US seaborne exports find new markets but fail to match lost volumes to China

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Producers and manufacturers in the US have found new buyers for the goods that have faced tariffs in China for over a year, but not enough to make up for lost volumes to China, according to a new report from the Baltic and International Maritime Council (BIMCO).

In 2019, total US seaborne exports of the goods were down 2.6% compared to 2017 before the trade war started, it said. In tonnes, the US exported 73 million tonnes of the tariffed goods to China by sea and exported 433.2 million tonnes of the same tariffed goods to the rest of the world in 2017.

In 2019, seaborne exports of the goods to China declined by 29.6 million tonnes from 2017, and exports to the rest of the world rose only 16.6 million tonnes—which means the US failed to make up for the drop in exports to China in other markets.

US exports of the goods rose to every region of the world except Europe and Asia, although the latter, excluding China, has seen higher imports.

“The changing export patterns have hurt all the major shipping segments, with dry bulk and container shipping in particular seeing felling US exports of the tariffed goods,” said the report.

Total US seaborne exports to China, not only those affected by Chinese tariffs, have fallen 42.7% in 2019, compared to 2017, totalling 59.6 million tonnes.

However, in the same period, seaborne exports to the rest of the world have risen by 22.7% to reach 735 million tonnes, with particular strong growth in 2018 (+20.2%) due to the strong US economy driving this figure up.

In 2019, growth in total US seaborne exports slowed to 1.1% as the effects of the trade was and slowing global growth kicked in.

Meanwhile, comparing US seaborne export volumes in 2019 with 2017 shows that all the major shipping segments have experienced drops in total volumes of exports of the tariffed goods.

“Volumes of the tariffed goods transported in containers to China fell by 33.6%, and exports to the rest of the world fell by 8.7%. Combined, the US has lost 8.4 million tonnes of the containerized goods facing tariffs in China,” said Peter Sand, chief shipping analyst at BIMCO.

“However, the damage caused by the fall in containerised exports from the US to China is limited, as volumes on the westbound transpacific lane are far less important than those in the capacity setting eastbound direction.”

Despite a drop in volumes in 2019, strong US exports to the world (excluding China) in 2018 means that 2019 seaborne exports remained above levels in 2017. In tonnes, seaborne exports to the world—excluding China—increased by 66.6 million tonnes in 2018, but dropped by 50 million tonnes in 2019, resulting in a total growth of 16.6 million tonnes.

The opposite is seen in exports to China where a rise in exports in 2019 (+8.3 million tonnes) wasn’t enough to offset the losses in 2018 (-37.9 million tonnes).

The report also noted that even without China, the rest of Asia remains the largest market for the tariffed goods. Compared to 2017, US seaborne exports of the tariffed goods to Asia were down by 12.9 million tonnes in 2019. However, excluding China, exports to Asia were up 16.7 million tonnes in 2019 compared to 2017, with growth in 2018 of 29.5 million tonnes before a drop of 12.7 million tonnes in 2019.

“Phase One” of the US-China trade agreement may reverse some of the lost volumes in exports to China, but won’t necessarily provide a large boost to US exports, as all tariffs on Chinese imports from the US remain in place as well as the majority of those on US imports from China.

“Furthermore, new suppliers have already been found on one side and new buyers have been found on the other. It is therefore unlikely we will see a reversal in falling exports to China,” said BIMCO.

It also comes in the midst of the coronavirus outbreak which is affecting both demand for the goods in China and their production in the US, hampering higher exports, Sand added.

Photo by Charles Csavossy