Posts Tagged ‘China’

U.S. Agriculture Exports on the ‘Grow’

September 17, 2013

The volume of agricultural exports, especially those that move in containers, will be higher in the coming year than they were following the drought of 2012, according to agri-business shippers who addressed the South Carolina International Trade Conference this week.

“Agricultural exports as a whole may go up, though the commodities will change,” said Doug Grennen, senior manager of the BCO group at the Scoular Co.

US Agriculture Exports Growing

For example, some cotton farmers this year shifted a portion of their acreage to higher-demand crops, and therefore cotton exports will likely be down about 8 percent, said Michael Symonanis, regional head of execution, North America, at Louis Dreyfus Corp.

Crop substitution makes sense because China the past two years stockpiled cotton, and therefore there will be less of the commodity moving to this important market. And the U.S. has relatively little inventory following last year’s drought.

Because the U.S. is the high-cost producer of cotton, importing nations will source more of their product from lower-cost countries. The bottom line this year is that there is “nothing pulling our commodity through the value chain,” Symonanis said.

The opposite scenario is developing with soybeans. The U.S. is a primary supplier of soybeans, a commodity that is in great demand overseas, especially in Asia, and soybean production should be strong this year.

The U.S. Department of Agriculture projects soybean exports to China — the largest buyer of U.S. soybeans — in the coming year will be 17 percent higher than they were this past year.

Although 93 percent of U.S. grain exports move in bulk vessels, the share of containerized grain is edging up, because some buyers value the financial flexibility and infrastructure advantages inherent in shipping 25 metric tons of grain in a container compared with 55,000 tons in a bulk vessel, Grennen said.

However, documentation requirements for smaller shipments are 10 to 20 times higher than for bulk shipments, and the freight cost per ton is higher. That is why shippers of containerized grain must differentiate themselves through their logistics advantages, he said.

Distillers’ dried grains, which are a byproduct of ethanol production, are a booming export commodity. DDGs are a popular feed commodity for cattle, pigs and chickens. “Pigs love DDGs,” Grennen said.

China has 600 million pigs, or 10 times the number in the U.S. DDG exports to China could total 4 million metric tons this year, up from 1 million tons just three years ago.

A problem shared by many shippers of containerized agricultural products is that crops are grown in rural areas, but the empty containers that are needed to carry the grain are located in cities. Repositioning of empties from urban areas to grain silos and transload facilities in the interior can be costly.

However, as ocean carriers continue to introduce bigger container ships into the U.S. trades, they will actively seek grain exports for the back haul to Asia, Grennen said. He indicated carriers could make money on containerized grain exports. “It’s far from the best rate, but it’s not the worst rate,” he said.

Chilled and frozen meat products command a higher freight rate than dry commodities, and they have a bright future in Asia, where the burgeoning middle class seeks high-quality protein products.

Chicken exports are leading the way, said Diogo Lobo, president of Lineage Logistics, but exports of beef and pork are also steady, he said. The U.S. and Brazil are positioned the best to satisfy the growing demand for protein products in the export markets, Lobo said.

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U.S. Containerized Imports of Furniture Up in 2Q

September 11, 2013

U.S. containerized imports of furniture continued to grow in the second quarter of 2013, with volume up 1% year-over-year to 561,689 20-foot-equivalent units. This increase, the seventh consecutive quarterly year-over-year rise, was at a slower rate compared to the past four quarters, but despite this, import volume reached its highest level since the second quarter of 2007.

PIERS- Furniture Imports Q22013

Second quarter 2013 containerized furniture imports jumped 5.7% from the first quarter. Mainland China, not including Hong Kong, held 71.7% of the U.S. furniture import market in the second quarter of 2013. Other top countries of origin for U.S. furniture imports in the second quarter were Vietnam, with a 9.4 % share; Malaysia, 3.2%; and Indonesia, 2.9%. Furniture imports from Indonesia in the second quarter jumped 19 % in volume year-over-year.

Italy remained the sixth-largest supplier of U.S. furniture imports in the second quarter, with containerized volume up 10 % year-over-year.

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In a Changing China, Shippers Must Rethink Strategic Goals

July 16, 2013

Restructuring of the Chinese economy will force transportation companies and many manufacturers in southern China and Hong Kong to rethink their long-term strategies, according to shipper representatives.

A number of analysts have downgraded economic forecasts for China this year as the export outlook has deteriorated. But the latest port statistics illustrate that trade to and from northern and central regions is still growing at relatively brisk rates even though export growth has been running in single figures for most of the year.

Of China’s top 10 container ports, the southern ports of Shenzhen and Guangzhou saw the slowest growth in the first five months of 2013.

