Global imports

Blossoms in East Africa

Kenya and Ethiopia’s growing garment exports signal a new phase of development in East Africa and underscore how China-backed investments in infrastructure are helping to reshape economies.

For decades, Kenya and Ethiopia’s main shipments to rich markets in Europe and the U.S. have been niche agricultural products such as coffee, tea, sesame seeds, and fresh cut flowers. Those are still mainstays. Now manufactured goods, especially clothing, are also making their way on container ships to Rotterdam and Los Angeles.

Kenyan clothing exports increased 6% to USD 102.9 million in the first four months of 2019 compared to 2018, according to Trade Data Monitor. Almost 95% of those shipments went to the U.S. In Ethiopia, exports rose 79% in the first six months of 2019, to USD 71.9 million. Around 70% went to the U.S., followed by Germany, Italy and Canada. Big Western clothes-making corporations, including Puma, Gap, Wal-Mart, JC Penney and H&M are sourcing in the two countries. East Africa’s garment exports could be worth over USD 3 billion a year by 2025, say analysts.

The evolution is part of what trade experts say is a vital step in economic development. “The first export sector to take off is always garments”, says Don Brasher, president of Trade Data Monitor and a trade analyst since the 1980s. “That’s what happened in China in the 1980s, Bangladesh in the 1990s and Vietnam in this century. Now wages have risen in those places, making Africa more competitive”.

United States Imports of Apparel from Kenya and Ethiopia, 2015 - 2019*, Millions of US Dollars; Kenya, Ethiopia; 500.00, 450.00, 400.00, 350.00, 300.00, 250.00, 200.00, 150.00, 100.00, 50.00, 0.00; 2015, 2016, 2017, 2018, Projected 2019*; Source: Trade Data Monitor; *2019: Projected based on Jan - May 2019/2018 growth rate.

As companies set up shop, their network makes it easier for other companies to build plants. Apparel companies, for example, draw firms that make zippers, boxes, bags and belts. Wages rise, along with education levels, business confidence and investment in other areas of manufacturing. Other industries follow, such as shoes, watches, electronics.

One crucial asset for exporting manufactured goods is good transportation — ports, roads and rail lines. It’s more complicated and expensive to make and ship factory goods than agricultural products.

East Africa has benefited from Beijing’s attempt this decade to win influence on the continent by helping to fund projects, as part of its Belt and Road Initiative, aiming to cement China’s status as the world’s dominant trading power, by backing transport and infrastructure projects in 68 countries, home to 4.4 billion people and USD 21 trillion in GDP.

These ventures include new fibre-optic cables in Somalia and Ethiopia, and in Kenya a new rail line between the capital Nairobi and the port city of Mombasa. The Aviation Industry Corporation of China has opted to set up its African headquarters in Nairobi.

One part of the BRI strategy is consolidating a trading empire that revolves around Beijing and doesn’t depend on the US. America, however, is still the world’s top market for garments, and its consumers no longer have many domestic options: since the 1980s almost all US production has been offshored. Overall US garment imports in 2018 totalled USD 83.8 billion with the top suppliers all in Asia: China, Vietnam, Bangladesh, Indonesia and India.

To be sure, East African exports are small compared to Asia, and there are obstacles to further growth. In Kenya, real estate and power costs are relatively high. Ethiopia has cheap electricity thanks to hydroelectric dams, but is landlocked, increasing logistical costs. In both places, inefficiency and bureaucratic red tape are a brake on growth.

Trade deals have also helped increase exports. In 2015, the US extended the African Growth and Opportunity Act, a trade deal implemented in 2000, to 2025. Kenya and Ethiopia are two of the 40-some countries receiving preferential treatment for garments under the agreement. In Kenya, firms received a 10-year tax break to invest in Kenya’s so-called Export Processing Zones.


John W. Miller is an award-winning journalist and filmmaker who covered trade, mining and global economics as a foreign correspondent for the Wall Street Journal. 

Trade Data Monitor (This email address is being protected from spambots. You need JavaScript enabled to view it.) is a Geneva and Charleston, SC based supplier of import and export statistics from 111 countries. 

