Archive for December, 2011

A Sparkling New Year’s Celebration!

December 27, 2011

There’s no question many bottles will be popping open this Saturday night as we say goodbye to 2011 and look toward 2012. According to PIERS data, imports of sparkling wine surged in October to a two-year high. Most imports came from Italy, France or Spain.

Celebrate responsibly and Happy New Year from everyone at PIERS!

PIERS Data Shows U.S. Containerized Exports Drop 3% in October – Struggling European Markets Led Losses

December 22, 2011

U.S. containerized exports contracted in October for the first time in 4 months as European markets softened markedly. Overall U.S. containerized exports fell 3.0% Year-Over-Year in October totaling 1,008,273 TEUs, after climbing 10.3% in September.

Year to date, through October, overall U.S. containerized exports were still up 7.1%. However, PIERS/JOC, Economist, Mario Moreno’s recent updated forecasts point to a 5.8% growth for full year 2011, and slower growth for 2012 at 3.8%. On a month to month basis, exports rose 1.3% in October over September.

U.S. Containerized Exports October 2011

Demand from Europe continues to decline as European economies struggle with ongoing sovereign debt problems and decelerating manufacturing activity. Following flat growth in Q3, exports to Northern Europe dropped 7% in October as shipments of motor vehicles (-38%), paper & paperboard (-29%), and wood pulp (-23%) contracted sharply. Losses in outbound shipments to the Mediterranean region continued. After plunging 10% in Q3, trade to the Mediterranean tumbled 14% in October as demand for vinyl alcohol (-58%), paper & paperboard (-18%), and wood pulp (-32%) succumbed markedly. Significant losses were also seen in South American markets, particularly in Brazil. On the upside, exports to Africa gained momentum, expanding 20% on account of grocery products, poultry, and vinyl alcohol among other goods.

On a country level, Brazil led the losses driven by a marked slowdown in economic activity, which led policymakers to reverse tightening policy. Exports to Brazil plunged 25% to a total of as demand for miscellaneous plastic products (-59%), wood pulp (-40%), and unclassifiable chemicals (-32%) reversed sharply. Italy and Hong Kong followed, each dropping by 34%  and 11% respectively. Exports to China, nevertheless, kept at posting gains, up 4% as demand for U.S. logs & lumber (+64%), wood pulp (+47%) and meat (+195%) continued.

On a commodity level, significant losses were seen in pet & animal feeds (-12%), grains & flour products (-32%), paper & paperboard (-2%), and motor vehicles (-7%). This marks the first decline for motor vehicles in 14 months, Year-Over-Year. Offsetting some of the losses are synthetic resins (+125%), meat (+38%), logs & lumber (+17%), poultry (+27%), and mixed metal scrap (+7%).

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 provide a complete view of U.S. trade. To learn more about PIERS export data, visit www.piers.com/USExports.

‘Tis Not the Season to Be Jolly… for China’s Toy Manufacturers

December 20, 2011

Recently reported in The Guangzhou Daily, China is calling this Christmas “the worst” for Chinese toymakers ever. Guangdong province, where 60% of China’s exported toys are made, are feeling the sting from plummeted orders from the US, down 25% from last year.  China’s toy manufacturers say soaring cost of raw materials and strict American laws are to blame. But Chinese government officials blame a stronger Chinese currency and the high cost of complying with stringent safety standards imposed by the U.S. and EU for compounding the problems and forcing them out of business.

More than 80% of the toys sold around the world come from China, but with U.S. safety laws putting more pressure on the Chinese government to upgrade and improve their toy manufacturing, China is struggling to stay afloat.

U.S. Containerized Toy Imports from China

Some of this is partially due to the Yuan which gained another 2.5% this year. But adding to China’s troubles are regulations passed by Congress after several recalls of China-made toys containing excessive levels of lead paint. The law requires toy manufacturers and suppliers to reduce the amount of lead contained in the surface coatings of children’s toys in three phases and test and certify their products in independent, accredited laboratories.

Although they view it as the U.S. “overreacting”, the Chinese government has been responsive to the new U.S. safety requirements. However, pressure in the U.S. to create more jobs in America is also a barrier for Chinese manufacturers. In a recent interview with China National Radio, Fang Ziang, deputy director of China’s Standardization Administration said, “Each time after we upgrade and improve our safety standards and meet their requirements, the U.S. and EU raise the bar again. The cost keeps going up and seriously harms China’s toy export business. I don’t think these trade barriers will save any American jobs. Instead, they’ll hurt American consumers.”

Rising manufacturing prices in China will eventually pinch the profits of U.S. retailers and toy companies. As a consequence, U.S. brands that are sourcing from manufacturers in China will have to reduce their own margins in order to maintain production or find other sources to manufacture their toys.