Hong Kong, which is likely to be supplanted by Shenzhen this year as the world’s third-largest container port by throughput, has fared even worse. Box volumes were 9.1% lower in January-May 2013 than a year earlier. And, although throughput was skewed by a 40-day strike by port workers that started on March 28, the port suffered double-digit year-over-year declines in February and March.

With economic growth slowing after 20 years of rapid expansion, and with the government increasingly focusing on its domestic market, shipping interests see danger signs for logistics demand in Hong Kong and southern China.

“The period of high growth in China many believe has now gone,” Sunny Ho, chief executive of the Hong Kong Shippers’ Council. told The Journal of Commerce. “The government already knows it cannot rely on exports for economic growth as much as before so it doesn’t come as a surprise.”

Rising wages in southern coastal China, meanwhile, has forced shippers to make adjustments, according to John Lu, chairman of the Asian Shippers’ Council. “From the nation’s point of view, wage increases are good, but for shippers, costs are now higher in the traditional manufacturing centers so they are less competitive,” he said. “They have to make major decisions about whether to move factories closer to markets or to the interior of China to bring costs down, or face the cost of high worker turnover.”

“China is looking to reduce its dependency on exports, by growing domestic consumption and that will take a lot of adjustment by manufacturers,” Lu added.

Ho believes shippers and the transportation sector in Hong Kong should plan for a further slowdown in export growth from the Pearl River Delta even though exports via ports in the north such as Tianjin on the Bohai Rim have been performing strongly.

“We are the most hard-hit region because this is where the largest concentration of labor-intensive and low-value production with a strong outward trade concentration is,” he said. “These are the products most seriously impacted by cost increases and the policy changes of central government.”

Hong Kong manufacturers need to upgrade to more premium products, find new markets or explore domestic markets, Ho said. “This is the only way out,” he said. “I think the trend has been continuing for the past seven years, and now it’s having a substantial impact.”

JOC Insights by Mario Moreno: Meat Exports Decelerate in 2012

May 28, 2013

U.S. containerized exports of meat (HS code 02) rose 3.2% in 2012, following a jump of 21.7% in the prior year. The index shows that exports more than doubled from 2004 to 2011. Between 2007 and 2012, exports grew at a compound annual growth rate of 10%. Index is up by 140% from 2004 January base.

US Meat Exports in TEUs

PORT OF SAVANNAH HELD LARGEST SHARE OF MEAT EXPORTS IN 2012
The Port of Savannah handled the most outbound shipments of meat in 2012, accounting for a 20% of all meat exports, unchanged from 2011. Th e largest recipients of U.S. meat shipped from the port of Savannah last year were China, Angola, Hong Kong, Georgia, and Taiwan. Port of Oakland follows Savannah with a 16% share. Los Angeles holds a 12% share while Houston and Norfolk each hold a 7% share. The share of each port is unchanged from 2011. These 5 ports account for 63% of all U.S. meat outbound shipments.

US Meat Exports

CHINA RAPIDLY GAINING SHARE OF U.S. MEAT EXPORTS
Japan and Mexico are 2 of the largest markets for U.S. meat exports by $ value. Japan held an 18.9% market share in 2012, up slightly by 0.2 percentage points over 2011, but still down by a 0.2 point from 2010. Mexico accounted for a respectable 17.2% market share last year, but its share is down by almost 2 full points. Meat exports to Japan and Mexico have grown modestly last year. Meat exports to Russia and China increased by 27% each last year. Russia used to be a top market up until 2009, but due to import limitations and the country building toward self-sufficiency in its meat sector, Russia is not a top market anymore. China’s share of exports is rapidly increasing, from 2.6% in 2010 to 6.2% in 2012. Exports to that market jumped 157% in 2011 but slowed the pace to 23% in 2012. Demand for meat will stay strong as long as the incomes on millions in China continue rising.

Losses in market share were seen in Taiwan and Vietnam. Taiwan holds a share of 2.1%, down from 3.1% in 2010, while Vietnam holds a share of 1.4%, down from 2.1% in 2010.

Chart 3

Source: International Trade Commission; author’s own calculations

More of Moreno’s trade and economic analysis can be obtained by subscribing to JOC Insights or by following him on Twitter @MarioMoreno_JoC.

JOC Insights by Mario Moreno: U.S. Apparel Imports Down in 1.7% in 2012

April 30, 2013

APPAREL IMPORTS DOWN IN 7 OF LAST 9 MONTHS

U.S. imports of apparel (HS code 61) slid 0.9% year-over-year in January after jumping 8.8% in December. Imports are down in 7 of the last 9 months. For all of 2012, apparel imports totaled $41.1 billion, down 1.7% over the prior year, partly owed to weak disposable income growth and soft demand from downstream retailers.

