Risky Business

Why exporting is outside many companies’ comfort zone

By Bill Armbruster

The results are in, and the risks have it.

37 people responded to the question in my last blog about the biggest obstacle to exporting. The results were:

4 Fear of the unknown
2 The credit crunch
5 Transportation bottlenecks
7 Red tape
12 Too risky
0 Tariff and non-tariff barriers
7 Something else

[You can see the responders’ comments here.]

The response depends in part on who you are, but in my view fear of the unknown is the biggest reason, followed by the perception of risk. Those two are closely related, and I’ll discuss them below. But from the perspective of many small and medium companies that might like to export, or to export more, the biggest obstacle might be the credit crunch. From the perspective of many shippers, the biggest obstacle is transportation – the shortage of vessel space and containers. And for others, it’s the red tape – the hassles of documentation and compliance with lots of rules and regulations. For them, it’s just not worth the trouble.

So let’s look at the fears and the risks. As one reader put it, “Americans are generally very uncomfortable with anything non-American.” I agree. Our culture, our educational system and our media are so American-centered. We just don’t know very much about the outside world, and what you don’t know, you tend to fear.

As for the risks, one reader commented that when companies analyze the risks, they decide that investing in the domestic market is a safer way to expand sales. To be sure, exporting is not for the faint of heart. There are plenty of risks — not getting paid; finding little demand in foreign markets for your product; running afoul of regulations, such as labeling and testing requirements; transportation bottlenecks; unreliable partners, agents and distributors; corruption; and intellectual property theft.

But there are plenty of opportunities, and many companies fail to consider them when they do their risk analysis. Ninety-five percent of the world’s population lives outside the U.S. At least 1 billion of them are in the middle and upper classes. That’s a huge opportunity, but too many business people, don’t know it, and are too afraid to try selling in foreign markets.

Fortunately, there are resources that can help. First and foremost, there is the U.S. Commercial Service, which has trade advisors at 108 offices around the U.S. and about 90 embassies and consulates overseas. Its Web site — http://export.gov/ — is a treasure trove of information. There is also the U.S. Export-Import Bank http://www.exim.gov/, which provides loan guarantees, credit insurance and working capital loans to U.S. exporters, and direct loans to foreign buyers of U.S. goods and services. There is also the Small Business Administration http://sba.gov/. Its services include quick and easy loans to small business exporters. So help is available.

I’ll have more to say about the obstacles to exporting, as well as other resources to help exporters, in my next blog. Meanwhile, let me know what you think.



About Bill Armbruster

Bill Armbruster, the anchor for The Datamyne Blog has covered shipping and trade for 30 years as a reporter and editor with The Journal of Commerce and Shipping Digest. “I’ll be blogging on headline news and current issues in oceangoing commerce, trying to shed some light on the backstories and, wherever I can, supply some sound advice for shippers.” Write to Bill@TheDatamyne.com

Braving the Risks

The U.S. Census Bureau profiles 288,700 exporters

A profile of U.S. companies that exported to one or more countries 2007-2008 has just been released by the U.S. Census Bureau. The report provides general information on companies that braved the risks of doing cross-border business (see the related Risky Business) to ship some $1,148 billion (FAS value) in exports in 2008. The largest companies (500 employees or more) represented 3% of all exporters and accounted for 69% of known export value. 58% of all exporting companies trade with only one other country. Top destination was Canada, followed by Mexico, U.K., Germany, and China. The top five states based on number of exporting companies were California, Florida, New York, Texas, and Illinois. More facts and figures in the report.

Fresh Outlook

U.S. imports will include more fresh veggies and, especially, fruit

The U.S. Department of Agriculture current Long-Term Projection foresees U.S. agricultural import values rising to US$106 billion in fiscal year 2019, compared with US$79.3 billion in 2008. Strong growth in “horticultural imports” (fruits and nuts and vegetables) accounts for almost half of the projected increase in the next 10 years.

The U.S. was a net exporter of fruits and vegetables in the 1970s. U.S. imports and exports were more or less in balance in the early 1990s. Since then, the U.S. has been a net importer, and import growth has continued to outpace exports.

A key driver: Americans’ demand for fresh fruits regardless of the season, and a varied menu that includes plenty of tropical fruits that were rare luxuries not so long ago. A case in point: avocados.

The California Avocado Commission estimates that Americans consumed 84.1 million pounds of avocados just during this year’s Cinco de Mayo celebrations. At one billion pounds, annual U.S. consumption of the green fruit far outstrips domestic output: Mexico and Chile are the source for most avocados eaten in the U.S., with Mexico supplying almost 82% of this import (by value), and Chile close to 18% last year, according to The Datamyne statistics.

Given the short shelf life of fresh produce, most U.S. fruit imports originate in the Western Hemisphere. See the Datamyne Top 5 Sources for U.S. Fresh Fruit Imports. Bananas are the top trade product, by volume and value. But avocados rank second, and mangoes, plantains and papayas make the top 20. For still more evidence of a changing national diet, see What’s for Dinner, Since 1909.

It's What's for Dinner, Since 1909

The USDA’s food consumption data series marks its centennial

The U.S. Department of Agriculture Economic Research Service recently marked the 100th anniversary of its Food Availability (Per Capita) Data System by updating access to its data and adding some useful new tools. A proxy measure of what Americans have been consuming for the past century, the data series captures what was on hand at grocery stores, restaurants, school cafeterias, and other eating places, from the potatoes, flour and cereal that were the mainstays of the 1900s to today’s more cosmopolitan diets. Try this report tool to see the rapid growth in U.S. per capita consumption of tropical and other fruits since 1970 (a key driver of growth in U.S. ag imports).

