Tennessee Trade Report 2nd Quarter 2023

Tables and Graphs

Tennessee 2023 second quarter exports were down by a bit over five percent from the second quarter of last year. That’s a loss of almost exactly $500 million. The state did at least have a better quarter than the nation. Total American exports dropped by 7.2 percent for the quarter.

All in all, the quarter saw far more concentrated export losses than are typical

The good news, if you wish to call it that, is that the losses were largely restricted to several sectors. Some relate to the aftereffects of COVID. Vaccine shipments, $184 million in 2022’s second quarter, disappeared totally while medicament shipments, $53 million in April of 2022 fell to $16 million in April of 2023. Except for cotton, most of the other losses were products sent in large volume to a small number of markets. Cotton exports were off broadly, to the tune of more than $100 million. (Most of this cotton was brokered through Tennessee, it wasn’t grown here.) Palladium and platinum scrap, both used in catalytic converters and other auto parts, suffered the largest losses of all. Palladium exports, $22 million in 2022’s second quarter, vanished completely. Platinum scrap exports collapsed as well, falling nearly $500 million. These two losses were almost entirely in Germany, likely implicated in VW’s supply chains in that country. Aircraft sales declined by more than a quarter (to $203 million). Finally, smartphone shipments were also down sharply, from $390 million to $328 million.

EV Shipments Were a Standout

So what actually gained? By far the most spectacular export performance was that of electric vehicles.  This past quarter EVs valued at $102 million were exported, as opposed to $7 million in 2022’s second quarter. Also in the automotive sector, internal combustion engine shipments nearly quadrupled, up more than $100 million for the quarter. Computer shipments were very strong. Laptops rose from $125 million to $191 million, while “miscellaneous” units gained nearly $40 million to $185 million. Then, the joke is that when times get bad whiskey exports shoot up. Whether that’s true or not, it was a great quarter for distillers, with whiskey exports rising more than 50 percent (to $214 million), with the largest increase being to the United Arab Emirates. Artificial filament tows, car tires, wood pulp, cyanides, and aluminum were other sectors that had very good quarters.

Mexico Up, Germany Down

Turning to regional performance, shipments gained substantially to Mexico. Increased exports of laptops, cyanides, car tires and aluminum, among other goods, led to a nearly one-third rise in total shipments to our southern neighbor (to $1.6 billion). Shipments north, though, were down modestly (off 4 percent). However if we removed the $151 million in vaccine exports to Canada that were lost, Tennessee exports would have increased there as well for the quarter.

The euro zone was the site of the state’s largest losses. This was almost entirely due to the noted declines in palladium and platinum to Germany. Exports to Germany were dramatically down as a result ($856 million to $289 million). The rest of the euro countries were in fact net positive. Shipments to the Netherlands were up nearly 40 percent, making it the best market in the continent. Outside the euro zone, exports to the U.K. were strong too, gaining nearly $27 million.  

China’s Slowdown Shows in the Numbers

Shipments to China, the state’s third largest export market, were down substantially. Much of the losses were in cotton, textiles, and chemicals, indicative of that nation’s slowing economy. The same was true for Hong Kong, the site of much of the loss in smartphone shipments. Elsewhere in East Asia, exports to Japan were down 7 percent (a $40 million loss), exports to Taiwan were down 9 percent (a $20 million loss), while those to South Korea were basically unchanged.

A strong quarter in Singapore (up 35 percent, to $260 million) powered the southeast Asian nations to a modest $13 million for the quarter. Exports to South America were down by $80 million, primarily due to significant losses in Argentina and Brazil.

Keep an Eye on China, Automotive Trade Too

As noted above, the degree to which export losses were concentrated in several sectors was unusual. In some cases, particularly in the vaccine and medicament sector, this was exceptional and arguably made the quarter look worse than it was. However several negative trends deserve watching, particularly the declines to China and the apparent softness in the automotive sector (excepting EVs).