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KÖRBER: ONLY 1 IN 10 BUSINESSES CAN STAY AHEAD OF THEIR SUPPLY CHAIN CHALLENGES

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KÖRBER: ONLY 1 IN 10 BUSINESSES CAN STAY AHEAD OF THEIR SUPPLY CHAIN CHALLENGES

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Körber, the Hamburg, Germany, global supply chain technology leader from software to materials handling automation, on Sept. 1 announced the results of its “2020 State of Supply Chain Complexity” survey.

Among the top findings: Manufacturing and fulfillment complexities only continue to grow–and 91 percent of supply-chain professionals cannot stay ahead of these challenges.

More products, distribution channels, and customer expectations make supply chains more complex, according to Körber, which polled 1,200 global supply chain professionals to learn how they cope with supply chain complexity, how they feel their solutions stack up against the competition and how they’re managing the transition from manual to automated processes.

Technology integration and customer demand ranked among the top challenges today’s supply chain faces.

The issues respondents said most often contribute to their company’s supply chain complexity include:

-48% ‒ integrating and ensuring software, materials handling equipment (MHE), and technologies work together throughout the entire logistics ecosystem

-46% ‒ integrating functions across the supply chain – from manufacturing to end-customer deliveries

-46% ‒ meeting consumer expectations for speed, cost and adaptability

Nearly three-quarters of survey respondents said senior executives view the supply chain as mission-critical–an important step in gaining support for upgrading warehouses and last-mile technology.

“Now isn’t the time for supply chains to break under pressure–yet, 48 percent of companies have experienced growth in complexity this past year,” said Rene Hermes, chief marketing officer for Körber Supply Chain. “It’s good to hear so many executives see this business area as mission-critical. Now we must transform that understanding into action.”

Access the 2020 State of Supply Chain Complexity Survey here: https://www.koerber-supplychain.com/complexitysurvey.

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Archives, Global Logistics, Global Site Selection, Global Trade Daily, International Trade, Stories

Back to Growth: U.S. Business Leaders Have Rosy Outlook for Economy

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The COVID-19 pandemic has affected every aspect of our work and life.

Business executives have had to quickly reconfigure operations, and millions have had to unexpectedly work from home or cease work entirely. Videoconferencing has become the killer app, and Zoombombing became a new privacy concern.

Despite the widespread health and business challenges brought on by the coronavirus, two-thirds of U.S. business leaders are optimistic the domestic economy will recover within a year, according to a survey TMF Group recently released.

It’s an encouraging sign that business executives in the U.S. are expressing this type of optimism, particularly based on the unprecedented challenges experienced throughout the economy over the last few months. This group was obviously very confident before the onset of the pandemic, and they now seem eager to not only restart their businesses but help reignite the economy as well.

We conducted the survey in the middle of April to gain insight into how companies plan to navigate these uncertain times. More than 40 percent of the 300 decision-makers who took part in the poll work in companies with more than 5,000 employees. Most of the respondents (85%) said their companies do business outside the United States.

Nearly a quarter of respondents (23%) expect a V-shaped economic recovery, meaning a dramatic bounce to pre-virus activity by the end of 2020 following the sharp collapse. Only a small minority (12%) anticipate the economic impact of the pandemic to the last two years or more.

Looking beyond the U.S., business executives were a little less optimistic but still positive: 56% of respondents said the global economy would recover within a year.

It may be easy for critics to judge the survey takers as stereotypical American optimists, but I believe their confidence is grounded on some key facts. The economic shock has been largely demand-driven, as travel restrictions and government stay-at-home orders shut down wide swaths of the U.S. and global economies. Many of the world’s governments acted quickly to offset the economic damage. In the U.S., the federal government and central bank organized a massive stimulus package and pumped trillions of dollars into financial markets. More than 60% of respondents said the financial support to workers and businesses in the U.S. has had a very positive or somewhat positive effect on their companies.

Now, as states allow more businesses to reopen, consumers are eagerly venturing out despite the ongoing health risks. As consumer and business demand rebound, companies will begin hiring again.

Indeed, business decision-makers are confident their businesses will rebound quickly. More than half say their companies will return to normal operations within six months.

In times of crisis, there’s a premium on bold leadership and decisive action. Resilient leaders continue to mount appropriate responses to the global pandemic while charting paths to recovery.

The survey underscored that the pandemic has forced business to rapidly evolve. Many are moving ahead to reassess, reimagine or reinvent their businesses. Thirty-six percent say they plan to accelerate plans for international expansion, and 32% plan to seize domestic growth opportunities.

It’s a positive sign that the strategic imperative to go global remains strong because COVID-19 has dealt a serious blow to the international system. The World Trade Organization predicted in April that world merchandise trade would plummet between 13% and 32% this year.

But the factors that have driven globalization for several centuries have not disappeared. People have been driven to seek profit internationally since the earliest days of the Silk Road, and this instinct will continue. Furthermore, the spirit of international cooperation has been strong in the response to the pandemic. Companies, government agencies and nongovernmental organizations are working across borders to solve problems at scale, such as developing a vaccine for the coronavirus.

A big motive for international expansion is the diversification of supply chains, cited by 35% of respondents. The coronavirus has interrupted the flow of goods across borders, from raw materials to finished products. The disruption has vividly illustrated that today’s highly interlinked, international supply chains have more potential points of failure and less margin for error for absorbing delays and disruptions.

Reducing dependence on one country or region is a priority. Diversifying your supplier base may increase costs in the short-term but will make your network more flexible and agile and potentially reduce the economic shock of future disruptions.

The outbreak of COVID-19 forced business to reassess every strategic objective and business plan. The health crisis has exposed vulnerabilities and created unforeseen challenges.

As businesses around the world consider how they can return from the economic crisis unleashed by COVID-19, the survey results provide some food for thought. Expanding internationally or domestically in uncertain times, for instance, may seem counterintuitive but could also fuel faster growth. Severe adversity provides real perspective. It is possible to find strength and confidence in the face of real hardship.

