Panjiva Basics: Using Supply Chain Data in Commercial Finance

Cons. Discr. - Apparel 328 Cons. Discr. - Autos 883 Corp - Ports 758 Energy - Renewables 126 Health Care 203 Panjiva Basics 7 Sanctions 106 Tariffs 1575 U.S. 4297

This report is part of the Panjiva Basics series reports that provide a guide to the key issues surrounding global supply chains and international trade policy as well as how to use supply chain data to make informed decisions. This review examines five uses cases for Panjiva’s data and services that are relevant to the commercial finance industry – including banking and insurance – in the context of recent and forthcoming trade policy issues. For more information regarding Panjiva’s data and services please contact

Commercial banks provide the life blood for commercial supply chains, engaging in the provision of trade finance, commercial lending, insurance and a variety of foreign exchange and financial intermediation services. The rapid development of international trade policy – particularly under the administration of President Donald Trump – has made supply chain data more important than ever for the business operations of the commercial finance firms.

Know Your Client – Banking on exemptions

The Know Your Client process – core to anti-money laundering activities – is becoming more complex as a wide range of alternative data sources become available. Supply chain data – based on bills of lading – is ideally suited for incorporation into the process of verifying customers’ identities given specific locations for deliveries are specified.

A widening range of small businesses may need new and extended banking services as a knock-on effect of the U.S.-China trade war. One example is bridge financing to deal with tariffs that are paid while exclusions are requested – a common strategy being used by both large and small corporations as outlined in Panjiva’s research of Oct. 18.

Politico reports that medical device distributor Klarity Medical has faced $250,000 of tariff expenses, but has had to wait 12 months for its exemption to be requested. Even then Peter Larson, CEO of the firm, has stated that the firm has only gotten back  “about 3 percent of what we’ve been paying taxes on”.

Panjiva data shows that 31 of the 57 seaborne shipments linked to Klarity Medical since the start of 2016 went to Columbus, OH, of which 17 came from China. The bills of lading provide even further granularity into the arrival addresses. A further 14 were delivered into Chicago, IL including 11 from China.


Chart segments U.S. seaborne imports associated with Klarity Medical in the Jan. 2016 to Sept. 2019 period by arrival point and origin.  Source: Panjiva 

Trade Finance and Insurance – Shining a light on solar supply chains

Decision on whether to provide trade financing services depends in part on understanding the difference between regular trade flows and changes in them. One result of the widening range of protectionism used both in the U.S. and elsewhere is that companies are rapidly changing the geographic structure of their supply chains.

The solar power industry has been particularly prone to this issue, facing changes in both industrial policy – in the form of tax credits – as well as a series of tariff changes. The most recent section 201 review introduced tariffs on all solar panel and component imports.

Jinko Solar, for example, has responded by shifting its U.S. imports from China, to Malaysia, then to Thailand and most recently to Vietnam. In 3Q 2019 Jinko sourced 40.0% of its U.S. imports from Malaysia, 14.0% from Thailand and 18.4% from Vietnam.


Chart segments U.S. seaborne imports associated with Jinko Solar by origin.  Source: Panjiva  

Counterparty risk – Stretching apparel supply chains

The deepening of corporate supply chains through specialization has meant that most counterparties have a wide range of onward corporate links that need to be assessed. Those risks can range from simple counterparts finance credit risk through anti money laundering and sanctions compliance.

Corporate supply chain restructuring in response to tariffs – particularly the newly imposed list 4A duties by the U.S. government on Chinese exports – can result in new counterparties being taken on that in turn generate new up and downstream risks.

For example Fast Retailing’s Uniqlo has had to respond to the need to reduce its exposure to Chinese exports, which represented 58.6% of its imports in 2018. The firm has historically had a small relationship with Brandix, an apparel manufacturer based in Sri Lanka and Bangladesh that it could ramp up.

Brandix’s upstream supply chain includes Regal Elastics of India which in turn utilizes Taekwang Synthetic in China. All three may need to speed up their supply chains to serve Uniqlo – requiring a change in both industrial and banking policies – and could in theory run afoul of rules-of-origin requirements in the future given the connection to China.


Chart shows corporate relations in the supply chain of Brandix Apparel in the two years to Sept. 30, 2019.  Source: Panjiva  

Event risk – Real and hypothetical issues for autos that come and go quickly

The location-based nature of supply chain data can allow a wide range of natural disasters, political exposures and other exogenous risk assessments to be made. These can include the hypothetical as well as the actual – indeed a large proportion of Panjiva research is based on these concepts.

Recent examples include the impact of Hurricane Dorian, potential Indian tariffs on imports from Malaysia, and U.S. sanctions against Turkey. The latter have been terminated after just nine days, but had the potential to spread beyond the steel industry and into autos.

The impact of wider Turkish sanctions could easily have captured the large automotive firms, most of whom source components or vehicles from Turkey as part of their dynamic supply chains. 

Ford was the largest importer from Turkey to the U.S. by mass among the big U.S. automakers in the 12 months to Sept. 30, sourcing brakes and other components from there. Imports associated with the firm had already fallen by 31.3% year over year in 3Q. 

Similarly Daimler sourced transmission components from Turkey, including for its Detroit Diesel operations, though it was only two-fifths the scale of Ford’s imports and had also fallen by 43.5% year over year in 3Q.

Third was Fiat-Chrysler where there has been a 213.1% in shipments in the third quarter, suggesting rapidly increasing reliance on Turkey. Yet, that’s mostly the import of vehicles which are subsequently shipped on to Mexico. That may obviate all but the most intrusive sanctions.


Chart compares U.S. seaborne imports from Turkey by Ford, Fiat-Chrysler and Daimler on a monthly and three-month average basis.  Source: Panjiva   

Business development – New inland empires to be built

Away from the sphere of disaster management, day-to-day business expansion often relies on finding new customers in existing industries or territories. A major development in U.S. logistics both recently and in the coming years is the development of inland ports. These act as collection points away from major ports which can reduce congestion on roads and improve efficiency by using rail connections. 

They can lead companies to refocus their operations in new locations, opening up the prospect for new financial services sales opportunities. 

The Georgia Ports Authority plans to build an inland port at Gainesville may increase trade activity in the region. Panjiva’s data shows businesses that are consignees within 100km of Gainesville active in past 12 months include furniture companies Belnick and Haverty’s as well as local operations of multi-regional firms including auto-parts distributor Genuine Parts and Home Depot.


Chart segments U.S. seaborne imports into the region 100km around Gainesville, GA that have been routed via the port at Savannah, GA in the 12 months to Sept. 30, 2019 according to consignee and origin.  Source: Panjiva   

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