QAD Precision News Round-Up: 17 September 2021

QAD Precision News Round-Up: 17 September 2021, UK delays post-Brexit imports checks; UK inflation surges; US Treasury yields fall; Toyota reduces production output; Amazon ups starting wages; plus navigating supply chain peak season disruptions and more.

Global Trade

BRITAIN DELAYS CHECKS ON POST-BREXIT IMPORTS FROM EU 

This week, Britain delayed checks on post-Brexit imports from the EU for the second time. The reason for the delay is to give businesses more time to rebound from the Covid-19 pandemic before new border controls are implemented. Export health certificates, which were to take effect from October 1st, will now begin on July 1st, 2022. In addition, safety and security declarations and physical checks at border control posts will begin July 1st next year. They were due to come into force on January 1st. For more details, please click here. 

UK INFLATION SURGES TO 3.2 PERCENT IN AUGUST 

In August, the Consumer Prices Index in the UK increased by 3.2 percent, according to official data released on Wednesday. This is the biggest month-on-month increase since records began in 1997. Furthermore, it was also greater than a 2.9 percent prediction by a Reuters poll of analysts. Additionally, in July, the index increased by 2 percent annually. According to the Office for National Statistics, the increase, expected to be temporary, may be due to the UK government’s “Eat Out to Help Out” program introduced last year. Chief UK economist at Pantheon Macroeconomics, Samuel Tombs, said the 4.9 percent rise in used car prices also added to the core CPI increase. For more information, please see CNBC.  

US TREASURY YIELDS FALL

On Tuesday, the US Treasury yields fell. A key inflation report showed a less-than-anticipated rise in prices. The 10-year Treasury note yield benchmark fell 4.7 basis points to 1.277 percent. In addition, the yield on a 30-year Treasury bond decreased by 5.5 basis points to 1.849 percent. A basis point is equivalent to 0.01 percent. Furthermore, in August, the consumer price index showed a 5.3 percent year-over-year increase. This was slightly below the Dow Jones estimate of 5.4 percent. The Core CPI rose 0.1 percent month over month, below estimates of 0.3 percent. The Federal Reserve is closely monitoring inflation and unemployment rates to judge how much or when to raise interest rates. For more details, please see CNBC.

Auto 

TOYOTA REDUCES OUTPUT AMID SEMICONDUCTOR SHORTAGE

This week, Toyota announced it was to lower its annual production target by 300,000. The new target is a result of reduced output at parts factories in Vietnam and Malaysia amid rising coronavirus infections. Additionally, Toyota has also been impacted by the semiconductor shortage. Until now, Toyota has avoided reducing output due to stockpiling key components. 

Nonetheless, at present, Toyota expects to produce 9 million vehicles in the year to March 31, compared to the 9.3 million previously estimated. Furthermore, the company did not amend its 2.5 trillion yen ($22.7 billion) operating profit estimate for the business year. In August, car sales in China dropped by almost a fifth from a year earlier due to lower production output. For more information, please see RTE.  

Carriers 

DHL TO INVEST 300 MILLION IN US

DHL eCommerce Solutions announced it will invest more than $300 million in the US in the next five years. DHL is looking to expand its footprint by adding an additional 70 percent more square footage. The carrier also plans to upgrade its IT system and add automation to all its US distribution centers. Additionally, it will be adding dedicated export gateways in Carteret, New Jersey; Franklin Park, Illinois; and Whittier, California. DHL eCommerce Solutions has 19 distribution centers, three US corporate offices, and approximately 4,200 employees. For more details, please click here. 

Retail 

AMAZON INCREASES STARTING WAGE

On Tuesday, Amazon announced that it would be increasing its average starting wage to $18 an hour. Furthermore, in some locations, Amazon will pay a sign-on bonus of $3,000 and increase the hourly wage to up to $22.50. In May, Amazon reported its average hourly rate is $17. Amazon also revealed its plans to hire an additional 125,000 warehouse and transportation employees. Amazon is hiring the additional workers to run its nearly 350 logistics facilities that opened this year. Amazon also needs the additional staff to assist with its one-day delivery option. In 2018, Amazon was one of the first retailers to offer a minimum wage of $15 an hour. For more information, please visit Reuters.

QAD Precision News 

SUPPLY CHAIN DISRUPTION AND PEAK SEASON SHIPPING

The global supply chain is facing more pressure than ever before. Over the past year and a half, Covid-19 has caused shipping problems throughout the world. Today, supply constraints and port congestion continue to affect shippers globally. This turmoil is resulting in consumer product shortages, delays and increasing shipping costs for companies and is particularly alarming as peak season begins. 

Shipping costs are continuing to climb for global shippers. According to data provider Freightos, shipping costs have surged to approximately $15,800 to transfer a 40-foot container from China to the US west coast. This is a tenfold increase on levels before the pandemic.

An analysis of shipping, port and manufacturing data at IHS Markit reveals the delays will extend into 2022. Furthermore, some shipping executives have a more pessimistic outlook and expect the disruption to continue into 2023. In this QAD Precision Report we look at how parcel shippers can mitigate delays and high costs. Please read the full report here.