Innovation and Challenges in Global Commerce

Can the future of global supply chains hold both challenges and opportunities in one fluid motion? Join me, Tony Hines, as I unravel the latest economic twists, from the Federal Reserve's bold interest rate cuts to the UK’s unexpected inflation conundrum. In this episode of the Chain Reaction Podcast, we're not just skimming the surface—we're navigating through the complexities of North American manufacturers' stockpiling strategies post-Trump, Europe's industrial recession, and the significant strides in US maritime port enhancements. We'll also dissect the impacts of FedEx and UPS rate hikes, fresh tariffs from the Biden administration on solar energy components, and the potential game-changing Honda-Nissan partnership in the electric vehicle sector. And that's just scratching the surface—a strike by Amazon workers championed by the International Brotherhood of Teamsters brings the fight for better wages and conditions to the forefront, demanding your attention.

As we shift focus to the regional powerhouses driving these global chains, Australia stands out with its mining sector’s vital role in green energy and EV markets, while its tech industry reshapes AI and renewable energies for supply chain efficiency. Across the Tasman Sea, New Zealand’s robust agricultural exports and an upsurge in tourism paint a picture of resilience and growth. We also explore Ultratech Cement's anticipated acquisition of India Cement, Amazon's new password-sharing policies in India, and the looming strike threat posed by the International Longshoremen’s Association in the U.S. DHL Supply Chain’s autonomous transport trials in Texas and Volkswagen subsidiary Powerco SE's raw materials deal with Novanix offer glimpses into the future—one that's both innovative and cautious, as seen in Australia's ban on engineered stone to protect worker health. Buckle up for a journey through the trends and transformations defining the global supply chain landscape today.

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Chapters

• 0:01 Global Supply Chain Trends and Updates
• 11:01 Regional Industries Drive Global Supply Chains

Transcript

Tony Hines: 0:01

Hello, tony Hines. Here You're listening to the Chain Reaction Podcast, all about supply chain advantage. Great that you could drop by today. Thanks for coming by and a great episode coming your way in just a few moments. The weekly news round and we've got all things impacting global supply chains this week. So stick around, stay tuned and find out more Chain Reaction Now. If you're looking forward to 2025, what does it hold in store for you? Well, drop by to the Chain Reaction podcast and pick up your first episode in January, which will be an economic outlook for the year ahead, and I'm sure you won't want to miss that one. So make sure you subscribe and you'll be notified when it comes out.

Tony Hines: 0:51

The Federal Reserve in the United States cut its bank rate to 4.25% from 4.5% this week. Fewer rate falls are expected in 2025. While in the United Kingdom this week interest rates hold at 4.75%, been an unexpected rise in inflation to 2.6% and that's caused the interest rates to be held at their current level. So it's likely to be the first quarter in a new year before interest rates are going to maybe fall again, but that might be doubtful too. Economic conditions at present look a bit uncertain and, of course, we've still got all those extra costs burdening business in the new year with the employment taxes through national insurance. So that's where the UK is right now.

Tony Hines: 1:52

Uk is right now when supply chain managers are looking to understand the various trends in what's happening in the maritime ports in the United States. They tend to look and see what the port indicators are and that helps them to understand how volumes are moving. It's a good stethoscope or weather barometer to test how things are. It's only a trend. Of course, it can change in an instant, as we know, when disruption hits, and from 2018 to 2020, it was difficult to spot those sorts of trends. To spot those sorts of trends and you'll remember, in 21 and 22, the volumes actually ramped up to more than 53 million TEUs, which caused congestion and delays at all the ports. In 2023, the volumes at the top 12 ports began to get back to some steady state of normalisation after that pandemic period, reaching 46.67 million TEUs. But keeping an eye on this data is important to understand exactly what's happening. The maritime gateways handled about 40% of international freight by value in 2022, according to the Department of Transport, and things have picked up substantially in 2024. Now if we look at the top three ports by cargo throughput in 2024, los Angeles 9.3 million TEUs, port of Long Beach 8.1 million, and New Jersey and New York 7. A half million teus. The port of houston 225 million metric tons, new orleans 100 million and the port of savannah 95 million metric tons. If we look at improvements of throughput in that period and we look at los angeles went up by five percent over 2023, long beach up by 4% compared to 2023, and New York and New Jersey up by 6% compared to 2023, so the 24 figures look much better. In upgrades that included new cranes and terminal expansion, long Beach invested a billion in similar upgrades and New York and New Jersey invested $800 million in infrastructure improvements. The environmental initiatives were also improved. Los Angeles reduced emissions by 20% through the adoption of cleaner technologies and alternative fuels. Long Beach achieved a 15% reduction in emissions and New York and New Jersey implemented a comprehensive sustainability plan that resulted in a 10% reduction in emissions. So these numbers are highlighting the significant improvements in cargo throughput, infrastructure investment and environmental initiatives at major US ports in 2024.

