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Kerry Logistics Network Reacts To Growing Demand with New 1S2 Service Between UK and Turkey

tive insights Turkey is a growth market and key cargo hub for the UK, particularly for textiles and fashion, automotive cargo and Fast-Moving Consumer Goods
3pls, Archives, Global Logistics, Global Trade Daily, Imports/Exports, International Trade

Kerry Logistics Network Reacts To Growing Demand with New 1S2 Service Between UK and Turkey

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Kerry Logistics Network Limited (‘KLN’; Stock Code 0636.HK) has launched a new One Stop Solution (1S2) for imports and exports between the UK and Turkey across all modes in response to strong demand.

“Turkey is a growth market and key cargo hub for the UK, particularly for textiles and fashion, automotive cargo and Fast-Moving Consumer Goods (FMCG) which have seen a strong surge in demand as companies search for alternative sourcing locations outside of Asia,” said Emma Rowlands, Strategic Sales Director, Kerry Logistics UK.

“We have locations throughout the UK and expert trade teams located in Istanbul, Ankara, Izmir, and Bursa. We have been operating in Turkey for 30 years, which makes us perfectly suited for the growth we are experiencing,” Rowlands added.

“Customers are increasingly looking for diversity, flexibility, and multimodal solutions that can be consistently maintained into and out of Turkey, which is why we have created the 1S2 to meet these needs.”

Already ranked IATA’s primary Agent in Turkey, KLN’s 1S2 has been developed to cater to growing multimodal demands and offers: Full Container Load (FCL) and Less than Container Load (LCL) fast transit services to all UK ports; daily Full Truck Load and Less than Truck Load across the European Union (EU); bonded and non-bonded, consolidation, value-added and Quality Control (QC) warehousing solutions; as well as in-house Customs clearance.

In combination with the 1S2, KLN offers a clearance service both on commercial and low value channels which is applicable for e-commerce.

Additionally, trade compliance, customs advisory and other consulting services are available for businesses looking to enter the Turkish market.

About Kerry logistics

Kerry Logistics Network Limited is a listed company engaged in third party logistics, freight services, warehouse operations, and supply chain solutions. It was listed on 19 December 2013, raising over US$280 million, as a spin-off of Kerry Properties Limited. Kerry Logistics is headquartered in Kwai Chung, Hong Kong.

gas
Archives, Foreign Trade Zones, Global Trade Daily, International Trade, News

The Next Big Disruption of the Supply Chain Network

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Turkey and Greece Clash Over Oil and Gas in the Eastern Mediterranean: 14 Actions to Take to Keep Your Cargo Moving and Your Supply Chain Agile and Resilient.

While the Mediterranean Sea as a whole has been the center of oil and gas explorations, it is in the Eastern Mediterranean Sea that massive gas fields exist. “According to a 2010 study by the US Geological Survey, the Eastern Mediterranean could hold as much as 122 trillion cubic feet of natural gas in total, equivalent to the reserves of Iraq.” However, the discovery of oil and natural gas in the region has reignited territorial conflicts between Turkey and Greece, both of whom are members of NATO.

Turkey has always felt that the Treaties of Sèvres and Lausanne were not only humiliating but that they stripped the country of valuable territory which is now very promising financially, economically, and logistically. In addition to Turkey and Greece, the discovery of gas affects Cyprus, Lebanon, Israel, Syria, Jordan, Egypt, and Libya. But for Turkey especially, it could be a means to leverage itself into a much stronger regional power.

In addition, Turkey felt that excluding it from the regional energy development talks in the Eastern Mediterranean, was a slap in the face. As a result, both Turkey and Greece are boosting their military presence in the Eastern Mediterranean Sea. There is no doubt that 2 events emboldened Turkey’s actions; the world is busy fighting the coronavirus and the strides made in technological advancement which made manufacturing and acquiring weapons a lot cheaper than what it used to be.

BCOs (Beneficial Cargo Owners) operating in this geopolitical climate should consider these long- term strategies:

-Rethink your supply chains by examining the geographical locations, financial and logistical strengths, weaknesses, agility, and resiliency of your suppliers.

-Add 2 to 3 weeks to your transit times. This will protect you from unexpected weather delays, blank sailings, removal of ships from service, or even the cancellation of sailings altogether if the conflict escalates and waterways and bridges are closed.

-Increase your lead time and inventory level, which may seem expensive at first, but will actually be less expensive in the long run, when you will be forced to resort to shipping by air in order to maintain high service levels and promises to customers.

-Review and revise your forecasts weekly.

-Increase your buffer stock and inventory when necessary; doing so won’t necessarily reduce your cash flow if you negotiate good credit terms with your suppliers.

-Build-in your budget increases in spend on ocean freight rates, BAF, and WRS.

-Assume the worst-case scenario and have alternative procurement sources should sanctions be imposed or should war break out.

