Panjiva Blog: Blogging Global Trade

A week ago, Panjiva released data showing that the economic downturn is decimating suppliers around the world, and we introduced new tools to help companies cope with the associated risk.  We appreciate the interest so many people have shown (see links to some of the coverage below).  We’ll be back with much more in Q1.  In the meantime, stay tuned for guest posts from a member of Panjiva’s technical advisory board.

Financial Times:

http://www.ft.com/cms/s/o/30c89a2e-c620-11dd-a741-000077bo7658.html

New York Times:

http://www.nytimes.com/external/gigaom/2008/12/08/08gigaom-panjiva-31244.html

Wall Street Journal:

http://blogs.wsj.com/runway/2008/12/08/the-daily-thread-abercrombies-sales-down-luxury-brands-modify-focus-uk-retail-sales-expected-to-drop/

CNN/Fortune:

http://money.cnn.com/news/newsfeeds/gigaom/startups/2008_12_08_panjiva.html

Forbes:

http://www.forbes.com/global/2008/1222/007.html

Gartner:

http://blogs.gartner.com/andrew_white/2008/12/10/%E2%80%9Cthere-is-information-gold-in-them-there-data-hills%E2%80%9D/

ARC Advisory Group:

http://www.arcweb.com/Domains/SCM/Lists/Posts/Post.aspx?List=7ae600da%2D7f89%2D41bb%2D8e5d%2D9838766ca24a&ID=154&RootFolder=%2FDomains%2FSCM%2FLists%2FPosts

About.com:

http://logistics.about.com/b/2008/12/05/finding-the-right-supplier-for-your-business.htm

GigaOm:

http://gigaom.com/2008/12/08/panjiva/

Ars Technica:

http://arstechnica.com/news.ars/post/20081210-downturn-hitting-tech-semiconductor-sector-hard.html

WWD:

http://www.wwd.com/business-news/us-apparel-suppliers-dwindling-1880152?justin=1880152

InformationWeek:

http://www.informationweek.com/news/internet/ebusiness/showArticle.jhtml?articleID=212300220

CIO:

http://www.cio.com/article/469565/Big_Supply_Chain_Troubles_in_China

SpendMatters:

http://www.spendmatters.com/index.cfm/2008/12/11/Supplier-Insight-That-Counts-Panjiva-Aims-High-Part-1

SupplyChainDigest:

http://www.scdigest.com/assets/On_Target/08-12-10-3.php?cid=2135

Logistics Management:

http://www.logisticsmgmt.com/blog/930000493/post/1790037779.html

Supply & Demand Chain Executive:

http://www.sdcexec.com/web/online/SourcingProcurement-News/Panjiva-Analysis-Shows-Economic-Downturn-Decimating-Global-Suppliers/27$10872

SupplyChainNetwork:

http://www.supplychainnetwork.com/?p=419

IT Governance, Risk, and Compliance:

http://itgrc.wordpress.com/2008/12/11/how-risk-management-tools-may-revert-decline-of-global-suppliers/

Enterprise Irregulars:

http://www.enterpriseirregulars.com/EI/34167

Alibaba:

http://news.alibaba.com/article/detail/apparel-news/100028342-1-apparel-industry%2527s-global-supply-chain.html

Home Textiles Today:

http://www.hometextilestoday.com/article/CA6621622.html

IT Professionals Database:

http://www.itpd.eu/panjiva-panning-for-gold-in-numbers

Sea Cargo Air Cargo Logistics:

http://scacli.blogspot.com/2008/12/apparel-industrys-global-supply-chain.html

On Monday, we released data showing the extent to which the economic downturn is decimating the global supply base.  Specifically, our analysis showed that there are fewer suppliers actively serving the U.S. market, and, of those that are active, many have suffered an alarming decline in the volume shipped to U.S. customers.

We’ve received questions about whether this is a China-only phenomenon.  The short answer is no.  Some statistics:

World: We saw a 72% drop-off in the number of active apparel suppliers from July to October.  Of those that remain active, 40% are on Panjiva’s Watch List, as a result of suffering a huge decline in the volume shipped to U.S. customers in the most recent three month period.

CHINA:  The comparable statistics for Chinese suppliers look much the same.  We saw a 69% drop-off in the number of active apparel suppliers from July to October.  Of those that remain active, 45% are on Panjiva’s Watch List.

Bottom line: the data suggest that this is not a China-only problem, but nor have Chinese suppliers been spared the pain that the global supply base is feeling.

Check out a related article over at MarketWatch.

The market has been quite busy this week, particularly on the other side of the Atlantic. After rallying to a record $1.60 on Tuesday where investors were betting the ECB would raise rates to curb inflation, the euro eased up a bit yesterday. Weaker data out of the euro zone, which included the steepest monthly fall in Germany’s Ifo index since September 2001, prompted a sell off in the currency. 

