Just when you think things couldn’t get any worse, they do.
We’re living in unprecedented times. First came Brexit. And while the world was still reeling from the COVID-19 pandemic, the Russian invasion of Ukraine caused worldwide disruptions to trade.
The future of the global supply chain looks bleak. But by analysing the export trends of 2022, international merchants can future-proof their businesses.
Here are the exporting trends to watch for 2022 and 2023. Let’s dive right in.
The global supply chain is under threat. There was Brexit, then Covid, and now the Russian invasion of Ukraine. If international merchants want to future-proof their businesses, they must study ongoing trends. From the global eco-awakening and revenge shopping to the rise of China and the cessation of the West’s reliance on Russian oil, we’ll be looking at the future of exporting and the trends to watch.
Buy British. Shop local. Watch your carbon footprint.
Consumers today are increasingly discerning about the impact of their choices on the environment. They pay attention to the carbon emissions involved in goods to be brought from the manufacturer to the end customer.
As a result, ocean carriers, shippers, and logistics service providers are faced with additional stress to assess and manage their carbon footprint.
Even countries like China have achieved the first-mover advantage as their factories seek to take advantage of rising demand from a more environmentally conscious group of global consumers.
The government has cut down exports on some of its most polluting industrial technologies and products to focus on sustainable growth. For instance, China has raised export tariffs twice for certain steel products in 2021. Additionally, China’s manufacturers have also proved capable of capturing global demand for green products — establishing competitive positions in the global export market for products from digital printers and e-bike motors to recyclable artificial turfs.
According to the CBI, businesses in the United Kingdom (UK) could increase their export of low-carbon products to the EU. Furthermore, electric vehicle and battery sales are projected to grow by £18 billion in the next decade. This is predicted to create 240,000 jobs in cities and towns across the UK.
Due to the omicron variant of the coronavirus crisis, lockdowns remain prevalent — with people around the world establishing new habits.
As many continue to work from home, these employees have been purchasing laptops, routers, and other technological devices to transform their spaces into home offices. The effects of the omicron variant will likely determine consumers' habits and buying patterns in 2022. From January to September 2021, high-tech imports rose by:
Remote working is here to stay. This was a trend long before Covid-19 came along. Indeed, as the global economy becomes ever more automated and interconnected, home offices will become the exception to the rule.
There are big markets to capture in the post-pandemic world, and revenge shopping is making those markets bigger.
Revenge shopping is a type of splurge shopping that takes place after a frugal spending period. Take the United States (US), where shoppers are eager to jump back into spending.
According to McKinsey, US household savings doubled from $ 1.5 trillion in 2019 to $ 3 trillion in 2020, spurring the richest of the population to spend at pre-pandemic levels. This could be good news for exporters to capitalise on pent-up demand from US consumers.
Globally, the price of lithium has surged — setting record highs almost daily. This was propelled by limited supply and high demand and will continue this year as supply tightness continues. But why?
Growing demand for electric vehicles (EVs).
S&P Global Market Intelligence revealed that lithium chemical supply is predicted to reach the equivalent of 636,000 mt lithium carbonate in 2022, a jump from 408,000 mt in 2020 and an approximate 497,000 mt in 2021. In 2021, the global sales of EVs doubled. With 6.7 million new car registrations, the EV market share has been brought up to 8.6% worldwide. With global consumers viewing EVs as a more environmentally-friendly choice, lithium demand will likely remain high over the next decade.
In 2020, GDP reports reveal that US' gross domestic product (GDP) dipped by 2.3%. On the flip side, China’s GDP rose by 2.3% despite the coronavirus pandemic. From January to October 2021, the US imported USD 2.3 trillion worth of products, compared to China’s $ 2.2 trillion USD. Some economists have argued that China could surpass the US as the world’s largest economy a few years earlier than predicted.
The Regional Comprehensive Economic Partnership (RCEP) is the world’s biggest free trade agreement. A decade in the making, the new trade deal under RCEP will eliminate approximately 90% of trade tariffs within the 15-nation bloc led by China. The treaty doesn’t include the US, which might exacerbate tensions with China, and create a further rupture in the global supply chain. As such, manufacturers have been compelled to build plants in countries such as Thailand, Vietnam, and Singapore.
RCEP makes it easier for businesses to use Southeast Asia as their production base and could boost the reallocation of foreign direct investment and supply chain diversification in Asia. Foreign companies can also take advantage of the low cost of production in South East Asia.
Commodity prices shot to their highest level since 2008 over Russia-Ukraine supply fears.
Long-term supply will be affected. Despite Russia and Ukraine’s small shares in world trade and output, the effects of halted exports could be felt by the rest of the world — the first dominos to fall.
Grain shipments going through Black Sea ports have already stopped, with dreadful repercussions for food security in less developed countries. A rise in grain prices set off protests and riots in Latin America, Africa, and Asia. Furthermore, new lockdowns in China are hampering trade by sea, which could result in higher inflation and shortages of raw materials.
Liquefied natural gas (LNG) export facilities in the US continue to operate at full strength as a tight global market sees domestic natural gas prices rise to their highest level in years.
There’s increasing demand for LNG cargoes, resulting in prices soaring. Worse still, this is during a global energy crisis brought about by the ongoing coronavirus pandemic and the Russia-Ukraine conflict. To replace Russian fuel, the US will increase LNG exports to Europe, ramping up LNG shipments conveyed by seagoing tankers by 15 billion cubic meters this year.
As 2022 gets underway, the future of exporting remains subject to constant change from political, economic, and environmental forces. A country’s importing and exporting movement can affect its GDP, its exchange rate, and its level of inflation and interest rates.
Exchange rate levels, on the other hand, can affect export volume. However, you can hedge against exchange rate volatility with Silverbird. All you have to do is to sign up for a business account, and you can secure currencies at competitive exchange rates. You can then hold, send or receive money with one multi-currency account that is available for converting over 30 currencies. Disruptions in global trade are about to go from bad to worse, but you can mitigate these disruptions to your business by managing foreign exchange risks.
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