Background

The International Trade Commission’s latest annual report on trends in U.S. services trade focuses on distribution services – activities that facilitate the movement of goods through the supply chain from producer to end consumer. The report states that distribution services accounted for 7.1 percent of total U.S. cross-border services exports and 17.4 percent of imports in 2021.

According to the report, responses to the COVID-19 pandemic created challenges for global supply chains and the distribution services that enable them, while recent volatility in consumer demand for goods imports and pandemic-related measures disrupted distribution and transportation networks. At the same time, firms have adopted new technologies to improve competitiveness and reach new customers. Examples include retail supply chains shifting focus from just-in-time inventory management to supply chain resiliency and transparency, small and medium-sized enterprises increasingly using global e-commerce marketplace platforms to reach foreign customers, and innovation (e.g., data analytics and tracking technologies) and new business models that helped the logistics industry improve efficiency and competitiveness.

Pandemic-related disruptions also led to developments in transportation services, the report states. Increased demand for ocean cargo led to record profitability for carriers and increased government scrutiny of the industry. Congestion at ports resulted in increased wait times, delays, and costs, while spurring investment in port expansion and automation, but delays and prices have fallen sharply since late 2022. Longstanding labor issues were exacerbated in the trucking and rail networks. Passenger air travel was disrupted, decreasing air cargo capacity, while the entry of new air cargo providers led to increased competition. The market for express delivery via drone remained small and developed slowly, but firms continue to pilot new drone delivery projects.

More broadly, the report finds that the U.S. remained the world’s largest services market and the world’s leading exporter and importer of services in 2021. The services sector represented the largest sector of the U.S. economy, with exports totaling $771.9 billion and imports totaling $524.9 billion, resulting in a $247.0 billion trade surplus. Preliminary data for 2022 show that total services exports were 15.9 percent higher compared to 2021.

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