-Account for the increases in duty should the alternative suppliers be located in countries subject to higher duty rates.

-Make sure that your cargo carries additional insurance coverage to mitigate war risk.

-Avoid the carriers whose ships carry the flag of the conflicting countries.

-Monitor the financial stability of all links in the value chain frequently, especially the stability of ocean carriers given the consolidations and reorganizations that have been taking place lately.

-Make sure that the air freight cost is accounted for and that your customer will accept the additional charges should you have to resort to airlift any cargo. Having these contingency plans negotiated and agreed upon in advance will eliminate delays, surprises, and even possible plant closures due to last-minute disagreements.

-Communicate, plan, and execute with internal and external stakeholders frequently. Constant communication cannot be emphasized enough. So is the frequent evaluation of all suppliers and service providers for products, services, and contract revisions if necessary due to the volatility and complexity of today’s supply chains.

-Stay abreast of events in the whole Middle East region given the daily geopolitical developments some of which may affect the movement of cargo between that region and the world.

This is a conflict that, at first sight, seems to be between Turkey and Greece but, in reality, it’s much more complicated than that because now the USA and the EU are involved. As a matter of fact, the EU is considering sanctions against Turkey.

The best course of action would be for the clashing countries to renegotiate the treaties that caused their grievances including but not limited to their territorial waters and the Law of the Sea.

Lastly, the latest military escalation was not the result of the discovery of gas only as it carries within its centuries of territorial and religious conflicts. Most importantly, this is happening between Turkey and Greece who at one time were glorious empires and who are intent on bringing that glory back.

______________________________________________________________

Omar Kazzaz specializes in business strategy, BPI (Business Process Improvement) as well as supply chain design, planning and execution. He has 28 years of experience in international business, global logistics and supply chain.   

Mr. Kazzaz is a long-standing member of the Global Thinkers Roundtable. In addition, he has been involved in numerous panel discussions on global trade and global logistics. His comments and articles on international trade agreements, global manufacturing and supply chain have been quoted in many publications. 

Mr. Kazzaz holds an MBA in International Management from Thunderbird, The American Graduate School of International Management in Glendale, AZ, and a BA in German and Economics from The University of North Carolina at Charlotte. Besides his native Arabic language, Mr. Kazzaz speaks French and German. 

polyethylene
Archives, Global Trade Daily, Imports/Exports

Turkey Ranks As the Largest Market for Imported Polyethylene in the Middle East, with $1B in 2018

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IndexBox has just published a new report: ‘Middle East – Polyethylene – Market Analysis, Forecast, Size, Trends And Insights’. Here is a summary of the report’s key findings.

Polyethylene Exports in the Middle East

The exports totaled 7.8M tonnes in 2018, rising by 27% against the previous year. The total export volume increased at an average annual rate of +7.3% from 2013 to 2018; however, the trend pattern indicated some noticeable fluctuations being recorded over the period under review.

In value terms, polyethylene exports amounted to $8.8B (IndexBox estimates) in 2018.

Exports by Country

Saudi Arabia was the key exporter of polyethylene in the Middle East, with the volume of exports recording 4.8M tonnes, which was approx. 61% of total exports in 2018. Iran (1,086K tonnes) ranks second in terms of the total exports with a 14% share, followed by Qatar (13%) and the United Arab Emirates (8.1%). Kuwait (167K tonnes) took a relatively small share of total exports.

Exports from Saudi Arabia increased at an average annual rate of +8.4% from 2013 to 2018. At the same time, the United Arab Emirates (+20.0%) and Iran (+13.6%) displayed outstripping paces of growth. Moreover, the United Arab Emirates emerged as the fastest-growing exporter exported in the Middle East, with a CAGR of +20.0% from 2013-2018. Qatar experienced a relatively flat trend pattern. By contrast, Kuwait (-8.9%) illustrated a downward trend over the same period. While the share of Saudi Arabia (+20 p.p.), Iran (+6.6 p.p.) and the United Arab Emirates (+4.8 p.p.) increased significantly, the shares of the other countries remained relatively stable throughout the analyzed period.

In value terms, Saudi Arabia ($5.2B) remains the largest polyethylene supplier in the Middle East, comprising 59% of total polyethylene exports. The second position in the ranking was occupied by Iran ($1.2B), with a 14% share of total exports. It was followed by Qatar, with a 14% share.

In Saudi Arabia, polyethylene exports expanded at an average annual rate of +5.1% over the period from 2013-2018. The remaining exporting countries recorded the following average annual rates of exports growth: Iran (+7.9% per year) and Qatar (-5.1% per year).

