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Trade war tears into apparel; GM, Hyundai hit reverse

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.

Tariffs strip growth from US apparel, electronics imports in November
The U.S.-China trade war has continued to take a toll on U.S. imports. Total U.S. seaborne, inbound shipments fell by 4.2% year over year in November, including a 5.7% slide in containerized freight. Imports from China fell 12.7% year over year, while imports from the rest of the world increased by 2.1%. The figures partly suffer by comparison to a year earlier when there was a rush of shipments ahead of a subsequently delayed increase in tariffs on imports from China.

The growth in imports from outside China were led by the partial replacement of sourcing from China seen in a 38.3% jump in shipments from Vietnam, 29.5% from Singapore and 11.9% from Thailand.

The decline in total imports has been widespread where tariffs have been applied with chemicals shipments down 11.2%, electronics and machinery off by 7.4% and apparel where imports fell by 7.0%.

Yet, the latter show that tariffs which were applied in September are not the only reason for the decline in U.S. imports. Shipments of apparel from China dropped by 12.9% while those from the rest of the world fell by 1.2%, suggesting a reduction in overall demand.

(Panjiva Research - Consumer Discretionary)

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Hyundai, GM slam on brakes, US auto sales may slow soon
U.S. auto sales climbed 2.1% in November compared to a year earlier, including a 3.3% rise in sales of foreign light trucks offset in part by a 3.6% slide in sales of foreign cars, according to Panjiva data. However, the big automakers may not be expecting a continuation. U.S. imports of cars and light trucks from outside Canada and Mexico dropped by 5.0% year over year in October, led by a 13.7% slide in shipments from Japan linked to Subaru Corp.'s production problems.

Exports from Europe slipped 0.3%, suggesting there are few concerns about the outstanding section 232 industry review by the Trump administration. Imports from South Korea, meanwhile, climbed 1.9% in October but may have sunk in November after shipments associated with Hyundai Motor Co. and General Motors Co. fell by 35.1% and 31.4%, respectively, on a yearly basis.

(Panjiva Research - Autos)

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Soybeans, circuits send China's imports higher, tariffs still a drag on exports
China's trade activity continued its slow decline in November with exports and imports combined having fallen by 0.5% year over year, the seventh straight decline.

The bad news is that exports continued to fall with a 1.1% drop led by a 23.0% slump in the dollar value of exports to the U.S. The latter should not be surprised given U.S. tariffs cover 68.1% of China's exports from 48.0% a year earlier. Additionally, November 2018's comparator included a pre-tariff increase rush of shipments.

The good news is that China's global imports increased by 0.3% compared to a 6.2% slide in October. That included a 40.9% surge in imports of soybeans and a 17.5% jump in electronic circuits from all suppliers, both in the U.S. and elsewhere.

The increase in imports of semiconductors and circuits may also be a stockpiling measure ahead of potential new U.S. export controls on high technology products. With imports from the U.S. up by 2.9% and those from the rest of the world increasing by 0.1%, there are signs that Chinese government stimulus is working.

(Panjiva Research - Policy)

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USMCA Watch: On the cusp of a deal, Canada is the remaining low hurdle
A revised U.S.-Mexico-Canada Agreement has reportedly been approved by the Mexican and U.S. governments in response to U.S. House Democrats' demands for changes in rules relating to labor, enforcement, healthcare and environmental issues as well as adaptations to automotive rules of origin requested by the Trump administration.

Approval of the labor rules by the AFL-CIO union body may allow a House of Representatives vote, where the Democrats have a majority, to occur by year-end.

Ratification by Canada's minority-led Parliament would be the last step, though Canadian plans for a digital services tax could be a stumbling block. Both major parties support the deal and the economic pressure to act from weak trade growth remains.

Canada's exports increased by just 0.1% on a balance of payments basis in October, and that was flattened by a one-off art work shipment that added 1.1% points. Exports to the U.S. only rose by 1.2%, excluding the artwork effect.

Shipments to China slumped by 41.6% due to reduced agricultural shipments linked to the Huawei controversy as well as a loss of market share to U.S. farmers due to China's goodwill purchases. While Canada's performance has been lackluster, it still outstripped the 3.6% year-over-year drop in exports seen across the Americas in October.

(Panjiva Research - Policy)

CSX's Syracuse port could speed deliveries for Constellation, Belden
Railroad operator CSX Corp. is in the process of opening an inland terminal at Syracuse, NY that should be completed in mid-2020. That could speed shipments and cut costs for trade through the seaports at Newark and New York.

Inland ports are becoming increasingly common in light of the 2018 peak season, though chassis management and the trade war with China are reducing the urgency to bring them online.

Seaborne imports to Newark and New York destined for the area 100 miles around Syracuse actually dropped by 9.9% year over year in the 12 months to Nov. 30, driven by an 18.1% slide in shipments from China.

Large-scale containerized freight importers in the Syracuse area that could be logical users of the inland port include wine-importer Constellation Brands Inc., telecoms equipment firm Belden Inc. and plastics maker Tredegar Corp.

(Panjiva Research - Logistics)

Logistics jobs momentum wanes on precision railroading, trade war
U.S. logistics employment climbed 1.3% higher year over year in November for the 112th straight month. Yet, momentum is slowing. That was the slowest rate of growth since October 2010 and was less than that seen by the economy at large for the first time since September 2013.

The introduction of precision railroading and lack of meaningful impact from inland ports dragged rail employment down 9.7%. Maritime employment meanwhile slid 0.3% lower as a result of the U.S.-China trade war. Meanwhile, U.S. seaborne inbound shipments fell by 4.2% compared to a year earlier in November.

(Panjiva Research - Logistics)

S&P Global Market Intelligence is owned by S&P Global Inc.

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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