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Ports Must Consider Pros and Cons Before Automation Implementation

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Archives, Global Trade Daily, Ocean Ports

Ports Must Consider Pros and Cons Before Automation Implementation

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Ports across the globe have been slow to embrace digital technologies in comparison to other supply chain industries. Most container ports still rely heavily on manually operating massive container yards, which presents several challenges, especially in large ports.

The biggest port in the U.S., the Port of Los Angeles, handled 5,039,363 twenty-foot equivalent units (TEUs) in 2018 alone, for example. In ports of this size, finding a specific container would be a considerable challenge without technology.

Certainly, many obstacles faced by ports can be overcome with the introduction of technology. People, equipment, infrastructure and other critical assets can all be connected across the ports using Internet of Things (IoT) devices, such as sensors and digital radios. This would not only improve productivity but also reduce operational costs in the future.

With a significant number of potential benefits, many may wonder why port operators are hesitant to embrace the Industrial IoT (IIoT). This is because many port operators focus on the cons of port automation as opposed to the long-term benefits of automating their key processes.

Emergence of the IIoT and Its Benefits

Industries across all sectors have taken advantage of the technology revolution, using IIoT devices to increase efficiency and reduce costs. IIoT devices are often more sensitive and precise than IoT devices, as they are often used in environments where precision is critical. Examples of these applications include the monitoring of health equipment, using robotics in factories, and analyzing data so users can better understand the performance of their operations.

A significant benefit of IIoT is that is has opened up opportunities to automate services for a number of industries, in particular ports. Automation can completely transform ports from mostly manual operations to a much more machine lead process, which can result in optimized operational productivity and efficiency.

Pros of Port Automation

The significant reduction in potential errors and the opportunity to introduce more services are just some of the reasons port automation will be an unmissable opportunity for many port operators. As many industries have already discovered, the pros certainly outweigh the cons when it comes to automation.

Increased efficiency is a significant benefit of port digitalization, with reports stating that productivity could rise by 10 to 35 percent. Examples include:

-Helping to predict and forecast demand by monitoring the arrival-and-departure patterns of container ships

-Easy to schedule the maintenance of equipment for optimal availability

-IIoT devices used to allocate equipment and frontline staff, as well as adjust the allocation in real-time

-Machine intelligence used to make plans ever more accurate

-Data collection standardized and used to help make ports and terminals more efficient

Port automation is also highly cost-effective; this is because while the initial start-up cost may be high, in the long-term operational expenses can fall by 25 to 55 percent. There are multiple reasons for this reduction in operating costs. For example, with the right network in place, operators can predict performance across the network, reducing human failures.

The landscapes of ports, in which their physical environment is structured and predictable, makes them a great platform to introduce new and innovative IIoT technologies. Ports are also able to generate large amounts of collected and processed data, which can be used by IIoT devices to increase efficiency and reduce costs massively.

Cons of Port Automation

The digitalization of ports is not without its drawbacks, though. Due to the ever-changing environment of ports, making sure data isn’t misaligned—or even absent—is extremely difficult. Any potential dead zones will prevent ports from collecting and exchanging information efficiently. This is particularly an issue for automated ports as unlike conventional ones, they can’t contain problems at individual functions or process steps, so there must always be close collaboration among activities.

Equally, with the extremely complex nature of ports, such as the necessary operational and security functions involved in the successful movement of cargo, the network used will need to be highly secure and highly mobile.

The initial investment cost of automation is exceptionally high with such a complex network being needed and is not affordable for every port, particularly those in developing nations. There are also potential updates that need to be considered to ensure ports can keep up with advancements in software. Ignoring these advancements could leave ports open to security breaches, which would be highly damaging.

On top of this, installing and maintaining an automated port requires a new skill set within the port industry. Finding these specialized technicians will not only be challenging but also costly for ports.

Enhancing the Pros, Reducing the Cons

Rajant’s Kinetic Mesh technology can provide robust and mobile-enabled connectivity that ports need to capitalize on the opportunities of IIoT fully. By using Rajant’s innovative BreadCrumb radio nodes with patented InstaMesh software protocol, connected port infrastructure has the ability to communicate wirelessly peer-to-peer, via multiple simultaneous connections. Information can be shared back and forth in a fully mobile, highly resilient web of communications.

Rajant’s BreadCrumb nodes are easy to install, as well as cost-effective. More BreadCrumbs can be introduced seamlessly to the network depending on the needs of the ports. The BreadCrumbs can also be directly deployed on a port asset—for example, a vehicle, quay crane, RTG, straddle carrier, light mast or drone—essentially turning that asset into a network node. These can then communicate not only with centralized access points but with other moving nodes within the network as well, meaning that all can share information back and forth in a highly interconnected web of communications—providing total network mobility.

DP World Antwerp

Rajant’s wireless Kinetic Mesh technology was chosen by BT to help form a wireless data backbone that could meet DP World Antwerp’s complex demands. Rajant’s “Make-Make-Make-Never-Break” method of forming connections played a significant role in this, ensuring that no connections have to be broken for new ones to be made, minimizing DP World Antwerp’s interference challenges.

What’s more, the Rajant network dynamically adapts to an autonomous, mobile environment of moving vehicles, such as containers or large ships, guaranteeing that DP World Antwerp can keep up with its ever-evolving, in-motion environment. Rajant’s ability to combine fixed, wireless, and mobile nodes together ensures that DP World Antwerp’s critical data always gets to where it needs to go–rapidly.

Handling more than 2.5 million containers every year, 3,000 trucks daily and almost 950 ships annually, it is vital that DP World can carry out its operations efficiently and effectively. With the help of Rajant and BT, DP World is now able to provide secure and resilient connectivity to 900 of its employees at Antwerp Gateway. Furthermore, DP World can analyze and optimize its processes and operations, such as the movement of vehicles around the terminal. This ensures that DP World Antwerp’s employees have an end-to-end view of operations, enabling timely analysis and decision making.

The Living Network of Tomorrow

In today’s competitive world, the demand for IIoT devices in ports will only increase. With the help of Rajant’s Breadcrumb nodes, which can be easily installed onto any object to turn it into an IIoT device, meeting this demand will become easier than ever.

By creating a living network such as this, port operators can protect their assets with proactive monitoring and improved situational awareness, whilst meeting the increasing demand to move a higher volume in and out of their ports.

With Rajant’s Kinetic Mesh technology, any potential cons associated with port automation will disappear, while the possibilities for the future of ports expand.

______________________________________________________________

Gary Anderson is senior vice president of Business Development with Rajant Corp., a Malvern, Pennsylvania-based provider of wireless telecommunication equipment. Anderson’s background includes several high-tech business start-ups, including the founding of AEI, where he served as president and CEO, and the director of sales at Vivato. Selling AEI in 2001, he was subsequently nominated by the Bush Administration to serve as the Assistant Secretary for the Department of Veterans Affairs. However, after Sept. 11, 2001, he withdrew his nomination and volunteered to assist the White House in establishing he Transportation Security Administration and the Department of Homeland Security. The retired U.S. naval officer joined Rajant in January 2006.