Export Prices by Country

In 2018, the polyethylene export price in the Middle East amounted to $1,128 per tonne, waning by -9.6% against the previous year. Overall, the polyethylene export price continues to indicate a perceptible shrinkage. The pace of growth was the most pronounced in 2017 when the export price increased by 16% year-to-year. The level of export price peaked at $1,431 per tonne in 2014; however, from 2015 to 2018, export prices stood at a somewhat lower figure.

Average prices varied noticeably amongst the major exporting countries. In 2018, major exporting countries recorded the following prices: in the United Arab Emirates ($1,245 per tonne) and Qatar ($1,227 per tonne), while Saudi Arabia ($1,080 per tonne) and Kuwait ($1,144 per tonne) were amongst the lowest.

From 2013 to 2018, the most notable rate of growth in terms of prices was attained by Saudi Arabia, while the other leaders experienced a decline in the export price figures.

Polyethylene Imports in the Middle East

In 2018, the amount of polyethylene imported in the Middle East totaled 1.6M tonnes, jumping by 11% against the previous year. Over the period under review, polyethylene imports, however, continue to indicate a relatively flat trend pattern.

In value terms, polyethylene imports totaled $2.1B (IndexBox estimates) in 2018.

Imports by Country

Turkey was the main importer of polyethylene in the Middle East, with the volume of imports accounting for 803K tonnes, which was approx. 51% of total imports in 2018. The United Arab Emirates (271K tonnes) ranks second in terms of the total imports with a 17% share, followed by Jordan (7%), Israel (6.3%) and Lebanon (4.8%). The following importers – Saudi Arabia (63K tonnes) and Yemen (43K tonnes) – together made up 6.7% of total imports.

Imports into Turkey increased at an average annual rate of +5.3% from 2013 to 2018. At the same time, Jordan (+8.1%), Lebanon (+2.6%) and Yemen (+2.4%) displayed positive paces of growth. Moreover, Jordan emerged as the fastest-growing importer imported in the Middle East, with a CAGR of +8.1% from 2013-2018. By contrast, Israel (-3.0%), the United Arab Emirates (-6.7%) and Saudi Arabia (-11.7%) illustrated a downward trend over the same period. While the share of Turkey (+12 p.p.) and Jordan (+2.2 p.p.) increased significantly in terms of the total imports from 2013-2018, the share of Saudi Arabia (-3.4 p.p.) and the United Arab Emirates (-7.1 p.p.) displayed negative dynamics. The shares of the other countries remained relatively stable throughout the analyzed period.

In value terms, Turkey ($1B) constitutes the largest market for imported polyethylene in the Middle East, comprising 49% of total polyethylene imports. The second position in the ranking was occupied by the United Arab Emirates ($362M), with a 17% share of total imports. It was followed by Israel, with a 6.8% share.

Import Prices by Country

The polyethylene import price in the Middle East stood at $1,315 per tonne in 2018, waning by -2.9% against the previous year.

Average prices varied somewhat amongst the major importing countries. In 2018, major importing countries recorded the following prices: in Saudi Arabia ($1,736 per tonne) and Israel ($1,412 per tonne), while Lebanon ($1,167 per tonne) and Jordan ($1,222 per tonne) were amongst the lowest.

From 2013 to 2018, the most notable rate of growth in terms of prices was attained by Saudi Arabia, while the other leaders experienced a decline in the import price figures.

Source: IndexBox AI Platform

beeswax
Archives, Global Trade Daily, Imports/Exports

Asia’s Beeswax Market Is Estimated at $206M in 2018, an Increase of 3.4%

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

The revenue of the beeswax market in Asia amounted to $206M in 2018, increasing by 3.4% against the previous year. This figure reflects the total revenues of producers and importers (excluding logistics costs, retail marketing costs, and retailers’ margins, which will be included in the final consumer price). The total market indicated a moderate increase from 2007 to 2018: its value increased at an average annual rate of +0.7% over the last eleven years.

Consumption By Country in Asia

The country with the largest volume of beeswax consumption was India (26K tonnes), accounting for 64% of total consumption. Moreover, beeswax consumption in India exceeded the figures recorded by the region’s second-largest consumer, Turkey (4.9K tonnes), fivefold. The third position in this ranking was occupied by South Korea (3.7K tonnes), with a 9.1% share.

In India, beeswax consumption expanded at an average annual rate of +2.6% over the period from 2007-2018. In the other countries, the average annual rates were as follows: Turkey (+1.9% per year) and South Korea (-1.1% per year).

In value terms, India ($127M) led the market, alone. The second position in the ranking was occupied by Turkey ($42M). It was followed by South Korea.

The countries with the highest levels of beeswax per capita consumption in 2018 were South Korea (73 kg per 1000 persons), Turkey (59 kg per 1000 persons) and Malaysia (39 kg per 1000 persons).

From 2007 to 2018, the most notable rate of growth in terms of beeswax per capita consumption, amongst the main consuming countries, was attained by Japan, while the other leaders experienced more modest paces of growth.

