High-Tech Exports Will Be in Demand, Says UPS

The UPS annual “Change in the (Supply) Chain” survey, conducted by IDC Manufacturing Insights and targeting U.S.-based senior-level supply chain decision makers in the high-tech/electronics industry, suggests renewed confidence in the nation’s exporting potential.

Despite economic uncertainty at home and abroad, survey respondents were bullish, said UPS.

“The anticipated shift in consumer market demand for high-tech goods brings opportunities and challenges for high-tech companies,” said Ken Rankin, high-tech marketing director at UPS. “Global demand will continue to grow in new and existing markets, causing supply chain executives to shift not only their fulfillment operations but also their sourcing strategies to serve those markets. We have already begun to see such a shift as companies look to India and Brazil as key markets not only for fulfillment but for production as well.”

Citing legislative changes and rising labor rates abroad as factors, 85 percent of U.S. high-tech executives believe the Obama administration’s National Export Initiative goal to double exports by 2014 is either “very likely” or “somewhat likely” to be achieved versus 40 percent who believed so just after the goal was set two years ago.

The survey is designed to uncover top business and supply chain trends driving change in the high-tech/electronics industry. The 2012 survey focused specifically on exporting and was conducted in May through July 2012.

Among executives who believe the export goal is achievable, nearly one in three attribute this to the steady increase in disposable income in emerging markets. Another third cite rising labor rates in traditional low-cost manufacturing countries as a primary factor, and approximately one in five cite legislative changes such as recent free trade agreements in Asia. A large majority, 81 percent, of U.S. high-tech executives anticipate recent free trade agreements in Asia will increase their company’s imports and exports to and from the region.

Although North America is anticipated to remain the largest high-tech consumer market over the next three to five years, demand for high-tech products is expected to decrease by seven percent in the region while demand in other markets is expected to increase, in some regions by double-digit percentages.

Specifically, executives report plans to increase sales/fulfillment in India, the Middle East and Africa by 22 percent each and in Brazil by 18 percent. Sales/fulfillment in other South American regions is expected to increase 19 percent. Eastern Europe (15 percent), Korea (13 percent), China (8 percent) and other Asian nations (8 percent) also rank on the list of top high-tech consumer demand markets.

IDC Manufacturing Insights Practice Director Kimberly Knickle said that shippers will be asking a number of questions before targeting these areas, however.

“Shippers soon discover which regions are capable of reliably serving their needs,” she said. “Can the seaports handle dense delivery? Can the airport accommodate five flights a day? What is the labor situation? Security will always be key. It’s all about infrastructure.”

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