__________________________________________________________________

TMG Group is an international professional services firm that provides administrative support services across multiple jurisdictions.

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Archives, Global Trade Daily, State Spotlight, Top Cities

The Top-Paying Low-Density Cities in the United States

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The COVID-19 pandemic has precipitated a mass exodus of people from dense, expensive cities to less crowded, affordable areas. A recent survey conducted by The Harris Poll found that 39 percent of urban Americans are considering moving to a less crowded location as a result of the pandemic. This shift in attitude follows a long period of urbanization that began during the Industrial Revolution and continued through the beginning of 2020.

Despite most Americans living in high-density areas, the overall population density in the U.S. is relatively low, at under 100 people per square mile. In fact, only about 5 percent of U.S. counties have a population density that exceeds 1,000 people per square mile. Most of these high-density counties are located in coastal states such as Virginia, New Jersey, New York, and California. Low-density areas are scattered throughout the country, with the lowest population densities observed in the North Central and Mountain regions.

While rural living might be attractive for some, many Americans are simply looking for less crowded alternatives to some of the most densely populated areas like New York City (27,954 per square mile), San Francisco (18,828 per square mile), and Boston (14,396 per square mile). For reference, the median population density of America’s 324 largest cities with over 100,000 residents is just 3,419 per square mile, about 80 percent less crowded than New York City.

For families seeking a less crowded place for health and safety reasons, but also wanting to maintain a comparable salary, there are several locations to consider, especially in the South and the Midwest. To find which low-density cities pay the best, researchers at Roofstock, a real estate investment platform, analyzed data from the U.S. Census Bureau for cities with over 100,000 residents.

The researchers first identified cities with population densities that fell below the median of 3,419 people per square mile. Then the researchers ranked the remaining cities by their respective median annual earnings for full-time workers. In the event of a tie, the city with the higher median earnings for all workers was ranked higher. To improve relevance, cities were further grouped into the following cohorts based on population size: small (100,000–149,999), midsize (150,000-349,999), and large (350,000 or more).

Here are the top-paying large U.S. cities with low population densities.

For more information, a detailed methodology, and complete results, you can find the original report on Roofstock’s website: https://learn.roofstock.com/blog/best-paying-low-density-cities

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AI and Cryptocurrency – How They Can Work Together Effectively

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There will soon come a time when artificial intelligence will be running on top of cryptocurrency systems like Blockchains with its capability to increase machine learning capacity and create new financial products. It will take the technology leaps and bounds further in making it one of the mainstream emerging technologies.

According to the research being conducted about the future of AI, the market is estimated to grow to a whopping $190 billion worth of industry by 2025. Considering how much the market is expected to grow, Blockchain and AI convergence are inevitable.

Both the emerging technologies have been around for a decade now and deal with data and value. Where Blockchain enables a secure storage and sharing path of data, AI analyzes and generates significant insights from data to create value.

Having such similarities, there is no doubt that both the technological realms can be merged to create a more advanced and efficient machine learning blockchain system to benefit the masses. Let’s have a look at how Blockchain and AI are a perfect match.

How Blockchain and AI Is the Perfect Match

The following are some key pointers and examples that evidently showcase how combining Blockchain and AI is a consequent step forward in the right direction for increased efficiency and profitability.

Blockchain connecting with the AI basics

Firstly, it is essential to know that most of the hype surrounding startups integrating Blockchain with artificial intelligence is exactly just that, hype. Such companies are far too young and inexperienced in the industry to be talking about a big game. With few clients and less commercialization, it is understandably not possible to carry out such advance convergence.

The majority of such companies have raised money through the initial coin offering or the ICO. This means that the solutions they offer are as thoroughly evaluated as they would have been had the company raised a significant amount of venture capital money.

However, it is quite so possible that these companies may become successful in the future, but until then, they just create useless hype about the advancements in this technology.

Many people limit the usage of Blockchain technology and associate it with just cryptocurrency transactions. As a digital ledger that can record economic transactions, Blockchain can be expanded to virtually record almost anything of value.

There can be both public and private blockchains. Where the public ones are open to the public, the private or ‘Permissioned’ blockchains are restricted for usage by ‘invitation-only’ and mainly used in the corporate environment. This also makes them faster than public forums as the users are mainly trusted and verified personnel making the transactions verifiable faster.

One of Blockchain’s more important features is that it allows even the unrelated parties to carry out a transaction and share data through a mutual ledger. As cryptography validates the transactions, it makes it more efficient for participants not to rely on third-party evaluators to carry out a transaction. Deploying cryptography ensures that data transactions are secure, incorruptible, and irreversible once recorded.

Artificial Intelligence is not a term making rounds for a decade now. It very much comprises of every new technology that has near-human intelligence to carry out a task. AI models are used to assess, understand, classify, and predict using relevant data sets. Machine learning then cleanses the data as it gathers insights creating better useful data sets for use.

As it is evident, data is the central component to AI and Blockchain that allows a secure and collaborative effort towards data sharing. Both Blockchain and AI ensure the trustworthiness of data and extract valuable insights from it.

How Microsoft is Improving Machine Learning for Blockchain

According to the research conducted at Microsoft, the company is working on finding out ways to design efficient collaborative machine learning models hosted on public blockchains. The incentive behind this effort is to make AI decentralized and a more collaborative forum using Blockchain.

While there is no doubt that advances are being made in machine learning, the benefits that are being created as the results of these efforts are not as openly available. The masses have limited resources and cannot always access cutting-edge technology such as machine learning systems.

Such systems are highly centralized and used as the proprietary datasets. Not only are they costly to recreate, but even the best models can become outdated if not consistently refreshed with new data.

