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Saturday, 6 August 2016

Logisticians: Are you prepared for war in the South China Sea?

It would be difficult to overestimate the threat to logisticians' best laid plans for trade with Asia than the worsening relations between China and its neighbours over the former's illegal territorial claims to 'islands' it has developed from reefs and shoals in the South China Sea, around which there may be rich reserves of oil and gas. These 'islands' are up to 650 miles from China's coast but less than half that from other nations like the Philippines and Vietnam who are also claiming rights over the Spratly and Paracel islands.

The permanent court at the Hague recently ruled against China's so-called nine-dash line that lays claim to almost all of the South China Sea, through which about US$5.5 trillion of sea-borne trade passes every year, but China has intimated that it has no intention to respect the Hague's rulings. The sabre rattling has consequently risen. The AFP, for example, reported that a Beijing minister urged preparations for a "people's war at sea."

China's state-backed media is awash in bluster over the subject of their military and sovereignty. China's Global Times even went so far as to challenge Australia directly, saying: "If Australia steps into the South China Sea waters it will be an ideal target to warn and strike. Lian Fang, a professor at the military-run National Defence University, said: "The Chinese military will step up and fight hard and China will never submit to any country on matters of sovereignty."

Beijing has even gone so far as to unilaterally announce a "no sail zone" in international waters which directly violates international maritime laws. Such Chinese insouciance will undoubtedly invite a response from the US Government whose Navy regularly patrols the South China Sea where it now faces new militarised islands.

"The People's Liberation Army is ready," a military source told Reuters. "We'll go in and give them a bloody nose like Deng Xiaoping did in Vietnam in 1979". Not all Chinese commentators are such belligerent sabre rattlers. One Chinese source seemed especially aware of the potential catastrophe of a shooting war which could so easily emerge from the military posturing. In a statement to Reuters he said: "We cannot take on the Americans. We do not have the technology yet," implying that when they do the risk of unpleasantness will rise. He want on: "The people who would suffer would be the ordinary Chinese." But the problem is that in the Chinese psyche losing face is worse than losing honour and irrespective of the enormity of a hot war it would not take much to tip the Chinese government hotheads over the edge.

If wise counsel prevails the Chinese authorities will realize that globalisation of trade has made them more interdependent on foreign markets to sustain the growing ambitions of ordinary Chinese people who want nothing more than to be left alone to scratch an honest living in an atmosphere that nurtures working people's labour conditions. China has enough internal problems from unsustainable debt levels to rising discontent among the people over living conditions (Google my blog: China facing a double bust?). If that were not bad enough, there is always Nature preparing for the next costly disaster through earthquakes and typhoons.

In my blog of June 2015 headed: "Should China's South China Sea ambitions be thwarted?" I warned that "The potential of the rising tension has huge implications for global logistics that stretches far beyond the cost of higher insurance and the re-routing of ships to avoid the South China Sea." Since then, the tension has risen sharply and so logisticians should review their South-East Asia supply pipelines by making sure they have robust plan Bs in the event of supply disruptions. This could mean having alternative supply centres ready to swing into action, especially given the amount of trade flows geared to JIT deliveries. Logisticians, for example, might like to consider sourcing their rare earths from outside of China, which dominates the market. Another precaution could be a temporary increase in component stocks until signs of tension have eased, even if that does mean rising costs.

The alternative, if push comes to shove, could be a re-run of the 2011 Japanese tsunami chastisement in which the asininity of western corporations over reliance on Japan for 100 key products geared to JIT deliveries left car plants and other industries around the world idled for want of parts, incurring multi-billion pound losses in sales and profits.
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Tuesday, 2 August 2016

China facing a double bust?

Since the abandonment of collectivism Chinese governments have done well to boost their economy and prosperity in a remarkably few years but are they now putting all that at risk through tightening political control and ever-more reliance on horrifically high debt levels? Potentially worse still, is the strength and size of the economy being used to cow much smaller nations as China, for instance, illegally lays claim to 'islands' it has developed and militarised from shoals and reefs in the South China Sea, up to 600 miles from its shores?

China's development has come at a big social cost, from an environmental disaster that kills over one million citizens every year, mainly through air pollution, to a hardening of central government repression as the people agitate for fairer rights and conditions, a process the government sees as squeezing the party out of leadership at the local level and therefore becoming a serious form of political opposition. One former Chinese government official, who has left the country, sensibly remarked: "I don't understand why the government doesn't let the people vent the way it used to. It relieves some of the pressures and you can see where the grievances are."

