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Algorithmically Derived Forecasts Provide a Stronger Foundation for Forward-Looking Financial Steering

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STUTTGART, Germany, Dec. 5, 2019 /Press Media Release/ Technology has enabled forward-looking steering in ways that were not possible even a few years ago. By automating and digitizing its forecasting processes, Daimler Mobility can rapidly generate forecasts about the future development of the most important factors influencing performance. The forecasts provide early guidance on the likely development of KPIs under different scenarios and on the impact these changes will have on future results. Decision makers can use this foresight to assess the attractiveness of alternative pathways that the company might take. As a result, they can make decisions to exploit opportunities and avoid adverse developments much faster than in the past.

Daimler Mobility has deployed an enriched, forward-looking approach to financial steering that helps it more effectively adjust to the ever-increasing levels of uncertainty in today’s business environment. The approach defines course corrections by analyzing algorithmically derived forecasts of the way key metrics will evolve over specific time horizons. Armed with foresight into how conditions will change, the company can take action to preempt unfavorable outcomes and promote competitive advantage. Daimler Mobility and Boston Consulting Group (BCG) discuss the model in a report, The Power of Algorithmic Forecasting, released today. The report is the first installment in a series titled “The Art of Forward-Looking Steering.”

“To master the digital transformation, a company must take a comprehensive approach to algorithm-based forward-looking steering,” said Stephan Unger, Daimler Mobility’s chief financial officer. “This includes not only advanced analytical methods, new technologies, and the right expertise, but also an engaging approach to change management.”

Daimler Mobility’s algorithmically generated forecasts predict performance for the next 18 months for more than 50 business entities, each with approximately 100 KPIs. In 70% of its predictions, the statistical forecast has proved to be the same as or more accurate than experts’ judgment—and it achieved these results faster and with far less effort than the experts did.

“This success comes from a forecasting engine managed by data scientists in collaboration with business controllers and IT experts, as well as from a rigorously designed and executed transformation,” said Marc Rodt, a BCG partner, member of the firm’s Center for CFO Excellence, and report coauthor. “The effort has yielded foresight that enables the company to shape the future by preempting negative outcomes and exploiting new opportunities.”

Adopting an algorithm-based forward-looking steering model is not easy. Among the many challenges involved are assembling a team that has statistical capabilities, setting up a new technical infrastructure, and building people’s trust in technology. In subsequent publications in this series, as well as in a video presentation, Daimler Mobility and BCG will discuss how to meet those challenges.

Source: Boston Consulting Group
www.bcg.com

Venture Capital Digest

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The Future of Fresh: Opportunities exist for retailers and manufacturers to realize value in the fresh food category

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Key takeaways
Over the last two years, two-thirds of consumers increased spending on the fresh food category.
Over 60% of consumers spend up to 30% of their average monthly grocery budget on this category.
Price is one of the most important considerations of fresh food purchases, with 92% of consumers citing cost as an important aspect in their purchasing decisions.
Eighty percent of consumers actively seek healthier versions of the food they purchase and 77% avoid preservatives and chemicals in their food.
When purchasing perishables, 58% of consumers actively consider sustainability aspects, such as local sourcing, recyclable packaging and water neutrality.

Why this matters
To gain deeper insight into fresh food consumers as well as fresh food manufacturers and retailers, Deloitte’s “Future of Fresh” study surveyed 2,000 consumers and 153 fresh food industry executives. The survey provides key insights into consumer behavior and how manufacturers and retailers can grow the fresh food category.

The Future of Fresh
FreshTech is on rise, Market Analysis

Growth in consumer demand, shelf space outpaces fresh food sales
With 2 in 3 consumers reporting more fresh food purchases, retailers are increasing the space allotted to fresh foods in their stores to meet the rise in consumer demand. But despite these trends, total fresh food sales continue to be outpaced in growth compared to overall food sales, creating untapped potential for retailers and manufacturers.

Key quote
“Despite the prominence given to fresh foods in stores, growth rates are not living up to their potential. Retailers should better understand and centralize management of the fresh food category to help address the issue from not only the consumer demand side, but also the manufacturing and retail side.”
Barb Renner,
vice chairman and U.S. consumer products leader,
Deloitte LLP

How Americans shop (or don’t shop) for fresh foods
Advanced analysis on U.S. fresh food consumers’ attitudes and behavioral patterns revealed three distinct buying personas:

Forwards (31%): Consumers who are very committed to health and wellness, actively choose health over convenience, place a high value on sustainability and are more willing to pay a premium for fresh foods.
Followers (47%): Consumers who display interest in healthier options and sustainability and have a willingness and ability to purchase fresh foods but aren’t as enthusiastic as Forwards.
Neutrals (22%): Consumers who show the lowest commitment to health and wellness, prioritizing price and convenience over health.
How retailers and manufacturers are prioritizing fresh foods
Much like consumers, companies in the retail and manufacturing space are also embracing the fresh food category at varying levels. When assessing companies on the criteria of percentage of revenue from fresh foods in relation to the annual budget for technology and supporting processes, four types of organizations emerge: Leaders, Learners, Aspirers and Testers.

