Panjiva’s contribution to this month’s Harvard Business Review: “Just How Healthy Is Your Global Partner?”
“Multinational corporations and their manufacturing partners in emerging markets need to rethink how they manage their relationships with each other in light of the global downturn.”
http://hbr.harvardbusiness.org/2009/07/just-how-healthy-is-your-global-partner/ar/1
Earlier this week, Panjiva released data showing that the number of global manufacturers serving the U.S. market increased for a third month in a row. This three-in-a-row increase is the first we’ve seen since we began tracking this metric in July 2007 — certainly an encouraging sign. However, in an absolute sense, we’re still seeing a low level of trade activity, and global trade remains vulnerable to additional shocks. Here’s a sampling of the press coverage of Panjiva’s latest analysis:
The Wall Street Journal: “‘America led the global economy into a downturn; now, a sustained increase in the number of global companies serving the U.S. market suggests that America may be leading us out of the downturn,’ said Panjiva CEO Josh Green. ‘That said, anyone hoping for a quick recovery to pre-crisis levels of global trade is likely to be disappointed.’”
http://blogs.wsj.com/economics/2009/06/18/trade-picture-clouded-by-rise-in-oil/
“Panjiva in BusinessWeek — Global Trade Data” />
BusinessWeek: “‘Increasingly, it feels that the worst is behind us,’ says Josh Green, chief executive officer of the trade-tracking firm. Waxing cautious, however, he adds ‘Still, we have a long way to get back to the pre-crisis level of global trade.’”
http://www.businessweek.com/managing/economic_recovery/blog/archives/2009/06/global_trade_ri.html
About.com: “Panjiva’s research team also found that there was a decline in manufacturers on their watch list, which was the first time since September 2008.”
http://logistics.about.com/b/2009/06/17/shipments-to-the-us-rise-again-in-may.htm
Supply Chain Management Review: “We are seeing some encouraging signs, but there is still a low level of overall activity in an absolute sense.”
http://www.scmr.com/article/CA6665999.html
Logistics Management: “Companies continue to be cautious in their approach to placing orders, according to Green, and they are much more cognizant of the risks that are in their supply chains.”
http://www.logisticsmgmt.com/article/CA6665988.html?industryid=48470
World Trade Magazine: “Panjiva cautions that there will likely be further supplier bankruptcies.”
http://www.worldtrademag.com/CDA/Articles/Breaking_News/BNP_GUID_9-5-2006_A_10000000000000610030
Modern Materials Handling: “Said Green… ‘As macroeconomic circumstances change, people are going to be looking at a variety of potential risks.’”
http://www.mmh.com/article/CA6665991.html
Carpe Diem: “[M]ore offshore manufacturers are shipping goods into the consumer-driven U.S. market, global-trade tracker Panjiva reports.”
http://mjperry.blogspot.com/2009/06/shipping-index-rises-for-third-straight.html
The word from Panjiva’s research team: for the third straight month, there was an uptick (2%) in the number of global manufacturers shipping to the U.S. market. Notably, this is the first time we’ve seen three monthly increases in a row since we began tracking this metric in July of 2007.
Some additional good news:
These numbers lend further credence to the possibility that global trade has already hit bottom and that we are witnessing the first steps of a recovery in global trade. However, pessimists should take note of the following:
Methodological notes for the data junkies:
Earlier this week, Panjiva released data showing that, after several months of free-fall, the number of global manufacturers shipping to the U.S. market appears to have stabilized. Of course, there’s still a lot of risk in the system, as highlighted in many of the news accounts of our analysis. Here’s a sampling of the coverage:
The New York Times: “‘The free fall in global trade seems to have halted,’ said Josh Green, the chief executive of Panjiva…”
http://www.nytimes.com/2009/05/29/business/economy/29norris.html?_r=1
The Wall Street Journal: “‘The number of companies shipping to U.S. customers is no longer in free fall — definitely a reason for optimism,’ Panjiva said.”
http://blogs.wsj.com/economics/2009/05/29/signs-of-stabilization-in-trade/
BusinessWeek: “‘Unfortunately, there is still substantial risk facing those engaged in global trade, and the global trading system remains vulnerable to further shocks,’ cautions CEO Green.”
http://www.businessweek.com/managing/economic_recovery/blog/archives/2009/06/global_trade_tu.html#more
MarketWatch: “Customers will have to decide whether they will share in the suppliers’ restructuring costs, or leave it entirely to the supplier “and run the risk of seeing [the] supplier go under.’”
http://www.marketwatch.com/story/gm-fallout-set-to-be-windfall-for-japan-automakers
CIO: “New global trade data from Panjiva, a vendor that tracks the health of the world’s suppliers, shows that ‘after four months of free fall in the number of manufacturers shipping to American customers, there have been small increases from February 2009 to March, and then from March to April.”
http://www.cio.com/article/493868/Supply_Chain_Reality_Much_Risk_Tied_Up_in_Shrinking_Pool_of_Suppliers_
The Business Insider: “[C]onfirming the rebound are privately collected numbers from the firm Panjiva, which monitors manufacturing and supplier information…”
http://www.businessinsider.com/the-rebound-in-china-is-real-2009-6
Supply & Demand Chain Executive: “‘While some may interpret this data as a welcome sign that the global manufacturing economy has hit bottom and is rebounding, analysis of historical trends and additional shipment data points to a need for continued caution as significant risk still exists.’ Panjiva said.”
http://www.sdcexec.com/web/online/Decision-Support-News/Green-Shoots-in-the-Supply-Chain-Manufacturers-Shipping-to-US-Increases-for-Second-Month-in-a-Row/37$11389
About.com: “[T]he risk for companies engaged in global trade remains high as the percentage of significant manufacturers on the Panjiva Watch List edged up from 30% in March to 31% in April.”
http://logistics.about.com/b/2009/06/01/reasons-to-be-cheerful.htm
Reuters: “CEO Josh Green… warns further that, ‘there is still a tremendous amount of risk in the system.’”
http://economics.alltop.com/
On Friday, I told The New York Times: “The free fall in global trade seems to have halted.”