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Archives, Global Trade Daily, Trade Credit Insurance

Payment Practices Deteriorating Across Asia

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COVID-19 is causing an unprecedented interruption in business activity across Asia as global trade is projected to plummet by as much as 15%. Businesses are up against major liquidity constraints. As a result, payment practices are deteriorating. The Payment Practices Barometer survey of businesses in the region by trade credit insurer Atradius reveals a concerning trend of rising payment default risks, bad debts and insolvencies.

Late Payments Run Rampant

The survey, which included firms in China, Hong Kong, India, Indonesia, Singapore, Taiwan and the United Arab Emirates, found that late payments affect more than half (52%) of the total value of B2B invoices issued in Asia, largely due to liquidity restraints.

China and Singapore both are trending better than the region’s average, but India and the UAE are in the opposite boat. Late payments there amount to 66% and 72%, respectively, of the total value of B2B credit sales, locking up a significant portion of working capital for weeks at a time. Payment terms in both India and the UAE are significantly longer than in other countries surveyed (UAE has the longest, with 57 days on average). Companies operating in either India or the UAE need to be aware of the situation, as it can be a notoriously difficult and long process to recover outstanding receivables through local courts.

Across the board, late payments have a negative cascading effect for Asian firms: When businesses don’t receive timely payment, they in turn delay payment of invoices to their own suppliers or turn to domestic supplier credit for short-term trade financing. Chasing overdue invoices also ends up eating up a large portion of a company’s time, resources, and funds. One silver lining here: firms in Hong Kong, Taiwan, and China appear to be quite successful in their collection efforts, indicating an overall benign business environment in these markets.

It is important to note that the survey was conducted in March 2020 and conditions have only further worsened since then. Supply chains have been thrown into chaos by the global spread of COVID-19. Major portions of the economy have been shut down for months, and it’s impossible to immediately resume normal supply chain operations. Every part of the production process is cloaked in uncertainty, causing enormous liquidity pressures. To make matters worse, after being less than fully operational for weeks or months, companies are also seeing a downgrade in their creditworthiness, making it difficult for them to obtain funding lines from banks.

Minimizing Credit Risk in the COVID-19 Era

Undoubtedly as a response to the current challenging environment, companies across Asia have expressed an increased commitment to tighter credit management.

To protect their accounts receivables, many Asian firms are increasingly turning to credit management tools and tactics, such as reducing single-buyer concentrations, self-insurance, credit insurance or demanding cash payment, letters of credit or payment guarantees. Self-insurance remains preferred for many companies in the region, especially India.

Many companies rely on a variety of tactics, and the popularity of each varies by country. In the UAE, for instance, bank guarantees and letters of credit are popular, whereas Hong Kong firms prefer to use self-insurance and trade credit insurance and Chinese businesses heavily rely on guarantees of payment prior to a credit-based sale.

Open account credit for B2B transactions is gaining popularity for Asian firms overall, as evidenced by a trend toward lengthening payment terms. The UAE leads the pack among surveyed countries in terms of percentage of the value of B2B sales made on credit (64%) and payment terms (57 days). For comparison, the regional average is 56% and 43 days.

A shift toward open account credit may be in part due to businesses wanting to offer more competitive sales terms amidst the U.S.-China tariff uncertainty or to better negotiate supply chain and trade challenges created by the pandemic. This is likely the case in Taiwan, for instance, where there was previously reluctance to use open account credit – now, credit-based B2B sales make up 54% of the total value of B2B sales, compared to 43% last year. China has also seen a reversal of typical payment practices and now more than half of B2B sales in the country are made on credit.

A Reason to Hope?

Even considering the challenging economic conditions and deteriorating payment practices, firms across Asia express optimism in the future, with many survey respondents expressing belief that both sales and profits in their industry will improve in the near term. But again, that was in March, and we have every reason to believe that this optimism has since faded.

While the total impact of the global pandemic remains murky, what is clear is that businesses throughout Asia would benefit from coherent credit management strategies that have buy-in from all parts of the business, including sales. It’s more important than ever for companies to know their customers, keep tabs on their customers’ financial standing and regularly review both their credit management strategies and the liquidity positions of trading partners.

__________________________________________________________________

Gordon Cessford is the president and regional director of North America for Atradius Trade Credit Insurance, Inc.

E-commerce
Archives, Global Logistics, Global Trade Daily, Special Reports

E-commerce Will Continue to Grow in Importance Post-COVID

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As we enter the second half of 2020, the global COVID pandemic seems to be slowing down in some places and taking wing in others. Through all the waves, however, one thing is becoming certain: we still have quite a while to go until things go back to “normal.”

For businesses, this brings a host of challenges. Although there’s a necessity to flatten the curve, economies cannot halt for the next year or so until scientists (or nature) come up with a solution. Ultimately, this means that some form of adaptation is necessary.

E-commerce growth in 2020

One of the most significant changes that we saw in consumer shopping habits in 2020 was the rapid growth in popularity of e-commerce. Just a few months back, online shopping was considered unreliable by most individuals over 65. Almost overnight, however, it has become an essential practice. And some numbers testify to the growth of e-commerce.

For example, for Q1 2020, Amazon reported a 29% increase in North American and an 18% increase in worldwide sales. What is even more interesting is that grocery sales have grown a full 8%, compared to the slower growth of 1% during previous years.

On the whole, this is a clear indicator that e-commerce is gaining importance in today’s society. And not just in categories such as tech, apparel, or entertainment. It’s also becoming more relevant when it comes to purchasing health or other essential products. 

With this increased exposure, it’s also likely to expand further during the coming months and years. After all, it’s widely available, convenient, and no longer a foreign concept to most.

For business owners, this prospect of accelerated growth sends a clear message. If they haven’t already, now is the time to make e-commerce an integral part of their business operations.

Changing work models

Adapting to changes can be difficult. And many have already made leaps to keep their operations going during the pandemic. From working remotely to introducing online shopping, these changes have made it possible for small businesses to carry on during these trying times.

But the truth is, small businesses need to put much more effort into their e-commerce webshops to allow them to work with the same efficiency as physical businesses.

For Americans, spending habits have changed drastically since the beginning of the year. The retail industry has taken a big hit, as have companies working in travel, hospitality, entertainment, and even health.

Moreover, there is a tendency towards turning to local shops for a variety of products. Of course, this is a lifeline to small companies who have taken the biggest hit since March. But, it can also be bad news for those whose business models were developed to serve a more global market.

This is why businesses need to start acting now.

Following trends

Over the next period, e-commerce businesses will need to be much more vigilant about how they approach the future. 

First and foremost, they will need to employ risk-mitigating strategies, which will allow them to continue reaching customers. These include diversifying supply chains, implementing DTC models, relying on automation, as well as re-thinking the entire business process.

Furthermore, they’ll need to pay special attention to meeting customers’ needs. Basic conversion-boosting practices such as search engine optimization, decreasing page load times, improving copy and visuals, will all influence user experience, and thus sales and rankings.

One way to future-proof e-commerce businesses is to take a hands-on approach to mobile optimization. Right now, mobile shopping is witnessing growth, and this trend is only likely to continue. If they want to keep up, businesses should adjust early on by adopting mobile optimization tools that are popular among their users.

Moreover, with fewer opportunities to make sales face to face, web design should receive a higher amount of attention. Do you deal with products for which tactile or sensory information is crucial when it comes to sales? Consider whether the visual content on your pages could bridge the gap between online and in-person shopping experiences.