US Apparel Imports

REAL DISPOSABLE PERSONAL INCOME GROWTH PER CAPITA FLAT IN LAST 5 YEARS

A major driver of apparel imports is disposable personal income because ordinary clothes aren’t luxury goods.

U.S. real disposable personal income (RDPI) per capita grew a tiny 0.8% in 2012 over the prior year, and is up 0.2% in February 2013 over February 2012. The graph shows that since January 2000 RDPI per capita expanded steadily through end of 2006 but since then growth has flattened. This is downbeat for the outlook of apparel imports as they are linked to disposable income growth. RDPI per capita was up 14.8% in December 2006 over January 2000, and up a similar 14.5% in February 2013 over January 2000.

US Real Disposable Income per capita

CHINA REGAINING SHARE OF U.S. APPAREL IMPORTS IN 2012

In previous reports I’ve analyzed how China is losing share of U.S. imports of major labor-intensive goods including footwear, toys and furniture. But, in the case of apparel, the facts show otherwise.

China is the largest supplier of apparel to the U.S. and to the rest of the world by dollar value. China sourced 36.4% of all U.S. apparel imports in 2012, up by 0.3 percentage point from 2011, but still down by 0.3 percentage point from 2010. Although imports from China declined modestly last year, a small rebound was seen in its share of imports helped by marked decreased shipments from other emerging economies. Other source countries that gained significant share last year were Vietnam, up by 1 full percentage point to a total import share of 10.1%, and El Salvador, up by 0.3 percentage point to a total import share of 3.9%.

US Apparel Imports and Annual Growth Rates

In terms of annual growth, the data shows that imports from China dropped 1% last years after rising by 8% in 2011. Rising wages and costs challenge the obvious benefits of a well-developed manufacturing infrastructure, prompting relocation of production activities to Southeast Asia and Central America. Imports from Vietnam jumped 10% last year following an increase of 13% in 2011, while imports from El Salvador rose 6% last year following an increase of 6%. Strangely, imports from Mexico declined 7% last year after growing by 6% in 2011 despite near-sourcing advantages. Mexico’s share of imports declined from 3.4% in 2011 to 3.2% in 2012.

More of Moreno’s trade and economic analysis can be obtained by subscribing to JOC Insights or by following him on Twitter @MarioMoreno_JoC.

PIERS Offers Exclusive Research Into China’s Impact on the Manufacturing Exports of Other Developing Nations – Available for Free Download

March 12, 2013

PIERS, the Standard in Trade Intelligence, is pleased to offer a one of a kind report available for FREE download. The report examines China’s waning strength in labor-intensive exports like furniture, apparel and footwear, and its impact on other developing countries.

Understand how rising wages and labor shortages are prompting factory owners in China to relocate facilities inland or in many cases flee to other developing countries where wages are lower or competitive, and supply of unskilled and semi-skilled workers is abundant. To isolate developing countries most exposed to this trend, this report identifies  13 countries for which manufacturing represents more than 15% of their GDP and wages are lower than in China or globally competitive.

China’s Impact on the Manufacturing Exports of Other Developing Nations

The results suggest that China’s waning strength in labor-intensive exports is benefiting some developing economies more than others, while a few appear to not be benefiting at all. Countries examined in this report include: Vietnam, Mexico, India, Thailand, Brazil, Honduras, El Salvador, Pakistan, Bangladesh, Indonesia, Poland, Philippines and Cambodia.

Key findings include:

  • Favorable trade conditions and geographic proximity with Central American countries have led to growth rates of U.S. apparel imports that significantly outpaced that of China, in part because shortened transit time is particularly important to shippers of apparel.
  • Lower wages and favorable exchange rates in recent years have given Vietnam an advantage over China in the footwear and apparel sector, leading to an increase in market share of U.S. imports in both of these sectors.
  • While Poland represents a relatively small share of the global furniture market, significant currency depreciation  against the U.S. dollar has resulted in a compound annual growth rate of U.S. furniture imports of 19.6% from 2001 through 2011.

Get a better understanding of how these trends effect the global supply chain and download your FREE report today!

March Food of the Month: Clams

March 7, 2013

Growing domestic incomes and changing lifestyles of the average consumer is fueling demand for many high value seafood commodities in Asia, creating abundant opportunities for U.S. exporters. Hong Kong remains one of the world’s largest per capita consumers of seafood and China remains the global seafood powerhouse as the largest consumer, importer, exporter and producer of seafood. According to PIERS data, the U.S. sends 40% of the clams produced to Hong Kong and 15% to China.

