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.
Grimaldi, weak auto sales bring grim tidings for vehicle shipping
Transatlantic shipping is in the middle of a slowdown that is "a lot to do with recession fears, protectionism in the U.S. and Brexit" according to Emanuele Grimaldi, an investor in Grimaldi Group S.p.A.
Vehicle shipping from the EU to the U.S. faces two major challenges. U.S. auto sales of foreign vehicles dropped by 13.7% year over year in September and fell by 1.5% in the third quarter. There is also the prospect of the U.S. applying section 232 "national security" duties to EU auto exports from mid-November which could be "a big challenge," Grimaldi previously said. While Grimaldi's Atlantic Container Line only represented 2.2% of U.S. seaborne imports of vehicles in the 12 months to Sept. 30, volumes handled jumped 69.8% year over year as it took market share from Wallenius Wilhelmsen ASA.
Major users of Grimaldi's Transatlantic services include the construction equipment makers Liebherr-International AG and Sandvik AB, leaving the firm exposed to the business investment cycle too.
Apple shows success of "Make in India" strategy, Samsung shifts sourcing
The first locally produced iPhones have gone on sale in India after Apple Inc. production started at Hon Hai Precision Industry Co. Ltd.'s factory in Sriperumbudur. Apple had already reduced imports of phones with a 69.2% year-over-year drop in July after an unchanged level in the second quarter. It has however been scaling up its imports of the Mac line of computers.
India's imports of telecoms components more generally have not been impacted by the Modi administration's "Made in India" strategy. Total imports of components by all manufacturers — including those by Samsung Electronics Co. Ltd. and Flex Ltd. — were unchanged in July after a 5.2% drop in the second quarter. That included a 10.8% drop in imports from China in July in favor of a surge in shipments of parts from Vietnam, led by those for Samsung Electronics.
TSMC's telecoms gain offset by South Korea's crunch as chip exports fall
The prolonged downturn in Asian export growth has been driven in large part by the electronics industry. A 6.6% slide in combined semiconductor exports from China, Japan, South Korea and Taiwan in September suggests that is an ongoing issue.
There are signs of improvement. Exports from Taiwan grew 6.6% year over year in September, driven in part by surging 5G telecoms demand which Taiwan Semiconductor Manufacturing Co. Ltd.'s CEO CC Wei has said he "could not have predicted" would be so significant.
Yet, there was a 31.5% slide in exports from South Korea, which has offset a 11.0% rise in shipments from China and an 8.4% expansion from Japan.
Japan's accelerating export downturn needs mini-deal, detente with South Korea
Japan's international trade activity fell 3.4% year over year in September, including a 5.2% drop in exports which was slightly faster than the prior three-month average of 5.0%. Trade with the U.S. has been a major driver with an 8.0% drop in exports, compared to 4.4% in August. That increases the urgency of passing the "mini deal" reached with the U.S., though the agreement only covers a limited range of Japanese capital goods exports.
Worsened relations with South Korea, including the bilateral withdrawal of trusted trader status, led to a 13.3% drop in exports to South Korea from Japan. A meeting between Prime Minister Lee and Prime Minister Abe on Oct. 24 provides an opportunity for improved relations.
At the sector level, the downturn in total Japanese exports was widespread. It is worth noting the 1.9% slip in auto exports may accelerate in October after Subaru had to close a factory in response to the effects of Typhoon Hagibis.
Glory shifts production as Commerce puts mattress case to bed
The U.S. Commerce Department has determined that exports of mattresses from China have been dumped at margins of up to 1,732%. The case has been largely successful in squeezing Chinese imports out of the market — imports from China fell 94.7% year over year in the three months to Aug. 31.
Total imports fell only 22.5% as shippers including Glory Home Furnishing switched production to Vietnam or Malaysia. The two countries accounted for 39.3% of U.S. imports in the three months to Aug. 31, up from 1.6% a year earlier. Mexican exporters have also lost out to renewed competition — imports to the U.S. for IKEA AB from Mexico fell 8.6% year over year in the three months to Aug. 31.
So far, consumers may have avoided additional costs from the tariffs, with the average import value per mattress unchanged year over year at $85 per mattress in the past three months.
Panjiva Basics: Dealing with dumping, subsidies and safeguarding
World Trade Organization rules provide several ways for companies to address unfair pricing practices including anti-dumping duties, countervailing duties to tackle subsidies and safeguarding regulations. This report provides a guide to the operation of the three systems, illustrated by worked examples in the glass, steel, chemicals and renewable energy industries.
Initiating and completing such cases — at least in the U.S. where the examples are drawn from — can take over a year. The impact can be felt quickly though. In a U.S. structural steel case launched in February, initial determinations were made in July and imports from China and Mexico fell 69.3% and 11.8% respectively in August, compared to a year earlier.
Ultimately however, market developments can overwhelm the impact of tariffs. The wide-ranging "safeguarding" methodology allows tariffs and quotas to be applied to imports from all countries when dumping or subsidization has been identified as a risk. In the solar power industry, a 39.7% surge in U.S. imports in 2016, compared to 2015, led the U.S. to apply both quotas and tariffs under the section 201 program.
Yet, despite a 39.6% drop in imports in 2017 versus 2016 there has since been a recovery such that imports in 2019 through Aug. 31 are the same as those seen in the same period of 2015.
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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