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China Ramps Up Supplies and Drives Out Competitors from the Philippine Apple Market

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Archives, Global Trade Daily, Imports/Exports

China Ramps Up Supplies and Drives Out Competitors from the Philippine Apple Market

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

In 2020, apple exports from China increased by 22% to 1.2M tonnes, thanks to the shipments to the Philippines have doubled. China’s share in the Philippine apple imports reached 92.1%. Apart from the Philippines, the main export destinations for China were Myanmar, Bangladesh, Thailand, Vietnam, Indonesia, Malaysia, Nepal, Hong Kong (SAR) and Singapore.

Apple Exports from China

In 2020, after two years of decline, there was significant growth in shipments abroad of apples, when their volume increased by 22% to 1.2M tonnes. Over the period under review, total exports indicated a tangible increase from 2012 to 2020: its volume increased at an average annual rate of +4.7% over the last eight-year period. In value terms, apple exports skyrocketed to $1.4B in 2020. Overall, exports enjoyed a prominent expansion.

Myanmar (183K tonnes), Bangladesh (179K tonnes) and the Philippines (168K tonnes) were the main destinations of apple exports from China, with a combined 45% share of total exports. These countries were followed by Viet Nam, Thailand, Indonesia and Nepal, which together accounted for a further 40%.

2020 saw a twofold increase in apple supplies from China to the Philippines. China gained its share in the Philippine apple market to reach 92.1% and was followed by the U.S. (4.1%) and New Zealand (3.1%).

From 2012 to 2020, the most notable growth rate in terms of shipments, amongst the main countries of destination, was attained by Viet Nam, while exports for the other leaders experienced more modest paces of growth.

In value terms, the largest markets for apple exported from China were Viet Nam ($322M), the Philippines ($213M) and Thailand ($213M), together accounting for 52% of total exports.

The average apple export price stood at $1,220 per tonne in 2020, waning by -4.9% against the previous year. In general, export price indicated a strong increase from 2012 to 2020: its price increased at an average annual rate of +5.0% over the last eight years. From 2012 to 2020, the most notable rate of growth in terms of prices was recorded for supplies to Viet Nam, while the prices for the other major destinations experienced more modest paces of growth.

Source: IndexBox Platform

social commerce
Archives, Global Trade Daily, Special Reports

Like, Follow, Buy Now: Harnessing the Power of Local Payments in Social Commerce

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A staggering 3.8 billion people use social media, around half the internet users worldwide. With these figures in mind, social media giants are eager to reach digitally connected consumers and monetize their userbases. Gone are the days where social media was simply a place to see what friends were doing and give them a ‘like.’ With the likes of TikTok, Facebook, and Instagram leading the charge, purchasing products online is now as easy as liking a friend’s post. In fact, with over one in three global shoppers having made a purchase on social media in the past year – social media is rapidly becoming the new online marketplace of choice.

However, whilst a good tool for attracting customers, social commerce must work hand in hand with digital payments to truly unlock success. Converting browsers to buyers on social media will rely heavily on a brand’s ability to offer a range of local payment methods at the checkout.

A growing opportunity for merchants

In the US, by the age of 12, most children have access to a social media account, but that’s not to say that this is the only audience social media is appealing to. Senior citizens in the US are the fastest-growing group of Facebook users, with numbers doubling between 2019 and 2021, indicating a lucrative opportunity for merchants appealing to a broad range of demographics.

In fact, Facebook is certainly leading the pack when it comes to social media – with over 2.7 billion monthly active users worldwide. For European regions such as Italy, the pandemic has also contributed to the explosion of social media usage. Time spent on Facebook’s suite of apps rose 70% in March 2020 – indicating the potential for social commerce uptake as people acclimatize to using these platforms to access shopping, entertainment, and communication.

For China, however, a country where the likes of Facebook, YouTube, and Twitter are blocked to consumers, sites such as Tencent, WeChat, and Weibo have been attracting millions of users, making China one of the biggest social media markets in the world. With multiple demographics across the globe now engaged with social media channels and more than comfortable with shopping online, the opportunity for merchants to trade on these platforms is greater than ever before.

Unlocking the power of social commerce

Because of the extensive reach and the power social media holds, brands embracing social commerce can scale rapidly. Everyone can do it, from international companies to individuals selling their goods on Instagram. But, it’s much more than just adding a ‘Buy Now’ button. Whilst social media platforms certainly have the power to unlock online and cross-border growth, the process will not be successful if merchants do not operate with consumer payment preferences in mind.

