Panjiva data points to import gains but outlook remains muddled

Data issued this week, for the month of July, by global trade intelligence firm Panjiva could be viewed as mixed but in a good way.

United States-bound July shipments—at 1,059,070—were off 5.8% annually and are down 3.9% year-to-date, at 6,845,061.

Despite the declines, Panjiva said the 3.7% TEU decline represented the slowest rate of decline going back to January and is an improvement compared to June’s 8.4% annual decline. What’s more, it marked a 16% increase, from June to July, with the firm noting that is the fastest start to a peak season since at least 2007 and “is indicative of a broad-based recovery in supply chains in the wake of COVID-19.”

In a research note, Panjiva said that this “sudden surge” in shipments may underpin some of the congestion challenges that major ports are up against, with the possibility of not letting up should the pairing of peak season and recovery from COVID-19-related challenges continues.

July import tallies—at 1.06 million TEU—saw a 4% increase in imports from China, which is the first time there has been a gain going back to December 2018, and also marked the largest number for July on record. While imports out of China were up, they were down for the rest of Asia, at 3.2%, which was much improved compared to June’s 13.8% increase, which Panjiva attributed to trade improvements with Singapore and Vietnam and improving conditions with South Korea and India, too. Imports out of the European Union, though, were off 14%, following a 14.4% June decline.

As for commodities, Panjiva reported that imports of discretionary goods were down only 2.1%, following a 13.8% June decrease and a 28.2% May decrease. Imports of home furnishings and home appliances were up 12.8% and 33.8%, respectively. Automotive imports were off 19.1%, faring better than May’s 32.8% drop off. Home/personal care imports, which includes PPE and hand sanitizer, rose 48.9%. Industrial sector shipments were off 6.1%.  

In an interview, Panjiva Research Director Chris Rogers said that on a top level, a lot of companies that have been reporting earnings recently have indicated that while recovery is underway, that comes with the caveat that governors again don’t lock down their respective economies.

“The resurgence [of positive COVID-19 cases] in some U.S. states is not enough for them to close factories and stores like we saw in April and May,” he said. “It looks like consumers are recovering more quickly than other areas such as those focused on industrial-type imports.”

But consumer spending on things like appliances and new furniture only lasts for a certain amount of time, he noted.

“On the industrial side, what we see are big parts of it like construction equipment and power generating equipment are still quite weak,” he said. “The same goes for industrial machinery as well. That speaks to a lack of investing in manufacturing capacity at the moment, which is not a surprise, as lots of companies were shut down for a while and need to maintain cash flow through the end of the year.”

Looking ahead to the remainder of 2020, Rogers said that current market and economic conditions make it difficult to issue a forecast.

“It is going to be dependent on a recovery on capital investment, which seems unlikely, as well as U.S. consumers, too,” he said. “But the gridlock in Washington may hinder future consumer spending, should it grind to a halt. It would point to the risk of an economic slowdown, rather than an acceleration.”