Global Supply Chain Shifts: Boeing Strikes, DSV's Major Acquisition, and Rising Trade Tensions

Can a single company acquisition reshape the global logistics landscape? Join us on the Chain Reaction Podcast as we dissect the seismic shifts rocking global supply chains this week. From Boeing's massive labor strikes in the U.S. that threaten to disrupt one of the country's largest manufacturers, to Chinese EV manufacturers making headlines at Frankfurt's Automechanica trade fair amidst international trade tensions, we cover the major events you need to know about. We also provide an in-depth look at Samsung’s struggles with worker strikes in India and analyze China's mixed trade signals, where record-high exports meet sluggish imports.

In our logistics segment, we bring you the latest on DSV's high-stakes acquisition of Schenker, which propels it to the top of the global logistics industry but not without some tough decisions in Germany. Discover how BYD is tackling youth unemployment in China by expanding its workforce and learn about the inflation trends affecting UK consumers, with essential goods like olive oil and cocoa seeing significant price hikes. We'll also touch on climate issues impacting the carrot market, the Federal Maritime Commission's green light for the Gemini cooperation, and the latest fluctuations in crude oil prices. Don't miss our recommended episodes on FAA directives for Boeing 787 Dreamliners and achieving supply chain synergy for more targeted insights.

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Chapters

• 0:06 Global Supply Chain and Innovation Trends
• 12:40 Logistics Industry Expansion and Challenges

Transcript

Tony Hines: 0:06

Hello Tony Hines. Here you're listening to the Chain Reaction Podcast all about supply chain advantage. This is the News Roundup all things impacting global supply chains this week. Boeing, chinese EVs and Samsung all in the news this week, along with Apple and, of course, huawei's new phone too. There's lots more than that as well. So stick around, stay tuned and find out more.

Tony Hines: 0:42

Well, it just goes from bad to worse for Boeing in the United States. This week, on Thursday, a vote was taken to reject a 25% pay offer and 30,000 machinists and workers at Seattle and Portland have voted to strike. And that won't do anything for the revised output targets set by the new CEO, kelly Orberg, saying that they'll get back to where they were. So more bad news 900 Chinese auto suppliers and a handful of EV makers are in Frankfurt this week showcasing their products at a trade fair. The country's automobile sector defies looming trading barriers to expand its global footprint and counter falling profitability back in China. The carmakers include BYD, geely, hongi and GAC International, all of whom are displaying their wares at the fair, which is called Automechanica. China is investing heavily in overseas expansion, even as europe and north america are erecting trade barriers to stem the inflow of chinese made evs, which they say are benefiting from subsidies given to them by the chinese government. Chinese investment in outbound automobiles has risen from 16% in 2018 to 22% in 2023. That's according to Moody's. Chinese carmakers, of course, are planning to produce more cars in Europe and elsewhere to minimise any trade barriers imposed by tariffs which might limit imports. Chinese companies, often with state backing are more likely to spend on improving batteries and software.

Tony Hines: 2:28

According to a PwC study that was released this month, samsung Electronics reported strikes in southern India, which has disrupted production. The strikes took place at India's biggest consumer goods company ahead of the festive season, when sales of electronic items bought by consumers as gifts for personal use are in full progress. Samsung competes with LG Electronics and domestic brands. The plant is one of two factories that Samsung has in India, which is a key market for the business. It contributes about 20-30% of the company's annual revenue of $12 billion in the South Asian nation. The posters said it's an indefinite strike and they went to outside a factory in Sriparambadol, which is close to the city of Chennai. Hundreds of workers in company uniforms had set up in tents to shade them from the heat. About half of the daily production has been effected. 1,800 workers are employed at the plant and they make things such as refrigerators, washing machines and TVs. A bigger plant in the northern state of Uttar Pradesh makes smartphones. They're demanding higher wages and benefits, and they also want equal remuneration for those with the same length of service.

Tony Hines: 4:02

China's exports have grown at the fastest rate in nearly one and a half years. In August. It suggests that manufacturers are rushing to push out orders ahead of tariffs expected from a growing number of trading partners. Imports, meanwhile, have missed forecasts amid weak domestic demand. It's a mixed picture of what's happening in trade in China.

