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.

America's pre-Brexit whisky binge sets record for imports
Britain’s Scotch Whisky Association warned that the U.K.'s departure from the European Union, which takes effect from March 29, 2019, could lead to increased costs and supply chain complications. British exports of whisky surged 17.3% in October year over year to reach a new record. The latest figure included a 51.3% surge in shipments to the U.S. as importers perhaps seek to pre-empt post-Brexit shortages.

U.S. imports of whisky from all countries increased in the 12 months to Oct. 31, to a record 9.1%. Irish whisky has been growing more quickly than scotch.

In the 12 months to end-November, U.K. export growth of whisky to the U.S. was driven by Diageo PLC, followed by Pernod Ricard SA.

(Panjiva Research - Food & Beverages)

Congested California faces lunar new year squeeze
The ports of Los Angeles and Long Beach are reportedly suffering congestion issues as a result of a pull-forward of imports from China to avoid tariffs and increased container-line service demands. Imports in November fell 5.1% year over year after a 17.7% rise in October, indicating congestion may already be disrupting services.

A delay in increased U.S. tariffs on Chinese exports to March 1, 2019, from Jan. 1, 2019, may increase shipping volumes in February. Additionally the 2019 lunar new year, with celebrations starting the week of Feb. 4, falls nearly two weeks earlier than in 2018. In 2011 and 2016, when there was a similar shift in holiday timings, shipments in January rose by as much as 34% year over year while in February they climbed 16.0%. If these trends repeat, early 2019 promises to be busy for users of the Californian ports.

(Panjiva Research - Logistics)

Navistar steers around steel tariffs, may hit the 232 review
Truck and bus maker Navistar International Corp. reported fiscal 2018 results below analysts' EBITDA expectations after facing increased costs. CFO Walter Borst said a new procurement venture has “more than offset the impact of tariffs and higher commodity costs.” The company's imports of steel declined 11.1% in the three months to Nov. 30, compared to the first three months of the year.

The firm may face bigger issues from the section 232 review of the automotive industry, which will likely include components that are also used for trucks. Navistar's seaborne imports to the U.S. mainly comprise braking systems, which represented 44.4% of imports in the 12 months to Nov. 30, followed by wheel hubs and assemblies, which represented 13.1%. Navistar's competitive position may be hurt by imports from the EU and Japan being exempted given that Navistar’s sourcing is focused on China, India and Brazil — together the three represented 83.9% of Navistar's seaborne imports.

(Panjiva Research - Capital Goods)

Nidec nixes Chinese motors in favor of Mexican supplies
According to Nidec Corp.'s COO, Hiroyuki Yoshimoto, the U.S.-China trade war has caused growing uncertainty at the electrical equipment maker, leading it to change its long-term investment plans for China and shift some U.S. sourcing to Mexico. Nidec's U.S. imports from China in the 12 months to Nov. 30 were led by servo-mechanism and sub-37.5kW electric motors, which were subject to 25% duties from August. There was a spike in larger AC motor shipments in November despite the launch of 10% duties as the company sought to pre-empt further tariff increases. The firm has already accelerated its shipments from Mexico to the U.S., with a 17.5% year-over-year increase in October to reach a record high.

(Panjiva Research - Capital Goods)

Worthington drums up price increases
Worthington Industries Inc. has reported a year-over-year decline in operating profit margins to 3.7% from 6.0% in its fiscal second quarter as the steel products maker deals with increased costs due to tariffs. Company President Andrew Rose said it is the biggest challenge facing the firm but it has been able to pass through price increases to customers. The firm has also cut its seaborne imports of steel and aluminum by 33.3% and 15.0% year over year, respectively, in the three months to Nov. 30. The company may face further challenges if U.S. tariffs on Chinese exports are extended — it imports aluminum cylinders from there — given China accounted for 35.5% of its imports in the 12 months to Nov. 30.

(Panjiva Research - Capital Goods)

Steelcase raises prices, tables a supply shift
Furniture maker Steelcase Inc. has passed through increased import duties to customers, according to CEO James Keane. The company's tariff challenges may grow given 30.6% of its seaborne imports from China in the 12 months to Nov. 30 included products that became subject to 10% duties in September. Those duties may increase to 25% in March. The firm could switch its imports of completed furniture to Malaysia and its steel components to Spain from China should further price increases not prove possible.

(Panjiva Research - Furnishings)

Lovesac throws more production capacity to Vietnam from China
The Lovesac Co. is managing its exposure to U.S. tariffs on Chinese exports of furniture via several routes. According to CEO Shawn Nelson, the company began moving much of its overseas production to Vietnam a year ago and has pursued "aggressive" vendor negotiations and selective pricing measures. The U.S. firm has not changed its sourcing since tariffs were implemented in September — its imports in the three months to Nov. 30 rose 4.6% over the three months to Aug. 31.

More broadly, U.S. furniture imports from China climbed 9.1% year over year in October as importers accelerated shipments ahead of tariff increases in 2019.

(Panjiva Research - Furnishings)

Worst year since the financial crisis looms for shipbuilders
The global shipbuilding industry may be heading for its worst year since 2008 after combined exports from China, Japan and South Korea, worth $58.4 billion, fell 28.4% from Jan. 1 to Nov. 30 from the year-earlier period.

The outlook for Chinese shipbuilders including China Shipbuilding Industry Co. Ltd. may be improving after remaining orders for new vessels increased in November for the first time since May and Jan. 1 to Nov. 30 orders climbed 30.3% year over year. Similarly Daewoo Shipbuilding and Marine has exceeded its order targets for the year. A turnaround for the industry may be hindered by reduced profitability for the shipping firms and the need to invest in sulfur emissions-mitigation technology.

(Panjiva Research - Logistics)

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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