QAD Precision News Round-Up: 16 July 2021

In the QAD Precision News Round-Up: 16 July 2021, Economic growth slows in China, but demand for Chinese goods rises; US inflation surges; UK retail sales hit quarterly record; Intel plans $20 billion chip investment; plus package consolidation and more. 

Global Trade

ECONOMIC GROWTH SLOWS IN CHINA 

On Thursday China said its economy expanded 7.9 percent in the second quarter compared to a year earlier. This growth was slower than expected due to higher raw material costs, supply shortages and coronavirus outbreaks. The country's economic growth slowed significantly from the expansion of 18.3 percent in the first quarter of this year. 

In June, retail sales grew at a slower pace. Additionally, industrial output also lagged due to a sharp decline in motor vehicle production. Data from the National Bureau of Statistics showed signs that the nation's housing market, a key driver of growth, is also cooling. Furthermore, according to NBS data, GDP in the period from April to June expanded 1.3 percent, beating expectations for growth of 1.2 percent forecast in the Reuters poll. For more details, please see Reuters.  

DEMAND FOR CHINESE GOODS INCREASE AS SHIPPING DELAYS EASE

As the world continues to recover from the pandemic, demand for goods made in China is surging. According to official data released on Tuesday, Chinese exports reached $281 billion in June, a 32 percent increase from the previous year. This result is the fastest growth rate since February, and beat forecasts of 23 percent by a Reuters poll of analysts. The result is also up 32 percent compared to the same period in 2019. A spokesman for the General Administration of Customs, Li Kuiwen, cited strong global demand for the increase in exports. In particular, shipments to the US and Latin America were strong, according to Mr Kuiwen. 

Imports were also up. Imports increased to $230 billion in June, surging 37 percent from a year earlier and up more than 40 percent on 2019 figures. Mr Kuiwen also stated that shipping backlogs at ports in South China are beginning to ease. For more details, please see CNN.  

US INFLATION HIGHEST IN 13 YEARS 

In June, US consumer prices spiked by the most in 13 years, beating all forecasts. According to Labor Department data on Tuesday, the consumer price index (CPI) increased 0.9 percent last month and 5.4 percent from the same period last year. The core CPI, excluding the food and energy components, grew 4.5 percent from June 2020. This is the largest increase since November 1991. 

Used vehicles accounted for over a third of the rise in CPI. Shelter costs, which are a structural component of the CPI and make up a third of the overall index, grew 0.5 percent in June. This was the biggest increase since October 2005. A 7.9 percent increase in hotel stays drove the rise. For more details, please see Bloomberg.  

Technology

INTEL MAY SPREAD SEMICONDUCTOR INVESTMENT ACROSS EU

Intel may spread its investment in semiconductor production across a number of countries to gain EU financial and political support. Intel's Chief Executive Officer Pat Gelsinger met with French President Emmanuel Macron and Italian Prime Minister Mario Draghi to discuss the global chip shortage that has affected industries in Europe and worldwide. Following the meeting, the EU signalled that the bloc could make large sums available to assist in doubling EU semiconductor production to 20 percent of the global market by 2030. 

Intel’s Vice-President of Global Regulatory Affairs, Greg Slater, stated that the company could consider separate sites for manufacturing and packaging. Furthermore, the company could divide research and development activities across a number of EU countries.

As part of a multi year strategy to compete with rivals TSMC and Samsung, Intel announced a $20 billion investment in two new factories in the US. Furthermore, the company plans $7 billion to double the capacity of its Leixlip plant in Kildare, Ireland. Intel is exploring a number of European countries for a factory location. The company is due to reach a decision by the end of 2021. For more details, please see The Irish Times.  

Retail 

UK RETAIL SALES RECORDS STRONGEST QUARTERLY GROWTH ON RECORD

The British Retail Consortium (BRC) said UK retail sales in June were 13.1 percent higher than the same month in 2019. Additionally, total sales for Q2 of 2021 increased 10.4 percent compared to the same period two years ago. According to the BRC, higher spending in June was due to warmer weather, people holidaying in the UK and the Euro 2020 tournament. 

Online spending for the month declined to 39.3 percent from 49.7 percent the year previous. As a result of lifted lockdown restrictions, consumers are opting to shop on the high street and in retail parks. For more details, please click here. 

Logistics

AGREEMENT SIGNED BETWEEN MARITIME REGULATOR AND  US JUSTICE DEPARTMENT 

On Monday, the US Federal Maritime Commission and the antitrust division of the US Department of Justice signed an agreement. The two agencies have agreed to enhance economic oversight of foreign ocean carriers serving US international container trade. This agreement follows an executive order by US President Joe Biden on Friday to control anti competitive behaviour among 72 industries, including the maritime and freight retail sectors. 

Although not legally binding, the agreement is a sign that the Biden administration is taking complaints by US exporters seriously. It also shows that it is taking lawmakers’ allegations against the container lines into consideration. These allegations include overcharging on rates, unreasonable fees and refusals of service in favor of more lucrative imports. For more details, please see Freight Waves.  

QAD Precision News

UNDERSTANDING HOW PACKAGE CONSOLIDATION WORKS

Shipment consolidation is a logistics strategy that combines two or more orders, packages or shipments. As a result, the shipper dispatches a larger quantity of packages to the same vehicle. 

Shipment consolidation is nothing new. It has been around for quite a long time. However it’s a topic that has enjoyed heightened awareness lately. This is partly due to geopolitical issues like Brexit. 

Cross-border shipping into and out of the United Kingdom has become more cumbersome due to customs clearance formalities. Shippers are looking to streamline their UK cross border shipments. By combining multiple packages into one simplified movement, shippers only need a single customs declaration. 

Despite it being around for a while it is an area that is open to interpretation. Many shippers have different experiences or expectations with regard to consolidations. In this QAD Precision Report we look at the benefits of consolidation, as well as the different types of consolidation available. To read the full report, please click here. 

[LIVE WEBINAR] DANGEROUS GOODS & REVISION 7: AN OVERVIEW FOR SHIPPERS

Please join us for a live webinar on Thursday, 29 July 10am EST where industry experts Dr. Luc Séguin of KMK Regulatory Services Inc and Paula Reavis, Dangerous Goods Trainer at Reavis Compliance Company come together with QAD Precision's Olivier Joncas to discuss best practices for shipping dangerous goods as well as the recent regulation changes and the impact for Revision 7 of the GHS. Register here!