Market Forecast 2019-2025 in Asia

Driven by increasing demand for beeswax in Asia, the market is expected to continue an upward consumption trend over the next seven-year period. Market performance is forecast to retain its current trend pattern, expanding with an anticipated CAGR of +0.2% for the seven-year period from 2018 to 2025, which is projected to bring the market volume to 42K tonnes by the end of 2025.

Production in Asia

In 2018, approx. 50K tonnes of beeswax were produced in Asia; remaining stable against the previous year. The total output volume increased at an average annual rate of +1.3% from 2007 to 2018; the trend pattern remained consistent, with only minor fluctuations being recorded in certain years. The pace of growth appeared the most rapid in 2008 when production volume increased by 5.6% against the previous year. Over the period under review, beeswax production reached its peak figure volume in 2018 and is likely to continue its growth in the immediate term.

In value terms, beeswax production stood at $292M in 2018 estimated in export prices. Over the period under review, beeswax production continues to indicate prominent growth. The growth pace was the most rapid in 2011 with an increase of 25% against the previous year. Over the period under review, beeswax production attained its peak figure level at $392M in 2014; however, from 2015 to 2018, production failed to regain its momentum.

Production By Country in Asia

India (24K tonnes) remains the largest beeswax producing country in Asia, comprising approx. 49% of total production. Moreover, beeswax production in India exceeded the figures recorded by the region’s second-largest producer, China (11K tonnes), twofold. Turkey (4.5K tonnes) ranked third in terms of total production with a 9% share.

In India, beeswax production increased at an average annual rate of +2.0% over the period from 2007-2018. In the other countries, the average annual rates were as follows: China (+0.5% per year) and Turkey (+1.4% per year).

Exports in Asia

The exports totaled 14K tonnes in 2018, surging by 8.1% against the previous year. The total exports indicated a strong increase from 2007 to 2018: its volume increased at an average annual rate of +6.7% over the last eleven-year period. The trend pattern, however, indicated some noticeable fluctuations being recorded throughout the analyzed period. Based on 2018 figures, beeswax exports increased by +9.1% against 2016 indices. The pace of growth appeared the most rapid in 2010 when exports increased by 26% year-to-year. The volume of exports peaked in 2018 and are expected to retain its growth in the near future.

In value terms, beeswax exports amounted to $79M (IndexBox estimates) in 2018. In general, beeswax exports continue to indicate a resilient expansion. The growth pace was the most rapid in 2010 with an increase of 34% y-o-y. The level of exports peaked at $80M in 2015; however, from 2016 to 2018, exports stood at a somewhat lower figure.

Exports by Country

In 2018, China (9.7K tonnes) represented the major exporter of beeswax, committing 69% of total exports. It was distantly followed by Malaysia (1,970 tonnes) and Viet Nam (1,494 tonnes), together committing a 25% share of total exports. India (339 tonnes) held a little share of total exports.

Exports from China increased at an average annual rate of +5.3% from 2007 to 2018. At the same time, Viet Nam (+19.6%), India (+15.2%) and Malaysia (+8.8%) displayed positive paces of growth. Moreover, Viet Nam emerged as the fastest-growing exporter in Asia, with a CAGR of +19.6% from 2007-2018. China (+30 p.p.), Viet Nam (+9.2 p.p.), Malaysia (+8.5 p.p.) and India (+1.9 p.p.) significantly strengthened its position in terms of the total exports, while the shares of the other countries remained relatively stable throughout the analyzed period.

In value terms, China ($61M) remains the largest beeswax supplier in Asia, comprising 77% of total beeswax exports. The second position in the ranking was occupied by Viet Nam ($12M), with a 15% share of total exports. It was followed by India, with a 2% share.

From 2007 to 2018, the average annual rate of growth in terms of value in China stood at +10.9%. In the other countries, the average annual rates were as follows: Viet Nam (+24.8% per year) and India (+15.5% per year).

Export Prices by Country

The beeswax export price in Asia stood at $5,595 per tonne in 2018, going up by 1.8% against the previous year. The export price indicated a buoyant increase from 2007 to 2018: its price increased at an average annual rate of +4.4% over the last eleven-year period. The trend pattern, however, indicated some noticeable fluctuations being recorded throughout the analyzed period. Based on 2018 figures, beeswax export price decreased by -5.3% against 2015 indices. The growth pace was the most rapid in 2012 when the export price increased by 20% y-o-y. Over the period under review, the export prices for beeswax reached their maximum at $5,910 per tonne in 2015; however, from 2016 to 2018, export prices failed to regain their momentum.

Prices varied noticeably by the country of origin; the country with the highest price was Viet Nam ($7,731 per tonne), while Malaysia ($670 per tonne) was amongst the lowest.