To enable a seamless transaction through social media channels, merchants and payment service providers (PSPs) need to take a highly customized and localized approach to digital payments. Consumers have become accustomed to choice when it comes to online payments – from buy now, pay later (BNPL) offerings such as Klarna to increasingly popular bank transfer payments such as Pay by Bank App or Trustly. Because of this, expectations around payment preferences have skyrocketed in recent years. So much so that 44% of UK consumers will abandon a purchase if their favourite payment method isn’t available. To ignore this when selling through social channels would be a huge mistake and a missed opportunity for retailers operating on these platforms.

A global strategy with local payments at its core

Whilst digital payments have the power to unlock the true power of social commerce, integrating a diverse portfolio of payment methods is no easy task. Although merchants are becoming increasingly aware of the need for a social strategy with local payments at its core, the cost and complexities associated with such integrations are acting as a major barrier for businesses. In fact, for smaller e-commerce players especially, local payment options may feel completely out of reach.

To overcome this, merchants and payment service providers are increasingly turning to infrastructure providers to meet the demands of global consumers. Partnerships of this kind mean that merchants and PSPs can take advantage of payments technology and on-the-ground local market knowledge.

Speed to market is everything in today’s digital-first retail era and merchants that are able to get up and running with a diverse acceptance of the right local payment methods quickly will be able to take strides ahead of the competition.

Those that neglect to consider the importance of local payments will see themselves fall short ahead of their competitors and lose access to thousands of potential customers.

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Archives, Global Trade Daily, International Trade, News

DMCC Reports on the Future of Trade as Global Trade Defies Expectations in 2021

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DMCC’s latest feature, Defying Predictions and Driving Post Pandemic Economic Recovery, unravels global trade predictions for 2021 in a positive manner. The article explains the surprising resilience through the 2020 year despite challenged by the global pandemic.

The report highlighted two key global and regional takeaways, first, global trade will underpin strong global economic growth in 2021 with the US and Chinese economies leading the way. This growth has defied expectations of double-digit annual declines, which had been estimated between 13-32% by the World Trade Organization. Second, Dubai, a major trade hub, saw its foreign trade growth rebound significantly in 2020, despite the economic challenges posed by the COVID-19 pandemic. The second half of 2020 seeing a particularly strong jump in volumes of 6% year-on-year. Dubai’s overall export values jumped 8% in 2020, on an annual basis.

Ahmed Bin Sulayem, Executive Chairman and Chief Executive Officer of DMCC, said, “In 2020, the outlook for global trade was bleak as the world sought to grapple with the impact of the pandemic. Today, the picture is much more positive, as evidenced by the findings of our latest Special Edition Future of Trade – 2021 report. But while global trade has shown its resilience, it is simultaneously in the midst of profound change. Technology, changing consumer behaviors, the drive to combat climate change, and geopolitics will all be key contributors to its reshaping in the years ahead. In this context, our research puts forward several tangible recommendations to governments and businesses seeking to navigate this new landscape and accelerate the recovery from the pandemic.”

According to the research, the most transformative element of the global trade outlook is technology. Blockchain, decentralized finance, DeFi, and other new and disruptive technologies will further accelerate growth. For example, DeFi protocols have seen a considerable amount of funds invested. Since the start of 2021 alone, the total value locked into DeFi has tripled from approximately USD 20bn to USD 60bn. As digital infrastructures grow, they will continue to accelerate a ground-breaking shift in trade from the national to the global.

Commenting on the release of the Special Edition report, Feryal Ahmadi, Chief Operating Officer, DMCC, said, “Following a challenging and uncertain period, the evidence presented in our Future of Trade report suggests an optimistic outlook. Global trade has defied all expectations and will underpin global economic growth. While geopolitics will continue to present challenges and impact the global trading system, the adoption of technology will continue to shape the future of trade. An important development over the last twelve months has also been the pivot of governments, companies, and investors towards sustainable practices in international trade – now high on the agenda. What the report ultimately reiterates, in line with our previous findings, is that international coordination and collaboration, and technology remain the key enablers and drivers of the recovery.”

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Archives, Global Trade Daily, News

Prices on the Global Tin Market Soar on Robust Demand Recovery

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

Tin prices rose to record levels in response to high demand from the electronics industry and a severe supply shortage on the market. The deficit has been driven on by pandemic-related decreases in mining output in 2020, the shipping container crisis and a drop in exports due to supply-chain disruptions. Prices are forecast to fall only in 2022 thanks to ramped-up mining output and supply and demand returning to equilibrium.

Key Trends and Insights

The year 2020 was marked by an 8.8% decline in global output for tin because of pandemic quarantine measures and a drop in demand from its primary consumer — the electronics industry. About half of tin produced in the world is used as a solder in electronics to assemble semiconductor microchips to printed circuit boards and other electronic devices.

