The Spanish Flu and the Stock Market: The Pandemic of 1919

March 11th, 2020 Bryan Taylor, Chief Economist, Global Financial Data Leave a comment

Everyone is concerned about the coronavirus and how it is impacting the global economy. Parts of China have been quarantined to prevent the spread of the virus and the world is wondering how the virus will disrupt supply chains between China and the rest of the world and how it will impact global travel. Will cities that are cut off from the rest of the world be able to contribute to the global economy?

The main precedent for the coronavirus is the SARS epidemic of 2002-2004, but you should also look at the more serious Spanish Flu pandemic of 1919. It is estimated that the Spanish Flu infected 500 million people worldwide, or about 27% of the world’s population and killed between 30 million and 50 million people, or about 1.7% of the world’s population. Were a similar pandemic to hit the world today, this would translate into 100 million deaths. This made the Spanish flu one of the deadliest epidemics in history. The pandemic occurred in the last year of World War I and military censors in France, Germany, the United Kingdom, United States and other countries were told to control information on the flu fearing that it would affect their ability to win the war, but there was no censorship on the flu in neutral Spain where King Alfonso XIII took ill. This gave the world the false impression that the flu originated in Spain, hence the name.

The Spanish flu came in three waves as is illustrated in Figure 1. The first wave, which made people notice the flu, occurred in July 1918. The second and most deadly wave occurred in October 1918 and resulted in millions of deaths. A final wave of the flu occurred in February 1919, and after that, the flu disappeared. Either the virus mutated to a less lethal form or doctors got better at treating or preventing it. Just as no one knows for sure exactly where the virus came from, no one knows why it disappeared.

Figure 1. Death Rates of the Spanish Flu, June 1918 to May 1919

It is interesting to contrast the response of the stock market to the Spanish flu in 1919 with the coronavirus in 2020. The Dow Jones Industrial Average fell over 2,000 points in four days out of fear that the coronavirus will continue to spread and impact the global economy. The fear is that cities will become quarantined, supply chains will be broken, world trade will be impacted and growth in the global economy will slow down.

However, the impact of the Spanish Flu on the stock market was minimal. If you look at the Dow Jones Industrial Average in 1918 and 1919, you can see that the stock market was relatively unaffected by any of the three waves of the Spanish flu. Of course, the Spanish flu occurred in 1918 while World War I was raging in Europe so the war had a larger impact on the stock market than the flu. There were few if any global supply chains that the Spanish Flu could disrupt because the war made supply chains nonexistent. The second and worst wave of flu occurred at the end of World War I when peace was finally achieved after four years of devastating destruction. It is interesting that there was little impact on the stock market of World War I ending on November 11, 1918. Perhaps euphoria about the conclusion of the war was offset by concerns about the Spanish flu.

It is comforting to see that when the final wave of the Spanish flu subsided in February 1919, the market began an increase of 50% which lasted until November of 1919. Whether this increase occurred because of the end of World War I or the end of the flu or both is impossible to say, but it does provide encouragement that once the coronavirus begins to subside, the market will bounce back once again.

Figure 2. Dow Jones Industrial Average, January 1918 to December 1919

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Dr. Bryan Taylor is President and Chief Economist for Global Financial Data. He received his Ph.D. from Claremont Graduate University in Economics writing about the economics of the arts. He has taught both economics and finance at numerous universities in southern California and in Switzerland. He began putting together the Global Financial Database in 1990, collecting and transcribing financial and economic data from historical archives around the world. Dr. Taylor has published numerous articles and blogs based upon the Global Financial Database, the US Stocks and the GFD Indices. Dr. Taylor’s research has uncovered previously unknown aspects of financial history. He has written two books on financial history.

Global Logistics, Global Trade Daily, Stories

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

January 9th, 2020 Bernhard Simon, CEO, Dachser Leave a comment

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

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

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

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

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

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

High Costs of Rail Freight vs. Ocean Freight

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

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

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

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

Would adding more train routes change the situation?

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

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

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

And what about the Maritime Silk Road?