You can look for inspiration from companies that are managing to do this with success. For example, Zoma is an online mattress retailer. Their product collection pages were designed to clearly illustrate the differences between various types of mattresses. This allows users to find the product that will meet their needs with much less hassle.

source: zomasleep.com

Putting customers first

Providing more in-depth information about your products and keeping your website visitors’ needs in mind is a big step in the right direction. However, it’s not going to be enough.

In e-commerce, sales rely on impeccable user experience, so you need to come up with ways to provide it to your customers. Things like free shipping, 24/7 customer service, or high-quality instructional content all play a part in driving conversions.

For this reason, it’s not a bad idea to call attention to the changes you’re making to your service. Are your locations open? Are you taking orders? Are you taking any extra precautions to protect your buyers? It may be wise to use a popup or banner on your website’s homepage to communicate to customers about how COVID might be affecting your business. A good example of this is the banner shown at the top of supplement machine manufacturer LFA Capsule Fillers website.

source: lfpacapsulefillers.com

As the current situation unfolds, you may even want to create a separate section on your website, addressing your response to COVID. That’s what retailer Massimo Dutti did. On their dedicated COVID-19 page, they call attention to an extended returns period to 30 days, as well as free standard home delivery.

source: massimodutti.com

For business owners, these changes are quite small. Though they require an investment in terms of time, they do provide a high level of value to customers. Ultimately what they’re doing is establishing a greater sense of trust, which is critical for any business, but especially for those just now expanding into e-commerce. In the end, trust translates into customer loyalty (and higher conversion rates). 

Navigating uncertain terrain

With the global situation being unpredictable at the moment, consumer behavior is more volatile than ever. What this means for businesses is that they need to be ready to make quick adjustments. And the only way to do this is to pay closer attention to everything that is or isn’t working.

One thing’s certain: e-commerce will continue to grow at a rapid rate, especially in the coming months. For this reason, do your best to follow current trends. Future-proof your business, mitigate risks, and find ways to improve your service. This way, you’ll be decreasing the chance of being run over by the times, and allowing your business to reach new heights.

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Archives, Executive Education, Global Trade Daily

How Global Leaders Can Manage Knowledge, Risk, and Talent Management

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Risk management, according to Karl Wiig, Chairman of Knowledge Research Institute, is an operational approach to represent knowledge management. But, in this case, it seeks to apply organizational knowledge in order to satisfy and exceed employees’ expectations and improve talent well-being.

All executives need to be aware of how to better control risk management, which coincides with talent well-being. To do this, they should understand the mediating role of knowledge management. This may be the answer executives need but may also lack the fundamental fortitude necessary to be an all-encompassing approach to predict talent well-being within companies. Due to this limitation, the focus of this article is based upon the critical role of risk management which allows a rich basis for understanding the mechanisms by which talent well-being is influenced.

Executives see knowledge management as an employee’s capabilities in securing benefits received by joining in risk management. Therefore, talent well-being has been determined as resources accessible through knowledge management to enhance executive operational risk management. One good example, in which Victor Sino, a director of Operational Risk Management at a prominent large organization states that operational risk is a risk of loss due to failed talent well-being, processes, systems, and an external event. Some of these can be controlled by executives and others are risks that have to be factored into strategic decision-making.

Companies were assumed to be defenseless entities against threats, and opportunities happened in business environments that were serendipitous versus planned and organized. Organizational risk management was developed to offset problems before they occur and to adjust or ship resources accordingly in the event of a threat. Executives must recognize problems, and work hard to overcome them. First, executives will need to adopt knowledge management to identify the employee’s individual learning needs and become more inspired them to put extra effort into their work. This can also improve talent well-being through acquiring additional knowledge and developing better relationships with them, and providing newer solutions and creating a better workplace for them.

Operational risk of large corporations is at risk if they can be easily imitated by the competition. Therefore, firm-specific knowledge must be guarded and not shared with the competition. Any leak of such information may expose the organization and increase the operational risk. Thus, the ownership of knowledge, or what I would prefer to call knowledge management, falls under the operational risk category and must be managed and also monitored due to fluctuations in the dynamic economic environment of today. This can improve talent well-being through fostering the dynamic relationships among employees and departments, but most importantly, through satisfying employee needs. When executives have people in place to manage knowledge and embrace risk management, the organization can see better satisfaction with the most talented employees, and most importantly, enhance talent well-being.

Integrating Knowledge Management and Talent Management to Retain the Most Talented Employees

I suggest that both important factors of knowledge management and talent management constitute the foundation of a supportive workplace to reduce operational risk – two major concerns of global leaders today. Talent management is essential for business growth and prosperity while knowledge management, if not embraced, can lead to operational risk. Knowledge management can help organizations identify their inefficiencies in each process, and subsequently, recover them on an instantaneous basis, enabling executives to prevent further operational risk. Adding more manageable control of internal resources and reducing operational risk. Thus, when executives ensure the effectiveness of knowledge management they increase control and lessen operational risk.

Knowledge management utilizes modifications in order to efficiently and effectively use organizational resources, decrease costs, and control operational risk. Knowledge management also develops cohesive infrastructures to store and retrieve the knowledge to enable employees in creating more innovative solutions to problems and managing operational risks. My explanation of this is clearly within the executive span of control and potentially limits operational risk. I designed an approach for executives in large corporations to use talent management coupled with very prominent and useful construct of knowledge management so that the managerial implication is sound, justified, and operational to eliminate the gaps and serve the most talented employees in the organization that exist in the spaces between the lines of the organization.

Knowledge management enhances a firm’s capabilities to decrease the risk of imitation of organizational capabilities by competitors thus, managing operational risk. In doing this, executives that adopt knowledge management develop organizational communications aimed at providing valuable resources for organizations. They also enhance knowledge sharing among organizational members and stipulate knowledge to be shared around the organization. This process can potentially build an effective learning company in which the most talented employees can develop both personally and professionally. Knowledge management could, therefore, positively impact the most talented employee’s retention, through meeting the goals of personal development.

Additionally, executives that employ knowledge management create new ideas and knowledge for innovation through motivating the most talented employees to more innovatively solve organizational problems. Executives today realize that knowledge is the one of most strategic factors for organizations from a competitive standpoint. Knowledge management is a necessary precursor to creating new knowledge and ideas within organizations. The creation of new knowledge is a process and can be essential to identify the most talented employees’ needs and also recognize changes happening in the business environment. Through knowledge management, executives can contribute to identify and meet the most talented employees’ needs which lies at the focal point of executive success.

In conclusion, I suggest that executives embrace knowledge management. Knowledge management influences some of the spans of control of executive responsibility. My primary focus is on one factor (i.e. talent management) but there are many more important components of the managerial function that can be enhanced when knowledge management is embraced. The key here is that there are positive effects of knowledge management on talent management.

_________________________________________________________________

Mostafa Sayyadi works with senior business leaders to effectively develop innovation in companies and helps companies—from start-ups to the Fortune 100—succeed by improving the effectiveness of their leaders. He is a business book author and a long-time contributor to business publications and his work has been featured in top-flight business publications.