The idea is to allow advanced AI models and bigger datasets to be easily accessible, sharable, updated and retrained to increase the adoption, acceptance, and overall effectiveness of AI. People will soon be able to adopt this easy and cost-effective method to run and access advanced machine learning models through regular devices such as laptops and smartphone browsers and collectively participate in improving data sets and models.

Therefore, Microsoft is keen on developing what they call a Decentralized & Collaborative AI on the Blockchain framework. It will significantly increase AI community collaborations to retrain such models with valuable datasets on public blockchains. The machine learning models would be made free for public use as they would know the code they are interacting with.

Some applications that Microsoft is looking forward to integrating are virtual assistants and recommender systems like used by Netflix to recommend shows to its audience. Considering such models, Blockchain makes sense because of the increased security and how trustworthy it is for the participants.

The well-established nature of the blockchain system and the associate smart contracts ensure that the models will always perform up to the specific requirement. As the models are consistently updated on the Blockchain used unhinged by the user’s local device, every user gets to see the one genuine version of the model.

Hence, even though Microsoft’s framework isn’t favorable for operating at large scale for now, but sooner or later, it will be the norm. There is little to no doubt that organizations like Microsoft are doing advanced research and practical work to converge AI and cryptosystems like Blockchain. There is no doubt that cryptocurrency is the future of money. So it is in the best interests of the organization to start working on merging Blockchain and AI for improved benefits.

How can an organization merge Blockchain and AI?

Just as Microsoft, more advancement is made for combining Blockchain and AI for fulfilling specific usage requirements. Such cases will depend on the company’s specific needs, but the core preference would be related to data. This will allow companies to improve their digital and data capabilities by developing a combination of AI and Blockchain solution to fit their operations.

The very first step needs to be taken by the executives to identify the specific business needs and whether creating an AI and Blockchain system would address that need. This can become easier if the organization has already worked on AI and taken initiatives in other operations because now you can integrate Blockchain to improve them.

Similarly, if the company owns valuable data, they can monetize by converging a blockchain environment and sharing the data with AI model creators. For instance, a progressive car company like Tesla probably has a good collection of valuable data collected by its cars. They can put it on a blockchain system as their self-driving cars will continue to collect huge amounts of data that they can use to improve the neural networks powering self-driving operations and functions.

With a trusted name as Tesla, the public would not be too complacent about maintaining their privacy. Blockchain would allow the company to make the driver information anonymous to ensure privacy while collecting data to improve neural nets in use.

The company can even share anonymous data with car insurance companies. It would allow the insurers to price their insurance packages for self-driving cars more efficiently and with an educated mind, given how the risk profile of a self-driving car is different from that of a regular car.

The whole packaged win-win situation here is that where the company would improve its cars, the public would get advanced transportation, complete privacy, and the right insurance for the right price without getting exploited.

Using Digital Investment Assets for Trading through Blockchain

You must be already aware of how Blockchain is already a ready-made, and good-to-go digital ledger used to store and trade financial instruments such as cryptocurrencies and cryptographic tokens. However, Blockchain is still a nascent technology, been only around for a few years. Where cryptocurrency has definitely taken the world by storm, cryptographic tokens are comparatively more nascent.

Hence, it is evident that there is no probable activity and enough data yet to apply AI to financial products like a cryptocurrency that are traded through Blockchain. However, the upgrading technology and data sets show a promising future for AI taking insights from these data sets to create financial products and trade them autonomously.

How can an organization merge Blockchain and AI?

The convergence of artificial intelligence and Blockchain would be a huge step forward, and the process will cover four distinct yet inter-linked stages.

Stage I: Proof of concepts

Stage II: Asset tokenization

Stage III: Digital Investment Assets DIA

Stage IV: AI agents trading DIA

The four stages will represent how Blockchain is proof of concepts initially. On the second stage, assets are tokenized and traded. Tokens can represent underlying security methods, physical assets, cash flows, and utilities. This reduces the alleged transaction cost and decreases the time taken for settlement to improve audit accountability.

AI and Blockchain Applications

There is no denying that a decade back if someone would have presented us with an idea of magical internet money called crypto in the future, we would have laughed and made fun of the person for coming up with Superman and Kryptonite theories. Fast forward to ten years down the line, and cryptocurrency not only exists, but there are real-world integrations of its blockchain system with AI.

Smart computing power

Think of a machine learning code that would upgrade and retrain when given the right data. That is exactly what AI affords the users to tackle tasks more efficiently and intelligently.

Diverse data sets

The combination of Blockchain and AI can create smarter and decentralized networks to host various data sets. Creating a blockchain API would enable the intercommunication of AI agents resulting in diverse codes and algorithms to be built upon diver data sets, ensuring development.

Data protection

It doesn’t matter if data is medical or financial. Certain data types are too sensitive to be handled by a single company and their coding system. Storing such data on a blockchain and accessed through AI would give its users a huge advantage of personalized recommendations, suggestions, and notifications while securely storing data.

Data monetization

Data monetization would make both AI and advance Blockchain easily accessible to smaller companies. As of now, developing and growing AI is costly for organizations, especially those who do not own data sets. A decentralized market would create space such companies for which it is otherwise too expensive.

Trusting AI for decision making

AI is growing smarter with time. Through the use of blockchain systems like crypto, transactions will become smarter, making the process easier to audit.

Conclusion

All in all, the collaborative effort of blockchain technology and AI is still majorly an undiscovered territory. One of the main reasons why we still have yet to see a commercialized joint adoption of the Blockchain system and artificial intelligence is that the upscale implementation of their convergence is quite challenging.

Many businesses, although having ventured on with AI, are skeptical when it comes to conjoining Blockchain. They are in their early stages for testing the waters for AI and Blockchain coming together in isolation. As they continue to figure it out for appropriate public distribution, the convergence of the two technologies has had its fair share of scholarly attention as well. Yet still, projects solely developed to promote the groundbreaking match are still primarily not catered to.