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

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

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

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

Conclusion

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

Bernhard Simon is the CEO of Dachser Logistics

Global Trade Daily, International Trade, Stories

How U.S. Trade Policies are Speeding the Development of a Multi-Polar Global Economy

November 7th, 2019 Kirk Samson Leave a comment

Several years in to the multi-front trade conflict led by the current U.S. administration, the world economy teeters on the edge of a possible recession. The International Monetary Fund (IMF) estimates that up to $700 billion in global trade could be wiped off the books by the end of next year due to the trade war. Much of the direct loss, of course, is tied to reduced trade between the U.S. and China, but other trading regions, such as the rest of Asia and Europe, are impacted by this global slowdown. How is this shaping future trade flows?

Of course, there are some immediate winners in this tussle between the two economic giants. Countries such as Mexico and Vietnam have seen sharp increase in trade as businesses scramble to find new production sites that would allow them to duck tariffs. Hidden behind these headlines, however, is perhaps a more important story; the rapid development of a multi-polar global economy.

Observers wringing their hands over the U.S.-China trade dispute may have missed what else is going on in the world. Europe has been negotiating trade agreements at a rapid clip, finalizing deals with Canada, Japan, Singapore, Vietnam, several African regions and South America (MERCOSUR) over the last three years. Africa is launching the Africa Continental Free Trade Area (AfCFTA), a 54-nation trade block that is hoped will dramatically increase inter-African trade. After a snub from the U.S., the Trans-Pacific Partnership (TPP) was retitled the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and is now an active free trade area among 11 partner nations. Asian countries are considering a 16-nation trade pact called the Regional Comprehensive Economic Partnership (RCEP). In brief, world leaders are not sitting on their hands waiting for the U.S.-China dispute to get resolved. They are seizing opportunities to trade elsewhere.

World demographics make this multi-polar trading system inevitable. Despite the United States’ tremendous economic power, it represents less than five percent of the world population. Although it is a wealthy sliver of the overall market, that means that 95% of the world’s consumers still reside elsewhere. Over the next few decades, rapid population growth in Asia and Africa will continue to change these market numbers, with 79% of the world’s consumers residing in Africa or Asia by 2050. The global middle class will continue to grow outside of ‘traditional markets’ and by 2030, over half of the world population will be considered middle class. Some estimates suggesting that over 90% of future middle class growth will come in Asia and Africa.

This dramatic surge in wealth and consumer spending power outside of Europe, the U.S. and Japan demands more infrastructure to support logistics. China’s initiatives to help itself carve out a primary role in developing these new markets through the Belt and Road program are well known, but Europe has also jumped into the seize a piece of the action, especially in Africa, and programs to upgrade infrastructure at the state level are fueling building from South America to the Philippines.

“It’s my expectation global trade will become even more fragmented over the next decades,” notes European logistics expert Louis Coenders, owner of the Dutch advising firm De Transportheker, which has been consulting on transportation, warehousing, and global distribution since 2010 and has stressed to clients the growing importance of diversity in logistics as the world becomes multipolar. “You cannot rely on one single source. From a risk management perspective, it’s never smart to put all your eggs into one basket. That also applies to international trade.” Coenders further noted that the growing middle class in places like Eastern Europe, Asia and Africa will encourage infrastructure changes to bring products into these markets as consumer spending rises. For the moment China has an edge into many of these areas, as illustrated by the first train shipments from Alibaba arriving into Liege, Belgium just last week as twice-a-week rail shipments are now sent directly from China to the EU courtesy of the improved rail system.

When the U.S. resolves its trade disputes with China (and potentially the EU, Turkey, Russia and other targets of the current administration), it will find that the unintended consequence of this long-term conflict is that the world has by necessity sped up economic exchanges, and adjusted trading systems and flows to accommodate this new multi-polar world. While some of the trade may ‘come back’ to the United States, the changes in world population and fast-paced creation of new free trade blocks outside of North America means that other markets will seize this opportunity to deepen their trade relations and the U.S. will find itself in a more competitive and varied trading environment. This change was inevitable, but the recent trade war has sped up its development. Agile, strategic companies will react to this market change by diversifying and partnering with colleagues in the growing markets of Africa and Asia. Those that are slow to change will find it hard to remain competitive in this brave new trade world.

