QAD Precision News Round-Up: 19 November, 2021

In the QAD Precision News Round-Up: 19 November, 2021, Japan and US to discuss steel and aluminum tariffs; WTO reports slower growth; EU proposes deforestation law; DHL Express invests in Asia Pacific; strong retail sales expected; plus five benefits of FTZs and more.

Global Trade

JAPAN AND US TO BEGIN TALKS ON US STEEL, ALUMINUM TARIFFS 

On Monday, Japan’s industry ministry announced that Japan and the US are to begin talks to address additional US tariffs on Japanese steel and aluminum imports. The Tokyo meeting was between Japan's Industry Minister Koichi Hagiuda and US Commerce Secretary Gina Raimondo. Despite this, neither side announced any concrete procedures, nor have they agreed on a date to start the negotiations. 

Earlier in November, Japan asked the US to remove the “Section 232” tariffs introduced by President Donald Trump’s administration in 2018. Additionally the US and European Union negotiated an agreement on the controversial tariffs. The agreement maintains Section 232 tariffs of 25 percent on steel and 10 percent aluminum, while allowing restricted volumes of EU-produced metals into the US duty-free. For more information, please see Reuters. 

WTO REPORT SHOWS SLOW GROWTH

Newly released data from the World Trade Organization (WTO) shows supply chain issues are hindering international commerce. The WTO’s quarterly trade publication indicates slower than expected growth. This quarter’s index is 99.5, which represents a growth below the baseline trend. In contrast, August’s report marked the highest growth pace on record. This October, the WTO forecast 10.8 percent growth in global merchandise trade for this year, as well as a 4.7 percent rise in 2022. This is up from its previous forecast 8 percent in March. 

Automotive products saw the sharpest fall — from 106.6 to 85.9. Furthermore, the shortage of semiconductors not only affected automotive products but electronics as well which fell to 99.6. Container shipping declined from 110.8 to 100.3 and raw materials dropped from 104.7 to 100. Conversely, air freight remained above trend at 106.1. For more details, please click here.

Supply Chain

UK BAKER GREGGS HAS VEGAN SAUSAGE ROLL SHORTAGE

The popular UK bakery chain Greggs has announced it is experiencing supply chain disruptions. Greggs’ vegan sausage rolls, launched in 2019 are unavailable in many locations. Greggs experienced a chicken shortage earlier this year and previously assured customers its sausage roll was safe from shortages. Supply chain disruptions are due to a shortage of truck drivers and factory workers. For more information, please click here.

Retail 

STRONG OCTOBER RETAIL SALES EXPECTED

This week, economists polled by Dow Jones forecast that the final October retail figures will show 1.5 percent growth, compared to the 0.7 percent gain a month earlier. The predicted increase is from peak season shopping and an increase in gasoline prices. Excluding autos, sales will grow 1 percent. Barclays chief US economist Michael Gapen said a strong figure will be an important indicator that the economy is recovering. Mr. Gapen expects a 1.2 percent gain and predicts the economy to expand by 5 percent in the fourth quarter. For more information, please see CNBC. 

Environment

EU PROPOSES DEFORESTATION LEGISLATION

On Wednesday, the EU executive outlined a proposed law that will require companies to prove their products are not linked to deforestation. Some of the products affected include: beef, palm oil, cocoa, wood, soy, and coffee. However, the proposal does not include rubber. Environmental activists have claimed that rubber is responsible for 5m hectares of deforestation in recent years.

This is the first time the EU will regulate products linked to deforestation. The proposed legislation will require companies to ensure they are not selling a product that has contributed to deforestation or forest degradation. To ensure compliance, the EU proposes monitoring land in countries of origin via satellites and geolocation tracking. The proposed legislation will not only affect companies but the bloc’s 450 million consumers as well. For more information, please see The Guardian.

Carriers 

E-COMMERCE PROMPTS DHL EXPRESS TO INVEST IN ASIA PACIFIC 

DHL Express has announced that it is investing approximately €750 million in its ground infrastructure and air network in Asia Pacific to respond to rising demand in the region. To handle growing intra-Asia demand and demand between Asia Pacific and the US, the company has extended its airfreight capacity. 

Due to the coronavirus pandemic and related restrictions, e-commerce growth has accelerated, with Asia Pacific leading the demand. Last year, online sales comprised half of the retail sales in Asia Pacific. Furthermore, e-commerce in the region is forecast to grow by 10 percent to 61 percent in 2025. For more information, please click here. 

UPS OPENS NEW COLD STORAGE FACILITY

UPS Healthcare is opening a new cold chain and packaging center in Louisville, Kentucky. This is the company’s first US-based facility to offer reusable cold-chain packaging. UPS’s temperature-controlled facilities manage biologics, like the COVID-19 vaccine at its required temperature. Cold chain is projected to grow 48 percent between 2018 and 2024 for 2 to 8 degrees Celsius storage according to the Biopharma Cold Chain Sourcebook. For more details, please visit UPS.

QAD Precision News

ELIMINATING AND REDUCING DUTIES WITH FTZS

There are several significant advantages to using a Foreign-Trade Zone. Perhaps the most compelling reason, for most companies, is the ability to eliminate or reduce duties. FTZs offer relief from inverted tariffs, as well as duty deferral, duty elimination, duty exemption on re-exports and duty-free zone-to-zone transfers. In this QAD Precision Report, we discuss these five key benefits of FTZs. You can read the full report here.