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The Pros and Cons of Local Sourcing

sourcing

The Pros and Cons of Local Sourcing

The Pros and Cons of Local Sourcing

Local sourcing is the practice of contracting suppliers located within your country or even city. This term also applies to the suppliers in your home county. However, there is always considerable debate over whether to prioritize the local suppliers or cast your net wider. To help decide, it is wise to look at the pros and cons of local sourcing.

The pros of local sourcing

Local sourcing means faster and more predictable delivery times

The news of supply chain disruptions is prevalent. Also, planning for survival in the new normal the pandemic has left us with is complex. So, it is no wonder that perhaps the most significant advantage of local sourcing is its reliability. Considering that the distance your cargo would need to travel is vastly reduced, the problems it can run into are fewer as well. You would not need to worry about ports or airports closing down and leaving your goods stranded. And, with that increased reliability, it becomes much easier to handle the risk factors of high-profitability deals.

You can work with suppliers much more closely

Another of the advantages of local suppliers is that you can work with them more closely. When dealing with an international supplier a whole sea away, it is natural that you can have at most one or two meetings in person a year. On the other hand, a short trip is all that would take to reach and discuss business with a local supplier. Of course, this means that you can also get them to customize some of their services for you, particularly if you need certain parts that need to be custom produced for your needs or a similar demand.

You would not need to manage your warehouses as meticulously

When your supplier is just down the street or a city or two away, timing deliveries right becomes easier. It means that, instead of having huge shipments that take up lots of space and cause logistics problems, it is possible to have a string of smaller deliveries. And, with the reduced risk and delay factors that we have already discussed, you can also order them, so they arrive before you need to have them shipped out. In turn, this would ensure that your warehouse is kept busy but never overflows or has shipments clogging up space better used for something else. And you could even manage with much smaller warehouses.

You could more easily make last-minute orders

Making a last-minute order is not something you should turn into a habit. However, if any of your suppliers run into problems, or you have a sudden order of goods yourself, you would be able to resolve the situation much more easily. A quick trip or a phone call would allow you to check in with your partners and look for additional goods. And the proximity would make getting the goods to you a breeze, as well. In the end, this extra wiggle room would let you approach your business in a much more relaxed way than ordering goods from overseas. After all, a missing shipment in such cases might take weeks to make up for.

You would not need to deal with import taxes

It is impossible to avoid worrying about taxes when trying to import goods. For any legitimate business, it is not too difficult a hurdle to cross. However, it can be tough to manage when you are just starting, and they are cutting into your profits. That is why, especially for brand new businesses, local suppliers that allow them to bypass this expense are an excellent choice. There are plenty of rare and common U.S. customs clearance issues you would entirely avoid by choosing to go through a local supplier, too.

Enhancing Sustainability and Reducing Carbon Footprint

One of the most significant advantages of local sourcing is its positive impact on the environment. By reducing the distance that goods travel, you contribute to lower carbon emissions and minimize the ecological footprint of your supply chain. With growing awareness of environmental concerns and increasing consumer demands for sustainable practices, opting for local suppliers can significantly boost your company’s reputation and attract eco-conscious customers.

Fostering Community Growth and Support

When you source locally, you actively contribute to the growth of your community and support the local economy. By providing business to nearby suppliers, you help create job opportunities and stimulate economic development. This, in turn, can lead to increased consumer spending within the community, benefiting other businesses as well. Additionally, building strong relationships with local suppliers can foster a sense of camaraderie and collaboration among businesses, creating a supportive network for mutual growth.

The cons of local sourcing

The local supplier might grow over-dependent on your business

It might sound odd. But be it for the supplier or the business, over-dependence is not great. If a supplier starts to prioritize the demands of the company they rely on for the majority of their profits, it can seriously impact their competitiveness in the market. They can grow too specialized to grow their business, and it can be challenging to secure new contracts. There is also the matter of their new product development slowing or halting entirely. It means that they might eventually be left behind and lose their chief source of income as well. It would make demand planning for the buyers difficult as well if planning to branch out to new products.

Canceling a contract can incur a lot of backlash

Hiring local suppliers and helping the local economy is fantastic for PR. However, if you ever need to move on from those contracts, you would be facing an equal amount of backlash and ill-will. No matter how justified your decision might be. The public could still view it as abandoning those same businesses and economies you were lauded for helping.

You might not be able to obtain the best or latest products

Local suppliers might not be able to offer you top-of-the-line goods. They are likely solid and reliable manufacturers, yes. But with the world as a stage for your business, it is always possible to find someone producing better versions of the product you are interested in. So, you are more or less choosing between reliability versus quality. Of course, there are exceptions.