From 2007 to 2018, the most notable rate of growth in terms of prices was attained by China, while the other leaders experienced more modest paces of growth.

Imports in Asia

In 2018, approx. 5.5K tonnes of beeswax were imported in Asia; stabilizing at the previous year. Overall, beeswax imports continue to indicate remarkable growth. The most prominent rate of growth was recorded in 2010 when imports increased by 40% against the previous year. The volume of imports peaked in 2018 and are likely to see steady growth in the near future.

In value terms, beeswax imports totaled $28M (IndexBox estimates) in 2018. In general, beeswax imports continue to indicate a prominent increase. The most prominent rate of growth was recorded in 2010 when imports increased by 47% year-to-year. Over the period under review, beeswax imports reached their maximum in 2018 and are expected to retain its growth in the immediate term.

Imports by Country

India represented the major importing country with an import of around 2.2K tonnes, which resulted at 40% of total imports. Japan (889 tonnes) took the second position in the ranking, followed by China (557 tonnes), Turkey (405 tonnes) and South Korea (357 tonnes). All these countries together took approx. 40% share of total imports. Pakistan (186 tonnes), Thailand (181 tonnes) and Taiwan, Chinese (93 tonnes) followed a long way behind the leaders.

India was also the fastest-growing in terms of the beeswax imports, with a CAGR of +23.1% from 2007 to 2018. At the same time, China (+20.6%), Pakistan (+14.2%), Turkey (+9.8%), Thailand (+5.9%) and Taiwan, Chinese (+1.8%) displayed positive paces of growth. Japan experienced a relatively flat trend pattern. By contrast, South Korea (-2.4%) illustrated a downward trend over the same period. India (+36 p.p.), China (+8.9 p.p.), Turkey (+4.7 p.p.), Pakistan (+2.6 p.p.), Japan (+1.6 p.p.) and Thailand (+1.5 p.p.) significantly strengthened its position in terms of the total imports, while South Korea saw its share reduced by -2% from 2007 to 2018, respectively. The shares of the other countries remained relatively stable throughout the analyzed period.

In value terms, the largest beeswax importing markets in Asia were Japan ($8.2M), China ($5.5M) and South Korea ($2.9M), with a combined 60% share of total imports.

China recorded the highest growth rate of imports, among the main importing countries over the last eleven years, while the other leaders experienced more modest paces of growth.

Import Prices by Country

The beeswax import price in Asia stood at $5,033 per tonne in 2018, remaining stable against the previous year. Over the last eleven years, it increased at an average annual rate of +1.5%. The growth pace was the most rapid in 2014 when the import price increased by 35% y-o-y. In that year, the import prices for beeswax attained their peak level of $5,431 per tonne. From 2015 to 2018, the growth in terms of the import prices for beeswax remained at a lower figure.

There were significant differences in the average prices amongst the major importing countries. In 2018, the country with the highest price was China ($9,919 per tonne), while India ($1,098 per tonne) was amongst the lowest.

From 2007 to 2018, the most notable rate of growth in terms of prices was attained by South Korea, while the other leaders experienced more modest paces of growth.

Source: IndexBox AI Platform

commerce
Archives, Global Trade Daily, News

COMMERCE ISSUES PRELIMINARY DETERMINATIONS IN PROBES OF DRIED TART CHERRY IMPORTS FROM TURKEY

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The U.S. Department of Commerce on Sept. 23 announced the affirmative preliminary determinations in the antidumping duty (AD) and countervailing duty (CVD) investigations of imports of dried tart cherries from Turkey, finding that exporters sold dried tart cherries at less than fair value at rates ranging from 541.29 to 648.35 percent and received countervailable subsidies at a rate of 204.93 percent.

Commerce will instruct U.S. Customs and Border Protection to collect cash deposits from importers of dried tart cherries from Turkey based on these preliminary rates.

Investigations were initiated based on petitions filed by the Dried Tart Cherry Trade Committee, whose members include Cherry Central Cooperative (Traverse City, Michigan), Graceland Fruit, Inc. (Frankfort, Michigan), Payson Fruit Growers Coop (Payson, Utah), Shoreline Fruit, LLC (Traverse City, Michigan) and Smeltzer Orchard Co. (Frankfort, Michigan). In 2018, imports of dried tart cherries from Turkey were valued at an estimated $1.2 million.

Commerce is scheduled to announce its final AD and CVD determinations on or about Dec. 5. If affirmative final determinations are made, the U.S. International Trade Commission (ITC) will be scheduled to make its final injury determinations on or about Jan. 21, 2020. Only if both Commerce and the ITC make affirmative final injury determinations will AD and CVD orders be issued. Any negative final determinations end the investigations with no orders issued.

