Sales of luxury goods are doing quite well, according to a recent report from LVMH, the manufacturer of Louis Vuitton bags and accessories and Dom Perignon champagne. The world’s largest luxury goods purveyor, LVMH reported a 53 percent increase in net profits to €1.1 billion ($1.4 billion) on sales of €6.9 billion in the 1st half of 2010. According to Bernard Arnault, LVMH chairman, the increase is due to his company’s status as “pioneer, and its early implantation in regions with strong growth.” Similarly, apparel notables Burberry and Hermes experienced a 27 percent increase in sales during the 1st quarter. Luxury cars like BMW and Porsche once again are in strong demand. However, Pam Danziger, president of Unity Marketing, urged caution. “We expect the pace of growth in luxury consumer spending to remain modest over the next two quarters,” Danziger said.
Posts Tagged ‘Asia’
Luxury Goods Sales Are Breaking Records
Thursday, August 26th, 2010Larry Armstrong: Architecture During a Recession
Monday, June 29th, 2009
The best way to survive a recession is to have a strategic plan firmly in place when the inevitable downturn happens. That’s the opinion of Larry Armstrong, President of Ware Malcomb, an Irvine, CA-based international architectural firm with ongoing projects in the United States, Latin America, Asia and Europe.
In a recent interview for the Alter NOW Podcasts, Armstrong says “There is no question that we learned everything about saving a business and building a business during the 1990s downturn.” In fact, Armstrong’s firm wrote a recession plan several years ago and determined exactly how they would react. “You have to look at what revenue can support what level of staff and all the additional expenses and costs which, over time, become discretionary. You have to look at those and decide what is necessary and what isn’t,” according to Armstrong.
The current environment does not support ego-driven, icon architecture. Rather, there is a move towards thrift, because corporate users want to be seen as economical and functional — not as extravagant. The recession also has impacted Corporate America’s attitude towards green design and LEED-certified buildings. According to Armstrong, “We’re seeing a bit of a retreat - not major - and a vast majority of our projects are still LEED certified”. Still, if the project is industrial, Armstrong is not hearing a desire for LEED certification anymore.
To listen to Larry Armstrong’s full interview on architecture during a recession, click here for the podcast.
No Port in the Global Fiscal Storm
Wednesday, April 22nd, 2009Shipping activity has plunged as much as one-third at U.S. ports most heavily invested in the once red-hot but now declining Asia trade.
Freight rates from South China to Europe have slid as much as 42 percent from some ports since November, leading shipping industry authority Drewry Container Freight Rate Insight Report to speculate that this once-robust market is in freefall.
As freight rates fall to record lows shipping companies are playing hardball to remain competitive, even though relatively little product is being shipped these days. According to Drewry, container lines could see a $68 billion plunge in global revenues this year, compared with 2008 revenues of $220 billion. Drewry notes that global all-in freight rates fell to $1,681 per 40-foot box, down from $2,098 in November. That’s a steep $400 drop per feu (forty-foot equivalent unit) or 20 percent in just two months.
The ports of Los Angeles and Long Beach are slashing cargo rates to retain old customers and attract whatever new business they can. Spanning 10,000 acres, these vast ports typically handle $357 billion in goods every year. The ripple effect of this year’s overall 18.1 percent downturn is evident in California’s vital Inland Empire logistics market, where higher vacancy rates - now approaching nine percent — are translating to cheaper rents.
Conditions are slightly better at the East Coast ports of New York and New Jersey, because their diverse mix of trading partners include Asia, Europe, Latin America and South America.
Foreign Investors Like Luxury
Friday, October 24th, 2008Volatile oil prices will minimally impact global air-freight growth over the long term, according to a Boeing Company report cited in a recent GlobeSt.com article. The Chicago-based aircraft manufacturing giant’s Current Market Outlook 2008 predicts that growth will achieve an annualized average rate of 5.8 percent from 2007 through 2027. Similarly, the report projects that the world freighter fleet will nearly double from 1,948 planes today to 3,892 over the next 20 years.
“The forecast is based on a number of factors, most significantly economic growth in diverse areas of the world,” said Jim Edgar, Boeing’s regional director, cargo marketing for Asia. “Over the long term, global economic growth will drive demand for new, high-value products as well as seasonal perishables that people have become accustomed to enjoying.”
The report notes that the nature of the air-freighter fleet will change as larger aircraft increase their market share. Currently, the largest freighters make up 26 percent of the market; in 20 years, that number will rise to 35 percent. Fleet additions will include 863 new-production aircraft; 641 of those will be wide-body planes with the capacity to carry more than 80 tons. The share of standard-body freighters (defined as having less than a 45-ton capacity with single-aisle body width) will fall from 39 percent to 35 percent over the next 20 years.
“We expect several trends to continue,” according to Edgar. “Dedicated freighters will continue to provide an increasing proportion of air-cargo capacity, going to nearly 54 percent, and the industry will continue to move to larger airplanes.”
High Costs Could Impact Shipping Routes
Wednesday, September 24th, 2008Two trends in international trade worth highlighting:
American exports are booming, thanks to the dollar’s current weakness. This considerable increase in volume has made it virtually impossible for U.S. manufacturers to get space on container ships within a four-week window, especially for products shipping from the ports of Los Angeles or Long Beach to any Pacific Rim destination. To illustrate the scope of the change, container space from these ports was available on demand just one year ago. And, according to a recent Reuters article, waiting times for cargo space have jumped from two days to three weeks on the East Coast.
Fast-rising transportation costs that are a direct result of the cost of fuel is another important logistics trend - one that could negatively impact globalization. According to an August 2 article in the International Herald Tribune by Larry Rohter, shipping a single loaded 40-foot container from Shanghai to the United States has soared to as much as $8,000 per unit, compared with just $3,000 earlier in the decade. Additionally, there are cost add-ons, primarily in the form of fuel surcharges and government-mandated fees. To save on fuel costs, container ships have shaved their top speeds by nearly 20 percent, which means it takes longer for products to reach their intended markets.
Shipping to and from Prince Rupert in British Columbia is slightly less costly, because the distance to Asian ports is shorter than from Los Angeles or Long Beach. Still, space amounts to several thousand dollars per container.
“If prices stay at these levels, that could lead to some significant rearrangement of production, among sectors and countries,” said C. Fred Bergsten, author of The United States and the World Economy and a director of the Peter G. Peterson Institute for International Economics in Washington. “You could have a very significant shock to traditional consumption patterns and also some important growth effects.”
A far better alternative could be to ship to and from Asia from the southern border regions, where the going rate is approximately $800 per loaded container. That price differential could potentially lure companies to move production facilities to Mexico or the Southwestern United States - primarily Texas. This would give them the opportunity to leverage the more attractive shipping rates through the growing Mexican ports of Lazaro Cardenas and Punto Colonet.