All countries, except Russia, Congo and Nigeria, experienced a significant contraction in mining. In Indonesia, tin ore production fell by 15% y-o-y, in China by 4%, in Myanmar by 21% and in Peru by 9%.

In the first half of 2021, demand for tin used in electronics soared to record highs outpacing supply. In the U.S., Asia and the EU, a construction boom also bolstered growth in demand for the metal which is used in joining pipes. The use of tin-plated cans in the stabilizing food industry as well as in metal containers for petroleum products and lubricants contributed to the rise in demand.

The deficit in shipping containers caused delays in deliveries from Southeast Asia and Latin America while the pandemic spurred on a decline in unrefined tin exports from Indonesia. Both of these factors led to a shortage of tin on the global market. As a result, in just six months, prices for the metal grew 1.5 times on the London exchange from $20,540 per ton in December 2020 to $31,264 per ton in June 2021.

High prices for tin should incentivize mining activity to ramp up and gradually balance out supply and demand on the market. According to the World Bank, the average yearly price for tin in 2022 will decrease to $23,000 per ton and stabilize in the midterm.

Global Tin Production

In 2020, production of tin decreased by -6.4% to 359K tonnes, falling for the third year in a row after two years of growth. In value terms, tin production reduced to $5.2B in 2020 estimated in export prices.

The country with the largest volume of tin production was China (168K tonnes), comprising approx. 47% of total volume. Moreover, tin production in China exceeded the figures recorded by the second-largest producer, Indonesia (70K tonnes), twofold. The third position in this ranking was occupied by Peru (26K tonnes), with a 7.3% share.

Global Tin Imports

In 2020, overseas purchases of tin were finally on the rise to reach 198K tonnes (IndexBox estimates) after two years of decline. Overall, imports, however, showed a noticeable contraction. The growth pace was the most rapid in 2014 when imports increased by 5.7% y-o-y. Global imports peaked at 292K tonnes in 2007; however, from 2008 to 2020, imports failed to regain momentum.

In value terms, tin imports declined to $3.6B in 2020. In general, imports, however, recorded a slight decline. The pace of growth was the most pronounced in 2010 with an increase of 44% y-o-y. Global imports peaked at $7.1B in 2011; however, from 2012 to 2020, imports stood at a somewhat lower figure.

In 2020, the U.S. (31K tonnes), followed by Singapore (20K tonnes), Japan (19K tonnes), China (18K tonnes), Germany (16K tonnes), South Korea (14K tonnes), Taiwan (Chinese) (13K tonnes), India (9.8K tonnes) and Malaysia (9.5K tonnes) represented the largest importers of tin, together creating 76% of total imports. The Netherlands (6.3K tonnes), Spain (5.7K tonnes), Italy (4.4K tonnes) and France (4.4K tonnes) occupied a relatively small share of total imports.

In value terms, the U.S. ($540M), Singapore ($374M) and Malaysia ($368M) were the countries with the highest levels of imports in 2020, with a combined 36% share of global imports. These countries were followed by Japan, China, Germany, South Korea, India, Taiwan (Chinese), the Netherlands, Spain, Italy and France, which together accounted for a further 51%.

In 2020, the average tin import price amounted to $18,195 per tonne, with a decrease of -9.7% against the previous year. From 2007 to 2020, the most notable rate of growth in terms of prices was attained by Malaysia, while the other global leaders experienced more modest paces of growth.

Source: IndexBox Platform

machine manufacturers
Archives, Global Logistics, Global Trade Daily

Want to Make Progress on Digital Transformation? Start With Machine Maintenance.

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Machines are at the heart of manufacturing. They affect every aspect of production — efficiency, output, quality, consistency — and form the basis of manufacturing performance. So it comes as no surprise that many use cases for digital transformation in manufacturing focus on machinery. It’s where the transformation manifests itself.

How it manifests itself is more complicated than it seems, however. Some may think that the primary goal of digital transformation in manufacturing is to make machines better at their intended purposes — by using digital technology to help them run faster, longer, or with greater precision. This is one goal, but digital transformation is also about much more than that. Another crucial component is giving machines new capabilities and greater purpose.

Here’s an example: When machines are equipped with internet-connected sensors that can collect machine health data and send it to a centralized platform, then each machine becomes an indicator of the overall health of the production line. Studying the parts reveals the condition of the whole, whether that’s a single production line, an entire factory, or a global supply chain.

This wasn’t possible prior to the new technologies of industry 4.0 because manufacturers had no way to monitor machine health remotely and comprehensively. But it’s possible now, and it’s changing expectations around digital transformation in manufacturing.

