Other Asian countries taking market share
The export data and Descartes import data point to a recent decline that may or may not be transitory. Another indicator — U.S. Census statistics on metric tons of U.S. imports — highlights a trend that’s been building for years.
U.S. imports from China were far higher than imports from other Asian nations in the years after the financial crisis. In 2009-2018, average import cargo tonnage from China during the first nine months of the year was 47% above average import tonnage from all other Asian countries combined.
But in 2019, imports from China were only 12% higher. In 2020-2021, amid the pandemic, imports from China were virtually even with those from other countries. In the first nine months of this year, the tables turned: Import cargo tonnage from China was 6% below imports from Asian rivals.
Monthly market-share data highlights how the move toward import diversification predated the pandemic.
In 2016-2018, China accounted for an average of 36% of U.S. import cargo tonnage, with the rest of Asia accounting for only 25%. China’s average monthly share was down to 31% in 2019, and the rest of Asia’s share had risen to 29%. In 2020-2021, they were even at 30% each.
In the first nine months of this year, China’s share remained at 30% and the rest of Asia jumped into the lead, with 32%.
Preparing for the future
“This started before 2022,” said the director of transportation consulting at S&P Global, in an interview with American Shipper last month. “[Events] this year obviously added urgency and attention to this strategy — that at a minimum, companies need to diversify supply chains even if they’re not going to abandon China altogether.”
Certain sectors become very, very sensitive — things like technology and pharmaceuticals. These are being identified as areas that have to have supply chains pulled out of China as a national security issue. They are going to be pulled in the coming months, quarters and years.
“On the other side, you’ve got many things that are mostly economic and not considered as much of a security issue. For now, these are being identified as OK. But the line for this changes based on tensions between China and the U.S. Two, or three years down the road — particularly if there are hostilities over Taiwan or the South China Sea or trade relations — that line continues to move, and there could be more and more pressure to pull supply chains out of China.”
Asked whether U.S. importers must seek alternative sources, the director of transportation consulting at S&P Global said, “I don’t think you can avoid doing that anymore. Because we know what the worst-case scenario is but we have no idea how close we’ll get to the worst-case scenario in the next five or 10 years. Will we have a war over Taiwan? Will the economic and trade side deteriorate even more? We don’t know how bad things could get. But we do know that not doing contingency planning is a very dangerous option.”