One reason why the Chinese government is tightening its grip by cracking down hard on legitimate dissent and free expression is the slowing economy -- a trend that current government economic policies seem wrong-headed or ambiguous to head off, though there are some glimmers of hope here. Chinese governments have repeatedly promised that they would keep a lid on borrowing and implement reforms. But the latest data suggests that government-owned banks are lending more, not less.

Cheap credit has played a key role in boosting GDP by 6.7% in the latest quarter to June from a year earlier but the result of all this debt bingeing is that government debt is now 2.5 times GDP and consumer and corporate debt at all-time problems highs. In June alone total lending soared US$244 billion but the problem is that many of the loans are going to unprofitable state-owned enterprises (SOEs) kept alive only to avoid heavy job losses. It would make sense instead to lend the money to private companies to expand their hiring. But the government knows it must, as promised, shift the economy from manufacturing towards services and consumption and that means slashing industrial overcapacity by closing inefficient SOEs and so initially raise unemployment -- a reason, perhaps, for its more repressive regime buttressed by the strengthening of the People's Liberation Army because it sees potential trouble ahead. The risk is that if the regime feels threatened by home-grown problems it will try to deflect them through nationalism and the most likely flash point is in the South China Sea.

This excessive debt has been described as China's "original" sin, which has led to some ratings agencies to warn that the banking system may need $500 billion more in capital to offset rising bad loans. Despite some bright spots in the economy and the authorities making some right moves, long-term growth prospects have hardly improved as risks continue to rise. The risk of an economic and social bust, therefore, is considerable.
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Sunday, 5 June 2016

Should and will Britain vote for Brexit?


Inability to adapt has often spelt extinction and so could it be said that the European Union (EU) faces such a risk, if not fate, by dint of its inflexibility to adapt to pressing, changing circumstances? What began out of the ashes of post-war Europe as an experiment at economic union, with ultimate political union a far-off goal of its founders, but not, evidently, the common man, to save Europe from any more disastrous wars now appears to have foundered on that oldest barrier to political integration -- self interest taking precedence. The economic experiment was a laudable one that has promoted internal growth and arguably helped keep the peace among Europe's club members, though as a customs union it was to the disadvantage of the developing world and EU consumers who pay higher food prices. But the experiment came at a price -- uncontrolled immigration on a hitherto unprecedented scale, an issue that is likely to be decisive on June 23, when Britain votes to stay or leave. An integral part of that immigration issue is the economic issue, the facts of which, in weighing up the pros and cons of immigration, have been prostituted by the most beguiling of effective lies -- deception by omission, to which I shall return.

If ever an election campaign was fought so crassly and deceptively, Britain's EU referendum on stay or leave must surely be it. Both sides have gone over the top in their wild claims but they have guardedly hedged their fear-mongering and alarmism with words like 'could', 'might' and 'likely', with the most favourite choice being Britain's Prime Minister, David Cameron, and his Chancellor of the Exchequer, George Osborne, frequent warnings about "a leap in the dark" if Britain leaves. George Osborne's latest scare is his claim that leaving the EU could add £1,500 a year to the cost of an average mortgage, based on figures that in turn are based on assumptions, and as most of us know economists are past masters at getting their forecasts hopelessly wrong because their assumptions underlying their forecasts proved false. And in any event could not a leap in the dark turn out to be a leap in prosperity? When Drake's ships steered to glory was that not a great leap into the dark which redounded to the whole world's benefit by creating the greatest empire that spawned the industrial revolution and its effusion of inventions and discoveries that changed the world for the better?

To return to the immigration issue, let it not be thought that Britain's past immigration was anything other than of immense value at enriching the national gene pool and subsequent economic progress. The problem is not immigration per se, it is the need to limit the numbers to sensible levels that do not overwhelm the social services and give rise to simmering resentment, and worse down the line, which under current EU rules is not possible. There are already ugly signs developing in Europe over the high numbers entering from war-torn regions and even higher numbers of illegal economic migrants taking advantage of the political refugees' plight. Germany, France, Sweden, Austria and Denmark are lurching to the hard right and that would be tragic if the trend continued to the detriment of recently-arrived immigrants contributing to the economy.

