EconSouth - Fourth Quarter 2007
The Southeastern Economy in 2008
Southeast Trade Feeds Growing World Demand
In 2006, one-fifth of the Southeast's total economic output traveled through the region's ports as imports or exports. Until late in 2006, growth in imports exceeded growth in exports, both regionally and nationally. However, the declining value of the dollar, which makes U.S. exports more attractive, reversed the trend so that by September 2007 exports from the Southeast were growing about 15 percentage points faster than imports (see chart 1). U.S. Department of Commerce data also show that the growth in Southeastern exports is significantly outpacing growth in total U.S. exports.
Import growth slows but still sets the pace
The growth of container import shipments has been a boon for the Southeast's ports. Containers, which are loaded onto trains or trucks after they arrive in ports, require special equipment and command higher fees than other types of shipments. The result is higher revenue for port revenues and freight services.
Georgia's coastal ports have led the way in attracting the growing trade from Asia. For example, for the fiscal year ending in June 2007, mainly because of booming trade with Asia, Savannah posted an all-time record of 2.3 million units equivalent to 20-foot containers, a 13 percent gain from the previous fiscal year. Savannah is the second-fastest-growing container port on the East Coast and number four in volume in the nation.
Growing container imports have prompted major retailers to locate distribution centers near the port, breathing new life into area transportation and other distribution-support services industries. Recently, the large Swedish retailer Ikea opened a 685,000-square-foot distribution center in Savannah to support current and planned shipments to stores in Atlanta, Texas, North Carolina, and Florida.
Regional seaports, including Savannah, Jacksonville, Mobile, and New Orleans, have recently upgraded their facilities to attract investment and capture growing container trade with Asia.
Regional exports expanded in 2007
Florida, the region's top exporting state, exported about $43.2 billion from October 2006 through September 2007, according to data from the U.S. Department of Commerce's Foreign Trade Division. Exports from the state accounted for about one-third of all Southeastern exports. Florida's ports are natural gateways to trade with Latin America, the destination of 80 percent of the state's exports. Much of the shipments to these countries are high value, consisting of computers and electronics, transportation equipment, and manufacturing machinery. Florida was the third-largest state exporter of high-tech goods last year, behind only California and Texas, according to a July 2007 Miami Herald story.
Louisiana's exports totaled $27 billion, while Tennessee and Georgia exported $21 billion and $22 billion, respectively, from October 2006 through September 2007. Louisiana's ports handle massive amounts of agricultural, industrial, and chemical exports flowing down the Mississippi River, products that primarily reach markets in Japan, China, and Mexico.
Tennessee's exports to Canada, Mexico, and China mostly consist of transportation equipment, computers, and manufacturing equipment. Half of Tennessee's exports to China consist of livestock, poultry, and cotton.
Of Alabama's $14 billion in exports for the year ending Sept. 30, 2007, 86 percent went to Germany and consisted of transportation equipment. An increase in auto exports was primarily the result of recent expansion of the Mercedes assembly plant in Vance.
Mississippi's value of exports was $5 billion, but shipments from the state increased by 15 percent in 2006 and 9 percent in 2007. The state's top export markets were Canada, Mexico, and the United Kingdom, with shipments consisting of computers, manufacturing and transportation equipment, and chemicals.
Looking ahead to 2008
Potential challenges for Southeast trade include broadening the region's product base, diversifying its trading partners, and reducing some ports' dependence on low-value exports such as agriculture, bulk minerals, scrap metals, and paper. However, a new U.S. trade agreement with South Korea, if ratified, would open up that market to regional agricultural products like citrus and beef. This agreement would be the largest trade agreement since the North American Free Trade Agreement.
David Avery, Michael Chriszt, Julie Hotchkiss, Whitney Mancuso, John Robertson, Navnita Sarma, Membere Shiferaw, and Gustavo Uceda of the Atlanta Fed research department's regional research group contributed to the regional articles. The Atlanta Fed's supervision and regulation department also contributed.