Leaders are achieving higher fresh food sales with smaller teams and greater investment in technology and supporting processes. Leaders are more than three times as likely to have a centralized staff for fresh foods (20%) than Learners (6%) and tend to have smaller teams, with 71% having less than 20 people managing their fresh foods categories. Leaders also tend to have a slower growth in fresh food staff with only a 27% annual increase compared to 53% for Learners. Leaders also show more caution when growing their budgets, with a 57% annual increase compared to 79% for Learners.

When it comes to managing fresh foods, manufacturers cite the following challenges: quality control of raw materials on the factory floor (25%), processing (20%), and procurement of raw materials (13%). For retailers, key challenges are spoilage (32%), product pricing (16%), and shelf life (15%). Storage is also a key concern for both manufacturers (20%) and retailers (24%).

Implementation of more advanced technologies is low
Technology can be a key enabler, but most organizations are in their nascent stages of implementing more advanced technologies. For example, only 38% have partially or fully implemented artificial intelligence based warehouse management to monitor fresh food stocks, with 3% using in-store technologies that allow for consumers to access product information using a smartphone. Further, only 9% are using big data and analytics to identify actionable insights and trends and only 4% are using blockchain to track the movement of fresh foods throughout the supply chain.

Across all organizations, the most common barriers to technology implementation include the extent of time required to implement technology (78%) and a lack of skilled workers (28%).

Secondary quote
“Retailers and manufacturers have ample opportunity to stimulate consumer demand by targeting ‘Followers’ as well as ‘Forwards’ and highlighting value proposition of fresh food through communication on sourcing, safety, and healthy eating. As companies create additional demand, they should look to implement technologies and analytics that help to deliver on the Fresh promise and improve their costs.”
Stephen Rogers,
executive director, Deloitte Insights Consumer Industry Center, Deloitte LLP

SOURCE: Deloitte
http://www.deloitte.com/us

Slow Growth but No Recession Predicted for U.S. Economy

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Stopping just short of predicting a recession in the U.S. through its 2021 forecast horizon, the UCLA Anderson Forecast, in its third quarterly report of 2019, expects the national economy to slow to 0.4% in the second half of 2020, before rebounding to 2.1% in 2021. Given the slow growth rate nationally and the weakness in the housing market, the Forecast expects California’s unemployment rate to rise to an average of 5.1% in the fourth quarter of 2020. For the entire years of 2020 and 2021, the unemployment rate in the state is expected to average 4.6%.

The National Forecast

The latest UCLA Anderson Forecast for the nation opens by acknowledging a global economy in flux, taking into account the U.S. trade war with China, President Trump’s criticism of Federal Reserve Chair Jerome Powell, near-recessionary conditions in Europe, Brexit, slowing economies in Brazil and Mexico, and all manner of rising geopolitical tensions. But despite the fluidity, the forecast does not suggest negative growth.

“Although we are not calling for a recession over the forecast horizon, as we have noted for over a year, it is very likely that economic growth will stall in the second half of 2020 as the effects of the 2017 tax cuts wane and as trade tensions exact their toll on corporate investments,” writes senior economist David Shulman in an essay titled “The Year of Living Dangerously.” The national forecast calls for real GDP growth of 2.1% and 1.2% in 2019 and 2020. “Indeed, in the second half of 2020, growth is expected to decline to 0.4% ― not quite a recession ― but pretty close,” writes Shulman. In 2021, GDP is expected to return to 2.1% growth.

Shulman’s essay cites six concerns: the trade war with China; the weakening of business investment in equipment and structures; the negatively sloped yield curve; the slowdown in employment growth; the inability of housing activity to launch; and the stagnant stock market. As for China, Shulman quotes a Federal Reserve study that noted that trade uncertainty lowered real GDP growth about 1% in 2019, while projecting a similar drop next year. “Make no mistake,” Shulman writes, “American businesses and consumers will bear the brunt of the tariffs. And despite all of the administration’s heightened rhetoric, the real trade deficit will continue to rise as it approaches $1 trillion this year.”

On the plus side, Shulman notes that consumption ― which accounts for about two-thirds of GDP ― continues to roll along. Federal spending is advancing smartly in response to the recent budget deal and businesses continue to invest in intellectual property.

Shulman concludes his report by noting that the near 3% growth rate of more than a year ago is now a memory, with fourth quarter to fourth quarter real GDP growth for 2019 and 2020 now forecast to be 2.1% and 1.2% respectively. In addition, job growth will slow to under 70,000 per month ― well below the 200,000 jobs per month that we’ve become used to. The greatest risk to an already slowing economy are the tariff policies and their effect on exports and business investment.

The California Report

The UCLA Anderson Forecast’s September 2019 report for California ponders why the state continues to outpace the nation in terms of job creation and economic growth. The answer, according to UCLA Anderson Forecast director Jerry Nickelsburg, is found in the growth areas of the state. “California is outperforming the U.S. for the same reason it has over the past decade; productivity gains through the employment of labor-augmenting technology,” Nickelsburg writes.

Nickelsburg’s report notes that eventually the slowing national and world economies will take their toll and that toll is likely to start getting paid in the latter part of next year, right around the time GDP falls below 1%.