Local suppliers can be less efficient

Even though they are more reliable, local suppliers can have efficiency problems. They tend to be smaller and have a smaller production capacity. Of course, as you work together and prosper, they might expand their business and build more facilities. But then you run the risk of our first cons: their reliance on your purchases growing to the point they practically only cater to you.

It is hard to ensure objective supplier selection

You might, over time, develop a tight-knit bond with the local suppliers, especially if they have been there for you since the foundation of your company. That is natural. However, if your company is developing faster than they are, you might find yourself in need of new partners to keep up with the demand you are facing. At such a time, due to your friendship or perhaps fear of public backlash, it wouldn’t be easy to objectively select another supplier better suited to your needs.

Limited Access to Specialized Products

While local suppliers offer reliability, they may not always have the capacity or expertise to provide highly specialized or cutting-edge products. In industries where innovation is crucial, you might need to explore international options to access the latest advancements and unique offerings.

Higher Costs and Reduced Cost Competitiveness

Local sourcing might come with higher production and labor costs compared to countries with lower manufacturing expenses. This can affect the cost competitiveness of your products in the global market. As a result, careful cost-benefit analysis is essential to ensure that the benefits of local sourcing outweigh the potential price disadvantages.

Dependence on Regional Vulnerabilities

By relying heavily on local suppliers, your supply chain could be susceptible to regional vulnerabilities. Natural disasters, economic downturns, or political instability in the region could disrupt your supply chain and affect your operations. Diversifying your sourcing strategy can help mitigate these risks and ensure a more resilient supply chain.

Final word

Now you know the pros and cons of local sourcing, so it should be easier to make an informed decision. Whether you decide to pursue local or international suppliers, remember that your priority is always the development and future of your company.

 

Q1

Top 10 US 2022 1st Quarter Exports

Energy tops the list of the most critical issues globally. Covid and the Russian incursion have jolted markets, pushing energy-related products to new demand levels. As such, it should come as no surprise that the top three US exports in Q1 2022 were oil, gasoline (refined petroleum), and LNG (coupled with other gases). 

  • Oil

Accounting for a robust $40 billion, oil leads the list by roughly $7 billion. The quarter-over-quarter change was drastic at 84%.

  • Gasoline, Refined Petroleum

Valued at $33 billion, gasoline, refined petroleum also lept by a significant amount – 74%. 

  • Natural Gases, LNG

Rounding out the top 3 are natural gases, LNG. The total export value was estimated at $28.9 billion and this too was a robust increase compared to Q1 2021 (+ 40.6%)

The only other top 10 export that increased by over 40% from last year were vaccines, plasma, and blood fractions. Exports 4 to 10 are repeats from previous years, but for the first time in seven years the broad aviation category (currently #4) is not #1. This speaks to energy’s dominance on the global stage.

  • Aircraft, parts

This category includes jets made by Boeing. In terms of export value, they are on par with natural gases, LNG, but the increase over last year was much smaller (27%). 

  •  Passenger Vehicles

Passenger vehicles have fallen, accounting for $17.7 billion in exports but down 5.6% from Q1 2021. This is the only category in the Top 10 that fell year over year. 

  • Computer Chips

While the newly passed CHIPS and Science Act will undoubtedly boost manufacturing stateside, computer chip exports are still represented in the Top 10. Like passenger vehicles, chips also accounted for approximately $17 billion and remained relatively stable compared to last year. 

  •  Vaccines, plasma, and blood fractions

Previously mentioned, this is a category that understandably jumped considering the continuing public health crisis. While only representing $14 billion in exports, a 42% increase from Q1 2021 was notable. 

  • Motor vehicle parts

Motor vehicle parts rose by 14.8% percent and registered $13.6 billion in export value. 

  • Medicines, pill form

Medicines, pill forms had a constructive Q1 2022, improving by 39% and tallyng $11.4 billion. 

  • Medical instruments 

Rounding out the Top 10 were medical instruments with a solid 8% increase over last year and $10.7 billion in value. 

Overall Q1 exports are up by over $100 billion. While much is made of the US’s reliance on imports the export market continues to surge. 

 

 

Ukraine

Five ways the war in Ukraine will change the world’s economy

The war in Ukraine is a tragedy that will continue to play out for months, with an uncertain ending as far as the sad cost in human life, new alignments in global geopolitics and the stunning damage that will be done to the economies in countries beyond just Russia and Ukraine. Even though the repercussions of this war will reverberate for decades, we can already identify some trends that will impact the global economy in the future.  As with any volatile trade and economic situation, there will be clear losers (the Russian economy), but there will also be potent secondary developments that arise as a result of this aggressive invasion of a democratic, Western-oriented Ukraine.


