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Fall 1996 - Volume 2, No. 2

Trafficking in Trade: A Look at Tennessee's Ports

That international trade is becoming an increasingly important part of our economy is no longer a revelation. But the economic importance of foreign trade is actually much broader than is often understood. The effects of international trade are not limited to just manufacturers, farmers, or other producers of exported (or imported) goods and services. The very flow of trade itself is becoming an important part of many local economies. A variety of important services are necessary to take a product from the producer's door to the foreign consumer, and, while little public attention is paid to this process, it has become a multimillion dollar industry in its own right.Any consideration of the total impact of international trade on Tennessee must include not only the raw trade statistics, but also the economic effects of handling the large volume of imports and exports which course through the state.

Few would guess the size of this activity in our state. Because Tennessee does not front an ocean, it is easy to underestimate how much international trade travels through this state. Many people are not aware that this state contains four international port cities Chattanooga, Knoxville, Memphis, and Nashville, as well as a special Federal Express port in Memphis. And the value of the goods going through these ports may surprise you. In 1995, $3.859 billion of merchandise, involving over 100 countries, went through Tennessee ports. At a shade under $2 billion through June, 1996 figures will likely exceed that. As with most of the U.S., the bulk of this trade is imports. In 1995, imports into Tennessee ports ran better than $2.3 billion ahead of exports. The state port's "trade deficit" however, has markedly slimmed in 1996, though it is still in the

1996 Trade "Balance" of Products Through Tennessee (in $millions)

neighborhood of $900 million. To put the size and importance of this flow of trade in perspective, if international trade were to be considered as its own economic sector, it would rate as seventh largest of the state's twenty major industries based on value of shipments.

The range of the products being shipped through these ports is vast. Automobile parts, aircraft parts, computer and office machinery parts, and apparel are some of the leading products moving through the state's international gateways, but products from 184 different SITC industry codes were exported from Memphis alone over the last year.

Leading Products by Port

Canada is the largest source of imports andthe largest destination for exports through Tennessee. But it is hardly the only foreign trade partner using this state's ports. Mexico is the major exporter into the Port of Nashville; while, in 1995, the Netherlands was the largest destination for goods leaving Knoxville.

Exports from Tennessee Ports by Country

As you might expect, Memphis is by far the largest of the state's ports. An important entrepot since the nineteenth century, Memphis remains one of America's leading trade centers. In 1995 over $668 million in goods were shipped abroad from Memphis, while roughly $2.5 over a quarter of which were aircraft parts entered the U.S. through its port. Memphis is showing particularly strong 1996 exports: year-to-date shipments as of June are already approaching the total 1995 figures.

Relative Size of the Four State Ports

The state's other ports are newer and smaller, but equally dynamic. Nashville has grown rapidly. Here imports dominate: the port will surpass $600 million in imports this year. As those who know the midstate economy can probably guess, the large majority of those imports involves motor vehicles. Car parts accounted for two-thirds of 1995 imports and are currently running at almost three-quarters of 1996 imports (and this is excluding engines and engine parts, which are counted as a separate SITC sector). The port of Knoxville, too, has grown over the past years. Based on annualized figures, 1996 shipments are up almost a quarter over those of 1995. As might be expected given its local economy, textile products and automobiles dominate among exports and imports. Chattanooga is the smallest of the state's ports, but even here goods involving twelve different countries have been shipped through the city during 1995 and 1996. Chattanooga has been importing and exporting a wide variety of goods, including aircraft equipment, auto parts, and textile products.

The state's ports are hardly provincial and do not serve Tennessee alone. Most of America uses Tennessee ports. During 1996, firms in forty-three states and Puerto Rico have shipped through Memphis. In fact, less than five percent of the goods exported through Memphis has come from in-state. (And, on the other hand, only one percent of this state's exports has gone through in-state ports!) Tennessee's $27.3 million in exports pales beside the $79.2 million in exports coming from Colorado, the port's biggest source of exports this year. The situation is similar for the other state ports. California is a major exporter out of Knoxville, while Minnesota and North Carolina firms are using the port of Chattanooga. Seventeen states are using Nashville's port, with Alabama in the lead.

This raises the question, "If most Tennessee exporters are not using Tennessee ports, where are they exporting from?" We map the flow of state exports below. State exporters have used 166 U.S. ports to ship their products this year. Thirty-nine ports, all shown on the map, shipped out more than $10 million in Tennessee goods in 1996. Memphis is one of these ports, ranking 22nd largest for Tennessee exports, and Nashville is another, placing 39th (Knoxville, with less than $10 million in state exports, ranks 92nd). But the bulk of exports is concentrated in a few major ports. Ten U.S. ports account for three-quarters of the state's exports, and the top five ports ship out half of the state's products. The map shows these ten largest ports by name; the size of the arrow indicates the relative size of state export's moving to that city. As you can see, Detroit is that state's largest port, with over $745 million of the state's $4.023 billion 1996 exports. But Tennessee trade flows all directions on its way overseas.

Mapping the Flow of Tennessee's Exports

It is easy to forget that international trade has effects far beyond the initial purchase of foreign goods or services. This brief look at the flow of trade through Tennessee should convince us that the very size of this flow is itself becoming an important part of the state's economy.

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