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Archives, Global Trade Daily, News

Global Direct Dye Market Decreased by -3.6% to $1.9B in 2019

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IndexBox has just published a new report: ‘World – Direct Dyes And Preparations Based Thereon – Market Analysis, Forecast, Size, Trends And Insights’. Here is a summary of the report’s key findings.

After two years of growth, the global direct dye market decreased by -3.6% to $1.9B in 2019. Overall, consumption, however, continues to indicate a relatively flat trend pattern in the past decade. The pace of growth appeared the most rapid in 2014 when the market value increased by 13% year-to-year. As a result, consumption reached a peak level of $2.2B. From 2015 to 2019, the growth of the global market failed to regain momentum.

Consumption by Country

China ($460M), the U.S. ($333M) and India ($144M) were the countries with the largest market size in 2019, with a combined 48% share of the global market. Japan, Brazil, Indonesia, Pakistan, Mexico, France, Canada, Germany, and the UK lagged somewhat behind, together accounting for a further 27%.

The countries with the highest levels of direct dye per capita consumption in 2019 were the U.S. (265 kg per 1000 persons), Canada (253 kg per 1000 persons), and the UK (235 kg per 1000 persons).

From 2009 to 2019, the most notable rate of growth in terms of direct dye per capita consumption, amongst the key consuming countries, was attained by China, while direct dye per capita consumption for the other global leaders experienced more modest paces of growth.

Global Trade of Direct Dyes 2009-2019

In 2019, global trade of direct dyes and preparations based thereon increased by 1% to 110K tonnes, rising for the fourth year in a row after two years of decline. The total export volume increased at an average annual rate of +4.5% from 2009 to 2019. The growth pace was the most rapid in 2010 with an increase of 32% against the previous year. Over the period under review, global exports attained the peak figure in 2019 and are likely to see gradual growth in the immediate term.

In value terms, direct dye exports fell modestly to $398M (IndexBox estimates) in 2019.

Exports by Country

In 2019, India (38K tonnes) represented the largest exporter of direct dyes and preparations based thereon, achieving 34% of total exports. Spain (18K tonnes) ranks second in terms of the total exports with a 16% share, followed by China (9.7%) and Germany (6.9%). Taiwan, Chinese (4.8K tonnes), the U.S. (4.7K tonnes), the UK (4.2K tonnes), France (4.1K tonnes), Mexico (3.1K tonnes), Turkey (2.7K tonnes), Poland (2.5K tonnes) and Italy (1.9K tonnes) took a little share of total exports.

From 2009 to 2019, the average annual rates of growth with regard to direct dye exports from India stood at +14.5%. At the same time, Turkey (+27.1%), Poland (+12.8%), Spain (+9.4%), France (+8.8%), the U.S. (+4.6%), the UK (+4.5%), Mexico (+3.6%) and Italy (+2.8%) displayed positive paces of growth. Moreover, Turkey emerged as the fastest-growing exporter exported in the world, with a CAGR of +27.1% from 2009-2019. China and Taiwan experienced a relatively flat trend pattern. By contrast, Germany (-4.2%) illustrated a downward trend over the same period. India (+25 p.p.), Spain (+9.5 p.p.), Turkey (+2.2 p.p.), France (+2.1 p.p.), Poland (+1.6 p.p.) and the U.S. (+1.5 p.p.) significantly strengthened its position in terms of the global exports, while Germany saw its share reduced by -3.6% from 2009 to 2019, respectively. The shares of the other countries remained relatively stable throughout the analyzed period.

In value terms, India ($110M) remains the largest direct dye supplier worldwide, comprising 28% of global exports. The second position in the ranking was occupied by China ($44M), with an 11% share of global exports. It was followed by Spain, with a 10% share.

In India, direct dye exports expanded at an average annual rate of +13.2% over the period from 2009-2019. In other countries, the average annual rates were as follows: China (+3.2% per year) and Spain (+7.3% per year).

Export Prices by Country

In 2019, the average direct dye export price amounted to $3,610 per tonne, dropping by -4.5% against the previous year. Over the period under review, the export price recorded a slight contraction. The pace of growth was the most pronounced in 2014 when the average export price increased by 13% y-o-y. As a result, the export price reached a peak level of $4,684 per tonne. From 2015 to 2019, the growth in terms of the average export prices remained at a somewhat lower figure.

There were significant differences in the average prices amongst the major exporting countries. In 2019, the country with the highest price was the UK ($6,110 per tonne), while France ($1,724 per tonne) was amongst the lowest.

From 2009 to 2019, the most notable rate of growth in terms of prices was attained by China, while the other global leaders experienced more modest paces of growth.

Imports by Country

In 2019, Germany (12K tonnes), followed by Italy (7.2K tonnes), Japan (6.2K tonnes), France (6.1K tonnes), China (4.8K tonnes), the UK (4.7K tonnes) and Indonesia (4.5K tonnes) were the largest importers of direct dyes and preparations based thereon, together generating 45% of total imports. The following importers – the U.S. (4.1K tonnes), Taiwan, Chinese (3.4K tonnes), the Netherlands (3.4K tonnes), Poland (3.2K tonnes) and Spain (3.1K tonnes) – together made up 17% of total imports.

From 2009 to 2019, the most notable rate of growth in terms of purchases, amongst the key importing countries, was attained by Poland, while imports for the other global leaders experienced more modest paces of growth.

In value terms, the largest direct dye importing markets worldwide were Germany ($36M), Japan ($35M) and Italy ($31M), together accounting for 26% of global imports. China, Indonesia, the U.S., France, Spain, the Netherlands, the UK, Taiwan, Chinese and Poland lagged somewhat behind, together comprising a further 35%.

Import Prices by Country

In 2019, the average direct dye import price amounted to $3,933 per tonne, surging by 2.8% against the previous year.

Prices varied noticeably by the country of destination; the country with the highest price was Japan ($5,749 per tonne), while Poland ($2,290 per tonne) was amongst the lowest.

From 2009 to 2019, the most notable rate of growth in terms of prices was attained by Indonesia, while the other global leaders experienced more modest paces of growth.

Source: IndexBox AI Platform

maize
Archives, Global Trade Daily, International Trade

Asia’s Maize Market – Imports Will Grow Due to Rising Feed Demand

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

In 2019, the Asian maize market was finally on the rise to reach $204.4B after two years of decline. The total consumption indicated buoyant growth from 2009 to 2019: its value increased at an average annual rate of +5.1% over the last decade. The trend pattern, however, indicated some noticeable fluctuations being recorded throughout the analyzed period. The pace of growth was the most pronounced in 2016 with an increase of 25% against the previous year. As a result, consumption reached a peak level of $215.8B. From 2017 to 2019, the growth of the market remained at a lower figure.

Maize Consumption by Country

The country with the largest volume of maize consumption was China (274M tonnes), comprising approx. 60% of the total volume. Moreover, maize consumption in China exceeded the figures recorded by the second-largest consumer, Indonesia (33M tonnes), eightfold. India (28M tonnes) ranked third in terms of total consumption with a 6.3% share.

From 2009 to 2019, the average annual growth rate of volume in China stood at +5.2%. In other countries, the average annual rates were as follows: Indonesia (+6.4% per year) and India (+7.3% per year).

In value terms, China ($130.1B) led the market, alone. The second position in the ranking was occupied by Indonesia ($15.2B). It was followed by India.