Driving Digital Transformation of Machine Maintenance

With additional machine capabilities should also come a rethinking of the role of maintenance technicians. They’re not just the on-site problem-solvers anymore — they’re the ones who move digital transformation forward as they keep machines up, running, and evolving. Technicians may not be the architects of digital transformation in manufacturing, but they are the drivers of it.

In that context, it’s time to consider upgrading the roles of the technicians closest to the machines. The maintenance of the past isn’t appropriate for the factories of the future. Technicians need new skills, tools, and processes to leverage the advanced capabilities being added to machines. They also need a new mindset, mission, and role within the factory. To put it differently, maintenance technicians need to transform as much as the machines they work on. Here’s how manufacturing leaders can help:

1. Change Your Mindset From Maintenance to Risk Avoidance

In the past, when technicians serviced machines because of a breakdown or because of a service schedule, the entire focus was on minimizing machine downtime. Fewer failures and faster fixes meant the maintenance department was doing its job.

Instead of focusing on solving problems after they occur, however, maintenance teams should focus on preventing them. When maintenance sees its primary purpose as risk avoidance, it puts everything technicians do into a new perspective. The team is focused on intervening early and effectively so that minor issues don’t develop into downtime.

Risk avoidance (rather than minimization) is possible when maintenance teams shift from reactive and preventive maintenance, which lag behind problems, to predictive and prescriptive maintenance, which lead ahead of them. Machine health monitoring sensors make that possible while also showing the maintenance team where, when, why, and how their agile efforts helped to prevent disasters.

2. Think About Digitizing Maintenance as a Skill Set Upgrade, Not Just Another Tool

Digital transformation in manufacturing is about more than just adding a bunch of new digital tools to your technicians’ tool belts. If you just give them better ways to do what they were already doing, you won’t see dramatic improvements from digital transformation efforts.

Instead, think of digitization as more than a bonus tool. Think of it holistically as a whole skill set upgrade for your team. Digital tools will allow maintenance technicians to spend less time on menial, repeatable tasks and transition that energy instead to higher-value knowledge work like prescriptive maintenance that can keep machines running better for longer.

3. Improve Your Collaboration Capabilities

Digital transformation in manufacturing maintenance is largely about improving collaboration capabilities. Maintenance teams are using technology to help them spread their resources around as quickly, widely, and effectively as possible. All three of those depend on maintenance teams working collaboratively.

In practice, that means each technician, team, and site has access to the same data and alerts. Everyone works from a single source of truth so that wires don’t get crossed, warnings never get ignored, and resources move everywhere efficiently. However digital transformation affects maintenance, increased collaboration should be the goal.

Every day, digital transformation in manufacturing becomes a bigger priority. Many manufacturers will discover that in their race to digitize, they forgot to update maintenance at the same pace. Those that do the opposite will discover something as well: Digitizing maintenance propels the broader transformation effort forward because it allows machines to do more than they ever have.

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Artem Kroupenev is VP of Strategy at Augury, where he oversees product, market, innovation, and ecosystem strategy. He has over a decade of experience driving the adoption of disruptive technologies and has previously co-founded companies in the United States, Israel, and West Africa.

demurrage D&D voyager
Archives, Global Logistics, Global Trade Daily, Ocean Ports

NEW REPORT: DEMURRAGE & DETENTION CHARGES MORE THAN DOUBLE IN A YEAR

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Demurrage and detention charges imposed on shippers by container lines have soared at unprecedented rates globally over the last year, according to the Demurrage & Detention Benchmark 2021 report published today by Container xChange, the world’s leading online platform for the leasing and trading of shipping containers,

However, the hikes are hugely inconsistent, with large differences apparent both by port and by carrier.

Across the world’s 20 largest container ports, the report found that average Demurrage and Detention (D&D) fees levied by container lines on customers two weeks after a box was discharged from the vessel more than doubled across ports and shipping lines between March 2020 and March 2021, climbing 104% or the equivalent of $666 per container across all container types.

None of the world’s top 20 ports by throughput saw a decrease in D&D fees over the period.

On average, D&D charges (see definitions below) in March this year were $720 per box across standard container types two weeks after the box discharge from the vessel.

“Demurrage and detention prices have always been an area of conflict between shippers and carriers and that tension has reached a new level this year as costs have spiraled,” said co-founder of Container xChange Christian Roeloffs.

“The key to minimizing D&D is to create transparency around the fees. With shippers informed about the costs associated with D&D, they’ll be able to make business decisions and enter negotiations informed of the accurate costs and per diems. We hope this report gives all parties increased transparency.”

