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China Rare Earth Ban Fuels Doubt About the Viability of the US Auto Industry

Published

1 an ago

16 décembre 2024

China Rare Earth Ban Fuels Doubt About The Viability Of The Us Auto Industry

The transition to electric vehicles will happen far faster than is commonly understood. Legacy auto companies are not likely to be competitive in the brave new world of electric vehicles. China’s new export bans put pressure on the two US companies – Tesla and Rivian – best positioned for leadership in the EV market.

Beginning on December 1st, China released plans to restrict graphite exports that can be sent to the US. Graphite is a critical input in EV batteries. Citing security and national interests, China will ban all high-quality, high-purity, high-density artificial graphite materials and related products from being exported out of the country without official permission, according to a joint announcement from the country’s Ministry of Commerce and the General Administration of Customs. 80% of the world’s Graphite is mined in China.

And in a move that affects all US auto manufacturers, China has banned the exports of three key rare minerals — gallium, germanium, and antimony – used to make semiconductors. According to Elon Musk, the chief executive officer at Tesla, “a car is essentially a computer on wheels.”

The move by China occurred after Washington expanded its list of Chinese companies subject to export controls on computer chip-making equipment, software and high-bandwidth memory chips. It is also seen as a new way of countering President-elect Trump. On November 25, he threatened to impose an “additional” 10% on the imports of Chinese goods in the US.

EVs Will Dominate the Automotive Industry

Michael Lenox, a Professor of Business Administration at Darden School of Business, University of Virginia, explained that industries typically have a technology S-curve associated with them. At the bottom of the S curve, performance and cost issues limit the adoption of the new technology. As performance increases and costs decrease, the new technology – electric vehicles in this case – rapidly replaces the incumbent technology.

The increased competitiveness of EVs has been driven by the “incredible decrease in the price of lithium-ion batteries over the last decade. In part, that is why this industry has become viable,” Dr. Lenox explained in a speech given to University of Virginia alumni. “The price decreases are continuing, but at a lower rate. It is not unreasonable to guess that in the next 2 or 3 years, the batteries will be cheap enough that these cars will be cheaper than internal combustion engines at the point of sale.” Restrictions of critical inputs, like graphite, could affect that progress.

The total cost of ownership for EVs is now lower than ICEs because of lower fuel/electricity costs, maintenance, and taxes. Based on “merit,” the number of new electric vehicles sold worldwide has experienced exponential growth.

US Legacy Auto Companies Face Obsolescence

Not all types of electric vehicles will have the same success in the market. “The plug-in hybrid is a transition technology that will be quickly replaced by battery-powered electric as range improves,” Mr. Lenox asserts. In terms of manufacturing, the hybrid plug-ins – built by legacy automakers like GM and Ford – consist of two systems. “You are building an internal combustion engine and an electric battery. There is no bending of the cost curve to make that cheaper than a pure EV. As range improves and the charging infrastructure improves, the logic of the plug-in hybrid goes away.”

Mr. Lenox also points out that the pure-play EV is much easier to assemble. “These are simple, simple machines.” In an internal combustion engine, you have a fuel injector, an exhaust system, a coolant, and a lubrication system. “All of these systems are expensive to make and maintain. An EV is a battery stack and an electric motor.” Because of this, factory automation can be more extensive in an EV plant. “We are already seeing the unions at GM and Ford fight this transition to EV because they know you will need far fewer people in the manufacturing plant.”

“I do worry about Ford and GM – about our legacy auto companies. They are pulling back on their EV production. I think it’s shortsighted. And it makes me very worried about whether they will survive a disruption like this.” In an attempt to survive the coming disruption, the professor believes we will start to see mergers and acquisitions among the legacy auto companies in the coming years. “History has not been kind to companies in this position.”

China Competes with the US For Leadership in EVs

Tesla is the US company best positioned for long-term leadership in the EV market. Tesla’s Model Y is the top-selling vehicle in the world.

When Americans think of electric vehicles, the first company they think of is Tesla. However, a Chinese company called BYD is the top global manufacturer of EVs. BYD sells a mixture of pure-play EVs and plug-in Hybrids.

BYD’s Seagull is listed at $11,000 in both China and Europe. This car is “clearly a disruptor.” Mr. Lenox points out that companies selling low-priced products initially deemed inferior have succeeded in moving up the quality curve and becoming market leaders in many industries. He points to the emergence of Toyota and Honda as leaders in the 1980s.

BYD’s U8 is now “competing at the highest luxury level. “Don’t dismiss BYD as a cheap Chinese car manufacturer.” They could well up being the world’s leading automaker.

Chinese EV manufacturers have a couple of other advantages. First off, the world’s largest market for EVs is China. Chinese consumers buy over 4 times as many EVs as Americans.

