The Pandemic to Put a Drag on the Growth of the Global Coniferous Saw Log And Veneer Log Market

August 28th, 2020 IndexBox Leave a comment

IndexBox has just published a new report: ‘World – Saw Logs And Veneer Logs (Coniferous) – Market Analysis, Forecast, Size, Trends and Insights’. Here is a summary of the report’s key findings.

The Global Saw Log and Veneer Log Market Expanded Robustly Over the Last Decade

The global market for saw logs and veneer logs (coniferous) totaled $68.8B in 2019, increasing by 2.5% against the previous year. This figure reflects the total revenues of producers and importers (excluding logistics costs, taxes, and margins, which will be included in the final consumer price). The market value increased at an average annual rate of +1.3% over the period from 2007 to 2019; the trend pattern remained relatively stable, with somewhat noticeable fluctuations throughout the analyzed period. Global consumption peaked in 2019 and is expected to retain growth in the near future.

The countries with the highest volumes of consumption of saw logs and veneer logs (coniferous) in 2019 were the U.S. (261M cubic meters), Russia (168M cubic meters), and Canada (113M cubic meters), with a combined 46% share of global consumption. In value terms, the largest saw logs and veneer logs (coniferous) markets worldwide were the U.S. ($13.2B), Russia ($9.3B), and Canada ($5.7B), together comprising 41% of the global market.

Sawlogs and veneer logs are one of the basic materials around the world, as they serve as raw materials for the production of sawn wood and all kinds of wood-based panels, which are widely used in construction, and, at a lesser extent, in industry. The key factor determining the development of the saw logs and veneer logs market is the dynamics of construction in a particular country, which, in turn, depends on a set of economic and social factors: population growth, employment and income of the population, economic growth of the country, rates of urbanization, investment volumes and the availability of credit resources for the population, which altogether reflect the overall GDP growth.

Over the past years, the global construction industry has grown at a steady pace thanks to residential construction and major investment infrastructure projects, in both emerging markets and some developed markets. The main driver of growth in the global construction industry was the growing demand from developing countries, mainly China and the countries of Southeast Asia.

In these countries the economic growth rates are the highest in the world, which is accompanied by active urbanization and growth of the population’s income; all this together leads to an expansion of the volume of housing, industrial, and infrastructural construction. The pace of construction in the United States was also high, which was due to both the growth of the economy and the tendency to move from large cities to the suburbs, as well as active immigration; these factors were especially relevant to the saw log market due to the high popularity of wood construction materials in America.

The Lockdown and Uncertainty in the Construction Sector to Hamper the Market Growth

Until 2020, the global economy has been developing steadily for five years, although at a slower pace than in the previous decade. The slowdown in global economic growth was caused by increased political uncertainty in the world and trade wars between the United States and China. According to the World Bank outlook from January 2020, the global economy was expected to pick up the growth momentum and increase by from +2.5% to +2.7% per year in the medium term.

In early 2020, however, the global economy entered a period of the crisis caused by the outbreak of the COVID-19 pandemic. In order to battle the spread of the virus, most countries in the world implemented quarantine measures that put on halt production and transport activity. The result will be a drop in GDP relative to previous years and a sharp fall in the demand for oil, which led to extremely low prices and heavy oil production cuts.

The combination of those factors disrupts economic growth heavily throughout the world. According to World Bank forecasts, despite the gradual relaxing of restrictive measures and unprecedented government support in countries that faced the pandemic in early 2020, the annual decline of global GDP could amount to -5.2%, which is the deepest global recession being seen over the past eight decades.

In Asian countries, especially China, which faced the pandemic earlier than others, the epidemic situation improved earlier, with the quarantine measures largely relaxed, and the economy is gradually recovering from the forced outage. Thus, in China, by the end of 2020, an increase of 1% is expected (while a year earlier it was 6.1%), and in general in Southeast Asia in 2020, an increase of 0.5% is expected. In the medium term, it is assumed that the economy will gradually recover over several years as the restrictions are finally lifted.

The U.S., by contrast, is struggling with a drastic short-term recession, with the expected contraction of GDP of approx. -6.1% in 2020, as the hit of the pandemic was harder than expected, and unemployment soared due to the shutdown and social isolation. In the medium term, should the pandemic outbreak end in the second half of 2020, the economy is to start recovering in 2021 and then return to the market trend of the gradual growth, driven by the fundamentals existed before 2020 and boosted by support measures imposed by the government. In the European Union, the economy may plunge by 9% in 2020, in many other countries a comparable negative trend is also expected.

An additional serious risk for the medium-term recovery is the growth of geopolitical tensions in the world, especially between the United States and China, which are being drawn into a political confrontation on a wide range of issues. If sanctions and restrictions are tightened, it will hit global trade and worsen economic growth both in the United States and China and in many other countries involved in supply chains.

The construction sector has proven extremely vulnerable to the pandemic as due to quarantine measures, construction projects were paused, and the drop in incomes of the population makes mortgage loans less affordable. Thus, the above economic prerequisites will have the most negative impact on the production of building materials, and, therefore, on the consumption of saw logs and veneer logs.

Taking into account the above, it is expected that in 2020 global consumption of saw logs and veneer logs will drop by approx. 5%. In the medium term, as the global economy recovers from the effects of the pandemic, the market is expected to grow gradually. Overall, market performance is forecast to expand with an anticipated CAGR of +0.3% for the period from 2019 to 2030, which is projected to bring the market volume to 1.2B cubic meters by the end of 2030.

Production

For the seventh consecutive year, the global market recorded growth in the production of saw logs and veneer logs (coniferous), which increased by 1.8% to 1.2B cubic meters in 2019. The total output volume increased at an average annual rate of +1.5% from 2007 to 2019; the trend pattern remained consistent, with only minor fluctuations being recorded throughout the analyzed period. The most prominent rate of growth was recorded in 2010 when the production volume increased by 6.4% year-to-year. Global production peaked in 2019 and is expected to retain growth in years to come.

