QAD Precision News Round-Up: 5 November 2021

In the QAD Precision News Round-Up: 5 November 2021, US factory orders rose in September; South Korea posted double-digit export growth; UPS announces 2022 GRI; American Eagle Outfitters to acquire Quiet Logistics; plus the benefits of FTZs and more.

Global Trade

US FACTORY ORDERS RISE IN SEPTEMBER

On Wednesday, The US Commerce Department said orders for US-made goods increased 0.2 percent in September. Economists polled by Reuters had predicted factory orders to remain unchanged for the month. Furthermore, orders grew 17.6 percent on a year-on-year basis. 

Growth in factory goods orders was primarily from machinery, primary metals and fabricated metal products in September. Orders for computers and electronic goods, transportation equipment as well as electrical equipment, appliances and components declined, likely as a consequence of the global chip shortage. Shipments grew 0.6 percent following a 0.1 percent gain in August. Inventories at factories jumped 0.8 percent in September while unfilled orders grew 0.7 percent. For more information, please click here. 

SOUTH KOREA POSTS DOUBLE-DIGIT EXPORT GROWTH 

In October, South Korea’s exports grew 24 percent compared to a year previous and followed a 27.9 percent rise in September, according to data released by the Trade Ministry on Monday. The data showed sales to China jumped 25 percent while exports to other countries also saw double digit growth. Exports to the US rose 22.9 percent, shipments to Japan increased by 35.2 percent and EU exports jumped 19.6 percent. 

Exports of petrochemicals expanded 68.5 percent, general machinery increased 12.7 percent and mobile devices were up 15.5 percent. Car exports declined 4.7 percent amid a global shortage of chips used in automobile production. For more details, please see Bloomberg. 

FINES FOR LINGERING CONTAINERS BEGIN

Penalties for 58,900 containers at the Ports of Los Angeles and Long Beach are starting. Last Monday, the ports notified carriers to move the containers or face fines. The fines start at $100 per container and increase by $100 per day until the container moves. There are 84,000 containers on docks, over 3,000 higher than a week ago according to the Port of Los Angeles Executive Director Gene Seroka. 

Containers are ‘long dwelling’ if docked nine days for transport by truck and six days for rail. The Port of Los Angeles reports that 40,000 containers have been sitting for over nine days. The Port of Long Beach reports 10 percent of its 27,000 lingering containers moved, while 18,900 containers are incurring fines. The Port of Los Angeles and the Port of Long Beach handle the majority of sea freight entering the United States. For more details, please click here.

Carriers

UPS ANNOUNCES 2022 GRI

UPS has announced General Rate Increases (GRI) for 2022 which will begin December 26, 2021. According to the company, the rate increases will support expansion plans along with capability enhancements. UPS Ground, UPS Air, and International services will increase by an average of 5.9 percent. In addition, UPS will implement an average net increase of 5.2 percent for UPS Air Freight within and between the US, Canada, and Puerto Rico. Furthermore, UPS’s Peak Surcharges will be renamed to Peak/Demand surcharges, taking effect January 9, 2022. For more details, please click here. 

Retail

AMERICAN EAGLE OUTFITTERS ACQUIRES QUIET LOGISTICS

American Eagle Outfitters (AEO) is acquiring Quiet Logistics Inc, a digital fulfillment company, for $350 million cash. The acquisition will help AEO streamline its supply chain to better meet e-commerce demands. 

In addition, the company also purchased AirTerra, an e-commerce delivery company in May to further its e-commerce business. The retailer’s online sales now account for 35 percent of its total revenue. Furthermore, AEO’s second quarter revenue this year hit a record $1.19 billion. The acquisition will close at the end of the year. For more information, please see The Wall Street Journal.

QAD Precision News

WHAT IS A FOREIGN-TRADE ZONE (FTZ)?

The United States Foreign-Trade Zones program was established in 1934 when Congress passed the US Foreign Trade Zones Act. The act allowed for the creation of “Foreign-Trade Zones” — that is, specifically designated, secure areas under the oversight of US Customs and Border Protection (CBP) but outside US commerce. FTZs are located in, or near, US Customs Ports of Entry and they are in all 50 states and Puerto Rico.

By using an FTZ, a company can realize a number of benefits, including significant cost savings. In this QAD Precision Report, we explain what an FTZ is, and its benefits. To read the full report, please click here. 

[WEBINAR] WHAT DOES MADE IN THE USA REALLY MEAN? FREE TRADE ORIGIN VS. COUNTRY OF ORIGIN

In order to qualify for duty-free treatment under the USMCA, goods imported into the United States must conform with the Rules of Origin set forth by the USMCA.

Join us for a 30-minute live webinar, featuring QAD Precision's own Olivier Joncas, where he discusses current rules of origin, how to apply them, and correctly complete and maintain the proper documentation to take advantage of the reduced tariffs under USMCA. Register here!