Secondly, the upstream supply chain for EV manufacturing strongly favors China. “The battery is far and away the critical component of these cars,” and Asian manufacturers dominate this market. The largest lithium battery manufacturer globally is China’s CATL. They have a market share of 35%. Other leading Chinese manufacturers include BYD, SK On, and CALB. The US is not competitive in this market.

However, Korean and Japanese companies do play here – companies like LG, Panasonic, and Samsung – so in the event of a worsening trade war with China, US EV makers have companies they can buy from. Nevertheless, 60% of the market is controlled by China.

But the situation becomes even more dire if you go further upstream in the lithium battery supply chain. The lithium, cobalt, and nickel supply chains – all of these are key materials in these batteries, are not a problem. However, graphite is also a core raw material. 80% of the world’s graphite is produced in China.

Then, after these ores are mined, they are processed into components used in the batteries – cathodes, anodes, separators, and electrolytes. These markets are also dominated by Chinese companies. Chinese market share dominance ranges from a low of 70% for cathodes up to 85% for anodes.

In short, the US could be at a real disadvantage in retaining leadership in the EV industry as geopolitical issues spike between the US and China.

The post China Rare Earth Ban Fuels Doubt About the Viability of the US Auto Industry appeared first on Logistics Viewpoints.

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India–U.S. Trade Announcement Creates Strategic Options, Not Executable Change

Published

12 heures ago

3 février 2026

India–u.s. Trade Announcement Creates Strategic Options, Not Executable Change

The announcement by Donald Trump and Narendra Modi of an India–U.S. “trade deal” has drawn immediate attention from global markets. From a supply chain and logistics perspective, however, the more important observation is not the scale of the claims, but the lack of formal detail required for execution.

At this stage, what exists is a political statement rather than a completed trade agreement. For companies managing sourcing, manufacturing, transportation, and compliance across India–U.S. trade lanes, uncertainty remains the defining condition.

What Has Been Announced So Far

Based on public statements from the U.S. administration and reporting by CNBC and Al Jazeera, several points have been asserted:

U.S. tariffs on Indian goods would be reduced from an effective 50 percent to 18 percent

India would reduce tariffs and non tariff barriers on U.S. goods, potentially to zero

India would stop purchasing Russian oil and increase energy purchases from the United States

India would significantly increase purchases of U.S. goods across energy, agriculture, technology, and industrial sectors

Statements from the Indian government have been more limited. New Delhi confirmed that U.S. tariffs on Indian exports would be reduced to 18 percent, but it did not publicly confirm commitments related to Russian oil, agricultural market access, or large scale procurement from U.S. suppliers.

This divergence matters. In supply chain planning, commitments only become relevant when they are documented, scoped, and enforceable.

Why This Is Not Yet a Trade Agreement

From an operational standpoint, the announcement lacks several elements required to support planning and execution:

No published tariff schedules by HS code

No clarification on rules of origin

No definition of non tariff barrier reductions

No implementation timelines

No enforcement or dispute resolution mechanisms

Without these components, companies cannot reliably model landed cost, supplier risk, or network design changes.

By comparison, India’s recently announced trade agreement with the European Union includes detailed provisions covering market access, regulatory alignment, and investment protections. Those provisions are what allow supply chain leaders to translate trade policy into operational decisions. The U.S. announcement does not yet meet that threshold.

Implications for Supply Chains

Tariff Reduction Could Be Material if Formalized

An 18 percent tariff rate would improve India’s competitive position relative to regional peers such as Vietnam, Bangladesh, and Pakistan. If implemented and sustained, this could support incremental sourcing from India in sectors such as textiles, pharmaceuticals, and light manufacturing.

For now, however, this remains a scenario rather than a planning assumption.

Energy Commitments Are the Largest Unknown

The claim that India would halt purchases of Russian oil has significant implications across energy, chemical, and manufacturing supply chains. Russian crude has been a key input for Indian refineries and downstream industrial production.

A shift away from that supply would affect energy input costs, tanker routing, port utilization, and U.S.–India crude and LNG trade volumes. None of these impacts can be assessed with confidence without confirmation from Indian regulators and implementing agencies.

Agriculture Remains Politically and Operationally Sensitive

U.S. officials have suggested expanded access for American agricultural exports. Historically, agriculture has been one of the most protected and politically sensitive sectors in India.

Any meaningful liberalization would raise questions around cold chain capacity, port infrastructure, domestic political resistance, and regulatory compliance. These factors introduce execution risk that supply chain leaders should consider carefully.

Compliance and Digital Trade Issues Are Unresolved

Several areas remain undefined:

Whether India will adjust pharmaceutical patent protections

Whether U.S. technology firms will receive exemptions from digital services taxes

Whether labor and environmental standards will be linked to market access

Each of these issues influences sourcing strategies, contract terms, and long term cost structures.

