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CH Robinson wins most improved forwarder; WH Group hogs the limelight

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CH Robinson wins most improved forwarder; WH Group hogs the limelight

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.

CH Robinson shines in lackluster month for forwarders
Freight forwarders operating U.S.-inbound, seaborne shipments suffered from the impact of the U.S.-China trade war with activity growth of just 0.1% year over year in August. Among the top 10 forwarders, Expeditors International of Washington Inc. saw the worst development with a 3.8% slide in volumes, though Kuehne + Nagel International AG's drop of 3.5% followed a 7.9% improvement in the prior three months on average. The newly combined DSV A/S-Panalpina has yet to see a growth dividend — its volumes fell 1.3%.

The best performer was C.H. Robinson Worldwide Inc. as its volumes handled grew 3.5% after a 6.9% drop in the prior three months. That was driven by a surge in shipments from Asia, excluding China, as well as from Europe. Whether the gain in market share has come at the expense of profitability remains to be seen.

(Panjiva Research - Logistics)

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WH Group, JBS high on the hog as China's U.S. pork imports surge
The Chinese government has indicated that "companies have begun to make inquiries on the procurement of US agricultural products." It also noted that both soybeans and pork are "within the scope of the inquiry." Exclusion from additional tariffs — but not a removal of tariffs — has reportedly been decided upon, and the government may also carry out direct purchases.

That would further improve relations with the U.S. after the recent introduction of tariff exemptions and the delay of U.S. tariff increases by two weeks to Oct. 15.

The need for pork purchases is pressing given the ongoing swine flu epidemic, leading Chinese imports of pork from all countries to rise 182.3% year over year in July. U.S. exports to China already surged 7.5x year over year in July after a 98.7% jump in the second quarter, leaving total U.S. pork exports in July at their highest level in over a decade.

The burst in shipments to China may have slowed in August, according to Panjiva's seaborne data. The largest shippers on basis in the past three months may have been WH Group Ltd.'s Smithfield and JBS SA's Swift Foods.

(Panjiva Research - Agriculture)

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Tariff take hits record $7B, could rise to $12B in next six months
The U.S. Treasury's tax revenue from tariffs reached a record $7.05 billion in August after a 64.9% year-over-year increase. The share of tax revenue relating to section 301 duties on Chinese exports likely reached $3.91 billion.

That will increase significantly as a result of the extension of tariffs to cover almost all U.S. imports from China in two phases on Sept. 1 and Dec. 15, as well as a delayed increase in existing duties to 30% from 25% on Oct. 15.

The resulting tariff revenue could reach $8.84 billion by February 2020 on the basis of current imports, potentially bringing the total to $11.9 billion. On an annualized basis, that's equivalent to around 65% of Treasury income from corporation tax in the current year.

(Panjiva Research - Policy)

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Healthcare hurdles remain for 2019 USMCA passage
The ratification of the U.S.-Mexico-Canada Agreement, or USMCA, continues to struggle in Canada and the U.S. The start of the Canadian election season through October likely puts passage there on hold. Negotiations between the U.S. Trade Representative and Congressional Democrats in the U.S. continue — including Democrats' concerns regarding the impact of USMCA on health care costs — with the ball currently in Congress' court.

U.S. healthcare costs continue to surge. Imports of pharmaceuticals rose 19.6% year over year in July to reach a one month record of $7.97 billion. That's been driven by higher prices rather than volumes imported, with shipments from Canada and Mexico climbing 36.6% year over year in July.

Yet, they only represent 5.6% of the total in the 12 months to July 31. The bigger issue remains supplies from the EU, which represented 70.8%, making health care a potential issue in EU-U.S. talks as well as USMCA ratification.

(Panjiva Research - Healthcare)

Pemex suffers export revenue slide, cuts distillates imports
Mexican state-owned oil company Petróleos Mexicanos SA de CV, or Pemex, will receive support from the Mexican government to alleviate its financial stress. Pemex's troubles may be partly tied to reduced export revenues, with Panjiva data showing the firm's crude oil export revenues falling 8.0% year over year in the 12 months to July 31.

At the same time, Pemex's imports of refined oil may have fallen 18.2% to $26.2 billion, led by a 25.9% drop in imports of distillates and kerosene. Given that most of Pemex's refined products come from the U.S., there may be a geopolitical as well as economic aspect to further import cutbacks.

(Panjiva Research - Energy)

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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