Methodology

To compile the report Container xChange collected more than 20,000 data points from publicly available sources. These were used to compare D&D rates imposed on customers by the world’s ten largest shipping lines across the world’s top-20 container ports. The data was then compared against data collected by Container xChange in March 2020.

The ten leading Chinese ports experienced a +126% increase in average D&D charges from March 2020 to March 2021. Qingdao saw the biggest rise in D&D rates, up 194% year-on-year, followed by Dalian where shippers suffered an average increase of +187%.

However, D&D charges in China remain far lower than in many other leading ports with seven of the top 10 cheapest ports located in the country. By contrast, average D&D fees two weeks after discharge at the Port of Long Beach in March were $2638, the most expensive in the world. In second place was neighboring Los Angeles at $2593.

“In the US, the Federal Maritime Commission is now looking into the practices of the container shipping industry and searching for ways to ensure that container users, many of whom feel they have been charged unfairly by carriers for D&D, can be refunded,” said Dr. Johannes Schlingmeier, CEO & Founder of the container leasing and trading platform. “Certainly, D&D rates have been accelerating, adding to the burden on shippers and industry on top of record container rates and global container shortages.”

Rotterdam had an average D&D rate in March of $756, Singapore was $615, and Antwerp was $709.

At the bottom of the spectrum was Busan (South Korea) with average D&D charges of only $132 in March this year. The next cheapest after the South Korean port were the Chinese ports of Dalian and Tianjin both with averages of $201.

Variations by carrier within ports

D&D charges do not just vary by port, they also vary by shipping line within each port. At the port of Los Angeles, which has been central to the chaos evident on the trans-Pacific container trade over the past year, average D&D charges increased by +142,7% from March 2020 to March 2021. CMA CGM’s D&D rates increased the most, up 167% over the period. Maersk was a close second, with its customers seeing a 161% increase in D&D charges.

By contrast, COSCO, unlike the other carriers in the Port of Los Angeles, lowered its average D&D fees by 15% over the period from $1417 in March last year to 2020 to $1213 in March 2021.

In Hamburg, meanwhile, the cheapest carrier in March this year was CMA CGM, which charged $258 in D&D after two weeks. Yang Ming was the most expensive line with rates of $1612.

Globally, the cheapest combination of carrier and port was COSCO and the Port of Busan in South Korea. The most expensive combination was CMA CGM at the ports of Long Beach and Los Angeles.

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Archives, Global Trade Daily, News, Trucking

Heavy-Duty Trucks Market: Top Key Trends Fostering the Industry Outlook through 2026

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The heavy-duty trucks market size is poised to expand at substantial CAGR during the forecast period. With the incorporation of advanced technologies including IoT, AI, smart navigation systems, and accident prevention technologies, the heavy-duty trucks industry worldwide is sure to undergo expansion. Focus on emission reduction, environmental sustainability, and efficient engines is expected to drive the demand for these trucks over the forthcoming years.

The following ten major factors have been observed across the heavy-duty trucks industry outlook:

Government investments in infrastructural activities in the Asia Pacific

With the thriving construction and real estate sector of countries such as India, South Korea, and China, heavy-duty trucks are expected to see a greater deployment rate in the next few years. By 2026, the Asia Pacific market share should have gained substantially from the numerous government investments and initiatives toward the promotion of construction activities in the region.

This includes the allotment of a massive government expenditure toward digitalization, integration of artificial intelligence (AI), Internet of Things (IoT), 5G networks, and intercity transportation networks.

Scrappage policy to boost India’s expansion

As part of the focus on economic recovery, the Indian government has been intending to incentivize heavy-duty truck owners to purchase new heavy-duty trucks and other commercial vehicles, discouraging usage of old, polluting ones via its new scrappage policy in Budget 2021.

The move will not only ensure lower pollution rates but also encourage the advancement of the heavy-trucks segment of the commercial vehicle market, which has been witnessing a decline in the past two years across the nation. The Indian market is likely to gain considerable revenue, thanks to the proposal of the Ministry of Road Transport and Highways (MoRTH) to provide new heavy-duty trucks with a discount of road tax as well as a waiver of the registration fee.

Growing demand for diesel heavy-duty trucks

The diesel engine segment of the APAC heavy-duty trucks market is expected to witness a significant expansion through the projected timeline, by credit to the lower fuel consumption alongside the higher efficiency of these engines when compared with gasoline trucks. Integration with compression-ignition of these trucks ensures their fuel efficiency. The lower costs and easy availability of diesel are likely to boost the demand for diesel-powered heavy-duty trucks in the upcoming years across APAC.

