The Supply Chain Daily provides a curated overview of Panjiva's research and insights covering global trade policy, the logistics sector and industrial supply chains and draws from global shipping and freight data.
Hapag-Lloyd lags Maersk, Cosco Shipping in slow start to Q3
Hapag-Lloyd AG reported an 11.1% year-over-year slide in volumes handled in the second quarter due to the impact of COVID-19 on economic activity. Shipments on Transatlantic and Transpacific routes fell by 15.3% and 13.8%, respectively. The company also sees "considerable uncertainty" in its outlook due to COVID-19.
Total U.S. seaborne imports handled by Hapag-Lloyd fell by 14.7% year over year in the second quarter and likely fell by a further 13.0% in July, marking a weak start to the third quarter. That put it well behind the industry average, with total U.S. seaborne imports down by just 3.7% in July due to a surge in shipments from China.
The latter helped boost volumes at Cosco Shipping Holdings Co. Ltd. which rose by 5.9% in July, while A.P. Møller - Mærsk A/S also saw a turnaround with a 3.9%, compared to a 14.2% dip in the second quarter.
Hapag-Lloyd's challenges in part reflect its longer-term route exposures. Just 16.4% of its inbound shipping to the U.S. in the past 12 months came from China while Hapag-Lloyd also has a higher-than-average exposure to Europe and Mexico which have both seen declining shipping.
(Panjiva Research - Logistics)
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Stein Mart stumbles as US retail sales, appliance imports recover in July
U.S. retail sales continued to recover in July with an 8.5% year-over-year increase. Among traditional stores, furniture and electrical stores did best with growth of 6.8% and 8.6%, respectively, while department stores continued to do poorly with a 9.1% slide.
Many retailers are still struggling. Stein Mart Inc. became the latest multi-line retailer to enter Chapter 11 bankruptcy, with U.S. seaborne imports linked to the company having dropped by 79.4% year over year in July after sliding 31.8% lower in the second quarter.
The recovery in the fortunes of electrical retailers looks set to continue, with total U.S. seaborne imports of household appliances by all retailers having increased by 33.8% year over year in July, while furniture shipments rose by 12.8%. Producers of small home appliances have done particularly well during the pandemic as they can benefit from e-commerce and not just store channels.
Shipments in July linked to Spectrum Brands Holdings Inc. and Samsung Electronics Co. Ltd. rose by 5.4% and 21.4%, respectively, while Breville Group Ltd.'s may have peaked and declined by 39.6% year over year in July.
(Panjiva Research - Consumer Discretionary)
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Target backs backpacks as back-to-school clothing imports slide
The continued recovery of the U.S. retail sales industry will depend in part on the current back-to-school season. That has already faced significant disruption as a result of COVID-19 and uncertainties about whether children will attend schools or work at home. There is a potential hit to spending, with a survey by AdColony indicating 86% of shoppers will spend under $500 this season.
Retailers do not appear to expect a recovery in sales, with U.S. seaborne imports of kids footwear and apparel in July down by 44.1% and 29.4% year over year, respectively. There has been a small recovery in imports of backpacks with a 5.4% increase after a 22.9% slide in the second quarter. The improvements in the latter have been isolated including a 600% increase in shipments linked to Target Corp., while VF Corp.'s shipments fell by 40.6%.
(Panjiva Research - Consumer Discretionary)
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Qurate sticks with China through tariffs, pandemic
Qurate Retail Inc. managed to generate 10% revenue growth in the second quarter as the online and TV retailer delivered a strong mix of product choices as well as cutting inventory days to 56.2 from 70.2 a year earlier. Yet, its stock price dropped on the day of the results after the company stated that profitability fell "primarily due to higher fulfillment costs mainly associated with COVID-19."
The company has been engaged in a longer-term process of optimizing its supply chain to keep costs under control. The drop in inventory included a 34.8% year-over-year reduction in U.S. seaborne imports linked to the company in Q2, Panjiva data shows. Growth may return in the third quarter with shipments up by 6.1% year over year in July.
Qurate has stuck with supplies from China despite the imposition of widespread tariffs. China represented 77.9% of shipments in the 12 months to July 31 from 68.5% in 2016. It has not been able to obtain any exemptions from Section 301 duties despite making 336 requests.
Analysis of the company's supply chain graph, Panjiva's mathematical representation of Qurate's buyer- and supplier-network, shows it has been through two phases of efficiency improvements in the past three years. The company trimmed its supplier base in 2017 and in the past 12 months, with the density of the company network rising by 16.3% in December 2017 versus December 2016, and by 48.1% in July 2020 versus July 2019.
Leoni leans toward the cautious as COVID-19 slashes cable demand
Cable and wiring manufacturer Leoni AG reported a 46.0% year-over-year slide in revenues in the second quarter, with CEO Aldo Kamper saying the COVID-19 pandemic has "hit the global automotive industry and its suppliers hard." The company expects a "gradual improvement," though the rest of 2020 will be "extremely challenging" even "assuming that there will be no second wave."
Leoni may have only reacted late in the quarter to falling demand with U.S. seaborne imports linked to the company having dropped by 29.1% year over year in the second quarter. A dip of 47.5% in July suggests inventory management is underway.
Other cable suppliers appear to be less cautious with shipments linked to Well Shin Technology Co. Ltd. and Furukawa Electric Co. Ltd. up by 41.2% and 7.7% year over year, respectively, in July. At the other extreme, shipments linked to Yazaki Corp. fell by 21.9%.
(Panjiva Research - Capital Goods)
Christopher Rogers is a senior researcher at Panjiva, a business line of S&P Global Market Intelligence, a division of S&P Global Inc. This content does not constitute investment advice, and the views and opinions expressed in this piece are those of the author and do not necessarily represent the views of S&P Global Market Intelligence.
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