Archive for November, 2011

Warning: U.S. Recovery Could be Derailed by European Crisis

November 29, 2011

The Organization for Economic Co-operation and Development (OECD) warned on Monday that the financial crisis in Europe shows little sign of being self-contained, and could pose a great risk to the growth of the U.S economy in 2012.

Reuters reported OECD predicts “Negative spillovers from the turmoil in European markets could be greater than expected,” contradicting previous down-played concerns from the Federal Reserve, and dampening predictions from economists earlier this year that showed an “Energizer-bunny-like” trade scenario between the U.S. and Europe.

“Spillover” seemed to be a key word in this statement—the European debt crisis spurs a series of events proving to be detrimental to future U.S. economic growth of which declining stock prices promises to have the most widespread and significant impact.  This means the need to slash our own debt, which is already a sore spot for lawmakers unable to agree on what to cut. The effects trickle down even more if extended benefits for nearly two million Americans are not renewed at the end of next month, causing the most dramatic negative effect on the economic recovery.

Executives at major corporations, however, maintain that important business opportunities remain untapped across the Atlantic. According to news reports, President Obama is open to suggestions from European leaders on ways to boost trade while debt continues to plague countries like Greece, Italy and Spain. This includes efforts to grow emergent sectors like electric cars, smart grids and nanotechnology, and to encourage more raw materials trade.

Even though U.S. exports to the euro zone account for only about two percent of GDP, those troubled countries commonly referred to as “PIIGS” (an acronym for Portugal, Ireland, Italy, Greece and Spain) have seen decreases in shipments of U.S. exports drop by 13% year-over-year in Q3, while total U.S. exports have risen by 6.7% over the same period according to PIERS data.  This sudden decrease could have serious implications for ocean carriers and NVOCCs who service these regions, especially considering the prevalent U.S. trade deficit with these countries.

To learn more about how PIERS data can help you keep a watchful eye on these and other trade developments, register for a free demo and a solutions expert will show you how PIERS trade intelligence can help shape your business.

 

Can Black Friday Help Toy Retailers Live Happily Ever After?

November 22, 2011

You’ve seen the commercials—Target and Macy’s announced in early November they will open their doors on Thanksgiving evening for Black Friday sales. Although Black Friday has crept into Thursday in years’ past, why such a drastic move this year?

Despite an upbeat outlook for the rest of the year from the Toy Industry Association and retailers like Mattel, PIERS and The Journal of Commerce (JOC) economist Mario Moreno indicates 2011 numbers are no fairy tale. Moreno’s recent report on toy imports showed September was the eighth straight month of year-over-year decline and toy trade was unlikely to match 2010 levels.

In a November JOC article, Moreno says toy imports are being hurt by “subdued growth in national disposable income, resulting from stubbornly high unemployment and constrained wages, which are causing retailers to be extra careful with their inventory positions,” said Moreno. Bottom line—toys aren’t necessities and Americans are still struggling to cover the basics.

Moreover, Moreno points to an important inverse correlation between containerized toy import volumes and toy prices. Basically, whenever toy import prices rise, import demand falls 74 percent of the time. Price increase culprits include higher costs in resins, paper, memory chips and labor in China, as well as the strengthening of the yuan against the dollar. Labor issues are affecting other areas of Chinese manufacturing and signal a possible move to areas like Vietnam to maintain cheap labor rates.

This year, with 31 days between Thanksgiving and Christmas instead of 30, including five Saturdays (one of which is Christmas Eve), toy retailers are hoping for a last-minute boost to otherwise slumping sales. “I would say our customers are all feeling pretty positive about the holidays coming up,” said Brian G. Stockton, Mattel’s chief financial officer last month.

With PIERS, you can arm yourself with the right information to put these and other market shifts into perspective. Contact us today to have a PIERS business development manager show you how our product solutions can help you grow your business, cut expenses and so much more.