The Datamyne’s access tools can help you to fresh data on U.S. imports of fruits, nuts, vegetables, and other foods, including such bill-of-lading detail as shippers, consignees and notify parties, information you can use to sell or source. Ask us how.

The Datamyne Top 5 Sources for U.S. Fresh Fruit

Ready to Go Global?

Do you have the 9 characteristics of successful exporters?

Export.gov, the web guide to U.S. government assistance for American businesses that want to sell internationally, is offering a short self-assessment of your company’s readiness to enter the global marketplace. Simply click “yes” or “no” to nine questions and find out whether your company shares the characteristics common to successful exporters — and where to find resources to remedy any shortcomings. Go to http://bit.ly/d2AhZo

Our online survey asks only one question: What’s stopping U.S. companies from exporting? The survey is here. Results so far are here.

How to: Import–Export

SCORE offers small companies an intro to global markets

Companies thinking about importing or exporting can get a good introduction to the basics of doing business across borders from SCORE, the nonprofit "Counselors to America's Small Business" and resource partner with the U.S. Small Business Administration (SBA). Three SCORE chapters have announced one-day Import-Export seminars: SCORE / New York, May 18; SCORE / East Bay (Oakland, Fremont, Calif.), various dates starting May 20; SCORE / San Diego, June 10. Look up local SCORE chapters here.

If you’ve thought about exporting, but have been hesitant to try, can you tell us why? Red tape? The credit crunch? Too risky? Choose (or write in) the biggest obstacle to exporting in our one-question survey here.

Unstop the Bottleneck

Port Authorities say freight infrastructure can’t handle doubling exports

Members of the American Association of Port Authorities (AAPA) testified yesterday at a U.S. Senate Finance subcommittee hearing that the most significant constraint faced by seaports for increasing U.S. exports is the capacity and efficiency of the nation's freight transportation infrastructure. The Subcommittee on International Trade, Customs and Global Competitiveness asked if U.S. seaports are ready to meet the goal set by President Obama of doubling U.S. exports over the next five years. According to the AAPA, while the ports have the capacity for higher volumes, the country’s highways, bridges, railroads, vessel navigation and marine terminal infrastructure are not up to the task.

The “transportation bottleneck” is one choice in the Datamyne one-question survey: What’s the biggest obstacle to exporting for U.S. companies right now? Other choices include: the credit crunch, too much red tape, fear of the unknown. You can cast your vote here.

What's Stopping U.S. Companies from Exporting?

Last update: 6:00 p.m. (ET) May 10

Latest comment:

“Not enough profit for the time invested and also disputing freights 3 months after the loads ships.” 5/10 11:05 a.m. (ET)

Earlier comments (oldest first):

“For those not exporting it is ultimately their risk assessment that takes into account other listed obstacles to exporting compared to investing the same resources in expanding domestic sales into the large US market, that is perceived (fairly or not) as lower risk.” 4/30 9:50 a.m. (ET)

“Quite simply, the most significant constraint faced by U.S. seaports for increasing U.S. exports is the capacity and efficiency of the nation’s freight transportation infrastructure, both land- and water-side.” 4/30 11:57 p.m. (ET)

“Americans are generally very uncomfortable with anything non American. This is why expect for the large corporations many of the entrepreneurial businessman involved in exports are foreign born Americans who are more familiar & do not fear traveling & dealing with overseas buyers or government entities. The US Department of Commerce' budget should be increased to create more help desk support, more trade delegations visiting overseas + more network opportunities & creating export financing opportunities for small businesses.” 4/30 4:51 p.m. (ET)

“In the last appx 20 years the USA has developed the 'lazy way' of doing business. Everything is done by outsourcing, all the products are only assembled, therefore costing too much.

“Also too many USA execs do not have enough knowledge and the brain power to compete outside of the USA, because they do not know anything about their industry and the processes.

“For 99% of them the products are only a computer blips, and they know nothing about the products, but they think that they are experts who can do any goods. It is normal to see some ex bank director who is a VP for Product Development in the apparel corporation (?).

“Too many execs prefer not to touch the goods, just invoice it, or even better just invoice the profit amount which they are supposed to receive.

“Soon the biggest exporters from the USA will be Disney and Hollywood, and it is sad.” 5/1 1:31 p.m. (ET)

“The lack of space is the biggest obstacle that prevents us from more exports of our goods. That, coupled with the frequent attempts by ocean carriers to increase contract rates.

“Contracts are not worth a dime these days as the rules change constantly, can't get rates filed that were quoted as carriers plan to increase quoted rates within 30 days of original quote.” 5/2 5:31 p.m. (ET)

“Product support infrastructure: How will a customer in Europe get a product repaired without sending it back to the USA? Poor support stories from overseas that reach the web reach customers in the US and hurt sales.” 5/4 1:45 p.m. (ET)

See the survey, add your comment, cast your vote here.

More than Granola

Organic foods claim a bigger share of grocery carts

The U.S. Department of Agriculture (USDA) launched a weekly market report on organic fruits and vegetables in April, acknowledgement that natural and organic foods now claim a big share of the mainstream U.S. consumer’s grocery cart.

According to the USDA’s Amber Waves magazine, the past decade has seen a major change in organic product retailing. Independent and small-chain health-food stores used to be the main conduit to market for these products. By 2006, approximately half of all organic food was sold through such conventional channels as Safeway and Costco.

