News

Global Trade and Manufacturing Slowdown: What You Need to Know

1

Maersk expects

Global container trade shrinks by up to 4% this year

Danish shipping giant Maersk, seen as a barometer of global trade, cut its forecast for global container trade this year on Friday, saying there were no clear signs of a recovery in cargo volumes this year. Global container trade could contract by as much as 4% this year, the company said.

Maersk and other shipping lines, which generated record profits in 2021 and 2022 due to a surge in demand for consumer goods amid the pandemic and limited supply of ships, are now facing a sudden correction as global economic growth slows, Companies are digesting existing inventories rather than shipping new products from Asia to Europe and the United States.

Maersk said: “The inventory adjustment observed since the fourth quarter of 2022 appears to be prolonged and is now expected to continue until the end of the year. Overall, the environment for container trade and logistics services remains challenging. There will be a sharp rebound in transaction volume.”

2

Destinations of outbound tourism in the first half of the year

The first echelon is Japan and Thailand

The latest statistics from the Ministry of Culture and Tourism show that in the first half of 2023, the total number of domestic tourists will be 2.384 billion, an increase of 929 million or 63.9% over the same period of the previous year. Domestic tourism revenue was 2.3 trillion yuan, an increase of 1.12 trillion yuan over the previous year, a year-on-year increase of 95.9%.

Recently, the “Analysis of Tourism Economic Operation in the First Half of 2023 and Trend Forecast in the Second Half of 2023” released by the China Tourism Academy pointed out that in the first half of the year, outbound tourism destinations received a total of 40.37 million mainland (mainland) tourists. Short-distance outbound travel took the lead in recovering, with 93.95% of tourists concentrated in Asia. China’s Hong Kong, China’s Macau, and China’s Taiwan are the main destinations for outbound tourism, with 79.89% of the outbound tourists received. Neighboring countries such as Thailand, Japan, South Korea, Singapore, Malaysia, Myanmar, and Vietnam maintain a high degree of enthusiasm.

3

Tesla invites

Many Chinese suppliers went to Mexico to build factories

With the advancement of Tesla’s Mexico Gigafactory project, Tesla has mobilized its Chinese supplier partners to build factories in Mexico. Many listed companies have responded positively, giving full play to their own advantages and “going overseas” to Mexico to implement new energy vehicle production capacity.

According to industry insiders, listed companies in Ningbo’s “Telian” (Tesla supply chain) such as Tuopu Group, Xusheng Group, Joyson Electronics, and Ningbo Huaxiang have started and accelerated the process of building factories in Mexico.

On August 2, the relevant person in charge of Precision Forging Technology introduced that the company has recently visited Mexico, and will start the Mexican factory in due course according to the progress of new projects for North American customers. At this stage, the company’s main product differential assembly is for new energy vehicles. supplementary.

As the world’s seventh largest automobile producer and the fifth largest producer of parts and components, Mexico was previously the main production base for popular cars in the United States. The industrial chain is mainly concentrated in the states of Nuevo Leon, Puebla and EIBaiio industrial zone. In terms of industrial distribution, Mexico covers more than 30 auto companies, more than 1,100 first-tier suppliers, and thousands of second-tier and third-tier suppliers. Among them, there are 39 large-scale manufacturing factories, including 22 automobile factories, 10 engine factories and 7 transmission factories.

4

Apple plans to reduce 20% of iPhone production capacity

Transfer to India

On August 3, according to the “Nikkei News”, Apple is optimistic about the Indian sales and production market, and plans to transfer at least 20% of iPhone production to India, and is investing heavily in the production of the new iPhone 15 in India.

Apple is reportedly aiming to produce 15 million iPhones in India this year, including the new iPhone 15 series, more than double its target a year ago.

It is worth mentioning that in addition to expanding and deepening production in India, it plans to produce more intermediate parts in India, such as metal casings, instead of just assembling completed components in India.

In May of this year, Cook pointed out that India is a key place for Apple, and emphasized that India will soon become a major market and production base. Apple assembled more than $7 billion worth of iPhones in India last fiscal year.

5

Indian Rice Export Ban

could affect millions of people around the world

India is the world’s largest rice exporter, and the Indian government recently introduced a ban on some rice exports, which may affect millions of people around the world, with consumers in Asia and Africa most affected.

Comparing the export volume of India and other rice exporting countries, it can be found that the export volume of Indian rice has more than doubled since 2020, far exceeding other exporting countries. The latest report from Barclays Bank pointed out that some Southeast Asian countries may be hit more severely.

Besides Asia, many African and Middle Eastern countries are also vulnerable. According to BMI Research, a subsidiary of Fitch Solutions, markets that are highly dependent on rice imports from India are mainly concentrated in sub-Saharan Africa and the Middle East and North Africa, especially Djibouti, Liberia, Qatar and other countries.

6

U.S. manufacturing activity shrinks for ninth straight month

Data released by the Institute for Supply Management (ISM) on Tuesday showed that its manufacturing activity index edged up to 46.4 last month. A reading below 50 indicates contraction, and the latest data came in slightly lower than expected.

Indicators of new orders and production improved in July, with the former rebounding to a nine-month high. Even so, both remain in shrinking territory. Meanwhile, the export gauge fell to its lowest level this year as U.S. merchandise exports continued to decline.

While the rest of the economy remained firm, high interest rates combined with a continued rotation of consumer preferences towards services held back manufacturing performance. Sluggish overseas demand is another headwind.

Manufacturing has been broadly weak, forcing factories to lay off workers. The ISM employment indicator fell to 44.4, the lowest reading since July 2020.

The ISM report also showed raw material prices fell for the third straight month in July, reflecting a normalization of supply chains. Inventory drawdowns have slowed while supplier deliveries have accelerated.

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