disputes have jumped as well.

This is no surprise – times of disruption tend to lead to more disputes. And given that the world is not yet even out of the pandemic, it’s reasonable to expect that this elevated incidence of international disputes – and thus elevated dispute risk for businesses – will continue for some time. In addition to the surge in disputes overall, practitioners are also seeing some specific developments in the kinds of cases that are being filed, and business and political developments that indicate what sorts of issues might come to the fore in the near to medium term as well.

International Business Disputes Already Arising

The Covid-19 pandemic has been the single largest force majeure event that has ever struck the international business community – larger than the Great Depression, larger than World War II, and larger than the oil shock of the 1970s or the 2009 financial crisis. It has affected virtually every business sector, to some extent or another, and the entire geography of the world. Thus, unsurprisingly, it has engendered serious business disputes across sectors and worldwide as well. Several such trends are already upon us:

Manufacturing, supply chain, and distribution

The onset of the pandemic in early 2020, for many businesses, brought with it an effective and immediate demand stop – not merely a downturn, but a near-complete stop. Others, meanwhile, saw an immediate demand surge. Combined with the immediate effects of the pandemic and governmental countermeasures, this led in very short order to disarray in logistics and supply chains, and in distribution channels. Overall, that shock eased over the course of the pandemic to date, and the parts of the world that are haltingly exiting from the pandemic are now experiencing marked demand amplification. Thus, even now, supply chains and distribution channels are now facing continuing whiplash, while some parts of the world are still stuck with serious impediments to consumer and business demand.

Disputes that were forestalled during the first year of the pandemic are now crystallizing into lawsuits and arbitrations, as temporary accommodations “sunset” and some supply chain participants simply fail. Businesses are still managing their way through, and there is not yet a massive wave of supply and distribution disputes, but they are now readily visible in the publicly filed cases and in discussions between businesses and their counsel and are likely to continue. Some are being presented as force majeure disputes and many others are presenting as simple breaches of contract or in insolvency proceedings. And now the same kinds of issues are also appearing in construction disputes, as the US and other real estate markets have heated up and international construction supply chains are stressed by the demand surge. Close surveillance of supply and distribution relationships thus remains important at this stage.

Corporate transactions

Another area that has seen a marked uptick in cases explicitly arising out of the pandemic has been in the corporate transactional deal space. There have been quite a few instances in which parties to prospective deals have invoked the pandemic, in one way or another, to forestall deal closings or to bail out of deals. These disputes have arisen often on the basis of Material Adverse Change or Material Adverse Event clauses, giving rise to substantial litigation and arbitration regarding the scope and applicability of these provisions. Given how the transactional space has taken off since the first stages of the pandemic, it appears that this development might be tailing off, at least in the parts of the world that are exiting the pandemic. But these cases will continue until the world is all the way out of this, and it’s also going to leave some other issues in its wake: The market is now seeing earn-out disputes related to the pandemic, for instance, and moving forward there are probably going to be novel “earn-out” disputes based on non-revenue, post-closing consideration benchmarks. The pandemic will also likely give rise to some novel valuation and damages disputes going forward, as parties dispute how to factor pandemic-era numbers into those measurements.

Tech transactions and intellectual property

Business and consumer adjustments to pandemic life have resulted in increased adoption of technology solutions of all sorts, in all areas of business, from communications solutions to supply and distribution management to business processes and CRM. This increased adoption of new technology solutions has been especially marked among middle-market companies, many of whom had been relatively late adopters prior to the pandemic.

This entails increased exposure to tech transaction disputes, which are still somewhat novel for many businesses. It also entails increased value of technology assets – both for a company’s own IP assets and for those that business license or acquire – and of company data. This in turn raises the stakes of disputes that do arise, and even further, increases the temptation for potential wrongdoers, inside or outside of the organization, to attempt improperly to “monetize” their access to these assets. Accordingly, there has been a marked uptick of IP, trade secret, and non-compete disputes, increasingly including cross-border disputes. And of course, the pre-pandemic trend toward more cross-border cybersecurity exposure and data protection compliance risk has only been accelerated by the increased adoption of tech solutions resulting from the pandemic. Businesspeople and in-house legal leaders thus must now have a working knowledge of their organizations’ entire suite of tech solutions, tech transactions, and the disputes that often arise out of them.