Tony Hines: 4:26

Picture of what's happening in trade in China and policymakers in Beijing are struggling to improve growth and not to become too reliant on exports. At the same time, consumer exports continue to grow. Imports are slowing down. That's the message. Exports grew by 8.7% year-on-year in August and that's the fastest rate since March 2023, but imports have only increased by 0.5%. Increasingly, trade barriers are impacting China's exports.

Tony Hines: 4:53

China's trade surplus with the United States has widened to $33.8 billion in August, and that's up from $30.8 billion in July. The US has repeatedly highlighted the surplus as evidence of the one-sided trade relationship with China. In Europe, similar pressures are having an impact on Chinese exports to the European Union, as EV tariffs have increased. Canada, too, announced last month that it would have 100% tariffs on China's EVs and 25% tariffs on Chinese steel and aluminium. China is switching tack to try and export more of its products within Asia. India is planning to raise tariffs on Chinese steel, indonesia is eyeing heavy duties on textile imports, and Malaysia, too, is accusing China of dumping plastic imports, but it would seem that China's growth is relentless, and it will remain to be seen how effective these particular tariffs will be. Commodity purchases in China have pointed to a bleak domestic picture. Iron ore imports are down 4.73% from a year earlier, and there's a weak demand in the construction sector. Apple's iPhone 16 is a disappointment to Chinese consumers because they say it falls short on AI.

Tony Hines: 6:20

Apple has said on its Apple iPhone 16 phones will be available in 2025 in the Chinese language, but until then there is no AI in the Chinese language on those phones. Apple are under pressure in China from Huawei's competition on those phones. Apple are under pressure in China from Huawei's competition and also they've had to reduce prices in the past year of the iPhones because of reduced demand from consumers. The new iPhone 16 will sell at the same price as the old one. Meanwhile, Huawei is growing in popularity. This week in Shenzhen, Huawei unveiled its Mate XT phone, which is a triple fold phone, and it takes the spotlight away from Apple's launch of the i16, so competing head on. 3.6 million pre-orders for their phone have been recorded, according to analysts, and the analysts have also said that it may not impact Samsung and Apple as badly as some have suggested. Huawei has 27.5% of the global market for foldable smartphones. Chain reaction.

Tony Hines: 7:35

Technology markets are always under pressure to innovate. Companies are constantly developing new ideas and products to persuade consumers like you and me to part with their hard-earned cash. Through savvy marketing strategies, they often succeed in convincing us to buy the latest gadgets, even when upgrades are minimal. The allure of new features, no matter how small, can be enough to entice consumers into making a purchase. However, these incremental innovations often come with a significant price increase. For example, the rumored $2,800 for the XT Mate in China and the ever-pricey Apple iPhones, which are now over $1,200, highlight the steep costs associated with cutting-edge technology. The psychological aspect of consumer behaviour plays a significant role in the technology market. Consumers often perceive added value in new products, even if the actual improvements are minimal. This perceived value can drive them to spend more money on the latest gadgets. However, there's always a trade-off in the customer's mind between the perceived value and the price they pay. Sometimes, the high costs of new tech can lead to consumer resistance. After all, spending a substantial amount of money on a product that may only last four or five years is a significant outlay. This resistance can impact the success of new product launches and affect a company's market share. When tech company strategies miss the mark, the fallout can be significant. The loss of market share to competitors can lead to a downturn in marketplace, resulting in job cuts and other cost-saving measures.

Tony Hines: 9:09

Marketing strategies in the tech industry are designed to create a sense of urgency and desire among consumers. They often appeal to younger consumers too, and those consumers may or may not have the cash to buy, so sometimes they will go in for deals that will cost them even more than the ticket price. And these strategies often play on fear of missing out, the FOMO. So we all need to stay up to date. That's the message. With the latest trends, highlighting the unique features and benefits of new products, companies create a buzz that drives sales, but it can also lead to consumer fatigue, and that's happened to some extent over the past few years in the market for many products. When every product is touted as a must-have, consumers become sceptical and less willing to upgrade.

