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Economic Digest

Business Without Borders ®

Economic Digest – January 2016


Canadian exports of crude oil by rail surged 38 per cent in the third quarter of 2015 as wider price differentials improved the economics of shipping oil on tank cars to markets and refineries in the United States. The country exported 116,000 barrels of crude a day in the three months ending September 30th, up from 84.000 barrels per day in the second quarter.


Flush with grain from the third largest US corn harvest, ethanol distilleries are cranking out unprecedented amounts of the biofuel. Ethanol production recently reached a record level of 1- million barrels a day for an annualized rate of 15.5-billion gallons. Demand for the additive to be blended into gasoline has been at an all-time high for most of 2015 as drivers take to the road amid cheap pump prices. Ethanol makes up about 10 per cent of gasoline consumption. Farmers harvested 13,654-billion bushels of the grain in 2015.


The United States Postal Service (USPS) reported a net loss of US$5.1-billion last November in the 2015 fiscal year. The loss is the latest in a steady delivery of poor results going back nearly a decade. The last year America’s post earned a profit was in 2006 when mail volume peaked at 213.1-billion pieces.  By 2015, total mail volume had fallen to 154.2-billion pieces. The biggest decline has been in first-class mail, its main money-maker. However, online shopping package volume at post offices is up 14.1 per cent and package revenues are up 11.4 per cent.


In 2014 the capacity of the global fleet of merchant ships grew by 3.5 per cent, to a total of 1.75-billion deadweight tonnage (a measure of how much vessels can transport).  This was the slowest annual growth rate in over a decade.  Ships are delivered several years after they are bought and Greece and Japan remain the two largest ship-owning countries by capacity, controlling almost 30 per cent of the world’s tonnage. China now owns the most ships. Many countries’ ships are registered under foreign flags of convenience, but China has a large proportion of nationally flagged ships used in coastal shipping.


A US federal Court, at the request of the US Federal Trade Commission has halted a nationwide work-at-home scam that took more than US$7-million from tens of thousands of consumers who were lured with false claims that they could earn up to $5,000 or more a week by stuffing and mailing advertising letters from home.  According to papers filed with the court, only 10 per cent of consumers received any payment at all, and their total average earnings were $19.50, far less than the $99 to $399 they had to pay up-front to participate.


The Trans Pacific Partnership (TPP), trade deal signals a disruption for Canadian dairy farmers, but the experience of their Dutch counterparts over the past several years offers hope and some lessons. Earlier last year, the European Union abolished its milk quota system which had been in place for about 30 years. By that time the Dutch dairy industry was already well established in the international market. The Netherlands only ranks 14th globally in milk production, but nearly two-thirds are exported, with 2013 revenue of over US$9-billion. By contrast, Canadian dairy exports now only account for $281-million. Producing milk in the Netherlands is expensive due to high land and labour prices.


There is a huge gap between the most and least fuel-efficient transatlantic airlines. The International Council on Clean Transportation (ICCT) ranked the top twenty transatlantic carriers by how much fuel they burned per passenger, per kilometre in 2014. Low cost airline Norwegian Air Shuttle came in first place, with 40 passenger kilometres per litre. By comparison, last place British Airways was found to burn 51 per cent more fuel than Norwegian at 27 passenger kilometres per litre. Air Canada, the only Canadian airline to be ranked, was tied for fourth place with four other airlines, generating 33 passenger kilometres per litre. The ICCT previously studied fuel efficiency between US airlines and found a difference of about 25 per cent between the best and worst performers.


Sales of Canadian aquaculture products and services amounted to C$735.4-million in 2014, down 23.1 per cent from 2013.  To avoid the onset of disease, some aquaculture farms harvested their fish earlier in the growing cycle in 2013. The early harvest increased the reported sales of aquaculture products in 2013, but lowered the inventory of finished goods available in 2014, resulting in the decrease in sales of aquaculture products.


December and January are the worst months for travellers to lose their bags when flying. During the first nine months of 2014, 3.3 bags were lost for every 1000 passengers. However, during the 2007 peak in air travel, airlines were mishandling twice as many, 7.2 bags per 1,000 passengers. Globally, the baggage mishandling rate has fallen 61 per cent from its peak in 2007 saving the industry US$18-billion. The majority, 80 per cent, are not lost, just delayed while 14 per cent are damaged or have their contents stolen and nearly six per cent are never found,


India’s growing economy and booming population means that its energy demand is set to increase rapidly over the next few decades.  It is estimated that coal will remain India’s most used fuel, making up 49 per cent of total energy demand in 2040. The forecast of a 6-million-barrels-a-day increase in oil consumption is the largest projected for any country. The rise can be largely be explained by increased vehicle ownership: 260-million passenger cars will be added to the Indian fleet over the next 25 years. Renewable and nuclear power will make up only a small slice of consumption.