The graph below summarizes the data behind the quote. As you can see, after four months of free fall in the number of manufacturers shipping to American customers, there were increases from February to March (~2%), and again from March to April (~8%).
Unfortunately, the news isn’t all good, as noted by the Wall Street Journal and BusinessWeek. Consider the following:
Clearly, global trade is still vulnerable to shocks. But it’s nice, finally, to be able to report a bit of good news.
Some methodological notes for the data junkies:
Yesterday Visteon, a major auto parts supplier, filed for Chapter 11. So did Metaldyne. Both have global supply chains, so our research team took a look at their shipping data — to see if there were tell-tale signs that these companies were in trouble.
Indeed, things looked grim starting for Visteon in January of 2008:
Similarly, things looked grim for Metaldyne starting in February of 2008:
The data behind the quote is coming Monday…
“The free fall in global trade seems to have halted,” said Josh Green, the chief executive of Panjiva…
http://www.nytimes.com/2009/05/29/business/economy/29norris.html?_r=1&ref=business
Thought you’d be interested in some of the recent coverage of Panjiva’s March data, as well as our recent initiative with Sinosure. Lots of good commentary including, for the first time, thoughtful criticism.
Reuters: “On a basic level, the greatest threat companies on the watch list pose is that these factories could go out of business,” said Panjiva Chief Executive Officer Josh Green.
About.com: “For purchasing professionals working with vendors in China, a new innovative solution will help to reduce their company’s supply chain risk. Panjiva, the online resource for information on suppliers around the world and Sinosure, the leading provider of credit information on companies in China, have combined their efforts to launch Panjiva SinoScreen, which will assist U.S. companies to assess if any of their Chinese partners are at risk.”
http://logistics.about.com/b/2009/04/29/panjiva-sinoscreen-reduces-supply-chain-risk.htm
Supply & Demand Chain Executive: “Leveraging various data sources, including U.S. customs data and credit information from Sinosure, Panjiva SinoScreen provides customers with an easy-to-interpret analysis of their Chinese supply chain.”
Supply Chain Management Review: “Sinosure has been the only provider of export insurance to Chinese manufacturers, which makes it a strong source of business intelligence… They know which companies are financially stable and which ones are in trouble. At a time when many supply chains are vulnerable to collapse, this is vital information.”
http://www.scmr.com/article/
Procurement Leaders: “The service [Panjiva SinoScreen] is particularly timely. And while many larger, more mature, organisations would be expected to carry out such analysis themselves, there is no harm in having a little bit of extra intelligence and data.”
Global Logistics & Supply Chain Strategies: “Panjiva will act as exclusive U.S. reseller of Sinosure’s credit reports on Chinese manufacturers.”
Spend Matters: “A business class ticket from the US or Europe and a stay in a Western style hotel to visit a single supplier will probably cost you more than the price of admission [to Panjiva SinoScreen]. But a onetime profiling effort should never be a substitute for consistent and proactive monitoring overtime — nor, when it comes to China especially, should it substitute for continuously monitoring supplier performance management trends as well. ”
New data from the Panjiva research team. Interestingly, our analysis of the U.S. shipping data through March seems to back up U.S. Treasury Secretary Tim Geithner’s recent claim that “the decline in world trade may be abating.” Specifically, from February to March, there was a slight increase in the number of companies shipping to U.S. customers (up to 120K in March, versus 118K in February). That’s the good news.
The bad news is that there is still a tremendous amount of risk in the system. At the end of March, as usual, we took a look at significant manufacturers, and we found that 30% of these companies qualified for the Panjiva Watch List, as a result of suffering a 50% or greater decline in volume shipped to U.S. customers during the most recent three month period, versus the same period a year ago.
Also, 40% of significant U.S. buyers have an active relationship with at least one Panjiva Watch List manufacturer.
The comparable numbers for February were similar: 29% of significant manufacturers were on the Panjiva Watch List, and 40% of significant U.S. buyers maintained an active relationship with at least one Panjiva Watch List manufacturer.
Bottom line… There’s some chance we’ve hit bottom, but it’s quite clear that we’re not remotely out of the woods yet.
Last week, President Obama warned that the United States is unlikely to return to its role as a “voracious consumer market.” If he’s right, the effect on global manufacturers is likely to be profound. Panjiva’s latest analysis of February shipping data illustrates this point.
From January 2009 to February 2009, in just a single month, the number of global manufacturers shipping to the U.S. dropped 10%, from ~131K to ~118K.
In case you’re wondering if it’s a seasonal thing, it’s not. In 2008, from January to February, there was a very slight increase in the number of companies shipping to the United States (from ~147K to ~148K).
At some point, the numbers have to start painting a rosier picture. However, for now, it seems clear that the global economy has not yet hit bottom.
Methodological notes:
Questions? E-mail us at info@panjiva.com.
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