Increasing US automobile exports leads to growth in logistics services

BMW recently announced it plans to invest $1bn in its South Carolina manufacturing facility – its only US manufacturing facility. The investment is expected to increase capacity by 50% which will make it BMW’s biggest factory. The South Carolina facility produces about 300,000 cars a year and 70% of that production is exported around the world.

Chrysler is also expanding, investing $500m to expand its plant in Toledo, Ohio, to produce Jeeps for the United States and for overseas buyers including China.

BMW and Chrysler are not the only manufacturers to enjoy an increase in US exports. Honda exported 20% more automobiles from the US than it imported from Japan in 2013. Meanwhile, Toyota and Nissan US exports increased 45% and 37% respectively.

Indeed, US automobile exports set a record in 2013. The US Commerce Department reported that overall US automotive vehicle and parts exports were $152bn in 2013, up about $6bn over 2012.

While Canada and Mexico are the recipients for many US automobile exports, this is changing. In 2004, these two countries imported about 80% of US total automobile exports. Today it is far less. Canada is still the largest export destination with a 30% share followed by the European Union with about 8.7%. Mexico is the third largest export market with 7.4% but a surprising Saudi Arabia is fourth with 7.1% of US total automobile exports. In fact, from 2011 to 2012, the number of exported units to Saudi Arabia increased 25.8%.

The growth in automobile manufacturing has been beneficial for the logistics market as well. For its fiscal year 2013 (year ending June 30, 2013), the Georgia Ports Authority achieved a record total for auto and machinery units with an 11.7% increase over the prior fiscal year to 636,942 units.

Class I Eastern US railroads Norfolk Southern and CSX have also noted increases in automobiles of 7.3% and 1.6% respectively.

In 2013, the South Carolina Port Authority and partner Norfolk Southern opened an inland port rail yard near the Greenville-Spartanburg International Airport. BMW, in turn, built a 413,000 sq ft export center nearby – both designed for easier and more efficient transport of goods to and from the port of Charleston.

While automobile exports are certainly on the rise, imports still make up the bulk of trade. Based on US International Trade Commission data, in 2012, the total number of US automobile export units increased 9.1% from 2011 to 2,547,237 units. However, the total number of US automobile import units increased 8.8% in 2012 to 8,269,464 units.

Regardless, the automotive industry is important to the US economy as well as logistics participants such as ports, railroads, trucking companies and more. Thanks to favorable economy, currency rates and labor costs, the US automobile manufacturing industry will likely remain strong for quite some time.