U.S.-bound shipments shine in April, reports Panjiva

Data recently issued by global trade data provider Panjiva showed annual and sequential gains for United States-bound waterborne shipments in April.

April shipments at 950,408 saw a 9.7% gain on an annual basis, which Panjiva said represents the fastest rate of growth going back to February 2016, and comes on the heels of a 8.7% annual gain in April that led to a 17.3% annual increase in the U.S. trade deficit.

Panjiva cited various factors for April’s strong performance, including:

• China and European shipments rising 16.4% and 16.1%, respectively;
• Chinese customs data reporting a 12% increase in the dollar value of goods shipped in April, with some arriving in May;
• shipment gains from Europe mark a return to double-digit growth and its fastest rate of expansion since August 2016; and
• imports from South Korea, where the U.S. is threatening to renegotiate the KORUS (U.S. - Korea Free Trade Agreement) saw its second straight month of declines, down 10.6%

“Fundamentally, the economy was looking pretty strong in April,” said Panjiva Research Director Chris Rogers in an interview. “What is really notable is the acceleration in imports from China and Hong Kong combined, which were up 21% in March and around 16% in April. It is likely being driven by more consumer goods being imported but the question is why they are being brought in? Is it because retailers are convinced they are going to have a really strong spring? That may be the case in the furniture industry. There is also a degree of suppliers wanting to build up their inventories in case President Trump starts implementing [stricter] trade policies with increased tariffs and all the different trade reviews the White House has going at the moment.”

In mid-to-late April around the time of Trump’s first 100 days in office, Rogers said there was a lot more “action” around trade, including what may be done with NAFTA, U.S.-South Korea trade relations; launching the special investigations of steel and aluminum, as well as reports on the causes of the trade deficit and performance reviews of all the free trade agreements the U.S. is involved in.

“This provides a mindset for trade partners of consumer activity looking strong, with a bit of a grace period before these reports start to come in….and by the time July comes the trade environment could be a lot tougher for importing into the U.S.,” he said.

For all of 2017, Panjiva said that imports could be up 3.2% annually, adding that by the end of April 31% of full-year imports have been completed, based on data going back to 2010. Other reasons for the expected gain include the ISM’s May import expectations being at its highest level since January 2015, consumer confidence at close to 15-year highs, according to Bloomberg data, and imports of durable goods up 33% in April.

Much of what happens, Rogers added, is contingent on what happens with the U.S. economy as it relates to tax cuts, infrastructure investment, and making healthcare costs more affordable.

“If those things don’t happen, then consumers will very quickly change how they spend their money, and import growth levels may slow down,” he said. “But if President Trump is true to his words and these things happen, then the consumer spending is likely to continue. The second part is if we get more trade barriers and tariffs that could slow things down. The story for the first part of the year, though, is the directorate we have seen from the White House to not be turned into party policies. That could all change in July when we get these reports and the government says ‘things are as bad as we thought it was’ and we need to renegotiate these trade deals, which could lead to things looking very different. But if the economy continues to move along and the government is moderate in its approach to trade policies, then it could be a good thing.”