WorldCity Business Magazine

Can Miami capitalize on its buoyant trade?

by Mary Dempsey

After years of economic ups and downs, much of Latin America is flush with cash. The money is being used to buy big-ticket items, everything from computers and cars to construction equipment and airplanes.

That’s good news for Miami’s trade, which is interlinked with the fortunes of its neighbors to the south. But there are still thorny problems that companies in the trade sector will have to maneuver if they want to fully capitalize on the bounty, according to experts at a TransWorld TradeLinks event sponsored by WORLDCITY.

“South Florida’s trade is growing faster than other Customs districts’ nationally,” WORLDCITY President Ken Roberts said during an analysis of 2005 trade results for the Miami Customs District, which includes airports and seaports from Fort Pierce to Key West.

Roberts noted that the strong 2005 trade performance resulted in a number of records, including:

-*$65.9 billion in total trade*. “In 1998 we passed the $50 billion mark for the first time. In 2005 we passed the $60 billion mark,” Roberts told the audience at the mid-March gathering in Miami.

-Exports and imports. Exports reached $34.1 billion and imports hit $31.8 billion, both the highest ever for the Customs district.

-Billion-dollar club. Twenty countries registered more than $1 billion in trade with South Florida. Seven were from South America, five from Europe, four from Central America and two from the Caribbean. One, China, was from Asia while another, Mexico, was from North America.

John Price, president of research firm InfoAmericas, said Miami’s goal has been to export to the region – and 2005 turned out to be the fourth successive year of growth in that category.

“Asia wants Latin American commodities. That brings cash to Latin America,” Price said, adding that 2005 was “the year that Latin America started to buy the big-ticket items that we’re producing and exporting.”

He was referring to the commodities that figured high on South Florida’s export roster: computers, computer parts, aircraft, automobiles, construction equipment. He predicted that exporters of highvalue products, including aircraft-maker Boeing, construction-equipment manufacturer Caterpillar and computer companies Dell and Intel, would see strong growth in 2006.

“The region is at a point in its business cycle that it has the cash to pay for these things that it needs. The whole middle class in Mexico and Chile is flush with cash,” Price said.

While speakers at the event were upbeat about the 2005 results, they identified obstacles that South Florida importers, exporters and logistics companies would have to steer around if they want to make the most of the trade opportunities.

The first step is understanding the trade statistics themselves. Roberts explained that the U.S. Census Bureau’s trade data records show cargo value at the point where it leaves or enters the United States.

“Some of the high-growth in Florida, we believe, is re-export,” Price added. “Some of Miami export products we know are not made in the U.S. southeast or even in the United States.”

He said shipments may come from Europe in large containers and go to bonded warehouses in South Florida to be registered as Miami Customs District imports when, in fact, they are simply making a stop before the cargo is divided up into smaller shipments destined for Latin America.

“A lot of products clear Customs even though they’re not staying here,” Price said. “We even believe that some of the China imports are coming to be stored and shipped out.” He said a portion of the U.S. imports from China may use South Florida as a way station until they are shipped out on the black market – thus avoiding duties – into Latin America.

Miami is a transshipment point for some cargo simply because shipping lanes do not offer direct routing. That is why Mexican cargo to the Caribbean frequently stops in Miami first.

Whether cargo stays in South Florida or not, its still represents business for local logistics and shipping companies. Trade attorney Lee Sandler, of Sandler, Travis & Rosenberg, said the complexity of handling that in-transit trade will only grow, especially as the government steps up levels of security and regulation.

“Let’s say you have air conditioners that come into Miami then go to Latin America. They can meet the Latin American efficiency standards but not the U.S. standards,” said Sandler. Can you park them here in Miami temporarily?

“Maybe not,” he said.

With free-trade agreements in various stages of implementation, new security regulations, toughened health standards, shifting Customs rules and other developments, Sandler said the trade landscape is becoming tangled.

Further, he noted that a significant portion of Miami’s trade depends on perishable goods, including fresh fruits, vegetables and flowers from Latin America. “That’s the most complex type of trade,” he noted.

Richard Godinez, vice president of the supply chain excellence practice at Auxis, discussed how multinationals can use technology to streamline – and add transparency to – many of their shipping processes. Among other things, Auxis helps companies decide if and how technologies like RFID – radio frequency identification systems – can help their businesses.

With RFID, products are tagged and can be tracked and monitored continuously. He said the systems go beyond simply showing companies the geographic location of the goods they are shipping, but also can electronically watch details such as the temperature within the cargo containers.

At the same time, knowing exactly what is in a container and where it is located at all times can speed processing by Customs and intermodal transfer of goods.

“This is smart technology that eliminates all the blind spots in your supply chain,” he said. He acknowledged that the cost of the technology has kept many companies from adopting RFID solutions but added that costs are coming down.

The speakers also discussed the trade role that the Miami River plays and how that may be reduced by residential development along the waterway. The river is used by shallow-draft vessels from the Caribbean and access to it, as an alternative to the Port of Miami, is crucial for some countries.

But condominium construction and the opening of retail establishments along the river have put developers at odds with shippers and there have been zoning challenges to the river’s use.

Sandler also noted that a 20-year effort to dredge the river is now without adequate funding.