In value terms, the production of saw logs and veneer logs (coniferous) expanded modestly to $69.8B in 2019 estimated at export prices. The total output value increased at an average annual rate of +1.6% from 2007 to 2019; the trend pattern remained relatively stable, with only minor fluctuations being recorded in certain years. The growth pace was the most rapid in 2017 when the production volume increased by 9.4% y-o-y. Over the period under review, global production attained the peak level in 2019 and is likely to see gradual growth in the immediate term.

Production By Country

The countries with the highest volumes of production of saw logs and veneer logs (coniferous) in 2019 were the U.S. (278M cubic meters), Russia (181M cubic meters), and Canada (120M cubic meters), with a combined 49% share of global production. These countries were followed by Sweden, Finland, Brazil, New Zealand, Germany, Poland, Chile, China, and Japan, which together accounted for a further 30%.

From 2007 to 2019, the biggest increases were in New Zealand, while the production of saw logs and veneer logs (coniferous) for the other global leaders experienced more modest paces of growth.

Imports

In 2019, global imports of saw logs and veneer logs (coniferous) totaled 155M cubic meters, growing by 3.4% against 2018 figures. Overall, imports saw a relatively flat trend pattern. The pace of growth appeared the most rapid in 2010 when imports increased by 24% against the previous year. Global imports peaked at 165M cubic meters in 2014; however, from 2015 to 2019, imports remained at a lower figure. In value terms, imports of saw logs and veneer logs (coniferous) contracted to $8.1B (IndexBox estimates) in 2019.

China Remains the Largest Market for Imported Coniferous Saw Logs and Veneer Logs

China was the key importer of saw logs and veneer logs (coniferous) in the world, with the volume of imports accounting for 69M cubic meters, which was approx. 45% of total imports in 2019. Austria (17M cubic meters) occupied an 11% share (based on tonnes) of total imports, which put it in second place, followed by Sweden (7.3%), Japan (7%), Germany (6.8%) and South Korea (4.8%). Belgium (3.7M cubic meters) followed a long way behind the leaders.

Imports in China increased at an average annual rate of +4.2% from 2007 to 2019. At the same time, Belgium (+7.5%), Germany (+5.3%), Sweden (+4.4%) and Austria (+2.5%) displayed positive paces of growth. Moreover, Belgium emerged as the fastest-growing importer imported in the world, with a CAGR of +7.5% from 2007-2019. By contrast, South Korea (-3.4%) and Japan (-5.4%) illustrated a downward trend over the same period.

In value terms, China ($4.1B) constitutes the largest market for imported saw logs and veneer logs (coniferous) worldwide, comprising 50% of global imports. The second position in the ranking was occupied by Japan ($663M), with a 8.2% share of global imports. It was followed by Austria, with a 7.2% share.

From 2007 to 2019, the average annual growth rate of value in China amounted to +5.5%. In the other countries, the average annual rates were as follows: Japan (-4.0% per year) and Austria (-1.0% per year).

The average import price for saw logs and veneer logs (coniferous) stood at $53 per cubic meter in 2019, shrinking by -3.3% against the previous year. Over the period under review, the import price recorded a relatively flat trend pattern. The pace of growth was the most pronounced in 2008 an increase of 17% y-o-y. As a result, import price attained the peak level of $63 per cubic meter. From 2009 to 2019, the growth in terms of the average import prices remained at a somewhat lower figure.

There were significant differences in the average prices amongst the major importing countries. In 2019, the country with the highest price was Japan ($61 per cubic meter), while Belgium ($34 per cubic meter) was amongst the lowest.

From 2007 to 2019, the most notable rate of growth in terms of prices was attained by Japan, while the other global leaders experienced mixed trends in the import price figures.

Source: IndexBox AI Platform

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Supporting Global Supply Chain Strategy with Cross-Border Shipping

August 25th, 2020 Kyle Toombs Leave a comment

COVID-19 has shed light on the importance of shippers being prepared to work through unforeseen market conditions. This is especially true for cross-border shippers, whose businesses are reliant on multiple countries’ markets. To better prepare for these variations, businesses that rely on cross-border shipping should consider optimizing their supply chain strategies now by dedicating time to understand the cross-border options available to them. There are two primary choices: through-trailer and transloading.

What’s the difference?

Through-trailer shipping is the process of moving shipments in the origin trailer through border crossings. Whether exporting or importing, through-trailer shipments are handled on one side of the border with a carrier from the same country who has an interchange agreement. A different carrier from the other country handles the second part of the shipment.

To illustrate, a Mexico carrier with a trailer interchange agreement with a U.S. carrier picks up the freight. It’s taken to a secure yard where a border drayage driver transports the trailer across the border to the U.S. carrier’s yard for final delivery.

The shipment remains in the same trailer throughout the transport process, leading some shippers to believe the shipment seal is not broken. This is not necessarily true. U.S. and Mexico customs officials often break seals during border crossing inspections to verify product details.

Transloading is another option and is often considered more efficient. Transloading is the process of transferring shipments from one trailer to another at the border crossing. For example, a Mexico carrier picks up the freight and moves it to a secure yard at the border. A border drayage carrier moves the trailer across the border to a transloading facility. The facility then transfers the product to a U.S. carrier for final delivery.

The Benefits of Transloading

While both options have their pros and cons, transloading can offer some unique benefits that fall into three categories:

Additional Carrier Capacity: Transloading offers shippers additional carrier capacity because it enables them to access the full capacity of two independent carrier bases. Any U.S. carrier can pair with any Mexico carrier on a shipment, increasing available carrier options and granting additional flexibility. Through-trailer service only allows shippers to use carriers with an interchange agreement in place with a counterpart carrier on the other side of the border, limiting the capacity pool. With lessened demand not filling up truckloads, the ability to leverage the additional carrier capacity to identify which carriers’ trucks best match truckloads keeps products moving to meet consumer demand.

Lower Shipping Costs: Transloading grants access to additional capacity on both sides of the border, which means more, and potentially more efficient, carrier options. With transloading, shippers and logistics providers can identify carriers whose networks most closely align with theirs, resulting in more cost-effective rates. During a time when all departments are urged to cut costs where possible, the method with lower shipping costs benefits everyone involved.

