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.
Pioneer clinches optical drive exemption, most others less lucky
The U.S. government has outlined the process for companies to request exemptions from 25% duties applied to about $200 billion of Chinese exports, starting May 10.
Prior experience with approximately $50 billion of products suggests the granting of exemptions will be slow. Of cases from July and August, 35.2% are awaiting a decision while 21.9% of the completed requests have resulted in an exemption.
The latest round of approvals includes Pioneer Corp. and Teac Corp.'s optical disc drive imports. Total U.S. disc drive imports in the 12 months to March 31 were worth $1.64 billion, with 29.7% sourced from China.
Pioneer more broadly has reduced its exposure to China — in favor of Thailand and Vietnam — to 13.0% of its U.S. seaborne imports in the 12 months to April 30 from 30.2% in 2016.
(Panjiva Research - Tech. Hardware)
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Kyocera, Sharp copy Ricoh by offsetting printer production from China
Sharp Corp. and Kyocera Corp. are following the example of Ricoh Co. Ltd. in shifting the production of their printers and copiers for the U.S. market out of China. The move follows the U.S. applying 25% import duties on those products.
Kyocera is moving to Vietnam, Ricoh and Sharp to Thailand. U.S. imports of printers already reflect the impact of tariffs with seaborne shipments from China down 19.6% in the first quarter of 2019 and dropping a further 35.4% in April.
Kyocera may have problems beyond tariffs however. Its U.S. imports of printers from China fell 37.9% year over year as at end-April while shipments from the rest of the world fell 30.0%.
(Panjiva Research - Tech. Hardware)
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Walmart, Dollarama face risk of disruption from Vancouver strike
The Port of Vancouver is facing strikes by longshore workers this week for the first time in 20 years. The dispute comes just as traffic growth across Canada has picked up. Vancouver’s containerized freight handling climbed 12.5% year over year in April while that through Port of Prince Rupert rose 20.0% and Montreal’s rose 8.3%.
An extended strike may lead shipping firms and their customers to reconsider their traffic patterns, perhaps including Seattle-Tacoma in the U.S.'s Pacific Northwest as well as Prince Rupert.
Retailers are particularly exposed to disruptions heading into the peak sales season. The largest Canadian retail consignees already using Seattle-Tacoma include Walmart Canada Corp., with 13,481 20-foot equivalent units inbound in the 12 months to end-April, followed by Dollarama Inc. and Costco Wholesale Canada Ltd.
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New plastic waste rules lead shippers to scrap supply chain plans
The global trade in scrap plastics is declining, with CMA CGM SA's APL no longer shipping to India in accordance with new regulations. Meanwhile, Malaysia’s government has returned 3,000 tons of scrap to their countries of origins. That follows a diversion of volumes from China. U.S. exports of plastic to China fell 90.0% in the 12 months to March 31 compared with 2016 while exports to India rose 50.0% and those to Malaysia climbed 260%.
The plastics supply chain is highly fragmented, with the largest shipper by sea from the U.S. being Sigma Recycling with 17.5% of tonnage shipped, followed by Berga Recycling with 3.4%.
(Panjiva Research - Materials)
Seaboard faces stiff competition from Maersk, Crowley on new routes
Seaboard Corp. is extending its U.S.-Central America container-line services, include a routing of New York to El Salvador, Guatemala, Honduras and Nicaragua. The move may be an attempt to shore up growth. Seaboard’s U.S.-inbound shipping volumes fell 5.1% year over year in the three months to end-April after an 8.6% rise in 2018.
It faces stiff competition however on routes from the four Central American countries to ports in the northeast of the U.S., which accounted for 87,600 TEUs in the 12 months to April 30. The largest container-line on the route, with 42.4% of volumes, was Fresh Del Monte Produce Inc.'s in-house shipping line. Second was A.P. Møller - Mærsk A/S, including Sealand, with 33.8% followed by Crowley Holdings Inc.'s 11.7%.
(Panjiva Research - Logistics)
Shipbuilding renaissance not widespread, faces trade conflict risk
China’s shipbuilding industry showed signs of recovery in April as new orders reached 4.9 million dry-weight tons, the highest since February 2018. Improving profitability in the container-line sector — including at Cosco Shipping — likely helped although the widening U.S.-China trade war may give shipping firms cause for caution. Globally the picture is mixed given that exports from South Korea soared 53.5% year over year in April while exports from Japan fell 18.1%.
(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.
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