According to the Toy Industry Association, the average price of toys has remained relatively steady over the past few years, at around $8 but few believe this will last. Whether the new regulations are necessary safeguards to protect children or an overreaction, American consumers will eventually have to bear the cost.

A Deluge of Challenges in Thailand

December 13, 2011

Since October 4, historic flooding in Thailand has been responsible for a ripple effect of problems in the Asia-Pacific supply chain. In a recent article for The Journal of Commerce (JOC), PIERS data showed the percent change in containerized trade drastically declining in a number of areas from 2010 to 2011. With these numbers in the red, and Secretary of State Hillary Clinton’s estimate that losses from natural disasters in the Asia-Pacific region could surpass $200 billion this year, experts in the industry are questioning the reliance on Thailand for everything from auto parts to microchips.

When one of the world’s largest automakers, Honda, has to shut down operations for over a month due to flooding in this productive area of the world, it’s no wonder a shift is being pondered. Drastic measures are being taken to recover some of the lost property under water—literally. Honda and other automakers such as Toyota and Mitsubishi are hiring divers to find parts molds in the flooded areas.

The tech sector is also feeling the loss of production, most notably in the hard disk drive sector, which is normally capable of supplying up to 45 percent of the world’s production in this area—now production has been sliced in half. Flooding has also been blamed for Intel and Apple’s drop in share price this quarter and a year-on-year contraction in global personal computer shipments.

The primary reason the recent flooding has had such a far reaching impact is because Thailand’s manufacturing supplies a disproportionate percentage of several key industries.  While this clustering of suppliers and customers has become popular due to the efficiencies it creates at the front end of manufacturing, it comes at the expense of flexibility in supplier networks, which is evident by the recent floods as well as the earthquake in Japan earlier this year.

It still remains to be seen how these natural disasters affect the future of production in Thailand.  But being that manufacturing in both the tech and automobile sectors are susceptible to long down times from damaged machinery and equipment, the recovery will likely take place over months and multiple quarters rather than weeks. To stay in touch with trade trends and shifts across geographical boundaries, check out PIERS product solutions designed to meet your global intelligence needs.

 

International Box Office Sales, or Another U.S. Export? How Do Hollywood Movies Stack Up?

December 6, 2011

At PIERS we talk a lot about exports in terms of TEUs (twenty-foot equivalent units), and rightfully so, we are the only source for waterborne export data in which TEUs is the standard unit of measure. So this got us thinking, what about other forms of exports that aren’t containerized waterborne shipments? 

What if we took the term “export” and looked at it in the broadest term we could outside of how we at PIERS commonly think of exports?  Exports that aren’t measured in TEUs…  Exports not even measured in shipments, and in industries that don’t even need to ship their product overseas to profit abroad.   Hmmmm.  How would those industries compare to our TEU figures?

One major and very prominent American industry stood out as a great point of comparison that is normally not on our radar (at least while we’re working) – Hollywood movies.   Through November 30th of this year, the “big six” studios which collectively share roughly 81% of worldwide box office revenue amassed combined international box office sales of $12.5B, just $16M shy of 2010’s record $12.7B, according to studio figures.

Just for fun we decided to look at some of the top grossing films in 2011 and see what it would take to ship these movies abroad assuming they were physical goods.  To make this comparison we took PIERS Estimated Value for all containerized U.S. exports through Q3 2011, and divided this number by total TEUs exported, to come up with an average value per TEU shipped in 2011 ($77,543/TEU).

Using these assumptions we’ve found that this year’s blockbusters (if they were physical goods) would have generated some pretty impressive container volumes.  Leading the pack would be Harry Potter and the Deathly Hollow Part 2 with an estimated volume of 12,214 TEUs!  That’s enough container volume to fill the fourth largest ship in the world the CMA CGM Thalassa. Pirates of the Caribbean: On Stranger Tides would place in second with 10,353 TEUs, followed by Transformers 3 and Kung Fu Panda 2 with 9,940 TEUs and 6,419 TEUs respectively, with Disney’s The Smurfs rounding out the top 5 is with 5,406 TEUs.

International Box Office Sales in TEUs

The numbers get even more impressive when we start looking to total box office sales for entire studios.  Through November 30th Paramount International alone generated $2.8B in international box office sales, which following our assumptions would translate to 37,025 TEUs or two and a half fully loaded Emma Maersks, which is the largest container ship in the world.  Warner Brothers would take a close second with 33,530 TEUs, followed by Disney with 27,959, 20th Century Fox with 26,076, Sony with 21,627, and finally Universal 15,488.  Totals for the entire industry would top 161,704 TEUs, which is comparable to the amount of total imports the Port of Los Angeles receives from China each quarter.

Top Studios International Box Office Sales in TEUs

Even with container rates at an all time low, Hollywood Execs should be counting their blessings they generate their money from ticket sales rather than a physical product.  To learn more about PIERS export data, visit www.piers.com/usexports.


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