Tennessee Trade Report 4th 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

After several very difficult quarters, 2020 ended with better news for Tennessee exporters. At $7.85 billion, fourth quarter exports were over 5 percent higher in value from a year earlier.  The turnaround really began in November but accelerated rapidly in December.  Tennessee ranked number 18 among American states in its export growth rate. However only 21 states turned in positive numbers for the quarter, so the recovery in exports is varying quite a bit across the nation.

Growth was Centered in Healing Supply Chains and Exports to China

The export gains were centered around those industries that had suffered severe supply chain issues or that export heavily to China.  Cotton shipments, for example, were up 75 percent for the quarter, entirely due to a $77 million dollar increase to China. The medicament industry, another that had strong gains this past quarter, owed half of its growth to China. The state’s “star” exporter for the quarter, and the primary reason for its net gain in exports, was the cell phone industry.  This was a largely a supply chain phenomenon, with a massive growth in shipments to Hong Kong (where its exports grew by almost $200 million, 80 percent of its global gain) and to the Philippines, key countries in the global production of that project.

Medical Exports Gained, While Automotive Shipments Were Down

As perhaps might be anticipated, medical exports also grew for the quarter. Brazil and Mexico joined China in sizably increasing their purchases of medicaments, while products such as antisera, diagnostic reagents, immunological agents, sterile bandages for wounds, and orthopedics were all up. The story wasn’t uniform, however, as the Japanese market in particular, one of Tennessee’s largest for medical products, suffered reverses.

It was a mixed bag for the auto industry. Shipments of sedans and smaller cars continued to decline, but SUVs were up (mostly to Canada) as were sales of hybrids. The latter, again, was mostly due to China. Automotive components tended not to fare as well as the cars and trucks themselves.  Auto parts and gas engine parts both suffered sizable falls in exports. In total, exports of products intended for placement in an automobile fell by about $100 million for the quarter.

Several other exports we might note as having a strong quarter were whiskey (gaining $28 million to $130 million, with the gains mostly in Europe), silicon (which more than doubled, with the lion’s share of the gain in Germany), and private aircraft (primarily to the Netherlands). The computer sector, on the other hand, which lost nearly $50 million, continued to have tough times.

Big Gains in China, Sideways Most Everywhere Else

Geographically, China, as hinted above, was the big story.  Exports to China and Hong Kong increased by some $400 million for the quarter, growing 55 percent from the 4th quarter of 2019. Shipments to Singapore and the Philippines also grew, but elsewhere in Asia there was little or no growth. Exports to Japan fell by over $100 million.

Exports to Latin America grew ever so slightly ($378 million to $385 million), thanks mostly to Brazil. Colombia, on the other hand, declined by more than ten percent, as did the Central American nations. The Middle East was the poorest performing market in percentage terms. Saudi Arabia and the United Arab Emirates, the state’s two largest regional markets by far, together declined by more than $65 million, almost entirely due to lost automotive exports.

The single worst-performing market of any size was Switzerland. There, Tennessee’s exports dropped by $54 million (from $73 million in 2019).  This was due to a very large decline in exports of artificial limbs and joints. The E.U. nations, on the other hand, combined for a gain of some $220 million. Most of this occurred in the Netherlands and was substantially owing to these same products. This suggests that we likely saw just a shift in the shipping destination of these products. Export growth to Germany and Italy was also very robust, with the state’s exports to that country up by more than a quarter for the quarter. The U.K. joined Switzerland by declining over $50 million. This loss, by the way, took Britain out of the list of the state’s top ten export destinations for the first time ever. There, electric car batteries, aircraft, and heparins were the problems. These disparate paths within Europe summed to a combined gain of about $100 million for the continent.

Finally, Tennessee’s largest two markets, our neighbors Mexico and Canada, barely budged. For the 4th quarter of 2019, state exports within NAFTA stood at $2.621 billion.  For the 4th quarter of 2020, they were $2.623 billion.

Perhaps the biggest story for the state after its return to positive export numbers, is how concentrated was the growth. A few products and a few markets accounted for almost all of it. This suggests that there is likely to be more volatility to come, as the global recovery resumes by fits and starts in different parts of the world. But the good news is that at least that recovery seems to be occurring!