International Business Disputes On the Horizon

The sorts of international business disputes discussed above are likely to continue, both in the parts of the world that are closer to an exit from the pandemic and certainly in those that are further behind. But even the path out of the pandemic will be strewn with business disputes, many of which will be novel.

Insolvencies

Many if not most governments have reacted to the pandemic with massive fiscal support for consumers and for businesses. Some jurisdictions have also implemented legal supports, such as debt enforcement holidays and state declarations of force majeure in favor of their domestic businesses. As a result, the pandemic to date has featured remarkably fewer insolvencies than what the business community had feared at the outset. Chapter 15 filings in the US – that is, US insolvencies in aid of primary insolvency proceedings overseas – jumped by 68% in 2020, but insolvency filings worldwide remained steady in many jurisdictions and actually dropped substantially in many others. However, those fiscal and legal supports are now largely reaching their sunsets. Accordingly, a recent World Bank report has forecasted a substantial rise in insolvency proceedings worldwide in late 2021 and 2022, as “zombie” organizations lose fiscal and legal supports and fail to survive. Legal and business leaders thus should monitor the financial health of key counterparties, as well as supply and distribution behavior.

China

China was of course central to the supply chain story over the last year and a half. There was widespread disruption in business relationships involving China, but contested disputes ended up being fairly rare, in part because China managed to work their way through the pandemic speedily – and probably also because disputes with Chinese counterparties, often sited in China and/or requiring enforcement in China, can be a particularly unappealing prospect, even as business disputes go.

But those relationships remain under strain, especially when the Chinese supplier has its own upstream suppliers in jurisdictions that are still suffering from the pandemic, so again the risk isn’t gone.  And going forward, the movement toward supply chain diversification – “China plus one” – is continuing and now appears likely to become a secular trend, and is necessarily going to entail some increase in disputes involving Chinese vendors, as relationships are scaled back or ended altogether. Organizations pursuing supply diversification, particularly with regard to Chinese counterparties, should be planning well ahead for the management of those transitions and endeavoring to manage away from legal disputes within China.

Tax Structuring Changes in Light of the Prospective Global Minimum Tax

This final sort of upcoming cross-border disputes remains somewhat speculative, but it is likely to affect some meaningful fraction of cross-border businesses with operations overseas. This summer, the OECD and dozens of other countries agreed in principle to a global minimum corporate tax regime, in part as a “pay-for” for the huge fiscal outlays of the pandemic.

Many of the details of the GMT remain under development, and it is expected that most manufacturing and other “brick and mortar” operations are likely to be excluded from the regime. But it does appear likely that the GMT will cause substantial restructuring of multinational corporate presences, as the tax benefits currently enjoyed in some jurisdictions evaporate and inter-jurisdictional competition shifts to non-tax measures, such as tariffs and duties. Those restructurings will entail follow-on disputes, as local relationships are ended. Organizations facing potential exposure to the new GMT should begin planning now for the corporate restructurings that will necessarily follow because managing through the transition with minimal dispute risk will be a complicated and laborious task.

The Practice of International Business Disputes and Dispute Risk Management Moving Forward

Even prior to the pandemic, the practice of international arbitration had been moving toward more usage of remote videoconferencing, at least for procedural stages of arbitrations. With the pandemic, remote proceedings – which can result in substantial cost savings – are now being adopted for merits in arbitration, with witnesses appearing and testifying remotely. And even courts in many jurisdictions, including the US, are now regularly conducting procedural conferences remotely, if not yet trials. And the increased overall incidence of international business disputes, as a result of the pandemic, may be expected to further increase the adoption of international arbitration for the resolution of international business disputes, which is already the preferred practice of repeat users of international dispute resolution services and is even more valuable to organizations that encounter such disputes more sporadically.

