"Ship Later" Strategies At Work as Seaborne Imports Rise 4% in 2017 | — Panjiva
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“Ship Later” Strategies At Work as Seaborne Imports Rise 4% in 2017

  • By Christopher Rogers
  • · January 11, 2018
  • ·

U.S. imports by sea climbed 4.1% in 2017 vs. a year earlier after turning in the 17th month of growth in the past 18 in December at 3.8%. There’s evidence of a “ship later” strategy to optimize inventories across supply chains, with 16.8% of imports arriving in November and December vs. 16.3% in the five years to 2015 ad 16.7% in 2016. The fastest growing exporter to the U.S. was Vietnam (17% higher in December, 13% for the year) as manufacturing switches from higher-cost Asian states such as Taiwan (7% lower for the year). At the product level furniture grew the quickest among major lines with a 9% rise for the year. With 52% of imports coming from China that may make the sector a tempting target for protectionist measures by the Trump administration. Autos were the worst performing sector, followed by apparel which appears to now be in a recovery. Business confidence remains strong – imports of machinery and electronics climbed 8% in December – and will likely mean trade growth continues in early 2018. One technical point is that lunar new year is 19 days later in 2018 than 2017, potentially flattering January and February comparators.

 

U.S. imports ended the year on a high note with a 3.8% increase in seaborne shipments in December, Panjiva data shows. That was the 17th increase in the past 18 months, and brought the total for 2017 to a 4.1% rise to reach 11.6 million shipments.

ANOTHER BUMPER YEAR FOR U.S. TRADE

Chart shows U.S. seaborne imports by number of records. Lower panel shows change vs. a year earlier. Source: Panjiva

The performance of trade during the latter part of the year shows some evidence for the “ship later” strategies being followed by retailers and other importers as they seek to optimize inventories. In 2017 16.8% of full year shipments arrived in November and December, compared to 16.7% in 2016 and 16.3% in the prior five years. For early 2018 it is worth noting that lunar new year starts 19 days later than in 2017, potentially flattering January and February figures.

SHIP LATE, SHIP OFTEN

Chart segments U.S. seaborne imports by month as a proportion of that calendar year’s total. Min/Max range covers 2010-2017. Source: Panjiva

As has been the case for most of 2017 the fastest growing major exporter to the U.S. has been Vietnam, with a 17.3% increase in December and 12.6% for the year as a whole. That’s been driven by a relocation of manufacturing capacity from mature Asian markets including Japan (down 3.2% for the year) and Taiwan (6.8% lower). Vietnam has now consistently outpaced Japan as an exporter to the U.S. since April 2017.

Yet, China remains the dominant reason for U.S. import growth though with a 7.1% rise for the year. That may soon come to a halt though, as outlined in Panjiva research of January 8, if the Trump administration makes good on its threat to apply broad-based tariffs in retaliation for intellectual property rights rules violations.

AFTER OVERHAULING JAPAN, CAN VIETNAM TARGET SOUTH KOREA?

Chart segments U.S. seaborne imports by shipment origin. Source: Panjiva

At the product level the strength in consumer and business sentiment in the U.S. continued to make itself felt. Among consumer durables imports of furniture climbed 7.4% in December to end the year 8.7% higher. With 51.9% of imports of furniture having come from China in 2017 that may be an area for tariffs to be applied if the Trump administration are willing to make consumers bear the price of not buying American.

FURNISHING THE PRESIDENT WITH INTERVENTIONIST IDEAS

Chart segments U.S. seaborne imports of furniture in 2017 by country of origin and product type (HS-6). Source: Panjiva

The worst performing major sector for the year autos which saw a 2.3% decline in shipments for the year overall as light vehicle sales dropped. Second worst was apparel with a 0.7% decline for 2017, though a 4.1% growth in December suggests a turnaround may be underway. At the business level imports of machinery and electronics climbed 7.5% to end the year 6.8% higher. With business sentiment regarding trade in the U.S. at the highest since 2014, and at multi-year highs globally, it would be a surprise to see an end to import growth in the near term without significant protectionist policy intervention from the government.

THE COST OF CONFIDENCE

Chart segments U.S. seaborne imports by selected product category for autos/parts, furnishings, apparel, toys, energy and machinery/electronics. Source: Panjiva

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