 

Energy Security / Renewable Energy

The U.S. and EU have spent decades wringing their hands over the Transatlantic joint dependence on oil and gas from ‘bad actors’, including Russia, Saudi Arabia, and Venezuela.  In the last few weeks, attempts to punish Russia economically have been hamstrung due to the fact that much of Europe still receives about half of its gas from Russia, an impossible dependency when it comes to confronting Russia for its illegal actions in Ukraine. While the ‘fracking revolution’ has assisted the U.S. to a certain level of energy independence, a sizeable portion of the nation’s oil still comes from unreliable external sources. The irony of Russia’s attack on a democratic Ukraine is that it might finally push the U.S. and EU to commit to a substantive, immediate and dedicated pursuit of renewable energy sources for which environmental activists and innovative business leaders have been lobbying for decades.  Renewable energy’s strongest proponent just became the national security crowd.

Defense Spending – Globally

The same national security concerns will also lead to a huge rise in defense spending from EU and other nations.  Germany’s proposed budget increase alone will be a critical shot in the arm for the European defense industry, but we can assume that other nations that have put off investments in this area were shaken by Russia’s willingness to break global norms and attack Ukraine and will respond with substantial budget increases.  Images of Turkish Bayraktar drones destroying Russian armor and video of the U.S.-made Javelin helping to stymie the 7th largest army in the world are going to change how smaller nations structure their arms inventory.  More importantly, Russia’s actions have disabused any remaining doubters of the notion that a country like Russia will ‘play by the rules’ of international law in the modern era.  If Russia can so brazenly violate their international agreements and obligations, then so can China – and that realization will have a substantive domino effect on the planning and defense expenditures of everyone from Finland to the Philippines.

Wheat and Foodstuffs – Even Greater Price Inflation

Russia and Ukraine accounted for 30% of the global wheat trade prior to this conflict. But that is not the only food product that will be taken off of the market as a result of the war – sunflower oil, corn and other key products will either be destroyed (or unplanted) as a result of the fighting or will be locked inside Russia’s domestic market due to sanctions and the inevitable tariffs.  The rest of the world will see massive price increases and shortages in certain foodstuffs.  Combined with the global surge in inflation and increasing transportation costs, many global food-producing companies will struggle to provide products that are affordable for their usual clients.  If there is a silver lining to this cloud, it is that locally-sourced products and wheat-alternatives (rice, corn, bulgur) should see a boom in demand.

Cybersecurity and Information Warfare

Russia and China have been fighting a shadow war with the U.S. and EU in the cyber realm for years, but this conflict has pushed that fight into the light of day.  U.S. and European struggles with Russian governmental and pseudo-governmental cyber strikes (from denial of service attacks to outright hacks for information and funds, as well as documented attempts to impact elections in both regions) should have the same impact on corporate and governmental cybersecurity spending as watching Russian tanks roll into Ukraine did for defense spending.  No one wants to be the easy target in this war and corporations that took some risk and saved money on cybersecurity will be scampering to close those gaps as quickly as they can.  Russian desperation to get at global fund sources in the next few months dramatically increases the risk of pseudo-governmental ransomware attacks, and the information warfare we are seeing between Russia/China and the rest of the world is astoundingly blunt (and for Ukraine, remarkably effective in generating global support).  The gloves are off.  Is your company ready to defend its business interests from cyber and information / reputational attacks?

A More Unified, Emboldened EU

The last month has been a litmus test for EU leadership, and they have come out looking much more poised and united than anyone would have believed.  Should they have taken this threat more seriously in the last decade?  Absolutely.  Have they tolerated Putin-loving populists in the EU club for years (Orban, Zeman, Le Pen, Salvini)?  Sadly, yes.  But all of that changed when Russia headed for Kyiv.  Member state leaders closed ranks and the EU turned from a reluctant bystander into ardent supporters of Ukrainian defense efforts in a few short weeks.  From an economic perspective, this more unified and confident EU will disrupt a number of patterns.  They’re likely going to be much more aggressive in nurturing and protecting their internal innovation in technology and defense.  They will redouble efforts to reduce their dependency on external energy sources (to the benefit of renewable technologies, electric vehicle innovations, the nuclear industry and even public transportation ventures).  Most importantly, they can be expected to be stronger proponents of democratic ideals in their foreign political and business affairs.  Countries (and companies) that interact with this new EU will likely find that they are much more insistent on ESG concerns and support for human rights, democratic principles and adherence to the rule of law.

