Here we are deep in Q2 of 2023, and headlines for U.S. exports continue to be a roller coaster. January marked a four-month high of $257.5 billion, only to be followed by February’s 2.7% drop — perhaps a sign of slowing global demand, an indication that U.S. goods are becoming less competitive in international markets, a reflection on the U.S. dollar and global inflation, or, of course, all of the above. But, as March figures rolled in, U.S. exports rebounded to $256.2 billion, coupled with a global ease on inflationary pressures. This increase comes, thanks in large part, due to industrial supplies sales, including crude and fuel oil and natural gas.
So how will April’s figures line up, and what about the rest of 2023? Well, according to the Journal of Commerce, “while lower shipping costs and high U.S. production still favor exports, the uncertain global economy makes the outlook for more growth murky.” And “murky” we have to agree with.
While there’s no way of knowing what exactly is coming down the pipeline, we do have a few thoughts around global impacts to U.S. exports that remain clear. Read on for our outlook on U.S. exports including agricultural, petrochemical and paper exports, for the remainder of 2023.
Performance of Major U.S. Exports
Major U.S. export categories have mixed forecasts for the remainder of the year — varying greatly by commodity. Macroeconomic and geopolitical factors are likely to shape exports overall, with the war in Ukraine, geopolitical tensions with China, and exchange rates having the greatest potential effect.
Outlook for U.S. Agricultural Exports
Let’s start with agricultural trade. According to the USDA, U.S. agricultural export sales for the fiscal year 2023 are projected at $184.5 billion, down $5.5 billion from November forecasts. Yes, forecasts for most major commodity groups are down, but the largest decreases are being seen in corn, sorghum and soybeans — amidst competition from other exporters and relatively high world market prices.
And there are a variety of economic, political and environmental factors that will continue to influence this important sector of the U.S. economy in the coming year:
Obviously, global demand
Trade policies and agreements
Weather conditions and crop yields (e.g., Central Californians are bracing for a very wet year that could cost billions in infrastructure and agricultural damages.)
Performance of competing exporting countries, such as Brazil and Argentina, as well as the significant damage to Ukrainian agriculture (and, in turn, significant increase of global food prices) caused by the Russia-Ukraine War
Outlook for U.S. Petrochemical Exports
To counter the downturn in U.S. agricultural exports, is the uptick in U.S. petrochemical exports. In January, U.S. plastic resin exports, in particular, saw their strongest volume since January 2021. And resins have only continued to drive U.S. exports in a big way, jumping 36% in February over the same period in 2022.
According to Chemical Data (CDI), the year should fare far better than last due to an ease in logistical constraints that were seen in 2022 (e.g, shipment delays caused by truck driver shortages, warehouse space and container ship availability). However, there are still some factors that could negatively impact U.S. petrochemical exports in the near or distant future, including:
A slowdown in consumer spending, which is expected to continue over the next two years
New technologies on the horizon, such as bottled beverage companies developing containers with less resin
Outlook for U.S. Pulp, Paper and Timber Exports
Exports of pulp and paper from the U.S. increased from $759 million in February to $776 million in March of this year, though still down from the all-time high of $1025 million in August of 2022. But with the U.S. only second to China as a producer of pulp and paper, our outlook for this export remains very positive, especially given the continued consumer shift to online purchasing and shipping. (According to projections by Pitney Bowes, “global shipping volume is expected to surpass 100 billion parcels in 2023,” resulting in an increased need for packing materials.)
As for lumber, demand has declined as home construction and improvement markets experience reduced demand — a market heavily influenced by economic downturn. Further impacts to U.S. lumber exports include:
A shortage of labor for all forest product operators
The effects of the warm winter on harvesting timber
Investing in Improving U.S. Export Processes
Splice has invested heavily in its exports product to ensure U.S. exports can run as accurately, efficiently and automated as possible — despite external factors affecting performance. This product seeks to minimize the effect of operational disruptions caused by logistics constraints, such as last-minute changes in vessel schedules, poor data-sharing between key terminals and carriers, and equipment availability issues. And we’re continuing to build applications to reduce risk in your operations.
With so many external factors shaping global markets and posing risks, Splice integrates data to control more of what’s controllable. Our team monitors the markets, because we feel strongly that you cannot create great logistics applications without understanding the challenges facing our customers in their operations.
Have a challenge you think we can help with? Hit us up.