The slight shifts in the percentage of containerized imports from China to the United States align with three major trends acknowledged by both the business and geopolitical communities: China Plus One, incremental gains in friendshoring by volume, and an increased reliance on Vietnam and India.
To mitigate their dependence on China, US retailers and other businesses are actively seeking alternatives, driven by the pursuit of cost-effective labor and a desire to hedge risks associated with relying on a single source for crucial goods. This trend is not new, as the share of US imports from China has consistently decreased since 2018, with a brief uptick in 2021 when retailers reverted to familiar partners.
A notable transformation has occurred over the past five years for China. In 2018, 47% of laden containerized imports into the US originated from China. However, last year saw a decline to 39.6% from 40.7% in 2022, as reported by PIERS. During the same period, the share of imports from Taiwan to the US also dipped slightly by 0.2 percentage points, settling at 2.5%.
While US allies may express concerns about the friendshoring policy, the data reveals an increase in the share of US imports from South Korea, Japan, and Germany in the past year. South Korea experienced the most significant gain, raising its share from 4.1% in 2022 to 4.7% in 2023. Despite Germany’s struggling manufacturing sector, it found modest success, with the share of US imports rising from 3.9% in 2022 to 4.1% in 2023. Japan also witnessed a modest increase, with its share rising from 2.3% to 2.5%.
In contrast to China’s decreasing share, Vietnam, the second-largest source of US containerized volumes, maintained its position with an 8.7% share of US imports. This stability prompts speculation about Vietnam nearing the peak of its production capacity, although a single year does not establish a trend. Vietnam has consistently shown stronger and steadier growth than other manufacturing alternatives to China, including India, which has doubled its share since 2013.
India, while slower in its ascent compared to Vietnam, is realizing its potential as an alternative sourcing destination. In the last year, the share of US imports from India increased from 3.9% to 4.1%. This gradual climb underscores India’s promise as a viable alternative to China, with its share surpassing 3% only in the last five years.
However, the data has limitations, failing to capture US-bound cargo potentially transshipped illegally from China through other countries. It also overlooks the extent to which Chinese-owned factories in other countries contribute to production lines. Additionally, the data does not reveal the magnitude of manufacturing shifts from China to Mexico, where goods are produced and then transported north to American consumers and businesses.