But the news is not all negative.

“At present, and in spite of the trade tensions between the United States and China, the economic news is positive. The July county-wide unemployment rates from Marin to Santa Clara are below 2.8%, from Sonoma through the East Bay below 3.5% and, in Southern California, Orange and San Diego, are at or below the U.S. rate of 3.7%,” writes Nickelsburg, while pointing out that L.A. and the inland regions are not doing quite as well.

The California forecast for total employment growth rates in 2019, 2020 and 2021 is 0.8%, 1.7% and 1.2%, respectively, as payroll jobs are expected to grow at a 1.6%, 1.1% and 0.9% rate across those years. “This reflects the stronger growth in payrolls over the last year, even while total employment growth was weaker,” Nickelsburg writes.

Real personal income growth for the state is predicted to be 1.3%, 1.7% and 1.9% over the three-year forecast period, as the continued growth in real personal income in 2020 reflects the changing mix of employment in California and tight labor markets in high-wage occupations. Homebuilding will be lower by about 11,000 units per year by the end of 2021 than previously forecast, as a consequence of the current weak housing market and the anticipated slowdown late next year.

Special Report: Tech Jobs, Talents and the Local Economy

In the first of a pair of additional reports, UCLA Anderson Forecast economist William Yu discusses the impact of tech job growth on U.S metroplexes; the relationship between tech job growth, local economic growth and low-skill job growth; and the relationship between human capital and tech job density. Yu’s analysis notes that the New York area employed the most tech workers as of 2018; Washington D.C. ranked second and Los Angeles third. However, it is San Francisco that saw the largest increase in such jobs from 2010 until 2018, adding 73,000 jobs in that time frame. San Jose has the highest density of tech jobs at 17.2%; Seattle ranks second with just under ten percent of the workforce in tech jobs.

Yu’s report ends with a pair of conclusions: First, the tech industry and tech jobs drive local economies as the associated high wages propel overall job growth including low-skill job growth, though wage growth of low-skill jobs is not guaranteed. Second, high human capital metros and regions are more likely to become tech clusters, as a region with high human capital and tech jobs tends to attract and recruit talent from outside the region.

Special Report: Parcel Taxes in California

In a companion essay, UCLA Anderson Forecast economist Leila Bengali examines some of the consequences of property parcel taxes, which may vary from community to community, on California real estate. Bengali’s report comments on such implications in an environment where home owners and potential home owners do not necessarily prioritize parcel taxes when making real estate decisions.

“The implications of California’s parcel tax system with imperfectly attentive consumers are mixed. Existing residents’ over sensitivity to parcel taxes may limit the number of options available both for themselves and for future residents, but future residents may not even be paying attention to the fact that they have choice,” Bengali writes. She adds that “buyers’ inattention may keep home prices higher than they otherwise would be, which is ultimately good for current residents and local governments.”

The UCLA Anderson September Forecast Conference: Focus on Technology

In addition to presentations of the U.S. and California forecasts, the September 2019 Forecast Conference, presented in partnership with UCLA Anderson’s Easton Center for Technology Management, features several panels and a keynote devoted to current trends and the implications of technology. The keynote will be delivered by Adam Miller (’94), founder and CEO of Cornerstone on Demand. The panel, moderated by Terry Kramer, director of the Easton Center, will feature a look at tech trends in Los Angeles from different perspectives. The conference takes place on September 25, 2019. Conference information may be found at bit.ly/2kQqKYf.

SOURCE UCLA Anderson Forecast
https://www.anderson.ucla.edu/centers/ucla-anderson-forecast

For Payments Players, a Tumultuous Landscape Brings New, Tougher Challenges

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Facing a Maturing Industry and Tighter Competition, Incumbents Must Accelerate Digitization, Gain Scale, Optimize E- and M-Commerce, and Tap into Developing Markets to Maintain Growth, Says New Report by BCG

As attackers continue to erode the edges of incumbent profit strongholds, established payments players must become ultra-focused to expand their businesses, concentrating on areas that are likely to be critical in the future and selecting those where they have natural advantages, according to a new report by Boston Consulting Group (BCG). The report, titled Global Payments 2019: Tapping into Pockets of Growth is being released today.

This 17th annual study by BCG outlines recent developments in the payments market globally and regionally, explores how retail providers can find the green shoots that will have the greatest impact in the 2020s and beyond, and explains why wholesale banks must reckon with digital disruption and find the most impactful areas for investment—focusing on a handful of strategic and operational areas that can deliver above-average growth. The report also offers action steps that payments providers can take to improve their competitive positions.

“The paths that global, regional, and local players take will vary tremendously,” said Yann Sénant, a Paris-based BCG partner, coauthor of the report, and global leader of the firm’s payments and transaction-banking segment. “But banks that capitalize on green-shoot growth areas, fast-track digitization, and operational improvements will reap outsize rewards.”

