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Coronavirus 2nd-order effects reach Cambodia, Mexico supply chains

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.

Levi Strauss, Adidas face 2nd-order Cambodian COVID-19 disruptions
The Cambodian garment industry faces widespread shutdowns due to a shortage of raw materials linked to the COVID-19 outbreak, according to the country's labor ministry. According to Panjiva data, Cambodia represented 1.5% of global apparel exports in 2016 while apparel and textiles represented 67.0% of Cambodia’s total exports that year.

Shipments to the U.S. surged 28.5% higher in 2019 versus 2016 as Cambodian manufacturers took market share from China. That has continued recently with Chinese supplies to the U.S. down 31.7% year over year in January 2020 while Cambodian shipments to the U.S. climbed 23.8%.

A handful of buyers have accounted for the recent growth in Cambodian supplies to the U.S. That has included an 81.7% surge in seaborne shipments linked to Levi Strauss & Co. in the three months to Feb. 28 as well as a 28.9% jump in imports associated with Adidas AG. Both have globally diversified supply chains for apparel, but may face a singular risk in the shortage of raw materials.

(Panjiva Research - Apparel)

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Kansas City Southern flags Mexican COVID-19 risks; GM, Mazda exposed
Mexican ports may soon feel the impact of a reduction in shipments from Asia linked to the coronavirus outbreak. Kansas City Southern CFO Michael Upchurch said "roughly 60% of our container traffic at the port of Lázaro could see some disruption," and is particularly focused on the automotive industry.

China represented 18.8% of imports into the port of Lázaro Cárdenas in Mexico in 2019 followed by South Korea at 18.4%. Total imports to the port fell by 14.0% in January, though that was driven by lower shipments from the U.S. and Japan. Imports from China actually rose 3.3%.

Shipments into Lázaro Cárdenas linked to the automotive industry fell 5.7% in the three months to Jan. 31, including an 11.5% drop in shipments linked to Mazda Motor Corp. However, General Motors Co. is the port's largest user for automotive products with 23.7% of shipments in 2019. GM has a significant exposure to China with those shipments, but has bucked the trend with a 15.4% surge in shipments in the three months to Jan. 31 compared to a year earlier.

(Panjiva Research - Logistics)

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1st signs of coronavirus' drag as US imports fall for 6th month
U.S. seaborne imports fell for a sixth straight month in February with a 7.5% slide, according to Panjiva data. Imports from China were largely to blame with a 21.0% yearly drop. That may be the first sign of the impact of COVID-19 disruptions, with more to follow given logistics in China have only returned to normal in the past week.

Shipments from Asia excluding China only partly compensated with a 6.2% year-over-year improvement, while aerospace-related tariffs may have driven a 3.7% decline in shipments from the EU.

There was a decline in both consumer and industrial products. Apparel and furniture fell by 13.3% and 9.3%, respectively, with the tariff burden on imports from China only being modestly reduced in mid-February.

Shipments of steel and chemicals meanwhile dropped by 16.0% and 7.3%, respectively. The latest import survey by the Institute for Supply Management and continued coronavirus-linked disruptions suggest only a modest chance of a recovery in March.

(Panjiva Research - Industries)

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Baltimore cuts capacity for coronavirus; Ikea, Fila may feel shortages
The port of Baltimore closed on March 5 and will do so again on March 17 due to a shortage of inbound shipments from Asia linked to the coronavirus outbreak. That follows warnings from Los Angeles and New York about similar reductions in traffic.

Seaborne imports to Baltimore fell by 3.8% in January and February combined compared to a year earlier, though there was a 12.5% surge in shipments from China. Leading importers to Baltimore from China that may be missing shipments include Ikea AB and Fila SpA. Baltimore’s performance was similar to the national total.

Aggregate U.S. imports of containerized freight fell by 3.5% year over year in January and February combined. The west coast ports of Seattle-Tacoma and Los Angeles did the worst with declines of 13.2% and 12.0% respectively. Southeast U.S. ports did better with Houston's imports up 19.7% and Charleston's rising 7.6%.

(Panjiva Research - Logistics)

Baosteel bucks coronavirus trend with surging US-bound shipments
Chinese steel exports may jump in March and April in response to a coronavirus-linked drop in demand for the products in China, S&P Global Platts reports. Chinese steel and aluminum exports dropped 28.6% and 22.7% year over year, respectively, in dollar terms for January and February combined, as both production and logistics were disrupted.

An increase in Chinese steel exports will do little to alleviate global protectionism in steel. The latter has been exemplified by U.S. national security and trade war tariffs on imports from China. That has driven shipments from China to just 2.0% of U.S. supplies in 2019 compared to 6.9% in 2015.

U.S. seaborne imports associated with Shanghai Baosteel Packaging Co. Ltd. have bucked the trend, rising 44.0% year over year in January and February, while those linked to Citic Ltd. have declined by 4.3%.

(Panjiva Research - Metals & Mining)

Christopher Rogers is a senior researcher 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.

The Supply Chain Daily has an editorial deadline of 5:30 a.m. ET. Some external links may require a subscription. Links are current at the time of publication. S&P Global Market Intelligence is not responsible if those links are unavailable later.