Tony Hines: 4:55

North American manufacturers are beginning to stockpile. They're holding materials to buffer against potential tariff hikes in the new year. They're expecting these tariff hikes to come into play after Trump's inauguration in January. The incoming president has promised to increase tariffs significantly. The stockpiling trend is reflected in the GEP Global Supply Chain Volatility Index, which tracks demand conditions, shortages, transport costs, inventories and backlogs.

Tony Hines: 5:27

Asian factories, particularly in China, have seen a sharp increase in the purchasing of inputs. The surge is the fastest in three and a half years and is driven by domestic stimulus measures and advanced buying ahead of possible tariffs. The increased procurement activity is a response to stronger orders and the need to ramp up production. In Europe, the industrial recession is worsening. It's a deepening recession, primarily due to Germany's manufacturing downtime. This contrasts to production in Asia, where it's ramping up. The worsening industrial recession in Europe is contributing to increased spare capacity among suppliers feeding into the region.

Tony Hines: 6:07

Fedex and UPS have hiked up their rates this week. They've announced additional surcharges and changes for 2025 affecting larger products. These increases are due to higher demand and changes at the postal service. Biden has also unveiled fresh China tariff hikes this week. New tariffs targeting critical solar energy inputs, including wafers, polysilicon and tungsten products, will begin on January 1, 2025.

Tony Hines: 6:43

It was announced this week that two Japanese car giants are considering some kind of strategic partnership, strategic alliance or even a possible merger. Nothing's been confirmed yet, but it's been widely reported that Honda and Nissan are looking at ways to share resources to become a stronger entity and compete more effectively in the EV market. It's an interesting strategy because it means that those two companies could combine resources and be much stronger together than perhaps they are individually. Individually. Amazon workers in the United States, represented by the International Brotherhood of Teamsters, have launched a strike at seven facilities across the US just days before Christmas. The strike is part of an effort to pressure Amazon to recognize the unions and negotiate better wages and working conditions. The strikes are due to happen in New York, atlanta, san Francisco, stokely, illinois and Southern California. Nearly 10,000 workers are participating through this, which represents only about 1% of Amazon's hourly workforce. The union is seeking higher wages, improved working conditions and recognition for the union.

Tony Hines: 8:01

Amazon's response. They've said that the strike is not expected to impact holiday deliveries and they've accused the unions of illegal coercion. The strike is significant and it's being called the largest strike against Amazon in the US history. The International Brotherhood of Teamsters is demanding higher wages for workers and delivery drivers, improved working conditions. They want better working conditions, including safer environments and more reasonable workloads and they're seeking formal recognition of the union from Amazon to allow them to negotiate on the workers' behalf. Amazon has increased the starting minimum wage for fulfillment center and transportation workers by 20% and raised the average base wage to $22 an hour. So these strikes are going to take place in New York, atlanta, san Francisco, stokely, illinois and Southern California multiple locations. Sean O'Brien is the Teamsters president and he says if your package is delayed during the holiday, you can blame Amazon's insatiable greed. He emphasized that Amazon had every chance to negotiate but chose not to A spokesperson for Amazon, kelly Nantell, said the Teamsters have continued to intentionally mislead the public, claiming that they represent thousands of Amazon employees and drivers. They don't and this is another attempt to push a false narrative. To push a false narrative Now.