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Kirk Samson is the owner of Samson Atlantic LLC, a Chicago-based international business consulting company which offers market research, political risk assessment, and international expansion assistance. Mr. Samson is a former U.S. diplomat and international law advisor who lived and worked in ten different countries.

Global Trade Daily, International Trade

Worried about trade wars’ impact on your supply chain? Here are three ways to manage risks.

October 31st, 2019 Mike Landry Leave a comment

Companies live in a world now where a tweet about tariffs and trade wars can rattle markets, prompt uncertainty, and question whether supply chains and global operations are positioned to handle the speed, unpredictability, and interconnectedness of the global economy. The prevalence and threat of trade wars generate pervasive uncertainty across the globe- carrying wide-reaching implications for overall global growth. Increased cost of goods sold from upstream suppliers are squeezing margins and forcing global supply chains to adapt and react mid-stream. Despite a robust US economy, and general stability across global markets, the escalating trade war is increasing prices and making raw materials harder to obtain – threatening the positive trajectory of domestic and international economic activity.

How is this playing out in real time? Let’s look at an example: An automaker may have its engine manufactured in Germany, its transmission in Mexico and its GPS from South Korea with final assembly in the US. Tariffs could force automakers to move production, reducing economies of scale and increasing prices for the end consumer. Processing the resulting number of variables, scenarios, and decision matrices brought on by the trade war is a daunting challenge, to say the least.

Despite these marketplace, competitor and regulatory challenges, digital technologies, such as data analysis, machine learning and artificial intelligence (AI) provides companies with the resources and insights to manage risk and anticipate events. Today’s leading supply chains run on data, monitoring for risk and opportunity, and blend human and digital strategies to make decisions in real time. This is called the cognitive supply chain. It is interconnected, self-learning, predictive, adaptive and intelligent, and it can help leaders react faster to risks outside of their control. As such, here are three approaches that can help leaders manage, anticipate, and address supply chain disruptions.

Leveraging predictive analytics

Data has always been at the center of the supply chain and helps leaders make decisions. With internet of things and the growing number of connected devices, organizations can be more proactive in how they use data to enable insights.

The expanse of datasets, and increasing ease to obtain them, allows proactive organizations to leverage data to help drive their decision structure. The resulting variety of perspectives creates an opportunity to align against broader company goals. For example, how does the planned production schedule of a Swiss supplier affect my organization’s market position in Asia this holiday season? What are the potential risks, and how can they be mitigated? Data availability opens the door to these solutions. Enablers from digital technology provide:

-Digital linkage – integrated sales, production and delivery processes which have seamless flow of information.

-Control tower –visibility of all processes across the internal and external supply chain.

-Centralized collaborative e-hub – a connected ecosystem where all partners interact seamlessly with improved flow of information.

-Integrated lean logistics – applying lean principles to eliminate waste, errors and defects, minimizes lead-time and materials impacted by tariffs.

-Virtual logistics – enable on the fly deployment decisions with new logistics models.

Creating the digital twin

Today’s supply chains have growing complexities with an international network of suppliers and service markets. Efforts to integrate with external partners has led to complicated systems and processes, overwhelming supply chain leaders with data and metrics. Add in the variability of demand, and a supply chain is pushed back on its heels, reacting to demand variability. One uniquely positioned solution is called a “digital twin”.

A digital twin is a model of the supply chain. The foundation is a transparent supply chain strategy, comprised of rules on how to absorb and refine costs, or pass through to customers downstream. A digital twin uses the multi-tier supply chain data to rely upon predictive outcomes and sensory response. Uncertainties such as pending tariffs can be run through “what if” scenarios to understand the service, cost, and risk implications of changes, decisions and unexpected market conditions.

These examples are not intended to be definitive outcomes; alternatively, they allow internal and external supply chain groups the opportunity to setup a plan of action which mitigates service risk while optimizing the collective cost. Organizations must learn the discipline of using “what if” scenarios for their analysis and guide the implementation of both short term and long-term strategies and events.