The countries with the highest levels of maize per capita consumption in 2019 were South Korea (223 kg per person), China (188 kg per person), and Viet Nam (159 kg per person).

From 2009 to 2019, the biggest increases were in Viet Nam, while maize per capita consumption for the other leaders experienced more modest paces of growth.

Production in Asia

In 2019, approx. 379M tonnes of maize were produced in Asia; rising by 4.8% on the year before. The total production indicated a noticeable increase from 2009 to 2019: its volume increased at an average annual rate of +4.9% over the last decade. Based on 2019 figures, production increased by +61.8% against 2009 indices. The pace of growth appeared the most rapid in 2015 when the production volume increased by 16% against the previous year. The volume of production peaked in 2019 and is expected to retain growth in years to come.

Production By Country in Asia

China (270M tonnes) constituted the country with the largest volume of maize production, accounting for 71% of total volume. Moreover, maize production in China exceeded the figures recorded by the second-largest producer, Indonesia (33M tonnes), eightfold. The third position in this ranking was occupied by India (29M tonnes), with a 7.6% share.

In China, maize production increased at an average annual rate of +5.1% over the period from 2009-2019. In the other countries, the average annual rates were as follows: Indonesia (+6.3% per year) and India (+5.6% per year).

Amid concerns about the impact of COVID-19 on grain supplies, the Chinese government has taken a number of measures to preserve the area sown with corn, which canceled previous measures. As a result, production in the country in 2020 is projected at 260-265 million tons. In India, after record yields in 2019, a return to normal yields is expected to lead to a slight decrease in corn production, which is currently projected at 28.0 million tons.

Harvested Area in Asia

The maize harvested area rose modestly to 69M ha in 2019, increasing by 2.7% on 2018 figures. The harvested area increased at an average annual rate of +2.6% from 2009 to 2019; the trend pattern remained consistent, with only minor fluctuations being observed throughout the analyzed period. The pace of growth appeared the most rapid in 2015 with an increase of 12% year-to-year. Over the period under review, the harvested area dedicated to maize production reached the maximum at 69M ha in 2016; afterward, it flattened through to 2019.

Yield in Asia

In 2019, the average maize yield in Asia rose slightly to 5.5 tonnes per ha, picking up by 2.1% against the previous year’s figure. The yield figure increased at an average annual rate of +2.3% over the period from 2009 to 2019; the trend pattern remained relatively stable, with somewhat noticeable fluctuations in certain years. The pace of growth was the most pronounced in 2010 when the yield increased by 5.2% y-o-y. Over the period under review, the maize yield hit record highs in 2019 and is expected to retain growth in the near future.

Maize Imports in Asia

In 2019, overseas purchases of maize increased by 7.7% to 77M tonnes, rising for the second consecutive year after two years of decline. Total imports indicated resilient growth from 2009 to 2019: its volume increased at an average annual rate of +5.3% over the last decade. Based on 2019 figures, imports increased by +45.3% against 2017 indices. The pace of growth appeared the most rapid in 2018 with an increase of 35% against the previous year. The volume of imports peaked in 2019 and is expected to retain growth in the immediate term.

In value terms, maize imports expanded notably to $15.5B (IndexBox estimates) in 2019.

Imports by Country

In 2019, Japan (18M tonnes), distantly followed by South Korea (11M tonnes), Viet Nam (11M tonnes), Iran (10M tonnes), Taiwan (4.2M tonnes), Malaysia (4M tonnes) and China (3.9M tonnes) represented the main importers of maize, together generating 80% of total imports.

From 2009 to 2019, the most notable rate of growth in terms of purchases, amongst the main importing countries, was attained by Viet Nam, while imports for the other leaders experienced more modest paces of growth.

In value terms, Japan ($3.5B), South Korea ($2.4B) and Viet Nam ($1.9B) constituted the countries with the highest levels of imports in 2019, together comprising 50% of total imports.

In 2020, the increases in imports are expected mainly due to rising feed demand. China’s (mainland) purchases from abroad can grow to 7 million tonnes amid relatively high domestic maize prices. It is expected that increased demand for maize imports in 2020 will be met by larger supplies from the United States, supported by sufficient domestic supplies from a projected record crop in 2020 and low prices.

Import Prices by Country

In 2019, the maize import price in Asia amounted to $200 per tonne, remaining constant against the previous year.

Average prices varied somewhat amongst the major importing countries. In 2019, major importing countries recorded the following prices: in China ($222 per tonne) and Malaysia ($213 per tonne), while Viet Nam ($177 per tonne) and Iran ($182 per tonne) were amongst the lowest.

From 2009 to 2019, the most notable rate of growth in terms of prices was attained by Iran, while the other leaders experienced a decline in the import price figures.

Source: IndexBox AI Platform

blockchain
Archives, Banking, Global Trade Daily

Blockchain and its Impact on Business Operations

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When one thinks of blockchain, one thinks of cryptocurrency, but even though much of this article is dedicated to the use of cryptocurrency, the truth is that more can be done with blockchain technology. This is because blockchain technology allows people from all over the world to create a transaction on a computer system. This transaction is secure (cannot be tampered with), it is dated, and it can be signed in many secure ways.

In short, if you wished, you could conduct a large digital Mexican wave around the world, and not only would the entire process be secure and efficient, it would also be traceable and wouldn’t rely on a central authority or third party to action.

The Omise Story

Omise is a company the operates a payment gateway for Thailand, Japan and Singapore. Rather than moving money from one country to another, convert it and so forth, they created their own coin OMISEGO, which they can quickly transfer anywhere. It can be deposited with an Omise office in another country. To help keep the price of their coin from fluctuating too much, they only conduct inter-office transfers as a way of getting money from one country to another. This is far faster and cheaper than using an Automated Clearing House, and far cheaper than using wire transfers.

But, what about the problem that each transaction creates a little more OMISGO coin? The answer for them was simple. They released the coin onto the general market, which gave it a market price, which therefore solved the “bit-extra” problem and introduced the problem that transactions now had to happen quickly for fear of sharp rises and falls in the coin’s price, which pushed up the potential transaction fee. However, the increase was marginal, and it was still cheaper than wire transfer and is still almost as fast.

Can the Omise Story Transfer Over?

Well, it certainly transfers to other payment gateways, and even modern US banks have stated their intentions to create their own cryptocurrency so they may move money within their own branches more easily. They would maintain full control of the currency, including its mining, which means that theft is more difficult and price fluctuations are not a problem.

Still, if it is to be applied to business operations, it needs to somehow improve efficiency, otherwise it is just another path to the same objective. If your business has an international element, then there is a chance that blockchain technology, specifically cryptocurrency, will help you. Otherwise, cryptocurrency needs to evolve and be retooled before it can do things like pay separate departments on demand more efficiently than the methods you are using right now.

What About Automated Clearing Houses?

ACH is hardly in its death throes since despite online transfers being as common as salt in the ocean, companies are still wrapping themselves in the warm blanket that is ACH, so what are their arguments against blockchain?

Argument – Costs pretty-much the same for each transaction.

Counter – Yes, on a per-transaction basis, but you receive your money up to 24 hours quicker with cryptocurrency.

Argument – We conduct thousands of transactions per day that only a clearing house could handle.

