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.
Union against USMCA ratification as Canadian steel heads to Mexico
Canada's United Steelworkers' union has called on the government to reject the U.S.-Mexico-Canada Agreement, or USMCA, until U.S. tariffs on steel and aluminum have been removed. If anything, Canada has been "winning" the steel and aluminum trade war. U.S. imports from Canada fell $507 million year over year in the six months since the tariffs were applied, while exports to Canada fell $713 million.
In the meantime, shipments from Canada to Mexico have increased as regional supply chains adjust to tariffs. Mexican imports of steel and aluminum from Canada have climbed 7.9% year over year in the second half of 2018 and by a further 15.8% in the first two months of 2019. Leading participants in Canada-to-Mexico shipments include capital goods manufacturer Superior Industries International Inc., metals trader Sumitomo Corp. and metals producers Essar Group and ArcelorMittal.
Orient Overseas prepares to sell Long Beach, Calif., assets; CMA-CGM could get more involved
Container-line Orient Overseas (International) Ltd. remains on track to sell its The Port of Long Beach port assets in California "in the coming months" after the port's operations reported a 3.9% year-over-year growth in revenues in 2018. While profitability remains lower than that of other port operators such as DP World Ltd., the assets have already been linked to several potential buyers including Yildirim Holding A.S.
The port more broadly, where there are also assets owned by A.P. Møller - Mærsk A/S, Kawasaki Kisen Kaisha Ltd. and Carrix Inc., has seen a steady slowing of growth recently including a 5.0% year-over-year drop in traffic in the first two months of 2019. Cosco Shipping Holdings Co. Ltd., which controls Orient Overseas, accounted for 27.4% of volumes through the port in 2018 while CMA CGM SA, in which Yildirim holds a minority stake, accounted for 9.0%. One strategy for Yildirim to improve Long Beach's profits post-deal would be to encourage CMA-CGM to redirect volumes from The Port of Los Angeles.
Hyundai may move more through Mobile, Ala., once access improves
The Alabama State Port Authority has secured $400 million for a channel widening project to improve throughput at the port of Mobile. That follows a 10.7% year-over-year increase in inbound volumes to the port in 2018 as shipments from Maersk and MSC Mediterranean Shipping Co. SA, which represented 50.0% of total shipments, CMA-CGM and ZIM Integrated Shipping Services Ltd. steadily improved.
CMA-CGM will likely push more volumes through the port in 2019 as a result of new service offerings. The deeper channel will be able to receive larger vessels from Asia via the Panama Canal. Leading importers to Alabama that do not use Mobile for all their shipping include Hyundai Motor Co., with 22,400 20-foot equivalent units shipped in 2018, as well as artificial fiber manufacturer Indorama Ventures Public Co. Ltd. and electronics firms including Panasonic Corp. and LG Electronics Inc.
Canada's canola farmers pay the price for Huawei spat
China has halted imports of Canadian canola amid a worsening of relations between the two countries, in part due to the detention of Huawei's CFO. That has also extended a drop in the price of canola to 6.0% year-to-date. The product has been the center of a series of disagreements between the two countries since late 2016. China accounted for 47.3% of Canada's $4.29 billion of canola exports in 2018. A suspension of purchases by Southseas Oils Ltd. and Chinatex Grains and Oils Imp. & Exp. Co. Ltd. comes as Canadian exports already fell 11.6% year over year in 2018 due in part to declining prices.
Michelin's rubber supply chain faces Thai election disruption
A reduction in rubber exports from Thailand — related to a price control scheme with Indonesia and Malaysia — may be delayed due to the delay in Thai election results. That may disrupt rubber supply chain plans, particularly to the U.S. where tire manufacturers also have an array of tariffs on finished products to deal with. Thailand, Indonesia and Malaysia combined accounted for 82.5% of the total $1.57 billion worth of U.S. imports of natural rubber in 2018. Michelin may be most affected given Thailand represented 38.9% of its imports in the 12 months to Feb. 28. Other importers include Continental Aktiengesellschaft, Yokohama Rubber Co. Ltd. and Goodyear Tire & Rubber Co.
World trade slippage about to become a slide
Global trade slipped for a second month in January with a 0.1% decline versus a year earlier compared to a 1.8% drop in December. A worse decline was averted because of the earlier lunar new year, though a 4.1% slide in emerging Asian exports shows a wider slowdown in activity. February has likely seen more of the same, with government data indicating a 4.7% slide in Chinese exports in January and February combined. U.S. exports are also likely to have slowed with data from eight seaports showing a 10.2% year-over-year decline in outbound containerized freight activity.
Christopher Rogers is a senior researcher at Panjiva, which is part of S&P Global Market Intelligence. 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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