There is no doubt that the potential of this combination is clearly there and developing, but how it will play out for future public use can be anybody’s call.

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Claudia Jeffrey is currently working as a Junior Finance advisor at Crowd Writer, an excellent platform to get assignment help UK. She is a self-proclaimed crypto-influencer. She has gained significant expertise and knowledge in this regard over the years and likes to share it with an interested audience.

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Archives, Commentary, Executive Education, Global Trade Daily

How Strong Is Your C-Suite Bullpen? Preparing The Next Generation Of Leaders.

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About $350 billion a year is spent on leadership development, but many companies aren’t getting much bang out of their buck. Studies indicate that lots of senior executives don’t think the next wave is prepared well enough to assume larger leadership roles.

With many companies in a transitional phase, either due to people retiring or radical changes prompted by the COVID-19 pandemic, having ill-equipped leaders taking over can compound problems. Some businesses will suffer if they don’t make major changes in how they develop leaders, says Jennifer Mackin (www.jennifermackin.com), ForbesBook author of Leaders Deserve Better: A Leadership Development Revolution and a leader of two consulting firms.

“With baby-boomer leaders nearing retirement, there are fewer people in the workforce that are capable of doing the work required,” Mackin says. “Generation X has smaller numbers of people and hasn’t been invested in leadership development like boomers have.

“Many CEOs complain that their people aren’t ready to lead into the future. The source of the problem is leaders don’t know what to do differently to strengthen their people. A leader’s primary role is to coach and to create an environment that perpetually develops new leaders. There are ways they can refocus on that.”

One of those ways, Mackin says, is for executives to align business strategies with their people strategies. She offers these tips on how senior management can link the two and develop leaders in the process:

See the need to prioritize people strategies. Strategic plans, Mackin says, must address more than the financial component. “Too often CEOs and senior leaders put their people at the bottom of their strategic plans and fail to connect their business strategies with their people strategies,” Mackin says. “People are the most integral component of your strategies. If you decide, for example, that your organization will enter new markets, you have to connect that objective to your people. Maybe you will need 500 new people or 10 new leaders with certain skills to achieve your objective. How do you prepare for that?”

Know the key components of a people strategy. “Your people must fully understand the business plan for the next one to three years,” Mackin says. “Broad strategies for people have been identified to execute the business plan. There’s a plan for succession for all key roles. Gaps in knowledge, skills and abilities have been identified, and an overall development plan for the organization’s leaders addresses those gaps. Once you have the people strategy, companies can acquire the right talent based on well-defined roles, measure the outcomes, and adjust the plan as needed.”

Continue to scrutinize leadership readiness. These are questions CEOs must ask regarding where both their business and their leaders are today – and how to get them where they need to be tomorrow. “This must start with a plan that compares current state to future state,” Mackin says. “What are the gaps and how are you going to fill those with business and people strategies?”

Build a clear line of sight. Once the alignment is determined, Mackin says it must remain in sight for all leaders and their direct reports. “The leader knows where the organization is going, and direct reports understand their role in getting there,” Mackin says. “A clear line of sight means there is a connection between leaders’ objectives, the business strategy, and individual contributors’ work. It is also important for direct reports’ engagement and feeling of purpose that they understand exactly how their work and objectives add value to the business.”

“All senior leaders should be involved in the business strategy and people plans,” Mackin says. “It is critical that executives prioritize the development of leaders who can drive strategic change.”

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Jennifer Mackin (www.jennifermackin.com) is a ForbesBook author of Leaders Deserve Better: A Leadership Development Revolution, and a leader of two consulting firms – CEO of Oliver Group, Inc. and president and partner of Leadership Pipeline Institute US. As an author and speaker with over 25 years of consulting experience, she is a recognized leadership development influencer, having worked with CEOs, human resources managers, leadership development leaders, entrepreneurs, and other senior leaders in healthcare, hospitality, distribution, government, manufacturing, higher education, banking, financial services, and social services. She earned her BS in marketing from Indiana University and her MBA from Owen School of Management at Vanderbilt University.

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5 Reasons you Need a Crisis to Drive Transformation

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There’s a saying that a crisis is a terrible thing to waste. What it actually represents is an opportunity–and the space–for change that normally isn’t available. Here are some of the key hurdles that usually stand in the way of change:

1. Change is uncomfortable

More to the point, the status quo is comfortable. We all take comfort in our routines, whether it’s a particular procedure for closing the books, taking comfort in a familiar organizational structure and close colleagues, or simply repeating the same stretches and workout routine every morning. Breaking out of that comfort zone is both difficult and not always seen as providing worthwhile rewards.

2. Incentives aren’t aligned

Every department and partner is driven by different objectives or KPIs. Revenue teams want to hire ahead of predicted growth, while finance wants to see proof, first. Companies with complementary capabilities to yours want to explore building the adjacent capabilities you deliver, rather than investing in partnerships. Suppliers and buyers are more invested in building long-term relationships and goodwill than in making sure every payment and collection is right on time. Without aligned incentives, finding a way to work together toward new and positive outcomes becomes arduous.

3. Stay in your lane

Teams tend to stay in their own swim lanes to avoid change. The tax department will keep to themselves, as will the invoice processing team. They have little need to talk to each other. If they need to align processes or computer systems, for example, they work methodically through that alignment, raising every possible objection and potential hurdle. The goal is to ensure the solution is correct, of course. But wading through the red tape of heavy opposition also serves to minimize change.

4. Competing incremental initiatives

In prosperous times, there are many attractive opportunities for an organization to invest in growth. From management’s point of view, focus is difficult to maintain and it becomes too easy to spread capital and management attention too broadly. Because there are many “easy wins,” more incremental, yet proven, ideas tend to fill up the investment budget.

5. If it ain’t broke don’t fix it

Persuading others to make changes is harder when the economic sea is calm and fortunate winds fill your sails. By definition, a crisis breaks things, and the fixes required can provide the impetus for changes that would be seen as too radical under normal circumstances.

