QAD Precision News Round-Up: 7 May 2021

In the QAD Precision News Round-Up: 7 May 2021, China-Australia relations sour; UK withdraws vessels from Jersey; DPDHL raises financial outlook; Eurozone retail sales jumps; and why you need to audit parcel shipping spend plus more. 

Global Trade

CHINA SUSPENDS CHINA-AUSTRALIA ECONOMIC DIALOGUE 

On Thursday, China’s government announced that it is suspending all activity under a China-Australia Strategic Economic Dialogue. Relations between the two countries have been strained in recent years. In 2018, the country's bilateral relationship came under pressure when Australia publically banned Chinese tech giant Huawei from its 5G network. Furthemore, tensions continued to rise last year when Australia requested an independent investigation into the origins of the coronavirus, prompting China to retaliate. 

In the period between March 2020 and March 2021, Australia exported A$149 billion ($115 billion) worth of goods to China of which iron ore was the largest product. Nonetheless, while the dispute is not expected to impact the iron ore trading relationship between the two countries, it will continue to have an impact on Australia's commodities sector by discouraging Chinese investment. Yanting Zhou, senior economist at Wood Mackenzie said effective bans on Australian imports are set to continue. For more information, please see Reuters.  

UK WITHDRAWS VESSELS FROM JERSEY FOLLOWING BREXIT ROW

On Thursday, the UK withdrew its Royal Navy vessels from the waters off Jersey. The UK dispatched the vessels following a charged row with France over post-Brexit access to Jersey’s waters. However, the patrol boats will remain on standby to support the Channel island if tensions escalate, according to the UK. 

Earlier this week, both countries sent patrol vessels to Jersey. The moves came after French fishing boats sailed in protest to Jersey's main harbour. The dispute centers on access to the waters for French fishing vessels. However, Jersey says it is adhering to the rules for issuing licenses set out in the EU-UK post-Brexit trade deal. For more information, please see Reuters.  

Automotive 

FORD EXPECTS SEMICONDUCTOR SHORTAGE TO WORSEN

Ford CEO Jim Farley said the company expects the ongoing semiconductor shortage to get worse before supply levels recover. In addition, Mr Farley estimates that the sourcing issue will reach its nadir in the second quarter. In the first quarter, Ford’s wholesale units sold to dealerships slumped 6 percent year-on-year due to the chip shortage. Mr Farley said overall volume declined 17 percent as a result of the supply issue. 

Furthermore, Mr Farley does not expect that semiconductor supply will fully recover until the fourth quarter this year or early 2022. As a result of the ongoing shortage, Ford is working to modernise its sales process which includes leaner inventory and higher turn rates. For more information, please click here.  

Retail 

ZALANDO TO ADD FIVE ADDITIONAL WAREHOUSES 

On Thursday, online fashion retailer Zalando announced plans to add five warehouses to its network by 2023. Following strong first-quarter sales and profits, the retailer raised its outlook for the full year. In Q1, sales surged 47 percent to €2.24 billion and operating profit reached €93.3 million. Consumers have also continued to return items at a rate, helping to boost profits. Furthermore, the company records its strongest customer growth since 2013, reaching 41.8 million active customers. 

According to Zalando, the additional warehouses will assist in reaching its target to capture over 10 percent of the fashion market in Europe. This year, two new warehouses in Madrid and Rotterdam will open and plans for the remaining three in France, Germany and Poland will begin. For more information, please see RTE.  

EUROZONE RETAIL SALES JUMPS MORE THAN EXPECTED IN MARCH

In March, retail sales in the Eurozone beat expectations as consumer demand increased across the region. According to the European Union's statistics office Eurostat, retail sales in the 19 eurozone countries increased 2.7 percent month-on-month in March for a 12 percent  year-on-year surge.

This beat estimates of economists polled by Reuters. Economists had forecast a 1.5 percent monthly jump and a 9.6 percent annual gain. Demand for non-food items, excluding automotive fuel, drove the surge. Online purchases grew 37.2 percent year-on-year, Eurostat said. For more details, please see RTE.  

Carriers 

DPDHL RAISES OUTLOOK AS PROFITS GROW

On Wednesday, Deutsche Post DHL upped its financial outlook. The move was a response to a very strong first quarter as operating profit tripled. The company also forecast that e-commerce will continue to surge and global trade will recover. 

The logistics company raised its operating profit forecast to approximately €6.7 billion ($8.05 billion) in 2021, and over €7 billion in 2023. Previously, the company forecast €5.6 billion for 2021. In Q1, operating profit increased to €1.9 billion on revenues up 26 percent to 18.9 billion. For more details, please see CNBC.  

QAD Precision News 

WHY YOU NEED TO AUDIT PARCEL SHIPPING SPEND

If shipping is a critical component of your operations, so is controlling your supply chain costs. Transportation is a major factor in the final calculation of the cost of getting your goods to the end user. 

Most enterprises understand the importance of tracking and auditing their transportation costs. But if small, express shipments have not been a core part of their distribution model, many have been slower to apply the same principals to parcel shipping. 

However, e-commerce has changed the way many enterprises reach their customers. Enterprises are supplementing traditional distribution channels with an increasing number of parcel shipments. With annual rate increases, accessorial charges, high fuel costs and dimensional pricing, the cost of parcel shipments add up. In this QAD Precision Report we look at the necessity of auditing your parcel invoices. To read the full report, please click here.