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California Exports Outpace Nation Despite Port Labor Dispute

March 9, 2015 - Despite labor strife that reportedly stymied trade through West Coast seaports in January, California’s export trade actually fared better than the nation as a whole that month, according to Beacon Economics’ analysis of foreign trade data newly released by the U.S. Commerce Department.

The state's merchandise export trade in January totaled $12.67 billion. While that represented a nominal 1.6 % decline from the $12.87 billion recorded in January 2014, overall U.S. merchandise exports fell 4.7% over the same period. Exports from Texas and New York plummeted by 15.4% and 13.0%, respectively.

Exports of manufactured goods from California saw a 2.2% drop from $8.26 billion to $8.07 billion. Exports of non-manufactured goods (chiefly agricultural produce and raw materials) took a much larger tumble, falling 17.9% from $1.69 billion in January 2014 to $1.39 billion. Re-exports meanwhile rose by 9.7% from $2.93 billion to $3.21 billion.

Beacon Economics attributs January’s decline in exports to a dollar which had been growing steadily stronger since last spring, economic slowdowns throughout much of the world, and logistical bottlenecks at the state’s major seaports, which appeared to have had a deleterious impact on farm exports.

The months-long dispute over a new longshore contract aggravated already congested conditions at West Coast seaports. While the media devoted considerable attention to the plight of importers and exporters whose maritime shipments were being delayed or thwarted, scarcely any news coverage mentioned that only about 20.1% of California’s $174.1 billion export trade last year was transported in the steel shipping containers that were the focus of so much concern. If anything, California exporters are more than twice as dependent on the state’s airports, which handled 44.1% of California’s export trade last year. The balance was overland trade with Canada and Mexico.

The broad outlook for exports is a mix of both good and bad news. “The global economy is starting to look better, which is good for export demand,” said Beacon Economics’ Founding Partner Christopher Thornberg. “But at the same time, the bifurcated global recovery has caused the U.S. dollar to appreciate sharply, which will start to weigh on purchases in the next few months.”

A Closer Look At The Numbers

As always, Beacon Economics cautions against reading too much into month-to-month fluctuations in state export statistics, especially when focusing on specific commodities or destinations. Significant variations may occur as the result of unusual developments or exceptional one-off trades and may not be indicative of underlying trends. For that reason, Beacon Economics compares the latest three months for which data are available (i.e., November 2014-January 2015) with the corresponding period one year earlier.

California's merchandise exports during the latest three-month period totaled $42.28 billion, a nominal decline of 0.8% from the $42.62 billion recorded during the same period twelve months earlier. The state accounted for 10.8% of total U.S. merchandise exports over the latest three months.

California’s export trade is highly diversified. Normally, eleven different major categories of goods have each accounted for at least $1 billion in exports during recent three-month periods. However, the November-January period saw that number fall to nine, as exports of Fabricated Metal Products and Waste and Scrap fell below the billion dollar threshold.

Among the remaining categories, performance was variable, with only five categories showing growth.

Topping the export list in latest three-month period was Computer & Electronic products (up 1.7% from $10.98 billion to $11.17 billion). Transportation Equipment also increased (up 3.2% from $4.40 billion to $4.54 billion). Also showing a gain were Non-Electrical Machinery products, up 0.5% from $3.70 billion to $3.72 billion, and Miscellaneous Manufactured Commodities (a catchall category of merchandise ranging from medical equipment to sporting goods), up 5.0% from $3.00 billion to $3.16 billion. Electrical Equipment exports also rose briskly from $1.05 billion to $1.67 billion, a jump of 23.0%.

Losses were especially sharp in Agricultural Products (down 12.0% from $4.09 billion to $3.60 billion) and Food and Kindred Products (down 14.1% from $2.69 billion to $2.25 billion).

Exports of Chemicals were off 0.2% from $3.30 billion to $3.29 billion. Petroleum and Coal Products exports declined by 1.4% from $2.16 billion to $2.13 billion. Exports of Scrap and Waste products plummeted 19.8% from $1.22 billion to $0.97 billion, while exports of Fabricated Metal products dropped 5.6% from $1.04 billion to $0.99 billion.

Mexico continued to rank as California’s single largest export destination during the latest three-month period, with the value of exports increasing by 9.9% from $5.87 billion to $6.45 billion. Exports to Canada fell 8.2% from $4.89 billion to $4.49 billion, while shipments to China tumbled by 22.4% from $4.39 billion to $3.45 billion. Japan (down 5.1% % from $3.12 billion to $2.96 billion) and South Korea (up 6.34% from $2.24 billion to $2.37 billion) rounded out California's ‘Top Five’ export destinations over the last three-month period.

Regionally, California's exports to the Asia Pacific region (including Australia and New Zealand) dropped 4.0% from $16.72 billion to $16.06 billion, a dip propelled largely by a fall-off in exports directly to China. Remarkably, considering the ongoing economic travails of the European Union, California’s exports to the EU were only off by 1.4%, slipping from $7.10 billion to $7.00 billion. California exports to Latin America and the Caribbean (excluding Mexico) fell by 11.4% from $2.92 billion to $2.59 billion. The state’s exports to Sub-Saharan Africa amounted to just $158.6 million, down 19.8% from $197.8 million during the same period twelve months ago.

By mode of transportation, 44.8% of California’s $42.28 billion merchandise export trade in the last three months was shipped by air, with Los Angeles International and San Francisco International Airports accounting for the vast majority of the state’s airborne trade. Seaports handled 31.7% of the state’s merchandise export trade, while the remaining 23.5% traveled overland by truck or rail to Canada and Mexico.

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