U.S.-bound shipments see steep decline in March, says Panjiva

The ongoing impact of COVID-19, or coronavirus, was on full display in the declining number of United States-bound waterborne shipments, for the month of March, according to data recently issued by global trade intelligence firm Panjiva.

March shipments—at 829,501—were off 10.1% annually, falling for the seventh consecutive month. And on a year-to-date basis through March, U.S.-bound waterborne shipments—at 2,706,690—are down 6.8% annually.

Panjiva noted in the report that the “toll of COVID-19 disruptions to global trade were clearly visible in March,” while not as severe as they were trending in mid-March, at which point shipments were down 15%. But that does not diminish the rough waves shipments sailed on in March, which represented the fewest shipments in a month going back to 2016. What’s more, Panjiva said the containerized shipments were off 9.2% annually in March, the lowest level going back to February 2017. 

Declining shipments out of China, which were down 34% annually for its lowest reading since at least 2007, as the full impact of the COVID-19-related industrial lockdown took hold, was a major driver for the March numbers, said Panjiva. Vietnam, however, was the opposite, with a 35.4% annual gain.

But that may not be long-lasting, Panjiva noted, as a shortage of materials from China could translate into an export decline from Vietnam to the U.S. for shipments set to arrive on U.S. shores in April. That was made clear in imports from other countries with shipments from Asia, but excluding China, which were up 2.7%.

European shipments to the U.S. eked out a 0.3% increase, ceasing a three-month stretch of declines, according to Panjiva. But it cautioned that may not be lasting, as the “widening lockdowns” seen in March has the potential to result in fewer U.S.-bound shipments in April. That is not the only reason April may be light, though, as reduced demand for products and supply chain disruptions could also have a negative impact, the firm said.

That was made clear in a recent webcast hosted by Panjiva’s parent company, S&P Global, which posited that a loss in demand could be more harmful to corporate earnings, ahead of of both supplier disruptions and logistics problems.

On a commodity basis, March’s volumes were grim, with various annual import declines, including: furniture down 21%; apparel down 17.9% (and expected to see further declines, due to outlet closures); iron/steel down 16.3%, chemicals down 4.5%; electronics and electricals down 15.7%; washing machines down 72.4% (due to earlier tariff implementations); TVs and monitors down 49.2%, despite an influx of people now working from home because of COVID-19, and valve systems off 49.1%, a key cog in capital goods supply chains.

Panjiva research director Chris Rogers said in an interview that over the last few weeks, since the global economy has largely gone on lockdown due the COVID-19 pandemic, there has been a growing concern, for global trade stakeholders, about supply chain efficiency, as it relates to these shipment numbers.

“They are asking questions like ‘is my supplier in China going to be available?’ or ‘am I going to see problems moving my supply chain elsewhere? Like India, for example,’” he said. “You may see that accelerate in other places, too, like Japan, Malaysia, and Europe, among others. Increasingly, we are hearing more about the demand situation and how things will end up [in certain countries]…and if they have more product than they can sell.” 

And with U.S.-bound shipment levels down, Rogers explained that there has been a subsequent need for ocean carriers to trim capacity levels at ports. He noted how the Virginia Port Authority recently cut capacity plans to cut capacity at one of its six terminals, coupled with MSC and CMA-CGM providing VPA shippers with storage services for product they don’t want to be delivered yet, at off-site storage facilities, as they get ready to receive those products

What’s more, Rogers said that in March things can be pretty relaxed, as it is not a month yet focused on Peak Season, and now in April, with the global lockdown still in place for an undetermined period, there are signs of disruptions at the onset of Peak Season planning.

“There are retailers making decisions about what they are going to need for Peak Season in the November timeframe, knowing they will likely not have a lot of sales before then,” he said. “And even as lockdowns end, in some countries, there is not likely to be a big spending spree [as consumers are being cautious]. It is tough to be making those sorts of decisions right now. When things come back online, there will also be supply chain worries from China probably coming back and supply chain worries from the rest of the world scaling up. It is the demand side of the equation where we are going to see the most disruption in April and into the next few months.” 

When asked about the possibility of the U.S. taking steps to re-open the domestic economy, in terms of how that could play out, Rogers said that is, and remains, a decision to be made by state governors, rather than the federal government.

“If you are running a supply chain across the U.S. and imports from the rest of the world, you don’t even know what re-opened really looks like,” he said. “In some states that re-open, for a basic parts production facility, as an example, that facility may start gearing up for imports. But you may have an idle facility in another state that is not open. Contrast that to some other countries and there is another layer of uncertainty. President Trump may want the economy re-opened….but it will not be rapid, it will be more gradual.”