The 2024 Presidential Elections and Supply Chains

Supply chain Tag Archive

The 2024 Presidential Elections and Supply Chains

19 March, 2024• Economy, Logistics

As the 2024 presidential election approaches, businesses are bracing themselves for potential disruptions to supply chains. With global disruptions already putting stress on U.S. supply chains in the first two months of the year, the looming election adds another layer of uncertainty to the economic landscape.

Predicting the specific impacts of an election on supply chains is challenging due to the complex interplay of various factors. However, historical data can provide insights into potential trends. For example, the election of Donald Trump in 2016 led to increased uncertainty in trade policies, causing businesses to delay investments and stock up on inventory temporarily. Similarly, the trade war between the U.S. and China during the Trump administration contributed to disruptions.

Trade policy is one area where presidential candidates typically have distinct stances, including on trade agreements, tariffs, and foreign relations. Changes in these policies can significantly affect the cost and flow of goods imported and exported from the U.S. Additionally, infrastructure upgrades, regulations, and labor laws can impact transportation efficiency, production costs, and overall supply chain efficiency.

Furthermore, election outcomes can influence consumer confidence and spending patterns, affecting demand for goods and potentially causing temporary disruptions in specific sectors. Immigration policies may exacerbate existing labor shortages, particularly in warehouses.

While the exact nature and extent of the impact of the 2024 election on supply chains remain uncertain, businesses should stay informed about candidates’ platforms and potential policy changes. Additionally, considering other factors influencing the supply chain landscape and utilizing risk management solutions, digital twins, and simulation tools can help businesses better prepare for potential outcomes and mitigate risks. Ultimately, businesses must remain agile and adaptable in navigating the evolving economic and political environment.

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China’s Export Boom to the US Despite Economic Challenges

21 February, 2024• Economy, Logistics

In an interesting turn of events, the trade landscape between China and the United States presents a paradox: while China grapples with a series of economic challenges, including dwindling consumer confidence and a turbulent stock market, the volume of ocean container freight flowing from China to the US is surging, reaching its highest levels since May 2022.

The surge in shipments can partly be attributed to the customary pre-Chinese New Year rush, during which factories in China expedite the movement of goods to ports before the holiday hiatus. However, this year’s peak transcends the typical patterns seen in previous years, with container volumes steadily mounting despite the backdrop of economic uncertainty in China.

China’s manufacturing sector, as reflected in the Purchasing Managers’ Index, has contracted for the fourth consecutive month, signaling a downturn in industrial activity. Compounding these woes, the liquidation proceedings of Evergrande, one of China’s largest property developers, loom large, with significant debts overshadowing its assets. Moreover, Chinese stocks have witnessed a downward spiral, with major indices experiencing substantial declines over the past year.

Against this backdrop, the question arises: Why is the port of Shanghai, among others, witnessing an unprecedented surge in shipping volumes despite China’s sluggish GDP growth, which hit a 21st-century low of 5.3% in 2023?

It appears that rather than being driven by a resurgence in China’s manufacturing prowess, the surge in shipping volumes is propelled by the robust demand from US importers. Inventory levels in the US have depleted significantly, with inventory-to-sales ratios falling below pre-pandemic levels. Simultaneously, retail sales in the US have exceeded expectations, indicating strong consumer demand.

The months ahead are poised to be favorable for US ports, particularly those on the West Coast. Low inventory levels coupled with robust economic growth necessitate the swift movement of goods, tightening transportation capacity and leading to increased freight rates.

However, global supply chains face additional challenges stemming from geopolitical tensions. Attacks in the Red Sea have disrupted international shipping routes, compelling vessels to circumvent the Suez Canal, thus prolonging transit times and reducing available container ship capacity. These disruptions, coinciding with heightened shipping volumes from China, have propelled spot rates on the trans-Pacific route to record highs.

Commenting on the impact of these disruptions, Dave Bozeman, CEO of C.H. Robinson, highlighted the strain on global supply chains and the resultant escalation in container rates. With the Red Sea crisis showing no signs of abating, the strain on capacity and elevated spot rates are expected to persist, at least in the near term.

Data from the Port of Los Angeles further corroborates the surge in container volumes, with TEU volumes in Week 6 registering a substantial increase compared to the previous year.

So, while China grapples with economic headwinds, its role as a key driver of global trade remains unyielding. The surge in container shipments to the US underscores the resilience of trade dynamics amid challenging times, albeit with complexities and disruptions that necessitate agile responses from stakeholders across the supply chain.

