QAD Precision News Round-Up: 6 August 2021

In the QAD Precision News Round-Up: 6 August 2021, US trade deficit at record high; China’s manufacturing growth slows; DHL to buy electric cargo planes; Toyota and Honda report profits; private job creation falls; plus sustainable last-mile delivery.

Global Trade

US TRADE DEFICIT AT RECORD $75.7 BILLION IN JUNE

As the American economy rebounds, the US trade deficit rose to a record $75.7 billion in June due to increased demand for imports. On Thursday, the Commerce Department reported that the deficit grew 6.7 percent from a revised May deficit of $71 billion. Last month's deficit set a new record, beating the previous record of $75 billion in March 2021. In addition, exports in June grew 0.5 percent to $207.7 billion while imports surged 2.1 percent to $283.4 billion. Furthermore, in June, the goods deficit with China climbed to $27.8 billion, an increase of 5.8 percent from the month previous. 

In the first six months of 2021, the US trade deficit totaled $428.6 billion, up 46.4 percent from the deficit during the same period in 2020. However, according to analysts, the growth in the deficit may start to slow in the coming months as the surge in consumer spending following the reopening of the economy begins to level off. Additionally, analysts expect increased growth in foreign countries to boost US exports. For more details, please see AP News. 

FTZ BOARD RELEASES ANNUAL REPORT

On Tuesday, the United States Foreign-Trade Zones (FTZ) Board released its annual report to the US Congress. The report details the FTZ activity for the 2020 calendar year. In 2020, there were 195 active FTZs, an increase of 2 from 2019. There were 347 active production operations, down from 348 in 2019. Additionally, a record number, 470,000 people were directly employed by 3,400 firms utilizing FTZs.That figure represents an increase of 10,000 jobs and 100 firms since 2019. 

The value of shipments into zones decreased by 18.5 percent, from $767 billion in 2019 to $625 billion in 2020. Of these shipments, 55 percent for production operations and 45 percent for warehouse and distribution operations. Exports from FTZ facilities also decreased by $11 billion since 2019 to $94 billion in 2020. For the first time, pharmaceuticals topped the list of largest industries involved in zone production, followed by oil refining, automotive, electronics, and machinery/equipment. For more details, please see the FTZ Board Report.

CHINA MANUFACTURING GROWTH SLOWS

China’s manufacturing growth in July has dropped to the lowest level in 15 months. Caixin, a business magazine, released a monthly purchasing managers’ index showing the decline. In July, China scored a 50.3 out of an available 100 points. This is a decline from June, where it reported a score of 51.3. Figures above 50 indicate increasing activity. The decline, attributed to a decrease in export demand from foreign markets. The decline also highlights a disruption in supply chains from the raw materials and components segment. For more details, please visit AP News.

US Economy

US PRIVATE COMPANY JOB CREATION FALLS

On Wednesday, the payroll processing firm ADP reported job creation at private companies in the United States fell in July. Overall, employers added 330,000 positions in July, a significant decrease from 680,000 added in June. The jobs created in July also fell significantly below the Dow Jones estimate of 653,000. 

The industry that added the most jobs in July was leisure and hospitality creating 139,000 jobs. Education and health services followed with 64,000 new jobs, and professional and business services with 36,000 jobs. The construction industry added the fewest jobs with 1,000 new jobs in July. 

Mid-size companies with 50-499 employees added the most new jobs with 132,000, followed by large companies with 106,000 jobs, and finally small businesses with 91,000. July’s reported job growth was the smallest gain since February. The decrease is being attributed to the Covid-19 delta variant spreading. For more information, please visit CNBC.

Carriers

DHL TO ADD ELECTRIC CARGO PLANES TO FLEET

On Tuesday, DHL Express announced that it will purchase 12 electric cargo planes for package delivery in the US in an effort to cut carbon emissions. The planes, purchased from start-up Eviation and will be in operation by 2024. Eviation is building a plane, called the Alice, that has the capacity to carry 2,500 pounds at a maximum speed of 250 mph and can travel 500 miles on one charge. The planes will move packages from major hubs in the US to smaller markets within range — the so-called middle mile. CEO of DHL Express Americas Mike Parra said the use of the electric planes is in line with the company's sustainability pledge.  For more details, please see CNBC. 

Auto 

TOYOTA AND HONDA PROFITS EXCEED ESTIMATES 

On Wednesday, Toyota Motor Corp reported record quarterly earnings and Honda Motors raised its annual profit forecasts. Sales for both the Japanese car makers increased following coronavirus lockdowns. However, both companies warned that the global chip shortage would continue. 

The two automakers are facing production constraints in China, which on Wednesday reported the greatest increase in locally transmitted COVID-19 cases since the beginning of this year. Honda and Toyota have both had to temporarily close facilities in China citing Covid-19 outbreaks. Toyota reported that it is on track to sell 8.7 million cars by March 2022. Honda lowered its forecasted sales to 4.85 million vehicles from a previously estimated 5 million. Both companies are attributing lower numbers to the global semiconductor chip shortage. AlixPartners estimates that the shortage will cost companies $110 billion in lost revenues this year. For more information, please see Reuters.  

QAD Precision News 

E-COMMERCE AND SUSTAINABLE LAST-MILE DELIVERY OPTIONS

Around the world, government bodies and consumers are becoming more and more concerned with their impact on the environment. 

The European Commission, the EU executive body, recently launched a major climate plan. This plan outlines how the bloc's 27 member countries can meet their environmental goals. EU members have been tasked with reducing net greenhouse gas emissions by 55 percent from 1990 levels by 2030. This is a step towards achieving the EU’s target of "net zero" emissions by 2050.  

Consumers are also becoming more aware of the choices they make and their impact on the environment. As a result, carbon-neutral delivery is becoming increasingly important to consumers. Read the full report here.