Global Trade:  Supply chain analysts issue mixed report on exports

U.S. companies still have a “continued dependence” on China, trade experts contend

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While last week’s news that the United States trade deficit headed in the right direction, coming in at $43.7 billion in April, its lowest tally since last December, analysis from Panjiva an online search engine with detailed information on global suppliers and manufacturers, indicates there may be more than meets the eye when gauging how much of an improvement the April numbers were.

This may be especially true on the export side, according to Panjiva, with April exports hitting $126.4 billion for an all time high based on U.S. Department of Commerce data.

Panjiva’s new quarterly report, entitled the Quarterly Trendspotting Report, takes a detailed look at the macro trends that impacted global trade during the first quarter of 2011. One of its main objectives is to assist sourcing executives determine which geographies are “trending hot” for products they are looking for on a worldwide basis and what the current trends are on an annual basis.

In an interview with LM—SCMR’s sister publication—Panjiva CEO Josh Green said that export data is important as it provides a sense of the expense of which the U.S. manufacturing economy is recovering, as well as which manufacturing sectors are recovering.

“There is a danger in looking at the top line export numbers and assuming we are in a strong recovery mode,” said Green. “Looking at the data it looks like oil and petroleum-based products saw the most growth in Q1 [up 63 percent from Q4 2010 at nearly $10.8 billion] and that says our oil industry is alive and well; it does not speak to a broad-based manufacturing recovery.”

Other strong sectors for U.S exports were computers, appliances, and industrial machinery up 14 percent at about $5.9 billion and vehicles up 21 percent at roughly $4.7 billion.

U.S. sectors not seeing nearly as strong export growth in the first quarter included pharmaceuticals, tobacco, and food waste and animal feed, among others.

Green said the report’s main takeaways have to do with the fact that U.S. companies still have a “continued dependence” on China, with the dollar value of U.S. imports from China growing by more than $13 million in the first quarter for an 18 percent improvement.

“When you look at imports and exports, China remains big and is growing,” said Green. “There has been a lot of talk over the last couple of years—particularly from sourcing executives—about diversifying beyond China, and realistically there is a disconnect between rhetoric and reality there,” he said. “People are talking about diversifying but there is still U.S. dependence on China.”

California exporters are especially reliant on the Far East and transpacific trade, other economic analysts contend.

For supply chain professionals sourcing goods and moving freight globally, Green explained that it is imperative to look at the data and listen to customers when making decisions and considering the fact that China is still the most common region to do global business in. And a close eye needs to be paid attention to the fact that despite recent strong export growth occurring, it is only in a few sectors and not a true indication of broad-based growth, said Green.

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About the Author

Patrick Burnson, Executive Editor
Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review magazines and web sites. Patrick is a widely-published writer and editor who has spent most of his career covering international trade, global logistics, and supply chain management. He lives and works in San Francisco, providing readers with a Pacific Rim perspective on industry trends and forecasts. You can reach him directly at [email protected]

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