From Ports to Cars Shaping Tomorrow's Economy

Unlock the secrets behind global supply chain dynamics and explore the critical events shaping our world today. Did you know that the reopening of Holyhead, the UK's second busiest passenger port, holds the key to revitalizing regional economies after the chaos of Storm Darragh? We'll take you through the aftermath and preventive strategies being rolled out to safeguard against similar disruptions. In a bold move, the UK has inked a £600 million trade pact with China, and Amazon is making waves with its foray into Cape Town through a walk-in store. Meanwhile, the brewing tensions in the semiconductor war between China and the US intensify as China probes US subsidies. 

Shifting gears to the electric vehicle landscape, join us as we navigate through the economic currents of the US, UK, EU, China, and Asia in 2024. Uncover how robust GDP growth and consumer spending are driving the American economy, while China experiences mixed outcomes with industrial growth lagging behind robust consumption. The electric vehicle market is booming, with China and the US leading the charge in EV sales. But what about the implications of heavier electric vehicles on road safety? Get insights from The Economist and understand how these factors are redefining automotive trends and economic landscapes. Stay informed and ahead with these insights that promise to keep you at the forefront of global developments.

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Chapters

• 0:01 Global Supply Chain News Roundup
• 14:46 Global Electric Vehicle Market Analysis
• 32:22 Podcast Subscription Benefits

Transcript

Tony Hines: 0:01

Hello, Tony Hines, here You're listening to the Chain Reaction Podcast, all about supply chain advantage. Thanks for stopping by today. Great episode coming your way in a few moments. So stick around, stay tuned, stay informed. Well, this is the News Roundup All things impacting global supply chains this week. We have a special report in this episode on the EV market, looking at sales in comparison to combustion engine cars, and we also talk about something that isn't very often spoken, which is the weight, the additional weight, of those EVs and the implications of that weight on infrastructure and on injuries and accidents. So that's coming up later. First of all, we have a summary of all the news impacting global supply chains this week.

Tony Hines: 1:01

The UK's second busiest passenger port is returning to its full number of services, and that's a month after being completely shut after the damage from Storm Darragh and I've been reporting this story on the Chain Reaction Podcast since it emerged. So it's been closed now for weeks. The damage was caused on the 7th of December and the port links Holyhead with Dublin and there's a lot of freight traffic that also goes on that route. It was originally, of course, the Royal Mail route. It was the packet steamers that used to operate that route at one time. It affects thousands of travellers, parcel deliveries and, of course, some heavy goods traffic. In fact, quite a lot of heavy goods traffic travel on that ferry, carrying goods to and from Ireland. The berth reopened on Thursday, the 16th of January, and Stenner Line operate from that port, as do Irish ferries.

Tony Hines: 1:59

Traders in the port of Holyhead have said they've seen a huge drop in footfall and earnings since the closure of the port, which sees 2 million passengers a year and 1,200 lorries and trailers crossing every day. The question for many now is how can they stop this from happening again? How can they stop the damage? What can they do better? Lots of the hotels in the area have, of course, suffered a big loss of income over the Christmas period. The economic impact on Holyhead and the surrounding area and, of course, many of the firms that operated through of Holyhead with the trucks going to and from Ireland, have been badly impacted by this closure, and many think it's been a bit slow to get the port reopened. The good news, though, is that the port is open for business.

Tony Hines: 2:56

The British government announced this week that it had a new trade deal with China. It's worth £600 million over a five-year period, so that's £120 million each year in the five-year period. This follows the UK Chancellor's visit to China to set up that deal. Amazon have opened a walk-in store in Cape Town, South Africa, this week. This is to take market share from other businesses, one of which is called Takealot, and apparently about 60% of everything stocked in these walk-in stores that's, the Amazon walk-in stores is supplied by small to medium-sized enterprises to medium-sized enterprises.