Practical Guidance for Supply Chain Leaders

Until formal documentation is released, a measured approach is warranted:

Avoid making structural network changes based on political announcements

Model tariff exposure using multiple scenarios rather than a single assumed outcome

Monitor customs and regulatory guidance rather than headline statements

Assess exposure to potential energy cost changes in Indian operations

Track implementation of the India–EU agreement as a near term reference point

Bottom Line

This announcement suggests a potential shift in the direction of India–U.S. trade relations, but it does not yet provide the clarity required for operational decision making.

For now, it creates strategic optionality rather than executable change.

Until tariff schedules, regulatory commitments, and enforcement mechanisms are formally published, supply chain and logistics leaders should treat this development as informational rather than actionable. In trade, execution begins only when the documentation exists.

The post India–U.S. Trade Announcement Creates Strategic Options, Not Executable Change appeared first on Logistics Viewpoints.

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Winter weather challenges, trade deals and more tariff threats – February 3, 2026 Update

Published

17 heures ago

3 février 2026

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Winter weather challenges, trade deals and more tariff threats – February 3, 2026 Update

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Published: February 3, 2026

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Weekly highlights

Ocean rates – Freightos Baltic Index

Asia-US West Coast prices (FBX01 Weekly) decreased 10% to $2,418/FEU.

Asia-US East Coast prices (FBX03 Weekly) decreased 2% to $3,859/FEU.

Asia-N. Europe prices (FBX11 Weekly) decreased 5% to $2,779/FEU.

Asia-Mediterranean prices(FBX13 Weekly) decreased 5% to $4,179/FEU.

Air rates – Freightos Air Index

China – N. America weekly prices increased 8% to $6.74/kg.

China – N. Europe weekly prices decreased 4% to $3.44/kg.

N. Europe – N. America weekly prices increased 10% to $2.53/kg.

Analysis

Winter weather is complicating logistics on both sides of the Atlantic. Affected areas in the US, especially the southeast and southern midwest are still recovering from last week’s major storm and cold.

Storms in the North Atlantic slowed vessel traffic and disrupted or shutdown operations at several container ports across Western Europe and into the Mediterranean late last week. Transits resumed and West Med ports restarted operations earlier this week, but the disruptions have already caused significant delays, and weather is expected to worsen again mid-week.

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The resulting delays and disruptions could increase congestion levels at N. Europe ports, but ocean rates from Asia to both N. Europe and the Mediterranean nonetheless dipped 5% last week as the pre-Lunar New Year rush comes to an end. Daily rates this week are sliding further with prices to N. Europe now down to about $2,600/FEU and $3,800/FEU to the Mediterranean – from respective highs of $3,000/FEU and $4,900/FEU in January.

Transpacific rates likewise slipped last week as LNY nears, with West Coast prices easing 10% to about $2,400/FEU and East Coast rates down 5% to $3,850/FEU. West Coast daily prices have continued to slide so far this week, with rates dropping to almost $1,900/FEU as of Monday, a level last seen in mid-December.

Prices across these lanes are significantly lower than this time last year due partly to fleet growth. ONE identified overcapacity as one driver of Q3 losses last year, with lower volumes due to trade war frontloading the other culprit.

And trade war uncertainty has persisted into 2026.

India – US container volumes have slumped since August when the US introduced 50% tariffs on many Indian exports. Just this week though, the US and India announced a breakthrough in negotiations that will lower tariffs to 18% in exchange for a reduction in India’s Russian oil purchases among other commitments. President Trump has yet to sign an executive order lowering tariffs, and the sides have not released details of the agreement, but once implemented, container demand is expected to rebound on this lane.

Recent steps in the other direction include Trump issuing an executive order that enables the US to impose tariffs on countries that sell oil to Cuba, and threatening tariffs and other punitive steps targeting Canada’s aviation manufacturing.

The recent volatility of and increasing barriers to trade with the US since Trump took office last year are major drivers of the warmer relations and increased and diversified trade developing between other major economies. The EU signed a major free trade agreement with India last week just after finalizing a deal with a group of South American countries, and other countries like the UK are exploring improved ties with China as well.

In a final recent geopolitical development, Panama’s Supreme Court nullified Hutchinson Port rights to operate its terminals at either end of the Panama Canal. The Hong Kong company was in stalled negotiations to sell those ports following Trump’s objection to a China-related presence in the canal. Maersk’s APMTP was appointed to take over operations in the interim.

In air cargo, pre-LNY demand may be one factor in China-US rates continuing to rebound to $6.74/kg last week from about $5.50/kg in early January. Post the new year slump, South East Asia – US prices are climbing as well, up to almost $5.00/kg last week from $4.00/kg just a few weeks ago.

China – Europe rates dipped 4% to $3.44/kg last week, with SEA – Europe prices up 7% to more than $3.20/kg, and transatlantic rates up 10% to more than $2.50/kg, a level 25% higher than early this year.