________________________________________________________________

Kirk Samson is a Director at the International Trade Association of Greater Chicago.  He is a former U.S. diplomat and spent ten years as an international law advisor for the Department of Defense.

supply chain management

Expert Insight: Supply Chain Disruptions Through the Eyes of TITAN Professional Tools

“Supply chain troubles.” “From bad [2020] to worse [2021].” It was a “perfect storm for our supply chain crisis.” These are just a few of the headlines I’ve seen in recent weeks looking back on 2021. While I think we’re all eager to turn the page and start anew, I fear many of the challenges we experienced last year will continue into 2022 – and perhaps beyond. If there’s one thing we learned last year, it’s that our supply chain is more fragile than many of us imagined.

Case in point, a recent estimate from the American Trucking Associations (ATA) reported that the truck driver shortage has risen to 80,000 – an all-time high for the industry. According to the ATA study, the driver shortage could surpass 160,000 by the end of the decade, noting that the industry will need to recruit nearly one million new drivers to replace those retiring or leaving the business. Not only did the outbreak of COVID-19 in early 2020 exacerbate the issue, but it also revealed gaps in every link of the supply chain and then amplified the impact of those collective weaknesses.


 

A recent Wall Street Journal article perfectly summarized the challenge:

Trucks haul more than 70% of domestic cargo shipments. Yet many fleets say they can’t hire enough drivers to meeting booming consumer demand as the U.S. economy emerges from the pandemic. The freight backup has intensified longstanding strains in the industry over hours, pay, working conditions and retention. The surge of goods has created logjams at loading docks and port terminals, gobbling up scarce trucking capacity and making drivers’ jobs even harder. Factories and warehouses are also short of staff to load and receive goods. Meanwhile, the broader labor shortage has left openings for other blue-collar jobs that compete with trucking, including in local delivery operations, construction and manufacturing.

To better understand the operational and logistical issues retailers, importers, wholesalers and other distribution organizations are facing due to the state of today’s supply chain, I recently spoke Nick Tsitis, vice president at TITAN Professional Tools. His account is eye-opening, to say the least, and can hopefully help those facing similar challenges.

Q:  How did the Suez Canal accident create operational and logistical issues for businesses like TITAN Professional Tools?

A:  No one talks about this anymore. Before conversations of current supply chain issues, however, our forwarders often referenced the incident. I believe it significantly contributed to and accelerated our current supply chain problems, including shortages of equipment and limited space on vessels and at our ports. There’s been a huge stress on the ports, making it difficult to even get containers off the ships. And when you do get them off the ships, they sit in these piles disorderly piles they’re calling “pig piles” now. Whatever’s on top becomes available first.  And if you’re on the bottom of that pig pile, your merchandise is stuck.

So, not only is it taking time to get containers off ships, but it’s also taking time to get them from the ground onto chassis. Once containers finally do make it to our facility, and we get them unloaded, you would think with such a shortage of equipment there would be an urgency to return containers, but they cannot be returned to the port. We recently discovered 12 containers being stored in our business park from someone that is not a tenant here.  Apparently, they ran out space in their complex, and decided to park the equipment at ours.

Q: How have issues like this impacted your operating costs?

A: In so many ways.  It used to cost $1,500 to get a container from Asia to Seattle. Now we’re paying as high as $18,000. We are often charged demurrage for containers that are off vessels but not delivered to us within a week.  There are surcharges being implemented on both sides as well (Asia and USA). It’s a huge burden on us. It also affects our cash conversion cycle as goods invoiced to us are stuck in transit, and we can’t invoice until we receive and ship to our customers.

Q: How are you dealing with dock scheduling and similar issues caused by all this unpredictability?

A: Once we can get the container and get an appointment, it hasn’t been too big of a problem. On occasion, the truck drivers will have to wait sometimes six to eight hours to pick up a container. We used to pay under $100 to get a container from Seattle to Kent. Now it’s almost $700 to move it seven miles. Local drayage is up, and we’re often having to pay the drivers by the hour to wait in line to ensure we get our merchandise.

Q: Are you also facing labor shortages in the warehouse that compound these issues?

A: I know others have but we haven’t realized that because we’re a small business and have a lot of family here that have been with the company for a long time.  We are fortunate and may be y the exception when it comes to labor. But, yes, when you look down the road and see Amazon hiring at $23.50 an hour with a $3,000 signing bonus, it can be hard to compete with that.  it has in the past.