The business world will exit from the pandemic era, haltingly and over time. But the sorts of international business disputes that have resulted from the event are likely to persist even after it has ended, and for some time to come. Dispute risk will follow. But that risk can be managed effectively, with diligent surveillance and monitoring of cross-border relationships, careful management of incipient disputes, and the use of experienced counsel and cost-saving measures such as arbitration and remote technology. These dispute risk management practices can help to ensure that organizations will enter the post-pandemic landscape with the least possible damage and the best possible competitive posture for the future.

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Archives, GT Podcasts

GT Podcast – Community Connection Series – Episode 5 – Tulare County, The Center of Business for California

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In this episode of our Community Connection series, our host Eric Kleinsorge speaks with President and CEO of Tulare County, Nathan Ahle, to find out why central California is such a business hot spot!

Check out more of our GT Podcast – Community Connection Series here!

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Archives, Global Trade Daily, International Trade

Asia Takes the Lead For Recovery and Regional Growth For Global Trade

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As global trade rebounds, the economies from East Asian and Pacific countries are increasing at a faster pace than their Western counterparts. China is fully expected to be the leader of this rise.

While part of this is because China is the largest economy in the region, another perhaps lesser-known reason is the fact that China (as well as other East Asian nations such as Vietnam) has not suffered from lockdowns and economic restrictions due to Covid to the same degree that Western countries have. 

In this article, we’ll dive into the increase in trade during the first half of 2021 from Asia in comparison to their Western counterparts. We will also talk about whether China has a stronger grip on world trade than ever before due to the pandemic…or if the evidence alternatively suggests that China’s position as a trade leader may be nearing its peak instead.

A Return to Normal Trade Levels in Asia

Businesses based out of East Asian countries have good reason to be optimistic as global trade starts to return to pre-pandemic levels. It’s clear that Asian economies have not been hit to the same level as countries in the rest of the world have. 

According to research conducted by the East Asia Forum, the digital economy is projected to add over $1 trillion to the Asian economy over the next decade, the most of any region in the world. And it’s not just projections about the future that are favorable to Asia. The results already speak for themselves. 

For instance, total export volumes from East Asian countries for the first quarter of 2021 were actually up 15.4% more than what they were in the first quarter of 2019. Meanwhile, exports have collapsed amongst nations in other regions of the world. Europe has reported a 2.9% decline in exports when compared to two years ago, with an even sharper decline of 11.2% and 19.9% for Africa and the Middle East respectively. 

There are two significant reasons why East Asian economies have rebounded so quickly in comparison to the rest of the world. The first is because they have largely followed China’s lead. The World Bank has forecasted that China’s economy will expand by 8.1% by the end of this year, which has helped carry an increase of 4.4% for other closely-tied countries in the East Asian and Pacific region as a whole. 

Then there’s the fact that Asian nations, including China, did not have to endure lockdowns and economic restrictions to the same level that the United States or Europe did. In the summer of 2020, for instance, it was widely reported how a massive pool party was held in none other than Wuhan while Western countries remained under strict lockdowns that were tightly enforced. 

This year, Western countries like the United States continue to feel the negative effects of the imposed economic restrictions in the form of a lower participation rate in the labor force, severe non-labor shortages (such as in the form of lumber and semiconductors), higher inflation, and costlier prices for basic goods.

This naturally begs the question:

Has The West Truly Fallen Behind?

In Western countries like the United States, Canada, and the United Kingdom, small businesses are perhaps the worst affected of all. Small businesses are responsible for a majority of private-sector employment and have also been the most severely hit. 

According to the Business Resiliency During Covid-19 study conducted by Freshbooks, 77% of surveyed business owners stated that they were either not confident or only somewhat confident in the state of their businesses. Among the reasons cited included a loss of income, reduced cash flow, and not having enough staff or resources to keep operations up and running.   

Of course, only time will tell if Western economies have truly fallen behind their Western counterparts. The United States has long been a leader in the global economy and even now remains the world’s largest economy when measured by nominal GDP…though China is now in a close second.

It’s also concerning that many businesses do not appear to have the appropriate financial security measures in place in the event of further financial or personal disaster. For example, in the same Business Resiliency survey, nearly a quarter of surveyed business owners indicated that they did not have any kind of an insurance policy in place.