While fruits and vegetables have been top sellers in the organic category since 1997, non-produce items, such as beverages, packaged and prepared foods and, yes, snacks, accounted for 63% of consumer spending on organics in 2008.

You can learn more about this changing sector in the USDA’s Marketing U.S. Organic Foods: Recent Trends from Farms to Consumers. You can learn a good deal about the sector’s current appetite for imports (including natural product and conventional distribution channels) from The Datamyne’s U.S. imports and bill-of-lading databases: just ask us.

Sea Change for Bottled Water?

U.S. imports of water from Fiji are down sharply

CNN Living poses the question — has bottled water become the new eco-no-no? — and answers, not quite yet.

But trade statistics do show a marked drop in U.S. imports of “unsweetened water” (HS code 2201) from top sources France (Evian, Perrier, among others) and Fiji (Fiji Water and Aqua Pacific). See the Datamyne Top 5 U.S. Sources for Imported Water.

The backlash against bottled water has been building since at least 2006. Critics say emptied water bottles add unnecessarily to the waste stream … and potable water is too scarce a resource in some exporting countries to privatize. The fall-off in exports of Fiji waters may owe something to local politics; exports were temporarily banned in 2008. Some bad press last year (to which Fiji Water responded here) probably didn’t help sales.

Still, a product touted as “the next wine” by Bottled Water of the World clearly has a future in global trade. Indeed, while many high-end restaurants now offer a choice of bottled or tap water, Fine H2O, a self-described “premier importer and distributor of the finest, most unique luxury bottled waters from around the world” has opened its first boutique in Carmel-By-The-Sea, with others to follow in New York and Philadelphia.

The Datamyne Top 5 Sources for U.S. Imported Water

An Earth Day Story

The HS gets in the way of spreading environmental goods

What’s the difference between a pipe used in treating wastewater and a pipe that transports oil? A hotplate and a solar cooker? A refrigerator that’s energy-efficient versus an energy hog? In the Harmonized Commodity Coding and Description System (HS) — at the six-digit level — absolutely nothing. And that’s a problem for policymakers who would encourage global trade in environmental goods, or EGs.

World Trade Organization (WTO) members have worked for years to agree on EGs that would benefit from trade liberalization, starting with a list of around 400. In 2007, the U.S. and EU called on WTO members to eliminate tariffs no later than 2013 on 43 EG identified by the World Bank as being “climate friendly.” Last December, the U.S. Trade Representative signaled support for a plurilateral agreement within the WTO to lower trade barriers to EGs.

The World Bank’s 43 EGs, identified at the WTO-recognized six-digit HS code level used to specify tariffs and track trade, fall into seven categories:

1. Air Pollution Control
2. Management of Solid and Hazardous Waste
3. Renewable Energy Plant
4. Heat and Energy Management
5. Waste Water Management and Potable Water Treatment
6. Cleaner or More Resource Efficient Technologies and Products
7. Environmental Monitoring, Analysis, and Assessment Equipment

Trouble is, the six-digit codes lump together the environmentally good, bad and ugly, drawing no distinction drawn between, for instance, clean and dirty coal technologies. The World Bank proposes a “systematic alignment of harmonization standards.” The World Bank’s 2007 report is at http://bit.ly/bT13xv.

Suggesting the magnitude of realigning HS is the multi-year “mapping exercise” by the International Center for Trade and Sustainable Development (ICTSD) that would “set the stage” for customs classification of renewable energy, buildings, and transport goods. Reports to date are at http://bit.ly/96iBsH.

Of course, the HS codes also frustrate buyers and sellers trying to gauge EG market demand. Fortunately, there are other sources for detailed market information — such as The Datamyne bill of lading database — for the U.S, the largest import market for EG, taking in 13% of an estimated $215 billion in global exports in 2008. More global EG trade numbers are in a December 2009 Special Report from U.S. Sen. Ron Wyden, at http://bit.ly/a7oxCZ. To learn more about how The Datamyne can help research the U.S. import market, contact us.

Miss Swaziland's "Dubai"

There’s a name for re-exported, pre-owned, repurposed cars

News that General Motors sold more cars in China than in the U.S. in March sent us to the data on U.S. car imports and exports. Among other searches, we looked for 2009’s top destinations for U.S. “passenger motor vehicles with spark ignition internal combustion piston engines” — gasoline-fueled cars in the Harmonized Tariff System — and found, not surprisingly, NAFTA trading partners Canada and Mexico in the lead (see the Datamyne Top 5 Destinations for U.S. Car Exports). What did surprise was the United Arab Emirates in fifth place … until we realized the data included new and used cars. Filter out the used cars, and the top 5 markets for U.S. car exports last year line up as Canada, Mexico, Germany, Saudi Arabia, with China taking the fifth slot (keep in mind that GM’s China sales are through its Chinese joint venture).

Focus only on used vehicles, and the UAE, home to one of the world’s major used-car marts, moves to the top of the list. The Dubai Cars and AutoMotive Zone (DUCAMZ) opened in April 2000 with the objective of re-exporting used cars, SUVs, and mini-vans, and their parts. The re-exports are commonplace in south Asia and Africa, many repurposed as taxis and kombis or mini-buses for hire. Indeed, in some markets, a “Dubai” is slang for “pre-owned vehicle,” as the headline on a story in the Times (Swaziland) about one of the newly-crowned Miss Swaziland’s prizes, a pre-owned Opel Astra, indicates. (DUCAMZ was in the news earlier this month as the zone’s car dealers protested the implementation of a new customs declarations system, now temporarily suspended.)