 

PIERS Data Shows U.S. Containerized Exports Advance 6.7% in Q3

November 17, 2011

According to PIERS/Journal of Commerce, Economist, Mario Moreno U.S. containerized exports advanced for the 8th consecutive quarter as demand for wastepaper and metal scrap continued, and the containerization of some grains strengthened. U.S. containerized exports rose 6.7% in Q3 2011 over Q3 2010, to a total of 2,933,396 TEUs.

U.S. Containerized Exports Q3 2011

The increase in exports was led by a 9% Y-o-Y surge in paper & paperboard (including wastepaper). Strong gains were also seen in metal scrap, ferrous, pig iron, up 54%. Exports also got a boost from grains and soybeans as the containerization of these products gain popularity. Grain importers in China are increasingly opting to receive the cargo in containers as it is easier to find financing when their shipments are containerized. Containerized exports of grains and flour products climbed 37%, while soybeans jumped 98%.

Furthermore, it seems U.S. poultry exporters have been able to find new markets in response to countervailing duties imposed by previous top market, mainland China. Solid gains in poultry shipments to Hong Kong, Korea, and Angola were seen. Overall poultry exports rose 32% Y-o-Y.

On the downside, shipments of fabrics (including raw cotton) dropped 43%, while pet & animal feeds and synthetic resins contracted by 11% and 13%, respectively.

On a regional level, exports to Northeast Asia rose by the most, up by 12% Y-o-Y, followed by Southeast Asia which showed a 7% gain, contributing to a 10.4% surge in total westbound Trans-pacific trade. On the downside, exports to the Caribbean and Mediterranean dropped 10% each.

On a country level, exports to top market China gained the most volume led mainly by strong gains in paper & paperboard, logs & lumber, wood pulp, and foam waste & scrap. Exports to China rose 13% Y-o-Y (up from a 6% expansion in Q2). Shipments to Taiwan climbed 24% while exports to Korea surged 12%. Exports to Australia surprised to the upside by rising 19%, driven by miscellaneous machineries, lawn & garden equipment, vegetables and auto tires. On the downside, exports to Italy dropped 23%.

Overall containerized exports fell by just 1.4% in Q3 2011 over Q2 2011. Monthly, exports surged 8.8% in September 2011 over September 2010 but slid 0.5% over August 2011. Year to date, through September, overall U.S. containerized exports were up 8.3%.

PIERS is the only source for transaction-level U.S. export data. PIERS staff reporters cover every major U.S. port, collecting and processing over 300,000 export Bills of Lading each month to give our customers a complete view of U.S. trade. To learn more about PIERS export data, visit www.piers.com/USExports.

JOC Reports A Whole Lot of Rolling and Bumping Goin’ On

November 15, 2011

PIERS sister company, The Journal of Commerce’s recent cover story points to market uncertainty and a reversion back to difficult Great Recession business decisions when it comes to the future of capacity utilization.

Some conflicting points of view within the industry seem to center around the so-called overcapacity environment. Industry insiders like Sheila Hewitt, vice president, international of Transplace, a logistics provider and NVOCC, tell JOC writer Peter T. Leach they are just short of a crisis with the rolling and bumping of containers, especially in China, which would point to the exact opposite of an overcapacity environment.

While it remains to be seen if this contradiction occurs more widely, the article alludes to predicted severe cut-backs on global capacity that are sending freight rates to new lows only seen in 2009 during the Recession. Industry executives interviewed for the article predicted many ships would be parked until demand picked up and they are forced to have difficult conversations with customers they didn’t expect to have since the economic recovery began. On the bright side, capacity reductions are “unavoidable” because of economics, said one insider, but not yet to the extent of 2009 reductions.

According to PIERS’ recent capacity utilization report, load factors have tumbled between 2010 and 2011. In the JOC article, Leach pointed to key findings showing that during the first two quarters of 2011, total U.S. inbound liner shipping volume shipped abroad pure container vessels increased 11% from the same period in 2010. But the growth capacity deployed rose 21%–depressing the average load factor by a full 7%.

“The imbalance between supply and demand in the second quarter of 2011 fell 4.3 percentage points below the Q4 moving average, which suggests further weakness moving forward,” the report stated. The article also went on to use PIERS’ comparative data to determine predictions for trans-Pacific load factors.

