The Friday Report: September 13th, 2019Quick wrap up of a few hot topic newsworthy stories in the supply chain logistics industry
Gallup Poll Reveals American Distrust of Biopharma Drug Makers
According to a recent Gallup poll, Americans reacted more negatively to questions about drug makers than more than 20 other industries that were included in the survey. This included the federal government, banking and the oil industry. The pharmaceutical industry’s net favorability rating was at an all-time low level of all the surveys conducted during the past 19-year history.
In August 2019, approximately 200 pharma industry CEOs retreated from the Milton Friedman credo that identifies that shareholder returns are the primary purpose of corporations out of concern for the current political climate. With the recent history and rampant news coverage of highly addictive products, skyrocketing drug prices and aggressive marketing tactics, the winds of change are blowing toward Washington. Pharmaceutical CEOs have recognized that the public no longer trusts their industry and are trying to find a new path forward.
Rather than focusing exclusively on profitability and monetary concerns, CEOs are more likely to take on unpopular social and political policies in the past year or so including immigration, transgender restroom access and gun violence. This new willingness to do so may be in response to show consumers what their organizations value.
Target Refuses to Pay Along Tariff Pain to Consumers
Recently Target communicated to its suppliers that it will not accept higher pricing from suppliers as a result of the imposition of tariffs on Chinese goods. In addition, Target pledged that it will not raise pricing for consumers. The major retailer explained that suppliers should have developed the needed contingency plans to prevent passing along price increases to its guests. The message was communicated to suppliers prior to the imposition of the September 1st tariffs.
One industry analyst estimated the percentage of goods Target imports from China for its in-house brands at nearly 80% that are exposed to the four tier of tariffs, however the number may be overstated. Major retailers such as Walmart and Target have considerable power to dictate vendor terms and behavior. Big box stores often are successful in spreading the financial discomfort out between numerous trading partners.
Sugar Prices Dropping
Did you know that sugar prices have dropped to the lowest level in eleven months? Policies on export quotas and subsidies established by the Indian government have initiated challenges from other sugar producing nations at the World Trade Organization (WTO). Raw sugar futures have declined between 8.4 to 11.02 cents per pound this year and industry experts that this is unsustainable.
While sugar producers may benefit from the global shift in using cane-based ethanol and the boost in demand in emerging markets, smaller sugar producers such as those in Guatemala and El Salvador are suffering, largely because of currency volatility.
The surplus in sugar appears to be over. Market experts report that inventory needs to be absorbed in order to have pricing return to beneficial levels for sugar producers. For India, the problem is unpredictable exports leading to unrealized goals.