2012_US_clam_exports_by_port

2012_US_waterborne_clam_exports

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Mexico: Near-Shore Advantage

March 5, 2013

ImageThe winds of manufacturing continue to shift, as companies seek manufacturing sites that offer the best of all worlds: low labor costs, high quality, good infrastructure, access to markets, reduced shipping time and costs and educated, skilled work forces. In the past China excelled at providing low manufacturing and material costs, but always fell short when it came to speed to market (freight and delivery), taxes and customs duties. Mexico’s proximity to the U.S. and Latin American markets reduces freight expense and minimizes supply chain disruptions; ensuring goods make it to the market faster.

Until recently, Mexico’s economy was based on low-paying, labor-intensive industries like textiles. Now Mexico is growing in industries, like autos, aerospace, and technology with the increase in the country’s educated workforce. Manufacturing in Mexico continues to display signs of positive growth; the country posted an increase in their Manufacturing Purchasing Managers Index (PMI) for the final month of 2012.

The U.S. is Mexico’s largest trading partner, accounting for approximately 80% of their exports. Mexico’s maquiladora program makes it possible for companies to bring in components and materials duty-free, which can in turn be exported for sale to the U.S. and Canada; even Chinese companies are moving to Mexico to take advantage of the North American Free Trade Agreement (NAFTA) commercial and fiscal benefits. Although the U.S. and Mexican economies have started to recover, it is still sluggish as the growth rate in Mexico is projected to slow down this year but remain at 3.5%.

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US Census Data

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JOC Insights by Mario Moreno: Furniture Imports Expand

February 5, 2013

U.S. imports of furniture jumped 13.4% Y-o-Y in October 2012, marking its 16th straight monthly advance and totaling $3.8 billion in constant dollars. Through October, imports were up by 12.2%, in line with a rebounding housing market.

China is by far the largest source of U.S. furniture (HS code 94) imports, accounting for a 51.5% share in 2011 according to ITC estimates. A great number of U.S. furniture makers had to shut down operations over the years as they saw production and jobs being transferred to China to take advantage of lower wages and costs. In fact, back in October 2003, a concerted coalition of furniture makers and unions petitioned the International Trade Commission for money repairs, arguing China was dumping furniture into the U.S. market (Drayse, 2008). A duty on Chinese furniture was later imposed; however, furniture shipments from China to the U.S. continued rising.

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This outsourcing trend bolstered China’s share of U.S. furniture imports significantly from 29.3 % in 2001 to 52.8 % in 2010. Nevertheless, China’s share declined in 2011 and in 2012 year to date according to U.S. International Trade Commission figures, while the share of Mexico and Vietnam rose in those same years. Mexico’s share of U.S. furniture imports increased from 14.9% in 2010 to 15.8% in 2011 to 17.6% in 2012 through October.

In 2012, through October, imports from China in constant dollars were up by 9.8 %, but imports from Mexico, Vietnam and India were up by double-digit growth rates. In terms of volume I see a similar pattern, with containerized shipments from China nearly flat this year while shipments from Vietnam and India were up by double-digit growth rates.

More of Moreno’s trade and economic analysis can be by subscribing to JOC Insights or by following him on Twitter @MarioMoreno_JoC.

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Chinese Lunar New Year: Year of the Snake

January 29, 2013

Doing business in other countries means working within the cultural context. Chinese New Year (CNY), also known as the Lunar New Year or the Spring Festival, is fast approaching! It is the most important of the traditional Chinese holidays.

Manufacturing plants across China typically shut down and tens of millions of workers make long trips back to their home towns from the industrial cities where their jobs are. It has a huge impact on global supply chains originating in China and it’s not always back to business as usual, before and after the 15 day celebration.  The celebrations are also expected to affect port operations in terms of loading, barging schedule and possibly product availability.

Container shipping lines servicing the Asia-Europe trade lanes are moving to cut back on capacity, maybe even skipping a series of sailings during these two weeks, in preparation of volume lulls following the start of the holiday on February 10th

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February is traditionally the slowest month of the year for imports; this is the time of the year when the U.S. can narrow the trade deficit with China, fewer goods and services are imported. In 2009 and 2012, the CNY fell in January affording 2 plus weeks of celebration with many Asian factories closed during the duration.

According to PIERS data, the volume waterborne imports from China during of the first quarter of every year is significantly lower than any other quarter of the year. In 2009, 12.9% less TEUs were imported compared to the previous quarter; 26.3% less in 2010; 8.1% in 2010; 8.4% less in 2011; and 8.7% less in 2012. Want to learn more about the details behind these container imports? PIERS solutions provide the support needed to accurately track vital trade intelligence around the world. Contact us today to have a PIERS solutions expert show you more.


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