Earlier I said that the economic cost and benefits of immigration were subject to that most beguiling  and effective of lies ---deception by omission, but what did I mean by that? Immigrants generate costs in ways which are not factored into any cost/benefit exercise for public consumption. One good example is the administration of justice, where the legal aid bill is about £2 billion a year. Why is this relevant? The answer is that Muslims account for 1 in 7 of all Britain's jailed population while accounting for only 4.5% of the total population. That is not part of the administration of the justice bill but is nevertheless a huge annual expense. Then there is the cost of running the immigration courts, where there is a backlog of  500,000 cases. The taxpayer picks up 75% of the cost of immigration asylum proceedings. Then there is the well over £100 million a year spent on interpreters to help people who cannot speak English, something that 50 years ago hardly existed. All of these legal-related issues are never included in any cost-benefit analysis of immigration, so it is a clear case of deception by omission, the most plausible of all lies, and something all newspapers wallow in. People cannot make the best decisions if they are not in possession of all the facts.

The expansion of the EU from its original five members to include over 25 members today, with more waiting in the wings, was bound to founder on the very different levels of economic development of its new members and differences over moral/cultural mores. Greece, for example, has been a recidivist debt welcher since ancient classical times and its populace thinks it is their God-given right to evade taxes come what may. This, combined with Greece's notorious corruption and cronyism, was bound to lead to ever-more Government borrowing to pay for what it could not afford to placate the people. The huge sums lent to Greece and other member countries exposes the economics of the madhouse and has seriously threatened the stability of Europe's banking system.

Nobody knows for certain that leaving the EU poses Britain significant economic risks. Fundamentally there is no reason to believe it should if both parties think and act sensibly. The risks are much higher for Europe in the political arena, mainly because politics has been allowed to trump sound economics, and the belated attempts by France to reform its labour laws in the face of fierce, lawless union opposition is stark testimony to this disturbing fact. Politics is like a harlot. The harlot can be beguiling but there is always a bill at the end to pay, and it could be far worse than one thinks.

So should Britain leave the EU and will it happen? For the present it seems the wiser course for Britain is to concentrate more on distant shores, as once did Drake, and leave open the option of a return when EU obduracy over badly-needed reforms has been removed. The chances are the Brexiters will win.
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Saturday, 16 April 2016

Why low interest rates pose growth and pensions risks

In business there is nothing so unsettling as uncertainty when it comes to new investment but what is it that ultimately drives the greatest of uncertainties  -- projected consumer spending habits?

Since the credit crunch of 2008 central banks have struggled with deflation and the stunting effect it has had on global growth. Their only two responses have been to lower interest rates to near and sub zero levels and quantitative easing (QE) of money supply, a form of electronic money printing. The theory was that making money much cheaper and more plentiful to borrow it would encourage new investment in capital equipment and boost consumer spending. The reality, however, is painfully different and it is not hard to see why.

Central bankers have been feted as masters of the Universe but like emperors with no clothes they are fallible. It is not so much, as some aver, that these institutions lack both the tools and the power to have any meaningful effect but rather that central bankers have relied far too long on economic theory instead of reacting to the real causes of consumer reluctance to spend. So what are these forces ostensibly holding back consumer spending and thus desirable, moderate inflation and are we entering uncharted territory brought on by  paradigm shift?

There are various causes but Larry Fink, chief executive of BlackRock, the world's largest asset management group, put his finger on one key issue that stems from a paradigm shift in post-war economics -- negative interest rates, which he warns risks hitting consumer spending and undermining the economic growth they are intended to encourage. He warned that not enough attention had been given to the effects of negative rates on spending habits, and a big concern here is the diminishing worth of pension schemes badly hit by prolonged, ultra low interest rates. If interest rates do not return to their long-term trend of 5% soon, instead of the current 2%, then consumers will have no choice but to save much harder to realize their ambitions of an adequate retirement income. As an example, Larry Fink says a typical 35-year old has to save three times as much to make the same retirement income when long-term interest rates are at 2% as when they are at 5%. When it becomes plain that adequate pensions can only be expected through much higher savings then cutbacks in day-to-day consumer spending for the long term are inevitable.