Business owners who have taken out large business loans or a line of credit, for instance, would benefit strongly from a comprehensive insurance plan that covers most or all of the financial damages in the event of defaulting on the debt from a lack of incoming cash flow, or worse, in their death that would essentially transfer the liabilities to their family members. 

When you combine the fact that most business owners do not have an insurance policy as a cushion in place with the realities that many of those same owners have burnt through their emergency funds during the lockdown and that Covid relief packages from the Federal government are set to expire (or have already), it’s easy to see how the situation is a bit dire.

In the short term at least, it’s clear that the economies of East Asian countries, spearheaded by China, have emerged out of the pandemic more favorably than the countries of the West. 

But is China’s rise set to last? And if not, what does this mean for the rest of East Asia?

Has China’s Grip Over World Trade Peaked?

China has been the largest exporter of goods worldwide since 2009, and it became the world’s largest trading nation in 2013. Both of these positions had previously been held by the United States.

In other words, China as a trading leader on the world stage is nothing new, and this is also why the faster recovery of Asian economies versus Western countries should not be surprising. More than half of all e-commerce transactions in the world are now coming out of China, which likewise has borne well for the Asian market.

But there are many who believe that China is nearing the peak of its current economic capacity, and with it, perhaps the rest of Asia as well. A report last spring by UNCTAD (the United Nations Conference on Trade and Development) argued that while China is almost certain to remain as the leading exporter in the world for the next few years, there are several inherent vulnerabilities that threaten to cut its rise a bit short.

Among the reasons cited for this include simmering geopolitical tensions that hinder social development, rising labor costs that could lead to production processes either being automated or transferred elsewhere, increased tariffs on Chinese exports from the U.S. and EU, and major companies pulling the production of their products out of China completely. 

As an example of the last mentioned reason, electronics conglomerate Samsung announced last year that they would cease manufacturing computers and phones in China in favor of other Asian countries like Vietnam and India. This decision was made in the face of both rising costs to manufacture in China and increasing international tensions. 

Each of the aforementioned factors means that China could become more dependent on domestic rather than international demand, and therefore stands to chip away at China’s competitiveness on the global scale if those factors don’t change. 

And the spread of the Delta variant has also spurred new lockdowns in China and other Asian countries, which means it’s almost certain that we will see new disruption to Asian supply chains, and particularly in regards to consumer goods and high tech equipment. 

In other words, even though East Asia may have taken the lead in economic recovery and trade growth for now, it’s still far from certain that this will last over the long term. 

Conclusion

Has the pandemic truly created a major economic realignment to global trade and the world order, or are the shifts we are seeing now temporary?

The evidence is clear that the economies of East Asian companies have recovered from the pandemic faster than the United States, Canada, or Europe. But those economies have also largely followed the lead set by China’s current dominance as a world trade leader, and vulnerabilities in China’s economy mean it’s easily possible the country’s grip over world trade could start to slip.

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Archives, Global Trade Daily, Software, Special Reports

Smart Cities of the Future Rely on Innovation, Critical Discussions

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In the Chinese city of Hangzhou, an AI-based smart technology called “City Brain” has helped reduce traffic jams by 15%. During the pandemic, New York City analyzed data related to spending pattern changes in specific neighborhoods to better allocate aid disbursement and investment priorities. And San Diego was lauded for approaching city-building with a “citizen-centric focus”, thanks in part to its use of mobile apps, and expansion of open data, along with its Get It Done citizen reporting tool.


 

Smart cities are sprouting up around the globe at an increasing rate, and they are quickly becoming model frameworks for future-ready urban centers seeking to level up how they collect and parse citizen data. What they all have in common is how they invest resources and time into developing city-centric solutions to address the wide swath of city challenges: waste and water management, public safety, transportation, air quality monitoring, traffic and parking, public works, municipal Wi-Fi, and more.

What the future of cities relies on, especially as they all recover from a devastating pandemic, is the innovation brimming across hundreds of projects built to answer a critical question: how can we leverage the data from smart city technologies to digitally empower cities to adapt and thrive?

