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– In new research this week, Market Intelligence finds the interplay of geopolitical rivalries, economic shifts and evolving trade dynamics will define a conflicted global landscape over 2025. – In logistics, we look ahead to the maritime chokepoints that may define 2025 as well as the prospects for a US East Coast port strike. We also find that US imports continued to surge in November thanks to preemption of tariffs and the potential port strike. – Government policies continue to provide both challenges and opportunities for supply chain decision-makers. Nvidia Corp. faces an antitrust probe in mainland China, while opportunities can be seen in the latest EU-Mercosur trade agreement (which is not guaranteed to be completed). Meta Platforms Inc. is diversifying its VR headset sourcing away from mainland China, and Rémy Cointreau SA is optimistic about the outlook for brandy despite the prospect of tariffs. Read More →
– The semiconductor sector is seeing varied recovery rates, with AI applications and Nvidia driving growth, but supply chain challenges persist with sector revenue growth expected to fall to 24% in Q1 2024 from 44% in the same period the prior year. Consumer devices have mixed prospects, with pent up demand driving smartphone growth and AI pushing a new PC upgrade cycle, while industrial and automotive chip demand lags due to high interest rates and geopolitical uncertainties. – China is likely respond to EU tariffs on electric vehicles by targeting EU food exports and possibly other sectors if negotiations fail. Analysis of company statements on US Section 301 tariffs cite cost increases and the failure to address key issues like intellectual property theft. Brazil will increase tariffs on imported electric commercial vehicles from 20% to 35% after imports of autos surged by 742%, reflecting a broader trend of trade restrictions. – Nike Inc. and H&M face inventory and demand challenges due to shifting market dynamics and external factors with the shoemaker expecting revenues to be “down mid-single digits”. Imports of shoes to the US were 37.7% lower in Q1 2024 than the same period in 2022. GE Appliances improved inventory turns by 50% by reshoring manufacturing and locating goods closer to customers. – The Labour Party’s UK election win may not drastically change supply chain policies but could increase union influence as they continue to tackle post Brexit trade issues. UK food imports have risen by 10.2% year over year in the 12 months to April 2024, indicating ongoing supply chain adjustments. – Steel safeguards in the UK and EU have been extended for two years as steel protections proliferate. Imports of non-fabricated steel to the continent fell by 12.3% year over year in the first quarter. CBAM may cause additional disruptions to the steel market and the US is considering similar carbon pricing on imports. Chemical plants in Mexico are resuming operations after water restrictions were lifted while China has tightened rare earth production rules, potentially lowering exports. – Hurricane Beryl, the earliest Category 5 Atlantic storm on record, caused disruptions including power outages and force majeure declarations in the US, with further disruptions expected in the 2024 hurricane season. Indian ports are starting to face congestion, with the approval of the Vadhavan deep water port the latest example of increased investment in capacity. – Shipping rates continued to climb with Asia to the US East Coast over US$10k/FEU, only 15.8% lower than the high-water mark of March 2022. Rates from Asia to Europe and the West Coast followed, both hitting or surpassing the US$8k/FEU mark. Read More →
• Supply chains in 2024 face higher labor costs which may hinder investments in resilience. Firms are returning to “just in time” rather than “just in case” inventory strategies and diversification of suppliers is falling. Reshoring continues, however, as firms look to cut costs and risks even as corporate cash flows remain pressured. • New data shows that US seaborne imports recovered more quickly in November, although a faster-than-normal seasonal dip may hold the seeds of a new slowdown. Tequila’s growing dominance drags on other spirits’ supply chains, including cognac. • New data from mainland China shows demand for semiconductors is improving. While new electronics manufacturing orders are still falling, the rate of decline was its slowest since February. Apple Inc. now looks for batteries in India, while Vietnam’s new tax rules may cut its attractions for electronics producers. • The US has tightened the eligibility rules for electric vehicle (EV) subsidies, potentially compromising Tesla Inc.’s reliance on imports from mainland China. Tesla is also facing widening industrial action in Europe. The EU meanwhile is providing more subsidies for EV batteries and has delayed new tariffs on UK imports. • Attacks on vessels around Bab al-Mandab make shipping via the Suez Canal more risky at the same time that vessel owners are diverting away from the Panama Canal. New data shows the process of shifting US imports back to US west coast ports accelerated in November. COP28 announcements herald a future downturn in shipping of coal. Read More →
• In new research this week with our colleagues from across S&P Global Market Intelligence, we look ahead to the key strategic trends and opportunities facing supply chains in 2024. Supply chain resilience is more important than ever, but falling profits and evidence of declining diversification suggest firms are either unable or unwilling to invest in the near term. • Our new deep-dive into the state of the semiconductor sector — including analytics based on supply chain activity measures, macroeconomic data, financial forecasts, and both manual and natural language processing of earnings calls — shows the sector is close to an upward inflection point but that it would not fully arrive until well into 2024. • Elsewhere in technology we look at new AI chip releases, the fallout of the Biden-Xi summit, new rare earth restrictions in mainland China, and India’s updated production-linked incentives for computers. • Retailers of consumer durable goods are facing falling sales but have continued to cut their inventories. Ethical sourcing remains in focus with the latest challenges being faced in wood sourcing for doors. • Strike risks in the US auto sector are dissipating in the US but remain elevated elsewhere, while investments in raw materials sourcing continue. Wind turbine manufacturers still face supply chain challenges. An EU-US steel deal may be delayed by as much as two years. • A vessel hijacking in the Red Sea illustrates the many operational risks facing supply chains, though the direct read-across for the shipping industry is minimal. Challenges facing the Panama Canal look set to continue for years, not months. Read More →
• The US peak shipping season is starting ahead of holiday shopping events. Shipping seasonality is close to normal, while US imports in September were flat versus a year earlier. Holiday decoration supply chains are the focus for our latest research. Apparel firms continue to repair their supply chains with regionalization being a leading strategy. • The latest trade data shows semiconductor supply chains are still in retreat even as investment in new capacity continues apace. New analysis indicates that most electronics categories will experience above-average price escalation in 2023. • The United Auto Workers’ strike strategy involves ratcheting up pressure by progressively halting work at plants while “rewarding” concessions by not including companies in each round of escalations. Elsewhere, manufacturing sentiment remains negative. • In commodities, the EU’s Carbon Border Adjustment Mechanism has come into force and promises to disrupt steel and aluminum shipments. Water stress is taking a toll on soybean supplies, while another round of resource protectionism is underway. Read More →