Fewer Border Delays: The broad variety of carriers available to shippers makes it easier to source carriers on both sides of the border that best match the ideal pick-up and delivery time frames. Through-trailer shipments are dependent upon the limited capacity of the two carriers tied to an interchange agreement. In turn, this can lead to delays at borders and in overall shipments. Such delays are becoming more widespread because of the imbalance between northbound and southbound freight.

The Types of Freight to be Transloaded

Any specialized transloading facility located near a major border should have the ability to handle a variety of freight, although some types work better than others. Freight loaded on slip sheets or pallets typically fare best with transloading, especially consumer packaged goods, food and beverage, and raw materials. Transloading is also prevalent when shipping to warehouses with strict labeling and palletization requirements. Conversely, freight is better off using through-trailer shipping when it requires specialized loading, contains over-dimensional products, or includes flatbed shipments.

The needs of each shipper with a global supply chain strategy differ and come with unique challenges and requirements. It’s critical for each shipper to know their cross-border options and determine which will work best for their business. By being knowledgeable and prepared, shippers can more easily select which process to implement based on what is most important to their company at the time, whether that be price, shipping time, or carrier capacity.

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Kyle Toombs is the VP and Head of Mexico and Canada at Coyote Logistics

Archives, Global Trade Daily, News

These Global Traders are Keeping Things Moving

August 20th, 2020 GT Staff Leave a comment

Richard Jung has joined NFI as vice president of Sales. He brings the Camden, New Jersey-based supply chain solutions provider more than 30 years of international transportation experience at such concerns as Mitsui OSK Line, Maersk Lines, Crane Worldwide and Evergreen Line.

Dachser is used to moving things around, something that now extends to the Kempten, Germany-based global logistics provider’s top offices. CEO Bernhard Simon will step down in 2021 to head the family-owned company’s Supervisory Board. Burkhard Eling is slated to take Simon’s place as CEO on Jan. 1, 2021. Robert Erni, who will succeed Eling as CFO, begins his onboarding phase at Dachser on Sept. 1 as a deputy director.

Jessica Tyler has been named president of Cargo and vice president of Airport Excellence with American Airlines. She now leads the Fort Worth, Texas-based carrier’s teams responsible for the success of the cargo business and delivering operational and customer service excellence for both airports and cargo.

Gonzalo Hernandez has moved to Seoul, South Korea, to become Delta Cargo’s general manager of Cargo Sales-Asia Pacific. Jonathan Corbi has replaced Hernandez as interim general manager for the Europe, Middle East, Africa and India region. Eric Anderson, who’d had the position in Seoul, returned to Delta’s Atlanta base to become director of Cargo Strategy, Alliances and Technology.

Jess Herrera, the longest serving commissioner at Port Hueneme (California), was recently received the 2020 Latino Leadership Award from the Pacific Coast Business Times, which also named the California port’s CEO and Port Director Kristin Decas as a Top Woman in Business.

Steven Polmans, director of Cargo & Logistics at Brussels Airport Co., has decided to make a career shift by the end of 2020. Over the next months, he will continue leading the European airport’s cargo business and retain his leadership functions at Air Cargo Belgium and The International Air Cargo Association.

Matthew R. Nicely has joined Akin Gump as a partner in its international trade practice in Washington, D.C. Nicely, who arrives from Hughes Hubbard & Reed, maintains a market access-focused practice centered on trade remedies and customs work as well as on disputes before the World Trade Organization (WTO).

Scott Lincicome has joined the Cato Institute full-time as a senior fellow in economic studies, with a focus on international and domestic economic and trade policy. He began at the Washington, D.C.-based think tank in 1998 as a trade policy research assistant and previously worked as an international trade attorney with extensive experience in trade litigation before national agencies and courts, the European Commission and the WTO’s Dispute Settlement Body.

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Leading in a Volatile World: How Cultural Intelligence and Political Risk Abilities will Define Winners in the New Global Trade Environment

August 16th, 2020 Scott Rencher and Kirk Samson Leave a comment

The world economic environment has been roiled by the impact of a lengthy trade war, the far-reaching impacts of the COVID-19 pandemic, and social protests which have ramped up consumer scrutiny of company practices. This new and volatile arena presents stiff challenges requiring different skills from business leaders. While some companies will fold under the strain of the lockdowns and global stagnation, others will survive but face a brave new world where many of the trade norms and logistics habits of previous years will have disappeared. Navigating this terrain successfully will, of course, require agility and innovation but also a profound understanding of global trends, diverse cultures, and the rapidly changing political and regulatory structures of international markets.

The growing importance of cultural intelligence in business leadership will sharpen in this multi-faceted trade environment, and political risk analysis will take a critical role in shaping company strategies. Leaders with strong cultural intelligence and an understanding of political risk in this unsettled business environment will have a significant edge in finding new customers, identifying strong partners for mergers and acquisitions, and in comprehending and partnering with the new political forces that will spring up in the wake of this global disruption.

The trade conflict between the U.S. and China forced many companies to decouple their production from established facilities in Asia and reevaluate business opportunities and partnerships in the global market. The tariffs alone caused some businesses, living as they were on slim margins, to fold. Others scrambled to develop, on short notice, new production facilities, and hurried global partnerships. Savvy companies recognized the crucial importance of properly vetting the political risk of potential new locations to ensure that they would welcome new investors for the long-term. They also had to make a sober assessment of which countries might be in the crosshairs of trade conflict in these uncertain times.

On top of the political risk concerns, leaders had to ensure that the working cultures of these new sites and new partners would align with their company values and communication preferences. How would they match up culturally?

Following on the heels of this abrupt and wrenching change to the global economy came the pandemic shutdown. The challenges that were brought on by the trade conflict pales in comparison to the economic impact we’ve seen over the last few months as businesses are cut off from their producers, employees and customers in ways never previously seen in the modern global economy. For the companies that survive this shutdown, the concern is urgent – how can they best position themselves to not only survive but thrive in the new international business environment? Only leaders with a firm understanding of the tenets of cultural intelligence and the tools of political risk analysis will be able to grasp and exploit the opportunities that are developing in the ‘new’ global market.