Market Outlook
According to analysis in the report—complemented by data from SWIFT, the world’s leading provider of secure financial messaging services—payments revenues globally should rise by a compound annual growth rate (CAGR) of 5.9% from 2019 to 2028, in line with the average CAGR of 5.8% posted since 2010. This expansion, fueled partly by a steady rise in cashless transactions, will add $1.0 trillion to the payments revenue pool, raising the total to $2.5 trillion by 2028. Rapidly developing economies will be the engine of that growth. Retail payments revenues will increase by an estimated 6.0% CAGR from 2019 to 2028, modestly outpacing wholesale payments growth (5.6%). E-commerce and other remote transactions, which BCG expects will grow by 11% annually over the next five years, should be a key driver of retail payments growth.

Retail Payments: Finding the Green Shoots
The report says that established retail payments players will have to work hard to capture their share of growth amid significant disruption in the payments landscape globally. Some of that disruption comes as regulatory bodies press for reductions in interchange rates. But perhaps the most significant shift reflects the impact of a rapidly expanding fintech presence that is accelerating technological innovation and increasing merchant power. Three factors, in particular, are poised to reshape the retail payments space in the 2020s:

Money movement is making a comeback. We are seeing massive innovation in the way money changes hands and in the infrastructure that enables that movement. Many new real-time payments rails are being launched around the world.
Increasing competitive intensity is driving mergers and blurring boundaries. In an effort to gain critical capabilities and scale, issuers and merchant acquirers are seeking partners.
Data use cases are moving beyond risk assessment. Leading players are beginning to shift their focus toward the customer experience, and the most advanced players are using data to personalize outreach and customer journeys.

Wholesale Payments: Some Parts Are Greater Than the Whole
According to the report, the wholesale payments category continues to be profoundly shaped by steady advances in digital tools and by the fast-maturing capabilities of digital attackers and fintechs. Among the most significant disruptive forces are the adoption of real-time payments systems, greater cross-border competition, and the growing number of connections and interdependencies between corporate and vendor payments systems. In response to the last dynamic, treasurers from large corporations and smaller businesses are increasingly turning to nonbank platforms to reduce the resulting complexity. To retain strong corporate relationships, incumbents need to provide a similar level of convenience, helping treasurers streamline their wholesale payments interactions and more readily gain access to cash management, account reconciliation, supply chain finance, and cross-border payments capabilities.

The report also says that wholesale banks can use their scale, resources, and other natural advantages to turn disruption into opportunity. The rapid expansion of the wholesale payments space over the past decade has created enormous complexity within the offering space, the competitive space, and the technological space. For incumbents and newer entrants alike, attacking complexity and providing simpler solutions throughout the value chain will yield the greatest returns.

“Ultimately,” said Sushil Malhotra, a New York–based BCG partner and coauthor of the report, “wholesale payments businesses must invest aggressively but selectively, focusing on a handful of strategic and operational areas that can deliver above-average growth. We recommend that banks consider building opportunities in high-value niches such as cross-border payments, trade finance, and working capital and supply chain finance.”

About Boston Consulting Group
Boston Consulting Group partners with leaders in business and society to tackle their most important challenges and capture their greatest opportunities. BCG was the pioneer in business strategy when it was founded in 1963. Today, we help clients with total transformation—inspiring complex change, enabling organizations to grow, building competitive advantage, and driving bottom-line impact.

To succeed, organizations must blend digital and human capabilities. Our diverse, global teams bring deep industry and functional expertise and a range of perspectives to spark change. BCG delivers solutions through leading-edge management consulting along with technology and design, corporate and digital ventures—and business purpose. We work in a uniquely collaborative model across the firm and throughout all levels of the client organization, generating results that allow our clients to thrive.

About SWIFT
SWIFT is a global member owned cooperative and the world’s leading provider of secure financial messaging services. We provide our community with a platform for messaging and standards for communicating, and we offer products and services to facilitate access and integration, identification, analysis and regulatory compliance. Our messaging platform, products and services connect more than 11,000 banking and securities organizations, market infrastructures and corporate customers in more than 200 countries and territories. While SWIFT does not hold funds or manage accounts on behalf of customers, we enable our global community of users to communicate securely, exchanging standardized financial messages in a reliable way, thereby supporting global and local financial flows, as well as trade and commerce all around the world. Headquartered in Belgium, SWIFT’s international governance and oversight reinforces the neutral, global character of its cooperative structure. SWIFT’s global office network ensures an active presence in all the major financial centers.

SOURCE Boston Consulting Group (BCG)
www.bcg.com

How Not To Get Lost In The Sea Of Event Information

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As analysts we attend dozens of professional conventions annually to keep the finger on the pulse of specific industry, to gather the latest market intelligence, to mix with professional crowd and socialize with peers. It’s easy to get lost in the sea of event information and the first question to answer is “What event to attend?”. Below is some primer on how to find the right event and what events to attend.

Technology Conferences
https://www.technologyconference.com

Event Calendar (Trade Shows)
https://www.eventcalendar.net

Most Popular Events (recommended by visitors)
https://esn.net

Media & Technology Events
https://www.exclusive.org

Cyber Security Events
https://www.cybersecuritymarket.com

Print Industry events
https://www.prints.org

Technology Briefings & Events
https://www.technologies.org

How Not To Get Lost In The Sea Of Event Information

Crude supply under threat after Saudi Arabia attack: Analysis finds higher oil prices would add to the headwinds facing the global economy

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S&P Global Platts, part of S&P Global (NYSE: SPGI), released today an analytical FACTBOX covering insights and reactions to the attacks on Saudi Arabia.

