June U.S.-bound shipments trend down, reports Panjiva

Following a three-month stretch of gains from March through April, United States-bound waterborne shipments fell in June, according to data recently issued by global trade intelligence firm Panjiva. The gains from March through April followed a decline in February, which was the first one in 24 months.

June shipments––at 1,010,429––were off 2.7% annually, and on a year-to-date basis, shipments through June––at 5,985,325––are up 1.6% compared to the same period a year ago, while containerized freight was off 3%. What’s more, Panjiva noted that June represented the first non-seasonal (Lunar New Year) decline going back to June 2016, with second quarter growth down to 0.5% annually, compared to growth rates of 2.7% in the first quarter and 9.4% for all of 2018.

Panjiva attributed the June shipment decline to being “driven entirely by imports from China,” which were down 9.8% annually in June, compared to a 1.6% decline for the same period a year ago. And it added that this decline was driven by the May increase in “list three” tariffs, on $200 billion in Chinese goods from 10% to 25%.

Other nations cumulatively accounted for a 2.8% gain in U.S.-bound imports, which Panjiva observed confirms “the switching of sourcing away from China on a broad basis. Supplier shipments from Asia, excluding China, were up 6.5% in June, with a significant surge by manufacturers in newer production centers, like Vietnam and India, which were up 20.5% and 12.8%, respectively. Shipments out of the European Union fell 0.6% annually, coming off of a three-month gain of 4.5%.

Panjiva’s ocean cargo import data for June varied according to sector, with:
imports of tariff-impacted products taking a hit, with imports of chemicals down 13.9%, furniture down 11.9%, and machinery/electronics down 3.8%; and

imports of toys and apparel saw gains of 14.5% and 4.5%, respectively, spurred on by shippers trying to get ahead of tariffs on “list four” products

Panjiva Research Director Chris Rogers wrote in the report that the race to beat tariffs should slow, given the de-escalation of tensions through the risk of a sudden increase in tariffs that was seen in May 2019 and September 2018 on a prior breakdown of U.S.-China talks and may see buyers take a conservative stance.

“That may result in an earlier than normal peak season surge in July and August,” he wrote.

In an interview, Rogers explained that the June shipment decline was expected for a long time.

“It is down to the cumulative effect of tariffs covering enough products for a long enough time period that you start to see this reversal come through,” he said. “And it is also worth bearing in mind that June 2018 saw an acceleration in imports, with importers rushing to get ahead of July 2018 tariffs. We are effectively a year down the line now. Tariffs are very much the new normal and are what’s driving some of these behaviors. What is not normal, though, is that the level of tax went up in May…and that has choked off some of the supply for things like chemicals and furniture and less so for machinery and electronics, as they have been exposed to a higher level of tariffs for longer.”

Supply chain executives are in a difficult position in July and August, he added. The reason for that is the regular peak season is coming up and they don’t want to be selling inventory any sooner than they want to, while also needing to be cognizant of the fact when change comes from the Trump administration, it comes quickly.

“It is not known what list four tariffs will be for and if there is an actual list or not,” he said. “It is hard to plan a supply chain on that basis. Do you try and get ahead of the game and import sooner or do you accept that there will be additional costs but unlikely it will be 25% or 10% on day one. A lot of companies will assume it will be lower at first, and if that is the case there is not as much of a rush.”