Q: How close do you think we are to seeing an end to these disruptions?

A: Well, everything’s related in one way or another – if not directly, then indirectly – to these supply chain problems. Our lead time with several factories is now as high as 18 months, where it used to take 45 to 90 days to manufacture product and 14 days transit is now taking as many as 60 or 90 days transit. There are some factories, that if we placed an order now, we won’t see it for almost two years. That’s an extreme. Most factories now are taking 6 to 8 months. As a result, we’re buying out a year, which is really scary. So, yes, it’s going to take a long time to recover. I don’t think it’s going to get back to normal for at least another year.

Q:  Based on your experiences, what advice would you share with other businesses facing similar challenges?

A:  We often use the word “partnership” between vendors and customers. We are making it thru these challenging times because of the true partnerships we have on both sides, with our vendors, and our customers. Everyone is understanding, being more flexible and forgiving, and more willing to accommodate than before. Pardon the pun, but everyone is “in the same boat” on this.  We need to work together to get through it.

talent

Hiring Supply Chain Talent: What to Look for In the Perfect Candidate

If your business is growing, maybe it is the right time to hire new talent. It also means facing the challenge of the dearth of supply chain talent and overcoming it. It is pretty common to find business growth these days with job titles evolving and shifting because of quick changes in supply chain management and the latest technology-oriented needs. With several businesses trying to remain competitive there is more demand for talent. Management of the ways you will use to seek the supply chain talent can make or break your organization. Here are some attributes you need to watch out for.

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Soft skills: Most recruiters normally have a list of around thirty job skills that they are looking out for while reviewing the candidates. It is pretty common for the supply chain industry. Soft skills are the top priority for producing more successful recruitment. Some of them include email marketing skills, fundamental business ethics, communication skills, and problem-solving skills. All of these may be identified via past job experience of the candidates, references, and the responses they provide to some key questions at the time of the job interview. When you are looking to hire globally you can take help from PEO services.

Inventory, finance, and supplier management experience: Watch out for earlier experience in financial, supplier, and inventory management together with direct knowledge. These are the important components of the skill sets required for a hire. If the candidate has financial management training in fields such as investing it is a massive advantage. Maybe this talent did not go through massive numbers every day in his earlier position. But there will be sufficient indications of whether the candidate has the requisite understanding of data utilization for making solid business decisions.

Education and area of interest: You need to look out for candidates that have certifications and university training. Some of the specific things you must look out for include participation in projects that involve a basic understanding of financial matters and problem-solving that is related to them. Sometimes even the way they handle personal finances could show something about their work skills. You need to look for talent that has enthusiasm, passion, and energy for the position he or she is applying for. For instance, they would have researched and displayed knowledge about an organization and how their skills could benefit this business.

Result-oriented track record: Ask the prospective candidates, not just about their earlier job responsibilities. Ask them to correctly quantify the results also. Try and find out people that will produce some examples of the projects they have accomplished with good results in their resumes. It should demonstrate that they had to work with supply chain departments, service providers, and suppliers. You also need to be flexible and open-minded while considering the top talent from other industries and fields. There are many candidates out there that are working in other professions. However, they have transferable skills that can make them the right candidate for your supply chain.

Hire female candidates: Women are under-represented in many industries and it’s imperative that we find ways to bring them into the fold. In order to remain competitive in the future of supply chain management, it is important that you consider hiring female talent for roles usually reserved for males. They can take on roles that men have traditionally held, but with some added perks- they’re better at relationship building and interpersonal skills which will be important for certain jobs. The best way to find a replacement for your position is by interviewing applicants who have the skills you need. This will allow you get more personal insight into their personality, knowledge of procedures, and ability-to-efficiently perform job duties than if they were applying without being interviewed first. You can also look at female workers’ resumes or career paths during mentorship programs that involved working closely with seasoned professionals in similar fields.

Conclusion

There are challenges involved in securing the supply chain talent at the moment, especially for filling out the necessary positions. it is a good idea to change your approach. You need to examine the staffing forecast, be aware of the specific needs and trends from historical data, and develop a talent management program. After doing all this, you need to take a closer look at the candidate pipeline that is capable of fulfilling the continuous hiring requirement. The organizations that perform well are the ones that consider the recruitment department as a value-added and strategic program.