Counter – Dealing with fiat money yes, but transacting thousands of blockchain transactions per day can be done in house with almost no security risks.

The truth is that there are many ways that blockchain technology can replace Automated Clearing Houses, especially in terms of speed, security and traceability. But, ACH is trusted, tried and proven, whereas blockchain is still too new for most companies to trust.

The Demand for More Transparency

Let’s say there is a new law where every company had to track every supplier from its source. Every screw and every wire from every phone ever made, and so forth. A similar thing already happens with products labeled “Organic” in stores. Such a law would cost most primary and secondary industries a fortune, but the costs could be reduced in such an event with blockchain.

They could use blockchain to track transactions from start to finish. That way, every product being sold could have its own history that is stored in digital form. If required, an authority figure could back track every single element within a product, from where the coffee beans were bought to where the glue was manufactured for the label. Plus, the system could be set up so that each supplier need not consult a central authority to execute transactions, and each transaction would be protected with encrypted data. It would be difficult for a single entity to disrupt the history of transactions, which on its own will make the transactions a lot more secure.

Supply Chain Tracking

Using the same method as above, a company could track its supply chain, which is more important in the food industry than anywhere else. Walmart is unable to trust the record-keeping of companies in China, so it is using blockchain to track the supply of pork. Record-keeping transactions are marked at intervals so that Wal-Mart can see if a piece of pork sat in a warehouse for six months before being processed. The record-keeping process happens with regards to where the meat comes from, is slaughtered, processed, and stored, and this information is then used by the company in the US to create its sell-by-date.

Conclusion – A Tool is Only as Good as Its Use

A paintbrush in the hands of a novice is no more useful than a shotgun in the hands of a kangaroo. The intrinsic benefit of blockchain, as described in the introduction, is very powerful, but businesses are having a hard time integrating it into their companies. There are plenty who claim they have tried, such as Tyson, Nestle, Unilever and Dole, but they are more like nervous children dipping their toes in the shallow end of the pool.

Blockchain will benefit those who wish to transact payments domestically and overseas, and those who wish to track a process, a supply chain, and/or who just wish to be more transparent about their business operations. However, it is only the really competitive industries like the financial and food industries that are worth the added benefits of blockchain for the slight edge that blockchain technology gives them over their competitors.

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Ava Williams is a Resumeble editor and a career expert from Vancouver. She finds her inspiration in blogging and career courses. Meet her on Twitter and LinkedIn

phase one
Archives, Global Trade Daily, International Trade

Trade Secret Protection in China After the US-China Phase One Trade Deal

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The US-China Phase One trade deal, signed in January 2020, was viewed by many as a game-changer in causing China to upgrade its enforcement regime against trade secret misappropriation. But how much impact will the deal actually have for US companies trying to prevent trade secret theft in China? As this article explains, while there will likely be an impact, it may be less consequential than anticipated.

The Phase One Agreement’s Trade Secret Provisions

The Phase One Agreement contains a number of provisions aimed at protection of trade secrets and effective enforcement against misappropriation. Although the Agreement’s requirements are bilateral, they mainly consist of obligations by China to take certain steps to enhance its trade secret protection laws to match existing U.S. laws. These steps include enumerating acts of misappropriation to include electronic intrusions, breach of duties not to disclose information that is secret, and unauthorized disclosure or use that occurs after acquisition of a trade secret. The Agreement also calls for burden-shifting in civil proceedings so that “the burden of production of evidence or burden of proof … shifts to the accused party … where the holder of a trade secret has produced prima facie evidence … of a reasonable indication of trade secret misappropriation ….”  Additionally, the Agreement dictates that China provide for prompt and effective provisional measures to prevent the use of misappropriated trade secrets, and identify use or attempted use of claimed trade secret information as an “urgent situation” authorizing judicial authorities to grant preliminary injunctions. Finally, the Agreement requires China to broaden the scope of trade secret cases where criminal liability may ensue.

Comparison to Current Trade Secret Protection Laws in China

China is a civil law country. The laws governing trade secrets are mainly provided in the Anti Unfair Competition Law, with the remaining authority provided in the Civil Law, the Criminal Law, the Labor Law and judicial interpretations issued by the Supreme People’s Court (the “SPC”). The latest amendment of the Anti-Unfair Competition Law in 2019 has already accomplished some steps required by the Agreement, such as the aforementioned expanded list of misappropriation acts and the burden-shifting rule. Similarly, for provisional remedies, a 2018 notice by the SPC provided guidance to all courts on what circumstances constitute “urgent situations” that should merit applications for preliminary injunctions; while the “urgent situations” were not expressly defined at that time to include use or attempted use of claimed trade secret information, when broadly interpreted, they would cover this situation. For these reasons, what US companies now should monitor is how effectively the laws are applied to protect trade secrets.

One of the major difficulties US companies face when enforcing their trade secret rights in China, is obtaining sufficient admissible evidence to prove both misappropriation and damages. This is especially true when the trade secret theft has cross-border elements, whereby the trade secrets are afterwards used in China, e.g. by third parties who are not obviously connected with the perpetrator.

According to China’s Civil Procedure Law, there are eight types of evidence, including statements, documentary evidence, physical evidence, audio-visual materials, electronic data, witness testimonies, court expert opinions and inspection records. However, in practice, documentary evidence is given almost total supremacy over the other types of evidence. This means that, in practice, witness statements and cross-examinations of witnesses carry less evidentiary weight. The prioritization of documentary evidence by China’s courts presents challenges for US companies seeking to use testimony or other non-documentary evidence available in the US to establish in Chinese civil proceedings that the trade secrets being used in China originated from the US (likely via an ex-employee’s breach of confidentiality duties).

Moreover, Chinese law does not provide for discovery procedures. This means that the defendant is not obliged to produce unfavorable evidence at the request of the plaintiff. At the time of filing the claim, the plaintiff must, by and large, submit (documentary) evidence to prove the facts it relies upon, and it must generally locate and produce such evidence on its own. The absence of discovery, as well as the additional formal requirements for receipt of foreign evidence, can make it challenging for trade secret holders to meet their burden of proof.

When facing these challenges, US trade secret holders should proactively think about how to collect necessary evidence cross-border so that they can support filing of a civil claim in China and ultimately stop further leakage or use of the trade secrets. This may involve collecting initial evidence of misappropriation from the US, and then using the US evidence to plead in China for a court investigation order or an order to search and preserve evidence from the defendant. The trade secret holder can leverage its pleading and the investigation and preservation orders, combined with the burden-shifting rule, to prevail on its civil claim.

Apart from civil claims, US IP owners may request that China’s law enforcement agencies pursue criminal liability for perpetrators in trade secret misappropriation cases. The Phase One Agreement calls for China to lower its threshold for initiating a criminal investigation of trade secret theft, including eliminating any requirement that a trade secret holder must establish actual losses as a prerequisite to such an investigation.

