In the QAD Precision News Round-Up: 2 April 2021, US threatens tariffs over UK digital tax; China factory activity grows; Eurozone inflation jumps; DPD had a strong 2020; US car sales are up; plus the importance of integrated supply chain operations and more. 

Global Trade

US THREATENS TARIFFS OVER UK DIGITAL TAX 

The US has warned that it could place tariffs of 25 percent on UK exports. The move is in response to the UK imposing a digital services tax on major technology companies. According to a list published by US officials, the price of clothing and footwear, ceramics, beauty products and furniture exports from the UK could increase by 25 percent. The levies should raise $325 million, equal to the amount Britain can expect to raise from taxing the UK sales of US tech companies. The digital services tax, which went into effect last April, levies a 2 percent charge on revenues of search engines, social media services and online marketplaces. For more information, please see The Guardian.  

CHINA FACTORY ACTIVITY GROWS FASTER THAN EXPECTED IN MARCH

In March, China’s manufacturing activity grew at the fastest pace in three months as factories increased production. On Wednesday, data from the National Bureau of Statistics (NBS) showed that the official manufacturing Purchasing Managers Index (PMI) rose to 51.9 from 50.6 in February. For the 13th consecutive month, this result is above the 50 mark separating growth from contraction. In addition, the official PMI showed both the sub-indexes for production and new orders were at the highest level since December. Furthermore, export orders also grew due to increased foreign demand. For more information, please see CNBC. 

EUROZONE INFLATION JUMPS IN MARCH 

In March, inflation in the Eurozone surged to 1.3 percent from 0.9 percent the month previous. This suggests consumer price growth may exceed the European Central Bank (ECB) 2 percent target later this year. A flash estimate from Eurostat, the European Union's statistics office, showed the result was in line with analysts’ forecasts. Inflation increased on higher energy and non-processed food prices. However, non-energy industrial goods inflation declined sharply. The ECB said following the predicted surge, inflation will then fall beneath its target in the coming years. For more information, please see RTE. 

Carriers 

DPD ANNOUNCES STRONG 2020 RESULTS 

DPD Group has announced strong 2020 results during the coronavirus pandemic. The carrier posted a 42 percent increase in revenue growth year-over-year. DPD’s revenue increased to €11 billion and it delivered 1.9 billion parcels worldwide — approximately 7.5 million parcels a day. This was an increase of approximately 500 million compared to 2019. In addition, over 55 percent of the parcels delivered worldwide were B2C. This was a 57 percent increase on the year previous. According to DPD, the pandemic accelerated a number of trends, including urban logistics demand and sustainability. Furthermore, specific delivery categories such as food and healthcare experienced unprecedented demand. For more information,  please see Post and Parcel. 

DHL SAYS B2B E-COMMERCE BOOM JUST BEGINNING 

In a study released on Tuesday, DHL Express has forecasted that the global market for business-to-business e-commerce will expand by over 70 percent to $20.9 trillion by 2027. Last year, DHL’s revenue increased by nearly 12 percent to €19.1 billion ($22.41 billion). Companies and consumers shifted to e-commerce during the pandemic — a trend, DHL believes, will remain post-pandemic. According to DHL, another reason for the growing demand in B2B transactions is the millennial generation. Millennials account for 73 percent of all B2B purchasing decisions. DHL predicts that 80 percent of all transactions between suppliers and business customers will take place on purchasing platforms and other digital channels by 2025. For more details, please see Reuters.  

Automotive

AUTOMAKERS REPORT STRONG Q1 SALES

In Q1, automakers are reporting strong vehicle sales. There has been strong consumer demand despite an ongoing semiconductor chip shortage. Analysts predicted that sales would increase by approximately 8 or 9 percent compared to the first quarter last year. However, many automakers are exceeding those forecasts. Automakers that are less dependent on fleet sales to corporate and government clients in the US had stronger sales in Q1. Detroit automakers saw single-digit improvements in sales compared to the first quarter of 2020. For more information, please see CNBC.  

QAD Precision News

THE IMPORTANCE OF INTEGRATED SUPPLY CHAIN OPERATIONS

Global trade has experienced a series of unexpected challenges in the last twelve months. The Covid-19 crisis caused a deep slump in trade volumes, particularly in the second quarter of the year. The World Trade Organization’s Goods Trade Barometer, published this February, found that trade rebounded in the third quarter. World merchandise trade volumes growth was due to increased exports from Asia and rising imports in both Europe and North America.

Trade volumes remained strong in the fourth quarter. However, the WTO is pessimistic that expansion will continue during the first half of 2021.

The pandemic has also caused a global shortage of semiconductors. As the crisis took hold, factories shut down, creating shortages. Although production has resumed, the pandemic also created demand for electronic devices. Consumers sought new TVs, computers, 5G-enabled mobile phones and games consoles — all of which use semiconductors. 

In this QAD Precision Report we look at the current state of global trade and how an integrated supply chain helps businesses meet tomorrow’s challenges. To read the full report, please click here.