QAD Precision News Round-Up: 4 February 2022

In the QAD Precision News Round-Up: 4 February 2022, RCEP takes effect in South Korea; China fails to meet US trade deal pledge; parcel carrier capacity to remain tight; DHL expands pharma logistics network; plus reducing import fees with weekly entries and more. 

Global Trade 

RCEP TRADE DEAL TAKES EFFECT FOR SOUTH KOREA

On Tuesday, the Regional Comprehensive Economic Partnership (RCEP) free trade pact entered into force for South Korea. The RCEP is the world's largest free trade agreement. As a result, its 15 member countries account for approximately 30 percent of global gross domestic product, population and trade volume. 

In November 2020, South Korea signed the pact with 14 other countries including 10 member nations of the Association of Southeast Asian Nations (ASEAN), as well as China, Japan, Australia and New Zealand. In December last year, the National Assembly ratified the trade agreement. According to South Korea’s industry ministry, the deal will assist in diversifying the country’s trade portfolio. For more details on this new item, please see The Korea Times. 

CHINA FAILS TO MEET TRADE DEAL PLEDGE WITH US 

On Tuesday, deputy US Trade Representative Sarah Bianchi said China had failed to meet its pledge under a two-year "Phase 1" trade deal that expired in December 2021. In addition, Ms Bianchi said discussions with Beijing are continuing. 

In the deal signed by the Trump Administration in January 2020, China committed to increase purchases of US farm and manufactured goods, energy and services by $200 billion above 2017 levels during 2020 and 2021. However, according to trade data by the Peterson Institute for International Economics, China fulfilled approximately 60 percent of that goal by November 2021. In January, agriculture Secretary Tom Vilsack said China's purchases of US farm goods fell short of the Phase 1 goal by nearly $13 billion. 

According to Chinese customs data, the country’s 2021 trade surplus with the US surged 25 percent to $396.6 billion following a decline for two consecutive years. Exports to the US increased 27 percent and imports of US goods rose 33 percent. For more details, please see Reuters.  

Carriers 

PARCEL CARRIER CAPACITY TO REMAIN TIGHT IN 2022 

On Tuesday, UPS CEO Carol Tomé said parcel carrier capacity will remain tight in 2022. Therefore, carriers will maintain their pricing powers. According to Ms Tomé, the small package market is forecast to expand by approximately 5 percent this year. Although additional capacity is being added, it is not enough to support growing parcel volumes. In recent weeks, UPS introduced a 5.9 percent general rate increase. 

UPS CFO Brian Newman said the delivery company plans to launch 30 delivery centers and two “automated hub projects” in 2022 to better harmonize sortation capacity with delivery capacity in the UPS network. Furthermore, USP is strengthening its weekend service to further improve capacity. For more information, please see Retail Dive.  

DHL INVEST $400 MILLION TO EXPAND PHARMA SUPPLY CHAIN

This week, DHL Supply Chain North America announced that it is investing over $400 million to grow its pharmaceutical and medical device distribution network in the US. Additionally, the company said it plans to add almost 3 million square feet of temperature-controlled storage. 

DHL Supply Chain said it will expand its US Life Sciences and Healthcare (LHSC) segment to 34 locations across the United States. The expansion includes six new facilities that will be in operation by the end of 2022. The company said its sites are strategically located nationwide, including in Atlanta, Cincinnati, Memphis, Reno, Nev,  and Lebanon, PA. For more details, please click Here. 

Retail 

CAPRI PLANS PRICE INCREASES AS LUXURY FASHION DEMAND SOARS

On Wednesday, Capri Holdings reported a 24 percent increase in holiday-quarter sales and raised its full-year outlook. The company, which owns Michael Kors, Versace and Jimmy Choo, said it plans to further increase prices across it’s brand as demand for luxury fashions soars.

Capri joins European rivals LVMH, Burberry, and Prada in demonstrating a strong recovery from the COVID-19 pandemic as consumer demand across the luxury goods sector increases. The company's total revenue rose to $1.61 billion in the third quarter ended December 25 as it reached levels achieved before the pandemic. According to Capri, sales were driven largely by consumers in the US and Europe. However, sales in Mainland China declined due to COVID-19-related lockdowns and restrictions. For more information, please click here. 

QAD Precision News 

REDUCING IMPORT FEES WITH WEEKLY ENTRIES

The Foreign-Trade Zone program provides numerous advantages to zone users. While most manufacturers and distributors understand that leveraging an FTZ allows you to defer customs duty payments, reducing import fees with Weekly Entries is a benefit that is often overlooked. 

When a company imports goods from a foreign country into the United States they must pay import charges, known as a Merchandise Processing Fee (MPF). Therefore, if you receive five imports in a week, you pay five MPFs. Read the full report here. 

LIVE WEBINAR: WHAT TO EXPECT WHEN YOU’RE EXPECTING…DISRUPTIONS! 

Please join us on February 17 at 3pm GMT for a 30 minute webinar where Corey Rhodes, President of QAD Precision, will discuss the impacts of disruptions and how agile enterprises can navigate these challenges. Topics covered include:

• Supply chain disruptions

• The growth of e-commerce and direct-to-consumer shopping

• Carrier capacity constraints

• Just-in-time vs just-in-case inventory management

Register here!