Global Trade of electric cars

Electric Cars Remodel Global Auto Trade

The push of government subsidies and pull of consumer demand are driving new markets for electric vehicles, which run on electric batteries instead of carbon-based fuel, with widespread repercussions on shipping, trade and supply chains.

Electric vehicles, which include cars, trucks and bicycles, are still less than 10% of the global $2 trillion auto market, but that number is expected to increase by over 20% a year, helping to increase electricity’s share of total energy production to 24% by 2040 from 19% last year, according to the International Energy Agency. By 2030, they could account for as many as a third of all cars on the road.

Investment in clean energy, including electric vehicles, is a key part of China’s Belt and Road Initiative, which aims to solidify the country’s status as the world’s dominant trading power, by improving transport and infrastructure with 68 countries, including 4.4 billion people, and $21 trillion in gross domestic product.

In the first quarter of 2019, China was the world’s second biggest importer of electric vehicles, according to Trade Data Monitor. It shipped in $866.4 million worth, up 112% from the year before. Over 90% of that came from the U.S., thanks to Tesla’s dominant position in the market. Other top electric vehicle makers include China’s BAIC, BYD and Chery, Japan’s Nissan and South Korea’s Hyundai.

Although Beijing recently shifted some investment to hydrogen fuel cars, electric vehicles are still a major part of its strategy for reducing pollution by weaning itself from carbon-based transportation. This decade, China has spent billions of dollars installing charging stations around the country. The new industry is also sparking new markets for batteries and materials like lithium, cobalt and manganese needed to make them, which account for around a quarter of the cost of every electric car, and China is the world’s biggest exporter of lithium batteries.

The world’s number one market for electric cars is the European Union, thanks to its sheer size and environmental and tax policies that make gasoline expensive. Other top import markets for electric vehicles include Canada, Switzerland, South Korea, and Japan, TDM figures show.

The world’s top exporter of electric cars in the first quarter of 2019 was the U.S., with $2.16 billion worth shipped out. Its main destinations, in order, were Belgium, China, Canada, South Korea and the Netherlands. A big portion of the exports to the first and fifth countries were reexports to Norway.

The best place to study how this trend will evolve, and number one importer by country, is a nation of only 5.3 million. Norway, surprisingly, is drawing record shipments of Teslas and other models from the U.S., South Korea and transshipment ports like Antwerp and Rotterdam. It imported $3.8 billion in 2018 and $1.01 billion worth of electric vehicles in the first quarter of 2019, roughly doubling amounts the previous year, beating bigger economies like China, France, Canada and the U.S. Norway’s top sources of electric cars over that 15-month period were the U.S. ($1.24B) and Germany ($793.3M).

Despite its legendary and lucrative gas industry, Norway has exempted electric vehicles from its 25% Value Added Tax (VAT) and carbon dioxide, nitrogen oxide and weight taxes imposed on gas and diesel vehicles. They also get discounts on parking, toll roads and ferries. It’s working: Gas and diesel-powered cars are at record low, and registrations of electric vehicles have doubled since last year.

For policymakers, Norway is proof that consumers might only need a slight nudge to embrace electric vehicles and knock smoky sedans back into the 20th century. Unlike some other green power products whose only appeal is cost, electric cars, with their low noise levels and stylish designs, are considered a luxury product consumers are willing to pay for.

 

John W. Miller is an award-winning journalist and filmmaker who covered trade, mining and global economics as a foreign correspondent for the Wall Street Journal.

 

China

Data Shows Chinese Trade Surplus Boosted by Belt and Road

As China relaunches its Belt and Road Initiative, an analysis of trade statistics for 10 key BRI economies suggests that the BRI has increased trade with Beijing and fueled China’s trade surplus and underscores the project’s vulnerability to financial crisis in individual countries.

When president Xi Jinping announced the endeavor in 2013, it was intended to amplify China’s status as the world’s dominant trading power, by building more ports, roads and rail links, and jumpstarting companies across the breadth of China’s orbit—a 21st century Silk Road including 68 countries, 4.4 billion people, and USD21 trillion in gross domestic product.

One thing is certain: The network is a direct challenge to the United States as trade relations with the Trump administration worsen, setting up dueling power poles in the world economy, and begging the question: How has the BRI worked out for China so far?