As with Miss Swaziland’s Dubai, the DUCAMZ re-exports are mostly Japanese makes and models. With its huge domestic market for used cars, the U.S. has not been a major source. But that was changing: U.S. used vehicle exports overall were up by more than 50% in 2008 — before the global financial crisis threw the trend into reverse. Based on January-February trade data, it looks like exports are climbing again, but not yet to the heights of 2008.

The Datamyne Top 5 Destinations for U.S. Cars

U.S. Export Market Sourcebook

ITA annual on FTAs, top trading partner nations available for download

The International Trade Administration’s Top U.S. Export Markets, published annually since 2007, consists of two-page fact sheets on 14 current or pending free trade agreements and on 50 countries (plus the European Union) that are leading markets for U.S. exports. The fact sheets cover basic economic data for the past three years, such as gross domestic product, exports and imports, trade balance with the U.S., and the level of foreign direct investment. Charts show the leading U.S. exports to each trade partner by industry category, U.S. market share, and other trade information. Download your copy at http://bit.ly/a7rCvm

Clock Stops on Countdown to Tariffs

Brazil, U.S. reach agreement in 11th-hour talks

Brazil’s threat to impose stiff tariffs on a range of U.S. products and commodities as of April 7 has been withdrawn thanks to negotiations that began April 1 and concluded with an agreement announced April 6.

The tariffs were to be in retaliation for U.S. government subsidies to American cotton growers.

In exchange for Brazil’s agreement not to impose countermeasures, the U.S. agreed to work with Brazil to establish a fund of approximately $147.3 million per year on a pro rata basis to provide technical assistance and capacity building. Under terms to be agreed by the U.S. and Brazil in a Memorandum of Understanding, the fund would continue until passage of the next Farm Bill, or mutual agreement on a solution to the cotton dispute, whichever is sooner.

The U.S. also agreed to make some near-term modifications to the operation of the GSM-102 Export Credit Guarantee Program, and to take steps to clear the way for U.S. imports of fresh beef from the Brazilian state of Santa Catarina.

Following these initial steps, the U.S. and Brazil will continue discussions with a view to agreeing on a process by June that resolves the cotton dispute. See the full text of the U.S. Trade Representative release at http://bit.ly/auwN0A

Update: 4/21/10 Brazil’s Foreign Relations Ministry announced it will suspend tariff retaliation on U.S. goods 60 days while it studies the U.S. offer of compensation for domestic cotton subsidies.

The Datamyne Top 5 U.S. Imports from China

Plastic Bag Tug of War

First-ever countervailing duty to be imposed on Vietnam

The Department of Commerce has issued final determinations of anti-dumping duties to be imposed on plastic grocery bags made in Taiwan, Indonesia, and Vietnam.

Polyethylene retail carrier bags — or PRCBs — have been the source of trade disputes between U.S. domestic producers and Asian manufacturers for years. These latest duties are the result of an International Trade Commission (ITC) import injury investigation launched last year. The ITC is expected to announce its final decision April 14. (Access the files on the preliminary and final phases of the ITC investigation here and here.) A second investigation focused on PRCB exporters in China, Malaysia and Thailand is also underway, with a final report due May 24 (ITC files here).

King & Spalding, legal counsel for the petitioners requesting both investigations, provides company-specific details of the ITC determination that sets dumping margins ranging from 69.64% to 85.17% for Indonesian producers, and 52.30% to 76.11% for Vietnamese producers. An earlier release covers the Taiwanese margins, which range from 36.54% to 95.81%.

Dumping margins of this dimension effectively bar the affected exporters from the U.S. market. When game-changers like this occur, The Datamyne’s bill of lading database can provide the transaction-level detail needed to locate supply-chain disruptions — and new opportunities to source or supply, ask us how.

Plastic Bags Upstream & Down

PRCBs are once and future export drivers

Stepping back from the trade tug of war over the U.S. market for polyethylene retail carrier bags, overseas suppliers make a positive contribution to growth in U.S. export sales of the low density polyethylene resins from which PRCBs are made.

PlasticNews reports that LDPEs, along with five other major commodity resins tracked by the American Chemistry Council, showed domestic sales losses in 2009, but posted overall growth thanks to big boosts in sales to export markets.

Downstream, discarded PRCBs have become such an environmental headache that some localities are outlawing them. While the American Chemistry Council reports recycling has reached an all-time high, only about 13% of plastic bags are recycled annually. And yet … the major market for the recycled material is the nascent composite-lumber sector. As composite lumber builds share in home and commercial construction, international demand for scrap plastic has begun to edge up. This new video explores both sides of the recycling issue.

Global Bounce Back

WTO forecasts 9.5% growth in trade volumes

The World Trade Organization (WTO) projects a rebound in world trade in 2010, recovering some, but by no means all, ground lost in 2009, when global trade volumes contracted 12.2% — the largest decline since World War II. If growth keeps to the current pace, it will take another year for trade volumes to surpass 2008 peak levels.

The WTO report measures trade on a volume basis because it provides a more reliable point of year-by-year comparison, undistorted by changes in commodity prices or currency fluctuations.

One good thing about the dismal year just past: no significant new barriers to trade were raised. Trade volumes tumbled because global demand contracted. The mix of products involved, the presence of global supply chains, and the synchronization of decline across countries were factors that steepened the fall.