At present, Article 219 of the PRC Criminal Law stipulates that whoever commits illegal acts of infringing on trade secrets and thus causes “serious” or “exceptionally serious” losses shall be subject to criminal liability.  Under the Regulations on Prosecution Standards for Economic Crimes of the Supreme People’s Procutorate and the Ministry of Public Security, losses of more than 500,000 yuan can trigger a criminal investigation. However, there are different views from local enforcement agencies on whether the losses should be limited to actual losses and how a trade secret holder should prove its losses. The current prevailing view is that the losses should not include anticipated losses such as reduced market share or loss of competitiveness. Such a narrow reading of losses as a criminal enforcement threshold contributes to insufficient protection of trade secret rights. As an example, for trade secret theft cases involving production know-how, it is difficult to show actual losses when the culprit has started to use the know-how to build a plant or prepare to make products, but it has not yet sold the violative products.

If the Criminal Law is amended to eliminate the requirement of establishing actual losses, this will address a current problem and improve trade secret protection in China.

Conclusions and Alternatives

The Phase One Agreement undoubtedly will enhance some aspects of civil and criminal trade secret protection laws in China.  Ultimately, however, the degree of success of these efforts may depend more on the commitment by China’s courts to reliably implement and enforce these laws.

One final note for US companies to consider is that trade secret enforcement alternatives may be available in US federal courts, even for acts of misappropriation in China. Specifically, the Defend Trade Secrets Act of 2016 applies to misappropriation outside the US if “an act in furtherance of the offense was committed in the [US].”  18 U.S.C. § 1837. Such “act[s] in furtherance of the offense,” that would enable a US court to adjudicate misappropriation in China, might be as straightforward as selling or marketing imported products within the US that incorporate the stolen trade secrets.

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Zhen Feng (also known as Katie Feng) is a partner based in Hogan Lovells Shanghai IP Agency.  She specializes in all areas of IP with a focus on IP litigation, IP strategic counseling and brand protection. She advises numerous clients from diverse backgrounds on formulation and implementation of IP enforcement strategies in China through a combination of administrative, civil and criminal actions. Katie has been recognized by several industry publications as a leading IP lawyer in China, such as Top 250 Women in IP 2020 by IP Stars, Top 100 Women in Litigation by Benchmark Litigation Asia-Pacific 2020 and Recommended Individual for Litigation by IAM Patent 1000 2020. She can be contacted at +862161223826 4032 or by email zhen.feng@hoganlovells.com or by wechat account: zhenkatiefeng_wechat

Steve Levitan is co-chair of Hogan Lovells’ global trade secret group. He has led numerous intellectual property lawsuits, with an emphasis on trade secret, patent, trademark and technology contract disputes. He practices before US federal district and appellate courts, California state courts, the US International Trade Commission (ITC), and in International Chamber of Commerce (ICC) and American Arbitration Association (AAA) arbitrations. He also regularly counsels clients on the protection of trade secrets and confidential information. He is based in Hogan Lovells’ Silicon Valley, California office, and can be contacted at +1 (650) 463 4032 or by email: steve.levitan@hoganlovells.com.

 

gold
Archives, Banking, Global Trade Daily

Increased Investment Demand in Gold in 2020

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Gold is a secure and safe-haven investment. It proves to be highly profitable as it is in demand today when the economy is highly volatile, and the threat of a pandemic is looming over nations. There is a global instability, and people are turning to gold, and investors are hoarding the metal.

The high demand for the asset is proving profitable for sellers, gold ETF companies, and miners and reassuring to investors who look to benefit in a possibly harmful economic future.

Investors see the fall of stocks, bonds, and other investments, while gold is maintaining an increased performance. In this case, there is an urgent need for financial security, and owning gold will provide substantial protection to companies and individuals.

There is also a movement in the bullion trade where numismatic gold and other metals are being traded. Individuals are collecting at a scale in the bullion market as they follow the expert advice that these assets are essential inflationary hedges.

Why does gold have a high investment demand today, and what are the trends that stimulate the movement of the precious metal’s high trading rate?

What Experts Say

Analysts see more optimism for gold and less for stocks and bonds as investment options in the current scenario. Gold could be the secure asset to put your money in, and you have to act quickly while the prices are at an ideal level.

Higher risk and uncertainty, together with lower opportunity cost, will plausibly be supportive of gold investment demand in 2020, according to the World Gold Council (WGC).

WGC says that the situation could offset the adverse results of lower consumer demand on gold performance while economic activity contracts. Gold’s behavior after that could depend on the rate of the recuperation and the duration of monetary policy and fiscal impetus.

Profitable Predictions

In an attempt to explain the state of gold, in May, Morgan Stanley placed the metal’s end-of-2020 base case at $1700 per ounce. Additionally, their analysts say that if a favorable series of circumstances align, the investment bank asserts that we could see gold prices increase as high as $1900 an ounce by the end of CY20.

For this buoyant price target to be hit, the analysts maintain that we would have to observe five factors to happen.

There must be a depressed US dollar, negative real rates, deterioration of equity markets, central bank buying, and the start of recuperation in fabrication demand.

The COVID-19 Factor

In the wake of COVID-19, central bank quantitative easing programs have sky-rocketed. The analysts forecast that the G4 Central banks’ balance sheets will increase by a cumulative $7.2 trillion.

In that respect, the investment bank additionally notes that as the scale of asset acquisitions in the US outpace that in other markets, USD debilitates, adding further upside propulsion to gold.

Although optimism has come back to some pockets of the global financial markets, particularly for equities, COVID-19 remains a threat. Fears of recession, and depression in some cases, remain. During a recession, even the most secure assets are sold off, as investors often try to de-disk at any cost.

Is it a good time to buy gold?

Experts say that while prices were less expensive for investors before 2020, investing in gold now is still more advantageous than in the coming years.

With the unpredictability of future economic scenarios, it is ideal to invest in an inflationary hedge. While other assets are failing for investors, gold is proving useful for-profit and safe. Experts even insist that individual investors must trade even on a small scale for self-preservation.

With lower global growth projection and volatility, the gold trend looks positive. This year, this valuable metal is trading on higher levels, and a host of circumstances will probably boost the rally in gold cost.

Currently, the world is seeing enormous demand destruction leading to an economic downswing, and the situation is benefiting the gold prices.

The Rising Demand

Bonds might no longer play a safe-haven role in balancing equity risk, and gold will fill the vacuum left by it. Factors including low-interest rates, low bond yields, risk aversion, fiscal and monetary stimuli, and inflationary pressure are resulting from a constrained supply chain point to a reality of a massive increase in gold prices.

In the instance of a downswing in emerging markets, economic models indicate that gold’s implicit returns in 2020 and 2021 will be higher than in most other scenarios. Its growth is seen to remain positive in 2022.

In this situation, gold’s strong return in 2020 is steered by the precariousness surrounding the COVID-19 outbreak and monetary policy action. On the other hand, negative economic growth bears a counterbalance by decreasing fabrication demand.

A Good Year For Gold

In a deep recession scenario, where the impact of the pandemic on the global economy is more significant and longer-lasting than initially predicted, gold’s excellent performance in 2020 will be followed by a rich but declining again until 2023. Afterward, the performance will turn negative in 2024, and it will result in an annualized inferred return of about 20% over a period of five years.

Investment demand has gone up substantially, and it proves rightful to be considered a safe-haven asset.

The Bank of America Securities (BofA Sec) suggests that gold prices in the worldwide market may rise to $3000 an ounce (Oz) by the end of 2021. Furthermore, the brokerage upped its target price from $2,000 to $3,000.

In the current scenario, experts say that stocks and bonds do not show much enticement as an investment option, and gold could be the asset to invest in.