This alarming scenario is reflected perhaps, even more seriously in America. It appears that the US public pension shortfall of $3.4 trillion is three times larger than official figures suggested, and still growing, and that will pile pressure on cities and states to cut spending or raise taxes. If these pension funds go insolvent "they will create problems so disastrous that the fund officials assume the Federal government will have to bail them out," warned David Nunes, A US Congressman. But American pension savers should not hold their breath . In the British private sector pension industry when private companies go bust their pension liabilities are placed in a Government-backed pensions lifeboat but would-be pensioners are still expected to take a hit. Such a fate could easily hit future American pensioners. In order just to stop the $3.4 trillion deficit ballooning any more states and local governments would have to raise their current contributions rate of 7.3% of revenues to 17.5% of, warns Olivia Mitchell, a professor at the Wharton School, University of Pennsylvania.

What history undoubtedly makes clears since the credit crunch of 2008 is that no amount of zero or negative interest rates and QE have make any significant difference to galvanise the global economy into real recovery. Already countries like America and Britain are scaling back their optimistic global growth estimates from last year and yet countries like Japan are still wedded to the surely now bankrupt notion that monetary easing and dangerously low interest rates are the only solution. Japan's experience over the last 20 years surely proves that their monetary easing and derisory interest rates have failed lamentably, and the European Central Bank has failed to learn from Japan. This has profound implications for logisticians planning long-term investments in, for example, ports because their plans are based on endless, steady growth . Such optimistic growth projections are looking more dubious unless the wherewithal for consumers to spend more is provided by higher interest rates.

This crass attitude to near zero and negative interest rates has not only failed to galvanize global growth but also to lead to asset bubbles in property and stocks and dangerously high consumer indebtedness and this, in turn, could be dissuading the financial authorities from raising interest rates quickly and significantly to more normal long-term trends. In Britain, there is much concern that a sharp rise in interest rates would wreck the housing market, especially buy-to-let, but house buyers, if they have any sense, would organise their finances so that they could tolerate a much higher interest rate. Behind every mortgagee are five investors and given that these investors are earning derisory returns the cumulative effect of that, in terms of damping down consumer spending, is likely to far outweigh any cutbacks the mortgagees would have to make to counter higher interest rates.

Lawmakers and economists fear that the use of negative interest rates in Japan and Europe will damage consumer sentiment and the heath of banks, as if the banks were not unhealthy enough. There is now a serious risk that people will start to hoard cash. Already there is evidence of this in Switzerland, where the central bank introduced negative rates in December 2014, as the demand for bank notes has risen above normal levels. If financial Armageddon is to be prevented then surely interest rates must be raised now and sharply to return to the long-term trend of 5%.


Monday, 4 January 2016

Shipping's parlous plight heralds economic storms

The critical point to ponder about soothsayers is that they are often overly paid, unashamed practitioners of charlatanry, no matter how often their predictions are wrong, usually otherwise known as economists. With that caveat in mind, here is my take on the global economy this year and the threats to logistics.

The consensus appears to be that the outlook for global economic growth is modestly bullish, but like a harlot GDP figures can be deceptive. America's 2016 GDP growth is being touted at 2.5% and Britain's 2% plus but GDP figures have an irritating habit of being subsequently revised downwards, and being more divorced from reality. When, for example, Chinese premier, Li Kequiang, was a regional official he examined the real figures that mattered, like electricity consumption, rail cargo volumes and loan disbursements to gauge the economy, telling the US ambassador in 2007 that such data captured the reality of growth better than "man-made" GDP. India, another fast-growth economy, is now taking a leaf out of China's book by paying more attention to data from various industries instead of relying on the official GDP figure. The result is that the private estimate of India's year-on-year GDP growth for the latest quarter is 6%, palpably less than the 7.4% official calculation. So the prudent decision would be to regard national GDP figures with caution.

Is there, however, one index that comes close to being an accurate bellwether of the global economy this year and if so what does it herald? Yes, there is, and it's called the Baltic Dry Shipping index, which when allied to other 'wether' vanes, like developments of a financial and political nature, paint a disturbing picture.