Tony Hines: 9:31

You might recall I spoke about the port of Holyhead, which is in North Wales, on the island of Anglesey, in Esmone, and that particular port has been closed since December 7th due to damage caused by Storm Darragh. There are more high winds returning to the UK on the weekend before Christmas, when winds will be 50, 60 mph and more. The damage was significant, with part of the berth structure collapsing, making it unusable. The port was initially expected to reopen on the 20th of December, but further inspections have revealed that the damage was more extensive than they anticipated and, as a result, the port will now remain closed until at least January 15th, and it could be longer. While repairs are carried out, line and Irish Ferries have arranged alternative routes and additional sailings to minimise disruption. Stenner, for example, is offering sailings from Dublin to Birkenhead and Fishguard, while Irish Ferries has added extra capacity on the Pembroke-Rosler route. It's definitely a challenging situation, especially during this holiday season, so watch this space. This could go on for some time, I think, quite damaging and obviously could have longer reaching implications if it's not resolved as quickly as it should be.

Tony Hines: 11:01

Well, australia's mining sector continues to attract significant investment, with companies expanding their operations and exploring new resources. The growth is critical for global supply chains, as Australia is a major exporter of minerals like iron ore, coal and critical minerals those minerals needed for green energy and the transition with electric vehicles. Increasing production and export of these minerals support to the global industries, including steel manufacturing and renewable energy technologies. When it comes to tech industry expansion, australian tech industry is seeing increased investment and partnerships, particularly in fields like artificial intelligence and renewable energies. The expansion can lead to innovations that improve supply chain efficiency and sustainability, benefiting global trade by providing advanced technologies and solutions.

Tony Hines: 11:55

In New Zealand, agricultural exports, particularly dairy and meat, remain strong. The country's dairy sector has improved global dairy prices, contributing positively to its revenue outlook, and these exports are vital for global food supply chains, providing essential products to market around the world. The tourism industry recovery in New Zealand since the pandemic is also attracting international visitors and, of course, domestic travel, and that recovery can boost global supply chains by increasing demand for travel-related services and products, such as hospitality, transportation and the tourism infrastructure. Both Australia and New Zealand play a significant role in the global supply chain and trade through mining and agriculture respectively, and their contributions help to meet global demand for essential resources and agriculture, respectively. And their contributions help to meet global demand for essential resources and products, supporting economic growth and stability worldwide.

Tony Hines: 12:56

Ultratech Cement receives an approval to acquire India Cement. Ultratech has received approval from the Competition Commission of India to acquire a majority stake in India Cement, and this move is expected to expand Ultratech's footprint in the southern cement market, also in India. This story caught my eye. Amazon has ended password sharing for Prime members and that starts in January 2025. Amazon is limiting Prime members in India to just five devices per account, including a maximum of two televisions. This change aims to curb password sharing, which obviously loses Amazon money.

Tony Hines: 13:45

Well, we're just about a month away, or slightly less, from when the International Longshoremen's Association contract with the United States Maritime Alliance expires, and the question on everybody's lips Will there be a strike? President-elect Donald Trump voiced his support for the ILA and their stance against automation at the ports following a meeting with union leadership. This hasn't yet led to a new contract, with concerns over another strike growing after the expiration of the existing agreement on January, the 15th. Many think that a strike is on the cards and preparations need to be made now if that's going to be the case.

Tony Hines: 14:34

Trucking is always an interesting industry and there's plenty of scope to improve efficiencies and operational performance, and this week, DHL supply Supply Chain is testing out autonomous transport along two routes in Texas. It has a partnership with Volvo Autonomous Solutions. This was in a recent press release on December 11th, and the company is now beginning to move freight from Dallas to Houston-Fort Worth and on to El Paso using the Volvo VNL Autonomous trucks. These trucks have what's known as an Aurora driver self-driving system. Dhl Supply Chain is providing the service, and this Texas launch is designed to test out how resilient it might be or prove to be. It's aimed at increasing freight capacity and optimising supply chain efficiencies that we talked about, and it's part of the digital transformation happening in supply chains at the trucking level.