For example, what is the correct level of holiday inventory investment that should be imported into the United States from China, given the potential tariff increase in the coming months? Which alternatives provide lower risk? Successful organizations will use their digital twin to move up the supplier tiers of a supply chain, and anticipate disruption, and arrange alternative routes and suppliers.

Consider managed services

Continuous investment in technology and talent with the skill and knowledge to use it can be expensive. The process engineering required to maximize ROI, along with the associating change management inevitably strains an organization’s resources. As a result, many organizations have found relief in managed services of their supply chains. It enables companies to focus on their core competencies of products and services, while contracting out the outcome: the best customer service at the optimal cost.

The consolidation of supply chain expertise into a vendor eases the necessary people, process, and technology investment. It allows organizations to shed the strain of daily variability, while maintaining the ability to make decisions and focus on the long term growth of the company. With the increasing pressure on tariffs, organizations will look to these partners to leverage their digital tools and technologies to limit the downstream effect across the supply chain.

Creating a cognitive supply chain is essential for answering the threat trade wars present. International supply chains will continue to become more expensive to maintain and manage. Businesses that are successful in meeting these complexities and adopting digital capabilities will be best equipped for the uncertainty that lies ahead.

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Mike Landry is the supply chain service line leader at Genpact, a global professional services focused on delivering digital transformation.

Executive Education, Global Trade Daily

Simon Paris, Chair of the World Trade Board & CEO of Finastra, Provides a Snapshot of this year’s World Trade Symposium

October 23rd, 2019 Simon Paris, Chair of the World Trade Board & CEO of Finastra Leave a comment

Protecting world trade from the current vicious cycle of trade tensions makes it imperative that those in a position to effect change – public and private sectors – work together; quickly and cohesively. Chairman of the World Trade Board and CEO of Finastra, Simon Paris, discusses three ways in which committed organizations can bring about a new pro-trade paradigm, even against the backdrop of today’s protectionist narrative, to lift people out of poverty globally and enable long-term growth and prosperity for all.

Across the globe, protectionist rhetoric and policy initiatives have become increasingly normalized. Tensions and tariffs continue to escalate with the World Trade Organization estimating that $339.5bn¹ in trade is now at risk from import restrictions – the second highest level ever recorded. Amidst this trend, we as business leaders, policy makers, and engaged thinkers must deepen our commitment to free and open trade benefiting communities and workers.

The path to open trade and ensuing economic growth is under shadow. The global economic uncertainty² risk index hit an all-time high this year. Ongoing friction between the United States and China has not only caused a tangible 12% drop in US imports from China, but triggered aftershocks across other Asian economies as a result of closely integrated supply chains³. Japan and Korea have made headlines with their own trade war that risks their trade relationship worth about $85 billion a year⁴ and the future economic relationship between the United Kingdom and the European Union amidst Brexit is uncertain.

In response free traders should commit to three acts of solidarity, with the aim of reversing – or as an absolute minimum, reducing – the pervasive change that continues to threaten trade as we know it.

Three commitments that will drive change

Firstly, we must be persistent in our reinforcement of the pro-trade narrative; uniting to protect and promote open trade as the unequivocal foundation for global prosperity and economic inclusion. Secondly, we must continue to investigate ways in which we can reduce the SME funding gap, currently estimated at $1.5 trillion⁵, which is precluding both innovation and financial independence on a global scale. It is imperative that we seek out new ways to free up finance or neutralize the perceived risk of lending to small firms. At a time where the least developed countries represent less than 1% of world exports⁶, we must find solutions that unlock the latent value within SMEs to stimulate competition, innovation and economic growth, and reduce the disparity of wealth in a sustainable way.

Finally, we must examine how open technology can act as the enabler for inclusive, sustainable trade. As global supply chains become increasingly complex, our goal should not be measured on a binary figure of turnover or profit, but on the ethical and sustainable impact of our technological innovation; our technological social responsibility (TSR). How can we use technology, collectively, to ascertain the provenance of materials, improve the health and wellbeing of workers in remote locations, reduce the cause and effects on environment pollution of long-distance transportation or minimize the impact of waste and disposal? How can we use open finance technologies – and by this, I include open systems, open software, open APIs, open standards and open partner networks – to transform supply chains and encourage the formulation of more relevant and inclusive trade models, in support of ethical trade?