Archives, Global Trade Daily, News

U.S. Strengthens Sanctions Targeting the Government of Venezuela

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On August 5, 2019, the Trump Administration intensified pressure on the administration of Nicolás Maduro by imposing broad economic sanctions against the Government of Venezuela, a move that could escalate existing tensions with Venezuela’s supporters, Russia and China.  In a late-night Executive Order, President Trump announced that all property, and interests in property, of the Government of Venezuela, including its agencies, instrumentalities, and any entity owned or controlled by the foregoing, that are within the jurisdiction of the United States would be blocked.

The Order further suspended entry into the United States of sanctioned persons absent a determination from the Secretary of State. The Order also authorizes the Secretary of the Treasury to impose additional secondary sanctions on non-U.S. persons who materially support or provide goods or services to the Government of Venezuela.

Background

In January 2019, after months of economic turmoil and political unrest under Venezuelan President Nicolás Maduro, the United States formally recognized Juan Guaidó, the leader of the Venezuelan National Assembly, as the country’s legitimate head of state.  More than fifty nations followed suit, asserting that President Maduro’s 2017 reelection was illegitimate and that Guaidó was the rightful interim president under the Venezuelan constitution.

The Trump Administration followed its recognition of Mr. Guaidó as interim president with sweeping sanctions on the Venezuelan government. The measures included designating Venezuela’s state-run oil company, Petróleos de Venezuela, S.A. (“PdVSA”), as a Specially Designated National (“SDN”), thereby prohibiting U.S. persons from engaging in transactions with PdVSA, as well as transactions by non-U.S. persons conducted in U.S. dollars, unless otherwise authorized by the U.S. Department of Treasury, Office of Foreign Assets Control (“OFAC”).  (We previously summarized the PdVSA SDN designation here.)

Despite the increasing U.S. pressure, President Maduro has refused to cede power.  He retains the support of the Venezuelan military, and Russia, China, Iran, Cuba, and Turkey have continued their economic and diplomatic relationships with the regime.

Sanctions Overview

Through this new Executive Order, the Trump Administration has ratcheted up its efforts against the Maduro regime, asserting that further measures are necessary to combat “human rights abuses,” “interference with freedom of expression,” and “ongoing attempts to undermine Interim President Juan Guaidó and the Venezuelan National Assembly’s exercise of legitimate authority in Venezuela.”

However, contrary to initial press reports, the action does not create a comprehensive embargo against Venezuela (on the model of the U.S. sanctions against Iran) that would prevent U.S. persons from engaging in almost all transactions. Instead, the new measures focus on the Venezuelan government by blocking all property and interests in property of the government that are currently in the United States, will be brought into the United States, or come into the possession or control of a U.S. person. There is, however, an exception for humanitarian goods, such as food, clothing, and medicine.  The Order applies regardless of contracts entered into, or licenses or permits granted, prior to the Order.

Further, the Order could have a broad impact outside of the United States by authorizing secondary sanctions against any party determined by OFAC to “have materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of” the Government of Venezuela.  U.S. National Security Advisor John Bolton warned the day after the Order, “We are sending a signal to third parties that want to do business with the Maduro regime: proceed with extreme caution.  There is no need to risk your business interests with the United States for the purposes of profiting from a corrupt and dying regime.”

In conjunction with the Order, OFAC also revised twelve existing general licenses (“GLs”) and issued thirteen new GLs.  Notably, GL 28 authorizes through 12:01 a.m. on September 4, 2019, transactions necessary to wind-down contracts with the Government of Venezuela.  GL 31 also authorizes transactions with the Venezuelan National Assembly and the shadow government of Interim President Juan Guaidó, underscoring that the target of the action is the administration of Nicolás Maduro.

The GLs and related guidance make clear that the people of Venezuela are not the target of the sanctions.  Specifically, OFAC released a document entitled “Guidance Related to the Provision of Humanitarian Assistance and Support to the Venezuelan People,” which emphasized that “humanitarian assistance and activities to promote democracy are not the target of U.S. sanctions and are generally excepted from sanctions . . . ”  OFAC simultaneously issued four new Frequently Asked Questions (FAQs).  FAQ 680 stresses that “U.S. persons are not prohibited from engaging in transactions involving the country or people of Venezuela, provided blocked persons or any conduct prohibited by any other Executive order imposing sanctions measures related to the situation in Venezuela, are not involved.”

OFAC also issued a number of GLs to authorize humanitarian transactions and transactions necessary for communications involving Venezuela, including new GLs 24 (telecommunications and common carriers), 25 (Internet communications), 26(medical services), and 29 (broadly authorizing certain non-governmental organizations).

Further, U.S. persons in Venezuela are not targeted by the sanctions.  Section 6(d) of the Order exempts from the definition of Government of Venezuela “any United States citizen, any permanent resident alien of the United States, any alien lawfully admitted to the United States, or any alien holding a valid United States visa.”  Further, GL 32authorizes U.S. persons resident in Venezuela to engage in ordinary and necessary personal “maintenance” transactions, including “payment of housing expenses, acquisition of goods or services for personal use, payment of taxes or fees, and purchase or receipt of permits, licenses, or public utility services.”