Tony Hines: 9:57

The economic dynamics of technology markets are also influenced by global factors. The cost of raw materials, manufacturing and distribution can all impact the final price of tech products. Additionally, trade policies and tariffs can affect the availability and cost of technology. These factors create a complex landscape where companies must navigate both local and global economic conditions to succeed. So, this week, with the news of new iPhones and the new Huawei phone and any other products that you've seen, give a thought to what the marketing department is telling you about the new product and think about those complex supply chains that work in the background to deliver those products to the consumer. Now, when it comes to supply chains, we have opportunities to make the world a better place by the choices we make the choices for fuels, whether they be fossil fuels or renewable energies, that drive our trucks, drive our production systems or simply get the goods to the customer.

Tony Hines: 11:03

And an article brought this home to me this week when I was looking at something about the Amazon rainforest, vital to combating global warming, and the data said that huge swathes of the jungle that are most vital for the world's climate to remain stable go unprotected. 40% of the Amazon rainforest, which is most critical to curbing climate change, has not been granted special government protection as either nature or indigenous reserves. According to an analysis by non-profit Amazon Conservation, the areas are in the far southwest of the Amazon, in Peru, and the far northeast in Brazil, french Guiana and Suriname, and those parts of the Amazon have the biggest, densest trees and the most continuous canopy cover. According to Matt Feiner, who leads Amazon Conservation's monitoring of the Andean Amazon Project, maap, this area holds most carbon which, if released into the atmosphere as climate-warming greenhouse gas if it's destroyed by fire or by logging. So this is of great concern and it really indicates the fragility of the earth and its atmosphere. So next time you switch on the lights, switch on those machines, get your production moving, think about transport and how to get goods to the customer. Just give a little thought for the Amazon rainforest and CO2 emissions, because every little helps, whatever we can do.

Tony Hines: 12:40

Well, denmark's DSV is set to become the world's biggest logistics company after its Schenker acquisition. The deal was financed through equity and debt finance. It's a mix DSV to cut up to 1,900 Schenker jobs in Germany. So obviously, when companies merge in this way or there's a takeover, they can see rationalization by cutting out duplication in some of the services that they offer, and I'm guessing that this is what's happening here with these job losses. But that doesn't help the workforce, of course. Schenker is the logistics arm of the German state rail operator Deutsche Bahn, and it's been purchased for 15.85 billion US dollars. The acquisition is the biggest by a Danish company. Dsv started as a small enterprise of just 10 truckers back in 1976, and it's grown through a string of acquisitions over the years, taking over much bigger companies than itself over the years, taking over much bigger companies than itself. The CEO, jens Lund, told journalists that this particular takeover is larger than all the transactions they've done before. Shares in DSV have risen by 4%. Equity raised about €4.5 billion and the other €10 billion was financed by debt. The new DSV group is likely to have turnover of about 293 billion Danish crowns. That's about 43.5 billion US dollars, and they've got 147,000 people in 90 countries. The cut of between 1,600 and 1,900 jobs in Schenker's German workforce is out of a total workforce there of 15,000. They intend to invest about a billion euros in Germany and they say that there will be more employees in Germany in five years' time than now. So it's based on a future growth model.

Tony Hines: 14:39

News out of the China EV market this week is that BYD are going to hire they're on a big purge to hire more workers, so they're ramping up production. They're gearing up to produce more, so this will increase the workforce to over 900,000 people. It makes it one of the biggest employers in the country. The Chinese government, of course, has prioritised creating more jobs as the economy has stagnated. This will push the headcount up by 5.8% from the end of August. It makes BYD the largest employer among 5,300 companies listed on the Chinese stock exchange. There's a big youth unemployment problem in China. About 100 million Chinese youngsters aged between 16 and 24 were reported in 2024. That's about 17%. Many foreign companies in China have been laying off staff as sales have plummeted. Saic and its joint venture partner Volkswagen General Motors have planned to slash jobs. So this is some welcome news for the Chinese government, although the news out of the UK this week was that the consumer prices for July held at 2.2%, so that's the rise of inflation on the CPI measure.