Protecting against threats, known and unknown

A global marketplace helps ensure a sustainable model of financial inclusion that protects future generations against wealth disparity and isolation. I believe that it is only through a powerful combination of forward-thinking policies, collaborative mindsets and funding, underpinned by open finance technology, that we can deliver the change so desperately required, that promotes equality and opportunity, and reverses the trend of poverty and protectionism. It is time to find solutions to today’s threats to open trade and together protect against further polarization and the unseen threats of tomorrow.

Simon Paris will be opening the third World Trade Symposium, held in the Grand Hyatt, New York on 6-7 November. The event brings together policy-makers, trade finance luminaries and thought leaders to openly collaborate and effect change. Register Today!

1. https://www.wto.org/english/news_e/news19_e/trdev_22jul19_e.htm

2. http://policyuncertainty.com/

3. https://www.oecd.org/newsroom/international-trade-statistics-trends-in-first-quarter-2019.htm

4. https://www.nytimes.com/2019/08/28/business/japan-south-korea-trade.html

5. https://www.wto.org/english/news_e/spra_e/spra241_e.htm

6. https://www.wto.org/english/res_e/statis_e/wts2019_e/wts2019_e.pdf

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Simon takes responsibility for Finastra’s strategic direction and growth. His leadership steers the company as it realizes its open platform vision, encouraging industry-wide collaboration to spark innovation and transform the next generation of financial services.

A firm believer in the principles of doing well by doing good, Simon chairs the World Trade Board and is passionate about how technology and open trade can drive financial inclusion and improve people’s lives.

An inspiring and trusted Fintech thought leader, Simon speaks regularly at large-scale events including the annual World Trade Symposium, Paris FinTech Forum and The Milken Asia Summit. He is a strong advocate for diversity and inclusion, with refreshing and candid views on equality in the workplace. He was also named in Bank Innovation’s ‘Innovators to Watch’ list for 2018.

Simon joined Finastra (formerly Misys) as President in 2015, was appointed Deputy Chief Executive Officer in 2017 and became Chief Executive Officer in June 2018. He brings more than 20 years of sales, management and global leadership expertise to the company, having previously held the role of President, Industry Cloud, at SAP. Prior to that he was a senior consultant with McKinsey & Company.

He holds a degree in Business Administration (MBA) from the INSEAD Business School in France and a Bachelor’s degree in Business & European languages from the European Business School.

Global Trade Daily, Trade Cycle

How to Successfully Conduct Global Business During a Time of Geopolitical Instability

August 26th, 2019 Scott Ferguson, CEO of the World Trade Centers Association Leave a comment

The way organizations approach global commerce is undergoing a radical change. Geopolitical instability is slowing growth in a volatile global economy as organizations are forced to adapt their tactics, making complex decisions that increase operational costs and, if mishandled, make them less competitive in an unforgiving business landscape. So, what can organizations do to navigate this ‘new normal’? As an association whose members deal with small- to medium-sized enterprises (SMEs) at the local level on a regular basis, we at the World Trade Centers Association (WTCA) released our second annual WTCA Trade and Investment Report: Navigating Uncertainty, in partnership with FP Analytics. The report focuses on how cities around the world are optimizing trade and investment opportunities despite challenges, both economic and political, and how SMEs benefit from these strategies.

The report shows that the majority (83%) of business leaders interviewed believe that global economic uncertainty will stay at its current elevated levels (30%) or get worse (53%) in the coming year. However, 69% of business leaders polled are cautiously optimistic about the coming year, as the report shows that resilient cities—defined as those that outperform their countries during economic downturns—have Foreign Direct Investment (FDI) as a percentage of GDP twice as high as non-resilient cities.