Such measures targeting an entire government have rarely been used by the United States, and there are many questions about how the restrictions and related authorizations will be interpreted and applied.  As Bolton observed, “This is the first time in 30 years that [the U.S. is] imposing an asset freeze against a government in this hemisphere.”

Effect of the Sanctions

There has been some confusion in the media over the breadth of the measures.  Some reports have mischaracterized the Order as a “total embargo;” however, the scope of the Order is limited to property, and interests in property, of the Venezuelan government, its agencies, instrumentalities, and entities owned or controlled by these.  Because many major Venezuelan government entities have already been designated as SDNs in earlier actions, including PdVSA and the Central Bank of Venezuela, the measures appear to be only an incremental expansion of the existing sanctions program.

More significantly, the Order creates a secondary sanctions regime for OFAC to designate non-U.S. parties who continue to do business with the Maduro government.  While these secondary sanctions are most likely to target Cuban, Russian, and Chinese entities that continue to provide aid to the ailing regime, all non-U.S. persons engaging in transactions in the country should carefully assess whether those transactions could benefit the government.  In particular, companies trading with Venezuela should conduct due diligence sufficient to ensure that their counterparties are not owned fifty percent or more by the Government of Venezuela, or are not otherwise controlled by the government.

In addition, from a practical standpoint, although the sanctions only apply to Government of Venezuelan and related entities, the measures may cause financial institutions, insurers, freight forwarders and other companies – who often apply a heighted level of compliance going beyond the minimum required by OFAC – to avoid dealing with Venezuelan entities altogether.

The measures against Venezuela could also escalate existing tensions with Russia and China if the sanctions further restrict the countries’ access to Venezuelan oil.  Russia and China, which have continued to back the Maduro regime, currently import Venezuelan oil as part of a debt relief program.  China is slated to continue receiving oil from Venezuela until 2021, so it stands to suffer substantial losses if it is unable to continue the shipments.  This uncertainty comes in the midst of deteriorating relations between the United States and China due to the ongoing trade war, relations which suffered another blow this week when the Trump Administration labeled China a “currency manipulator.”

Archives, Global Trade Daily, Imports/Exports

Margarine Market in the Middle East – Trends, Analysis and Forecast

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IndexBox has just published a new report, the Middle East – Margarine And Shortening – Market Analysis, Forecast, Size, Trends and Insights. Here is a summary of the report’s key findings.

The revenue of the margarine and shortening market in Middle East amounted to $1.1B in 2017, growing by 11% against the previous year. This figure reflects the total revenues of producers and importers (excluding logistics costs, retail marketing costs, and retailers’ margins, which will be included in the final consumer price).

The market value increased at an average annual rate of +2.8% from 2007 to 2017; the trend pattern indicated some noticeable fluctuations being recorded over the period under review. The most prominent rate of growth was recorded in 2011, with an increase of 37% y-o-y. In that year, the margarine and shortening market attained its peak level of $1.4B. From 2012 to 2017, the growth of the margarine and shortening market remained at a somewhat lower figure.

Production in the Middle East

In 2017, approx. 837K tonnes of margarine and shortening were produced in Middle East; growing by 2.4% against the previous year. The margarine and shortening production continues to indicate a relatively flat trend pattern.

Exports in the Middle East

In 2017, exports of margarine and shortening in Middle East amounted to 165K tonnes, coming down by -22.4% against the previous year. Overall, the total exports indicated a modest expansion over the last decade, increasing at an average annual rate of +1.9% from 2007 to 2017. In value terms, margarine and shortening exports stood at $183M (IndexBox estimates) in 2017.

Exports by Country

Turkey prevails in margarine and shortening exports structure, recording 141K tonnes, which was approx. 85% of total exports in 2017. It was distantly followed by Oman (13K tonnes), achieving 7.6% share of total exports. The United Arab Emirates (7.1K tonnes) followed a long way behind the leaders.

Exports from Turkey increased at an average annual rate of +2.3% from 2007 to 2017. At the same time, Oman (+22.5%) displayed positive paces of growth. Moreover, Oman emerged as the fastest growing exporter in Middle East, with a CAGR of +22.5% from 2007-2017. By contrast, the United Arab Emirates (-5.4%) illustrated a downward trend over the same period. From 2007 to 2017, the share of the United Arab Emirates increased by 3.1% percentage points, while Oman (-6.6%) and Turkey (-17.6%) saw their share reduced.

In value terms, Turkey ($149M) remains the largest margarine and shortening supplier in Middle East, comprising 82% of global exports. The second position in the ranking was occupied by Oman ($15M), with a 8.1% share of global exports.