“Common Sense” is not a Common Currency

When working globally in this volatile environment, it is not possible to prepare for any and all potential outcomes, especially when there are such unpredictable variables in people. What may be “common sense” to one person may not be common to another. Each person is influenced by culture, personal experiences, and cognitive interpretation which impacts values, attitudes, and behaviors. So how do global business leaders prepare for the unexpected when there is no playbook for every situation and every person? They develop their cultural intelligence skills.

Cultural intelligence is an interpersonal skill that has emerged in the last two decades from the same body of research as emotional intelligence. It is the capability to function and relate effectively with others in culturally diverse contexts. Cultural intelligence is a crucial tool to help leaders adapt and work effectively with people who have different cultural orientations, values, and expectations.

How do political risk and cultural intelligence go together?

When leaders get involved in a foreign culture, there are many cues that can be easily missed or misunderstood. Most leaders will be familiar with objective culture cues, such as a country’s economic performance, political system, and social institutions. They may become familiar with social customs, history, arts, language, food, and kinship relationships. Market analysis reports and “Doing Business in…” books look at this objective data, comparing national measurements and the visible artifacts between two or more cultures. However, the subjective culture cues are harder to interpret and certainly challenging to measure. These cues are hidden psychological inputs such as values, beliefs, norms, and assumptions. For example, a leader may be well-read on the legal, political, and social frameworks of foreign culture but understanding how conflict is expressed (or not expressed) and resolved in a particular culture is the crucial domain of cultural intelligence.

Leaders with an individualistic and confrontational communication style may struggle when working with a counterpart who prioritizes relationships and harmony. If leaders are not aware of the subjective cultural cues, deciphering “silence” in those contexts may leave a wide interpretive space between compliance and defiance. If any leader assumes his or her own cultural perspective and behaviors are superior ways to “get things done”, that leader will almost certainly fail to build trust and succeed in a foreign environment.

Even great cultural intelligence does not deliver business success if politics threaten market stability. Thus, cultural intelligence needs to go hand-in-hand with an understanding of the relevant global and local politics and risks. A definition of political risk for global leaders is whether business interests and market stability are threatened by unexpected or chaotic government action. Those terms – unexpected or chaotic – highlight the difference between government action detrimental to business interests that is normal, and which can be forecast (regulations, new taxes, changes in currency exchange rates) from government action that is unexpected. This issue of ‘expected’ and ‘unexpected’ is a clear nexus between the arts of cultural intelligence and political risk: a profound understanding of a culture can help navigate political risk and reactions to outside pressure.

Everything is ‘unexpected’ if leaders do not understand the culture, but savvy and adept practitioners are much more capable of responding appropriately, in culturally intelligent ways, in the face of government actions and reactions.

How can global leaders sharpen their cultural intelligence?

Cultural intelligence and political risk analysis can be learned and share certain key characteristics. An ability to speak a foreign language not only improves your cultural knowledge, it also gives you a key tool to understanding the risk factors in a foreign market as you can delve into primary sources of political and business reporting.

While cultural competency is one component of Cultural intelligence, it is a skill that goes well beyond just facts and knowledge. It is made up of four capabilities, each of which can be developed and sharpened:

Motivational

What is it: This relates to the leader’s desire and ability to direct attention and energy toward learning about and functioning in intercultural situations.

One tip to improve it: Leaders who connect deeply with their motivation, it helps them persist and be open to work with people who think and behave differently from them. Some leaders enjoy travel. Others enjoy watching how other people solve daily problems. For others still, it may be the prestige of a successful merger & acquisition.

Cognition

What is it: This refers to a leader’s knowledge of the norms, practices, and conventions in different cultures. This is commonly addressed in trainings and in books on objective and subjective culture.

One tip to improve it: Learn the language, read about the culture, read the local news, and understand the socio-economic and political history of a culture. Be aware these are meant to build archetypes for understanding the mindset of a culture and not stereotypes to judge or question other cultural norms.

Metacognition

What is it: This refers to the leader’s cultural consciousness and awareness during intercultural encounters.

One tip to improve it: The culturally intelligent leader plans prior to an engagement. They ask questions about the culture, who they are going to meet, and about different possible cultural scenarios. During an engagement, they evaluate and assess what is familiar and what is not familiar and adjust accordingly. After an engagement, an effective leader will write down their thoughts and debrief from their cross-cultural experience. One of the most important assets to a culturally intelligent leader is having a trusted cultural attaché who is independent and can give a leader unbiased feedback, interpret, and connect some of the cultural dots.

Behavior

What is it: This refers to the leader’s ability to exhibit appropriate verbal and nonverbal actions appropriate for the intercultural interaction. A culturally intelligent leader must know when and be willing to adapt to most situations. They also must know and be able to communicate why they are unwilling to adapt in a given situation.

One tip to improve it: A leader must be aware of their own beliefs and behaviors. If a leader comes from an individualistic, competitive culture and is working in a culture that is more community-oriented and cooperative, they need to adjust how they give praise. Calling out an individual for an accomplishment may not be received well by the individual or the group.

While these may seem like “common sense”, when a leader is out of their cultural element, a leader with low cultural intelligence may become overwhelmed, disoriented, angry, or frustrated. Some leaders may retreat and appear withdrawn, while others may magnify their behaviors and come across as ignorant and insensitive. I’m sure we’ve all seen and maybe been that “Ugly American” at some point. Cultural intelligence helps leaders be more confident and effective in foreign and sometimes uncomfortable situations.

Moving forward in the coming decade

The 2020 Bloomberg Innovation Index selected the top 20 most innovative countries. The U.S. is #9. It is tempting to think that your own experience and common sense has shown you “the right way” to get things done. While that may be true in a familiar environment, it may not be the most effective way to get things done in other contexts (other families, companies, communities, or social systems). Great innovations come from harnessing divergent thinking. While the US emphasizes agile methods and shared leadership, other top innovative countries like Germany emphasize cooperative planning; South Korea culturally emphasizes hierarchical, top-down decision making. Both have outranked the US in innovation for the last five years of this index. None of those cultural approaches are necessarily superior. They are simply different ways innovation occurs in other cultural contexts.

