Do the New L.A. Port Import Numbers Signal American Companies are Decoupling from China?
Previously, we chronicled the decline in Chinese imports as reported by U.S. shipping ports in August and September of 2022. FrieghtWaves noted that imports from China were down 18% in August, and 23% in September respectively (year on year). In that two-month span, compared to other nations, China accounted for 62% of the U.S. import decline. This is important for a number of reasons, and shows how dependent the U.S. and other Western nations have become on Chinese goods.
L.A. Port Imports Continue in Freefall
The Port of Los Angeles’ total throughput in September was 709,873 twenty-foot equivalent units (TEUs), down 21.5% year on year. Exports were at 77,680 TEUs, up 2.6% year on year while empties were at 288,731 TEUs, down 19.8% year on year.
Loaded imports to Los Angeles totaled just 343,462 TEUs, down 26.6% from one year ago. Imports fell 15.1% from last month after dropping 16.7% in August from July.
Shockingly, September imports were down 31.3% compared to last September. Imports in September were the lowest for any month since May 2020, when the U.S. and other nations were enforcing draconian pandemic lockdowns.
Take the Slow or Fast Boat from China?
The decline in imports may be partly due to American and European companies either beginning or continuing to “decouple” from China as a strategy moving forward, aiming toward more domestic production while reconfiguring trade policies with China and other nations. Corporations are initiating decoupling on their own since there is no current U.S. policy to do so. Decoupling is a strategy also championed by Chinese policy expert Emily de La Bruyere, a senior fellow at the Foundation for Defense of Democracies (FDD), and founder of Horizon Advisory.
When it comes to foreign companies breaking away from China, a higher percentage of Chinese ownership in foreign companies usually calls for a slower decoupling strategy. De La Bruyere cites Europe’s major aerospace company Airbus as one of the many companies dealing with the decoupling dilemma—23% of Airbus’ revenues come from China. Tesla is another example of investing heavily in the Chinese market—a market that will eventually create its own dominant aerospace and car industries which will eventually compete and possibly overtake Airbus and Tesla.
In Airbus’ case, it has traded science and technology (including avionics) for its significant Chinese market share. De La Bruyere states that Airbus will not always have a significant share of the Chinese market due to China’s domestic expansion—they simply won’t need Airbus anymore.
China has made no secret of wanting to be the world’s industrial leader—major control of the Suez Canal and saber rattling with Taiwan are two glaring examples, but China has acquired lands in Asia and Africa for agriculture, forestry and mining purposes, and is buying more land in the U.S. as well; they are securing vital minerals and precious metals which have been utilized in the semiconductor industry for decades, making the West dependent on outsourcing computers and components. What are experts such as De La Bruyere saying will be the key to decoupling? Timing. Will it be on American and European terms, or on Chinese terms? Whoever has the advantage of convenience will be the big winner.
Made in America is More Important Than Ever
The U.S. and Europe have outsourced products made in China for decades; both have shrunk their domestic manufacturing capacity by outsourcing goods and services to China and elsewhere around the globe. Today it’s a business model that’s dangerously outmoded. That is why for most American and European companies, decoupling must come at a slower rather than a faster pace. Still, acting now can wrestle much of the economic leverage from China in the not-so-distant future.
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