Logistics reliability vs. capacity vs. regulation; Nidec pursues outsourcing

The Supply Chain Daily provides a curated overview of Panjiva's research and insights covering global trade policy, the logistics sector and industrial supply chains and draws from global shipping and freight data.

Reliability to trump capacity while risking regulation as container lines blank sailings

The big three container shipping alliances have cut 24 sailings around the lunar new year holiday in an attempt to improve service reliability. For example, a surge in demand in the 2020 fourth quarter combined with shortages of equipment have left Hapag-Lloyd AG with "no choice but to implement a comprehensive schedule recovery plan to get vessels back in their intended positions" and ensure smooth operations second quarter 2021 onwards.

The capacity withdrawal may draw the ire of regulators around the world who have already raised questions about service availability for exporters. The elevated demand may continue with Hapag-Lloyd's Americas president, Uffe Østergaard, stating "we definitely, (for the) first half of this year continue to see quite strong demand and continued supply chain challenges."

While some care is needed with weekly figures, that continued demand can be seen in U.S. seaborne imports which rose by 9.6% year over year in the first two weeks of January. Hapag-Lloyd's shipments have returned to growth with a 9.3% increase after an improvement of just 1.6% in December 2020.

Growth has again been led by A.P. Møller - Mærsk A/S and MSC Mediterranean Shipping Co. SA with shipments into the U.S. which rose by 27.2% and 44.0%, respectively. That's despite the delayed arrival of Maersk's Essen due to storms. Ocean Network Express Pte. Ltd.' volumes meanwhile, which have suffered the delay of the ONE Apus for similar reasons, saw growth of just 2.4%.

(Panjiva Research - Logistics)

Nidec pursues temporary outsourcing as motor demand fluctuates

Electric motor maker Nidec Corp. reported a 6.1% year-over-year increase in revenues in the fourth quarter of 2020, helped by "new stay-home demand" including brushless DC motors used in a variety of home appliance and electronics applications according to Chief Product Officer Akira Sato.

The firm's supply chain has been a challenge though, despite a 14.2% year-over-year increase in U.S. seaborne imports linked to the firm. Indeed, CEO Shigenobu Nagamori stated "we received a lot of [complaints] from OEMs" in the autos sector. That's led the firm to pursue selective and temporary outsourcing until demand normalizes.

The electric motor sector has seen a mixed performance, with U.S. seaborne imports linked to Regal Beloit Corp. up by 56.5% year over year in the fourth quarter of 2020 while shipments associated with General Electric Co. dropped by 19.2%.

(Panjiva Research - Capital Goods)

PPG, Chemours roll on paint supplies, demand remains choppy

Paint and coating maker PPG Industries Inc. has released fourth-quarter 2020 earnings with revenue growth of 2.3%. While the firm's supply chain activity has increased, with U.S. seaborne imports up by 12.9% year over year, the firm's CEO, Michael McGarry, has noted the "demand is very strong, but it is very choppy" in the autos and industrials business.

At the product level, shipments of paints climbed 42.9% year over year in the 2020 fourth quarter while imports of polymers dropped by 9.5%. Other major paint importers are also experiencing an expansion with shipments linked to Contran Corp. and The Chemours Co. having increased by 72.4% and 39.4%, respectively, over the same period.

(Panjiva Research - Chemicals)

Levi Strauss awaits end-2021 for pandemic recovery, cuts inventories

Levi Strauss & Co. reported fiscal fourth-quarter revenues which fell by 12% year over year, flattered by 3 percentage points due to seasonal effects. Like most retailers the impact of the pandemic was felt in store closures and the firm has stated that if "conditions do not worsen, (it will) return the company to pre-pandemic revenues by the end of 2021."

One strategy for tackling the impact of the pandemic has been to run down inventories, which declined by 8%. U.S. seaborne imports linked to the firm fell by 14.8% year over year in the 2020 fourth quarter before slowing to a 4.6% dip in December after sales of the firm's iconic jeans returned to growth. Levi's total shipments did slightly worse than total U.S. seaborne imports of denim products, which fell by 9.8% in the fourth quarter after lagging PVH Corp. but beating H & M Hennes & Mauritz AB (publ).

(Panjiva Research - Consumer Discretionary)

US fisheries losing out as pandemic disruptions of supply chains continue

Global fish supply chains have suffered a series of challenges during the pandemic that have continued into 2021. Demand has shifted from food service to retail and declined overall, based on international shipping data.

A shortage of capacity at key ports for refrigerated capacity and concerns in China about the transmission of SARS-COV-2 on packaging have also restricted product flows. Trade has also been disrupted by the U.S.-China tariff war and U.S.-EU aerospace spat with their resulting customs duties.

U.S. fish exports dropped by 17.8% in the 12 months to Nov. 30 and by 16.0% year over year in terms of seaborne exports in the fourth quarter of 2020. Exports to China fell by 23.0% in the past 12 months despite the phase 1 trade deal between the two countries. Shipments to the EU fell by 21.1% despite a side deal being reached on lobsters.

There are some signs of growth though, with exports linked to Japanese processors Maruha Nichiro Corp. having increased by 23.8% while those associated with Nippon Suisan Kaisha Ltd. climbed 7.1% higher.

(Panjiva Research - Consumer Staples)

Christopher Rogers and Eric Oak are researchers at Panjiva, a business line of S&P Global Market Intelligence, a division of S&P Global Inc. This content does not constitute investment advice, and the views and opinions expressed in this piece are those of the author and do not necessarily represent the views of S&P Global Market Intelligence.

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