WorldCity Business Magazine

Miami Trade 2006: Annual Report

by Claudio Mendonça

Latin America still dominates South Florida’s trade, but the exchange with Asia is on the rise

The Miami Customs District is racking up records.

For the first time ever, South Florida has exceeded the $70 billion mark for trade, closing 2006 with an international exchange that surpassed $72 billion.

It also chalked up the country’s second-largest trade surplus $7.2 billion, equivalent to 10 percent of its business which amounts to the United States longest-running surplus, according to WorldCity Business analysis of trade results released by the U.S. Census Bureau.

Miami, by comparison, has seen trade surpluses every year since analysis by WorldCity Business began in 1998. South Florida has the longest running surplus of any U.S. Customs District.

Only one other Customs district, Seattle, had a greater surplus. The northwestern gateway recorded a $10.6 billion surplus in 2006. A year earlier, it carried a $2.9 billion trade deficit.

Asia played no small role in the trade upswing.

Soaring imports from China joined strong performances with Chile and the United Kingdom to push Miami’s overall trade up 9 percent during 2006.

“In past years, South Florida cargo movement went mostly North-South and vice versa,” said Peter Quinter, a trade attorney and partner at law firm Becker & Poliakoff. “In the last few years, however, there has been slight shift in trade with greater amounts of Asian products coming in.”

Quinter said Asian imports are coming by sea through the Panama Canal. He also said there has been a jump in products that reach Miami after traveling by rail from West Coast ports, although U.S. trade statistics do not include that cargo. The trade data track where, in the U.S., commodities make their entrance not where they ultimately arrive.

South Florida imports from China, which have doubled over the past three years, rose 13 percent in 2006 to turn the Asian giant into the area’s fifth most important trade partner behind Brazil, Venezuela, the Dominican Republic and Colombia. In 2005, China ranked 7th among Miamis top traders.

South Florida saw nearly $3.9 billion in trade with China last year. The results included a 14.7 percent spike in two-way trade with China, which is now the Customs district’s top source of imports beating out Brazil, which had held that distinction for years.

South Florida’s exports to China, meanwhile, jumped by nearly 65 percent although those trade totals are still small at $295 million.

Asia in the ascendancy

There are only seven Asian and Southeast Asian traders among Miami’s top 50 trade partners. Every one saw gains in 2006.

Miami-India trade was the big winner, skyrocketing 49 percent to total $277 million as India climbed five spots up the ranking of trading partners to become South Florida’s 40th most important partner. Exports to India more than tripled, but imports made up nearly three quarters of the trade total.

South Korea also saw big gains. Two-way trade leaped more than 17 percent, largely behind a dramatic increase in imports, which rose 20 percent to close the year at $453 million. South Korea is the Customs district’s No. 30 trade partner.

One reason for the boost was the addition of Korean Air cargo service between Miami and Seoul. The carrier launched twice-weekly flights in August 2006, and Miami International Airport marketing director Chris Mangos said the carrier may increase its service over the next several months.

“The new Seoul service also means a myriad connection possibilities via Koreas exceptional route network throughout Asia and, particularly, China,” said Mangos, who identified Asia as an up-and-coming market for the airport. “As such, 2007 will be an experimental year for us and one we must definitely watch.”

MIA is operating seven weekly freighter flights to and from Asia. Airport director Jos Abreu said the service from Korean Air cargo, combined with shipments on China Airlines’ route via Taiwan, should elevate Miami’s air cargo with Asia above the $2 billion mark in 2007.

Last year, trade with other Asian partners soared. Thailand spiked 15 percent while that with Japan rose 13 percent. Malaysia and Hong Kong each saw their exchange with South Florida climb 6 percent. Trade with Singapore increased 5 percent while that with Taiwan inched up 1.3 percent.

At the Port of Miami, 40 percent of business is done with Latin America. Nevertheless, Asia has made great progress in the last three years and now accounts for 27 percent of all cargo. In 2003, Asias trade slice accounted for 15 percent.

Still, geographic proximity counts and Latin America remains the more important region for the Miami Customs District. John Price, president of business research and consulting firm InfoAmericas, said South Florida will never handle more than 4 percent of total U.S. trade with China, in part because the bulk of exports will continue to leave the country from West Coast ports. But Miamis take of Latin American trade could swing as high as 60 percent of the U.S. figure, he said.

Price said Miami imports from China and elsewhere in Asia have grown exponentially in the last few years because of bottlenecks at Pacific Coast ports. However, he said a 60 percent hike in tolls at the Panama Canal designed to help bankroll the canals $5.2 billion expansion might scare away Asian shippers now trading with South Florida.

Off pace

Although South Florida’s trade results for 2006 showed gains of 9 percent, they trailed the national average: 11.5 percent. As a result, the nation’s 13th most important Customs district runs the risk this year of being overtaken by Philadelphia.

Philadelphia, currently No. 12 among Customs districts, saw the value of its international trade leap more than 19 percent to total $69.2 billion in 2006. Among other things, Philadelphia is the most important U.S. gateway for Nigerian oil.

Becker &?Poliakoff trade attorney and partner Peter Quinter said the Port of Miami needs greater infrastructure investment to improve its competitiveness.

“What is holding us back is not limitation of land but the entire highway system, which is congested,” said Quinter. “We must invest more in the road system. If gridlocks continue, companies will not locate here and the ones already in South Florida will move out.”

The trade attorney said trucks transporting 53-foot containers already have difficulties handling cargo near the airport.

The Port of Miami still handles the most cargo worth more than $21 billion in 2006 but Port Everglades is making fast gains. The Fort Lauderdale port saw its cargo grow 20 percent to close the year just short of $18 billion.

Cargo value at the Miami seaport grew just more than 1 percent last year.

Miami is losing business to Port Everglades, which does not suffer from traffic congestion like Miami and is less costly for shippers. Miami may also be losing cargo traffic to Houston and Savannah, according to government trade statistics.

“This is the third year in a row that Port Everglades has experienced double-digit increases, and the second year of record growth in containerized cargo,” port director Phillip Allen said in a state-of-the-port address. “In the past four years, the port has added several new services and increased containerized cargo tonnage by more than 2.2 million tons annually.”

A number of new cargo services have appeared at Port Everglades. Hamburg Sud bolstered its business from the Fort Lauderdale port and Hapag Lloyd has followed by moving its business to Port Everglades from Miami. Swiss shipping line MSC is shipping to and from the Mediterranean from Port Everglades.

Cognizant of the competition, Port of Miami director Bill Johnson has promised that improvements to alleviate traffic are on the way. The first phase of the seaports 16-lane, gatehouse project should be completed by April and all work finished by September.

The Port of Miami Terminal Operating Company (POMTOC) is introducing the lanes to streamline entry and exit from the port and to prevent bottlenecks. The lanes complement the 10 security lanes that the port is operating.

The improvements aim to reduce security delays at the port’s entrances.

“This new gate system will make the flow of cargo more efficient,” said Johnson. “We will no longer see congestion and delays once these facilities are completed.”

The seaport is also working with Florida East Coast Railway to improve its intermodal capacity. Officials have also considered a controversial plan to build a $1 billion access tunnel at the port for cargo vehicles to alleviate congestion at the Port of Miami. WC