Tennessee Trade Report 3rd Quarter 2021

Tables and Graphs

Tennessee's Largest Export Industries

Tennessee's Largest Markets

Tennessee's Most Rapidly Changing Exports

Tennessee's Most Rapidly Changing Markets

Tennessee’s 3rd quarter exports increased to $8.928 billion, a nearly two billion dollar increase over last year. This was one of the state’s biggest quarterly gains ever. The primary cause was the incredible growth of medical-related foreign shipments.

A Dramatic Increase in Vaccines and the Medical Sector

We can begin with vaccines.  In the 3rd quarter of 2020, there were no vaccine exports from Tennessee.  This past quarter, vaccine exports were valued at over $771 million. These went to four destinations: Belgium ($367 million), South Korea ($244 million), Colombia ($44 million), and Saudi Arabia ($20 million). But behind that, medical instrument shipments, always one of the state’s top sectors, added another $100 million in increased exports.  China and Japan accounted for the bulk of that growth. Artificial joint exports were up by more than a quarter, a $60 million gain mostly to the Netherlands. And surgical catgut, medical needles, and immunological products were all up strongly. Combined, the medical goods sector more than doubled its exports and accounted for almost one-fifth of all Tennessee’s foreign shipments.

But a Number of Other Sectors were Strong as Well

The cell phone industry had another strong quarter.  Cell phone shipments were $163 million higher than they were in the 3rd quarter of 2020. The vast majority went to Hong Kong, cementing its position as one of Tennessee’s top ten export destinations. The other two standout export sectors were plastics and the computer industry.  Shipments of plastics rose by $200 million, to $627 million. About half of these gains were in East Asia, with the rest spread quite widely around the globe.  More concentrated was the success of Tennessee’s computer industry exporters. Their shipments rose by a similar $200 million, almost double that of the previous 3rd quarter. But this time one country, Canada, accounted for almost all the growth.  A number of other industries had good quarters too.  We might point out, in particular, a $60 million shipment of helicopters to the Netherlands this past August.  

The Automotive Sector was a Mixed Bag

The automotive sector, the state’s biggest export industry, had a mixed quarter, however.  Shipments of SUVs were up by $33 million, but those of smaller cars were down by a far larger $100 million. Exports of car engines also feel steeply.  Hybrid vehicle and EV battery exports essentially collapsed. Lithium battery shipments to the UK, their primary destination, dropped from $46 million to $6 million. Hybrid cars suffered a very similar decline (from $40 million to less than $200,000).  China was the site of this latter loss.  Though shipments of auto generators were down sharply, elsewhere engine and body parts were mostly unchanged.

As the quarter’s numbers suggest, few other industries saw major declines in their exports this past quarter. In addition to the auto sectors just noted, the major exceptions were cotton, aircraft, and ceramic wares.  Cotton exports to China fell by more than $100 million, more than enough to eliminate gains in Turkey and elsewhere. Aircraft losses were centered in China, Thailand, and Canada.

East Asia was the Top Region for the Quarter

Geographically, East Asia was the site of the state’s strongest export performance. Both Korea and Hong Kong imported more than $200 million more Tennessee products than they did a year earlier. For South Korea, this was vaccines. For Hong Kong, cell phones.  Japan added another $100 million, mostly medical-related. The growth in these three countries easily made up for the loss of $60 million in exports to China. The euro area was also an extremely robust market. Tennessee sent $2 billion in exports to the euro countries, more than sixty percent more than a year earlier. Latin America was strong. Colombia, Chile, Brazil, and the Central American republics together powered a $200 million gain in shipments to that continent as well. Closer to home, Mexico saw a big gain, crossing the $1 billion mark. Tennessee’s 29 percent increase in Mexico was mostly in the automotive industry. Canada posted a more modest gain, 7.3 percent (although that amounts to more than $100 million), with computers and optical media leading the way.

Very Few Markets Saw Declines

Who bucked the trend? Besides China, not many. The failure to repeat a large 2019 aircraft purchase led Thailand to the poorest performance of any significant market last quarter. The UK (due to those lithium batteries) and the Philippines (much of its cell phone imports now go to Hong Kong) were the only other large markets where Tennessee exporters saw their shipments decline. In all, there is little doubt that this was one of the very best quarterly export numbers for quite some time.

The number of industries and of markets with substantial gains was remarkable. Supply chain problems and the continuance of covid-19 make it hazardous to project how long this will last. But we would be more than happy for a few more quarters with this kind of export growth.