WorldCity Business Magazine

(3) Miami TradeNumbers 2007: 1st Half Report – On Track for Another Record Year

by WC

_In the second quarter, imports slowed, especially from China, but South Floridas
two-way trade still rose 7 percent to nearly $38 billion in the first half of the year_

Call it the power of inertia. After rocketing ahead in the first quarter of 2007, South Floridas imports from China fell sharply in the second quarter. As a result, two way trade with the Asian powerhouse through the first half of the year was virtually identical to the result recorded during the same six month period last year $1.87 billion. Even so, China moved up one more rung to become the Miami Customs districts fifth largest trading partner.

Still, if imports from China continue to stall, as is likely unless the U.S. economy rebounds sharply in the coming months, China will probably lose fifth place to Honduras, which registered only slightly less trade with South Florida from January through June $1.85 billion.

Two-way trade with Honduras was up 7 percent during the first half of the year, matching the pace of growth of South Floridas overall trade during the period.

Total trade reached nearly $38 billion, fueled by a 13 percent increase in South Florida exports, as fast-growing markets throughout Latin America sucked in raw materials, consumer products and capital equipment.

The Miami Customs district, which stretches from the Keys to Port Pierce, is the No. 1 one trading post in the U.S. for the majority of countries in Latin America, which mean that South Florida exports are a good barometer of the health of the regions economies.

(For the record, the only Latin American countries which do not have the Miami Customs district as their top trading partner in the U.S. are Mexico, whose biggest partner is Laredo, Texas; Ecuador, which does the biggest part of its two-way trade with Los Angeles; Chile and Venezuela, both of which do more trade with Houston.)

South Floridas strong export performance in the first half of the year, coupled with stalled imports, resulted in a $5.3 billion trade surplus. This compared to a $3 billion surplus in the first half of 2006.

If the demand for exports continues to be strong throughout the year, as is likely given the robust economies and currencies of our major trading partners to the south, Miami could register a $10 billion surplus in 2007 and vie for top honors as the biggest trade surplus in the country.

Last year, the Miami Customs district had a $7.2 billion trade surplus, which was second only to the Seattle Customs district, which registered a surplus of $10.6 billion, due in large measure to a banner year for Boeing airplane deliveries. Miami is also on track to setting another record in total trade, for the fourth successive year.

In 2006, total two-way trade was $72 billion, topping the $70 billion mark for the first time. If two-way trade continues to grow at a 7 percent clip, Miami would finish the year with $77 billion.

Among Miamis top trading partners, both China and Honduras moved up a notch, while Costa Rica fell two, from fifth to seventh place, as two-way trade dipped 11 percent to $1.79 billion.

The decline in imports from Costa Rica was due to efforts by several major shippers in that country to diversify supply routes to the U.S. market, according to Jorge Zamora, director general of the U.S. office of Procomer, Costa Ricas export promotion agency.

Zamora, based in Miami, said that the Costa Rican government has been heavily promoting the countrys goods and services in other parts of the U.S., particularly Houston and California. In addition, some Costa Rican exporters have altered their supply routes through other U.S. ports. The push is paying off, said Zamora, citing a 40 percent increase in the value of Costa Rican shipments to California in 2006.

Despite the efforts at diversification, Zamora expects Miami to continue to be the principal point of entry into the U.S. market. Last year, more than half of the U.S. imports from Costa Rica moved through Miami ports, compared to only 15 percent in California and 7 percent in Houston. This is not going to change significantly, said Zamora.

Another move among the top ranks of trading partners involved the United Kingdom, which moved back into 10th position, with two-way trade of just over $1 billion during the first half of the year. The U.K. recaptured 10th spot from El Salvador which slipped four spots to fourteenth position with two-way of $800 million from January through June, down 12 percent from a year ago.

Meanwhile, France moved up four spots to claim 11th place, on twoway trade of $989 million, an increase of 40 percent during the first half of the year. For the first time ever, Miamis 10 largest trading partners all topped $1 billion during the period.

Miamis top two trading partners, Brazil and Venezuela, consolidated their positions. Fast-paced export growth to both of these markets, fuelled by a strengthening currency in Brazil and abundant petrodollars in Venezuela, resulted in a 15 percent increase in two-trade with Brazil, to $4.9 billion, and a 13 percent increase, to $2.7 billion, with Venezuela.

Trade Finance

The steady growth in South Florida is being matched by growing demand for trade finance, especially among small and medium-sized exporters. Daniel Schwartz, president and COO of Republic Federal Bank (formerly Hemisphere National Bank), which provides financing for South
Florida shippers as well companies in the region exporting to the U.S and Europe, said that the banks volume of trade credits is expanding at 10 to 15 percent this year.

Most of our clients in South Florida are small companies that are capitalized by their owners, who cant afford to keep receivables on their books, said Schwartz. The average credit term for the buyer is 180 days, but exporters can receive their payment within 48 hours of shipping the goods.

Federal Republic finances about $150 million of two-way trade each year, largely through revolving lines of credit that average about $1 million. The bank finances international sales of raw materials, industrial equipment and finished products.

According to Schwartz, business is growing fastest with in Brazil, the Dominican Republic and Mexico.