As we look out over the next fifty years, with nearly 77% of the world’s population living in Africa and Asia, these economies will continue to benefit from young workforces, improvements in infrastructure and education, and a growing middle class. If you want to work in these regions, regardless of culture, people generally prefer to do business with people they can trust. Building trust requires both parties to adapt and find agreement on values, respect, and mutual outcomes. Understanding why how to adapt in each situation are hallmarks of a culturally intelligent person.

Peter Diamandis recently noted that if companies ‘are not disruptively innovating now, you are done. The old ways of working are done. We are going to see 20% of companies go out of business’ as a result of the pandemic lockdown. However, innovating successfully also requires that you use the tools of cultural intelligence and political risk analysis to establish your business in the right locations. Disruptive innovation will not pay dividends if you suddenly lose your valuable intellectual property in a country that does not value and support the rule of law.

Your global teams will not be successful or engaged in producing new solutions and innovative products if you cannot break down the communication and collaboration barriers using cultural intelligence. The U.S. represents only 5% of the world’s population. Despite being a wealthy, critical market for any conceivable service or product, it is just a sliver of the available total global market. Companies, stressed by an economic collapse which is unlike anything seen in a generation, must boldly jump into the global market with both feet to thrive. To succeed in this new world, modern leaders need to bring an analytical tool kit which is well-stocked with political risk insights and cultural intelligence methodologies. If business leaders don’t apply these key perspectives in their global strategies, the volatile market forces that continue to churn around us will disrupt even the best of business plans.

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Scott Rencher, a former Regional Director and Country Manager at Euromonitor International, is a CQ Certified, Cultural Intelligence evangelist and business strategist.

Kirk Samson, worked as a U.S. diplomat and international law advisor and is the head of Samson Atlantic LLC; a Chicago-based consulting company providing global political risk analysis.

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RURAL EXPORT CENTER SUPPORTS THOSE IN THE AMERICAN BREAD BASKET SEEKING NEW GLOBAL MARKETS

August 6th, 2020 GT Staff Leave a comment

The U.S. Commercial Service in July opened the Rural Export Center (REC) in Fargo, North Dakota, to promote rural America’s exports and equip its companies with the research and resources to compete and win in the global marketplace.

“The Rural Export Center addresses the unique needs of rural American companies by providing in-depth market research and training designed specifically for them,” explained Ian Steff, assistant secretary of Commerce for Global Markets and director general of the United States and Foreign Commercial Service.

“These companies are a crucial part of the continued growth of the American economy,” Steff continued, “and providing them with these essential, customized tools will help bolster their success in both the domestic and international markets and will increase U.S. exports worldwide.”

Companies from anywhere in rural America can request virtual consultations and assistance through the REC and many can apply grants from the Small Business Administration’s State Trade Expansion Program toward REC services. Armed with REC research, the company then collaborates with their local U.S. Commercial Service Trade Specialist to implement plans and strategies informed by REC analysis.

“Together, they leverage the global network of U.S. Commercial Service offices located in U.S. Embassies and Consulates in more than 75 markets around the world,” states a U.S. Commercial Service press release.

Archives, Global Logistics, Global Shippers 101, Global Trade Daily

How to Improve Your Company’s Shipping Process

August 3rd, 2020 Jonas Myers Leave a comment

Having international shipping capabilities has practically become a must for any serious online store. At the very least, you need to have a solid shipping service within your country if your company is going to grow and properly sell your product. So, it stands to reason that having an overall efficient shipping service is something you really ought to invest in. Luckily, we are here to give you a couple of ideas on how to improve your company’s shipping process.

Why is it important to have an efficient shipping process

The shipping process is, in essence, delivering goods from point A to point B. So, why should you spend your time and money on improving this basic service? Well, to put it simply, it is because people have grown to expect efficient shipping. Now, you can opt for outsourcing your shipping, but this is often the more expensive, less efficient way. With a bit of research and investment, you can organize your own e-commerce shipping process, and therefore have the necessary freedom to improve it.

Ways to improve your company’s shipping process

There are literally thousands of different ways to improve your company’s shipping process. Depending on where your shipping services are at now, you can be looking at smaller improvements like boosting your navigation process, to larger ones like implementing a major overhaul of your logistics equipment. So, before you decide on any of these upgrades, we suggest that you take a closer look at your company. More often then not, there is at least one improvement that will give you huge value for your investment. So, plan long and hard before you implement anything.

Streamline shipping orders

A surprising number of shipping issues have nothing to do with bad navigation or poor equipment. Most of them are due to poor internal communication and bad optimization of the beginning of the shipping process. So, if there is one place we suggest you start, it’s at the beginning. Try to pick up on the little details that make the shipping process needlessly long. These details may look insignificant on their own, but once they pile up and combine, they can easily take up a lot of time and energy. Go through the whole process both as a shipping coordinator and a customer. If you don’t have much experience with shipping, you can always hire a professional to go over your process and give you tips on how to improve.

Improve communication

In order to have an efficient shipping service, you need to have a top-notch communication system within your company. This means that your workers need to be able to communicate with each other whenever, wherever. If this is not the case currently, make it so. There are a ton of mobile apps that can make communication easier. Among the ones we can recommend are:

-Slack

-Chanty

-Troop Messenger

-Brosix

Be sure to try out a couple and to read reviews before you opt for one. To make communication more efficient, you can even look into digitalizing your shipping process as much as possible. Recent events with COVID-19 have certainly incentivized shipping companies to adopt digital shipping solutions.

Use tracking technology

One of the ways to both improve your company’s shipping process and keep your customers happy is to utilize tracking technology. Being able to have a live feed of where your shipments are will make the whole process much easier to handle. And, if you can give that info to your customers, you will effectively make them happier. In fact, most customers have grown to expect shipment tracking. This is why, sooner or later, you will probably have to implement it within your shipping process.

Be aware of courier services

When it comes to international shipping, you can rarely afford to work on your own. More often than not, you will have to coordinate with other shipping companies and courier services in order to ship efficiently. So, our advice is to prepare for your international shipments and look for local courier companies in advance. While you may have an easy time finding a shipping company in the U.S., finding one in Europe or Asia can prove to be a time-consuming process. Especially if you have to overcome the language barrier in order to set up a shipping agreement. So, do yourself a favor and prepare the groundwork for different areas before you start shipping internationally.

