Keep your business up to speed with the latest news.
The US replaces China as India’s main trading partner
The US has replaced China as India’s biggest trading partner in 2022-23, The Hindu reported.
According to India Commerce Ministry figures, the bilateral trade between India and the US increased by 7.65% to $128.55 billion in 2022-23. This compares to $119.5 billion in 2021-22 and $80.51 billion in 2020-21. Exports to the US rose by 2.81% to $78.31 billion in 2022-23. Imports grew by about 16% to $50.24 billion – meaning the US was one of the few countries with which India maintains a trade surplus.
However, India also represents an increasingly valuable opportunity for US exporters. It is the world’s third-largest consumer market and the fastest-growing economy. India also recently overtook China as the world’s most populous country.
SMBs from the US interested in trading with India should note that aside from commodities, key exports included unpolished precious stones such as diamonds; textile and apparel; machinery, nuclear reactors, and boilers; electrical and electronic equipment; optical, photo, technical, and medical apparatus; miscellaneous chemical products, among others.
The trend represents New Delhi’s growing appetite for trade with Western countries. This sits somewhat uneasily with its traditional protectionist instincts – with high tariffs aimed at protecting domestic manufacturers.
Commerce Minister Piyush Goyal has expressed a desire for a trade deal with the US. But there is insufficient political appetite for such a deal in Washington at present. However, India is negotiating free trade deals with Canada, the UK, and the UAE.
Federation of Indian Export Organizations (FIEO) President A. Sakthivel said: “The trend of increasing trade with the US will continue in the coming months also.”
Chinese firms join reshoring exodus
The trend to restore manufacturing from China to alternative Asian destinations has been reinforced by shifts in production from an unexpected partner – China itself.
According to the South China Morning Post, Chinese companies have partially joined the trend to relocate manufacturing facilities to countries like India, Indonesia, and Malaysia.
Chinese companies, which form a key part of Western manufacturing supply chains, are reportedly under pressure from customers to diversify production to mitigate risk or lose business. Chinese companies were some of the main victims of Beijing’s hardline anti-Covid stance. Until that stance was relaxed in December last year, many factories were forced to close their doors temporarily as part of local lockdowns.
Many Chinese shippers found it hard to access ports which saw operations hampered by harsh restrictions on truck drivers entering terminals. Other factors pushing Chinese manufacturers to diversify production include rising trade tensions with the US and increasing costs of wages in China.
According to the publication, Southeast Asian countries such as India and Bangladesh have proved among the most popular alternative manufacturing destinations for Chinese companies.
Bangladesh, already one of the world’s most important apparel manufacturing centers, has attracted $770 million worth of FDI from China. With typical average monthly salaries in Bangladesh amounting to around one-fifth of Chinese factory workers’ wages, the country is becoming increasingly popular for Chinese firms relocating manufacturing.
Thailand has also become an increasingly important auto parts and electronics manufacturing hub. Multinationals such as Sony and Sharp are already producing goods in Thailand. They have been joined by Chinese solar panel manufacturers and companies producing car parts.
A supplier of electric vehicle charging components told Bloomberg a European customer had forced him to set up a factory outside China.
“It looks like I have no choice. Move out, or lose the business,” the respondent said.
Shippers’ headaches ease as West Coast labor talks show progress
One of the most significant supply chain headaches for US shippers over the last year is easing as more positive news finally begins to emerge from West Coast port worker contract talks.
The International Longshore and Warehouse Union (ILWU) said it had reached a “tentative agreement” on “certain key issues” with the Pacific Maritime Association, which represents employers, The Loadstar reported.
After launching last May, talks on new contracts for dockworkers on the West Coast had been edging towards a stalemate. The ILWU has refused to officially confirm the tentative agreement’s terms. This is in line with its agreement with the PMA to keep tight-lipped over the progress of the talks.
But media, including the WSJ, have said sources indicate the deal covers the especially thorny area of port automation.
Automation has been a sticking point in the contract talks.
- Automated terminal machinery would save significant sums of money and bring much-needed efficiencies to West Coast container shipping.
- PMA has said that expanding the use of remotely controlled cranes to lift containers on and off ships and yard tractors to move containers around terminals would help West Coast ports remain competitive.
- It would also reduce CO2 emissions – a factor of increasing importance in supply chains.