U.S. Canned Vegetable Imports to Surpass Previous Year’s Record of $1.5B

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

In Q1-Q3 2021, the U.S. imported 576K tonnes of canned vegetables worth $1.3B, which was 23% more in physical terms and 17% more in monetary terms than in 2020. Over the full 2021, U.S. imports are estimated to hit the previous year’s record of $1.5B. China, Canada and Peru remain the leading suppliers of canned vegetables to America.

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U.S. Canned Vegetable Imports by Country

Canned vegetable imports into the U.S. were estimated at 704K tonnes in 2020, increasing 14% against 2019 figures. In value terms, purchases amounted to $1.5B (IndexBox estimates).

China (165K tonnes) constituted the largest canned vegetable supplier to the U.S., accounting for 23% of total imports. Moreover, canned vegetable supplies from China exceeded the figures recorded by the second-largest supplier, Canada (82K tonnes), twofold. The third position in this ranking was occupied by Peru (73K tonnes), with a 10% share.

In value terms, Spain ($204M), China ($192M) and Canada ($183M) were the largest canned vegetable suppliers to the U.S., with a combined 37% share of total imports.

In 2020, the average canned vegetable import price amounted to $2,192 per tonne, declining by -4.9% against the previous year. Prices varied noticeably by the country of origin; the country with the highest price was Greece ($4,441 per tonne), while the price for China ($1,162 per tonne) was amongst the lowest. In 2020, the most notable rate of growth in terms of prices was attained by Thailand, while the prices for the other major suppliers experienced more modest paces of growth.

Source: IndexBox Platform

President Biden Issues Executive Order Banning U.S. Imports of Russian Origin Oil, Gas, and Coal

On March 8, 2022, President Biden issued Executive Order 14066 which prohibits the following actions:

-The importation into the United States of any “crude oil; petroleum; petroleum fuels, oils, and products of their distillation; liquefied natural gas; coal; and coal products” of “Russian Federation origin”;

-New investment in the Russian energy sector by U.S. persons, wherever located; and

-Any approval, financing, facilitation, or guarantee by a U.S. person, wherever located, of any transaction conducted by a non-U.S. person that would be prohibited by Executive Order 14066 if performed by a U.S. person or within the United States.


The Executive Order further prohibits any transaction by anyone (whether a U.S. person or a non-U.S. person) that evades or avoids, has the purpose of evading or avoiding, causes a violation of, or attempts to violate any of Executive Order 14066’s prohibitions, as well as conspiracies to violate the prohibitions.

In a Fact Sheet, the Biden Administration stated that the Executive Order is intended to “further deprive President Putin of the economic resources he uses to continue his needless war of choice”.  A  press release from the U.S. Department of the Treasury also stated that “[t]he United States continues to take severe action to hold the Russian Federation accountable for its brutal, unprovoked invasion of Ukraine.  Treasury has targeted the infrastructure supporting President Putin’s invasion of Ukraine”.

Executive Order 14066 is immediately effective.  However, the U.S. Treasury Department’s Office of the Foreign Assets Control (“OFAC”) has issued General License 16 authorizing all transactions that are “ordinarily incident and necessary to the importation into the United States” of certain products of “Russian Federation Origin”, if performed pursuant to written contracts or written agreements entered into prior to March 8, 2022.  The products of “Russian Federation Origin” authorized for import into the U.S. under General License 16 are:

-Crude oil;

-Petroleum;

-Petroleum fuels;

-Oils, and products of their distillation;

-Liquified natural gas; and

-Coal products.

General License 16 will remain effective until April 22, 2022, at which time all such transactions will be fully prohibited.  General License 16 does not  authorize any other actions that are prohibited under the existing Russian Harmful Foreign Activities Sanctions Regulations or transactions with persons who are otherwise subject to blocking sanctions unless such actions or transactions are separately authorized by OFAC.

OFAC also issued new Frequently Asked Questions (FAQ) guidance and updated existing FAQ guidance in order to clarify certain aspects of the Executive Order.  Among other things, these FAQs establish definitions for the terms “Russian Federation origin”, “new investment in the energy sector in the Russian Federation” and “energy sector”.  The FAQs also clarify that the Executive Order’s prohibitions do not extend to products that are not of Russian Federation origin “even if such products transit through or depart from the Russian Federation”.

Additionally, U.S. Customs and Border Protection (“CBP”) issued Cargo Systems Messaging Service Number 51260049 indicating that it will “be requiring filers of entries or admissions to Foreign Trade Zones for shipments of [the Russian Federation origin banned products] to provide purchase orders and/or executed contracts and/or any other documentation showing when the order and/or contract went into effect” through the expiration of General License 16 on April 22, 2022.  CBP also stated it will require the documentation prior to unlading and it “should include conveyance information, bill of lading number(s) and entry number(s) or FTZ admission information.”