Tony Hines: 3:49

China is about to launch an investigation into the US government subsidies given to the semiconductor industry over alleged business harm caused to Chinese mature node chip makers. That's what the Chinese Commerce Ministry said this week. Mature node chips are cheaper than the cutting-edge chips that power AI and they're easier to manufacture. They're used for less complex tasks such as home appliances, washing machines, dishwashers, that sort of thing. This is all part of the ongoing spat between China and the United States with regard to the future of chips. You might remember that the Biden administration introduced something called the Chips Act back in 2022, when they gave the industry in the United States quite a flip by putting aside over US$52 billion to invest in the sector. The Biden administration introduced the Chips and Science Act in 2022 and they pledged US$52.7 billion in subsidies for US semiconductor production, research and workforce development. The Chinese say this is disrupting their own economy and the accusation, of course, is that it's not very market-friendly. At the same time, tariffs were placed on Chinese chip imports, so it was an encouragement to American manufacturers to actually develop the industry further and make sure that they could supply everything within the boundaries of the United States. I'm sure this will continue under the new administration which comes into force and into power next week with Trump's inauguration as the new president his second term in office term in office.

Tony Hines: 5:52

The UK government's budget for growth has faced significant criticism from various causes, and here are the key points. Critics argue that the budget has failed to stimulate significant economic growth. Despite some positive indicators, the overall economic performance has been underwhelming, with growth figures falling short of expectations. The budget includes substantial tax hikes, particularly a £25 billion increase in national insurance for employers. This move has been criticised for potentially stifling business growth and leading to higher prices for consumers. As those taxes impact the costs of business, They'll feed through into higher prices in retail stores and, of course, in business supplies.

Tony Hines: 6:34

The budget reliance on increased public borrowing has raised concerns. Government borrowing costs have surged and there are fears that it could lead to long-term financial instability. There are some worries that the budget could contribute to stagflation a combination of stagnant economic growth and persistent inflation, and that would be particularly damaging to the economy. Politically, the budget has faced backlash from opposition parties and even from some within the ruling party. The critics say that the budget lacks a clear strategy for sustainable growth and economic stability, and some of the decisions that have been taken have been criticised by the CBI, the British Chamber of Commerce, in their surveys from members and employer groups, who've all said that they'll not be hiring as many people after April because of the changes to the national insurance. The Chancellor, of course, is resilient in her approach and has battered away many of the criticisms, saying that she did have a budget for growth and some hard choices had to be made. And the International Monetary Fund this week has said that the UK will achieve growth better than in its previous forecast, when it said UK growth would be 1.5% in 2025. Since the budget, it's come out and said it will be 1.6%, so a modest increase, and they've also said it will be faster growth than in the European Union. The IMF was also critical of the US government's proposed tariff increases and said that would actually impact the US economy negatively.

Tony Hines: 8:27

What a difference a week makes. Borrowing costs for the UK government have plunged this week as there's a small fall in inflation and in core inflation in the United States and this has put hope in lenders that the rate will fall for interest on borrowing. The rate of interest for UK government debt has dropped below 4.8%. Last week it rose to the highest level in 16 years. Inflation has cooled, but it's only slight, from 2.6% in November to 2.5% in December, and it's eased the pressure on the Chancellor of the Exchequer, Rachel Reeves, whose budget policies have been heavily criticised for contributing to market turmoil. Only last week, the 10-year gilt market in the United Kingdom for bonds issued by government had been approaching 4.9% and there was much unease around in the investment community. But this week, surprise, surprise, government data showed inflation dropping for the first time in three months and that's calmed the market slightly. But it's only very small, isn't it? These amounts are very, very tiny and it doesn't take account of what's coming down the track, and down the track are coming the wage cost increases and the employers national insurance hike and, of course, in a very difficult market and as those come in to impact the economy, then no doubt we could be back where we were last week, or even worse. So it's a bit of respite.

Tony Hines: 10:08

Personally, I think it's too early to think about rate cuts at the moment. But hey presto, it depends how powerful the argument is made by government to lower interest rates. They certainly want to do that. They want to do it for their own reasons and they want to do it, of course, to reduce the borrowing cost in the economy, but that in itself could be inflationary. They've got to be very careful.