The Baltic Exchange's main sea freight index tracks cargo rates for ships carrying dry bulk commodities like coal, iron-ore and grains, and as such is regarded as a forward-looking indicator, because about 90% of the world's traded goods by volume is transported by sea. Investors look to this index for any signs of changes in sentiment for industrial demand. Given that this index plunged to an all-time low last month, more than 95% down from a record high hit in 2008, it is hardly surprising that Basil Karatzas, head of New York Consultancy Brokerage, Karatzas Marine Advisers, opined: "The state of the dry bulk market especially indicates that economies worldwide are likely to stay weak, much to the disappointment of Central banks....foreign exchange traders, miners, steel makers, trading houses and commodity economies." Commercial banks, in particular, have good cause for concern owing to their heavy exposure to non-performing shipping loans, even though they have already written off billions of pounds from such loans. In the first nine months of 2015 the cumulative loss from revenues of 13 shipping companies publicly listed in New York reached over $3.36 billion. Having lent on generous, often lax terms in a market awash with cash since 2008, the banks are now left with loans worth less than the underlying value of the ships.

                             Perfect storm ahead                           

The flood of new ship builds coming onto the market is likely to depress it for at least two more years, especially as China's slowing economy is stifling demand for dry bulkers, leading to a perfect storm. The situation in the oil market is hardly less fraught, as oil producers and their production rig suppliers face huge cutbacks in new developments, closures, bankruptcies and many tens of thousands of job losses, not to mention straightened circumstances for oil-producing nations who now are going to have to impose taxes on their citizens for the first time --- a potential cause for civil unrest.  

On a wider financial front there is little to inspire confidence. The completion of the European Central Bank's comprehensive assessment asset quality review stress test in October 2014 revealed an additional Euro135.9 billion non-performing loans in Euro zone bank balance sheets, bringing the total held by 130 banks examined to Euro879.1 billion, hardly small change. 

The economic global outlook can expect little relief from the hitherto burgeoning BRIC nations. Brazil's tragic comic corruption opera, alas, has left the country a busted flush, an affliction that routinely affects Argentina, the two biggest South American economies. Brazil's economy, according to Goldman Sachs, is sliding into a full blown recession. Events in Russia, another key BRIC nation, are equally disturbing, driven by plunging oil prices, trade sanctions, soaring inflation and private consumer financial delinquency. Matters are so parlous that many citizens are sharing taxis to save money and pay down their credit card debts. The growth rate in overdue credit debt has been a staggering 45% in 2015, and as double digit inflation erodes Russians' disposable income, some are desperate enough to turn to loosely regulated microfinance outfits that charge macro rates up to 880% p.a. In such a climate it is hardly surprising that retail sales have plunged. 

I see global economic growth being much weaker than currently touted by pundits, with some countries slipping into recession. Unemployment in the developed world is likely to rise significantly, when part-time jobs are factored out. There will be more shocks to the financial system as some banks are forced to close or merge. The bloodletting in the shipping and mineral industries will worsen and shipbuilders face dire straits. New York and London's DJ and FTSE indices respectively are likely to end the year significantly lower, i.e. at least 10%. 

On the political front, there is some cause for good news. Putin will strive for a rapprochement with the West to relieve the economic pressures on the nation, leading to defrosting relations. China, on the other hand, will ratchet up the tension over its insouciant behaviour in the South China Sea through creation of military bases on artificially-created islands from reefs in the Spratlys, islands claimed by several other, much nearer nations and in an area where 40% of global trade sails through. Logisticians should take note of that threat accordingly and be prepared.   
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Friday, 30 October 2015

Brussels' diesel decision condemns many to death and illness

Brussels' move to water down diesel vehicle emission rules condemns many to an early grave and far more to pulmonary illness unless the European Parliament votes to reject the approach by unelected EU officials seemingly deferring to the diesel lobby. Air pollution from all sources is estimated to kill about 60,000 persons in Britain alone every year, with 80% of the pollutants affecting health coming from transport, according to Britain's environment ministry. Across the whole of Europe the death toll is put at 500,000. The cost to Britain's national health service and the economy is incalculable, though a recent estimate puts the cost of the VW scandal alone at £300 million in health and social costs annually. Road transport is by far the biggest cause of nitrogen dioxide (NO2), a known killer for decades, and despite the diesel engine industry's advances in cleaner engines none can yet cope with sub 2.5 micron oily particulates which lodge permanently in the body.

VW's rigging of emission standards based on defeat software to give favourable readings only on rolling road tests will cause over 60 early deaths and maybe even up to 200 every year in Britain alone if VW drags its feet, according to a study by Harvard University and Massachusetts Institute of Technology, specifically examining the VW diesel car impact. VW's criminal act has led to recalls of 482,000 cars in America and 1.2 million in Britain, leaving the company facing an investigation by the Serious Fraud Office for "corporate criminality." Britain's Transport Minister, Robert Goodwill, says the option of pursuing a prosecution of corporate manslaughter is also "open."