Since you read this far, I’ve got two bonus reasons that you need a crisis to drive change:

6. A lack of momentum and energy

Those of you who remember chemistry class might recall that a chemical reaction requires energy to start, even if it releases energy overall in the course of the reaction (if no energy was needed, the reaction would have happened already).

A very similar logic exists for making major changes in a business. Although the outcome on the other side of the change might be a better situation compared to the status quo, it’s hard to get past the energy required to make a change.

7. The process doesn’t allow for change

Think about procurement processes, for example. For many large organizations, purchasing anything requires a request for quote (RFQ) from at least three pre-qualified vendors and a formal tender process. It’s a very prolonged, and actually quite inefficient, exercise.

What many enterprises often don’t realize is the ease with which adapting to a crisis can turn a seemingly untenable situation into an opportunity to thrive.

_________________________________________________________________

Uri Kogan is VP of Product Marketing at AppZen, the world’s leading AI platform for modern finance teams

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Archives, Global Trade Daily, Imports/Exports, International Trade

SEPTEMBER ISSUE: FASHION & TRADE IN A SHIFTING GLOBAL LANDSCAPE

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As any devoted reader of Vogue knows, September is usually the time for a wardrobe refresh. This year, the new season may not be looking so good for the fashion industry which faces tariffs, changing consumer demand, and of course, fallout from the pandemic.

Going into 2020, fashion’s global leaders were already apprehensive about a difficult year ahead. They feared external economic shocks and were feeling pressure to adapt quickly to digitization and embrace the push for sustainability. Then, the COVID-19 pandemic upended their industry, cutting demand and disrupting supply chains. Meanwhile, escalating global tensions including the U.S.-China trade war added to the burden of trade barriers.

Though fashion can be seen as a luxury or even a hobby, the apparel industry is one of the largest in the world. Disruptions to this trillion dollar industry have meaningful impacts across the globe for the millions involved in making the world look good while clothing it.

The Big Players in the Global Fashion Trade

Fashion is a global business with global supply chains so tariffs, trade disputes, and transportation disruptions all play an important role in determining what we can buy and how much we pay for it. The global apparel market is valued at over one trillion U.S. dollars. The United States is currently the world’s biggest market for imports of apparel and footwear, importing around $85 billion worth of clothing, accessories and footwear in 2018.

“Knit apparel” is defined as any clothing made from the weaving of fibres. It’s the largest single apparel designation. The United States buys 18.95 percent of total knit apparel imports, twice that of the second-largest importer, Germany. Other top destinations for knit apparel around the globe include European countries such as Spain, the UK and France, and fashion-conscious Asian powerhouses like Japan and Hong Kong.

China remains at the top when it comes to exports of apparel. In 2018, China’s exports of knit apparel made up just shy of 31 percent of total world exports. Bangladesh and Vietnam take the number two and three spots, but with market shares of 7.52 and 5.66 percent respectively.

Top Ten Knit Apparel

A look at longer term trends reveals that China’s market share has been slipping. In 2012, China commanded 41 percent of total knit apparel exports, meaning in the past six years it has lost ten percent of its market share. The below graph shows this decline, as well as the increasing share claimed by rising South and Southeast Asian competitors Bangladesh, Vietnam, and Cambodia. This can be explained partially by the escalating trade war between the United States and China, prompting businesses to shift all or part of their production away from China and to neighboring Asian countries to avoid the Made in China label and the tariffs that come with it.

Asian country share of knit apparel exports v China (1)

An Industry at the Whims of International Policy – and Trends

Even before the pandemic hit, the industry was expecting a shake-up as both global relations and trends were shifting. Global value chains are morphing and new industrializing markets emerging. At the same time, e-commerce continues to accelerate; and expectations for brands to be sustainable and socially conscious are growing. The global pandemic, social movements and international relations of 2020 have forced the fashion industry to be more innovative than ever before to stay in business.

Trade Disputes & Barriers

The fashion industry has long suffered from tariffs — global average import tariff rates for clothing products stood at 17 percent in 2018, about twice as much as that for all other manufactured goods.

In the United States, tariffs are as high as 32 percent for clothing and 65 percent for footwear. In fact, around 75 percent of the total tariff burden on American households comes from apparel products. U.S. tariffs generally vary widely, but those on clothing tend to be higher than in almost any other category and affect a larger portion of U.S. imports, translating into higher prices paid by U.S. consumers.

Given China’s textile and apparel export dominance, it is unsurprising that tariffs on clothing originating in China have been significantly affected by the U.S.-China trade war. The United States levied tariffs ranging from 7 to 25 percent on knitted and non-knitted apparel; textiles including silk and cotton; fabrics such as lace and embroidery; and a whole host of other inputs the fashion industry relies on (like rubberized textiles). China retaliated with its own list of tariffs against American products, including U.S.-produced apparel. The existence of these tariffs, and the constant threat of more, make China a less appealing location for production. If they can find the right mix of cheap-but-skilled labor, manufacturers are likely to relocate factories. Those Made in China labels may instead read Made in Vietnam, Bangladesh or Turkey.

COVID 19: Decreased Demand & Shaky Supply Chains

The COVID-19 pandemic dealt a major blow to the fashion industry worldwide. The one-two punch of disrupted supply chains and a global population reining in luxury expenses hit designers, manufacturers and retailers of clothing and footwear particularly hard.

While people self-quarantined at home, retailers who rely on sales at their brick-and-mortar stores were impacted immediately. During the first six months of 2020, the sales of clothing and accessories at stores in the United States were close to 40 percent lower than one year prior. Department store Nordstrom has suffered a 53 percent dip in sales, and many retailers, including household names like Brooks Brothers, JC Penney and Neiman Marcus, have filed for bankruptcy. Tangentially, a whole population staying home did not demand the same types of clothes as before. No vacation meant no new summer wardrobe. No special events cut down on the need for fancy outfits, causing demand to fall even further.