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How Imports from Mexico Are Winning Super Bowl Sunday

14 February, 2024• Economy, Logistics

With the buzz from Sunday’s Super Bowl LVIII lingering, we want to take a moment to shed some light on the real stars of game day (No, not the four-time Super Bowl Champions, the Kansas City Chiefs), the food. More specifically, avocados and beer from Mexico. While millions of viewers across the nation sat down for the showdown between Kansas City and San Francisco, the journey of these beloved party staples from Mexican farms to American living rooms is a story worth celebrating.

The Super Bowl isn’t just a game; it’s a cultural phenomenon with an entire food culture standing beside it. According to the National Retail Federation, Americans are projected to spend a staggering $17.3 billion on Super Bowl-related expenses this year alone, a testament to the magnitude of this event. Behind the scenes, a complex supply chain ensures everything from chicken wings to avocados arrives on time and in abundance.

Avocado consumption, particularly for guacamole, skyrockets during Super Bowl Sunday, with estimates suggesting that the game accounts for approximately 20% of annual avocado sales in the United States. Mexico, the world’s largest avocado producer, plays a pivotal role in meeting this demand, supplying 81% of avocados consumed in the U.S. In the weeks leading up to the big game, over 6,000 truckloads of avocados make their way across the border, with Texas ports of entry in Laredo and Pharr serving as crucial gateways.

Similarly, Mexican beer has become a fan favorite for Super Bowl celebrations. With annual exports totaling around $5 billion, brands like Modelo Especial and Corona have become synonymous with game day. Modelo Especial, in particular, made headlines in mid-2023 when it surpassed Bud Light as the top-selling beer in the U.S. market. From the bustling port of Eagle Pass, Texas, millions of cases of Mexican beer make their way to eager consumers, solidifying their status as must-have beverages for Super Bowl Sunday.

According to Instacart’s “Snacktime Report: The Big Game Cravings,” Modelo Especial and Corona Extra rank among the top 10 most popular beers on game day, underscoring their enduring appeal among football fans nationwide. 
From the avocado farms of Michoacán to the breweries of Mexico City, these imports from south of the border add an extra layer of flavor and festivity to America’s biggest sporting event. So, when you sit down and cheer on your favorite team, take a moment to appreciate the journey of your snacks and raise a glass to the flavors of Mexico that every year make Super Bowl Sunday a fiesta to remember.

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How digitalization will impact aerospace

16 January, 2024• Nearshoring

In a joint initiative, the Mexican Federation of the Aerospace Industry (FEMIA) and 3D CAD, a leading software developer, are shining a spotlight on the critical necessity of digitizing processes within the aeronautical sector. The call for this digital evolution is not just a mere recommendation; it is a strategic imperative for companies looking to streamline operations and harness the potential of nearshoring to drive unprecedented growth.

During the insightful webinar, “Document Management for the Aerospace Industry,” organized by FEMIA, industry leaders underscored the invaluable lessons learned from the challenges posed by the COVID-19 pandemic. The consensus is clear: companies, irrespective of size, must embrace technological advancements to not only meet current standards but also to propel themselves forward in the dynamic landscape of the aeronautical sector.

Angel Diaz, Senior Industrial Processes Consultant for North America at 3D CAD, emphasized that the size of a company is no longer the sole determining factor of its success. Instead, it’s the adoption and effective utilization of cutting-edge software and technologies that will define a company’s ability to meet the ever-evolving demands of the sector.

FEMIA highlighted the current rebound in investment and production volumes within the aerospace industry. As the supply chain gears up for increased demand, there arises a unique opportunity for local and foreign companies to play a pivotal role in providing components, subassemblies, and services.

The specialist stressed the importance of optimizing collaborations, ensuring regulatory compliance, and establishing traceability of essential documents. These measures, he noted, are instrumental in expediting procedures and formalities, enabling companies to navigate the resurgence of the aerospace sector effectively.

According to data from the Ministry of Economy (SE), Foreign Direct Investment (FDI) in the aerospace sector reached $38.6 million during the second quarter of 2023. Year-to-date figures for Foreign Direct Investment in Aerospace Equipment Manufacturing totaled $156 million, with a significant portion attributed to reinvestment of profits.

This clarion call for digital transformation resonates as a guiding principle for aeronautical entities aiming not just to survive but to thrive in the post-pandemic era. As we witness the resurgence of the aerospace industry, companies must seize the opportunity to embrace digital innovation, fortifying their position in a rapidly evolving and globally competitive landscape.

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