Anyone reviewing Executive Order 14066 should also be aware of the significant sanctions and export controls that the U.S. government imposed on Russia prior to Executive Order 14066.

_____________________________________________________________________

Grant Leach is an Omaha-based partner with the law firm Husch Blackwell LLP focusing on international trade, export controls, trade sanctions and anti-corruption compliance.

Cortney O’Toole Morgan is a Washington D.C.-based partner with the law firm Husch Blackwell LLP. She leads the firm’s International Trade & Supply Chain group.

Tony Busch is an attorney in Husch Blackwell LLP’s Washington, D.C. office and is a member of the firm’s International Trade & Supply Chain practice team.

integrate logistics automation freight

The emergence of logistics platform

Since the start of the pandemic in early 2020, the logistics supply chain industry began to experience difficulties. Due to the air traveler restrictions in most countries, air transport was the first to reduce their normal scheduled flights which disrupt air transport shipments. Then, ocean transport experienced its own set of problems; vessels had to berth longer out of the ocean since ports were operating at half capacity because of the alternating work schedule of its workers. Problems worsened with an increased demand of containers capacity by Asian manufacturers due to an explosive demand by e-commerce. As a result, ocean liners were not quick enough to return empty containers back to Asia, which created a supply chain backlog and a price increase to the industry.

The International Trans-Pacific Ocean freight charges significantly increased over the last two years. For example, the cost of moving shipment from South East Asia regions cost $3,000 USD/container to the US. It gradually increased every other month and reached $11,000 USD/container by December of 2020, an increase of more than 300% in over a year. The cost reached $16,000 to (US-West Cost) and $19,000 to (US-East Coast) in main ports by December 2021. An inland transport to the final destination, for example, Atlanta, costs $26,000/container. Imagine, a container that has 1,000 items from Asia to the US with a transport cost of $3.00 had become $26.00/ item. It is why inflation has been unusually high.


 

The logistics company (transporter) has been operating an offline business method for decades. Operating business in an offline environment makes operation and administration slow, expensive and non-transparent. Quotations given by transporters listed too many itemized charges, making it difficult for shippers to analyze. Charges at origin and destination varies among transporters. Shippers who want to get five quotations must make inquiries to five different local transporters, requiring about 2-3 days for one quotation to be delivered. Companies using an offline business method lack efficiency and are far behind those who have adapted to technology. We are now living in an online world where platform news, social communication and shopping is done in an instant, and businesses should use a technology platform to its advantage.

Shippers who participate in Logistics Platform would be able to analyze available transporters at Origin and at Destination. Logistics service information is properly displayed and all questions can be answered directly by transporters with the chat feature in the platform. With just a few clicks, shippers will be able to confirm shipments to transporters with transparent detailed services: pricing, schedules, document requirements at origin and at destination. Once the shipment is accepted by transporters, work-order and reminder note are issued by the platform to alert everyone involved. A shipper that paid $26,000 from Jakarta to Atlanta in an offline environment, would only pay $22,500/container in platform business model.

Internet technology is an important factor in our daily lives. The relationship between transporters and their shippers is now more interactive with direct communication. A platform with its embedded algorithm into digitalization would speed up and minimize transporter manual operation and paper administration. The status of delivery in Bangkok can be instantly viewed by the Shipper in Amsterdam. The identity of the truck and driver is available for shippers in Tokyo to track before shipment is released. Digital Proof of delivery in Los Angles is transmitted to the transporter in San Francisco to speed up invoicing and confirmation of acceptance by Shipper. Warehouse space becomes easily searchable with the selection of available warehouse operators where the platform operates. Decision-making is faster with less human involvement and operation becomes simpler.

We are now able to do almost everything using our smartphone, and it has become our identity and trusted 24/7 companion. Any individual with a smartphone can create products and sell online from every corner in the world. There are now more individuals who have joined Global Digital Market as either Buyer or Seller, driving the demand of logistics services. A platform that fits into the Business-Consumer trend will open up new channels and bridge the transition from traditional systems would attract many followers. The integration of the Logistics Industry with Internet Technology will be beneficial for all parties involved. With no barriers, shippers in Jakarta able to make a seamless transaction to select transporter at Jakarta and at Atlanta via smartphone or computer in just a few clicks. Companies that fail to catch up with Digitalization and Automation will lose out their Development Growth to connect the Online World, which demands direct interaction, competitive pricing and consolidated services.

apple juice

European Concentrated Apple Juice Imports Dropped Twofold over the Past Decade

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

In 2020, concentrated apple juice imports in the EU dropped twofold after peaking in 2007, from $1.2B to $0.6B. In physical terms, imports fell from 808K tonnes to 463K tonnes over this period. Germany represents the main European importer of concentrated apple juice, accounting for 34% of total import volume in the EU. Austria and the Netherlands, with a further combined 25%-share, follow Germany. From 2007 to 2020, Germany, Austria and the Netherlands recorded a slump in the value of imports.


