QAD Precision News Round-Up: 2 July 2021

In the QAD Precision News Round-Up: 2 July 2021, US-Taiwan trade talks; power shortage in China; Euro zone factory output expands at record pace; US jobless claims fall; FedEx reports record Q4; plus multi carrier shipping software for retailers and more. 

Global Trade

US-TAIWAN TRADE TALKS TO FOCUS ON SUPPLY CHAINS AND DIGITAL TRADE

This week, Taiwan and the US began trade talks for the first time since 2016 as they attempt to deepen economic ties with each other amid growing tension with China. The two nations will discuss supply chain security and digital trade as part of the negotiations. 

The decision by the US to resume negotiations under the Trade and Investment Framework Agreement (Tifa) shows a shift from President Trump’s administration, which prioritised a limited trade deal with Beijing. Taiwan President Tsai Ing-wen has requested a bilateral trade deal since the country opened its market to US beef and pork last week. During the trade talks, the US is likely to focus on semiconductor supply chain security and digital trade. For more details, please see Financial Times.  

POWER SHORTAGE AFFECTING CHINA

China is facing its worst power shortage since 2011. Extreme weather and surging demand for energy, coupled with strict limits on coal usage are the driving factors behind the power shortage. The shortage could possibly last for months, with some local officials warning it could last the remainder of the year. The power shortage is currently affecting an area the size of the UK, Germany, France, and Japan, combined. 

The Guangdong province, included in this area, is responsible for $1.7 trillion — over 10 percent — of China’s annual economic output. The rationing of power is forcing many companies to shut down production for a few days per week to reduce energy consumption. The industries most likely affected by the power shortage are construction and manufacturing. Last year, these two industries combined drew almost 70 percent of China’s electricity according to the National Bureau of Labor Statistics. The power shortage could potentially slow China’s economic recovery and the global trade industry as a whole. For more details, please see CNN.

EUROZONE FACTORY OUTPUT EXPANDS AT RECORD PACE 

In June, manufacturing activity in the Euro zone expanded at its fastest pace on record according to a survey released on Thursday. In addition, the survey showed factories faced the largest rise in raw material costs in over two decades. IHS Markit's final manufacturing Purchasing Managers' Index (PMI) grew to 63.4 in June from May's 63.1. This result was above an initial estimate of 63.1 and is the highest reading since the survey began. The input prices increased to 88.5 from 87.1, the highest level in the survey’s history, due to a shortage of shipping containers and supply chains affected by the coronavirus pandemic. For more information, please see Reuters.  

US JOBLESS CLAIMS FALL

Last week, the US jobless claims reached a new pandemic low. On Thursday, the Labor Department reported that the jobless claims fell to seasonally adjusted 364,000. Jobless claims, representing layoffs, are down approximately 50 percent since the first week of April. Although the claims have fallen recently, they are still above pre-pandemic levels. This decline should increase over the summer as the labor market improves and states phase out pandemic-related benefits. For more details, please see Wall Street Journal.

Retail 

GAP TO CLOSE UK & IRELAND STORES AND FOCUS ON E-COMMERCE 

US retail company GAP announced that it will close all of its stores in the UK and Ireland by the end of the year as it shifts its focus to e-commerce. The company will close a total of 81 stores as it becomes the latest retailer affected by the coronavirus pandemic in the UK. On Wednesday, Gap said in a statement that they aim to be a “digital first business” as the adoption of e-commerce by consumers accelerates. Last year, the UK suffered one of the world's deepest recessions following strict lockdown measures. This resulted in the closure of stores across the  UK high street including department chain Debenhams and Arcadia Group. For more details, please click here. 

BANGLADESH LOCKDOWN AND THE APPAREL INDUSTRY 

On Thursday, Bangladesh entered a seven-day stay-at-home order prompted by increasing Covid-19 cases in the area. The lockdown will affect approximately 170 million people. The order is likely to impact supply chains, especially in the apparel industry. Factories will likely shut down as employees will need to remain at home. 

According to Panjiva, a business line of S&P Global Market Intelligence, retailers H&M and Levi Strauss are at risk of supply chain disruptions. In the last three months, ending May 31, H&M shipments increased 13.5 percent compared to 2019. Imports associated with Levi Strauss reportedly fell 47.8 percent and those associated with Calvin-Klein owner PVH fell 68.7 percent. Bangladesh has been gaining market share in the apparel industry as China moves away from more labor-intensive industries, according to US International Trade Commission data. For more details, please visit CNBC.

Carriers 

FEDEX REPORTS RECORD Q4 RESULTS

FedEx has announced record fourth quarter and full year results. FedEx Express fourth quarter operating income more than doubled year-over-year as demand for international export and US domestic package services grew. Additionally, FedEx Ground reported record earnings and revenue growth of 27 percent for Q4. This growth, driven by a rise in business-to-business shipments and a 14 percent increase in revenue per package. Furthermore, FedEx Freight reported record earnings for the same period and operating margin of 16.1 percent. Daily shipments increased 30 percent and revenue per shipment saw growth of 6 percent. For more details, please click here. 

QAD Precision News 

WHY RETAILERS NEED FLEXIBLE MULTI CARRIER SHIPPING SOFTWARE

The last 15 months or so has been extraordinary for consumers as well as e-commerce and retail businesses. The pandemic sent parcel volumes skyrocketing in unprecedented ways. However, when it comes to e-commerce, the genie is out of the bottle — online shopping will continue to become an ever greater part of our consumer habits. 

In order to survive and thrive, retailers need a way to manage growing volumes, standardize parcel shipping and leverage flexible, multi carrier shipping software. 
For omnichannel and e-commerce retailers standardizing customer delivery operations is no easy task. When you add in different distribution centers, brick-and-mortar stores and geographic locations, this can seem impossible. In this QAD Precision Report we look at how retailers can standardize shipping and contain costs with multi carrier shipping software. Read the full report here.