“The events in Saudi Arabia have ratcheted up tensions in the Middle East to a new level raising concerns about supply security. While in the short term the direct physical impact on the market might be limited, this should move the market away from its bearish macroeconomic cycle and raise the risk premium in the market as funds reduce their short positions. While some commentators may call for triple digit oil prices we would suggest that the sudden change in geopolitical risk warrants not only an elimination of the $5-10/Bbl discount on bearish sentiment, but adds a potential $5-10/Bbl premium to account for now-undeniably high Middle Eastern dangers to supply and the sudden elimination of spare capacity. As such prices are likely to break out of the current $55-65/Bbl options range, to test the high $70s as currently supported by fundamentals. Price could move higher if Saudi production is confirmed to be curtailed for a more substantial period which is not our current assumption.” – Chris Midgley, Global head of Analytics, S&P Global Platts

crude supply under threat after Saudi Arabia attack

This incident signals a significant escalation by Iran-backed groups, who until now have demonstrated awareness of critical infrastructure such as the East-West pipeline and Strait of Hormuz, while limiting impact.
The timing of the attack could be significant, on a weekend, just one week after the announcement of Prince Abdulaziz as Energy Minister, fracturing of Yemeni government forces and UN accusing US, UK, and France of being complicit of war crimes in Yemen.
The reported 5 MMB/D disruption indicates an alarming level of effectiveness and sophistication, and more importantly a change in tactic towards a more direct and serious offensive.
In the short term Saudi Arabia will be able to maintain exports and use reserves to ensure supply security, but any evidence of prolonged disruption of production would heavily impact OPEC spare capacity and the ability of IEA to use Strategic Petroleum Reserves to shore up the market.
The US Administration and IEA have both raised concerns around supply security, with Secretary of State, Pompeo laying blame on Iran, which is likely to put an end to any likelihood of an agreement and return of oil from Iran in medium term.
Higher oil prices would add to the headwinds facing the global economy which could tip it into recession which would itself limit any prolonged period of excessively high oil prices as demand rebalances the market.
S&P Global Platts FACTBOX: Crude supply under threat after Saudi Abqaiq attack

Author Paul Hickin
Editor Claudia Carpenter
Singapore — Attacks on Saudi Arabia’s pivotal Abqaiq processing facility and Khurais oil field have raised questions over the kingdom’s — and also the world’s — security of crude supply.

The kingdom confirmed over the weekend the temporary loss of 5.7 million b/d of oil production after disruption at its facilities, but said export customers would continue to be supplied from inventories. Abqaiq is the single most important facility in Saudi’s oil industry, while Khurais is the second biggest oil field.

The attack is an escalation in severity after a number of strikes on key oil infrastructure and transit routes in the Middle East this year. Flows had been temporarily halted through Saudi Arabia’s main oil transport pipeline to terminals and refineries on the Red Sea, while oil tankers have been attacked in the Strait of Hormuz maritime chokepoint.

“The sudden change in geopolitical risk warrants not only an elimination of the $5-10/b discount on bearish sentiment, but adds a potential $5-10/b premium to account for now-undeniably high Middle Eastern dangers to supply and the sudden elimination of spare capacity,” S&P Global Platts Analytics said.

INFRASTRUCTURE

**Saudi Arabia, OPEC’s biggest and most influential member, produced 9.77 million b/d in August, according to the latest Platts survey and exports around 7 million b/d.

**Located in the kingdom’s eastern province, plants in Abqaiq process around 7 million b/d of crude.

**The Abqaiq facility is Saudi Aramco’s largest oil processing facility and processed about 50% of the company’s crude oil production in 2018.

**Khurais, about 250 km southwest of Dhahran, is the second-largest oil field in Saudi Arabia with capacity to pump around 1.5 million b/d of mainly Arab Light crude.

**Output from the 5m b/d Ghawar field, Shaybah and Khurais fields is all processed at Abqaiq.

**Saudi Arabia’s East-West Pipeline to the Red Sea has a nameplate capacity of about 5 million b/d, with current movements estimated at about 2 million b/d. The East-West pipeline runs from Abqaiq to the Yanbu Port on the Red Sea.

**Saudi Arabia ships about 10% of its total crude exports to Europe through the line to the Red Sea. The line is also critical to Saudi Arabia’s own Red Sea refineries, which are mainly supplied with crude oil produced in its eastern region shipped from the Persian Gulf.

**Saudi crude is generally a mix of heavy to medium sour oil, which is generally high in sulfur and yields a decent amount of residual fuel and vacuum gasoil.

**The oil is particularly popular with complex refineries in Asia, US and Europe which can crack heavy sulfurous crudes, and still yield distillate products due to the refiners having complex secondary units.