Curious to learn more about the numbers associated with these important industry forecasts? Download your complimentary copy of the PIERS Capacity Utilization Report: First Half, 2011 today for full details of capacity utilization.

PIERS Capacity Utilization Report Fills a Void in Carrier Supply Data

November 8, 2011

PIERS has issued an exclusive report titled “The PIERS Capacity Utilization Report: First Half, 2011.” This report closely examines capacity utilization, a critical factor in determining both long-term contract freight rates and short-term spot rates for fully cellular vessels. The report is now available for free download.

Capacity utilization refers to the load factor of matching ocean carrier supply with shipper demand. Efficient matching of supply and demand requires accurate and up-to-date market information. PIERS’ report is particularly significant because of the overall lack of carrier supply data available since 2006. This report also offers exclusive information not found with other capacity data sets, as it is derived at the individual vessel-voyage level, enabling PIERS to provide estimates of capacity deployed by steamship line when multiple lines are sharing the same vessel-voyage.

“PIERS capacity data is unlike any other capacity data set. Because the data is derived at the individual vessel-voyage level, it is more useful for market research, analyses of trends in demand, supply and vessel dimensions, vessel routing, infrastructure constraints and industry concentration,” said PIERS Vice President, Jeff Campbell.

This report is a broad overview of capacity utilization on major U.S. trade lanes by quarter, and as well as a comparison of the first half 2011 and the first half of 2010. Beginning with an overview of total capacity and capacity utilization, the data is then broken down to the trade lane level.

The PIERS report can be leveraged to ascertain the underlying factors affecting regional water-borne trade worldwide, as well as their impact on your current and future business decisions. Download your exclusive and complimentary copy of the PIERS Capacity Utilization Report: First Half, 2011 to learn more about this market segment.

That’s Trade Intelligence Video – Learn Why PIERS is the Standard in Trade Intelligence

November 3, 2011

To learn more about PIERS products visit www.piers.com and request a free demo, or call +1-973-776-8660, option 2 to speak with one of our solutions experts.

New Free Trade Agreements Cause Controversy

November 1, 2011

In mid-October, Congress passed three long-awaited free trade agreements—a bipartisan effort aimed at using foreign trade to drive America’s economic growth. With the addition of South Korea, Colombia and Panama in this deal, the United States now has free-trade agreements with 20 countries.

Source: New York Times

The New York Times reported the passage of the trade deals has important foreign policy and political ramifications. The U.S. has now solidified relationships with strategic allies and President Obama claimed a victory for pushing through the first trade agreements to pass Congress since Democrats broke a decade of Republican control in 2007. Proponents also predicted that these free trade zones will reduce prices for American consumers and increase foreign sales of American goods and services. These two snap shots from PIERS show South Korea in particular has a great deal of import/export activity.

However, these moves have angered trade unions, which fear job losses to foreign competition, and economists project the overall benefit to the sluggish economy to be marginal.

Further, as PIERS sister company The Journal of Commerce (JOC) reported yesterday, the signing of the free trade agreements has actually caused a 65 percent increase in the Merchandise Processing Fee (MPF), a fee created in the early 1990s to cover Customs and Border Protection’s costs  for import entries. Critics say the fee has never been used for this purpose but instead has helped offset the costs of Medicare in the past. In this case, the fees are being used to cover the costs of the free trade agreement’s passage, the renewal of two other government programs—the Generalized System of Preferences (GSP) and Trade Adjustment Assistance (TAA).

After blindsiding importers with this increase, the industry has no choice but to cope with the new fee. The National Retail Federation’s international trade counsel, Eric Autor, told JOC that importers could reduce their costs by consolidating shipments. But that’s not always possible—a significant number of import entries fall below the new maximum, $140,000 in value (previously $230,000).

What do you think of the new free trade agreements? Use the comment box below to sound off, or join us on Facebook, LinkedIn and Twitter to discuss your point of view.

 

 

 


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