Prepare for customs clearance

Another way to make international shipping more efficient is to prepare for customs clearance. Keep in mind that your shipments will spend a lot of time at customs, especially if you don’t have the necessary paperwork and you don’t follow the strict guidelines. So, before you ship off your goods, ensure that the person in charge of them has everything necessary for smooth customs clearance.

Keep your customers informed

The final way in which you can better your shipping process is to always keep your customers informed. Issues and hiccups do happen, even with the most efficient shipping companies. So, while you should do all that is possible to improve your company’s shipping process, don’t expect to have a full-proof system. If and when a delay does happen, you shouldn’t shy away from informing your customers. In the long run, this act will ensure that you have better reviews.

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Jonas Myers has worked as a professional shipping coordinator for over 20 years. During that time he helped companies like U. Santini Moving and Storage improve their shipping capabilities and increase their travel efficiency. He now focuses on raising his daughters, woodworking, and on writing helpful articles about shipping.

Archives, Global Logistics, Global Trade Daily

SUPPLY CHAIN COMPLIANCE CHALLENGES AND SOLUTIONS

July 16th, 2020 Haylle Sok Leave a comment

In the current trade atmosphere both domestic and international supply chain players have a myriad of concerns to consider while determining the next step in successful operations. Specifically, in 2020, these concerns have challenged shippers, carriers, manufacturers, distributors and other trade players to mitigate risk in new ways on an almost monthly basis.

The year kicked-off with the highly anticipated IMO 2020 regulation disrupting ocean shippers and carriers. IMO 2020 left many scratching their heads and trying to figure out the best way to navigate compliance and the latest trade tariffs without halting operations. For the most part, shippers were prepared, and IMO wasn’t nearly as scary as doomsayers made it out to be. However, for those that waited until the last minute to implement required changes, the transition left some compliance pains and costs that were avoidable.

Fast-forward to mid-January, and the appearance of the COVID-19 pandemic. Global trade and its supply chains were abruptly impacted, as the coronavirus started in China and eventually moved on to Italy, South Korea and other global markets. Businesses rapidly started temporarily shutting down amid a global panic. Supply and demand shifted while talk of force majeure slips—acknowledgements that contracts cannot be fulfilled due to unforeseen circumstances—shined a light of hope for the devastated Chinese suppliers. As of the second week in March, the National Trade Promotion System confirmed the issuance of more than 4,000 force majeure certificates as the U.S. prepared for the virus to disrupt domestic markets and business.

“The virus is the primary cause of the supply-chain impact but the secondary causes coming from the virus include financial, regulatory, compliance and legal,” explained David Shillingford with Resilience360 at the 2020 Modex conference. “One thing supply chains hate is variance, and there’s going to be a lot of variance and volatility on the demand side.”

So, what do these things have to do with compliance? The answer is all-encompassing. These and other disruptions will ultimately prove which players in the supply chain can stand the test of compliance and regulation risk mitigation and which ones are simply unprepared. For now, companies across the supply chain would be doing themselves a favor by reviewing regulations, disclosures and other compliance-related documentation and processes to ensure the highest level of compliance is achieved, if not already. As the National Law Review puts it in the article “Managing the Commercial Impact of the Coronavirus: An Effective Supply Chain Response Plan:”

Public companies should review and make accurate required disclosures, in the event that business operations are impacted such that a reporting requirement is triggered. All companies who are parties to credit agreements and other financing arrangements should review existing MAC clauses, and potential impacts on the borrower’s financial covenant compliance, in order to determine whether any proactive conversations with lenders may be warranted.

The takeaway is simple: Proactive measures should be in place among all links in the supply chain before, during and after major industry disruptions and changes in policy, regardless of the specific market operations. Factors including transparent communications, emergency planning and navigating an evergreen supply chain atmosphere can prevent costly fines and waste. Shifts in supply and demand are inevitable and it’s not a matter of if regulations will be accounted for, it’s a matter of when they will be accounted for. Don’t wait until your business is required to prove compliance. Instances like a global health crisis are one of many examples of how noncompliant companies can create unneeded delays or worse if found to be noncompliant. Visibility is key and it starts with your business knowing every moving part of the chain and your involvement with its success.

Visibility tools are every company’s best friend when it comes to compliance, providing a new level of security for both small and large-scale operations. Compliance issues come in a host of various forms from cyber risk and government sanctions to ethical trade practices and supporting sustainable practices and demand. And more recently, global supply chains have been shaken by natural disasters and global health concerns. Whether it’s a natural or unnatural occurrence, there’s no reason to be unprepared when it comes to compliance and preparation. These are all issues that require accountability on behalf of the partners involved. Ignorance is not excuse in the modern age where technology advancements, procurement and systems of checks and balances are created at each point.

“Knowing who you’re doing business with and ensuring your supply chain is compliant isn’t just a necessity; it’s good for the bottom line,” states Hemanth Setty, senior product director, Supply Chain Management & Compliance Solutions at Dun & Bradstreet, in his blog “7 Steps to Supply Chain Compliance.” Setty dives into why and how companies are challenged with a new list of onlookers requiring compliance and an ongoing approach rather than quick fixes to placate regulators.

He notes that the modern supply chain player now has “investors, suppliers, partners, customers and the media” to satisfy when it comes to compliance. Solutions presented keep department collaborations and meeting the expectations of customers at the top. But before a company can meet expectations, they must understand exactly what is expected and that requires transparency from the beginning, throughout the chain. This includes a pulse check on data and ensuring it’s up to date and preparing for the unexpected. Setty also advises that all corporate policies and procedures are understood across the board to avoid inconsistencies when onboarding new vendors and adding to the business.

The subject of compliance doesn’t have to be messy. In fact, the solution to many compliance issues is clear. When compliance is a priority in business, all other parts of the chain follow suit. Keep communications open and well understood, keep ethics at the forefront of operations, and be mindful of the changing regulations and potential disruptors that can easily shake the bottom line. Understand what expectations are and how critical it is to meet them. Utilize technology to support large-scale supply chains and eliminate mistakes with updated data and processes.

