Trade trends are forever changing, and 2018 is proving to be no different. As technology soars and seemingly dominates all industries, retailers, manufacturers and everyone in between attempt to acclimatise to rapidly changing global trade trends. Below we have documented some key global trade trends that may influence industries around the world in the coming year, as many already have…
The retail industry is in the midst of much change as e-commerce continues to dominate sales. Consumer dynamic is changing and this is particularly noticeable over busy holiday periods. According to Shelley E. Kohan. vice president of retail consulting at RetailNext, retailers can expect to see more online purchases during these peak periods than they will in store if US data is anything to go by. To illustrate, the number of shoppers in US stores over Thanksgiving and Black Friday in 2017 fell four percent from the previous year, yet online sales reached over $5.05 billion according to Adobe Analytics, indicating a 16.9 percent increase.
This trend follows a wave of store closures around the world wherein old, established companies and newcomers were taken down in kind. Whilst the harsh economic climate globally is in-part responsible for this, the main culprit is the flourishing e-commerce landscape.
As consumer dynamic changes, supply chains are required to adapt by closely managing their flow of goods both online and in traditional sales in order to keep customers satisfied. Delays at the factory and during shipment must be minimised, cross-border documentation requires streamlined clearance and high-quality, competitively priced products need to be prioritised.
Tailing on, supply chain technology is seeing unprecedented investment as we speak. More than $4 billion has been invested in artificial intelligence by US venture capitalists alone in the last year, indicating a powerful push towards developing and implementing machine learning, automation and robotics. Effective and fast supply chain solutions are paramount, illustrated by Multi-Echelon Inventory Optimisation (MEIO) – a product of machine learning capable artificial intelligence – whereby inventory is reduced by 30 percent while maintaining or improving customer fill rates.
A survey conducted by The Chartered Institute of Procurement & Supply (CIPS) in November 2017 reported that 63 percent of the participating EU companies intended to move some of their supply chain out of the UK due to the country’s decision to leave the EU. Additionally, one in five UK businesses reported difficulty obtaining new contracts that extended into 2019 as a result of Brexit.
This data demonstrates how the continued Brexit talks are impacting UK businesses as investors keep their cards close. The manufacturing industry in the UK is incredibly strong and can only maintain such momentum if raw material imports from Asia remain duty and tariff free, as they currently are. With Brexit imminent, costs will likely go up without the current trade advantages and thus result in higher export costs from the UK.
Although e-commerce is positively impacting the retail industry, it also brings along its own unique challenges. There has been enormous growth in the counterfeit goods market, which is worth nearly $500 billion a year according to a report by the Organisation for Economic Cooperation and Development.
Unfortunately, most of these goods are sold and purchased online and subsequently shipped across borders in the form of small, low-value packages. Pirated and counterfeit goods are a direct violation of intellectual property rights which are regrettably difficult to regulate. A multifaceted approach is recommended, encompassing good enforcement of intellectual property laws, international policy initiatives being enacted and a concerted effort by companies to trademark and protect their work as far as possible.
Although large businesses are the primary targets for counterfeiting, medium and small businesses alike stand to lose the most when faced with intellectual property infringements due to their generally lower capital and profit margin.
Multiple countries across the globe are working towards diversifying their economies, with particular regard to the oil industry. Venezuela suffered through the collapse of its oil-dependent economy very publicly in recent years, and it has largely driven many major oil-providing countries across the globe to put huge efforts into diversifying national income.
For example, 70 percent of Nigerian government revenue depends on oil. As such, the country has launched a new program to increase yam exports to Europe and the US, given that Nigeria already produces 60 percent of the world’s yams.
Special attention should be paid to these evolving trends going forward, as minor fluctuations in stability can lead to disaster. New Horizon Freight Solutions is dedicated to providing outstanding freighting and logistics services to its clients, whatever the economic climate. Contact us today to discuss your freight and logistics needs.