**The key export grades are Arab Heavy, Arab Medium, Arab Light and Arab Extra Light.

OIL PRICES

**Platts Analytics noted prices are likely to break out of the $55-65/b options range, more likely testing the high $70/b it previously forecast, if not higher.

**Platts Analytics added that any additional risk premium “could see prices test $80/b despite Saudi Arabia today claiming production and exports will not be significantly impacted.”

**On Friday, NYMEX front-month crude settled 24 cents lower at $54.85/b, while ICE front-month Brent settled 16 cents lower at $60.22/b.

TRADE FLOWS

**Saudi Arabia stockpiles totaled 187.9 million barrels in June, according to the Joint Organization Data Initiative. This implies that the kingdom has 26.8 days of cover, assuming zero crude production.

**Saudi Arabia holds crude in storage in domestic tanks as well at sites in Eqypt, Japan and the Netherlands.

**The country’s largest oil export terminals are in the port of Ras Tanura which can handle about 6.5 million b/d, according to the EIA. All of Saudi’s key crude oil grades load from here along with condensate and products.

**The port comprises three terminals: Ras Tanura terminal, Ju’aymah crude terminal, and Ju’aymah LPG export terminal. The Ras Tanura crude terminal has a 33 million barrels storage capacity.

**The other key crude export terminal is the King Fahd terminal in Yanbu on the Red Sea, which has a loading capacity of 6.6 million b/d.

**Total crude oil storage capacity at the terminal is 12.5 million barrels. Only Arab Light crude oil grade is loaded at the Yanbu terminal.

**Platts Analytics estimates that global spare capacity is currently 2.3 million b/d, but more than 1.6 million b/d is in Saudi Arabia, showing how vulnerable the market is to supply-side risks.

**The US could move as much as 2.12 million b/d of SPR crude to global markets, but as much as 1.74 million b/d of addition marine distribution capacity would likely be needed in the event of an Abqaiq attack, according to a 2016 DOE report.

**As of Friday, the SPR held 644.8 million barrels of crude in four sites in Texas and Louisiana, including 250.3 million barrels of sweet crude and 394.5 million barrels of sour crude, according to DOE.

**IEA consumer countries are required to hold emergency oil stocks equivalent to 90 days’ worth of net imports and the agency sent a note over the weekend saying oil markets remain well supplied.

https://www.spglobal.com/platts/en/market-insights/latest-news/oil/091519-factbox-crude-supply-under-threat-after-saudi-abqaiq-attack

About S&P Global S&P Global is a leading provider of transparent and independent ratings, benchmarks, analytics and data to the capital and commodity markets worldwide. The Company’s divisions include S&P Global Ratings, S&P Global Market Intelligence, S&P Dow Jones Indices and S&P Global Platts. S&P Global has approximately 21,000 employees in 33 countries. For more information visit www.spglobal.com.

About S&P Global Platts
At S&P Global Platts, we provide the insights; you make better-informed trading and business decisions with confidence. We’re the leading independent provider of information and benchmark prices for the commodities and energy markets. Customers in over 150 countries look to our expertise in news, pricing and analytics to deliver greater transparency and efficiency to markets. S&P Global Platts coverage includes oil and gas, power, petrochemicals, metals, agriculture and shipping.

S&P Global Platts is a division of S&P Global (NYSE: SPGI), which provides essential intelligence for individuals, companies and governments to make decisions with confidence. For more information, visit www.platts.com.

SOURCE S&P Global Platts

Major Industrial and Automotive Manufacturers Are Far Behind the Industrial IoT Innovation Curve, Harming Productivity, Revenues

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New Survey from Software AG Reveals that Manufacturers Are Not Scaling IIoT Across the Enterprise Due to Failure to Invest in Predictive Analytics and Innovative Integration Strategies

Software AG (Frankfurt, MDAX: SOW) today announced an original survey of over 125 North American manufacturers primarily in the heavy industry and automotive sectors that revealed they are unable to scale their Industrial Internet of Things (IIoT) investments across their enterprises, and therefore are losing millions of dollars in potential profits while falling behind competitors that have invested in enabling technologies that support IIoT across the enterprise.

The survey also revealed that the vast majority of manufacturers queried report that their IIoT investments are limited – locked in one small department or sector of their company – preventing these organizations from sharing the power of IIoT across their enterprises. This has caused these manufacturers to lose millions of dollars in potential profits as they fall behind more forward-thinking competitors that have invested in predictive analytics and innovative integration strategies that scale IIoT across the enterprise.

Other key findings include:

80% of all survey respondents agree that processes around IIoT platforms need to be optimized or they will face a competitive disadvantage but very few are doing this.
IT-OT (Information Technology and Operations Technology) integration is considered one of the most difficult tasks – with 57% of automotive manufacturers stating that this has prevented them from realizing full ROI from their IIoT investments.
84% of automotive and heavy industry manufacturers agree that the most important area of IIoT is “monetization of product-as-a-service-revenue.” However, optimizing production is still important with 58% of heavy industry and 50% of automotive manufacturers agreeing with that statement.
Curiously, defining threshold-based rules is considered almost as difficult as leveraging predictive analytics to scale IIoT. More than 60% of respondents stated that defining threshold-based rules was as difficult as integrating IT systems and IoT sensors into existing control systems.
“Manufacturers place a high value on IIoT, but they are encountering serious difficulties in unlocking the complete intended value to unleash their innovation across their organizations,” said Sean T. Riley, Global Industry Director, Manufacturing and Transportation, Software AG. “Fortunately, there is a way for them to quickly and easily resolve this problem. By investing in the right IT-OT integration strategy that leverages sensors, predictive analytics, machine learning, control applications and product quality control, manufacturers can fix this problem in less than 6-12 months while realizing other key benefits, namely extended equipment lifetime, reduced equipment maintenance costs and accessing more accurate data for production-quality improvements.”