U.S. Imports Surge

Latest stats from The Datamyne show 15.9% jump in February

The Datamyne’s latest statistics from its U.S. imports bill of lading database show imports recovering this February as compared with February 2009, but still short of prerecession levels.

Here are the TEU (20-foot equivalent unit) tallies:

Feb. 2010 1,120,239
Feb. 2009 966,942
Feb. 2008 1,394,173
Feb. 2007 1,442,657

Container shipments from China, the top source for U.S. imports, were up 3.5% in January, and 23.2% in February, compared to the same months one year ago, final figures show.

Earlier data on increased imports coupled with discouraging returns on such indicators as consumer confidence and disposable income led Bill Armbruster to wonder whether the surge in imports is a triumph of hope over reality (see Cockeyed Optimism).

Bands of Gold ...

… already tie U.S. & India as they sign trade framework

U.S. Trade Representative Ron Kirk and Indian Minister of Commerce and Industry Anand Sharma signed a “Framework for Cooperation on Trade and Investment” March 17, and followed up by launching the “Integrating U.S. and Indian Small Businesses into the Global Supply Chain” initiative. Both governments have recently implemented policies aimed at getting more small businesses to engage in cross-border trade, the U.S. with the National Export Initiative, and India in the form of 2010-11 budget objectives that extend a subsidy for small and medium exporters. U.S.-India trade has more than doubled in the last five years.

The Datamyne ranks “petroleum oils and oils from bituminous minerals” (HS 270900) as India’s leading import from the U.S. Ranked number 2 and 3 are “gold, nonmonetary, unwrought” (710812) and “gold, nonmonetary, semimanufactured” (710813) — to be expected, given that India is the leading consumer and the U.S. one of the leading sources for gold (although The Datamyne top 5 U.S. exporting districts may surprise).

India is also one of the largest exporters of gold jewelery items in the world. India’s export of gold jewelery products in February 2010 saw a big jump of 37.51% compared to the same period last year, according to provisional figures released by India’s Gem and Jewelery Export Promotion Council (GJEPC). Closing the circle, U.S. is the largest importer of India-made gold jewelery items.

The Datamyne can help you learn more about opportunities to buy and sell in India. Contact us.

The Datamyne Top 5 U.S. Export Districts Gold to India

Designing in NY?

… Design Your Export Future

The U.S. Commercial Service is offering Exporting 101, a one-day seminar featuring executive-level, pragmatic presentations from experts in international business expressly for designers of apparel, films/videos, footwear, furniture, consumer goods, jewelry, toys/games, textile fabrics. Register here for the April 13 seminar in NYC.

Brazil's Countdown Continues

Scope of threat broadens
Brazil has broadened the scope of threatened retaliation to include 21 new items, including pharmaceuticals, music and movies (http://bit.ly/cQQ7a8), which would be subject to not only tariffs but also suspension of patents and intellectual property (IP) rights (http://bit.ly/cLNimL). Without concessions from the U.S., the higher tariffs on the original 102 targets are set to go into effect April 7.

The Datamyne Top 5 Brazil’s U.S. Imports

Speed Dating for Customers

The Commerce Dept. wants to make you a match

Last Thursday, Commerce Sec. Gary Locke took questions during a live webcast about the administration’s National Export Initiative (NEI) to double U.S. exports in the next five years. (You can watch the webcast at http://trade.gov/.)

American products are highly valued and in great demand abroad, Locke says. “We simply need to match up those American companies, especially the small and medium-size companies who don’t have a huge marketing department, to help them find the customers and buyers for those American-made products and services.”

Locke describes the work of his Dept.’s foreign commercial service officers and trade specialists in over 130 cities around the world: “Their sole job is to find customers and buyers for U.S. companies. It’s almost like speed dating. There are various programs where, for instance, our people will actually look up potential customers, arrange for them to come to one location, and you as a company owner would go, let’s say, to Budapest, Hungary, sit down in a room at the consulate, and we will bring, let’s say, eight or nine of those potential buyers or customers to you every half hour on the half hour, and you conduct the interviews.”

He’s talking about programs, starting with the Gold Key Program, that have been around for a while, as he acknowledges, but they haven’t been publicized enough. “Not enough people know of our services. And so that’s why we have a toll-free hotline to connect up with people … and we have people here in the U.S. that will sit down, talk with that American company, find out what their strengths, expertise is, and then connect them with potential markets around the world.”

We're happy to help by publicizing the hotline: 1-800-USA-trad(e). Can anyone who's called the hotline tell us what happened next?

Brazil’s Retaliatory Tariffs

After 8 years, 30 days to sanctions

With the approval of the World Trade Organization, Brazil is set to impose tariffs on a range of U.S. products and commodities in retaliation for U.S. government subsidies to American cotton growers.

The trade dispute started in 2002 when Brazil went to the WTO with its complaint against the U.S. subsidies and their impact on Brazilian cotton. The WTO sided with Brazil in 2004 and its decision was upheld on appeal in 2005. In 2006, the U.S. agreed to comply with WTO recommendations; but a 2007 WTO review found the U.S. had fallen short on compliance. A 2008 WTO arbitration panel set the parameters for retaliatory action. (This synopsis is based on a policy statement from U.S. Wheat Associates, a trade group anxious to increase U.S. wheat’s share of the Brazilian market.)