When cities smarten up, everyone wins

For cities considering the pros and cons of adopting new technologies, it’s hard to argue with the data: By 2025, cities that deploy smart-mobility applications have the potential to cut commuting times by 20% on average, with some people enjoying even larger reductions, a McKinsey report found.

Take the sprinkler your neighbors automatically ran this weekend after it rained. If cities deployed sensors and analytics to water consumption patterns, which pairs advanced metering with digital feedback messages, it can urge people toward conservation and reduce consumption by 25% in cities where residential water usage is high. While currently, much of this IoT technology and data is owned by the private sector, it’s critical to bridge this gap in order to help the public better understand their behaviors and impact through data. Additionally, access to this data will enable cities to make better decisions about public resources and amenities.

The more data a city can collect about its citizens’ habits, the more sense they can make of which resources can be allocated where. And it can save lives, too. In Nevada cities, Waycare’s predictive AI delivers an 18% reduction in primary crashes and a 43% reduction in the percentage of speeding drivers along key corridors.

Some cities haven’t caught up to the shining examples of layering data collection and real-time analysis in urban centers. More often than not, they are encumbered by bureaucratic and outdated approaches to data collection.

There’s a disconnect between the municipalities and corporations that may have IoT data and the stakeholders, including those same cities and private developers who could benefit from it, too. Same-old strategies on data gathering, such as physical surveys and endless meetings to pick at each process, should be phased out, and allow for an intermediary to help finesse the conversation between those three pillars of city development.

Also, cities have to address the unease some people may feel about surveillance technology, for example. In China, where that tech has long been the norm, they’re even anxious about how their data will be used by their government: According to a recent survey by tech firm Tencent and Chinese state broadcaster CCTV, nearly 80% of respondents said they worried about the impact of artificial intelligence on their privacy.

Pandemic’s curveball could end up being a home run

If there’s any hand wringing over the state of cities due to the havoc wrought by the pandemic, urban theorist Richard Florida offers some comforting words: “Cities have been the epicenters of infectious disease since the time of Gilgamesh, and they have always bounced back—often stronger than before.”

Some insiders believe that as much as the pandemic crippled supply chains and shut down business sectors across communities, it brought a few silver linings. Data collection strategies accelerated immensely, whether from health care departments or government agencies. The continuing trend of leveraging Internet of Things devices, which connect to each other quickly and remotely, also gave rise to intriguing pairings.

At the state and infrastructure levels, AI and machine learning will likely be matched with IoT for even closer social monitoring as pandemic warning and control systems are established, notes a report from research firm MSCI.

As broadband use skyrocketed during a year of work-from-home policies, rollouts of 5G networks continued at a brisk space, and even picked up in areas that needed high-quality connectivity as soon as possible. Building that underlying network is fundamental to enable seamless adoption of technologies at the heart of smart cities of the future.

Going forward, city planners and developers will work with datasets from businesses who layer various granular data on heat maps via an analytics platform. Understanding the correlation between income levels and access to certain retail, like grocery stores, or access to transit and parks where a neighborhood’s density is rapidly increasing, may be opportunities for cities to identify community needs and work with developers on new projects.

“Six key groups of people should be at the table to discuss where smart cities go from here,” says Chelsea Collier, founder of Digi.City, a consultant specializing in smart city technology.

Those groups should be:

-Government bodies, from local to federal

-Educational institutions, from kindergarten to post-secondary

-Startup entrepreneurs to bring subject matter expertise to the discussion

-Artists and creative who can fuel projects with outside-the-box solutions

-Social sectors such as nonprofits and advocacy groups

-and communities and their citizens

“When everyone listens to each other’s perspective, it’s more useful than just working towards someone’s agenda,” adds Collier.

The smarter the city, the more it’s open to how various sectors, private and public, can drive innovation and growth forward. The future of cities will be written by those players who look beyond their own personal missions and instead cast a wide net to strengthen neighborhoods adapting to a strange post-pandemic era fraught with challenges.

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Sara Maffey is the head of industry relations at Local Logic, a location intelligence platform that digitizes the build world for consumers, investors, developers and governments. Local Logic delivers an unrivaled clarity and actionable insights capable of creating more sustainable and equitable cities.