Riley outlined five best practices for manufacturers to follow when looking to scale their IIoT investments across their enterprises and realize immediate profits and competitive advantage. Those best practices are:

Ensure clear collaboration between IT and the business by leveraging a step by step approach that starts focused and has clear near-term and long-term objectives to scale.
Create a transparent roll out process and don’t let other plants or departments move ahead outside of it.
Give IT the ability to connect at speed with a digital production platform that is proven to be successful.
Leverage a GUI-driven, consistent platform to enable an ecosystem of IT associates, business users and partners around the platform.
Enable the plant or field service workers to work autonomously without continual support from IT through GUI-driven analytics, centralized management and easy, batch device connectivity and management.
Riley also stated that it is critically important for manufacturers to select the best possible IIoT integration platform supported by key enabling technologies like streaming analytics, machine learning, predictive analytics and a larger ecosystem. Software AG’s Cumulocity IoT platform recently received the highest use case scores from Gartner Group in the brand new “Critical Capabilities for Industrial IoT Platforms” report which included Monitoring Use Case, Predictive Analytics for Equipment Use and Connected Industrial Assets Use Case for its IoT.

Cumulocity IoT is Software AG’s cloud-first and fully extensible IoT platform that lets customers start quickly and scale rapidly. Being device and protocol agnostic allows to connect, manage and control any “thing” over any network. Cumulocity IoT is an industry leading IoT solution, which is open and independent, letting customers connect to millions of devices without being locked into one single vendor.

“Our platform is already helping customers such as Gardner Denver, Nordex and Certuss find the right solution for their IIoT requirements,” said Riley. “The recognition and acceptance of our Cumulocity platform underlines our commitment to enabling customers to quickly and easily bring their ambitious IIoT visions to life. However, the ChangeMaker network has also been created to ensure the talent needs shortage can be managed and projects will be successful in the near and long term.”

The Software AG IIoT Implementation survey was completed in Q2 2019 by Software AG and an independent third-party research house. The survey queried nearly 200 respondents at large manufacturing companies across automotive, heavy industry, high-technology, electronics, pharmaceutical and medical device industries. The respondents were primarily senior executives leading manufacturing or information technology with the breakdown of 50% managers, 38% directors and 13% vice presidents or higher.

To access the full text survey, please email [email protected] Please see the following link to the Gartner Group “Critical Capabilities for IIoT Platforms” report: https://www.softwareag.com/corporate/products/internet_of_things/gartner_cc_IIoT_2019.html

About Software AG

Software AG offers Freedom as a Service. We reimagine integration, spark business transformation and enable fast innovation on the Internet of Things so you can pioneer differentiating business models. We give you the freedom to connect and integrate any technology—from app to edge. We help you free data from silos so it’s shareable, usable and powerful—enabling you to make the best decisions and unlock entirely new possibilities for growth.

Learn more about Software AG at www.softwareag.com.

IBIA and S&P Global Platts Collaborate to Help Shipping Industry Comply with IMO 2020

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The International Bunker Industry Association (IBIA) and S&P Global Platts, the leading independent provider of information and benchmark prices for the commodities and energy markets, have agreed on a collaboration agreement to help market participants across the shipping ecosystem prepare ahead of the implementation of the International Maritime Organization (IMO) low sulfur marine fuel regulations in January 2020.

Under the terms of the agreement, Platts and IBIA will offer shipping industry market participants:

Platts Marine-Fuel

Joint webinars series – to update and educate IBIA members and S&P Global Platts clients on practical market related developments ahead of IMO 2020 implementation, featuring speakers from both organizations.
Price assessments and data insight – Platts will provide IBIA with complementary access to its bunker data and insights including Bunkerwire and its full suite of 0.50% Marine Fuel Oil price assessments to help inform and add transparency to IBIA research.
Platts Market On Close demonstrations – complementary tours to help IBIA members around the world understand the Platts MOC, the process which ensures Platts price assessments reflect market value through a robust and transparent methodology based on tested market data.
Global conference collaboration – including the provision of Platts Pricing and Analytics speakers and IBIA experts at IMO related conferences
Platts IMO 2020 insight to be made available to IBIA members including white paper research, news and analysis
Unni Einemo, Director of IBIA and its representative at the IMO said: “We are very pleased to work with S&P Global Platts in bringing industry stakeholders the tools they need to manage the transition to IMO 2020. IBIA has been heavily engaged in working at the IMO to help develop guidelines for effective implementation, including preparations such as tank cleaning contained in the IMO’s Ship Implementation Plan, and recently in a Joint Industry Project to develop guidance on the safe supply and use of compliant fuels. Through this new collaboration, we will also have access to market data and analysis from a trusted partner.”