On March 3, Brazilian Foreign Minister Celso Amorim, said the U.S. had 30 days to negotiate a bilateral agreement with Brazil to avoid the new tariffs. On March 8, Brazil published the list of 102 import products on which it intends to levy tariff increases. You can see the complete list here: http://www.bit.ly/bI5OZp. The product descriptions are in Portuguese, but the tariff codes and percentages don’t need translation. Top U.S. import crude oil (see The Datamyne Top 5 Brazil’s U.S. Imports) is not on the list, but #2 passenger motor vehicles is.

The Datamyne Top 5 Exporters of Wine from Chile to the U.S.

Cockeyed Optimism

The surge in imports may be a triumph of hope over reality.

By Bill Armbruster
Have U.S. importers been too optimistic about growth prospects in the U.S. this year?

I think so — and I think that helps explain why there such was a mad scramble for container space out of China in January and the first half of February. Sure, importers wanted to get their goods on the water before factories shut down for a week or two during the Chinese New Year, which began Feb. 14. But there’s always a rush before Chinese New Year. This year’s frenzy was unprecedented.

The chaos was largely due to carriers’ cutbacks in capacity, as I discussed in my last blog entry. In fairness to the carriers, they were caught off guard by the surge in demand. Part of the reason for that surge was the need for importers to replenish inventories. Merchandise was flying off their shelves, so it was natural to feel that they had to step up their orders.

A Bureau of Economic Analysis report showing that personal spending in January was up 0.5% over December — seems to add ground for that sense of optimism. However, that same report shows that disposable personal income – what’s left after taxes — was down 0.4% in January.
Another disappointing indicator was February’s sharp decline in consumer confidence. After rising for three straight months, the Conference Board Consumer Confidence Index dropped to 46.0, down from 56.5 in January.

Meanwhile, the housing market isn’t looking any better. Existing-home sales fell in January, and the market could be in for a rough ride once the home buyer tax credits end on April 30, according to the National Association of Realtors. Housing is a major driver of the import market because people tend to buy more home furnishings when they are moving into a new home. In addition, no meaningful recovery in commercial real estate is expected before 2011.

Most analysts are forecasting 8 to 10% increases in import containers this year, although the Port Tracker report for February, prepared by Hackett Associates and the National Retail Federation, projected that retail container imports would be up 25% in the first half of 2010. Look for that projection to come down to about 15% in this month’s Port Tracker, but it still seems wildly incongruous with the NRF’s forecast that retail sales will grow just 2.5 percent this year.

As for the data on container trade, The Datamyne’s figures show just a 2.8% increase in arrivals of container imports from China in January. Final figures for February will not be available until March 15, but preliminary figures show an increase of about 12 to 13%. I would not be surprised if it’s even higher. Watch this space for the final tally.

I’ve let you know what I think, but what do you think about the container market this year? Please post your comments below.




About Bill Armbruster

Bill Armbruster, the anchor for The Datamyne Blog has covered shipping and trade for 30 years as a reporter and editor with The Journal of Commerce and Shipping Digest. “I’ll be blogging on headline news and current issues in oceangoing commerce, trying to shed some light on the backstories and, wherever I can, supply some sound advice for shippers.” Write to Bill@TheDatamyne.com

The Day the Earth Got Knocked off Its Axis …

… in other news, trade in wine, fish, fruit is disrupted

The Chilean earthquake may have shifted the Earth’s axis by 3 inches and shortened the length of an earth day by about 1.26 microsecond NASA calculates. It has most certainly caused hundreds of casualties and at least $US30 billion in damages.

Now add to the toll the disruption of Chile’s export sectors.

As the AP reports (here, in the Miami Herald), the tsunami that hit Talcahuano wiped out that port city’s $40-million business in anchovies and sardines. The quake chewed up the nation’s only north-south highway, halting shipment of farm-raised salmon. According to The Datamyne’s trade data, Chilean exports of fish (fresh and frozen) and fish products were valued (FOB) at more than US$1.1 billion in 2009.

The Maule region, most affected by the quake, is the heart of Chile’s wine growing region. Chile’s biggest winemaker, Concha y Toro, said Monday that it would be halting production for at least a week.













All told, Chile exported approximately US$50 billion in 2009, with the U.S., its second-biggest market, buying US$5.6 billion worth of goods and commodities.

Not all the news is bad: Chile’s copper mining and refining operations, concentrated well north of the quake epicenter, were relatively unscathed. Key ports of departure for Chile’s top export, Antofagasta and Mejillones, were back in operation within hours.

The Datamyne Chilean database provides comprehensive information about the nation’s import-export trade — including bill of lading details about transactions. The Datamyne’s data assets can also be used to locate alternate sources of supply in the Americas, Asia and Europe. To learn more, click here.

The Datamyne In the News

The March cover story in American Shipper (subscription only) on “The Resilient NVO” features data and analysis from The Datamyne, including the top 100 non-vessel operating common carriers on Asia-to-U.S. and Europe-to-U.S. trade lanes based on TEU volumes, 2008-2009, as well as market share charts for the top 10 in both directions — Asia to U.S. is shown here.

The Datamyne Top 5 Sources of U.S. Citrus Imports

Low Expectations

U.S. consumers are pessimistic; confidence is back in Asia, Brazil

The Conference Board Consumer Confidence Index (released Feb. 23, based on a survey of 5,000 U.S. households through Feb. 17) now stands at 46.0 (1985=100), down from a relatively optimistic 56.5 in January. The closely watched indicator, based on a monthly survey by TNS, echoes other measures of the American consumer’s readiness and/or willingness to spend. The Reuters/University of Michigan Surveys of Consumers on Feb. 12 reported its preliminary index of consumer sentiment for February was 73.7, down from 74.4 in late January (but up from 56.3 a year ago).