Tony Hines: 15:54

There are some interesting anomalies, because over the past year we've seen a 37.5% price rise in olive oil and cocoa, and powdered chocolate's gone up by 19.6% and fortified wine, including sherry and vermouth, up by 17.2%. So lots of things are obviously much higher than the 2.2%, and some of those ingredients are, of course, used in restaurants and cafes, and that pushes their cost up too. So if you're in a business, you've got a big rise in your cost, even though the inflation figure is telling you something different Because it's a package of goods with inflation and it's many, many items that are taken into account. So it all depends on what you buy.

Tony Hines: 16:41

Another thing I saw in the news this week in the United Kingdom was the disruption in the carrot market, and the carrot market relies on growers turning out the produce and they've had significant problems over the past year as the climate has become much wetter and if we get higher than expected rainfall then that can damage the crops and in fact for one month or more in the past year the production of carrots was halted. They couldn't process them because they didn't have carrots coming out of the fields. So there's lots of strange things happening in agricultural and food markets.

Tony Hines: 17:26

The Gemini cooperation, which is an operational alliance between Maersk and Hapag-Lloyd, was given the go-ahead by the Federal Maritime Commission on Monday. It was originally set to take effect from July 15th, but it was halted by the FMC because it was determined the agreement lacked details on its potential competitive impacts, but now they've decided to let it go ahead. It will be subject to extensive monitoring. So while the agreement does take effect, it will be carefully monitored by the FMC when they originally decided not to let the agreement does take effect, it will be carefully monitored by the.

Tony Hines: 17:57

FMC when they originally decided not to let the agreement go ahead. They requested details from the companies about the impact from the agreement, and it's to do with competition and the impact it has on other shippers, the US economy and, of course, consumers. The detail is not publicly available. It's all done behind closed doors. Crude oil prices this week as we draw to a close, Brent crude was $70.73, and West Texas oil $67.22. And. West Texas Oil $67.22.

Tony Hines: 18:41

Now, we've had some great episodes over the past few weeks and they've discussed a wide range of topics, and I'm sure that you'll want to stop by and pick those up and have a listen, because you might learn something about how you can adapt your own business to deal with some of the issues that some of the businesses reported in those podcasts have dealt with, and I'll just give you a quick taster.

Tony Hines: 19:03

There was the FAA directives and airline mergers. That was on August the 24th, and that episode looked at the Federal Aviation Administrator's recent directive for Boeing 787 Dreamliners, so there's quite a bit about the aircraft industry if you were involved in that particular sector. Then there's a program on applying supply chain synergy, which I'm sure will be of interest to most people interested in supply chains, and that was on August the 21st, where I explored the secrets to achieving supply chain synergy, focusing on networks, collective value, harmony and the orchestration and collaboration that needs to take place in a supply chain for it to be successful. Then there are EV battery fire hazards on August 17th, and the episode uncovers some of the complexities and dangers and risks associated with EV battery fires, highlighting a significant incident that took place in South Korea involving a Mercedes-Benz EV. Then we have the language of supply chain management, which is a slight diversion, but why do we call things a supply chain and not a demand chain was one of the questions I asked, and then I looked at the historical roots of logistics, from ancient times through to Napoleon up to the modern day and some of the contemporary issues. The language it's used, and I'm sure you'll find it interesting. It might just tickle your grey cells and you might quite like the episode. And then we've got the economic slowdown and geopolitical tensions that I discussed on August the 10th, where we tackle pressing issues affecting global supply chains, including economic slowdowns, geopolitical tensions and industry shifts.

Tony Hines: 20:38

And, of course, this week I'm dealing with another, broader topic, but it does involve all of us in supply chains. It's about tolerance, inclusiveness and intolerance in the workplace and why it pays to be tolerant, essentially. So you might want to listen to that, especially if you're involved in a team management capacity, so I hope you'll stop by, have a listen and pick those up. There are plenty more, too, and there's some good episodes coming down the track too, as well. And just before we close, some good news about US import prices. They've hit their lowest for eight months, just at 0.3%, so it looks like inflation in the months ahead is likely to fall. Well, that's it for the news roundup this week. I hope you've enjoyed the episode and I hope you found out something new. I'm Tony Hines. I'm signing off and I'll see you next time in the Chain Reaction Podcast. Bye for now, thank you.