Export Prices by Country

The margarine and shortening export price in Middle East stood at $1.1 per kg in 2017, increasing by 7.4% against the previous year. The the margarine and shortening export price continues to indicate a relatively flat trend pattern.

Average export prices varied somewhat amongst the major exporting countries. In 2017, the country with the highest export price was the United Arab Emirates ($1.5 per kg), while Turkey ($1.1 per kg) was amongst the lowest.

From 2007 to 2017, the most notable rate of growth in terms of export prices was attained by the United Arab Emirates (+3.4% per year), while the other leaders experienced mixed trends in the export price figures.

Imports in the Middle East

In 2017, the amount of margarine and shortening imported in Middle East totaled 353K tonnes, waning by -5.1% against the previous year. The total imports indicated a remarkable increase from 2007 to 2017: its volume increased at an average annual rate of +5.9% over the last decade. In value terms, margarine and shortening imports totaled $411M (IndexBox estimates) in 2017.

Imports by Country

In 2017, Iraq (99K tonnes), distantly followed by Saudi Arabia (64K tonnes), Syrian Arab Republic (41K tonnes), Turkey (38K tonnes), Iran (32K tonnes), the United Arab Emirates (21K tonnes) and Lebanon (16K tonnes) were the key importers of margarine and shortening, together comprising 88% of total imports.

From 2007 to 2017, the most notable rate of growth in terms of imports, amongst the main importing countries, was attained by Lebanon (+19.4% per year), while the other leaders experienced more modest paces of growth.

Import Prices by Country

In 2017, the margarine and shortening import price in Middle East amounted to $1.2 per kg, jumping by 4.7% against the previous year. Over the period from 2007 to 2017, it increased at an average annual rate of +1.3%.

Average import prices varied somewhat amongst the major importing countries. In 2017, major importing countries recorded the following import prices: in Turkey ($1.4 per kg) and the United Arab Emirates ($1.4 per kg), while Iraq ($965 per tonne) and Syrian Arab Republic ($1 per kg) were amongst the lowest.

From 2007 to 2017, the most notable rate of growth in terms of import prices was attained by the United Arab Emirates (+4.0% per year), while the other leaders experienced more modest paces of growth.

Source: IndexBox AI Platform

Archives, Global Trade Daily, News

Grace Buys Out Turkey Construction Products JV Partner

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Columbia, MD – Construction engineering giant W. R. Grace & Co. has entered into definitive agreements to acquire the remaining 50 percent equity interest in the joint venture it formed in 1996 with STFA Yatırım Holding A.S., one of Turkey’s most established and reputable construction industry conglomerates.

With the agreement, STFA will sell its 50 percent stake in Grace Yapı Kimyasalları to Construction Products Dubai, a Grace subsidiary.

The business, located in Istanbul, Turkey, provides cement additives, concrete admixtures, and building envelope products in Turkey and the surrounding region.

The transaction is pending Turkish regulatory approval and is expected to close by the end of the year. Terms were not disclosed.

Following the transaction, the business will become a wholly-owned subsidiary of Grace and operate within its Grace Construction Products business segment.

The business will continue to provide specialty construction chemicals products to customers in Turkey, Azerbaijan, Georgia, Kazakhstan, and Iraq.

Grace is a global supplier of catalysts, engineered and packaging materials, and specialty construction chemicals and building materials.

The company’s three industry-leading business segment – Grace Catalysts Technologies, Grace Materials Technologies, and Grace Construction Products – provide innovative products, technologies, and services to customers in over 150 countries around the world.

Grace employs approximately 6,500 people in over 40 countries and had 2013 net sales of $3.1 billion.

12/01/2014

 

Archives, Global Trade Daily, News

TRACE Expands into Ghana, Hungary and Turkey

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Annapolis, MD – TRACE International, the global anti-bribery association, has expanded its worldwide presence with new partnerships announced in Ghana, Hungary, and Turkey.

The latest organizations to partner with TRACE are CommerceGhana, an organization committed to facilitating investment in Ghana; EuCham CEE, a private, non-governmental institution working to enhance the business environment for companies operating in Europe; and the Ethics and Reputation Society, or TEID, a nonprofit organization dedicated to building a robust and ethical business culture in Turkey.

In the past 12 months, TRACE’s global footprint has expanded significantly, with a new on-the-ground presence in Dubai, Manila and New Delhi and new partnerships established with American Chambers of Commerce in Zambia and Libya and the Makati Business Club in the Philippines.

TRACE International is a non-profit membership association that pools resources to provide practical and cost-effective anti-bribery compliance solutions for multinational companies and their commercial intermediaries.

Founded in 2001, the association is one of the world’s leading non-profit organizations dedicated to anti-bribery compliance with hundreds of corporate members and thousands of intermediary members around the world.

06/23/2014