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.
China's exports slip, but US still lost out in December's trade war
China’s exports fell 5.8% year over year and its imports declined 4.4% in dollar terms in December. That was the first year-over-year decline in exports since December 2016. Trade with the U.S. slipped — China’s exports to the U.S. fell 3.7%, the first drop not related to Lunar New Year-related trade slowdowns since October 2016. The decline could have been a result of the previous pre-tariff rush having subsided.
Yet, China's imports from the U.S. slumped 35.8%. As a result, in December, China's exports to the U.S. fell by $1.53 billion while imports from the U.S. fell by $5.80 billion. Net export reductions for the U.S. may overshadow trade negotiations that restart in late January. It is worth noting that China's exports to Japan also fell, by 1.0%, and to Taiwan, by 1.7%.
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Evergreen beats Cosco on US routes as ONE turns a corner
Container liners operating U.S.-inbound routes ended 2018 with a bang after volumes climbed 13.5% compared to a year earlier. That led to full-year growth of 7.7% to reach 28.01 million 20-equivalent units. All but one of the top 10 shippers — Cosco Shipping Holdings Co. Ltd. — saw an expansion, with CMA CGM SA passing A.P. Møller - Mærsk A/S to become the second-largest liner in December 2018.
Ocean Network Express may be turning a corner — volumes rose 7.2% year over year in December 2018 after a troubled post-merger experience for the liner operations of Mitsui O.S.K. Lines Ltd., Kawasaki Kinkai Kisen Kaisha Ltd. and Nippon Yusen Kabushiki Kaisha The fastest-growing liner, however, was Evergreen Marine Corp. (Taiwan) Ltd., with a 25.0% rise from a year earlier.
That may reflect a grab for market share from Cosco. Evergreen's shipping from China to the U.S. climbed 28.3% while Cosco's increased 6.5%. The latter's takeover of Orient Overseas, which was preceded by a surge in market share in 2017 as well as lower profitability, may have reduced management's appetite to pursue market share at any price in 2018. A slowdown in shipments during the U.S.-China trade truce may drag on all container lines, especially over the Lunar New Year break in early February.
(Panjiva Research - Logistics)
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Mexican pipeline closures could bring pain for Tesoro and Exxon Mobil
Mexico’s gasoline imports are in decline after the government closed supply pipelines across the country in response to theft from the pipeline system. The country's energy supply chain had already been disrupted by port congestion at the end of 2018. The result was a 1.2% year-over-year drop in Mexican refined oil imports in November following average growth of 10.6% in the first 10 months of the year.
Congestion has been particularly prevalent at the Gulf Coast port of Coatzacoalcas, with Petróleos Mexicanos SA de CV having shifted deliveries to Tuxpan, which saw a 28.3% year-over-year increase in imports in November. Gasoline shortages will help the government's push for investment in new refineries. Potential losers are U.S. exporters, including Tesoro Refining & Marketing Co. LLC and Exxon Mobil Corp. Mexico accounted for 29.6% of U.S. refined oil exports in the 12 months to Oct. 31.
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CAFTA-DR faces NAFTA's fate, fruit and clothes pay the price
The administration of U.S. President Donald Trump may be set to renegotiate the CAFTA-DR free trade deal with six Central American countries. It would be principally looking to remove the Dominican Republic, El Salvador and Nicaragua for failing to deliver on political reforms, leaving Costa Rica, Guatemala and Honduras. The administration has yet to apply for Trade Promotion Approval authority and so will not be able to start negotiations straight away.
Doing so would be transformative for the deal given the three countries targeted accounted for 43.4% of total trade by the U.S. with the CAFTA-DR group. Products shipped that face disruptions include fruit — especially bananas, whose exports to the U.S. have already been in decline — apparel and auto-components.
DP World's Chilean purchase driven by cars
DP World Ltd.'s latest acquisition is Chilean port operator Pulgosa. The fourth acquisition since the start of 2018, which has an enterprise value (equity plus debt) of $728 million, is equivalent to 3.3% of DP World’s enterprise value as at Jan. 11, 2019. The Chilean facilities, in San Antonio and Puerto Lirquen, have likely experienced significant growth recently as the ports in total saw a 23.4% expansion in the value of in- and outbound traffic in the 12 months to Oct. 31. The growth has been driven by the automotive industry, in particular imports by auto distributor Derco, whose imports rose 68.0%, and Ford Motor Co. with a 29.8% rise.
(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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