Panjiva reports gain in July shipments despite trade concerns

Amid tariff pressures and related global supply chain uncertainty, United States-bound waterborne shipments were up in July for the third time in the last four months, according to data recently issued by global trade intelligence firm Panjiva.

July shipments, at 1,120,131, posted a 1.5% annual gain, and on a year-to-date basis, shipments through July–at 7,112,696 ––are up 0.1% compared to the same period in 2018.

While shipments have been up annually in recent months, Panjiva noted that over the last three months shipments have only seen a 0.1% cumulative annual increase, well off a recent peak of 8% during the fourth quarter of 2018.

The firm said that the peak seen during the fourth quarter of 2018 was paced, in part, by stockpiling ahead of an expected, but eventually delayed, increase in list three tariffs that was expected on January 1, followed by a tariff increase in May and a recent threat of further tariffs on all Chinese exports that could lead to a similar inventory build up. But it pointed out that the impact is likely to be minimal, with the next round of tariffs set for September 1 making it unlikely for products to be “on the water” in time.

Panjiva said that China-originated shipments were down for the third consecutive month, falling 3%, in line with a 3.3% second quarter decrease, while saying this was offset by higher imports from Asia, excluding China, which saw an 11.4% gain, due to shippers changing sourcing plans.

That was seen in Vietnam accounting for a 28.5% shipment gain, en route to a new record, coupled with India up 17.6% and Thailand up 16%. Shipments out of the European Union were lackluster, up 1.2% in July, off of a 0.8% second quarter gain.

“What we saw in July is reduced imports from China being substituted by an increase from other Asian markets like Vietnam and Thailand, which has been happening for a few months,” said Panjiva Research Director Chris Rogers. “It is showing that the Trump administration’s trade policies are delivering the economic outcome it was hoping for, which is to put pressure on China. Whether it yields the political outcome [it hopes for] remains to be seen.”

On a product level, apparel imports rose 7.5% annually in July (up from 3.5% in the second quarter), and toys were up 18.5% (up from 11.1% in the second quarter). Imports of electronics and capital goods rose 2.5%, ahead of a 2.3% second quarter decline. And for goods that already have tariffs in place the declines were more apparent, with chemicals off 11.1% (with the second quarter down 12.4% in July and steel imports off 4.4% (with the second quarter down 5.2%).

“We have seen demand for industrial products continue to trend down, whereas the consumer side remains fairly robust,” said Rogers. “When the U.S.-China trade talks broke down in May, that may have spooked consumer importers into stockpiling ahead of time at the product level. At the end of the day, the story is very much one of trade policy having an effect of a more generalized slowdown but not a reversal in trade activity. That reversal may come, but we are not there just yet.”