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Green Shoots in the Supply Chain? Manufacturers Shipping to U.S. Increases for Second Month in a Row
Panjiva sees analysis of global trade data in April providing reason for optimism, but cautions on continued
New York — June 1, 2009 — The number of manufacturers shipping to American customers increased for the second month in a row in April, providing some small reason for optimism about the trajectory of the global economy, according to a report from Panjiva, a provider of information on global manufacturers.
After documenting four months of free fall in the number of manufacturers shipping to American customers, Panjiva reports an increase of about 2 percent for the February-to-March period and a more significant bump up of 8 percent from March to April.
"While some may interpret this data as a welcome sign that the global manufacturing economy has hit bottom and is rebounding, analysis of historical trends and additional shipment data points to a need for continued caution as significant risk still exists," Panjiva said.
Specifically, though the March-April increase surpassed last year's March-April increase, data released by Chinese authorities suggest that, on a seasonally adjusted basis, April was worse than March for the world's largest exporting economy.
In addition, risk for those engaged in global trade remains high: the percentage of "significant manufacturers" on Panjiva's "Watch List" edged up from 30 percent in March to 31 percent in April. Similarly, the percentage of "significant buyers" having done business with a Panjiva Watch List supplier in the preceding three months edged up from 40 percent in March to 41 percent in April.
The Watch List includes suppliers that have suffered a year-over-year drop of 50 percent or more in terms of volume shipped to U.S. customers. Companies that work with these suppliers are encouraged to develop back-up plans in case these suppliers go out of business.
"Significant manufacturers" are companies that have sent 10 or more shipments to American customers within the last year. "Significant buyers" are companies that have received 10 or more shipments from overseas manufacturers within the last year.
"In any other year, the March-to-April improvement would appear modest, but 2009 is unique," said Panjiva CEO Josh Green. "Frankly, we expected to see far worse numbers, and yet these numbers suggest we may have already hit bottom. Unfortunately, there is still substantial risk facing those engaged in global trade, and the global trading system remains vulnerable to further shocks."
To assess aggregate risk in the global supply chain, Panjiva analyzes waterborne shipments to U.S. customers, tracking manufacturers that are serving the American market. For each manufacturer, Panjiva tracks changes in volume over time. The results of Panjiva's analysis are released on a monthly basis.
After documenting four months of free fall in the number of manufacturers shipping to American customers, Panjiva reports an increase of about 2 percent for the February-to-March period and a more significant bump up of 8 percent from March to April.
"While some may interpret this data as a welcome sign that the global manufacturing economy has hit bottom and is rebounding, analysis of historical trends and additional shipment data points to a need for continued caution as significant risk still exists," Panjiva said.
Specifically, though the March-April increase surpassed last year's March-April increase, data released by Chinese authorities suggest that, on a seasonally adjusted basis, April was worse than March for the world's largest exporting economy.
In addition, risk for those engaged in global trade remains high: the percentage of "significant manufacturers" on Panjiva's "Watch List" edged up from 30 percent in March to 31 percent in April. Similarly, the percentage of "significant buyers" having done business with a Panjiva Watch List supplier in the preceding three months edged up from 40 percent in March to 41 percent in April.
The Watch List includes suppliers that have suffered a year-over-year drop of 50 percent or more in terms of volume shipped to U.S. customers. Companies that work with these suppliers are encouraged to develop back-up plans in case these suppliers go out of business.
"Significant manufacturers" are companies that have sent 10 or more shipments to American customers within the last year. "Significant buyers" are companies that have received 10 or more shipments from overseas manufacturers within the last year.
"In any other year, the March-to-April improvement would appear modest, but 2009 is unique," said Panjiva CEO Josh Green. "Frankly, we expected to see far worse numbers, and yet these numbers suggest we may have already hit bottom. Unfortunately, there is still substantial risk facing those engaged in global trade, and the global trading system remains vulnerable to further shocks."
To assess aggregate risk in the global supply chain, Panjiva analyzes waterborne shipments to U.S. customers, tracking manufacturers that are serving the American market. For each manufacturer, Panjiva tracks changes in volume over time. The results of Panjiva's analysis are released on a monthly basis.
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