BusinessEurope, which boasts a membership base of over twenty million European companies, said that damage to the export market has been small so far but “expecting emerging countries to compensate for weaker U.S. growth and consumption is hardly feasible.” 

Intrigued as always by current events, Panjiva’s research team ran some quick analyses on our data to see how European exports have been behaving.

 *Data Source: Panjiva Analysis of data from U.S. Department of Homeland Security                                                                                                                                                                                                                                              As the numbers indicate, apparel shipments to the U.S. from Europe and Germany (the continent’s biggest exporter) have remained robust. Compared to analogous periods from previous years, the data also showed significant improvement (thanks in part to a stronger dollar back in 2007). Given the lag time for when orders are placed, products are manufactured, and shipments are received, it will be interesting to see how exports change over the next few months as European economic sentiment fluctuates. Panjiva will keep you posted so stay tuned.

Want the latest export data from Europe and other parts of the world? Contact our team at research@panjiva.com.

Social Accountability International (SAI) is a non-profit standards setting organization that promotes human rights for workers around the world. To achieve this goal, they issue SA8000 certificates to factories in a variety of industries. SA8000’s guiding principles are based on international workplace norms of the International Labour Organisation (ILO), the Universal Declaration of Human Rights and the UN Convention on the Rights of the Child.   

In a recent collaboration with SAI, Panjiva compared the scores of factories in its database that are SA8000-certified with those that are not. We discovered that the mean rating for SA8000-certified factories is 70.7 out of 100, while the mean rating for all factories (excluding those we have ‘not rated’ because they only have a handful of shipments) is 49.03. So simplistically, SA8000-certified factories have a 44% higher rating on average than non-SA8000-certified factories. Conclusions? As our numbers indicate, SA8000 certification can go a long way in distinguishing a factory from the huge universe of competitors. 

For more information on the analyses Panjiva did of SA8000-certified factories and others, you can contact our team at research@panjiva.com. To learn more about the work SAI is doing to promote labor rights visit their website. 

In his latest article, entitled “Shining a Light on Subcontractors”, WWD correspondent Evan Clark writes about the dangers of unauthorized subcontracting. He highlights how Gap’s problem in India last year brought media attention to an issue that has grown in importance and frequency as today’s global supply chains have grown in complexity.

Clark explains how some brands are responding by enforcing corporate compliance programs, spacing out their orders, or moving towards consolidation among other things. But even these measures are not enough to guarantee safety from unapproved subcontractors.

Here’s what our research team had to say on the subject:

Panjiva Inc., a New York-based firm that helps brands evaluate factories, trolls governmental data for suspicious spikes in production so that companies using its service can follow up. Of the roughly 38,500 suppliers in Panjiva’s database, almost 3 percent, or 1,107 factories, shipped 50 percent more in August, September or October than they had during any previous month. That is a 33 percent increase from a year earlier.

There are legitimate reasons for such a jump in production — new capacity, for instance — but dramatic increases might also be picking up unauthorized subcontracting. 

“There are spikes [in production] on a regular basis,” said Josh Green, chief executive officer of Panjiva. “This is a trend that is clearly increasing in terms of frequency.”

Continue reading “Shining a Light on Subcontractors”.

Learn more about our analyses of subcontracting behavior in the apparel industry by contacting our research team at research@panjiva.com.

As fears over another U.S. economic downturn heats up, Asian exporters are bracing themselves for the worst. All eyes are on our leaders in Washington who passed a fiscal stimulus package yesterday that they hope will be the catalyst for change.

Decreasing demand from the American market has already pushed many Asian suppliers to embrace reform in a variety of ways. According to NYTimes Hong Kong bureau chief, Keith Bradsher, some are simply lengthening their worker’s holidays whereas others are taking a more proactive approach by investing in new technologies or expanding their presence in additional countries.

Such shifts in behavior have been in response to not only external shocks, but also worries over the stability of suppliers’ indigenous economies. While there are those who remain optimistic about Asia’s continued growth despite a U.S. slump, Goldman Sachs CEO, Lloyd Blankfein, is not one of them. “It’s impossible for [there] to be a complete decoupling,” he said at this year’s World Economic Forum meeting in Davos. “How can growth be maintained if the ultimate source of demand is receding?”

Yiping Huang, head of Asia-Pacific analysis at Citigroup, agrees that the global nature of today’s businesses means possible recessions in Europe and the U.S. will have ramifications well beyond the borders of those countries. Earlier this month Citigroup actually reduced their average estimate for Asian economic growth by four-tenths of a percent.

Panjiva’s independent examination of apparel export data mirrors the deceleration seen in global trade. Shipments from China to the U.S. dropped 61% from the third to fourth quarter of 2007. In comparison to the same quarters for previous years, the numbers are considerably lower: (23%) in 2006, and 1.3% in 2005. India posted a similar decrease, with the change in exports from Q3 to Q4 in 2005 and 2006 falling a modest 1.9% and 5.2% respectively, while in 2007 it slipped 29%.