Resilient and nimble supply chains are vital to any fashion house, as they must be able to react quickly to changing trends and draw on skills and resources spread throughout the world. This resilience was put to the test during the coronavirus pandemic as major production and transportation faltered. The clothing retailers that seem to be weathering the storm best are online-focused stores in a position to pivot quickly to the stay-at-home demand for comfy clothes and “athleisure” wear.

For Some Countries, Fashion Means Everything

Fashion houses and retailers are obviously struggling. Unraveling the threads of trade in fashion reveals the much larger number of people involved in the global fashion industry who have been impacted worldwide. They include millions of people employed as manufacturers of apparel and footwear, as well as producers of textiles and other materials, and farmers who produce raw materials, as well as myriad designers, creators and marketers who are part of the innovative “orange economy”.

Many countries are involved in apparel production, but for some South and Southeast Asian countries it forms a significant part, even the vast majority, of their total revenue. For example, 44 percent of national export revenue in Sri Lanka comes from apparel. That number is even higher for Cambodia, at 58.45 percent. Apparel is also Vietnam’s third-largest export sector, bringing in over $36 billion annually and accounting for 16 percent of GDP.

And nowhere is the apparel industry more important than Bangladesh, where 83 percent of total export revenue comes from the garment industry. The apparel industry, and more specifically the ability to trade the clothing and accessories manufactured in Bangladesh, has been a huge driver of economic development in the country and has given many the opportunity to earn a living beyond subsistence farming. About 80 percent of jobs are held by women, providing not only employment but autonomy and education to one of the world’s poorest and most vulnerable populations.

However, this specialization comes at a cost. Although trade in apparel has brought much needed revenue into the country, the heavy reliance on a single industry has also been a source of concern. For example, worldwide orders dried up at the height of the coronavirus pandemic, risking millions of Bangladeshi jobs and even prompting fears of starvation.

Bangladesh Garment Sector (1)

Trends in Fashion and Trends in Trade – Where Next?

Trends rule in the world of fashion. In this especially uncertain time, who knows what will win out as new autumn fashion appears on our shelves (and in our feeds)?

Will the growing shift to more sustainable and ethical fashion continue with a slow down of “fast fashion” in favor of investing in long-lasting pieces with a low environmental footprint? If so, we might expect a shift away from clothing produced in far-flung destinations to cut down on carbon footprints or to trace the origin of clothing made with free and fair practices. Or, as the world opens up post-COVID will the return of traveling and social events spur a worldwide shopping-spree and a desire for more clothing, more quickly? In that case, suppliers who can utilize large and diverse – yet agile – supply chains will come out on top.

Two things are certain: fashion will continue to be a global industry and trade will continue to play a vital role in shaping what we wear.

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Alice Calder

Alice Calder received her MA in Applied Economics at GMU. Originally from the UK, where she received her BA in Philosophy and Political Economy from the University of Exeter, living and working internationally sparked her interest in trade issues as well as the intersection of economics and culture.

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

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3pls, Archives, Global Logistics, Global Trade Daily

UPS, FEDEX, AMAZON, TARGET, WALMART AND BEST BUY ARE KILLING IT IN E-COMMERCE. HERE’S HOW.

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COVID-19 has sped up e-commerce adoption across all industries as many businesses emerge from the global pandemic battered and bruised. At the end of 2019, e-commerce represented 11.3 percent of total U.S. retail sales. This percentage inched up to 11.8 percent at the end of the first quarter of this year. For the second-quarter, some estimates suggest this percentage could double, at minimum, as businesses closed, and consumers stayed home because of COVID-19.

Indeed, while increased online sales is not a new phenomenon, the speed with which new generations of customers have gone online is and has led to a change in demand that is unlikely to reverse quickly according to McKinsey & Company’s latest COVID-19 Briefing Materials: Global Health and Crisis Response (June 1, 2020). McKinsey estimates that 20-60 percent more U.S. consumers are digital as a result of COVID-19. Stickiness of digital, localization, and selectiveness in spending are major trends that businesses will need to address as the pandemic alters the way business is conducted.

McKinsey also found that consumers are shopping online more and are more willing to switch across brands. This can be seen in one the biggest “winners:” groceries. According to Adobe’s Digital Economy Index, online groceries grew 110 percent in daily sales between March and April. However, there were delays in last-mile deliveries as companies including Amazon, Walmart and Instacart had to hire more workers to assist with the increased consumer demand.

In March, Amazon had to restrict non-essential shipments from third-party sellers and other retail vendors and focus on receipt, restocking and delivery of essential products that were most in demand. Meanwhile, Walmart touted not only its online store capabilities but also curbside pickup. The result was a strong first-quarter earnings for the period ending April 30 with comparable-store sales up 10 percent and e-commerce sales up 74 percent. Strongest sales were in food, consumables, health, and wellness.

Retailer Target also noted strong first-quarter sales. While comparable-store sales increased only 0.9 percent in its first-quarter ending April 30, e-commerce sales jumped 141 percent with 80 percent of e-commerce orders fulfilled in Target’s stores. Food and beverages rose over 20 percent, essential and beauty 10 percent, and home rose in the single digits.

As more workers work from home, electronics and furniture sales also increased. Best Buy noted in the eight days ending March 20, sales jumped 25 percent as customers purchased work-from-home-related items. As stores closed, online sales increased more than 250 percent, with half of those orders using curbside service available at most Best Buy stores.

For small parcel carriers including FedEx and UPS, the e-commerce volumes proved to be a boon. Both carriers have been preparing for rising e-commerce volumes by introducing such service offerings as seven-day deliveries, faster delivery times, later pick-up times, returns solutions, fulfillment solutions designed for e-retailers, alternative delivery pick-up and drop off locations and more. By all accounts, FedEx and UPS appeared prepared to handle the sudden e-commerce volume increases.