Focus on product launches across the Asia Pacific

Several industry leaders in the APAC heavy-duty trucks industry have been seeking to expand their presence through product launches. For instance, in June 2020, Mahindra introduced its Blazo X, a commercial truck with optimized fuel efficiency, across India. Similarly, in January 2021, Daimler India Commercial Vehicles (DICV) launched its new heavy-duty specialized refrigerated truck for safely and efficiently transporting COVID-19 vaccines throughout India.

U.S. auto sector to flesh out higher gains

The heavy-duty trucks market in the U.S. has been exhibiting growth due to higher demand for transportation of cargo and goods, generating more revenue. The American Trucking Association (ATA) findings reveal that over 71% of the freight tonnage across the U.S. is transported using trucks. The thriving cross-border trade between the U.S. and neighboring countries is expected to boost the North American heavy-duty trucks market size.

Integration with ADAS technologies in North America

With technologically advanced heavy-duty trucks being developed by the leading manufacturers across the region, the market in North America is sure to soar. The focus on driver assistance and automation technologies has been a major trend defining the market’s progress. Recently, heavy-duty truck manufacturers have been prioritizing accident prevention and blind-spot monitoring through the adoption of ADAS systems in their product offerings.

Expanding demand for 4×2 axle heavy-duty trucks in Europe

Big trucks with multiple axles offer a better driving experience than single axle trucks. The demand for these vehicles has been spiraling across Europe’s heavy-duty trucks market. There is a growing utilization of 4×2 axle heavy-duty trucks, primarily triggered by the stringent regulatory policies of the European Commission. The EU has enforced permissible weight carriage as per the axle count of heavy-duty trucks.

300-400 horsepower trucks to gain traction across Europe

Owing to the advantages of 300-400 horsepower trucks, the demand for these vehicles has been witnessing an uptick. These trucks feature superior fuel efficiency alongside a lower engine weight. The segment is expected to surge at a high CAGR through the forecast years, due to their comparatively lower costs and enhanced abilities to haul heavy loads.

Hefty penalties for non-compliance with EU standards

Numerous heavy-duty truck manufacturers in Europe have been investing in the integration of innovative technologies aiming at achieving the zero-emission target from 2025 onward, in order to avoid payment of hefty penalties for non-compliance with EU standards. Recently, the EU has announced the adoption of carbon-neutrality targets and standards for heavy-duty trucks.

These include a 15% reduction from 2025, which will augment to 30% by 2030, attaining zero emissions by 2050. The implementation of such regulatory frameworks is certain to flesh out more demand for electrified trucks across the European region.

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Archives, Global Trade Daily, Imports/Exports, News

The U.S. Milk Production Rises on Strong Domestic and Export Demand for Processed Dairy Products

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

USDA forecasts that milk production in the U.S. will rise by 2.1% in 2021 thanks to gains in yield per cow as well as a slight increase in the number of milk cows. The average yearly price received by farmers for cow milk in 2021 is predicted to grow by 3.9% y-o-y amidst a rally in prices for animal feed. Rising consumer demand for cheese and butter continues to drive the market on the backdrop of lower demand for beverage milk. Demand in Asia for imported dairy products features as another factor boosting milk processing in the U.S.

Key Trends and Insights

According to IndexBox, in 2020, U.S. milk production increased by 1.3% y-o-y to 100M tonnes, and it is forecast to rise at the same pace for the next two years due to demand from the growing population.

The average number of milk cows in the U.S. rose from 9,337 heads in 2019 to 9,388 heads in 2020 but remains below the 2017-2018 figures. In the second half of 2021 and into 2022, farmers are expected to accelerate the pace of butchering and decrease the total head of cattle as they respond to higher costs of feed resulting from summer droughts. The expected decline in milk due to fewer cattle should be offset by increased milk production per cow.

The USDA estimates that as of year-end 2021, the average yearly farmer’s price will grow by 3.9% y-o-y to $0.43 per liter due to rallying feed prices. In 2022, the cost of milk should fall by 2.4% in comparison with 2021 to $0.42 per liter thanks to the expected increase in production but will remain higher than the 2020 figures ($0.41 per liter).

Over the last decade, the per capita milk consumption in the U.S., incl. both fresh milk of all kinds and milk used for processing, grew by 6.7% and in 2020 reached 354 kg/person, but the structure of the demand has been changing. Americans continue drinking less milk while consuming more cheese and butter. This long-term shift towards processed dairy products will drive market growth for milk in the mid-term. In Asia, imported produce is becoming highly sought after and this should expand exports of American cheese and other dairy products, while additionally driving demand for milk.

