Tennessee Trade Report 4th 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

State Exports Up Nearly $2 billion in the Fourth Quarter

Tennessee exported $9.5 billion of goods in the fourth quarter of 2021, a remarkable gain of $1.7 billion from a year earlier. Indeed, the state exported more last December than in any other month of its history. However, this 21.5 percent growth in exports only put the state in the middle of the national pack, number 22 among the 50 states.  This indicates the magnitude of the recent increase in America’s exports.

A Dramatic Rise in Vaccines, and a Surge in Other Medical Exports

By far the largest story of the quarter is the continued dramatic rise in vaccine shipments out of Tennessee. From virtually nil in 2020, the state sent $1.07 billion in vaccines overseas in the fourth quarter of 2021. Three-quarters of this was in December alone. However, there’s a bit less than meets the eye here. The exports were Pfizer vaccines manufactured elsewhere and then sent out through (mostly Memphis) Tennessee distributors.

That said, the state’s “traditional” medical exports also had a very good quarter.  Exports of medical instruments grew by sixteen percent (to $761 million). Related items such as surgical catgut and medical needles also posted double-digit percentage gains (each had gains of over $20 million).  Though medical exports were up in South America, Canada, and Japan, it was China that accounted for most of these increases.

A Great Quarter for Cell Phones and Computers as Well

The two other large, vibrant export sectors were cell phones and computers.  The state’s recent success in exporting phones continued. This past quarter, shipments grew another $170 million, a 46 percent increase. The destinations expanded as well, though Hong Kong remained the major destination, taking almost three-quarters of the exports. Shipments of computers are returning to the levels of several years ago, thanks to supply chain shifts. The largest single export was laptops, the value of which more than doubled over the fourth quarter of 2020 (to $182 million).  This growth was centered in Canada, although there were increased shipments throughout the Americas. Desktop computers also made robust gains, from $63 million to $137 million.  Computer storage units and optical media (DVDs, etc.), which we might include in this sector, joined in the export growth to the tune of increased exports of $29 million and $58 million, respectively.

Other strong export industries included whiskey, polyesters, and packaging paper. A notable new large export was platinum scrap. Tennessee exported more than $100 million of this material in the fourth quarter, most of it going to Germany.

But Tough Times for the State’s Automotive Industry

On the other side of the ledger this past quarter was the state’s automotive industry.  Here its well-known supply chain problems significantly impacted its ability to export. Car sales fell from $164 million to $93 million. SUVs fared even worse ($318 million to $172 million). Shipments of hybrid vehicles ended, for all practical purposes. That $52 million loss was entirely in China. Products involved in EV manufacturing, such as lithium batteries and silicon, also suffered dramatic drops. Fortunately, few other industries experienced difficulties of this magnitude. Cotton was the other major Tennessee export to fare as poorly.  Thanks to production shutdowns in China, Tennessee’s cotton exports dropped nearly $100 million over the quarter.

The Gains Were Centered in the Americas and in the New Vaccine Destinations

Geographically, the biggest gains, as one might expect, were in those markets receiving vaccines. Thus, state exports to Africa nearly doubled (to $192 million), while those to Southeast Asia rose by more than $250 million (to $828 million). Elsewhere, exporters did very well in South and Central America.  All its big markets (Argentina, Brazil, Chile, Colombia) posted strong numbers, as the continent combined to increase its purchases from Tennessee by one-third over the quarter. The USCMA markets both turned in good numbers as well, despite being the center of the losses in the automotive industry. Canada added about $400 million to its Tennessee imports of a year earlier while Mexico added about $85 million to its fourth quarter 2020 imports.  In the aggregate, Europe barely moved.  But this hid some sizable changes. Exports were up strongly in Belgium, France and Germany --- and down just as strongly in Italy and the Netherlands. For the first time in some quarters, East Asia was flat as well.  Hong Kong was up significantly due to those cell phone exports, but China was little changed.  Exports to Japan and South Korea weren’t much different than they were a year earlier.

Geopolitics Joins the Challenges Facing Tennessee Exporters

As a side note, state exports were strong to both Russia and Ukraine. Sales to Russia increased from $42 million to $58 million, while those to Ukraine grew from $3 million to $34 million.  Needless to say, this gives warning that things may be very different in the quarters ahead. As if covid, inflation, and continuing supply chain problems were not enough, we now face one of the worst geopolitical climates for global trade in quite some time. Whether, and how, exporters can meet all these challenges will be the story going forward.