Just as the COVID-19 impact was being felt in the U.S., UPS noted in its first-quarter earnings that March volumes were 70 percent business-to-consumer (B2C) with April trending similar. FedEx also noted a similar trend with higher than usual B2C volumes.

The result was a sharp increase in residential volumes for both carriers and delays occurred. It should be noted that residential deliveries are typically more costly for FedEx and UPS versus business-to-business moves in which batches of parcels can be picked up and delivered at once.

A number of consumers took to social media to voice their frustrations and share photos of overflowing packages at carriers’ facilities. However, not only were carriers faced with higher than normal volumes, but they were also dealing with the coronavirus itself, affecting an unknown number of FedEx and UPS employees who would otherwise be sorting packages, loading and unloading delivery vehicles and delivering packages. Networks slowed as a result.

Having temporarily suspended all service guarantees and implemented international peak surcharges in March to handle a surge in international volumes, FedEx and UPS introduced new temporary peak surcharges to address the U.S. domestic situation.

UPS’s latest surcharges took effect on May 31 and addressed Residential, SurePost, and Large Parcels. Meanwhile, FedEx’s domestic temporary peak surcharges took effect on June 8 and addressed Residential for FedEx Ground and FedEx Express parcels, SmartPost, and Oversize Parcels for FedEx Ground and FedEx Express parcels. Keep in mind, these temporary peak surcharges are in addition to already existing surcharges and individual shipper’s contracted rates.

Besides surcharges, FedEx also capped some shippers’ volumes. This is a similar approach to what the carrier does during the holiday season if a shipper exceeds agreed-upon volume commitments. However, this is not the traditional holiday season and many shippers were caught off guard by this tactic. UPS also took a page out of their holiday season playbook and dispersed managers and supervisors across the U.S. to pitch in and help at sorting facilities and deliver parcels.

The rapid increase in e-commerce parcels seemed to catch FedEx and UPS off-guard and significantly impact their lower margin service, Residential. Moving beyond the COVID-19 crisis, e-commerce will play a bigger role in B2C as well as B2B. Businesses will utilize a number of creative ways to handle the last mile – curbside pickup, buy online, pickup in-store, residential, third party locations for pickup and delivery, and more. FedEx and UPS will need to work closely with customers to share capacity availability and concerns.

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John Haber is the founder and CEO of Spend Management Experts. With more than 25 years of supply-chain experience, John has helped some of the world’s leading brands drive greater efficiencies through their supply-chain operations while reducing transportation, distribution and fulfillment costs. He began his career at UPS, where he held various executive level positions in corporate finance and corporate strategy and was instrumental in developing profitability and costing models. He also managed the carrier’s National Accounts Profitability Group where he audited the pricing and profitability of UPS’ top customers. John’s finance background combined with decades of experience working with high-volume shippers enables him to offer unique insights on strategic supply chain planning, including distribution model optimization, transportation cost analysis and carrier contract optimization and compliance.

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Archives, Global Trade Daily, International Trade

THE “HOMEBODY ECONOMY” AND TRADE

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Mindful Spending

An estimated 2.6 billion people – one-third of the world’s population – continue to live under some form of quarantine conditions. These are trying circumstances for individuals and businesses. From a consumer demand perspective, the longer we all engage in some form of quarantine or social isolation, the more likely our new habits will take hold.

The emergence of this “homebody economy” is becoming apparent in consumer spending. Only China seems to be rebounding in consumer spending – the rest of us are still cutting back on discretionary spending. We are focused on essentials, being cost-conscious and cutting back on services and travel. We are even spending less on apparel and footwear, which impacts millions of jobs worldwide as workers in global value chains face uncertainty in their employment.

According to the International Labor Organization (ILO), 93 percent of the world’s workers live in countries experiencing workplace closures due to COVID-19. ILO estimated the reduction in working-hours for the second quarter of 2020 as equivalent to the loss of 400 million full-time jobs. Job losses, reduced hours and foregone income are having a clear dampening effect on spending habits and demand in international trade, which in turn creates more job insecurity.

No Contact

In most countries, the vast majority of people have turned to e-commerce and other digital or contactless services such as curbside pickup and drive-throughs. Many consumers are likely to delay resuming “normal” shopping and other behaviors until after a vaccine is widely available. That includes, unfortunately, the resumption of preventative healthcare. The hidden health impacts of foregoing routine health screenings and other interventions will be felt in national economies for years to come.

On top of all this, we know that the impacts of recession – layoffs, loss of income and the growing effects of income equality are closely correlated with reduced health outcomes and life expectancy. The World Health Organization has cautioned about the long-term consequences of lockdowns and isolation on mental and physical health, noting that depression and anxiety under normal circumstances cost the global economy an estimated $1 trillion per year in lost productivity.

No doubt we’re all feeling some level of anxiety, mood swings, and changes in sleep patterns. McKinsey’s consumer sentiment survey shows, in another twist of cruel circularity, that people are spending more time inactively, consuming digital content, which could have negative implications for people’s happiness.


Trade Antidote for the Irritable, Anxious and Exhausted Among Us

Lest we leave you further depressed, might trade in some goods and services provide a much-needed antidote to the mental and physical wear and tear of COVID-19? We think so. Here are some ideas.

Yoga – Global demand for PVC has been hit hard with a major drop in demand in China. So, why not do your small part by buying yourself a fresh, new vinyl mat. The PVC-based mats are cushy, which might be nice for your next savasana. If you’ve gained a little weight during the lockdown, you can rely on American textile engineers – the same ones medical personnel turn to for durable emergency wear – to also deliver yoga pants that will hold your belly in place as you stretch in downward dog.