 

Concentrated Apple Juice Imports in the EU

Concentrated apple juice imports dropped to 463K tonnes in 2020, reducing by -13.7% compared with 2019 figures. In value terms, concentrated apple juice imports estimated at $584M (IndexBox estimates) in 2020.

In value terms, European concentrated apple juice imports dropped twofold, from $1.2B in 2007 to $0.6B in 2020. In physical terms, imports reduced from 808K tonnes to 463K tonnes during this period.

Germany represented the major importer of concentrated apple juice in the EU, with the volume of imports reaching 158K tonnes, which was approx. 34% of total imports in 2020. Austria (58K tonnes) occupied a 13% share (based on tonnes) of total imports, which put it in second place, followed by the Netherlands (12%), France (11%) and Poland (11%). Ireland (20K tonnes) and Denmark (10K tonnes) followed a long way behind the leaders.

In value terms, Germany ($209M) constitutes the largest market for imported concentrated apple juice in the EU, comprising 36% of total imports. The second position in the ranking was occupied by the Netherlands ($73M), with a 12% share of total imports. It was followed by Austria, with a 12% share.

From 2007 to 2020, the average annual rate of growth in terms of value in Germany totaled -6.9%. The remaining importing countries recorded the following average annual rates of imports growth: the Netherlands (-3.6% per year) and Austria (-8.8% per year).

The concentrated apple juice import price in the EU stood at $1,262 per tonne in 2020, jumping by +19% against the previous year. Prices varied noticeably by the country of destination; the country with the highest price was Denmark ($1,397 per tonne), while Ireland ($572 per tonne) was amongst the lowest. From 2007 to 2020, the most notable rate of growth in terms of prices was attained by the Netherlands, while the other leaders experienced a decline in the import price figures.

Source: IndexBox Platform 

bicycle

European Bicycle Imports Peak at $3.6B

IndexBox has just published a new report: ‘EU – Bicycles And Other Cycles (Not Motorized) – Market Analysis, Forecast, Size, Trends and Insights‘. Here is a summary of the report’s key findings.

European bicycle imports grew from $3.4B in 2019 to $3.6B in 2020, while in physical terms, imports slightly decreased by -3% y-o-y to 14M units. The supplies to the Netherlands, Germany and France comprise 58% of bicycles imported in the EU, while Austria recorded the highest import value growth last year. In 2020, the average bicycle import price in the EU grew by +3.9% y-o-y to $262 per unit.


 

Bicycle Imports in the EU

Bicycle imports in the EU dropped slightly to 14M units in 2020, decreasing by -3% in 2019. In value terms, bicycle imports grew from $3.4B in 2019 to $3.6B (IndexBox estimates) in 2020.

The Netherlands (3.5M units), Germany (2.7M units) and France (1.9M units) represented roughly 58% of total imports of bicycles and other cycles in 2020. They were distantly followed by Spain (1M units), which accounted for 7.2% of total imports. Poland (597K units), Austria (472K units), Sweden (469K units), Italy (456K units), Belgium (392K units), Denmark (352K units), the Czech Republic (280K units), Finland (263K units) and Ireland (233K units) followed a long way behind the leaders.

In value terms, the largest bicycle importing markets in the EU were Germany ($791M), the Netherlands ($768M) and France ($438M), together comprising 55% of total imports. Austria, Spain, Belgium, Italy, Sweden, Denmark, the Czech Republic, Poland, Finland and Ireland lagged somewhat behind, together accounting for a further 38%. In terms of the main importing countries, Austria (+86.4% per year) saw the highest growth rate of the value of imports last year.

In 2020, the bicycle import price in the EU amounted to $262 per unit, picking up by +3.9% against the previous year. There were significant differences in the average prices amongst the major importing countries. In 2020, the country with the highest price was Austria ($567 per unit), while Ireland ($156 per unit) was amongst the lowest. In 2020, the most notable rate of growth in terms of prices was attained by France, while the other leaders experienced more modest paces of growth.

Source: IndexBox Platform