Tennessee Trade Report 3rd Quarter 2020

Tables and Graphs

Tennessee's Largest Export Industries

Tennessee's Largest Markets

Tennessee's Most Rapidly Changing Exports

Tennessee's Most Rapidly Changing Markets

The catastrophic collapse of exports produced by COVID abated during third quarter. Though still down substantially over the same period last year, Tennessee’s losses were much smaller. For some products, gains were actually recorded. We may be seeing the first signs of a recovery?

Third quarter exports declined to just over $7 billion, about a ten percent loss versus last year.  Tennessee ranked nineteenth among the states in export performance, and it did outperform the nation. Total American exports fell a bit over thirteen percent for the quarter.

China and Cell Phones Posted Strong Gains

The single largest reason for the better numbers was China. Tennessee exports to China gained nearly fifty percent over last year (over $250 million). The ongoing Chinese economic recovery led to large increases in purchases of medical equipment, cotton, and aircraft from this state.  Right behind the country of China, though, was the industry of cellular phones.  It was the quarter’s star export. Globally, Tennessee’s cell phone equipment shipments more than doubled this past quarter, from $149 million to $309 million.  Cell phones accounted for the 184% increase in exports to the Philippines, the state’s single best performing trade partner in the third quarter (and the primary destination of these items). Cell phone related exports also surged to Hong Kong.

Of course these big gains were the exception. Closer to home, shipments to Canada fell ten percent, though this was a far smaller loss than in the previous two quarters. Once again cars (especially SUVs) and auto parts accounted for most of the losses, but at least there appeared to be a bit of a revival in the last month of the quarter. Mexico, for which auto shipments are a far more sizable component of the state’s exports, did more poorly for that reason. Shipments to Mexico fell by about $200 million (a twenty percent decline).

South Korea, Japan, and the UK Saw Particularly Large Declines

The state’s most difficult partners were South Korea, Japan, and the UK. Exports to South Korea fell by $50 million (a loss of 29 percent). Japan’s losses were over $170 million, with car engines and parts and medical related exports bearing the brunt.  Shipments to the UK were off by 34 percent, the worst of these three countries. This amounted to a loss of about $90 million. The virtual collapse of Tennessee’s electric car sales was the primary reason for the poor performance in Great Britain. The value of the shipments of electric vehicle storage batteries dropped by more than half.

Excluding the UK, Europe was a mixed bag. Sales to the eurozone were off by eight percent (to $1.6 billion), with gains in Germany and the Netherlands countered by losses in Belgium and France. Exports to South America dropped by some $80 million, about one-third of the state’s exports in the third quarter of 2019.  Half of the loss was in Brazil, largely in the medicament sector.

Medical Sectors Were Generally Solid, but the Automotive Sector Suffered Substantially

Viewing by sectors, the state’s largest, medical equipment, held pretty steady for the quarter, suffering just a small drop. Pharmaceuticals and exports of orthopedic equipment actually increased for the quarter. The automotive sector again experienced the largest losses. Car shipments fell by more than $150 for the quarter, while auto parts, car engines, and basically anything that goes into or on a car or truck saw losses of the same magnitude. The chemical industry dropped from $477 million to $406, with the losses widely dispersed globally. Plastics, electrical equipment, and computers (particularly laptops) were other large sectors that experienced more than twenty percentage point losses from a year earlier.

It’s rather difficult to get too excited about a ten percent loss in quarterly exports! But green shoots are appearing. As supply chains come on line, especially in the automotive sector, we can be somewhat optimistic that improvement is coming. Of course that is all predicated on what COVID has in store for us.