Global Logistics: California remains in lead of high-value export growth trend

The news comes on the heels of a U.S. Commerce report indicating that Texas, too, is benefitting by its concentration on manufacturing and outbound goods.

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Amid gathering fears that America’s economic recovery may be sputtering, California exporters posted their 19th consecutive month of healthy year-over gains in May.

The news comes on the heels of a U.S. Commerce report indicating that Texas, too, is benefitting by its concentration on manufacturing and outbound goods.

Cross-border shipments for the month totaled $13.20 billion, a gain of 10.5 percent over the $11.95 billion reported in May of last year, according to an analysis by Beacon Economics of foreign trade data released by Commerce.

The state’s manufactured export trade was up by 6.1 percent, while non-manufactured exports (chiefly raw materials and agricultural products) soared by 24.2 percent. Re-exports, meanwhile, jumped by 17.2 percent.

“Adjusting for inflation, California’s export trade is as robust as it was prior to the recession,” said Jock O’Connell, Beacon Economics’ International Trade Adviser.

In an interview with LM, O’Connell noted that while Texas may owe its export success to its low wage model, California has high value commodities to credit.

“In the long run, it’s a wash,” he said. “California is a far more expensive place to live, but the state attracts a more highly educated work force.”

Export activity is important to both the U.S. and California recovery. “We opened up a huge deficit in the boom years,” said Beacon Economics Founding Partner Christopher Thornberg. “To get back on solid footing, exports need to continue to rise.”

The Beacon Economics analysis forecasts sustained growth in California’s export trade, especially in the second half of the year when the pace of foreign trade normally picks up.
 
“With the dollar as cheap as it is, California as well as other U.S. goods are selling at bargain prices on the world market,” O’Connell noted.

He also added that an apparent reprieve from steadily rising oil prices should help exporters by keeping transportation costs in check at least through the summer. 

Even as most of the state’s chief trading partners are taking steps to battle inflation or curtail budget deficits, Beacon Economics forecasts that those economies will continue to grow and draw in imports from California.

On the import side of the ledger, the value of foreign shipments entering the U.S. via California’s airports, seaports, and border crossings rose by 14.7 percent in May over the same month last year.

As the nation’s primary gateway to the Pacific Rim, California derives ample economic benefits from the import trade. “As much as we might like to reduce our dependence on imported goods, it’s worth emphasizing that moving imported goods to markets throughout the nation represents a vital source of jobs—many of them well-paying—in a state where unemployment rates remain perilously high,” O’Connell said. 

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About the Author

Patrick Burnson, Executive Editor
Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review magazines and web sites. Patrick is a widely-published writer and editor who has spent most of his career covering international trade, global logistics, and supply chain management. He lives and works in San Francisco, providing readers with a Pacific Rim perspective on industry trends and forecasts. You can reach him directly at [email protected]

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