Wondering if such slides were systemic, our team looked at data from Middle Eastern and African economies. Sure enough, those trends continued. In Egypt the changes from Q3 to Q4 was up 22% in 2005, down 19% and 58% in 2006 and 2007 respectively.

When taking a step back though and looking at the annual figures, things are less gloomy. China’s apparel exports, a bit sluggish during the last quarter of 2007, did rise to record levels that year, peaking just below 252,000 apparel shipments, well above the 146,000 in 2006 and 101,000 in 2005. India also demonstrated record growth, where shipments to the U.S. jumped from 18,500 in 2005 and 24,000 in 2006, to 48,000 in 2007. Over in Egypt, exports increased an astounding 117% from 2005 to 2006 (largely because of duty free access to the U.S. market), before cooling off in 2007, where it locked in a still impressive 22% spread.

Overall, 2007 was a good year for the world’s biggest apparel exporters, but with the U.S. subprime crisis ringing in the New Year, the industry will need to proceed with caution if it hopes to stay on course.

Curious about what the numbers look like for Indonesia, Turkey, Hong Kong and the rest of the world? Contact our team at research@panjiva.com for more info.

Thanks to growing demand from international markets a slew of Italian brands have been going public in hopes of raising both funds for expansion and brand awareness. After several failed attempts, Prada followed suit by announcing on Wednesday that it would go IPO sometime mid-June of 2008.

Last year may have been a signal of things to come when the husband and wife duo of Miuccia Prada and Patrizio Bertelli, who own 95% of the company, decided to sell the remaining 5% to Intesa Sanpaolo, for €100 million, at a valuation of €2 billion. For this deal they have again aligned themselves with some big guns. Goldman Sachs, UniCredit, and Intesa Sanpaolo are slated to be the global coordinators while Mediobanca will be Prada’s financial advisor.

As always our research team was intrigued about how our data could shed light on recent news events. We did a bit of digging last night and came up with some interesting statistics. For starters, it looks like shipments into the U.S. from premium apparel brands have spiked an startling 50% in 2007 after two years of relative stagnation.

Where are these garments coming from? According to our data, the majority of them are being shipped from Asia. The table below shows the Top 10 Sourcing Destinations (based on raw shipments) for premium apparel brands importing into the U.S.

*Data Source: Panjiva Analysis of data from U.S. Department of Homeland Security

It should come as no surprise that export giants Hong Kong and China dominate the list, but the fact that Bangladesh is so high up does pique our interest. These three countries also rank as the top three sourcing destinations (in varying orders) for mass (i.e. The Gap) and discount (i.e. Target) buyers. Egypt, Honduras, and Italy have the unique distinction of being the only non-Asian countries on the list. Meanwhile, a surprising no-show is India. In fact India only appears once on our list of Top Sourcing Destinations per Buyer Caliber. 

To learn more about our research on the sourcing behavior of apparel companies, please email our team at research@panjiva.com.

While browsing CNN.com earlier today, I came across a somewhat surprising headline, China’s Trade Surplus Soars. Given all the import horror stories from last year, I immediately assumed this was a typo, but my doubts were misplaced.

China’s trade surplus did indeed rise to a record 50% in 2007 (47.7% to be exact). Although slightly below the $300 billion forecast, China’s $262.2 billion surplus is still a number to behold.

Curious as to whether the same increase applied to the apparel industry, we got our research team on the case. Sure enough, they came up with some interesting results. When looking at total shipments from Chinese apparel suppliers to U.S. buyers, the raw numbers indicate:

100,033 shipments in 2005

144,730 shipments in 2006

251,366 shipments in 2007

In the language of percents, the apparel industry saw a 45% increase in Chinese shipments from ‘05 to ‘06 and an astounding 74% increase from ‘06 to ‘07.

What do the experts predict for 2008? In his interview with CNN, Citigroup economist, Yiping Huang, says “We are not expecting the surplus to decline substantially. We are still expecting the overall trade surplus to rise a bit further as 2008 progresses.”

For the time being it looks like China’s export-driven economy will see sustained growth - certainly good news for suppliers in that country.

Here’s an interesting list Panjiva’s research team recently compiled on the countries that most frequently ship underwear to the United States. At the top are Asian mainstays like China and Hong Kong, but what comes as a nice surprise is the number of smaller Central and South American nations that are in the mix. To learn more about the analyses we conducted on underwear suppliers, as well those in other areas of apparel, email us at research@panjiva.com. Or, to find out how many suppliers we have in the product you’re interested in sourcing, visit our search page and see for yourself. 

*Data Source: Panjiva Analysis of data from the U.S. Department of Homeland Security