Tennessee Trade Report 1st Quarter 2023

Tables and Graphs

Tennessee's Largest Export Industries

Tennessee's Largest Markets

Tennessee's Most Rapidly Growing Exports

Tennessee's Most Rapidly Growing Markets

Sometimes the numbers don’t tell the whole story. On the face of it, the first quarter of 2023 was a mediocre one for Tennessee exporters. The state exported $9.734 billion in goods, a one percent gain from the first quarter of 2022.  That small gain placed it 42nd among all American states in its export growth. But, last year the state was being credited for a gigantic amount of covid vaccine trans-shipments. That clearly was going to end and, sure enough, it did. If we subtract out that $571 million of vaccine shipments (there were none this past quarter), all the continuing state exports rose a combined 7.4% percent. This is well in line with America’s overall 6 percent export growth for the quarter.

Automotive Shipments Led the Way

The biggest dollar gains were in the automotive sector.  Although car shipments fell by some $25 million (a long-term trend), this was more than outweighed by a huge gain in SUV exports. These rose from $231 to $536 million in the first quarter. To this gain we can add a surge in electric vehicles. Their shipments rose by more than 400 percent (to $63 million), making it the largest percentage gainer of all Tennessee exports of any size. Auto and truck engines posted similar strong numbers.  Spark-plug engine shipments rose by about $90 million (to $131 million), while diesel engines picked up an additional $15 million (to $84 million) from 2022’s first quarter. Motor vehicle parts were, in total, up by more than 4 percent. Of course this hides some sizable movements in both directions, such as the 86 percent loss in gear box exports. Automotive tire shipments more than doubled to $44 million.

A Huge Quarter for Whiskey Exports

Whiskey had a remarkable quarter. Shipments of whiskey out of Tennessee soared from $145 million to $404 million. The gains were global. Its exports to the euro zone were up by more than $200 million, while exports to Australia, to Japan, and to the Gulf states all doubled or more. Other successful industries included computer systems, cyanides, chemical woodpulp, machine parts, bituminous coal, and aircraft. Cotton and artificial filament tow were both up strongly, though miscellaneous polyester shipments dropped by nearly $50 million.  Chemicals were generally up, though again with exceptions (such as polyamides, which saw exports fall by three-quarters). The state’s largest single export, medical instruments, posted foreign shipments of $691 million. This was a gain of $30 million from last year’s first quarter. Medicaments, though, fell by more than a third (to $62 million).

Palladium and Platinum: The Problems

The largest export losses (outside of those vaccines) were, in their way, related to automobiles as well.  Shipments of platinum scrap fell by more than $200 million (a 50 percent loss), while exports of palladium simply disappeared (their exports in the 1st quarter of 2022 were $160 million). Both goods are involved with catalytic converters. The only other large industry with a substantial decline was smartphone manufacturing, where exports fell by $100 million.

North America Was the State’s Best Export Region

The strongest region for state exporters this past quarter was close to home.  Shipments to Mexico were up 23 percent, while those to Canada were up by 3.5 percent. Lest that Canadian number seem unimpressive, this gain is despite the loss of several hundred million dollars in vaccine shipments. The growth in both countries was led by the auto industry. Exports to the euro zone slipped by about $200 million. This despite that massive $200 increase in whiskey shipments.  The lost palladium and platinum scrap exports to Germany (about $500 million!) was just too much to overcome, even though there were solid gains in almost all other euro markets.  In In Great Britain, on the other hand, scrap exports were up. Along with increased aircraft sales, this produced a 52 percent gain in sales ($80 million) for Tennessee exporters. China, the state’s third largest market, fell a bit for the quarter. Despite a $30 million growth in medical instrument exports, there was an overall 3 percent decline, to $760 million.  Hong Kong was the site of the lost smartphone shipments, the reason for its 14 percent decline. Sales to Korea fell by 17 percent. However, gains in East Asia were made to  Japan (13.4 percent), mostly because of medical-related goods, and to Taiwan (38 percent), due to silicon and computer shipments. Elsewhere in Asia, the strongest markets were India, due to coal, and the Gulf states, due to SUVS. The state’s export performance across other significant areas of the globe, including Latin America and Southeast Asia, was largely unchanged from a year ago. As an aside, exports to Russia dropped from $26 million to $1 million in 2023’s first quarter.

How Will a Slowing Global Economy Impact State Exporters?

In sum, once we get past the paper losses stemming from the loss of the covid vaccine shipments through Tennessee, it was not a bad quarter.  Most of the state’s major industries fared well, even if, in a few cases it has been a bumpy ride. The IMF and other forecasters are predicting a slowing of the world economy as the year progresses. This is obviously not good news for state exporters, especially when added to all the economic and political uncertainties involving Chinese economic growth. On top of that, American economic growth is expected to slow, which will impact Tennessee’s automotive exports since so many of them are for cars and SUVs eventually sold in the U.S.  So… for state exporters the year began rather well. We’ll just have to see what comes next!