Tony Hines: 10:32

In the United States, the monthly report on the Labour Department showed that overall inflation rose to 2.9% in December, and that's up from 2.7% earlier. But it's the core inflation that people focus on, and that's food and energy cost, and those indicators are the ones really to watch. And that measure unexpectedly moved from 3.3 to 3.2%, raising hopes that the US central bank would cut their interest rates too in the months ahead. Share prices, of course, bumped up as the yields in the US fell. Germany was also among the countries, along with the UK, where yields on government debt fell. But the pound is still languishing. It's still at 1.22 against the dollar, and that's the lowest it's been for some time, for an extended period. More recently it's been seeing 125, 126, 127. So this is only a slight fall. So commentators are talking about a cut in the next couple of months and a later cut later in the year, but it's far too early to say.

Tony Hines: 11:41

I think what's also quite interesting is they put out growth figures the Office for National Statistics this week which shows growth in the UK up by 0.1% last month. Now in the previous two months growth had fallen slightly and if that had been a third month in a row we'd have been officially in recession. And you do wonder if somebody manipulates the figures, don't you behind the scenes just to make that not happen? Of course, those figures on inflation don't reflect the reality in the stores as you buy food and they don't reflect the reality of other costs pushing up and energy costs are still a big problem for individuals and businesses alike. So I think we're still in turbulent times Rents and bills, household costs still rising. I think what it currently shows is that the UK economy is flat-lying. It's basically hovering around 0% in terms of growth and it's likely when the new tax measures come in in April, then it will go below that line, so there won't be growth. It'll be quite the opposite no growth, but how negative will it go, and that depends on how people respond and what the sentiment is like in the economy. The problem, of course, for all governments is they might be making the right decisions in terms of investment, but investments take time to come to roost, and time is something in politics that governments don't have thinking in politics that governments don't have.

Tony Hines: 13:17

The economic landscape has seen significant shifts since July 2024, with varying performances across the UK, EU and the United States. Let's take a quick look at what's been happening in those few months. The UK economy has experienced modest growth since July. According to the Office for National Statistics, the UK's GDP grew by 0.1% in the third quarter of 2024, following a 0.5% growth in the second quarter. However, the economy faced a slight contraction in October 2024, with GDP falling by 0.1%. The service sector showed minimal growth, while the construction sector saw a more substantial increase. Despite the challenges, the UK economy has managed to return to growth in November 2024, but at a very slow pace 0.1%. So it's hovering around that flat line I talked about. The EU, by contrast, has shown more robust recovery compared to the UK. European Central Bank reported a GDP growth of 0.4% in the third quarter of 2024. This growth was driven by increased consumption and business investment. The EU's inflation rate has also been on a downward trend, with headline inflation projected to average 2.4% in 2024. The ECB's recent interest rate cuts have contributed to easing financing conditions, supporting further economic recovery.

Tony Hines: 14:46

The United States economy has outperformed both the UK and the EU in terms of GDP growth. The Bureau of Economic Analysis, the BEA, reported a GDP growth rate of 3.1% in the third quarter of 2024, up from 3% in the second quarter. This growth was primarily driven by increases in consumer spending, export, business investment and federal government spending. The US also saw a rise in personal income and disposable personal income, indicating a positive economic outlook. So, in summary, while the UK economy has shown signs of recovery, its growth has been relatively modest compared to the EU and the United States. The EU's economy has benefited from increased consumption and business investment, while the US has experienced robust GDP growth driven by a strong consumer spending and government expenditure.

Tony Hines: 15:39

Let's compare this to China and Asia. China's economy has shown a mixed performance. While there's been a surge in consumption and trade, industrial growth has been sluggish. The National Bureau of Statistics reported that China's GDP grew by 5.3% in the first quarter of 2024, surpassing market expectations. However, the economy has been operating at two speeds. Manufacturing and exports have performed well, while consumption and the property market have remained stagnant. The Chinese government has introduced new policy measures to support the property market have remained stagnant. The Chinese government has introduced new policy measures to support the property market, including providing loans to fund state purchases of unsold homes.

