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.
Elections should cut Brexit risks, US trade deal importance rises
The British elections on Dec. 12 may simplify the outlook for Brexit. A majority Conservative government — which some polls are predicting — will lead to passage of the existing Withdrawal Bill and an exit from the EU with or without a trade deal by Jan. 31, 2020, according to party leader Boris Johnson.
Labour, the opposition party, has said it will hold a referendum pitching a revised Withdrawal Bill against remaining in the EU if it wins the election.
A trade deal with the U.S. is also becoming increasingly important. British exports to outside the EU rose 9.1% year over year in October, largely due to a 17.4% surge in exports to the U.S. The latter included a 20.9% jump in car shipments to reach a record high.
The autos expansion was largely due to increased U.S. seaborne imports associated with Bayerische Motoren Werke AG, including its Mini brand, as well as other luxury manufacturers with the exception of Tata Motors Ltd.'s Jaguar Land Rover.
Among other products, exports of organic chemicals to the U.S. jumped 32.9% while pharmaceuticals fell 27.7% year over year in October.
Nintendo's Switch, Spin Master's Owleez mean toy imports are nice, not naughty
U.S. toy imports have been nice, not naughty, this year with seaborne imports having increased by 5.6% year over year in the peak shipping season from July 1 to Nov. 30. Imports of newly popular toys, including Spin Master Corp.'s Owleez and Sky Rocket's Blume Dolls, peaked in October and September, respectively.
Peak season came earlier than usual, and imports fell 6.6% year over year in November due to worries about tariffs on exports from China. The tariffs have been delayed until at least Dec. 15, with future tariffs depending on a phase 1 trade deal between the U.S. and China.
Imports of videogame systems fell 11.1% in the July to November period, with imports associated with Sony Corp.'s PlayStation down 32.1% and Microsoft Corp.'s Xbox down 24.6% over the peak shipping period. That's likely due to an absence of new consoles. The bright spot was Nintendo Co. Ltd.'s Switch Lite launch which may have driven a 10.5% year-over-year rise in imports linked to the firm, including a tariff-beating 48.2% surge in October.
(Panjiva Research - Tech. Hardware)
Power of Siberia may be bane of Texas as US LNG exports reach record
China will become more reliant on Russian gas after the opening of the "Power of Siberia" pipeline, which could meet 10% of demand. The new pipeline could limit the ability of U.S. exporters of liquefied natural gas to access Chinese demand.
This ability also depends on the signing of a phase 1 trade deal between the U.S. and China. The deal could include commitments regarding Chinese imports of U.S. LNG. Chinese imports of natural gas climbed 23.3% year over year in the 12 months to Oct. 30, though they reversed by 7.7% in November.
U.S. exports meanwhile surged 105.5% in October to reach a record high after Freeport LNG Development LP's new facility came online. Facilities equivalent to 121% of current capacity are under construction by other exporters.
Another risk to U.S. LNG exports by Cheniere Energy Partners LPs and Sempra Energy among others comes from a potential trade war with the EU. The bloc's digital services taxes could lead to retaliatory U.S. duties on the EU's 38.8% share of U.S. exports. Room for such duties may be limited though, as they would increase Europe's reliance on Russian gas.
Lockheed, Boeing may benefit from Trump's trade-and-arms approach
Global sales of military equipment and services reached $420 billion in 2018, after a 4.6% year-over-year rise according to SIPRI data. The top three exporters were all U.S.-based, including Lockheed Martin Corp., Boeing Co. and Northrop Grumman Corp.
They may see further growth in sales after a push by the Trump administration to increase arms exports. U.S. approvals for exports of military aircraft and weapons systems reached $70.8 billion year-to-date in 2019 versus $48.1 billion in 2018.
Exports have begun to improve too, with total U.S. exports of military aircraft and weapons having risen 9.4% year over year in the 12 months to Oct. 31.
The tying together of trade negotiations and arms exports could lead to further growth in exports to Japan — which increased 57.1% in the past 12 months compared to 2016 — as well as the EU and the U.K. The latter's imports from the U.S. increased by 38.4% over the same period.
(Panjiva Research - Aerospace & Defense)
Yazaki, Epson help Philippines avoid Asia's fate, for now
Export growth from the Philippines was an anemic 0.1% year over year in October. It was kept out of negative territory by a 7.9% surge in exports to the U.S. The longer-term growth in U.S.-bound exports was in part due to the relocation of manufacturers from elsewhere in Asia.
The expansion may continue, but at a slower rate. U.S.-seaborne imports associated with autoparts maker Yazaki Corp. climbed 24.4% year over year in November, slower than the 139% seen in the prior three months. Those linked to Seiko Epson Corp. grew 14.0% in November after climbing 25.4% in the three months to Oct. 31. Yet, some exporters including HP Inc. are already cutting their shipments.
The Philippines managed to buck the wider Asian trend with exports across 15 countries having fallen by 3.9% year over year in October after a 2.1% drop in the third quarter. With weak business sentiment surveys and falling exports from China in November, the Philippines faces an uphill struggle to continue to beat the trend.
(Panjiva Research - Tech. Hardware)
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Christopher Rogers is a senior researcher at Panjiva, which is 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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