No Rates Cuts … for now…
Hopes that central banks would start reducing rates as soon as March have been further dashed.
“We want to see more evidence that inflation is moving sustainably down to 2%. Our confidence is rising. We just want some more confidence.” – Federal Reserve Chair Jerome Powell during a recent interview with 60 Minutes
Pressure is also coming from the OECD, which said interest rates globally must remain high over the next year to ensure inflation is defeated, per The Times.
LOGISTICS
Carriers are activating excess capacity to adapt to the longer journeys. At the same time, pre-Lunar New Year demand has leveled off. This has led to improvements in space and equipment availability at Asian export hubs, smooth operations at most major ports and few signs of congestion, per Freightos.
CMA CGM suspended Red Sea transits again until further notice due to security risks, per Flexport.
Maersk has suspended travel through the Panama Canal due to the ongoing drought impacting travel. The company is expecting to utilize rail to transport cargo across Panama to avoid further delays or disruptions as the uncertainty and restrictions on passage continue, per UPS.
Rates are likely to decline by late February or early March as ocean freight enters its slow season and carriers adjust to diverted routings, per Freightos.
Global international air cargo capacity increased by 10% in January compared with 2019, per Flexport.
Global air cargo rates have increased for the first time in nearly two months due to pre-Lunar New Year demand and some cargo shifting to air as a result of delays as ocean carriers avoid the Red Sea.
- The Baltic Air Freight Index reported a 6.4% rise in rates, with larger jumps seen in some outbound Asian markets, per UPS.
INSIDE SOURCING
China Could Lead the Way
Small orders have become the new normal – even for big brands. Mills and manufacturers are now struggling to re-imagine legacy models built to produce massive volumes into what looks almost like boutique-sized runs.
The way forward might come from China’s fast fashion brands like Shein and Temu.
They’ve mastered a system that enables them to produce almost limitless styles, on demand, and at rock bottom prices.
These smart companies could be giving us a future vision of what next gen agile manufacturing might look like.
PODCAST
New Tech Developers are Leading Manufacturing’s Digital Revolution
Manufacturing is getting modernised as companies look to boost process efficiencies, create more resilient supply chains – and of course reduce costs.
Elon Musk redefined manufacturing through Tesla and SpaceX, where he leaned into new technologies to make his processes faster and better.
The manufacturing sector is now starting to look to startups and SaaS solutions.
In this podcast Renan Devillieres, CEO of OSS Ventures, talks about the technology-driven businesses that are helping to scale manufacturing.
You’ll Learn:
- How manufacturers can navigate the evolving landscape of SaaS in operations.
- What manufacturers might be overlooking about implementing SaaS in their businesses.
- How even small manufacturers can use what is often seen as enterprise level applications.
MATERIALS
Cotton futures sustained their bullish momentum, hovering around four-month highs of 87 cents per pound, mainly on expectations of robust demand.
The U.S. Cotton Trust Protocol has tripled its grower membership in just three years and accounts for 23% of cotton-growing area in the US. Read more
Synthetic yarn and fiber prices remained flat as oil prices, despite tensions in the Middle East, remained soft.
MARKETS
China’s January CPI inflation came in at -0.8% year-on-year, which is the lowest level since September 2009, and marked the fourth consecutive month of negative headline inflation. This is expected to mark the bottom of the current cycle, per ING Bank.
CURRENCIES
The euro extended losses below $1.08, reaching a new low since November 13th, as hopes of a US rate cut faded.
The Japanese yen depreciated past 148.5 per dollar, as the central bank said it was unlikely to raise interest rates aggressively, even after ending its negative interest rate policy.
The Indian rupee appreciated past 83 per USD, approaching the two-week high of 82.95 touched on February 1st.
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