Tennessee Trade Report 4th Quarter 2023

Tables and Graphs

Exports by Region

Tennessee's Largest Export Industries

Tennessee's Most Rapidly Growing Exports

Tennessee's Most Rapidly Growing Markets

Tennessee exports rose in value to $9.618 for the fourth quarter of 2023.  This was a 5.6% increase over the last quarter of 2022, amounting to around $500 million.  This was quite a bit better than the national numbers.  America overall saw its exports fall by 1.5% for the quarter.  Tennessee in fact ranked as the 15th best state in its percentage export gain.

Many Industries Had a Good Quarter

A disparate set of industries accounted for this relatively good export performance. Though SUV shipments were down substantially ($391 million to $266 million), large increases in car and EV shipments led to an overall increase of $200 million in automobile exports for the quarter. The medical sector turned in some very strong numbers.  Medical equipment exports, long the state’s single leading export sector, were up almost $80 million (to $956 million), while orthopedic sales soared 42 percent, to $510 million. Aircraft and their parts were up by a similar amount (to $342 million).  Auto engines, computer equipment, and smartphones had strong quarters as well.  Finally, vaccine shipments (almost entirely to Canada) rose from all but zero to $129 million for the quarter.

There were, of course, a few industries that struggled. Plastics lost about a third of its shipments from a year earlier ($169 million to $110 million). Whiskey might have had the worst quarter of any major Tennessee export with sales falling by over 60 percent to $124 million – a nearly $200 million loss. The largest dollar losses (around $260 million) were in the waste & scrap and palladium sectors. Despite the name, these materials are essential for catalytic converters and other high-value parts.

The USMCA Leads the Way

For the past several quarters, it is the USMCA market of Canada and Mexico that has been Tennessee’s best market, and the fourth quarter was no exception. Shipments to Canada were up more than $200 million (to $2.2 billion), and Mexico by over $350 million (to $1.5 billion). Both countries saw declines in SUV exports, but this was more than counterbalanced by car and EV shipments (the later to Canada).  A wide variety of auto parts contributed to the increases to Mexico (gear boxes and tires being two examples), while much of the Canadian gain was due to the $111 million increase in human vaccine shipments.

Perhaps the most significant numbers for the quarter came out of China.  Combined with Hong Kong, Tennessee exports to the region about broke even with last year. But the number of industries that saw their shipments decline was unusually large. Tennessee’s aircraft, medical goods, and plastics were three that saw substantial losses. The big exception was the continued growth of smartphones to Hong Kong.

It was not the best of quarters for Tennessee’s trade with East and Southeast Asia. Exports to both Japan and South Korea were off, as were sales to the ASEAN countries. Singapore did eke out a small gain because of a substantial increase in computer equipment exports, while larger shipments of smartphones produced a solid increase in Tennessee exports to the Philippines. But that was about it. 

Elsewhere in Asia, exports to Saudi Arabia and the U.A.E. were up smartly thanks to car sales (though the latter did participate in the global fall of whiskey exports). It was also a very good quarter in India, with exports to that nation rising from $82 million to $108 million.

Hot and Cold in Europe

Exports to the EU could best be characterized as sluggish, albeit with dramatic differences across countries. Overall, shipments were down 8 percent (to $1.576 billion). But goods going to the Netherlands leaped by 42% to $660 million. This was the site of the major increases in orthopedics and medical equipment shipments. Meanwhile, exports to Germany all but collapsed. The $298 million in goods going to Germany last quarter was less than half the value of a year earlier. This is where the waste & scrap and palladium losses were concentrated. Outside the EU, shipments to the UK were up 30 percent (to $280 million) thanks mostly to the aircraft industry.

Finally, it is almost impossible to summarize the state’s performance in Latin America this past quarter. Overall, the numbers for the region were close to flat ($711 million vs. last year’s $725). But this balanced large percentage increases in Brazil, Chile, Ecuador, and Honduras with large percentage declines in Argentina, Guatemala, Peru, Uruguay, and Paraguay.

Increased Volatility, the New Normal?

We noted the heightened volatility of export volumes across goods and across countries in our summary a year ago of 2022’s fourth quarter.  We saw the same thing in 2023.  Whether this will prove to be a passing feature following all the disruptions of the past few years or whether this will become the new normal as we enter into a new phase of global trade, will be interesting to see.