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Panjiva: Supply Chain Wage Inflation Worries Buyers and Suppliers

panjiva_logo_250Last Fall BIIA member Panjiva kicked off a new State of Trade Survey to Panjiva members.   These members are a cross section of people who use trade data:  buyers, sellers, and people who research or analyze trade in other capacities.

BIIA has just received Panjiva’s report which has the aim of showing how individuals working in trade see how the world is changing in 2014.  Panjiva found several clear trends:

Outlook:  Respondents were more optimistic about 2014 than expressed in a previous survey.

Concerns:  Respondents are concerned about wage inflation.

  • Buyers: Almost all of the buyers in Panjiva’s survey reported that they currently source from China or related countries.   About half expect to spend more in 2014 but rising wages is the biggest economic concern for 2014.  Buyers are anticipating cost increases in their supply chain in 2014, and sourcing in new geographies’ is the most popular opportunity for cost savings next year. Further, 61% of buyers/other respondents said that sourcing in China had become more expensive over the past twelve months and nearly 75% said they were actively looking for suppliers outside China.
  • Suppliers:  A quarter of our respondents identified themselves as ‘suppliers’ in diverse industries covering machinery production, logistics, and hardware.  Of those, 52% are in the North America, 12% are in Asia, and the remaining 36% are in South America and Western Europe.   Like buyers, suppliers were optimistic about 2014.

The suppliers in the Panjiva survey were also concerned about rising costs.  When asked about the biggest challenge of working with buyers in the U.S., the biggest by far was competition on price.  This creates a difficult challenge for suppliers who face cost pressure from buyers and wage pressure from their work force.

When asked about their interest in supplying various regions, the biggest changes were interest in supplying Europe and China.  Back in 2012, 55% of our supplier respondents were ‘more interested’ in supplying Europe.  By the end of 2013, that number had dropped to 36%. In 2012, 41% were ‘more interested’ in supplying China.  This year, that number is just 22%.  It’s not clear that suppliers are looking to new geographies in the same manner as buyers, but they are definitely aware of cost pressure and also find it to be a challenge on their side of trade.

New hotspots:  Africa and Vietnam were selected as the hot, new places to source.

News:  The Bangladesh factory collapse and the U.S. government shutdown did not appear to significantly impact trade.

To read the Panjiva Survey Report click on this link: State-Of-Trade-2014

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