U.S. Milk Production

In 2020, approx. 118M tonnes of milk were produced in the U.S.; picking up by 1.6% compared with 2019 figures. The total output volume increased at an average annual rate of +1.3% from 2012 to 2020; the trend pattern remained consistent, with somewhat noticeable fluctuations being recorded throughout the analyzed period. The pace of growth appeared the most rapid in 2014 when the production volume increased by 2.7% year-to-year. Milk production peaked in 2020 and is expected to retain growth in the immediate term.

In value terms, milk production expanded significantly to $127.8B in 2020. The total output value increased at an average annual rate of +4.4% over the period from 2012 to 2020; the trend pattern indicated some noticeable fluctuations being recorded in certain years. Milk production peaked at $130.4B in 2017; however, from 2018 to 2020, production remained at a lower figure.

U.S. Milk Imports

For the third consecutive year, the U.S. recorded growth in purchases abroad of milk, which increased by 7.2% to 19K tonnes in 2020. Overall, imports recorded buoyant growth. The pace of growth appeared the most rapid in 2016 when imports increased by 51% against the previous year. Over the period under review, imports hit record highs in 2020 and are expected to retain growth in years to come (IndexBox estimates).

In value terms, milk imports dropped rapidly to $22M in 2020. Overall, imports posted a strong increase. The pace of growth appeared the most rapid in 2018 when imports increased by 24% year-to-year. As a result, imports reached a peak of $30M. from 2019 to 2020, the growth of imports remained at a lower figure.

In 2020, whole fresh milk (31K tonnes) constituted the largest type of milk supplied to the U.S., with a 68% share of total imports. Moreover, whole fresh milk exceeded the figures recorded for the second-largest type, skim milk of cows (14K tonnes), twofold.

Canada (25K tonnes), Mexico (16K tonnes) and New Zealand (818 tonnes) were the main suppliers of milk imports to the U.S. In value terms, Mexico ($35M), Canada ($25M) and New Zealand ($1.9M) appeared to be the largest milk suppliers to the U.S.

In 2020, the average milk import price amounted to $1,157 per tonne, waning by -21.3% against the previous year. There were significant differences in the average prices amongst the major supplying countries. In 2020, the country with the highest price was New Zealand ($2,270 per tonne), while the price for Canada ($997 per tonne) was amongst the lowest.

Source: IndexBox Platform

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Archives, Global Logistics, Global Trade Daily

Pandemic Preparedness Plans: 3 Things to Consider

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The pandemic showed us how quickly consumer behavior can shift — or stop — on a dime. As part of the Strategic Partners team at Arrive Logistics, I focus on growing and strengthening partnerships with our enterprise shippers and carriers by tailoring unique solutions specific to their organization, industry and logistics challenges. While many of these organizations were forced to adjust to a new normal, the question of “What if there is another pandemic?” has inevitably been raised. With science suggesting this is a likely possibility, it’s important that all organizations have a supply chain pandemic preparedness plan in place tailored to their specific needs and how they operate. These plans should focus on three elements:

Scope of Supply Chain

Understanding the elasticity or inelasticity of your product in a pandemic and how nimble your organization can be, is key. For example, let’s consider a food packaging company whose business is split 50/50 between food service and CPG customers. When a disruption like a global pandemic shutters restaurants at a moment’s notice, do they have the ability to change their food service production lines over quickly to minimize waste? In this case, the biggest hurdle to shifting half their lines from gross production to CPG would likely be packaging. Knowing now what a disruption of this caliber may require, food packaging companies should be looking at how they can plan for future production shifts.

When you’re considering the scope of your supply chain, a contingency plan that allows you to shift your production model efficiently can save time, money and resources.

Supplier Relationships

In an extraordinary situation like a pandemic, relationships with suppliers are put to the test. As you put your pandemic preparedness plan together, consider what your relationships with your suppliers look like throughout the supply chain. Do you view your suppliers as simply service providers needing to come down in price, or do your suppliers view you as a close partner where you regularly talk about your business needs? When you encounter a disruption, is the goal to save money, or are you focused on protecting service and ensuring on-time delivery for customers?

Based on your responses to the above questions, you need to determine how best to forge deep relationships that allow you to lean on your partners when necessary to continue meeting business goals. Is meeting quarterly for business reviews an option? Are you talking about how suppliers are creating their own pandemic preparedness plans, and are you aligned on the procedures they have in place? Answering these questions before you need to will allow you to create a pandemic preparedness plan that is agile and effective. Then, when things change, expectations are clearly understood from the start.

Inventory Strategy

A pandemic preparedness plan needs to reflect your inventory strategy. As we’ve seen over the past year and a half, the pandemic exploited the “just in time” approach to inventory that a lot of companies have adopted since the 1970s. Can your inventory strategy stand up to months of backorders and constantly changing consumer habits?

