Introduction

Introduction

Today, Americans are buying more imported merchandise than ever before, and more of the goods produced in U.S. factories are bound for export. Much of the imported merchandise is transported in containers from far-flung corners of the world, raising the need for heightened cargo security measures from the foreign points of origin to the final destinations in the United States. In 2001, the U.S. transportation system carried merchandise exports worth $731 billion and merchandise imports valued at $1.1 trillion (in current dollars). Transporting this merchandise requires a significant amount of equipment. For example, in 2001, there were over 936,000 aircraft, 215,000 maritime vessels, and 19 million vessel, truck, and rail container entries into the United States.1 From a national security perspective, the large amount of transportation equipment involved in U.S. international trade highlights the possible threat of using freight vessels and vehicles for terrorist activity. This vulnerability underscores the importance of national measures aimed at improving security while maintaining quick and efficient freight flows (see appendix A, Transportation Security and International Trade, pp. 101-109).

In the aftermath of the September 11, 2001, terrorist attacks on the United States, improving security and maintaining an efficient flow of goods have become key transportation and international trade issues. Immediately following the attacks, the U.S. economy and international transportation networks were affected as merchandise imports and exports temporarily declined and the volume of freight passing through the nations airports, seaports, and land borders slowed. In the attacks aftermath, cargo security and handling have received increased attention, with government and industry seeking enhancements in this area. A key component of this effort is expanded information on traded goods and crews, such as advance and near real-time data (see appendix B, International Trade and Transportation: Data Issues and Challenges, pp. 111-114).

This report provides an overview of U.S. international merchandise trade, reviews changes in trading patterns and modal trends, and examines shifts in the patterns of freight demand among U.S. international freight gateways.2 In addition, the report reviews the changing mix of traded commodities, focusing especially on transportation-related goods. It also examines U.S. freight transportation and port services and their important role in facilitating U.S. international merchandise trade.

The report further analyzes the critical role freight transportation continues to play in enabling international trade and discusses capacity and access challenges that growth in international freight pose to the U.S. freight transportation system. It also looks at some of the new security challenges facing the U.S. freight transportation system as the nation implements transportation security measures following the 2001 terrorist attacks. The report concludes with a discussion of some of the major underlying factors that are driving change and continuity in U.S. international merchandise trade and the possible effects of trade growth on the nations transportation networks. For most of the major topics discussed in this report, detailed trade and transportation data tables are provided in appendix C. These tables complement the tables in the text.

Overview of Merchandise and Services Trade

Although total U.S. international trade, including trade of goods and services, rose throughout the 1990s, levels fell in 2001. U.S. merchandise trade, the primary focus of this report, accounted for more than three-quarters of total U.S. international trade in 2001.3

From 1990 to 2000, the United States experienced strong growth in merchandise trade and economic output. During this period, the expanding U.S. economy favorably affected U.S. international merchandise trade, which grew at an average annual rate of 9.3 percent, about three times the rate of the nations economy in inflation-adjusted terms (box 1). Between 2000 and 2001, however, real GDP grew by 1.2 percent while total merchandise trade declined by 3.9 percent.4

Box 1
Current and Inflation-Adjusted Economic Data

To compare trends in economic activity, current or nominal values of currencies must be deflated or adjusted for inflation. This is important because a fundamental issue in comparing GDP and economic data over time is determining how much of any increase is real and how much reflects price inflation. This report uses inflation-adjusted figures whenever official statistics are available. Where inflation-adjusted data are unavailable, as is the case with official overall merchandise trade data prior to 1987 and all trade data by country, mode of transportation, and specific commodity detail, the report uses current dollar figures without controlling for inflation.

For GDP and overall U.S. merchandise imports and exports, inflation-adjusted chained 1996 dollars are presented, as reported by the Bureau of Economic Analysis. The technique used to derive chained dollars adjusts for inflation and captures the effect of relative changes in prices and the composition of economic output better than nominal or current value.

While adjusting for inflation is important to reflect the correct size of any change in the value of trade, other factors such as foreign currency exchange rates, business cycles, balance of payments, stock market news, and policies of central banks affect the prices of goods and services traded internationally. Due to the complexity of the factors that influence international trade, it is difficult to control for trading partners inflation rates as well as currency exchange fluctuations.

Since 1990, freight transportation and port services used in moving the traded goods have also increased. Between 1990 and 2001, U.S. exports (receipts) and imports (payments) for freight services grew at an average annual rate of 5.3 percent, while port services grew at 4.2 percent per year (in current dollars) (USDOC BEA 2003). During this period, the United States remained the worlds largest exporter of transportation services, maintaining its share of the global export of these services at about 16 percent (IMF 2001).

The U.S. freight transportation system has shaped and been shaped by the increase in and changing demands of international trade. Major U.S. seaports have grown in importance, reflecting, in part, the use of large container vessels to ship goods between ports in Europe, the Pacific Rim, and the United States. Increased containerization and other developments by the nations freight railroads have contributed to the continued expansion in intermodal transportation. Growth in international air freight has contributed to the emergence of U.S. cargo airports as global leaders in this industry. Expanded trade between the United States and its top two trading partners, Canada and Mexico, has increased the importance of north-south surface freight corridors relative to the traditional east-west movement of international trade.

This expansion in trade has been accompanied by changes in how freight moves. It has raised concerns about potential capacity bottlenecks at major freight gateways, for example, landside access to and from seaports and traffic congestion that can cause delays and impact the cost-effective delivery of goods. Since many of the nations major ports are located primarily in metropolitan areas, delays and congestion sometimes occur as port-related truck and rail traffic flow into local passenger traffic. Furthermore, the effects of trade-related transportation on the quality of life in communities near or adjacent to major gateways and corridors are a concern. After September 11, security issues have come to the forefront and heightened cargo-handling procedures are being implemented at all of the nations ports of entry, but their long-term implications for throughput are not yet known.

Footnotes

1 U.S. Department of Transportation, Bureau of Transportation Statistics; based on U.S. Department of the Treasury (2002).

2 This report generally examines merchandise trade trends from 1990 to 2001. Unless otherwise stated, references to U.S. trade and trade balances represent U.S. merchandise trade only. Due to limitations of data availability, some of the maritime and aviation trends are only reviewed through 2000, because 2001 data were unavailable at the time this report was prepared. This report also includes a section on transportation services trade.

3 Total U.S. international trade includes both merchandise and services trade.

4 In current dollars, GDP grew by 3.4 percent and U.S. merchandise trade declined by 6.2 percent (USDOC BEA 2002a).