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October 28 2019

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40 The Journal of Commerce | October 28 2019 North American Export Outlook Special Report www.joc.com UNITED STATES CONTAINERIZED exports to China plunged 21.5 per- cent in the first half of 2019 while exports to other Asian countries increased 11.8 percent, showing that shippers of key exports such as wastepaper, grains, plastics, and forest products are developing new markets for their products. However, because China accounts for about 30 percent of US containerized exports to Asia, even the strong growth in shipments to other nations in the region could not compensate for the double-digit decline in the China market in the first six months of 2019. Exports to all of Asia, including China, edged 0.8 percent lower year over year in the first half, according to data from PIERS, a sister company of The Jour- nal of Commerce within IHS Markit. Declining shipments to China reflect the impact of Beijing's retal- iatory tariffs in the US-China trade war. The year-over-year comparisons could worsen in the months ahead, since containerized exports to Asia normally peak in the winter–spring period. Declining exports to China could cause the already low west- bound trans-Pacific freight rates to fall further. According to the Shanghai Containerized Freight Index (SCFI), the spot rate for shipping a 40-foot container from Los Angeles to Shanghai has fallen from $519 per FEU on April 4 to $396 on Sept. 26. Beginning in late September 2018, the spot rate had hovered close to $500 per FEU for 10 consecutive months. The top five US containerized exports to Asia are wood pulp and wastepaper, oilseeds and grain, plastics and plastic articles, wood and wood articles, and paper and paperboard, according to PIERS. In each of those categories, exports to China in the first half of 2019 were down year over year, while exports to the rest of Asia were higher. The good news for US exporters is that they have diligently expanded nascent markets outside of China, especially in Southeast Asia, and car- riers in the past year have expanded services between Southeast Asia and the US. The bad news is that China has such an outsized impact on US exports to the region that even the cumulative impact of increased exports to Southeast Asia and the Indian subcontinent will fall short of the volume of exports that has been lost to China in the past year. "There is no replacement for a country of 1.4 billion people," Mike Steenhoek, executive director of the Soy Transportation Coalition, told The Journal of Commerce. Tough row to hoe Soybeans were among the hardest-hit US agricultural exports, going back to the 25 percent tariffs that China levied on the US last year. With the US out of the picture, Brazil this past year rose to become the largest soybean producer in the world. Beijing has been investing heavily in infrastructure in Brazil, which has facilitated the transpor- tation of agricultural products from An irreplaceable market Growing US exports to Southeast Asia can't offset China loss By Bill Mongelluzzo "There is no replacement for a country of 1.4 billion people."

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