- However, the ILWU commissioned a report which found that automation eliminates jobs.
The news that both sides have struck a deal in this crucial area will help reassure shippers — especially as the deadlock gave way to industrial action just before Easter. ILWU members staged a short-lived walkout – alleging they were attending meetings or spending time with family members rather than gauging in industrial action.
The talks still face a potential stumbling block as wages still need to be agreed. But FourKites’ GM network collaboration, Glenn Koepke, recently played down the prospect of potential failure and resulting supply chain chaos.
“With lower import volumes and significantly lower dwell times, labor issues at the ports of LA and Long Beach are proving to be minor inconveniences, more than severe disruptions,” Koepke told the Loadstar.
“Given the government’s willingness to intervene to avoid a crisis, it’s likely that labor disputes will not become a major issue in the near term.”
Vietnam and Israel prepare to sign free trade deal
After seven years of negotiations, Vietnam and Israel are due to sign a free trade agreement later this year. The actual signing will be timed to mark the 30th anniversary of relations between the two countries, the Diplomat reported.
According to Vietnam’s government, bilateral trade between Israel and Vietnam rose 18 percent last year to $2.2 billion. It also said that Vietnam’s principal exports to Israel include smartphones, footwear, and seafood, while the leading trade in the opposite direction includes electronics and fertilizer.
The deal reflects Vietnam’s urgency to create free trade agreements with multiple countries and blocs to help it take advantage of many Western companies’ desire to reduce reliance on China for sourcing and manufacturing.
So far, Hanoi has signed deals with 16 countries or blocs, including the EU, ASEAN, RCAP, Japan, South Korea, and the UK. This network of deals has integrated it into global supply chains and helped create a fast-growing manufacturing sector.
It is also negotiating another agreement with the European Free Trade Association – a bloc that includes Iceland, Liechtenstein, Norway, and Switzerland.
In 2018 Nadav Eshcar, then Israel’s Ambassador to Vietnam, described the overall level of trade between the countries as modest but said that their economies were highly complementary.
“Vietnam is a large-scale exporter of food and agricultural products primarily focused on fish, meat, rice, fruit, and spices, and Israel is a natural partner, providing technologies that will improve both the quality and quantity of Vietnamese goods,” he said.
Israel has a small but significant Vietnamese population dating back to the late 1970s when then-Prime Minister Menachem Begin allowed around 360 refugees, so-called “boat people” fleeing the Vietnam War, to settle. Vietnam maintains a trade surplus with the United States, which grew to $94.9 billion last year. Exports of garments, shoes, smartphones, electronics, and wooden furniture fueled this.
AI revolution draws near for Walmart suppliers
The AI revolution has just come a little closer for Walmart suppliers. The retail giant has revealed that it uses an AI chatbot to negotiate prices and terms and conditions in its supply chain, Retail Today reported.
According to Bloomberg News, Walmart uses a chatbot developed by California-based Pactum AI to automate vendor negotiations. Armed with Walmart’s budgets and needs, AI takes the place of buyers to close deals with suppliers.
At present, Walmart is only using AI bots to purchase indirectly, including equipment like shopping carts used in its stores rather than goods sold. There is no word from the company on if and when it might expand the use of the chatbot into purchases of goods for resale.
According to Walmart, three out of four suppliers involved in the program said they preferred negotiating with the AI to dealing with a human buyer. However, Bloomberg did not specify which areas the chatbot superseded its human counterparts.
The other question many suppliers will be asking themselves is whether the chatbots negotiate as hard as Walmart’s notoriously hard-nosed buyers. The answer, for now, appears to be yes. Suppliers cede profit in at least some negotiations, as much as Pactum said, gaining concessions in return in areas such as payment terms or contract length.
What the AI brings to the negotiation is access to data around trends and prices to help it more efficiently resolve issues such as discounts, payment terms, and detailed pricing. Walmart said the AI had successfully reached deals with about 68% of suppliers approached, achieving an average saving of 3% on contracts since the software was introduced in early 2021.
The retailer has no plans to use the chatbot to replace its human buying teams – especially those who handle major accounts like Unilever.
Walmart has also announced that it is re-engineering its supply chain by creating a more intelligent and connected omnichannel network. The company’s plans for a more automated supply chain will improve inventory accuracy and flow across different channels.
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