Subscribe to our free, weekly email newsletter!



China will no longer be the “default” sourcing destination

By Patrick Burnson, Executive Editor
January 21, 2011

Panjiva, an online search engine with detailed information on global suppliers and manufacturers, has joined those experts predicting a substantial boost in sourcing expenses.

“In 2011, manufacturing costs will rise,” Panjiva (http://panjiva.com/) CEO Josh Green, noted in a recent blog post.

He added that for years, China’s huge labor pool helped keep global manufacturing costs down, but wages are escalating.

“China’s move toward a more flexible Yuan amplifies the effect of wage increases. But perhaps the most important thing going on in China is the rise of its middle class — a middle class that is demanding goods and services,” Green added.

In a poll conducted with its clients, Panjiva learned that it was “jarring” for Americans to see China prosper while the U.S. held on for dear life through the Great Recession.

“Meanwhile, Chinese leaders have over a billion mouths to feed and are unwilling to take measures that could jeopardize additional growth,” Green said. “In 2011, we will continue to see an economic recovery that is uneven, and we will continue to see fear about the future as a driving force in shaping government policy.”

Green has also joined the chorus against protectionist rhetoric and more protectionist policies. While he does not see an all-out trade war, he is predicting “flare-ups” that will create headaches for sourcing executives in a variety of industries.

As a consequence, said Green, China will no longer be the “default” destination, and sourcing teams will need to grow their capabilities outside.
More of his forecast can be found at:

http://panjiva.com/blog/2011/01/03/global-sourcing-what-to-expect-in-2011#respond

About the Author

image
Patrick Burnson
Executive Editor

Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review magazines and web sites. Patrick is a widely-published writer and editor who has spent most of his career covering international trade, global logistics, and supply chain management. He lives and works in San Francisco, providing readers with a Pacific Rim perspective on industry trends and forecasts. You can reach him directly at .(JavaScript must be enabled to view this email address).


Subscribe to Logistics Management magazine

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your
entire logistics operation.
Start your FREE subscription today!

Recent Entries

Working with research partner, The Economist Intelligence Unit, the IBM Institute for Business Value surveyed 1,023 global procurement executives from 41 countries in North America, Europe and Asia.

U.S. Carloads were down 7.8 percent annually at 259,544, and intermodal volume was off 15.7 percent for the week ending February 21 at 213,617 containers and trailers.

The Department of Transportation’s Bureau of Transportation Logistics (BTS) reported this week that U.S. trade with its North America Free Trade Agreement partners Canada and Mexico in December 2014 was up 5.4 percent annually at $95.8 billion. This marks the 11th straight month of annual increases, according to BTS officials.

While the volume decline was steep, there was numerous reasons behind it, including terminal congestion, protracted contract negotiations between the Pacific Maritime Association and the International Longshore and Warehouse Union, and other supply chain-related issues, according to POLA officials.

Truckload rates for the month of January, which measures truckload linehaul rates paid during the month, saw a 7.9 percent annual hike, and intermodal rates dropped 0.3 percent compared to January 2014, which the report pointed out marks the first annual intermodal pricing decline since December 2013.

Article Topics

Blogs · Supply Chain · Manufacturing · Panjiva · All topics

Comments

Post a comment
Commenting is not available in this channel entry.


© Copyright 2015 Peerless Media LLC, a division of EH Publishing, Inc • 111 Speen Street, Ste 200, Framingham, MA 01701 USA