Is the pessimism universal? The latest Nielsen Global Consumer Confidence Index shows the consumers of Latin America (at 98 on a scale of 0 to 200) and Asia/Pacific (at 91) well ahead of their counterparts in North America (84) and Europe (77) when it comes to confidence, with the biggest gains in the markets recovering fastest from recession — including Hong Kong, China, Singapore, India, and Brazil. [Note: The Datamyne covers China, India and Brazil.]

But post-holiday second-thoughts about what lies ahead can dampen spirits in even the strongest markets. The Getulio Vargas Foundation (Fundação Getulio Vargas), which saw a boost in its Brazilian Consumer Confidence Index in January to 113, now reports [in Portuguese] slippage of 2.2 point in February. The current 110 is still well above the historical average of 107.

OJ on Ice

A January cold snap spikes the price of citrus

Latest assessments from the U.S. Department of Agriculture put the loss to Florida citrus growers from January’s cold snap at 7.4 million boxes of fruit at minimum — this on top of a harvest forecast that was already 20% off peak. Bad news for consumers but, as The Ledger of Lakeland, Fla., reports, by forcing prices up the freeze-related losses may have turned a money-losing 2009-10 season into a profitable one for growers, especially in groves that escaped significant damages.

For produce wholesalers and distributors who want to protect profit margins, one option is to look for alternative sources in California or Texas (also affected by the cold snap, although with more damage to onions than citrus) — or further afield. The Datamyne can help here: our bill of lading database yields current information on who’s shipping citrus now; and our international databases include the top countries for U.S. citrus imports, Mexico, Spain and Chile. To learn more about using The Datamyne to find new sources or new customers, contact us.

Update: On February 27, Chile was struck by an 8.8 earthquake. Aftershocks continue to hamper rescue and recovery. Go to http://www.google.com/relief/chileearthquake/ if you are looking for or have information about someone in Chile—or want to contribute to relief efforts.

Tainted Tomatoes

Fraud steals into the food supply chain

Kraft Foods is just one of the higher-profile victims of a scheme to sell millions of pounds of moldy or otherwise defective tomato products. Federal prosecutors say more than 55 companies may have inadvertently moved the tainted shipments through supply chains and out to consumers, the New York Times reports. The culprits at SK Foods were able to move substandard tomato paste and puree by bribing purchasing managers (at Kraft, Frito-Lay, Safeway, and B&G Foods) and by falsifying the documentation on sales to other customers.

One commentator points out that, while product tainting is often associated with imports, this case was made entirely in the USA. The take-away is that supply chains need close monitoring, both to prevent distribution of bad product and to roll it up if reaches the market by accident or by criminal intent. When the supply chain crosses borders, The Datamyne can help: contact us to learn how.

Engine for growth

Betting that more exports = more jobs

The Obama administration’s National Export Initiative (NEI) aims to double U.S. exports over the next five years by expanding government promotion efforts. The ultimate goal is job creation. As the Economic Report of the President concludes: “If consumption and construction are not the drivers of growth going forward in the way they were in the early 2000s, two components of private demand are left to fill the gap: business investment excluding structures and net exports.” In 2008, exports represented the work of roughly 10 million American workers.

The NEI calls for an additional $132 million for the Commerce Department’s International Trade Administration (ITA), and the Department of Agriculture to educate farmers and businesses about opportunities overseas and directly connect them with new customers. The NEI also seeks improved access to credit, especially for small- and medium-sized businesses, and increased government focus on knocking down barriers that keep U.S. companies from foreign markets. (Read more details here.)

Of course, you don’t have to wait for Congress to approve a bigger budget for the ITA, you can identify overseas business opportunities today with The Datamyne’s commercial intelligence: contact us to learn more.

Cloudy with a chance of …

Trade outlook depends on the dollar’s rise and fall

Back from a three-day weekend you might have picked up a copy of the Wall Street Journal on Tuesday to find the U.S. dollar had strengthened relative to the euro, the result of a crisis of confidence in the European Union’s ability to cope with the struggling Greek economy. If, on the other hand, you read the Journal’s digital edition online with your morning coffee, you learned that the dollar’s surge had snapped as investors pushed the euro to its biggest single-day gain since July.

No matter whose trade forecast(s) you follow, the biggest variable (barring catastrophe) is the rise and fall of the U.S. dollar — and that can turn on a dime.

You can follow the dollar’s fortunes online with ICE U.S. Dollar Index (USDX), a leading benchmark for the international value of the U.S. dollar since its origination by the New York Board of Trade, or NYBOT. (The ICE, or Intercontinental Exchange, acquired NYBOT in 2007.) The ICE USDX Futures line graph captures the dollar’s fluctuations intraday or, over the last 3 months, year, or 2 years. The dollar-tracker at INO.com offers a bit more detail, and a few more choices of short timeframes. To monitor trends and calculate the value of your dollars against 164 currencies and 3 metals, try the Oanda currency converter.

