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.
Lego has a built-in advantage as US supply chain avoids China
Lego System A/S plans to add 40% to its store count globally, as well as develop new gaming and e-commerce routes to market. It may be part of a plan to boost sales growth in some parts of the world Panjiva’s data for U.S. imports associated with the Danish company fell 15.8% year over year in the second quarter in volume terms.
There are already signs of recovery though, with imports in July up by 21.2% year over year due to a 46.2% surge in shipments from Europe. The firm may be benefitting from a sustained cost advantage over its peers, including Hasbro Inc. and Mattel Inc., given that China only represents 0.5% of its imports. This may help Lego avoid fallout from tariff hikes that the U.S. will impose on Chinese imports from Dec. 15.
(Panjiva Research - Consumer Durables)
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Pemex has room to diversify export sales as government oil hedging ends
The Mexican government may be close to completing its annual oil price hedging exercise. The country has been a net energy importer since 2014 and recorded oil and petroleum exports of $28.8 billion in the 12 months to July 31. One challenge for the main exporter, Petróleos Mexicanos SA de CV (Pemex), has been increasing U.S. oil independence. The U.S. accounted for 57.7% of Mexico’s oil exports in the 12 months to July 31 compared with 72.5% in 2013.
This has left Pemex more dependent on shipments to Spain, which represented 35.6% of non-U.S. exports from Mexico in the past 12 months, and India, which accounted for 35.1%.
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JCB builds Indian inventories as local financing, Brexit issues gather
J.C. BAMFORD EXCAVATORS LIMITED says banking liquidity is a challenge for its customers in India. As a result, the U.K.-based market for its construction equipment may slump, according to CEO Graeme McDonald. Indian imports linked to JCB fell 24.9% year over year in the three months to May 31, following a 53.1% surge in calendar 2018.
Brexit-related supply chain challenges should be manageable. There’s some evidence of stockpiling to prepare for Brexit. The company's exports from the U.K. to India climbed 65.9% year over year while those from China and Germany fell.
(Panjiva Research - Capital Goods)
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Dorian downgraded, but risks for Daimler, Home Depot supply chains remain
The U.S.'s National Hurricane Center has downgraded Hurricane Dorian to a category two event, but it is still expected to cause significant rainfall and winds that have already led to the closure of the ports in Savannah, Ga., and Charleston, S.C.
September has historically been an off-peak month for both ports, with an average 4.8% month-over-month decline over the past four years. Yet, growth in handling of 4.7% year over year on a year-to-date basis currently suggests both ports may be running closer to full capacity.
Shipments in September 2018 may provide a guide to which companies are exposed to the closures this year. Panjiva’s shipping data suggests that Daimler AG, Compagnie Générale des Établissements Michelin SCA and adidas AG were the largest importers through Charleston in September 2018. The largest shippers through Savannah have been more retail-focused and may have included Home Depot Inc., Walmart Inc. and Amazon.com Inc.
(Panjiva Research - Logistics)
MSC, Maersk enhance their routes as America wanes, Lone Star surges
The 2M Alliance of MSC Mediterranean Shipping Co. SA and A.P. Møller - Mærsk A/S is extending two Asia-to-U.S. East Coast container-line services in similar ways but for very different reasons. The alliance’s America service will now include a call at Nansha in China. That may be an attempt to bolster flagging demand, with volumes likely having fallen 6.6% year over year in the past 12 months. There are few users of the Nansha-to-U.S. East Coast services currently so it may need to target COSCO SHIPPING Holdings Co. Ltd. West Coast customers, including Midea Group Co. Ltd. and Panasonic Corp.
The 2M alliance’s Lone Star Express service will include a call at the port in New Orleans, La. That follows the service growing 60.9% year over year. Potential targets for the extended Lone Star service could include CMA CGM SA's customers, such as KidKraft Inc. and Syngenta AG.
(Panjiva Research - Logistics)
Collapse in US trade outlook driving corporate reactions
The U.S. ISM Manufacturing Index fell to 49.1 from 51.2 in August, the first time it indicated a contraction in activity since August 2016. The export expectation reading of 43.3 down from 48.1 a month earlier marking the weakest result since at least 2010.
Its import survey findings also worsened, hitting the lowest level since December 2015, though the ISM said supply chains adjustments are compensating for higher tariffs on U.S. imports from China. Business outlook surveys in the U.S., China and Germany are all negative for exports.
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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