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.
Primark looks to localize sourcing for U.S. expansion
Discount fashion retailer Primark — owned by Associated British Foods PLC — plans to expand sourcing for its U.S. operations to include imports from Central America, including Mexico. Aside from reducing transport costs the move should also lower regulatory risk. Panjiva data shows 50.7% of U.S. seaborne imports associated with Primark were sourced from China in the 12 months to Aug. 31, leaving it exposed to new U.S. tariffs.
Apparel exports from Mexico were only a small part of U.S. imports at 3.9% of the total in the 12 months to July 31 after slipping 6.2% year over year. Mexican apparel exports to the U.S. are currently dominated by workwear with Cardinal Health Inc.'s exports from Mexico equivalent to $672 million in the 12 months to July 31. The largest consumer clothing buyer was V.F. Corp. with $503 million shipped over the same period.
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Levi Strauss, Adidas boost Cambodian purchases ahead of wage rise
The Cambodian apparel industry faces a 4.4% rise in the government-mandated minimum wage, potentially hurting its competitive position as an alternative supplier location to China, which is set to be hit by U.S. tariffs. U.S. imports of apparel climbed 14.0% year over year in 2018 to $2.47 billion, and have expanded by a further 10.6% in the three months to July 31.
That growth is focused on a handful of U.S. importers. Panjiva's seaborne shipping data shows imports associated with Levi Strauss & Co. and adidas AG climbed 76.7% and 21.1% year over year respectively in the three months to Aug. 31. The outlier was Children's Place Inc. — historically the largest importer — which cut shipments by 22.1%.
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Pernod Ricard, Diageo make the most out of Liverpool's service expansion
Container-line MSC Mediterranean Shipping Co. SA and terminal operator Peel Ports Ltd have created a joint venture to expand port capacity in Liverpool, U.K. The timing is somewhat surprising as it is so close to a potential "hard Brexit," though the two have worked together since 2016 and port developments can take years to complete.
Shipping activity through Liverpool expanded by 10.9% year over year in the second quarter, in part due to new service offerings from MSC, and was well ahead of the total for all British ports which saw traffic drop by 6.8%. The impact of MSC's new offerings can be seen in a 21.4% rise in shipping to the U.S. in the 12 months to Aug. 31.
The route has been popular with the drinks industry. Panjiva data shows there were over 3,300 TEUs in U.S. seaborne imports associated with Pernod Ricard SA after an 18.7% year over year expansion, outstripping Diageo PLC's 3,100 TEUs. Brexit may complicate the transshipment of Irish beverages headed to global markets via Liverpool.
(Panjiva Research - Logistics)
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Fastenal, Bossard cut back threaded rod imports before tariff tightening
The U.S. Commerce Department determined that anti-dumping duties should be applied to threaded steel rod imports from China, India and Taiwan. Unlike the wider section 232 review of the steel industry, the threat of tariffs on steel rod shipments has not deterred importers.
Indeed, shipments from China and India climbed 14.7% and 16.1% respectively in the three months to July 31 compared to a year earlier. This was partly driven by a drop in import values per ton of the construction material, perhaps reflecting a late grab for sales.
Leading U.S. importers may already be cutting shipments though. Seaborne imports of steel rods more broadly associated with Fastenal Co. fell 41.5% year over year in the three months to Aug. 31 while those linked to Bossard Holding AG fell 22.8%.
(Panjiva Research - Metals & Mining)
Shipbuilding faces heavy weather as China's orders slump
Shipyards in South Korea and Japan experienced a surge in activity in August, with exports having climbed 164.5% and 12.8% year over year respectively. When added to activity in China, the total year over year increase for the three countries was 30.2%.
Order activity in China suggests there may be a rougher patch ahead. New orders in China slumped 19.7% year over year to the lowest one month total since Oct. 2016, around the time of Hanjin Shipping's financial failure. This left the remaining orders at Chinese shipyards at their lowest since at least 2012.
In South Korea the merger of Daewoo Shipbuilding and Marine and Hyundai Heavy Industries Holdings Co. Ltd. may be held up due to the Japan-South Korea trade war, potentially delaying the restructure of local industry.
(Panjiva Research - Logistics)
Britain's toehold in sock exports needs post-Brexit U.S. trade deal
Prime Minister Boris Johnson has indicated that British exports of socks to the U.S. are minimal as they face both tariff and nontariff barriers. While the prime minister is reportedly incorrect on the nature of the barriers, it is clear that the British apparel industry has made little headway into the U.S.
Exports of socks to the U.S. from the U.K. were worth just $2.8 million in the 12 months to July 31, or 0.1% of the total. That followed an 11.7% year over year contraction. A cut in shipments to the U.S. from China — which represented 62.3% of the total in the 12 months to July 31 — due to tariffs could provide an opportunity for non-Chinese suppliers, but may favor low-cost production centers over Britain's luxury-oriented suppliers.
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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