Despite escalating hostilities over Taiwan and the Russia-Ukraine war, trade between America and China remains deeply entwined. China is the source of more than one-third of all containerized imports into the US. The United States’ purchases account for more than a sixth of China’s export value.
However, evidence of at least some decoupling is accumulating. China-related imports into America have decreased more quickly recently than overall imports. China is losing market share to other Asian nations in the United States; this trend started before the pandemic and has persisted.
Imports from China falling faster than total imports
Descartes recently released data showing that American containerized imports in October were unchanged from September (up 0.2%). However, imports from China decreased by 45,071 twenty-foot equivalent units, or 5.5%, month over month. Gains from Thailand, South Korea, Taiwan, Japan, and other nations completely offset China’s fall.
According to Descartes statistics, total U.S. imports fell 12% in September compared to August. China’s imports decreased more rapidly, by 18% or 83,396 TEUs.
40% of all U.S. imports in August came from China, and that percentage increased to 42% in February. Its percentage of American imports dropped to 35% last month.
Chris Jones, executive vice president of industry and services at Descartes, told American Shipper: “You can see that during the highly publicized lockdowns [earlier in the year], there was still a healthy flow of goods out of China.
Bookings in China falling faster than total bookings
Data from FreightWaves SONAR shows that bookings for China-to-U.S. cargoes have slowed more than overall inbound bookings.
Throughout 2021, the index for bookings loaded in China was significantly higher than the index for all export destinations. The gap has narrowed since March and has now almost vanished, as the China-to-U.S. bookings index declined faster than the overall index.
Both indexes fell below 100 points this month (100 is indexed to bookings in January 2019). This implies weak volumes from China and other countries arriving in U.S. ports in December and early 2023.
Surprise decline in Chinese exports
The Chinese government released October export figures on November 7 that were far below forecasts.
Export value decreased 7.5% from September and 0.3% from year-ago levels. The Wall Street Journal surveyed economists, and they predicted a 4%
Other Asian countries taking market share
Descartes import data and export statistics both indicate a recent fall that may or may not be temporary. Another measure, U.S. Census data on the metric tons of U.S. imports, reveals a long-term trend.
In the years following the financial crisis, American imports from China were significantly higher than those from other Asian countries. In the first nine months of each year from 2009 to 2018, China’s average import cargo tonnage was 47% more than the average import cargo tonnage from all other Asian nations combined.
Data on monthly market shares shows how the shift toward import diversification came before the pandemic.
Between 2016 and 2018, China contributed an average of 36% of the tonnage of imports into the United States, while the rest of Asia contributed only 25%. In 2019, China’s average monthly share fell to 31%, while the rest of Asia’s portion increased to 29%. They were equal in 2020–2021 at 30% each.
China’s share stayed at 30% in the first nine months of this year, while the rest of Asia overtook it with 32%.
Preparing for the future
Paul Bingham, director of transportation consulting at S&P Global, stated in an interview with American Shipper this month that “this started before 2022.” “Events this year clearly increased the urgency and focus on this strategy—that at the very least, corporations need to diversify their supply chains even if they’re not going to completely give up on China.”
At this month’s FreightWaves F3 conference, China Beige Book CEO Leland Miller stated: “You’re seeing certain sectors becoming very, very sensitive – things like technology and medicines. As a matter of national security, these are the areas where China’s supply chains must be cut off. In the upcoming months, quarters, and years, they will be removed.
“On the other hand, there are a lot of issues that are primarily economic in nature and are not seen as being as security-related. These are currently deemed to be acceptable. However, the exact wording of this varies according on Sino-American tensions. In two or three years, if there are conflicts over Taiwan, the South China Sea, or trade relations, there may be more pressure to withdraw supply chains from China.
Miller responded, “I don’t think you can avoid doing that anymore, when asked whether American importers must look for alternate sources. In light of the fact that we are aware of the worst-case scenario but are unsure of how near it will be to what really occurs.
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