Thoughtful write-up of Panjiva on one of my favorite tech blogs, ReadWriteWeb:
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 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.”
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.’”
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.”
The Business Insider: “[C]onfirming the rebound are privately collected numbers from the firm Panjiva, which monitors manufacturing and supplier information…”
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.”
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.”
Reuters: “CEO Josh Green… warns further that, ‘there is still a tremendous amount of risk in the system.’”
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%).
- Though the March-April increase surpassed last year’s March-April increase, data released by Chinese authorities suggest that, on a seasonally adjusted basis, April was worse than March for the world’s largest exporting economy.
- Risk for those engaged in global trade remains high: the percentage of significant manufacturers on the Panjiva Watch List edged up from 30% in March to 31% in April.
- Similarly, the percentage of significant buyers having done business with a Panjiva Watch List supplier in the preceding three months edged up from 40% in March to 41% in April.
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:
- Manufacturers that have suffered a 50% or greater decline in volume shipped to American customers in the most recent three month period, versus the same period a year ago, are on the Panjiva Watch List
- “Significant manufacturers” are companies that have sent 10 or more shipments to American customers within the last year. As of the end of April, there were 86,740 significant manufacturers.
- “Significant buyers” are companies that have received 10 or more shipments from overseas manufacturers within the last year. As of the end of April, there were 72,447 significant buyers.
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…
Earlier today, Panjiva announced an exclusive relationship with Sinosure, the leading provider of information on the financial health of Chinese companies. Now we’re moving quickly to provide you with the tools necessary to assess the health of your Chinese supply chain.
Specifically, I’m excited to tell you about Panjiva SinoScreen — a diagnostic tool that will help you quickly and inexpensively assess the health of your Chinese supply chain. The Panjiva SinoScreen report will provide you with an assessment of 20 Chinese suppliers, based on Panjiva‘s analysis of import data and Sinosure‘s analysis of credit data. Why two data sets? No one data set is perfect, so triangulation using multiple data sources increases the likelihood that you’ll reach an accurate conclusion about which of your suppliers stand the best chance of surviving the downturn.
Over the last few years, I’ve heard many complaints about the lack of reliable information on companies around the world. However, I’ve heard one complaint more than any other: “There just isn’t good information on the financial health of Chinese companies.”
Today, I’m pleased to announce that Panjiva is tackling this problem head on, by providing access to information on the financial health of 8 million Chinese companies.
How are we doing this? Via an exclusive deal with Sinosure. Let me explain…
For the last few years, we’ve been looking for credible information on the financial health of Chinese companies. To be sure, there are lots of organizations offering information on Chinese companies — but credible information on financial health? Tough to find.
About a year ago, we met Sinosure. Sinosure is the organization that was originally set up by the Chinese government to provide export insurance to Chinese companies. In order to correctly price this insurance, Sinosure had to develop an approach to assessing the financial health of exporters — and get access to the information needed to fuel these assessments. Which brings me to why we concluded that Sinosure can provide the best possible perspective on the financial health of Chinese exporters:
- Access to the most information — By virtue of their government ties, Sinosure has access to an unbelievable array of data sources, providing Sinosure with a variety of data points on any individual company.
- Reliance on their analysis for decision-making — At Panjiva, we’re by nature skeptical of data sources — because every data source has a bias. Interestingly, that’s what makes Sinosure so compelling. Their bias is to get the analysis right. After all, if they get the analysis wrong, they’re going to price insurance incorrectly and lose money. At which point, the Chinese government loses money.
Is Sinosure data perfect? Of course not. No data set is. That’s why we advocate looking at multiple data sets anytime you’ve got an important decision to make. My next post will walk you through how Panjiva‘s making this kind of triangulation as easy as possible.
In the meantime, I want to welcome Sinosure to Panjiva‘s extended family. In the months ahead, our U.S. customers will be able to get access to Sinosure reports on any Chinese manufacturer — only through Panjiva.
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).
- Along similar lines, the percentage of significant global manufacturers on Panjiva’s Watch List has grown to 29%.
- The percentage of significant U.S. buyers doing business with Watch List manufacturers now stands at 40%.
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.
- Watch List manufacturers are those that, during the most recent three month period, suffered a 50% or greater decline in volume shipped to their U.S. customers, versus the same period a year prior.
- Significant manufacturers are those that have sent 10 or more shipments to the U.S. by boat in the last 12 months, and at least one shipment by boat to the U.S. in the last three months. As of the end of February, there were ~93K significant manufacturers. (Note that this number is different from the number of companies that shipped to the U.S. during February. Not all significant manufacturers shipped in February, and not all companies that shipped in February are significant.)
- Significant U.S. buyers are those that have received 10 or more shipments by boat from overseas manufacturers in the last 12 months, and at least one shipment by boat from overseas manufacturers in the last three months. As of the end of February, there were ~78K significant buyers.
Questions? E-mail us at email@example.com.
Thought I’d share some of the recent mentions of Panjiva across the web.
“One in four major Chinese manufacturers shipped less than half as much to U.S. customers in November through January than they did a year earlier, [Panjiva CEO Josh Green] said.”
“Panjiva data shows that 132 of the Big Three’s overseas suppliers wound up on Panjiva’s watch list at the end of January 2009″
“Yesterday, Panjiva came out with news that paints a dangerous and ugly picture when it comes to the financial viability of global suppliers.”
“What can you do about supplier disappearing acts? I’d recommend a heathy dose of supplier risk preventive medicine to start, using both internal performance and quality related information as well as proactive third-party content from providers like Panjiva and D&B.”
“Panjiva analysis shows nearly half of large U.S. buyers doing business with troubled global manufacturers; ‘they never even tell you they are in trouble…they just disappear’”