The Panjiva Watch List & The Panjiva Pain Index

  • By Josh Green
  • · December 8, 2008
  • ·

To get a sense of the impact of the economic downturn on global suppliers, the Panjiva research team took a look at the shipment data that we track, clean, and analyze on a continual basis using our proprietary algorithms.  The data suggest that the economic downturn is decimating suppliers.  Consider what we found in the apparel industry, a bellwether of global trade:

  • In October 2007, there were 43,653 companies that were actively serving the U.S. market.  (For these purposes, we consider a company “active” if it has shipped to a U.S. customer in the preceding three months.)
  • By July 2008, the number of active suppliers had dropped to 22,099.
  • By October 2008, the number of active suppliers had dropped to 6,262 — a 70% drop in just three months.
  • Of the 6,262 suppliers that were active as of the end of October, 40% suffered a year-over-year drop of 75% or more in volume shipped to their American customers.

To help companies spot suppliers that are at risk of failing, we are establishing the Panjiva Watch List.  This list includes each supplier that has suffered a year-over-year drop of 75% or more in volume shipped to their American customers.

Also, we will continue to track the industry-wide stats.  So that we can quickly communicate whether things are getting better or worse, we are introducing the Panjiva Pain Index – a number that gets higher as things get worse.  The Panjiva Pain Index is calculated by averaging two numbers: the percentage of suppliers previously considered “active” that became “inactive” in the last month, and the percentage of “active” suppliers that are on the Panjiva Watch List.

In August, the Panjiva Pain Index stood at 24.  The percentage of companies that went inactive was 23, and the percentage of companies on the Watch List was 24.

In September, the Panjiva Pain Index stood at 37.  The percentage of companies that went inactive was 32, and the percentage of companies on the Watch List was 41.

In October, the Panjiva Pain Index stood at 43.  The percentage of companies that went inactive was 46, and the percentage of companies on the Watch List was 40.

Questions?  Comments?  Let us know.

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