The Datamyne Top 5 U.S. Exports to South Korea

The Datamyne Top 5

Top U.S. Export Markets

"We will double our exports over the Next five years..."
– President Obama, SOTUS, January 27

Here's where we start:
Top Countries of Destination
2009 - JAN to NOV - FOB Value US$

The Big Squeeze

Coping with capacity shortages and rising rates

By Bill Armbruster

The Problems:

• Shippers are facing severe shortages of vessel capacity. Even some who have booked shipments weeks in advance and who are regular customers have had their containers “rolled” at the piers because container carriers are giving priority to bigger customers and/or those who are willing to pay more.

• Carriers are demanding – and getting – hundreds of dollars in rate increases, regardless of the rates they agreed to in contracts signed last year. Carriers in the trade from Asia to the U.S., for example, posted “emergency recovery charges” of up to $400 a box. Space was so tight in the weeks prior to Chinese New Year that some imposed an extra $200 a container just to guarantee that the shipment moved on the booked voyage.

• Besides the shortage of vessel space, there is also a shortage of containers. Carriers have slashed intermodal service so that shippers, particularly exporters in the U.S. interior, have to make their own arrangements with truckers or railroads to move their cargo to the port. This can cost upwards of $2,000.


The Cause:

In order to raise rates, carriers reduced the supply of capacity by laying up their own ships, returning chartered vessels to their owners, by slow steaming, by eliminating services, and through vessel-sharing agreements.

The Background:

Carriers’ bottom lines have taken a huge hit over the past few years. I see four reasons for their plight. The first two are their own fault.

• The Great Recession. With the biggest contraction in trade since World War II, cargo volumes tumbled in 2008 and 2009. The plunge in imports especially hurt the carriers’ bottom lines because their rates on finished goods, which dominate imports, are much higher than the low-value commodities such as waste paper, scrap metal and hay that dominate U.S. containerized exports.

• Billion-dollar buying binges. Carriers invested massive amounts of money on large new vessels – enough to double the capacity of the world container fleet by 2013.

• The race to the bottom. In a desperate bid to get whatever revenue they could, carriers slashed rates by hundreds of dollars a container – even when shippers didn’t ask them to do it.

• Bunker busters. Soaring oil prices, which topped off at $147 a barrel in mid-2007, sent bunker fuel costs so high that for a while they accounted for more than half of voyage operating costs.

What Shippers Can Do:

Unfortunately, the options are limited, given the carriers’ success in tilting the supply-and-demand equation in their favor. But here are some ideas:

• Plan ahead. Try to determine your future needs.

• Communicate those needs to your carriers.

• Book your cargo early – perhaps even four to six weeks in advance.

• Be flexible. For example, consider alternative ports even if the inland transportation will be more expensive.

• Work with your truckers, and perhaps with other shippers in your region. For example, if you’re an exporter based in the U.S interior, you may find a trucker who is delivering import containers to a site near your facility. Perhaps the trucker can deliver that container to your facility and then carry your cargo in that container back to the port. You may be able to split the extra cost for the inland move with an importer.

• Inform your customers that your shipment may be late reaching them. Also tell them that your transportation costs are rising, and that you may want them to share in that extra cost.

• Finally, be realistic. Accept that you are going to have to pay more and that you may have to face some delays.


About Bill Armbruster

Bill Armbruster, the anchor for The Datamyne Blog has covered shipping and trade for 30 years as a reporter and editor with The Journal of Commerce and Shipping Digest. “I’ll be blogging on headline news and current issues in oceangoing commerce, trying to shed some light on the backstories and, wherever I can, supply some sound advice for shippers.” Write to Bill@TheDatamyne.com

As Seen on TV

Who makes this stuff?
The Snuggie wearable blanket, the PedEgg foot callous file, TopsyTurvy upside down tomato planter — these and more solutions to problems you didn’t know you had until you saw the infomercial are brightening up an otherwise gloomy retail sector.

As reported in the Wall Street Journal (link here: subscription required), the recession has driven down traditional consumer companies’ advertising and the cost of television air time. As Seen on TV — or ASOT — marketers’ rushed in to fill the gap and found a newly cost-conscious audience eager to buy their low-priced merchandise. So successful are the ASOT pitches that the products are moving out of the ether and into bricks-and-mortar retail outlets near you, including Wal-Mart, Target, Bed Bath & Beyond, and Walgreens.

The WSJ focuses on the inventors of these thingamabobs and the marketers who recognize their telegenic potential. But who makes this stuff … and makes the discount price possible? As Telebrands founder A.J. Khubani recounts his pioneering success in the ’80s, he saw UV sunglasses advertised for $59.99, got in touch with his father’s Taiwan-based supplier who agreed to make them for $1.00, then sold them for $10.00.

Your dad doesn’t have offshore contacts? You can turn to The Datamyne. A quick search of The Datamyne bill of lading database found Asad International of Hong Kong (Loud ’n Clear personal amplifiers), China’s Longhai Jun-Yi Metal Co. (Perfect Brownie Pans), Ningbo Dongrun Leisure Products (TopsyTurvy planters), and many more manufacturers (as well as other ASOT marketers such as Ideavillage and Allstar Marketing). To learn more about using The Datamyne to find new sources or new customers, contact us.

Trade Winds – The Americas

Still some room at the forum
One of the most important regions for U.S. exports is the Americas, market for more than $525 billion in U.S. merchandise in 2008. The Trade Winds Forum, to be held this year in São Paulo April 25-30, is the signature event of the U.S. and Foreign Commercial Service. The multi-sector trade mission is overbooked … HOWEVER, alternative programs taking place in São Paolo and Rio de Janeiro have been opened for companies in select industries, including architecture/construction/engineering and transportation. Click here to learn more.