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Stevedores tempt wrath of Brazil's Bolsonaro; Toyota leads tariff criticism

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.

Stevedores tempt Bolsonaro's wrath, raising risks for Hyundai, Volkswagen
The risk of strikes has returned to the Brazilian port of Santos as unions test the resolve of the administration of President Jair Bolsonaro to tackle labor disputes. Santos accounted for 46.4% of inbound containerized freight to Brazil in the 12 months to March 31, raising significant risks for regional supply chains if disruptions prove lengthy.

The largest containerized freight exporters shipping into Santos are focused on the autos and capital goods sectors. For autos, that includes Hyundai Motor Co. with 14,100 twenty-foot equivalent units, or TEUs, shipped in the past 12 months to March 31 and Volkswagen AG's truck subsidiary Scania with 13,000 TEUs. Caterpillar Inc. is the largest capital goods supplier through the port with 6,600 TEUs shipped.

(Panjiva Research - Logistics)

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Toyota leads tariff criticism as Japan's auto exports lose drive
Japan's seven largest automakers cut their global exports by 1.8% year over year in April despite a 4.9% increase in production. The latter will likely have dropped in May due to the coronation holiday, disrupting downstream supply chains.

The slippage in exports was largely led by a 29.3% slump in shipments by Nissan Motor Co. Ltd. and partly offset by an 8.5% increase from Toyota Motor Corp. Both face a disruption in their shipments to the U.S. as a result of forthcoming Section 232 national security tariffs. That has led Toyota in particular to express criticism, stating that the tariffs make it clear its "investments are not welcomed."

There is little Toyota can do in the meantime, though it did increase U.S. seaborne imports by 15.3% year over year in April after an 18.2% drop in the first quarter. Not all automakers followed suit though, with Honda Motor Co. Ltd.'s exports having fallen 25.6% in April.
(Panjiva Research - Autos)

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China's semiconductor prospects could be helped by trade conflict push
The U.S.-China trade war is drawing in industrial policies as well as tariff increases. The Chinese government is providing tax breaks to develop its semiconductor industry which, over the long term, may reduce the reliance of Huawei Technologies Co. Ltd. and others on U.S. manufacturing.

Support for Chinese exports and overseas manufacturers including Intel Corp. and SK hynix Inc. has already led to 23.7% growth to reach $89.3 billion in the 12 months to April 30. China's exporters have also taken market share from other countries including South Korea, which has expanded by only 8.4% to $119.1 billion, as well as those in Taiwan, Japan and the U.S.

(Panjiva Research - Tech. Hardware)

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Scrap exports set for second round of crushing on new China rules
The Chinese government is set to further tighten imports of scrap metal, imposing import licenses on high-grade aluminum, copper and steel. China already implemented rules for low-grade scrap in 2018, slashing an import market that was worth $13.2 billion according to 2017 figures.

U.S. exporters including Sims Metal Management Ltd. and Greta Group are unlikely to receive licenses given the ongoing trade conflict. U.S. exports to China in this category fell 72.4% year over year in the first quarter, with annualized shipments of $940 million that could easily fall further as a result of the new rules.

Substitute shipments to South Korea and Taiwan may also be at risk if the restrictions seen in other waste products such as plastics still proliferate.

(Panjiva Research - Metals & Mining)

Norfolk may court Subaru, Toyota for US Midwest expansion goal
The Port of Virginia in Norfolk has set a goal to ship 40% of its volumes to the U.S. Midwest and is about to finish a rail expansion that should help that mission. The Midwest region accounted for 19.3% of outbound volumes from Norfolk in the 12 months to April 30, following an 11.7% increase in the three months to April 30.

The main competing ports for supplying the Midwest were Long Beach and Los Angeles with 37.4% of inbound shipments to the region, followed by Newark with 15.3% and Norfolk itself handling 8.6%.

Key growth markets in the Midwest region include Kentucky, which saw a 24.9% growth rate in the 12 months to April 30 versus a year earlier, led by Amazon.com Inc. Shipments to Indiana expanded by 9.6% year over year and are led by automakers including Subaru Corp. and Toyota. Imports to Ohio grew by a more modest 4.4% and included Hercules Tire & Rubber Co. Inc. and Cooper Tire & Rubber Co.

(Panjiva Research - Logistics)

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.

The Supply Chain Daily has an editorial deadline of 7:30 a.m. ET. Some external links may require a subscription. Links are current at the time of publication. S&P Global Market Intelligence is not responsible if those links are unavailable later.