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.
Trump's de-escalation may reduce peak shipping disruption
The Trump administration has modestly de-escalated the trade war by splitting into two parts the "list 4" tariff group, thereby reducing the risk of interrupting seasonal peak shipments.
The smaller part, worth $108.8 billion in terms of imports in the 12 months to June 30 and known as list 4A, will have duties of 10% applied from Sept. 1. Product lines include certain apparel lines worth $38.8 billion and TVs and monitors worth $8.6 billion.
List 4B covers $154.8 billion of products such as phones, laptops, toys and the remaining apparel items. Tariffs on List 4B will now kick in on Dec. 15 at a 10% rate.
List 4B apparel imports have peaked in August in the past three years. Shipments of toys normally reach a maximum level in October, phones in October or November, and laptops in November or December. So far only laptops showed signs of stockpiling with a 39.1% year-over-year rise in June, likely after earlier talks between the two countries failed the previous month. All other list 4B items were down 0.1%.
CMA-CGM, THE Alliance the root of Long Beach's problems in July
Containerized-freight handling through the port of Long Beach, Calif., fell 9.7% year over year in July, largely due to a 9.9% drop in imports. An earlier slowdown in shipments into the California port by Orient Overseas (International) Ltd. and COSCO SHIPPING Holdings Co. Ltd., which saw volumes fall 27.5% year over year in July according to Panjiva data, was potentially linked to the former’s sale of assets at the port. That reversed to 7.4% year-over-year growth in July.
CMA CGM SA recorded a decline of shipments by 27.5% year over year in July, those of Hapag-Lloyd AG and Ocean Network Express — the lead members of THE Alliance — declined 8.3%. The slowdown meant Long Beach lagged both Los Angeles and Oakland, though the three Californian ports recorded a combined 2.2% decline in exports and export growth of just 1.2% in July.
Inventec restructures production for HP, Sonos supplies stay the same
Inventec Corp. reportedly is moving its laptop manufacturing for the U.S. market to Taiwan from China, with fellow contract manufacturers potentially following suit.
Taiwan has been a niche supplier to the U.S., with exports of 1.28 million units in the 12 months to June 30 compared with 93.73 million units from China, according to Panjiva’s data. Taiwanese output though has focused on higher-end machines with an average U.S. import value of $885 per laptop as opposed to $438 for China.
As well as supplying HP Inc. with laptops in the U.S. from both China and Taiwan, Inventec also supplies Sonos Inc. with smart speakers, Panjiva’s seaborne shipping data shows. Imports of the latter jumped 23.4% year over year in July after a 2.1% drop in the quarter to end-June.
Drug shipments down on Brexit hangover, headaches remain
The healthcare sector is particularly exposed to legal and political uncertainties related to Brexit. According to its senior management, Sanofi and Alliance Pharma PLC boosted inventories ahead of the original March deadline.
It’s not just about short-term planning. AstraZeneca PLC Chairman Leif Johansson said the company has been preparing for a no-deal Brexit since the referendum in 2016.
British imports of medical products jumped 69.8% year over year in March, including a 99.2% surge from the European Union, which accounted for 78.5% of British imports. It has fallen since then, with total imports in the second quarter down 24.0% year over year and EU shipments down 32.7%.
An interruption may provide an opening for suppliers from other countries, including the U.S. It represented 9.3% of imports in the 12 months to end-June, but saw a 9.1% decline in the second quarter. Switzerland, which accounted for 5.1%, has also experienced a downturn.
Alaskan fish, ores hit by the US-China trade war
The Alaskan fisheries industry is paying a heavy price for the U.S.-China trade war. Exports of all products to China, fell 44.3% year over year in the second quarter after a 34.7% drop in the previous three months. One challenge for Alaska more broadly is a lack of export diversity, with fish having accounted for more than two-thirds of exports to China.
Exports of frozen fish fell 25.7% year over year in the second quarter while fishmeal fell 25.5%. A collapse in exports of lead and precious metals ores did the rest of the damage. There have been some bright spots though, with exports of lumber up 30.7%.
Reduced exports, combined with lower imports – particularly of refined oil products – have taken a toll on the logistics industry serving China-Alaska routes too. Bilateral seafreight volumes have fallen by 19.0% year over year in the 12 months to Jun. 30 while airfreight – focused on consumer electronics – has fallen by 1.4%.
The good news is that Alaska’s trade with the rest of the world remains robust – indeed total seafreight increased by 14.0% and airfreight by 2.3%.
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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