Archives, Global Trade Daily, State Spotlight

U.S. Metros With the Most Small Businesses Per Capita

May 13th, 2020 Construction Coverage Leave a comment

Small businesses across the United States face dire circumstances following the COVID-19 outbreak. While each individual small business might seem inconsequential to the broader economy, in aggregate, these firms are critical to the country’s financial well-being.

According to the most recent data from the U.S. Census Bureau, small businesses with fewer than 50 employees makeup approximately 95 percent of American business establishments and employ 40 percent of private sector workers. These 7.4 million small businesses (or 2.27 per 100 residents) also account for roughly a third of total private sector payroll.

Unfortunately, research shows that small businesses and their workers are particularly vulnerable during recessions and other periods of economic hardship. A recent survey conducted by the New York Fed found that even prior to the pandemic, 64 percent of small businesses faced financial challenges in the preceding 12 months. The same survey reported that a two-month loss of revenue would cause 86 percent of firms to take a serious financial action, such as using the owner’s personal savings, taking out a loan, or cutting staff salaries.

Moreover, small businesses in some industries have a larger economic impact than others. Among small businesses with fewer than 50 employees, those in accommodation, food services, and retail trade—coincidentally, the sectors hit hardest by COVID-19—employ the most workers. These industries, combined, account for more than 16 million employees and $362 billion in annual payroll.

Like the businesses themselves, small business employees are also more financially vulnerable than their large-firm counterparts. Data from the Bureau of Labor Statistics shows that fewer small business employees have access to retirement benefits, healthcare benefits, paid sick leave, life insurance, or disability insurance. Troublingly, only half of employees in small businesses have health insurance through their company and only two-thirds have paid sick leave.

While small businesses are a critical component of the national economy, some parts of the country depend more on small businesses than others. To find the metropolitan areas with the most small businesses, researchers at Construction Coverage, a review website for workers’ compensation insurance and construction software, analyzed the latest data from the U.S. Census Bureau. The researchers ranked each location according to the number of small businesses per 100 residents. Researchers also included statistics on the total number of small businesses, the number of retail, accommodation, and food service businesses, and the share of workers who are self-employed. For the analysis, small businesses were defined as those employing fewer than 50 workers.

To improve relevance, only metropolitan areas with at least 100,000 people were included in the analysis. Additionally, locations were grouped into the following cohorts based on population size: large metros (1,000,000 residents or more), midsize metros (350,000-999,999 residents), and small metros (less than 350,000 residents).

Here are the large metropolitan areas with the most small businesses per capita:

For more information, a detailed methodology, and complete results, you can find the original report on Construction Coverage’s website: https://constructioncoverage.com/research/cities-with-the-most-small-businesses

Archives, Global Shippers 101, Global Trade Daily

Effects of COVID-19 Outbreak on the Car Shipping Industry

May 5th, 2020 Scarlett-Rose Duffy Leave a comment

There is hardly an industry in the world that hasn’t been affected by COVID-19. While tourism and travel industries have arguably suffered the most, industries related to shipping are not far behind. So, what precisely are the effects of the COVID-19 outbreak on the car shipping industry, and how will it behave in the following months? Well, that is what we are here to find out.

How COVID-19 affects car industry

To get a good understanding of the effects of the COVID-19 outbreak on car shipping we first need to take a look at the car industry itself. After all, a big part of car shipping is closely connected to car manufacture and sale. So it stands to reason that any effects that the coronavirus outbreak has had on the car industry will have a ripple effect on car shipping.

Reduced production

The best way to imagine the effect of the COVID-19 pandemic is to envision it as a wave. It started off in China and then made its way into numerous countries. This means that it did not affect all countries at the same time. Therefore, there is a notable time difference when the COVID-19 started effecting companies depending on where those companies were situated. And there will be a notable time difference to when these companies will be able to start recovering from the effects of COVID-19.

Worker safety

The first effect that COVID-19 has had on both the car industry and the car shipping industry is the mandatory safety standards for workers. Standards such as:

-Physical distancing.

-Hand sanitation.

-Mandatory masks and protective gloves.

-Increased ventilation.

Countries were quick to instate these measures, as they are the most cost-effective. And they will also be the last ones that the countries are able to lift. This, as you might guess, makes the overall industry a bit slower. Not only do workers have to take the time to adhere to these regulations, but, there is also an increase in state inspections that ensure that those regulations are met.

Little to no demand

As the coronavirus pandemic got stronger, the economy of the affected countries grew weaker. After it became evident that the safety measures weren’t enough, countries turned towards lockdown and curfews. This has led to a significant drop in trade. The full economic repercussions of the coronavirus pandemic are still hard to quantify. But, if there is one thing we can say for sure, it’s that the demand for cars has plummeted as a result. People were fearful of losing their jobs. And seeing that 22 million Americans claimed for unemployment benefits as a result of COVID-19, those fears were not without ground. And the last thing that unemployed or scared people do is go out of their way to purchase cars.

The following effects of COVID-19 outbreak on the car shipping

So, with the reduced trade and halted production, what were the following effects of the COVID-19 outbreak on car shipping? Well, not good. There is hardly a shipping company that hasn’t taken a hard financial hit due to worldwide lockdowns. Companies that also deal with medical shipping did fair a bit better since a lot of countries urgently needed medical supplies. But, when it comes to car shipping, companies have slowed down to a crawl.

International shipping

Since almost 80% of car manufacturers have some part of their production done in China, they were among the first industries to feel the effects of the COVID-19 outbreak on car shipping. Once the outbreak started it was almost impossible to ship cars or car parts outside of China as the country soon went into lockdown. This scenario, as we mentioned, occurred in subsequent countries as they became affected by COVID-19. International trade, and therefore international shipping of cars, has slowed down considerably. Now, since it is fairly safe to ship cars even during COVID-19, companies managed to tackle a large number of shipments scheduled before the COVID-19 outbreak. But during the hiatus of the pandemic, international car shipping was practically non-existent.

Local shipping

When it comes to local shipping, car shipping companies are doing a bit better. Companies that are situated in a country with a decent local economy had no trouble dealing with local car shipping needs. After all, intrastate shipping has far fewer restrictions during the COVID-19 outbreak.