Despite their differences in location and culture, resilient cities have a set of commonalities that allow trade and investment to thrive. These characteristics include diversified economies and strong service sectors. In fact, resilient cities on average saw the share of services in GDP grow by 3.3% over the last five years; more than double the pace of non-resilient cities. Their populations are largely educated, with many inhabitants having college or other advanced degrees, as well as diverse, with higher rates of foreign citizens. On average, foreign citizens represent 11.6% of resilient cities’ populations, which is one-quarter higher than that of non-resilient cities. These cities also tend to have strong transportation infrastructures, including both airports and public transit options.

Building Resilience

The report also identified specific tactics used by resilient cities that organizations, including business and civic leaders looking to improve their own city’s resilience, can mirror.

In resilient cities, key stakeholders are prioritizing direct diplomacy, meeting face-to-face to navigate obstacles created by regional or national governments. By cutting through political red tape, organizations have been able to create new meaningful relationships with each other and strengthen existing ties. The ability to engage in a direct dialogue creates efficient business interactions that are beneficial to all parties. For example, World Trade Center (WTC) Arkansas has organized multiple diplomatic trade missions with Mexico. As a result, its exports to Mexico are growing 3.6 times faster than to any other country.

Cities are also proactively building programs to attract and retain skilled foreign citizens. For example, Twente, located in the eastern Netherlands, is evolving from a region focused on machine-building and textiles to one with an economy driven by high-tech systems. To retain young, skilled workers from across the globe, WTC Twente created an Expat Center that offers a range of services, including Dutch language courses, visas and work permits, housing, and support for families, as well as social events with the goal of enticing technically-skilled foreign workers and their families to integrate into the community for the long term.

Turning Obstacles into Opportunity

Economic turmoil affects everyone, but not always in the same way. For some, the current geopolitical reality presents opportunity. City leaders are adapting to these geopolitical changes and establishing themselves as cost-efficient and low-risk trade and investment partners to capitalize on the situation. FDI is being redirected towards these agile cities who have recognized the advantages created by this global uncertainty, and supply chains are shifting and realigning based on new benefits. Competition for FDI is escalating (global FDI slowed 27% over the last year, according to the OECD) and the private and public sectors need to work hand-in-hand to create attractive fiscal and tax environments, and institute policies that will attract business.

Cities are also increasingly investing in both high-tech industries, and SMEs to ensure they are able to attract FDI at a time when this investment comes at a premium. These high-tech industries will lead to future growth and play a central role in the next industrial revolution. Additionally, partnerships with major research institutions are being used to create new technology and modernize existing tech. For instance, in Delaware, private agriculture technology or “ag-tech” companies have partnered with universities to pioneer better technology in seeding, pest management, antibiotic reduction, and biopharmaceuticals.

SMEs are well suited to adapt quickly in the face of change and evolving economic realities, which enables them to capitalize on changing conditions. However, their size can prevent them from competing on a global scale. To combat this, programs that help SMEs move forward given limited resources can be critical in encouraging and nurturing growth opportunities. As an example, WTC Toronto created the Trade Accelerator Program (TAP), a six-week program that connects SMEs with export and business experts to train them on developing export plans fit for the global market. This program has now been adopted by several other WTC members in Canada, including Vancouver and Winnipeg.

At the moment the global economy is relatively unpredictable, and increasing risks for businesses have made sound strategic business planning more difficult at a time when it is absolutely vital. Knowledge, preparedness, and agility are key traits cities and businesses need to acquire in order to achieve success and growth. Despite the prevailing conditions, with a strategic approach and tactics proven to increase resilience, organizations can optimize current trade and investment opportunities and set themselves up for success now and in the future.

To review the full 2019 WTCA Trade and Investment Report: Navigating Uncertainty, including commentary from WTCA Members, visit www.WTCAReports.org

Global Trade Daily

Time Management in a Global Workforce

May 16th, 2019 Chris Vandersluis Leave a comment

Time management used to be a much simpler challenge for businesses. Staff were given a schedule, they appeared, put a card in a clock then did their work. Workers were all co-located, with similar schedules.

The globalized economy has made time management of the workforce a much more involved process.

Now, some staff may be in the same office, but thanks to improved connectivity that is available to virtually everyone, it is just as likely that they are distributed across many locations, time zones and countries. Connectivity makes it possible to be a mobile worker, participate in distributed work, work from home, or do work share or “Smart Work.”