Tony Hines: 15:42

I think these stories always interest me and they seem to try them and in places where there are more open roads so that traffic is less congested. But I have to wonder whether autonomous vehicles like this are going to prove that they can operate in congested areas too, because if they're to be successful in the longer term, that's what's got to happen. I'm just wondering what the insurance is like on these vehicles and how expensive that might prove to be. It would only take a couple of accidents and the economies, I think, would change significantly. So we have plenty of risks to weigh up here and consider as we move towards these things, but it's good to see that they're being tried out and tested before they're implemented. More widely. I think you can obviously see use cases, in particular, long-distance travel, where there's open road and not a great deal of traffic on that road.

Tony Hines: 16:49

A subsidiary of Volkswagen, powerco SE, has linked up in a five-year battery deal for raw materials with Australia-based Novanix. Under the agreement, novanix will supply Powerco with at least 32,000 tonnes of synthetic graphite and that's the material needed for EV battery production, and that begins in 2027. All materials will be manufactured from Novenick's Riverside facility in Chattanooga, tennessee. Commercial production will start in 2025. In July 2024, australia became the first country to ban engineered stone.

Tony Hines: 17:37

Now this is the sort of stone that people get supplied in their houses, usually in a kitchen setting things like quartz and other types of engineered stone, like quartz and other types of engineered stone. And sometimes there's engineered stone that goes into patios and those sort of areas. But the cutting of this stone, especially in confined settings, can be very dangerous to those doing the cutting, and there've been lots of people who've contracted silicosis by working on this engineered stone. And it's become a real problem for businesses who supply that stone and for the workers who work with it. And a lot more needs to be done to keep people's safety and health at the forefront when dealing with dangerous materials like this.

Tony Hines: 18:26

Engineered stone is a popular material for countertops. It poses a significant health risk to workers due to the high silica content when it's cut ground or polished engineered stone releases fine silica dust into the air which can be inhaled and lead to silicosis, a serious and irreversible lung disease. This lung disease is caused by inhaling respirable crystalline silica particles, leading to inflammation and fibrosis in the lungs. It can be disabling and sometimes fatal. High silica content in engineered stone, with over 90% crystalline silica, making it more dangerous than natural stone. Workers exposed to silica dust can develop severe silicosis and it can take years to manifest. Symptoms include shortness of breath, cough and fatigue.

Tony Hines: 19:17

There's been a growing number of silicosis cases among stone fabrication workers, particularly in the United States, also in the United Kingdom and in Australia. Many affected workers are young Latino men in the US, often underinsured or undocumented, and in other parts of the world it could be migrant labour or it could be local labour, but usually people working on things like kitchen improvements or home improvements and that sort of thing. The Occupational Safe and Healthy Administration regulations in the United States require employees to limit worker exposure to silica and perform periodic medical surveillance. Masks are essential, but they can't protect you from everything. Awareness and surveillance has increased and efforts are needed to improve disease surveillance to reduce exposure, better diagnostic practices and awareness among clinicians is needed. There have been nearly 200 legal cases in California since 2019, and at least 13 deaths have been reported. In the United Kingdom, there have been at least 18 cases linked to engineered stone in the last year. It's likely that more of these cases are going to come through the courts, and there are going to be hefty fines, I think, for organisations that exposed their workforce to silica dust. So those quartz kitchens well, you might just have to change the material, not if you've already got one, but if you're thinking of putting some kitchen improvements in place. Of course, anybody supplying engineered stone in this way will also need to be cautious and make sure that the workers are protected appropriately and to avoid any litigation.

Tony Hines: 21:14

Now, as we're approaching Christmas, we've still got a couple of chain reaction programs that will head your way before New Year, and then in the New Year, we've got the Economic Roundup, which you need to stop by and check out because you want to know what's going to happen in 2025. We all do so. I'll see you then. In the meantime, have a great Christmas if you don't drop by before, but there is a special Christmas episode coming along too, so look out for that one. It's a reflection on the year we've had. So there we are. I'm Tony H ines, I'm signing off and I'll see you next time in the chain reaction podcast and, of course, I look forward to welcoming you back in the new year. Bye for now, thank you.