Moving industry

A big part of car shipping is related to the moving industry. After all, one of the reasons why people choose to ship their cars is because they need to move. Or, they have already relocated and they need their car shipped to them. So, with this in mind, what was the effect of the coronavirus on the moving industry (when related to car shipping)? Well, again, not good. Relocation was practically non-existent in the past couple of months. This, in turn, means that people didn’t ship their cars due to relocation. There was a decent amount of people moving back to their home states when quarantine measures were instated. But, international car shipping was difficult, to say the least.

Recovery

If the car shipping industry is to recover from the effects of COVID-19, it needs to do so slowly. As of writing this article, the coronavirus pandemic is slowing down and countries are lifting certain safety measures. Therefore, we should see an increase in international trade, especially from China (which is quite important for car shipping). But, if we are not careful, we might see another coronavirus pandemic in the near future. The key thing here is for countries and companies to slowly tackle the recovery process and to keep public health in mind while increasing trade. Only by doing so will the effects of the COVID-19 outbreak on the car shipping industry wane. After all, the last thing we want is for another wave of the coronavirus to hit.

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Scarlett-Rose Duffy is an established expert in the moving and shipping industry. She is most known for work as an industry advisor, in addition to her work with All Season Movers NJ.

Archives, Global Shippers 101, Global Trade Daily

How to Save Time and Money With Your International Shipping

April 27th, 2020 Paul Rehmet Leave a comment

Whether you are just dipping your toes into international shipping, or you are a veteran who wants to update the firm’s processes, there is always more you can do to make your shipping practices more streamlined and efficient. After all, if you are going to compete with local players, then you need to be offering the best deal possible on international shipping. How you can do that is going to be unique to your firm, but some general practices can help.

From managing customer’s expectations of speed to optimizing your packaging, investing in cargo insurance to getting help when you need it, read on to learn how to save time and money with this guide to international shipping.

1. Balance your need for speed.

Generally, the quicker you want your shipments to be delivered, the more expensive the shipping is going to be. Therefore, it is essential that you balance your need for speed with your budget and your customer’s expectations. Customers expect reliable delivery times, not necessarily the fastest possible time, and in many cases, they are happy to wait a couple of days to bring costs down.

Therefore, your best strategy is to provide them with a variety of delivery options to choose from. That way, they can decide how much they are willing to pay and how long they can wait for their goods. Keep in mind that for most companies, the goal is to limit the number of individual shipments and instead maximize the amount of cargo shipped. This generally brings about the most efficient results.

When organizing international shipping for your customers, it is essential that you make their experience as pleasant as possible. One of the best ways to do this is by providing them with accurate shipping information that keeps their expectations in check.

2. Optimize your packaging.

One of the most overlooked ways to reduce international shipping costs is to optimize your packaging. The ideal packaging keeps your products safe and secure while also reducing shipping weight and box size so as not to receive additional charges. In order to find the optimal packaging for your goods, you need to take different factors into consideration, including a product’s height, weight, and volume.

From there, look for boxes that fit your product while leaving minimal wasted space. Additionally, choose lightweight packaging materials that still protect your items. Depending on what you are shipping, you may want to consider utilizing standard sized packaging that is provided by your freight provider, as this will remove your firm’s requirement to source custom box sizes.

When planning your packaging strategy, it is vital to think dimensionally, which means knowing the length, width, and depth, which together comprise the dimensional weight of your goods. If you are shipping in bulk, keep in mind that you want your packages to be shaped so that they can be expertly arranged to fit into the smallest size carton.

3. Invest in cargo insurance.

Just as you have insurance for your home, car, and health, it is also essential that you have coverage for your cargo. Unfortunately, it only takes one international shipping incident for your firm to feel adverse effects, which is why cargo insurance is so important. By getting this insurance, you will be covered for damaged goods, cargo theft or loss in transit, and any other unforeseen events that affect your products.

While many carriers and freight forwarders offer liability insurance, this is generally limited to a specific monetary amount and has many exclusions. Therefore, you don’t want to solely rely on this liability insurance because it usually is not enough to cover the costs of severe loss or damage. On the other hand, cargo insurance will render you a more comprehensive level of protection, ensuring you can recover the full value of lost, damaged, or stolen goods.

Having cargo insurance is highly recommended because it provides you with greater peace of mind which, in the long run, makes for a more efficient and streamlined international shipping process. The last thing you want is to be worried about your firm going under because something happens to a shipment that is out of your control. Do your company a favor and invest in cargo insurance.

4. Get help when you need it.

No matter what size your company is, what products you are shipping, or whether you are moving individual parcels or sizable cargo, there is no need to do it all on your own. After all, there are experts in these fields who have the knowledge and experience to help you reduce your costs and the number of resources you have to spend on shipping logistics.

By opting to work with an online freight forwarder, such as Shipa Freight, you are not only setting yourself up for shipping success now but also in the future. From generating an online quote to scheduling your shipments and then tracking them, an online freight forwarder provides you with all the tools you need to make your international shipping processes as streamlined as possible.

For example, as an individual, it can be challenging to locate the ports and other destinations that you need, but a high-quality freight forwarder can find them for you. Additionally, you will be personally guided by a representative throughout the process so that you can be assured that you are choosing the best options for your firm. When working with Shipa Freight, you will always be treated as a partner, not a commodity.

Final Thoughts

When it comes to international shipping, if you want to come out on top, then your firm must incorporate as many cost-saving and time-effective measures as possible. By including these steps into your international shipping strategy, you will be well on your way to having the most efficient shipping process possible.

What do you think are the most effective steps for reducing costs and time related to international shipping? What strategies does your firm use?

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As Chief Product Officer for Shipa Freight, Paul Rehmet is responsible for translating the vision of Shipa Freight into an easy-to-use online freight platform for our customers. Formerly Vice President of Digital Marketing for Agility, Paul managed Agility’s website, mobile apps, content marketing and online advertising campaigns. In his 25-year career, Paul has held various technology leadership positions with early-stage startups and Fortune 500 companies including Unisys, Destiny Web Solutions, and US Airways. Paul has a Masters in Software Engineering from Carnegie Mellon University and a Bachelor of Computer Science from Brown University. Paul is based in Philadelphia.