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Judah Levine

Head of Research, Freightos Group

Judah is an experienced market research manager, using data-driven analytics to deliver market-based insights. Judah produces the Freightos Group’s FBX Weekly Freight Update and other research on what’s happening in the industry from shipper behaviors to the latest in logistics technology and digitization.

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Microsoft and the Operationalization of AI: Why Platform Strategy Is Colliding with Execution Reality

Published

2 jours ago

2 février 2026

Microsoft And The Operationalization Of Ai: Why Platform Strategy Is Colliding With Execution Reality

Microsoft has positioned itself as one of the central platforms for enterprise AI. Through Azure, Copilot, Fabric, and a rapidly expanding ecosystem of AI services, the company is not merely offering tools, it is proposing an operating model for how intelligence should be embedded across enterprise workflows.

For supply chain and logistics leaders, the significance of Microsoft’s strategy is less about individual features and more about how platform decisions increasingly shape where AI lives, how it is governed, and which decisions it ultimately influences.

From Cloud Infrastructure to Operating Layer

Historically, Microsoft’s role in supply chain technology centered on infrastructure and productivity software. Azure provided scalable compute and storage, while Office and collaboration tools supported planning and coordination. That boundary has shifted.

Microsoft is now positioning AI as a horizontal operating layer that spans data management, analytics, decision support, and execution. Azure AI services, Microsoft Fabric, and Copilot are designed to work together, reducing friction between data ingestion, model development, and business consumption.

The implication for operations leaders is subtle but important: AI is no longer something added to systems; it is increasingly embedded into the platforms those systems rely on.

Copilot and the Question of Decision Proximity

Copilot has become a focal point of Microsoft’s AI narrative. Positioned as an assistive layer across applications, Copilot aims to surface insights, generate recommendations, and automate routine tasks.

For supply chain use cases, the key question is not whether Copilot can generate answers, but where those answers appear in the decision chain. Insights delivered inside productivity tools can improve awareness and coordination, but operational value depends on whether recommendations are connected to execution systems.

This highlights a broader pattern: AI that remains advisory improves efficiency; AI that is embedded into workflows influences outcomes. Microsoft’s challenge is bridging that gap consistently across heterogeneous enterprise environments.

Microsoft Fabric and the Data Foundation Problem

Microsoft Fabric represents an attempt to simplify and unify the enterprise data landscape. By combining data engineering, analytics, and governance into a single platform, Microsoft is addressing one of the most persistent barriers to AI adoption: fragmented and inconsistent data.

For supply chain organizations, Fabric’s value lies in its potential to standardize event data across planning, execution, and visibility systems. However, unification does not eliminate the need for data discipline. Event quality, latency, and ownership remain operational issues, not platform features.

Fabric reduces friction, but it does not resolve governance by itself.

Integration with Existing Enterprise Systems

Microsoft’s AI strategy assumes coexistence with existing ERP, WMS, TMS, and planning platforms. Integration, rather than replacement, is the dominant pattern.

This creates both opportunity and risk. On one hand, Microsoft can act as a connective tissue across systems that were never designed to work together. On the other, loosely coupled integration increases dependence on interface stability and data consistency.

In execution-heavy environments, even small integration failures can cascade quickly. As AI becomes more embedded, integration reliability becomes a strategic concern.

Where AI Is Delivering Value, and Where It Isn’t

AI deployments tend to deliver value fastest in areas such as demand sensing, scenario analysis, reporting automation, and exception identification. These use cases align well with Microsoft’s strengths in analytics, collaboration, and scalable infrastructure.

Where value is harder to realize is in autonomous execution. Closed-loop decision-making that directly triggers operational action requires tighter coupling with execution systems and clearer decision ownership.

This reinforces a recurring theme: platform AI accelerates insight, but execution still depends on operating model design.

Constraints That Still Apply

Despite the breadth of Microsoft’s AI portfolio, familiar constraints remain. Data quality, security, compliance, and organizational readiness continue to limit outcomes. AI platforms do not eliminate the need for process clarity or decision accountability.

In some cases, the ease of deploying AI services can outpace an organization’s ability to absorb them operationally. This creates a risk of insight saturation without action.

Why Microsoft Matters to Supply Chain Leaders

Microsoft’s relevance lies in its ability to shape the default environment in which enterprise AI operates. Platform decisions made today influence data architectures, governance models, and user expectations for years.

For supply chain leaders, the key takeaway is not to adopt Microsoft’s AI stack wholesale, but to understand how platform-level AI affects where intelligence sits, how it flows, and who ultimately acts on it.

The next phase of AI adoption will not be defined solely by model performance. It will be defined by how effectively platforms like Microsoft’s translate intelligence into operational decisions under real-world constraints.

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