Many organizations are embracing this new trend. According to globalworkplaceanalytics.com, more organizations embraced telecommuting in 2016 than they did in 2011. The advantages to having remote workers where possible are numerous, including reductions in workspace cost. The trend towards global and mobile workers who are not co-located is so strong that many larger employers find themselves unable to compete for top talent without these more flexible work options.

Time management in such a world becomes much more challenging. If your staff members work from home, how do you determine that they are actually working? Suddenly, a passive timesheet system seems not to be enough. Should you impose monitoring, or forget about time altogether and focus on getting work complete? For more and more companies that have employees in multiple time zones, how do you manage starting and stopping times in systems such as project management or timesheets, which are centrally located? If you have contractors who don’t work by the hour, should you track time the same way you do for full-time staff? If you have people in multiple countries, how do you deal with things as simple as a timesheet in the correct language, or accessing the system from their location?

All of these are common time management challenges in today’s world.

My company’s experience with deploying a commercial off-the-shelf project-based timesheet system for global organizations has been about dealing with those challenges. With some clients, having software that is available both for on-premise deployment or in the cloud deals with connectivity issues from different parts of the world. Management is able to use the data collected from timesheets to better assess and manage employees to maximize productivity. For languages, we have had to make interfaces that are adjustable by the end user into the language of their choice without affecting the data. For staff accessing the system from many countries, we made it available in both an on-premise and Software as a Service subscription model.

According to CNBC, 70 percent of workers globally work remotely at least once a week. So for those people who are on the move, having a free Mobile App for Apple and Android devices has been a critical element of success. Our decision was to make the mobile application available on both Android and Apple devices, and to make it free for anyone with a Time Control timesheet license.

With the spread of workforces across many countries, even something as simple as “when is the weekend?” is not certain. In the US, it is almost always Saturday and Sunday. In the Middle East, it might be Friday and Saturday. For some workers, the weekend is no longer relevant as they work at different times during the week. We’ve had to support multiple calendars simultaneously in the background of our system in order to support collecting timesheets for all workers with different calendars and different schedule situations.

It’s fair to say that this trend towards global resources won’t stop anytime soon. As organizations consider how to manage the scheduling of time, and tracking time spent and what it is spent on, it is important to consult with stakeholders in different situations and different locations to ensure your systems will be able to keep up.

Chris Vandersluis is a public speaker, project management industry expert, and president and founder of HMS Software, a leading provider of enterprise timesheet and project management solutions. Over the last 30 years, he has helped hundreds of organizations, both small and large, improve their business management performance.

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Global Connectedness Reached All-Time High in 2017

February 15th, 2019 Haylle Sok Leave a comment

Global connectedness reached all-time high numbers in 2017 as a direct result of a substantial increase in, “flows of trade, capital, information and people across national borders” in a decade, according to DHL’s newly released Global Connectedness Index. Additionally, the delay of implementing key policy changes contributed to the increase of international economic growth.

“Even as the world continues to globalize, there is still tremendous untapped potential around the world. The GCI shows that currently, most of the movements and exchanges we’re seeing are domestic rather than international, yet we know that globalization is a decisive factor in growth and prosperity,” explains John Pearson, CEO of DHL Express. “Increasing international cooperation continues to contribute to stability so companies and countries that embrace globalization benefit tremendously.”

Among the countries that topped the list of “Most Globally Connected,” the Netherlands, Singapore, Switzerland, Belgium and the United Arab Emirates took the spot for top five in the world.
North America, the Middle East and North Africa ranked as the top three regions for capital and information flows.
“Surprisingly, even after globalization’s recent gains, the world is still less connected than most people think it is,” commented GCI co-author Steven A. Altman, Senior Research Scholar at the NYU Stern School of Business and Executive Director of NYU Stern’s Center for the Globalization of Education and Management. “This is important because, when people overestimate international flows, they tend to worry more about them. The facts in our report can help calm such fears and focus attention on real solutions to societal concerns about globalization.”
To read the full report, click here.
Source: DHL