WorldCity Business Magazine

New currents

by Mary Dempsey

Shifting trade lanes affect South Florida cargo

South Florida was already poised to break the $60 billion mark for imports and exports in this year. Then the hurricanes came.

“You’re going to see a real surge in trade that is diverted because of New Orleans,” said *WORLDCITY *President Ken Roberts, in releasing an analysis of 2005 trade statistics at a meeting in late August. “The good news is that trade is up and going up more. The bad news is that South Florida’s trade is growing slower than the other Customs districts and the United States in general.”

Still, South Florida’s trade surplus will surpass $1.1 billion in 2005. John Price, president of market research company InfoAmericas, which focuses on Latin America, told participants at a recent *TransWorld TradeLinks *conference that Miami has “the largest trade surplus of any port.” He said 4 percent of all U.S. exports leave the country from South Florida and 2 percent of all U.S. imports enter through the same Customs district.

Added Roberts: “Miami is one of the only Customs districts that has a reliable trade surplus. But that has been shrinking, largely because of China.”

The value of cargo passing in and out of the Miami Customs District reached $32 billion between January and July, a jump of 12 percent from the same period in 2004. Even more, *WORLDCITY’S *analysis of U.S. Census Bureau trade information shows that 19 countries are on their way to posting more than $1 billion in trade with South Florida in 2005, compared to only 13 countries in 2004.

Despite that showing, the Miami Custom District lags behind the revenue growth rate in most other U.S. Customs districts. Roberts said the reason lies with South Florida’s dependence on Latin America a region where the pace of economic improvement has begun to slow. Thanks to the dramatically rising value of oil shipments, petroleum-producing Venezuela posted great leaps in both exports to and imports from South Florida, both of which increased more than 45 percent to together total nearly $2 billion. The results favored South Florida, which registered a surplus close to $1 billion. The boost in energy shipments comes despite

Washington’s harsh criticism of Venezuelan President Hugo Chvez, a populist that the Bush Administration fears is destabilizing the region

But few other Latin American countries saw such impressive results. Overall trade with Costa Rica and Honduras was down. Exports to South Florida from Colombia, El Salvador, Argentina, Ecuador, Paraguay and Uruguay were also down in the first half of 2005. “Some countries in Latin America still have not returned to levels of five or six years ago,” Roberts said. “And we won’t see the affect from CAFTA yet.” Price warned the audience that Miami will have to work to keep its trade position from weakening. For one thing, he foresees the departure of Spanish companies now using Miami as gateway into Latin America.

“We know how to speak the region’s language. We know how to get in those markets. We understand the customers and how to do business in Latin America,” Price said, explaining why European countries and China ship goods to and from Latin America via South Florida. “But the Spaniards don’t need us for our access or language abilities. They have those. They just need us for the infrastructure and services and facilities. Post 9/11, we’ve lost efficiencies in those areas.”

Price said South Florida should also keep an eye on cargo originating in China. The world’s cargo traffic has been increasing at a record pace of 8 percent to 10 percent annually, largely because of Asia’s fevered economic growth. Miami has captured some of the cargo diverted from the U.S. West Coast ports, which are saturated with Asian imports and cannot keep up with the traffic, even with round-the clock operations. But Miami’s edge with China could be diluted if the Panama Canal raises its fees as planned.

The Panama Canal Authority raised tolls in May 2005, with additional per-container increases scheduled for May 2006 and May 2007. “Asian trade [to Miami] will drop off with the hike in Panama Canal rates,” Price predicted.

Shipping companies have already confronted a number of other increases in recent years, including the cost of container vessels, which increased an estimated 35 percent in 2004, and those of containers, which jumped about 40 percent. Insurance has risen double digits since the 9/11 terrorist attacks. And some U.S. ports have begun adding additional fees to fund Department of Homeland Security programs.

To hedge its dependence on China, Price suggested, South Florida should explore deeper ties with Argentina and Chile.

Also at the *TransWorld TradeLinks *conference, Ivan Aldea, general manager for the international sales and exports department at Home Depot, discussed the need for simplified logistics, streamlined procedures and alternative shipping routes for transporting customers’ goods internationally.

Florida has become a Home Depot shopping destination for Latin Americans who order home-improvement supplies in Miami for shipment to their homes in Mexico or Central and South America, where Home Depot does not have stores.

“The people come in, charge it on an international credit car and expect us to deliver,” he said. Home Depot offers customers a number of shipping options in an effort to lower costs. He said rising fuel costs, increased security, ever-growing legal requirements for cargo and other issues have made his job difficult.

“Logistics have become a competitive market. The United States used to think that we are ahead of the game, that we are technologically advanced,” Aldea said. “That’s not necessarily true any more. The fact is that [other countries] are catching up while we’re adding costs because of security concerns.

“We’re losing trade and market,” he said.

Home Depot customers buying supplies for international shipment include both individuals upgrading their homes and contractors working on housing development projects involving multiple buildings.