So how has the EU-wide legislative 'green' environment come to this ugly pass? When it came to global warming issues an EU official said that the block was carbon neutral but because petrol emits more carbon than diesel the latter was favoured with lower fuel duties and other incentives. This soon led to half of all cars sold in Britain being diesel-powered. Unlike petrol, however, diesel emits lethal sub 2.5 micron oily particulates which soot filters and other emission controls cannot eradicate, so they lurk permanently lodged in the body as silent, insidious killers.

What Brussels' unelected officials want from their watering down of emission rules is that diesel engine manufacturers be allowed to exceed legal levels of nitrogen oxides (NOx) by 110% between September 2017 and the start of 2020. After that, the industry will be permitted to exceed the limit by 50% indefinitely, a time frame that would apply to new models. To their credit, Denmark's and Holland's officials voted against such watering down. Clearly, the EU policy makers are out to protect diesel technology, the mainstay of the European motor industry, irrespective of health concerns. That does not, however, mean that the public cannot fight back against an industry that has callously put profit before lives.

In Britain, for example, the Government plans to improve air quality in city centres, with diesel vehicle owners facing pollution surcharges, extra parking charges and even a ban on entering towns and cities at certain times. In the short term these diesel-free zones and punitive surcharges are the best way to tackle the problem of law-breaking, diesel vehicle producers but there is much the public can do to break the arrogant spirit of not just VW but other suspected diesel car producers. They could stop buying diesel cars forever.

In the logistics industry the problem of eschewing diesel forklifts is less in that the alternative motive power sources like electric and the oncoming hydrogen fuel cells and bio-gas are more than just feasible alternatives. At one time diesel was favoured over electric because of its superior performance. That is no longer the case cite the electric forklift lobby owing to advances in battery technology, in particular.

The need for strong, determined action now is imperative. Dr Penny Woods, chief executive of the British Lung Foundation, said: "Every year in the UK there are tens of thousands of premature deaths linked to air pollution...The VW emissions scandal is only the tip of the iceberg."
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Wednesday, 23 September 2015

More woe for British food retail suppliers?

The tribulations of the food and drinks suppliers seem only to be getting worse at the hands of their large retail taskmasters. Not content with extending payments to quarterly intervals, or worse, the world's biggest food retailer, Walmart (sales $486 billion p.a.) now proposes to charge its suppliers for storing goods in its own warehouses and shelf space in new shops. For some years, of course, other food retailers have levied multiple charges like rental for favourable shop shelf positions but Walmart has been reluctant to be so proactive. However, for added chutzpah, to help suppliers adjust to prolonged payment schedules, Walmart is encouraging them to seek low-interest loans through one of its financing programmes.Understandably, many of its 10,000 suppliers are discommoded, with some reaching for their lawyers, and one wonders how long it may be before Walmart's British subsidiary, ASDA, one of the four dominant UK grocers, will follow suit.

Some see Walmart's move as an attempt to fatten its margins and offset raises it recently gave store workers but Walmart says its new fees are part of a strategy to revive its US business through moves like keeping its often chilly stores warmer.

This strategy of business revival may have disturbing implications for all of Britain's grocery retail suppliers because the big four grocers are struggling to stem market share losses to the smaller, largely foreign-owned, retailers who offer so much better value, based on their business model that gives them logistics advantages the big retailers cannot enjoy with their current business models.

These no-frills, low-cost, recent UK start-up retailers like Aldi, Netto and Lidl have one enormous logistics advantage over the giants. Their small, fast-moving SKU range of typically 1,600 products, means that no vast sums of money are tied up in huge stocks for long periods, a cost that can dwarf all other warehouse costs combined. Some 25 years ago I visited the Danish food discounter, Netto, where just one centralised distribution centre (DC) replenished all of its 120 EPOS-connected shops overnight so that 90% of the DC's stocks passed through it every 24 hours. SKUs that became slow movers were quickly replaced for new, hoped-for fast movers.

However much Walmart may argue that driving everyday low cost gets to everyday low price increases sales for them and suppliers, the inescapable fact remains that without a fundamental change in their business model to meet the new paradigm shift in shoppers' habits, where good value is paramount, it is unlikely to succeed against the arrivistes tilting at the giants.
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