The Friday Report: June 12th 2020

Get Ready for Higher Postal Rates July 1, 2020

On July 1st, cross-border shipping rates will be increasing for many American shippers.  Last September, a deal was reached by the Universal Postal Union enabling countries which import over 75,000 metric tons of parcels and mail to establish their own shipping rates.  In addition, a secondary tier of importing countries are now able to establish “self-declared” rates as of January 2021.  The decision was made in order to placate the United States, which had made complaints against the current policy which provides China with an unfair advantage in shipping. 

The Universal Postal Union governs shipping rates and rules for cross-border postal services across the world.  Global shipping rates in and out of the United States are anticipated to rise.

Manufacturers Put COVID-19 Lessons into Place

Manufacturers learned some valuable lessons during the recent global pandemic.  Now, supply chain companies see production in a whole new light.  Before opening up production, many manufacturers are moving deliberately, first evaluating their logistics capacity as well as the readiness status of their suppliers.  Given the conditions of the past few months, it is no wonder that manufacturers are wary. 

To be sure suppliers are ready, manufacturers are questioning whether they have the amount of raw materials necessary to produce enough goods to effectively build up inventory.  Re-evaluating suppliers takes time but is an important step in getting ready for another potential upcoming disruption:  the USMCA trade deal which will replace NAFTA July 1st.  USMCA imposes new labor rate and complicated country of origin standards requiring transparency across the entire supply chain.

Companies doing business overseas or operating divisions overseas need to have an understanding of the risks even in dealing with foreign sub suppliers and manufacturers are subject to answering the same questions from their own suppliers.  This may impact credit and payments as some suppliers may require payment in advance, draining working capital.

Evaluating logistics capabilities and consumer demands are other issues of primary consideration for manufacturers. 

For additional information, keep reading here.

COVID-19 Changes the Way People Eat

Based on surveys of consumers in March 2020, here are some of the predictions about how the coronavirus outbreak is changing the way consumers eat:

 1. More emphasis on health and wellness will lead to consumers’ desire for organic, nutritious eating. This is likely to lead to a change toward vegan or vegetarian products, health foods including produce and nutritionally dense foods.

2. Closer scrutiny of food safety. Consumers prefer foods that are pre-packaged or canned to eliminate fears of contracting coronavirus from food products.

3. Movement away from exotic foods, primarily protein products derived from the slaughter of wildlife.

4. Focus on eating local. Consumers are eager to know the source of their food products and frequently report a desire towards community-supported agriculture.

5. Snacks, snacks, snacks. Can anyone say carb loading?  From pretzels to granola bars, cookies, nuts and fruit, American consumers love a good snack.  The hoarding has begun….