Tony Hines: 16:17

The Asian Development Bank reported that growth in developing Asia accelerated in the first quarter of 2024, driven by resilient domestic demand and strong export growth, particularly in electronics. The region's growth forecast for 2024 was slightly increased to 5% resilient domestic demand and strong export growth, particularly in electronics. The region's growth forecast for 2024 was slightly increased to 5%, with the 2025 projection maintained at 4.9%. Inflation in developing Asia is expected to ease further, from 3.3% last year to 2.9% this year. Southeast Asia has shown mixed growth, with Vietnam and Singapore experiencing strong GDP growth, while Indonesia and Malaysia saw slower growth. The region's growth outlook remains positive, supported by strong exports, higher investments and stable consumption.

Tony Hines: 17:19

Us vehicle sales of EVs in 2024 reached 3.2 million. According to Motor Intelligence, the auto data firm. This included 1.9 million hybrid vehicles, including plug-in models and 1.3 million all-electric models. So the all-electrics are still behind the hybrids. The hybrids are more popular. Tesla continues to dominate that pure EV market, but I wonder if that'll hold in 2025, if BYD are allowed to be more competitive in the United States? Of course they won't be, will they?

Tony Hines: 17:53

Electric vehicle sales in 2024 marked another milestone for electric vehicles worldwide, with significant growth in various regions. Here's a detailed look at the EV sales data from the US and Canada, the United Kingdom and the European Union. In 2024, the US and Canada combined saw 1.8 million EVs sold, reflecting a 9% growth year-on-year. According to Motor Intelligence, Over 3.2 million electrified vehicles were sold in the US, including 1.9 million hybrid vehicles, including plug-in models, and 1.3 million all-electric models. Cox Automotive report 1.3 million pure EVs sold, with Tesla market share dropping to about 49%. Evs accounted for 10.5% of total vehicle sales in the US and Canada, and that's about 1.8 million vehicles. As we said, In the United Kingdom, 20% increase in EV sales totaled 400,000 units in 2024.

Tony Hines: 18:59

The growth in the UK market highlights the increasing adoption of EVs among consumers, driven by government incentives and a growing charging infrastructure. Evs made up 19.6% of the total vehicle sales in the UK. In the European Union and EFTA, the European Free Trade Association, there were 3 million EVs sold in 2024. Although this represented a 3% decline compared to 2023, despite the decline, the EU remains a significant market for EVs, with several countries leading the way in EV adoption. Evs accounted for 15% of total sales in the EU and that's about 3 million units, as we said, 15% market share. So the key takeaways from this comparison between the US, Canada, UK and EU is that the US and Canada combined sales of 1.8 million EVs, with a notable increase in both hybrid and pure EVs. Evs made up 10.5% of total vehicle sales. In the UK, 400,000 EVs sold 20% increase in sales, with EVs accounting for 19.6% of the total vehicle sales. And in the EU, 3 million EVs sold, despite a slight decline compared to the previous year, 2023. They still made up 15% of total vehicle sales. If we look at the global outlook, EV sales surged by 25%, with 17.1 million units sold in 2024. China led the way with 11 million units, a 40% increase from the previous year. Evs accounted for 10% of total vehicle sales worldwide.

Tony Hines: 20:45

The data from the different sources highlights the importance of understanding the context and definitions used in reporting EV sales and there may be some slight discrepancies in the different data sources. By considering both hybrid and pure EVs, we get a comprehensive view of the market growth and trends. So the trend is upwards, but it's still generally a low number in terms of market share. As the world races towards EVs and it starts to push away fossil fuel vehicles, you may have noticed that cars have become much heavier. They're about 40-50% heavier than the previous non-EV vehicles they've replaced, and this has implications for road traffic accidents. While these heavier vehicles protect the people in the heavier vehicle itself, they actually put at risk the people who those vehicles may possibly crash into in other lighter vehicles or directly. Earlier in the year, I saw some statistics in the Economist, which did a study using data from 7.5 million crashers in 14 American states between 2013 and 2023. And for every 10,000 crashers, the heaviest pickups and SUVs kill 37 people in the other car, and that's compared with about 5.7 in other types of vehicle. Of course, passengers who have bought those heavier vehicles or ride in those heavier vehicles are quite pleased about the protection they have, but of course, everyone else may not be.