Scientists in Japan have developed a type of ultra-hard glass. The new material is thin as well as hard and is made using alumina, an oxide of aluminium. If successfully commercialised, it could increase the durability of glass used in the windows of buildings, cars and in smartphone displays.


The UN is predicting that over 50 million people will be forced to leave their homes by 2020 because their land has turned to desert. Each year the UN estimates that 12-million hectares of land are lost, land where 20-million tonnes of grain could have been grown. And that land degradation affects 1.5-billion people globally. Desertification is defined as the persistent degradation of dry land ecosystems by human activities and by climate change.


The traditional stethoscope could someday be replaced by devices that incorporate smartphone technology. A group of cardiologists in Florida has developed what they call HeartBuds, a device that plugs into a smartphone and operates with an app. They rate their device as comparable in sound quality to the more traditional and electronic models that have the Y-shaped tube that feeds into the doctor’s ears. Research shows that the HeartBuds performed just as well in detecting heart murmurs and carotid issues.


Computers are not great for storing secrets. The number of data breaches at organizations in America hit a record high of 783 in 2014. A data breach is defined as the loss of information from computers or storage media that could potentially lead to identity theft, including social-security numbers, bank-account details, driving–license numbers and medical information. Since 2005 there have been more than 5,000 known incidents of this type, involving an estimated 675-million individual records. The real figures are likely to be much higher. In 2014, medical records accounted for 43 per cent of all data stolen.


One of the most renowned Belgian beer brewers said it is the victim of climate change because increasingly high temperatures have shortened the brewing season by a month compared with the 1950s.  The Cantillon brewery needs to cool its hot brew in open tanks so that natural yeasts in the air can help produce the sour beer that has developed a niche following throughout the world. However, because summer temperatures have stayed as high as 15C (59F) at night, Cantillon has stopped brewing since it doesn’t want to use artificial refrigeration.


Billion dollar drone company DJI is expanding from consumer and camera drones into the agriculture industry.  The Chinese firm’s latest model is a crop-spraying drone, which it claims is 40 times more efficient than manual spraying, despite having just 12 minutes of flight time.  It will be released in China and Korea where hand-spraying is more common. DJI made US$500-million in drone sales in 2014 and some analysts predict the firm will hit $1-billion in sales this year. The Agras MG-1 model has eight rotors and can carry up to 10kg of crop-spraying fluids per flight. The model is expected to cost about US$15,000. Their current best seller, the Phantom 2 Vision+ camera drone, cost $1100.


The world’s biggest canal project, a US$50-billion interoceanic canal through Nicaragua, has been delayed following an environmental report and a collapse in the fortunes of the Chinese businessman behind the company that planned to build it. The Hong Kong Nicaragua Development (HKND) Group announced it would be another year before the start of major works on the proposed rival to the Panama Canal. Preliminary operations on ports and access roads started 14 months ago. In the past 500 years there have been more than 70 canal proposals that have been later dropped.


A new method of delivering data, which uses the visible spectrum rather than radio waves, has been tested in a working office. Li-Fi can deliver internet access 100 times faster than traditional wi-fi, offering speeds up to 1Gpbs (gigabit per second). It requires a light source, such as a standard LED bulb, an internet connection and a photo detector. Laboratory tests have shown theoretical speeds of up to 224Gbps. The visible light spectrum is 10,000 times larger than the radio waves we use for wi-fi today. Information can be encoded in light pulses, just like in traditional TV remote controls.


According to the Nigerian government, thieves have stolen nearly US$250-million of gasoline from a single pipeline in the past year. Half a billion litres have been taken from a pipeline that runs north-east from Lagos and stretches 250km from Lagos to the city of Ilorin. The incessant hacking of the System 2B pipeline has made the task of providing a seamless flow of petroleum products to retail outlets more burdensome.  Long queues often form at gas stations across Nigeria.


US Food and Drug Administration have given the go-ahead to genetically modified salmon, making it the first GM animal destined for human consumption.  The FDA says that it had given approval on the grounds that “food from fish is safe to eat.” The company behind the fish first submitted its application almost 20 years ago. Opponents say consumers do not wish to eat genetically engineered seafood and have expressed concern that the salmon could pose risks to other fish if it were to escape into the environment. The FDA has ruled that the salmon must be raised in tanks on land at only two facilities in Canada and Panama. It will not be bred or raised in the US.


A medical dressing that changes colour when it detects infection could cut down the unnecessary use of antibiotics according to scientists at Bath University.  It works by releasing fluorescent dye from tiny capsules when toxins are given out by bacteria in a wound. This allows doctors to identify bacterial infections and treat them more quickly, particularly in children with burns. These infections can slow the healing of wounds, leading to longer stays in hospital and sometimes permanent scarring and in severe cases, infections can kill.


A Google self-drive car has been pulled over on the highway in California for driving too slowly. No action was taken but it does raise the issue of whether such cars, in their current form, are too cautious.

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