Letter from the Editor
China + TEU
By Mark Szakonyi
US importers will reduce their exposure to China as they can , chasing cheaper labor while also hedging risk .
The modest changes in the share of US containerized imports coming from China and others jives with the three major sourcing trends widely accepted by the business and geopolitical communities : China + 1 , the marginal so-called friendshoring gains by volume , and increased leaning on Vietnam and India finally coming into its own .
US retailers and others will reduce their exposure to China as they can , chasing cheaper labor while also hedging the risk associated with depending on one origin for key goods and items . That ’ s not a new trend ; since 2018 , the share of US imports from China has been falling steadily — except for one year when retailers turned to familiar partners in 2021 .
Something has clearly changed in the last five years for China . In 2018 , 47 % of laden containerized imports into the US came from China . Last year , the share fell to 39.6 % from 40.7 % in 2022 , according to data from PIERS , a sister product of the Journal of Commerce within S & P Global . In the same period , the share of imports from Taiwan to the US slipped 0.2 percentage points , to 2.5 %.
While US allies may bristle that the country ’ s friendshoring policy takes more than it gives , a greater share of US imports came from South Korea , Japan and Germany last year . South Korea was the greatest beneficiary , increasing its share the most among all US trade partners , from 4.1 % in 2022 to 4.7 % in 2023 .
As its manufacturing sector craters , making it the worst-performing Western economy last year , Germany and its exporters can take solace in modest inroads into the US market .
The share of US imports coming from Germany rose from 3.9 % in 2022 to 4.1 % in 2023 . Japan ’ s share of US imports rose in the same period , ticking up to 2.5 % from 2.3 %.
Vietnam share unchanged
Even as China ’ s share slipped , Vietnam , the second-largest source of US containerized volumes , didn ’ t see its share of US imports change between 2022 and 2023 . The share of US imports from Vietnam , arguably the largest beneficiary of the shift to cheaper manufacturing away from China , held at 8.7 %.
That gives ammunition to those warning that Vietnam is nearing the peak of its production power , though one year doesn ’ t make a trend . And the overall trend for Vietnam has
NamLong Nguyen / Shutterstock . com
been steadier and stronger growth than other manufacturing alternatives to China , including India ; indeed , Vietnam has more than doubled its share from just 3.3 % in 2013 .
India ’ s long promise as an alternative to China sourcing shows in the PIERS data . Last year , the share of US imports from India rose to 4.1 % from 3.9 %. It ’ s been a slower climb than Vietnam , with India only increasing its share above 3 % in the last five years .
What the data doesn ’ t show is US-bound cargo that might be illegally transshipped from China through other countries . Nor does the data capture the extent that factories in China feed production lines — often under Chinese ownership — in other countries . The data also doesn ’ t reveal just how much manufacturing has shifted from China to Mexico , where goods are produced and then shipped north to American consumers and businesses .
However sourcing changes , annual import volumes reflect the post-pandemic comedown in US demand and explains why expectations for future inbound container growth in 2024 are modest . Total US imports fell 12.9 % last year to about 24.2 million TEUs .
In the two years prior , US import volumes hit record levels of just under 28 million TEUs . And in the five years leading up to the pandemic-driven boom , US imports grew at a compound annual rate of just 4.5 %.
email : mark . szakonyi @ spglobal . com
4 Journal of Commerce | February 12 , 2024 www . joc . com