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.
UPS, CH Robinson already struggling as new round of forwarder competition arrives
The freight forwarding sector may face a round of renewed competitive pressure after EBITDA margins stabilized in the first quarter at 10.5%. A period of restructuring in the sector has brought both larger freight forwarders – particularly DSV A/S with Panalpina Welttransport (Holding) AG – as well as new entrants such as J.B. Hunt Transport Services Inc. and vertical integration at A.P. Møller - Mærsk A/S and CMA CGM SA. The restructuring comes as global export volumes have begun to decline.
Even the previously strong U.S. seaborne import sector saw growth of just 3.6% year over year in April. There's already been a marked divergence between the major freight forwarders. DSV and Panalpina saw growth of 20.5% and 10.3% in April, respectively, while United Parcel Service Inc. and C.H. Robinson Worldwide Inc.'s volumes fell 13.2% and 9.1%, respectively. The latter is only partly explained by their exposure to Asia and may widen further as new U.S. tariffs on Chinese exports are brought to bear.
Hikvision set for sanctions after imports hacked back by tariffs
The U.S. government may apply technology export sanctions against Chinese security systems manufacturer Hangzhou Hikvision Digital Technology Co. Ltd. Those may be similar to those applied, but delayed, to Huawei and should be seen against the backdrop of the wider trade war between the U.S. and China.
Hikvision's U.S. seaborne imports have already been in decline with a 57.0% year over year drop in shipments in the three months to April 30. That has been due to tariffs on monitors, where imports slumped 71.5%, and video recorders which fell 59.2%. Hikvision redistributes most of its own imports, accounting for 53.8% of shipments in the 12 months to April 30. It also supplies independent distributors such as LT Security, and integrated services firms including United Technologies Corp.
Meat deal could quell Trump's beef with Japanese exports
Japan's export downturn entered a fifth straight month after a 2.4% year over year decline in April. An outlier has been trade with the U.S. where exports surged 9.6% including a 32.4% rise in chemicals shipments and an 83.2% jump in semiconductor equipment.
The improved exports resulted in the largest trade surplus Japan has had with the U.S. since Dec. 2015 at $6.55 billion. That may cast a shadow over trade negotiations which are ongoing this week ahead of a summit meeting between U.S. President Donald Trump and Japanese Prime Minister Shinzo Abe from May 25.
One early, though pre-announced, win comes with improved access for U.S. beef in Japan which could add $200 million, or 10.6%, to U.S. beef exports to Japan. That may help Tyson Foods Inc., which accounted for 26.9% of all U.S. seaborne beef exports in the 12 months to April 30, and JBS SA, which represented 21.7%.
Rare earths may become rarer if China applies retaliatory restrictions
Rare earth products – used in the autos and renewable energy industries – could become a battleground in the U.S.-China trade war. The potential for restricted exports from China as part of a wider package of retaliation against U.S. tariffs has arisen after Chinese President Xi Jinping visited a rare earth manufacturing facility.
China accounted for 58.2% of the U.S.' $144.6 million of rare earth compound imports in the 12 months to March 31. Shipments in the first quarter are already down 8.8% year over year. Chinese suppliers also represented 72.1% of the $167.3 million of rare earth magnets imported by the U.S.
Among leading seaborne importers of rare earth products, BASF SE is the leader with a 12.6% share, with a diversification that also includes imports from Japan. Shipments by number 2 and 3 consignees Albemarle Corp. and Samsung Electronics Co. Ltd., meanwhile, are solely from China.
Drug supply chains get more sophisticated as CMA-CGM launches new service
CMA-CGM has launched a new pharmaceutical shipping service with enhanced end-to-end guarantees. The firm has a track record of using new services to build market share. The move comes as U.S. imports of pharmaceuticals reached $74.4 billion in the 12 months to March 31.
CMA-CGM already attained a 17.4% share of U.S. seaborne imports of pharmaceuticals in the 12 months to April 30. That still left it well behind sector leaders Maersk and MSC Mediterranean Shipping Co. SA with 22.4% and 19.4% respectively.
The largest import route is from India, which accounted for 26.0% of seaborne imports, led by Aurobindo Pharma Ltd. and Cadila Healthcare Ltd. Shipments from Europe come in at second and included Baxter International Inc.'s shipments from Switzerland and Fresenius SE & Co. KGaA from Germany.
Dole crushed as bumper Indian grape harvest heads to Europe
Indian grape exports to Europe increased 31% over the recent growing season as a result of a bumper harvest. That's likely led to a collapse in prices however, as the value of exports in February – the start of the peak shipping season – fell 28.0% year over year. Shipments to the Netherlands, the largest destination market for India's grapes in Europe, dropped 16.0% in February while those to the U.K. slumped 32.8% lower. Competition between the major EU consignees worked against Dole Food Co. Inc., which saw a 51.6% drop in shipments and Greenyard NV, which fell 30.0%. The only major winner was U.K. independent J.O. Sims, whose shipments rose 39.4%.
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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