Tony Hines: 22:33

Now let's take a deeper dive into the weight of progress and the implications of electric vehicles for other matters, such as infrastructure. An electric vehicle increasingly becomes a staple on our roads, and the weightier nature compared to traditional fossil fuel cars brings forth a new set of considerations and challenges for our infrastructure. Let's have a look at this additional weight impacting roads, driveways, garages and even road safety. Heavier vehicles. Electric vehicles generally weigh around 200 to 300 kilograms more than their gasoline counterparts, with some models being up to 40 to 50 percent heavier. For example, the Audi e-tron weighs significantly more than a similar-sized gasoline-powered Audi Q5.

Tony Hines: 23:20

Heavier vehicles naturally exert more force on road surfaces, leading to accelerated wear and tear. This necessitates increased road maintenance and repairs, which translates to higher cost for road transport authorities. The additional weight can also impact bridges, requiring them to undergo assessments and potential reinforcements to ensure safety. Engineers perform load rating assessments, regular inspections and field measurements to evaluate and maintain structural integrity. What about domestic driveways? Well, older driveways and garages may not be equipped to handle the extra weight of EVs, leading to structural issues like cracks or, in severe cases, collapses. Ensuring the structural soundness of these areas might involve assessments and reinforcements, such as adding support beams or upgrading the materials used on those driveways and in garages.

Tony Hines: 24:18

And we've already talked about the road traffic accidents? The increased weight of EVs can have several implications for road traffic accidents. Accident severity Heavier vehicles can lead to more severe accidents injuries, especially when colliding with lighter vehicles. The braking efficiency the additional weight necessitates longer stopping distances, which can be a factor in accidents. Then there's tyre wear Heavier vehicles stress tyres more, leading to increased wear and potentially reduced traction.

Tony Hines: 24:50

What about driver behaviour? Ev drivers may exhibit different behaviors, potentially affecting accident rates. We don't know enough about that yet, but this is what people are saying. Pedestrian and cyclist safety it increases the mass if it strikes a bicycle and that's a higher risk to vulnerable road users such as pedestrians and cyclists. And then there's the insurance and repair costs Heavier EVs can lead to higher repair costs and insurance claims due to more complex components.

Tony Hines: 25:23

To address the challenges, road transport authorities must strategically plan infrastructure upgrades, enforce new policies and regulations and collaborate with other agencies. Aids enforce new policies and regulations and collaborate with other agencies. The holistic approach ensures the transition to EVs is smooth and beneficial, while mitigating the associated risks. But there's one thing that's certain isn't there, and that is it's going to cost to have EVs on the road, and this hasn't really been talked about. We've talked about all the benefits of reducing CO2, and those are indisputable. There's no question that that will bring large benefits to many, but the cost of the road networks, the support on bridges particularly older bridges, where they'll need to be carefully assessed for the weight and, of course, driveways and domestic places where we park the vehicle Heavier vehicles.

Tony Hines: 26:17

According to the Department of Transportation in the United States, a 2,000 pound increase in the axle weight can cause 50% more damage to pavement, and that means that as more EVs hit the roads, there could be an increased need for road maintenance and repairs. On domestic driveways, for instance, many multi-storey parking garages in the UK built in the 1960s and 70s are at risk due to their age and lack of maintenance. So does that mean there's an accident waiting to happen? There's also some evidence to suggest that EV drivers might be more prone to at-fault accidents, possibly because of unfamiliarity with the vehicle's handling and braking characteristics. With regard to the insurance and repair costs, the more complex and expensive components, such as the battery packs, may need to be repaired or replaced.