Your strategy should address how much inventory to carry and where to carry it and, if the inventory was previously outsourced, you need to flesh out the details for how you will now bring that inventory strategy in-house.  As you begin to plan, you should consider whether you have enough inventory to carry you through another global disruption, if you have the option to own your inventory instead of outsourcing it, as well as your ability to implement a direct to customer or drop-ship option to get your product to customers on time.

Much like weather contingency plans, pandemic preparedness plans are likely to become a staple in the supply chain. As we take time to review the learnings from the current pandemic, it’s important your organization considers how to put in place a plan that is tailored to its specific requirements to help thwart the level of disruption we saw in 2020. By evaluating the scope of your supply chain, your supplier relationships and your inventory strategy upfront, you’re setting your organization up to survive the next global disruption.

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Archives, Global Trade Daily, Imports/Exports

The American Cable Market Will Shoot Up Thanks to Infrastructure Development for Electric Vehicles

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

Electric wires and cables may hit a record demand amid the infrastructure development for electric vehicles in the U.S., for which the Biden administration’s infrastructure bill will allocate $174B. The active deployment of 5G networks and the expansion in the construction sector due to the rush demand for dwellings will also continue driving the market in the medium term.

Key Trends and Insights

The insulated cable and wire market could begin a new era of growth due to the expected increase in demand for infrastructure for electric vehicles in the U.S. In March 2021, the Biden Administration unveiled a plan to stimulate the introduction of electric vehicles, providing for the installation of charging stations throughout the whole country. The plan outlines investing more than $174B in infrastructure creation and development.

The construction boom in the private low-rise building sector will further stimulate the wire market. In the context of an acute shortage of housing amid the rush demand, the intensive pace of new construction will ensure a stable need for cables for the next two years at least.

The intensive construction of a new 5G network for broadband access will be another important driver of the wire market. The development plan for this segment is described in the National Strategy for 5G Security in the U.S., adopted in 2020, which points to allocate $100B for its implementation.

Producer prices for copper wires and cables in the U.S. grew steadily over the last three quarters of last year and prices in April 2021 exceeded their April 2020 level by a rate of 1.3. In the short term, prices are expected to continue growing as demand outstrips the market supply. Production in 2020 fell by 2.7% y-o-y and has not yet fully recovered from market disruptions due to the Covid pandemic. The rise in prices for copper and PVC, raw materials for manufacturing wires and cables, also contributes to the rise in the cost for the final product.

Given the above-mentioned circumstances, the U.S. wire market is expected to post solid gains in the medium, term. Driven by strong demand in the electrocar industry, the construction and the growing telecommunications segment, the market could reach 1.8M tonnes by 2030 (IndexBox estimates).

Insulated Wire and Cable Production in the U.S.

In 2020, the amount of insulated wire and cable produced in the U.S. reduced to 731K tonnes, which is down by -2.7% compared with the year before. Overall, production recorded a perceptible downturn. The most prominent rate of growth was recorded in 2019 with an increase of 6.1% y-o-y. Wire and cable production peaked at 996K tonnes in 2012; however, from 2013 to 2020, production remained at a lower figure.

In value terms, wire and cable production dropped modestly to $9.6B in 2020. Over the period under review, production recorded a perceptible descent. The most prominent rate of growth was recorded in 2019 with an increase of 6.1% year-to-year. Wire and cable production peaked at $12.9B in 2014; however, from 2015 to 2020, production stood at a somewhat lower figure.

Insulated Wire and Cable Imports into the U.S.

In 2020, purchases abroad of insulated wire and cable decreased by -28.1% to 1M tonnes, falling for the second consecutive year after three years of growth. In value terms, wire and cable imports shrank to $18.4B in 2020. The total import value increased at an average annual rate of +2.7% over the period from 2012 to 2020.

In 2020, Mexico (417K tonnes) constituted the largest supplier of wire and cable to the U.S., accounting for a 41% share of total imports. Moreover, wire and cable imports from Mexico exceeded the figures recorded by the second-largest supplier, China (148K tonnes), threefold. Viet Nam (65K tonnes) ranked third in terms of total imports with a 6.3% share.

In value terms, Mexico ($9.4B) constituted the largest supplier of wire and cable to the U.S., comprising 51% of total imports. The second position in the ranking was occupied by China ($2.9B), with a 16% share of total imports. It was followed by Viet Nam, with a 6.1% share.

In 2020, the average wire and cable import price amounted to $17,883 per tonne, increasing by 23% against the previous year. Over the last eight years, it increased at an average annual rate of +3.0%.

Source: IndexBox Platform