Risk assets, including equity and debt, are declining all over the world because of uncertainty over their growth. Because of this situation, the investment demand for gold has gone up and it is a safe-haven asset.

Experts observe that macroeconomic perturbations due to the COVID-19 outbreak are leading investors to hoard gold.

The demand for gold in 2020 is high, and it is ideal to invest in the metal.

poultry
Archives, Global Trade Daily, Imports/Exports

Global Poultry Production to Reach 137M tonnes in 2020, Mainly Driven by Growth in China, the EU, and the UK

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

In 2019, the global poultry market increased by 6% to $231.5B, rising for the third consecutive year after two years of decline. The market value increased at an average annual rate of +4.4% from 2009 to 2019. The growth pace was the most rapid in 2011 with an increase of 11% y-o-y. Global consumption peaked in 2019 and is expected to retain growth in the near future.

Poultry Consumption by Country

The countries with the highest volumes of poultry consumption in 2019 were China (20M tonnes), the U.S. (19M tonnes), and Brazil (12M tonnes), with a combined 40% share of global consumption. These countries were followed by Russia, Mexico, India, Japan, Indonesia, Iran, South Africa, Malaysia, and Myanmar, which together accounted for a further 21%.

In value terms, China ($53.4B) led the market, alone. The second position in the ranking was occupied by the U.S. ($21.3B). It was followed by Brazil.

The countries with the highest levels of poultry per capita consumption in 2019 were Malaysia (63 kg per person), the U.S. (58 kg per person), and Brazil (57 kg per person).

From 2009 to 2019, the most notable rate of growth in terms of poultry per capita consumption, amongst the leading consuming countries, was attained by Myanmar, while poultry per capita consumption for the other global leaders experienced more modest paces of growth.

Market Forecast 2020-2030

Driven by increasing demand for poultry worldwide, the market is expected to continue an upward consumption trend over the next decade. Market performance is forecast to decelerate, expanding with an anticipated CAGR of +2.3% for the period from 2019 to 2030, which is projected to bring the market volume to 166M tonnes by the end of 2030.

According to FAO forecasts, global poultry meat production will reach 137 million tonnes in 2020. Growth is expected in China, the EU, Britain, Brazil, and Mexico, while production decline is possible in India, Thailand, Turkey, and the U.S.

In China, poultry production is projected to grow, albeit slowly, due to relatively steady demand amid high pork prices. Although the discovery of new HPAI cases at the beginning of the year in some European countries forced China to ban imports of live birds from these suppliers. However, the impact on domestic production is likely to be limited, since the measure coincided with the lifting of the 2015 ban on imports of live poultry from the United States.

New investments in processing capacity are expected to increase poultry production in the EU and the UK. However, a positive outlook could become negative if the recent fall in prices associated with COVID-19 continues. Slaughter of birds in countries where new cases of HPAI have been diagnosed may also hinder production growth in the EU this year.

In Brazil, poultry production is projected to increase driven by growing demand for imports, especially in China, as well as in other countries that are attracted by Brazil’s status as a supplier of products with high biosafety standards.

Growth in poultry meat production is also projected to continue in South Africa due to strong consumer demand, and in Mexico because of competitive feed prices.

In contrast, poultry meat production in India is likely to decline as the outflow of labor from cities after the COVID-19 lockdown reduced the availability of workforce in this sector, which also led to a decrease in consumer demand.

Similarly, in Thailand, a sharp drop in demand for poultry meat from the food retail sector, including street food, is driving the expected decline in production. However, the prospects for production in 2020 could be positive if efforts by the government to persuade Asian countries, especially China, Japan and the Republic of Korea, to import more poultry meat are successful.

In the United States, declining food sales and labor shortages have led the sector to abandon expansion plans and reduce the share of large poultry production preferred by HoReCa. It is also reported that the requirements for maintaining distances between workspaces in processing plants reduce the efficiency of meat processing, which leads to a drop in production.

Global Poultry Production

In 2019, the amount of poultry produced worldwide expanded to 130M tonnes, growing by 3.7% against the previous year’s figure. The total output volume increased at an average annual rate of +3.4% from 2009 to 2019; the trend pattern remained relatively stable, with somewhat noticeable fluctuations being observed throughout the analyzed period. The pace of growth appeared the most rapid in 2010 with an increase of 4.7% against the previous year. Global production peaked in 2019 and is expected to retain growth in years to come. The generally positive trend in terms output was largely conditioned by a perceptible increase in the number of producing animals and a relatively flat trend pattern in yield figures.

Production By Country

The countries with the highest volumes of poultry production in 2019 were the U.S. (23M tonnes), China (20M tonnes), and Brazil (16M tonnes), with a combined 45% share of global production. Russia, India, Mexico, Indonesia, Turkey, Japan, Iran, Argentina, and Myanmar lagged somewhat behind, together comprising a further 20%.

From 2009 to 2019, the most notable rate of growth in terms of poultry production, amongst the key producing countries, was attained by Russia, while poultry production for the other global leaders experienced more modest paces of growth.

Exports

For the fourth year in a row, the global market recorded growth in overseas shipments of poultry, which increased by 2.2% to 17M tonnes in 2019. The total export volume increased at an average annual rate of +3.3% over the period from 2009 to 2019.

In value terms, poultry exports rose to $27.3B (IndexBox estimates) in 2019. Over the period under review, global exports reached the maximum at $28.5B in 2014; however, from 2015 to 2019, exports remained at a lower figure.

Exports by Country

Brazil (4M tonnes) and the U.S. (3.6M tonnes) represented the main exporters of poultry in 2019, resulting in at approx. 24% and 22% of total exports, respectively. It was distantly followed by the Netherlands (1.5M tonnes) and Poland (1.5M tonnes), together generating an 18% share of total exports. Belgium (509K tonnes), Turkey (493K tonnes), Germany (473K tonnes), France (398K tonnes), Ukraine (361K tonnes), the UK (359K tonnes), Hong Kong  (328K tonnes) and Thailand (295K tonnes) followed a long way behind the leaders.

From 2009 to 2019, the biggest increases were in Ukraine, while shipments for the other global leaders experienced more modest paces of growth.

In value terms, the largest poultry supplying countries worldwide were Brazil ($6.5B), the U.S. ($3.7B), and Poland ($2.9B), with a combined 48% share of global exports. These countries were followed by the Netherlands, Germany, France, Belgium, Thailand, Turkey, Ukraine, Hong Kong, and the UK, which together accounted for a further 31%.

Export Prices by Country

The average poultry export price stood at $1,644 per tonne in 2019, remaining relatively unchanged against the previous year. In general, the export price, however, continues to indicate a relatively flat trend pattern. The most prominent rate of growth was recorded in 2011 when the average export price increased by 11% year-to-year. The global export price peaked at $1,893 per tonne in 2013; however, from 2014 to 2019, export prices remained at a lower figure.

There were significant differences in the average prices amongst the major exporting countries. In 2019, the country with the highest price was Thailand ($2,683 per tonne), while the U.S. ($1,045 per tonne) was amongst the lowest.

From 2009 to 2019, the most notable rate of growth in terms of prices was attained by Thailand, while the other global leaders experienced more modest paces of growth.

Source: IndexBox AI Platform