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QAD Precision News Round-Up: 10 May 2019

In the QAD Precision News Round-Up for 10 May 2019....

US ups tariffs on Chinese goods; EU says no to US food in trade talks; Adidas uses air freight to tackle supply woes; FAA expects commercial drones to triple; US seizes North Korean ship; and the rise of same- and one-day shipping.

Global Trade

TARIFFS INCREASE AS US-CHINA TRADE TALKS FALTER

At 12.01am today, the US government raised tariffs on Chinese goods from 10 percent to 25 percent. Talks held this week in Washington between US trade representative Robert Lighthizer and Chinese vice premier Liu He failed to reach a deal. The new tariff rate will apply to goods that leave China after the deadline. Consequently, there may be time for an agreement before these goods reach the US. Talks are due to continue today. For more details, please see The Guardian.

EU SAYS NO TO AGRICULTURE AHEAD OF TRADE TALKS WITH US

This Friday, the European Union’s agricultural minister, Phil Hogan, said that agriculture will not be up for discussion during trade talks with the US. Washington has demanded that food products be a part of the upcoming talks. Notwithstanding Washington’s insistence, the EU plans to restrict talks to reducing tariffs on industrial goods, and simplifying the process whereby companies can show that their goods meet EU or US standards. Hogan stated that the free trade agreement between the EU and Japan would act as the “benchmark” for the bloc’s negotiations with the US. He also urged the US to reverse tariffs on Chinese goods. For more on this story, please click here.

Supply Chain

ADIDAS TURNS TO AIR FREIGHT TO FIX SUPPLY CHAIN WOES

Adidas is to increase its use of air freight to counter supply chain shortages. These supply constraints, the company says, will impact sales growth during 2019. CEO Kasper Rorsted warned that air freight costs for the next two quarters will be substantial. Adidas has also audited suppliers looking for those who have extra capacity, and those with authorized overtime. The company also hopes to add new suppliers. Despite the challenges, Rorsted called Adidas’ supply chain woes a “temporary setback.” Furthermore, he stated that Adidas has signed contracts to ensure that similar shortfalls do not follow the company into 2020. For more information, please see Supply Chain Dive.

Transportation

FAA FORECASTS COMMERCIAL DRONES TO TRIPLE BY 2023

The US Federal Aviation Administration’s (FAA) annual report forecasts that the number of commercial drones could triple by 2023. According to the FAA, integrating unmanned aircraft systems (UAS) — and their pilots — into existing airspace has resulted in a number of operational challenges. Last year, the FAA selected 10 cities to take part in a pilot program to give the US government real-world test cases to see how UAS would impact airspace. Use cases included drone food delivery in San Diego as well as testing drones for logistics and planning applications by US Customs and Border Patrol. For more information, please click here.

Sanctions

US SEIZED NORTH KOREA SHIP FOR SANCTIONS VIOLATIONS

This week the US announced the seizure of a North Korean ship. The US government claims the vessel violated international sanctions. The ship was transporting coal. Coal is North Korea’s largest export, but subject to a United Nations export ban. The vessel, the Wise Honest, was first seized in 2018 and impounded in Indonesia. The US filed a seizure warrant last July. The vessel is now enroute to the US. Officials from the US government have stated that the seizure is not related to North Korea’s recent missile tests. For more details about this, please see the BBC.

QAD Precision News

RETAIL AND THE RISE OF SAME-DAY AND ONE-DAY SHIPPING

During the company’s Q1 earnings call in April, Amazon announced plans to turn Prime two-day shipping into one-day shipping. With this declaration, Amazon shook up the e-commerce and transportation sectors. Amazon’s vast logistics network means that it can already deliver to 72 percent of the US population within one day. In some areas, it also has same-day capabilities. Prime same- and one-day shipping is also available in other locations, including much of the European Union, and in Japan. However, to turn one-day delivery into a reality an expensive undertaking. Amazon plans to spend a hefty $800 million during this quarter alone to expand one-day shipping. Where Amazon leads, others follow. In this QAD Precision Report we look at the trend towards shorter delivery times, and how retailers can remain competitive. To read the complete report, please click here.

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