Vera Blei, Global Director, Head of Oil Markets, S&P Global Platts said: “We are delighted to strengthen our close partnership with IBIA which aligns with our ongoing commitment to support the global shipping community as it transitions towards IMO 2020. The transparency offered by our full suite of Marine Fuel 0.5% and HSFO price assessments together with the in-depth market insight provided by our global News and Analytics teams plays an important role in helping the industry understand and comply with what many consider to be the most disruptive change in living memory.”

The premium of 0.5% marine fuel to high sulfur fuel oil in Europe has grown this year as preparations continue in earnest for the implementation of the new sulfur cap.

The FOB Rotterdam Marine Fuel 0.5% barges were assessed at a $69.75/mt premium January 2, the first day of Platts 0.5% Marine Fuel assessments but increased during August to a premium closer to $210/mt. Contributing to the increase in the 0.5% vs.3.5% spread was increased demand causing a firming of the Platts 0.5% Marine Fuel assessments ahead of the January 2020 implementation, while softening of the 3.5% high sulfur fuel oil driven by falling demand for bunker fuel, with market participants less inclined to utilize storage options.

In Asia, Singapore premiums for Marine Fuel 0.5% to the Mean of Platts Singapore 380 CST high sulfur fuel oil reached as high as $135.00/mt in June, with the premium on September 1 around $120/mt. According to traders the relatively large amount of 0.5% being stored in large tankers near Singapore, in addition to in land-based storage tanks, and the relatively low demand levels were the reason for the decline in the premium of 0.5% over 3.5% from June to September.

About IBIA
The International Bunker Industry Association (IBIA) is the voice of the global bunker industry and represents all stakeholders across the industry value chain. IBIA promotes improved knowledge and standards in the industry and lobbies for effective, pragmatic and workable regulations.

Our membership includes ship owners/operators, bunker suppliers, traders, brokers, barging companies, storage companies, fuel testing agencies, surveyors, port authorities, credit reporting companies, lawyers, P&I clubs, equipment manufacturers, journalists and marine consultants. IBIA represents the industry at the International Maritime Organization. For more information, visit https://ibia.net/

About S&P Global Platts
At S&P Global Platts, we provide the insights; you make better informed trading and business decisions with confidence. We’re the leading independent provider of information and benchmark prices for the commodities and energy markets. Customers in over 150 countries look to our expertise in news, pricing and analytics to deliver greater transparency and efficiency to markets. S&P Global Platts coverage includes oil and gas, power, petrochemicals, metals, agriculture and shipping.

S&P Global Platts is a division of S&P Global (NYSE: SPGI), which provides essential intelligence for individuals, companies and governments to make decisions with confidence. For more information, visit www.platts.com.

SOURCE S&P Global Platts

Related Links
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300mm Fab Equipment Spending to Seesaw in Coming Years, Hit New Highs in 2021 and 2023

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300mm fab equipment spending will slowly recover in 2020 after the 2019 downturn and take off in 2021 to log a new record high topping US$60 billion, only to lag again in 2022 and rebound to an all-time peak in 2023, according to the SEMI Industry Research and Statistics group in its first edition of the 300mm Fab Outlook report.

Most of the surges in fab equipment investment over the five-year outlook will be driven by memory (primarily NAND), foundry/logic, and power. Korea will head the list of top-spending regions followed by Taiwan and China, though Europe/Mideast and Southeast Asia are also expected to show healthy increases between 2019 and 2023.

Fab equipment spending and volume fabs/lines count 2012-2023 and high-probability fab projects.

Offering projections through 2023, the 300mm Fab Outlook report details fab investments across construction and equipment, as well as fab capacities and technologies investment for DRAM, NAND, foundry, logic, and a host of other products manufactured on 300mm wafers.

The number of semiconductor fabs/lines in operation is expected to jump more than 30 percent, from 130 in 2019 to 170 in 2023, and climb even higher, to nearly 200, when lower probability fabs/lines are included in the count.

The new SEMI 300mm Fab Outlook report shows facility details by quarter through 2023 and also includes projections for fab projects through 2030 with estimates of various probabilities.

To learn more about the SEMI 300mm Fab Outlook report, click here: https://www.semi.org/en/news-resources/market-data/global-300mm-fab-outlook

About SEMI
SEMI® connects more than 2,100 member companies and 1.3 million professionals worldwide to advance the technology and business of electronics design and manufacturing. SEMI members are responsible for the innovations in materials, design, equipment, software, devices, and services that enable smarter, faster, more powerful, and more affordable electronic products. Electronic System Design Alliance (ESD Alliance), FlexTech, the Fab Owners Alliance (FOA) and the MEMS & Sensors Industry Group (MSIG) are SEMI Strategic Association Partners, defined communities within SEMI focused on specific technologies. Visit www.semi.org to learn more, contact one of our worldwide offices, and connect with SEMI on LinkedIn and Twitter.