Tony Hines: 27:08

Now there have been accidents and reports and studies that highlight the impact of weight in electric vehicles on the accident's severity. For instance, the Insurance Institute for Highway Safety has conducted tests showing that the heavier weight of EVs can lead to more severe outcomes in collisions, especially when they're involved in accidents with lighter vehicles. The additional weight can result in greater force on the occupants of the lighter vehicle and that increases the risk and severity of injury. Additionally, AXA accident researchers, AXA from Switzerland found that EVs cause around 50% more collisions with self-inflicted damage on the road compared to conventional cars. The powerful lithium-ion batteries in EVs contribute to this increased weight and can influence driver behavior, leading to unintended and jerky acceleration. These findings underscore the points that we've made and the importance of considering the weight of EVs in road safety assessments and accident prevention measures.

Tony Hines: 28:15

I was also interested to take a look, while I was looking at the extra weight of EVs, about the fire risks involved, and EVs do present some unique fire risks, primarily due to the lithium-ion batteries. I'm guessing as battery technology improves and those lithium-ion batteries change, they'll become safer. But the current state of play seems to be that EV fires are relatively rare. But then again, there's only a small number of EVs compared to internal combustion engine vehicles on the road. For example, in the UK there were 239 EV-related fires from July 22 to June 23, and that's an increase of 83% year-on-year, but it's still a small fraction of total vehicle fires. According to a study carried out in Sweden, EVs are 20 times less likely to catch fire than an internal combustion engine.

Tony Hines: 29:15

Thermal runaway is a common cause of EV fires. This happens within the battery and it can be triggered by factors like overcharging, overheating or physical damage, and you do hear of these sorts of fires occasionally happening, usually in domestic settings. About 18-30% of EV fires occur while the vehicle is plugged in and charging. Now you might walk past somebody's house where they've got an EV and you often see that cars or vehicles are left unattended and they're plugged in to a wall socket and they're charging up. And when it goes wrong, of course that has the potential to injure people not simply walking past, but also people living in the house. So people still need to be quite watchful of the process of charging and there is difficulty in extinguishing EV fires. They can be very challenging to put out and they might reignite hours, days or even weeks later. According to the evidence that's been gathered and you do hear of that too occasionally Fire services and emergency services of course have to be developing new strategies to handle EV fires and they need to be trained in how to deal with those fires, especially when they're unpredictable.

Tony Hines: 30:32

They're quite volatile. Some of the batteries the lithium batteries and if they do explode, ignite, go on fire. Then it's how to handle them safely, without injury and to recover the vehicle. Public awareness and education needs to be increased so that people understand the risks of EVs. While the risks of EV fires exist, it's important to note that they are relatively rare and can be managed with proper precautions and training, and it's likely that internal combustion engines can have some similar problems. But of course, it's the battery element that's the big one here. So overall, just to recap, the weight of evs does seem to be some cause for concern, and it will actually push up costs for road transport authorities as they have to repair roads and bridges and carry out assessments perhaps more frequently than they used to.

Tony Hines: 31:40

And again, people need to be watchful when it comes to the risk of battery fires from EVs. And we won't know for a few years, I don't suppose, until more EVs are on our roads whether these risks are something we have to fiercely address or that's something that perhaps could be overstated at the current time. So it's about keeping balance. So don't be unduly alarmed. Just simply watch the facts and, of course, we're not always told all of the facts, so you have to be vigilant, Ask the right questions.

Tony Hines: 32:22

Well, that's it for this week. I hope you've enjoyed the episode and I hope you've learned something that you didn't know before you began listening. If you don't already subscribe to the Chain Reaction Podcast, you should do. And why do I say that? Well, you'll be first to know when new episodes arrive and you'll be sent a mail that will tell you a new episode is out, and you can be one of the first to hear the new episode. I'm Tony Hines, I'm signing off and I'll see you next time in the Chain Reaction Podcast. In the meantime, stay safe, have a good week. Bye for now.