A study of first quarter 2019 export and import data published by Trade Data Monitor from 10 key BRI countries shows that in two economies (Kazakhstan and Turkey) total trade with China has declined since 2013. In eight others (India, Indonesia, Egypt, Iraq, Thailand, Malaysia, Vietnam and Pakistan), that number has risen since 2013.

Total trade with China, billions of dollars; TOTAL, India, Indonesia, Egypt, Iraq, Kazakhstan, Pakistan, Turkey, Thailand, Malaysia, Vietnam; 0, 20, 40, 60, 80, 100, 120, 140, 160; Q1 2019, Q1 2013

A few trends worth noting

The BRI has fueled further growth in China’s trade with the rest of the world. In the 10 nations surveyed, total trade with China rose to USD 140.6 billion in the first quarter of 2019, up 28% from 2013. However, the BRI is much better at helping Chinese companies reach new markets than it is at triggering more shipments going in the other direction. China’s trade surplus with those 10 countries increased almost 300% over that time, to USD 24.2 billion in the first quarter of 2019.

Also, the initiative is heavily dependent on the health of the individual economies taking part. For example, total trade with Vietnam, a buzzing economy where Chinese investors are building factories as part of their electronic and industrial supply chains, increased 140%, to USD 31.9 billion in the first quarter of 2019, more than double the USD 13.3 billion in the first quarter of 2013.

But in Pakistan a struggling economy has dented demand. The government is negotiating a USD 8 billion bailout package with the International Monetary Fund. In the first quarter of 2019, trade between China and this sprawling country of 200 million fell to USD 4 billion, down 17% compared to the same period in 2018. In Q1 of 2019, Pakistan imports of cars, steel, plastics, fertilizers, electronics and electric parts from China all fell over 15% relative to the year before, according to TDM data.

It’s not enough to build new tracks and roads and send trucks and trains full of goods to sell. You also need customers at the other end with the capital to buy them.


Source: Trade Data Monitor 

John W. Miller is an award-winning journalist and filmmaker who covered trade, mining and global economics as a foreign correspondent for the Wall Street Journal. 

Electric cars imports

Norway Draws Record Imports of Electric Cars, Trade Data Shows

The epicenter of the world’s burgeoning trade in electric cars is Norway, which is drawing record shipments of Teslas and other models from the U.S., South Korea and transshipment ports like Antwerp and Rotterdam, according to import and export statistics published by Trade Data Monitor.

The Nordic nation of 5.3 million imported $3.8 billion in 2018 and $1.01 billion worth of electric vehicles in the first quarter of 2019, roughly doubling amounts the previous year, and outpacing much bigger economies like China, France, Canada and the U.S.

Norway’s top sources of electric cars over that 15-month period were the U.S. ($1.24B) and Germany ($793.3M). 

The world’s top exporter of electric cars in the first quarter of 2019 was the U.S., with $2.16 billion worth shipped out. Its top destinations, in order, were Belgium, China, Canada, South Korea and the Netherlands. A big portion of the exports to the first and fifth countries were reexports to Norway, trade data shows. 

The second and third top exporters of electric vehicles in the first quarter of 2019 were Germany and South Korea. 

The latter’s shipments of electric cars increased almost 300% in the first quarter of 2019 from the same period a year before, to $499.9 million, heading mainly to the U.S., Netherlands and Norway. 

Despite its massive gas industry, Norway has gone full force into the adoption of zero-emission cars, enacting a range of subsidies to promote their use. Zero-emission cars don’t pay the 25% Value Added Tax (VAT) and are exempt from Norway’s carbon dioxide, nitrogen oxide and weight taxes imposed on gas and diesel vehicles. They also get discounts on parking, toll roads and ferries.

The results have been dramatic: Of the roughly 18,000 new cars registered in the country in March 2019, 10,732, or over 55%, were zero-emission vehicles, more than double the number of zero-emission vehicles sold in March 2018.

The star of this movement is Tesla: 5,315 Model 3 sedans were registered in March, setting a record for sales of a single car model in a single month. Meanwhile, the number of gas and diesel vehicle sales dropped to a record low.

 

John W. Miller is an award-winning journalist and filmmaker who covered trade, mining and global economics as a foreign correspondent for the Wall Street Journal.