Guided Meditation – Evidence of meditation practice dates back to approximately 1500 years BCE, but we generally thank Chinese Taoists and Indian Buddhists from the 6th to 4th centuries BCE for developing forms of practice that spread throughout the world. These days, Andy Puddicome, a Brit who studied meditation in the Himalayas and became ordained as a Tibetan Buddhist monk in Northern India, can be credited for making meditation accessible, modern – and available online – for the masses through his app, Headspace. Through Headspace and others, you can have guided meditation through an app on your phone, a service traded across borders thanks to the Internet.

incense

Incense – The use of incense can be traced back to ancient Egypt where it was used by priests for fumigating ceremonies and tombs. It was thought to hinder the presence of demons and served as an offering to their gods during worship and ritual, which is how incense came to be used in India and throughout southern Asia and China. Resin-based incense such as frankincense traveled to Europe and the Mediterranean along a trading route known as the Incense Route. Today, you can buy very high end and exotic incense like the brand, Astier de Villatte, which is handmade on the Japanese island of Awaji by masters of aroma who have been honing their craft and handing it down for hundreds of years. Also popular is incense made from palo santo (which means holy wood), a tree that grows along the coast of South America.

A Cleanse – If you’ve tried any form of keto, paleo or cleanse diet these days, chances are you had to look online to find far-flung ingredients from around the world. Popular ingredients include Maca powder derived from root vegetables grown in the Andes mountains in Peru, carob, which is native to the eastern Mediterranean region, and the Schisandra berry, which comes from mountainous regions throughout China. Another exotic ingredient is moringa, a nutrient-rich plant derived from “the miracle tree” native to North India. If your diet has you cutting back on caffeine, you can also try teas that taste like coffee, such as from Teecino. Their herbal teas use herbs and nuts like ramón seeds harvested in rural communities in Guatemala through programs that support educational and nutritional programs for women and children in Central America.

inredients

The Struggle is Real, Trade Can Help

The WTO issued a news release in June that estimated an 18.5 percent decline in merchandise trade in the second quarter of 2020 as compared to the same period last year. By any measure, the impact on trade, on livelihoods, and on our well-being has been profoundly negative. But as we work toward collective resilience, one thing you can do is to work on being healthy at home. And, with all of the products and services available to us through trade, we have lots of ways to do just that.

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Andrea Durkin is the Editor-in-Chief of TradeVistas and Founder of Sparkplug, LLC. Ms. Durkin previously served as a U.S. Government trade negotiator and has proudly taught international trade policy and negotiations for the last 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.

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Archives, Global Logistics, Global Trade Daily

3 Approaches to Continuing Operations through COVID

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COVID has impacted every aspect of our personal and professional lives. Businesses across different industries and verticals are adjusting their strategies and day to day processes in an attempt to make the best of this unprecedented moment. For this reason, different types of technology have become more prominent as they allow businesses and professionals to maintain the pace of business in light of how COVID has transformed the way we work.   

A recent survey from the National Bureau of Economic Research shows that half of Americans are currently working from home. Along with these changes in work come new challenges regarding problem-solving, engagement in work tasks, and productivity. But as the trend of working remotely is here to stay – especially for Dev teams, for whom this was already somewhat the norm. In fact, in a recent IBM survey, 80% of respondents want to work remotely occasionally, and over 50% want to work from home primarily.

In particular, businesses within the logistics industry need to be able to address the logistical issues of keeping employees safe and aware of the risks, as well as maintaining internal operations so that business can continue. Here are three tips and suggestions for technology and process shifts that can help logistics businesses continue operations through COVID. 

Large Scale Consent with COVID Waivers

As employees at all levels of the supply chain continue to work, and as plans to reopen the office are being built out, there needs to be a way to keep everyone safe and healthy. This involves letting employees know about risks associated with COVID. Using liability waivers – legal agreements that must be signed before a particular activity is undertaken – can be a good solution for this. But rather than use pen and paper contracts (which require face to face contact) or traditional eSignature (that does not scale, especially when there is a high volume of signers), consider one-click contracts. They allow for rapid and seamless acceptance and still carry the same legal weight as a normal contract. They can also be accepted via text or email.

Use Clickwrap to Present Standard Agreements

Because of COVID, businesses are seeking ways to improve their current processes by cutting down on the time or money spent completing them. When it comes to contracts, many use pen and paper or eSignatures to send agreements and collect acceptances. However, these old processes have no place in this new world. One solution is to use clickwrap agreements to present your standard agreements, or market terms. A clickwrap agreement removes the necessity of signing and replaces it with a box or button that users can check or click to signify acceptance. That way, there is no need for face-to-face contact, and contracts can be executed remotely as necessary. 

Automate Everything 

With the changes in business priorities, logistics teams will no longer have the bandwidth for some repetitive tasks that previously received a lot of attention. Instead of hyper-focusing on them or ignoring them altogether, automate those processes so you have time to focus on others. Workflow and Content Automation (WCA) is a growing category of technology that businesses should leverage. After identifying the repetitive processes, WCA enables you to identify high volume, low-value transactions and automate the document workflow associated with them such as implementing clickwrap agreements. This includes standardized agreements like terms and conditions, privacy policies, and NDAs. 

As these constant changes require businesses to make changes to their current internal processes using technology that helps them adapt better to the ongoing circumstances. Using clickwrap agreements can help significantly reduce the amount of contact between transacting parties. It can also be a massive internal lift as it helps with workflow and content automation, thereby enabling you to reduce repetitive processes. Finally, using COVID liability waivers that scale with your business is a sophisticated way to ensure that your business minimizes physical contact and protects its best interests in this new world.

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Brian Powers is the founder and CEO of PactSafe and a licensed attorney. As the CEO, Brian leads the strategic vision of the company’s high-velocity contract acceptance platform.  Prior to founding PactSafe, Brian’s law practice focused primarily on representing the transactional needs of tech companies. Brian is a frequent speaker, instructor and author on topics ranging from clickthrough contract acceptance to privacy-related consent management.