According to data provided by Xeneta, Vietnam is a growing source of manufactured goods for the U.S. This has softened China’s dominance in the Trans-Pacific container trade, while geopolitical tensions, reshoring, and shifts in the flow of foreign investments are reshaping global trade patterns.
Looking at the U.S., containerized imports from Asia have increased by 27% over the past five years. Of the region’s 12 major economies, China and Singapore recorded the lowest export growth at 7%, while Hong Kong recorded no volume growth. Meanwhile, Vietnam saw a 156% increase in container trade to the U.S. between 2017 and 2022.
The share of imported volumes reflects a similar trend. In 2022, China accounted for 56% of containerized imports from Asia into the U.S. Despite this being a significant percentage, it marked a -10 percentage point decline from 2017. Meanwhile, Vietnam’s share has nearly doubled from 6% in 2017 to 11% in 2022.
The International Monetary Fund reports a 73% year-on-year (y/y) decrease in foreign investments in China to $42.5bn. In comparison, foreign investment averaged $160 billion each half-year between the second half of 2020 and the first half of 2022.
Meanwhile, Vietnam’s foreign direct investments (FDIs) have grown 61.2% y/y across the first three months of 2023, including a 62.1% increase in new foreign-invested projects, with the processing and manufacturing sectors accounting for 75% of the total investment. Exports from China to the U.S. also mirrored the current market conditions, with March recording $3.6bn less in than a year ago. Despite this significant reduction, China’s total exports managed a y/y growth rate of 15% in March because of thriving trade with Russia and countries in South Asia.
“It takes time to build new production bases and make port infrastructure investments, as we’re seeing in, for example, Vietnam, Cambodia, and Singapore, so the impact of investments today won’t be fully appreciated until tomorrow. This implies that the changing trade patterns we’re seeing now could just be the beginning of a far greater realignment,” said Xeneta’s market analyst, Emily Stausbøll.
Stausbøll suggests that in time, trade and investment decisions will be based on geopolitics rather than availability or price but noted the progression would depend on “a range of uncertain factors”. She cites escalating tensions around Taiwan as an example, saying that “another major geopolitical event” would again change the outlook.