Negotiating Next Year’s Trucking Contracts - Setting the Stage for LTL Pricing, Service, & Capacity
Thursday, Dec. 4, 2008 1:30 PM EDT

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Falling volume, reduced capacity and changing operating networks have created one of the most dynamic pricing environments in recent years for shippers and carriers alike. Heading into 2009, carriers are focused closely on increasing efficiency, maximizing yield in an economy where demand is low and stakes are high. Consolidation, growing bankruptcies and failures of high-profile operators suggest the economic peril afflicting the carrier ranks and that means the stakes have never been higher for shippers.

How do manufacturers, distributors, retailers and other shippers ensure their goods get to market with the least possible risk and the greatest possible return on the transportation investment? How can shippers set the needed safeguards against the volatility in energy costs and the uncertainty in services that made 2008 such a difficult year? More importantly, how can logistics managers and transportation buyers take the lessons of the past year to the negotiating table as they prepare for trucking contracts in 2009 that will protect their companies’ interests and set a foundation for economic recovery.

A live questions and answer session will follow the presentations.

Speakers include:
Moderator: Paul Page, Editor, Traffic World
Gary Girotti, Vice President, Transportation Practice, Chainalytics
Gail Rutkowski, President, Wabash Worldwide Logistics and Chairman of the Executive Committee, NASSTRAC

Who Should Listen:
Logistics Managers
Intermodal Marketers
Transportation Planners
Purchasers
Distributors3PLs

Live participation is $99 and allows access to one phone line for an unlimited number of listeners. A live question and answer session will follow the presentations.
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Unclaimed Cargo Clogs Indian Ports
Indian Times and World Trade Magazine

AHMEDABAD: The meltdown in the West has started to clog Indian ports. Container Freight Stations (CFS) at two of Gujarat's biggest ports, Kandla and Mundra, are spilling over with unwanted goods. With the world having gone upside down in the last six weeks, importers are shying away from claiming their cargo and many exporters are busy re-negotiating deals with overseas clients. As against an average of 300 uncleared containers at any point in time, there are over 2000 containers lying unclaimed in the 16 CFS in and around both the ports, since the clogging started one month back.

Conjestion at the Inland Container Depot (ICD) in Ahmedabad has increased by 70% in the past couple of weeks alone. There are around 1800 containers lying unclaimed here.

"We have around 1900 containers unclaimed, mostly of scrap. Importers dealing in scrap have not come to collect their cargo because of the crash in prices. Also, the rupee depreciation has resulted in increased landed cost of cargo," said a Kandla Port Trust (KPT) official. Prices of scrap in local markets have crashed by almost half -- from Rs 33 per kg to Rs 18 per kg.

The scene is slightly better with exporters. "Some consignments of pharma and chemical companies too are lying as these firms are trying to re-negotiate with their foreign clients," said an Ahmedabad-based clearing and forwarding agent. Industry sources say an average of 4500 containers are exported from one ICD every month. Jyotindra Kothari, president of Ahmedabad Customs Agents Association, says "unclaimed containers are shooting up." Market sources said that decision of the central government to impose 5% import duty on steel could ease the piling up of scrap imports.

VWP Travelers Need Electronic Authorization
News from Export News -- U. S. Department of Commerce

AS OF JANUARY 12, VWP TRAVELERS NEED ELECTRONIC AUTHORIZATION
Have plans to host an international visitor next year? Beginning January 12, 2009, all
Visa Waiver Program (VWP) travelers will be required to have an electronic travel authorization
to board a carrier and enter the US. The Electronic System for Travel Authorization (ESTA) is a new requirement implemented by the 9/11 Act to determine the eligibility of VWP visitors to travel to the U.S. The program affects all 27 VWP countries. Travelers must log on to the secure, web-based ESTA system and provide basic biographical and travel information. Each application is then checked against law enforcement databases, including the terrorist
watch-list, lost and stolen passport records, and visa revocation/ refusal files, to determine if the traveler poses any security risk. Applications must be submitted at least 72 hours prior to travel. For details, see www.cbp.gov/xp/cgov/travel/id_visa/esta/.

Despite storms and economy, Gulf ro-ro still rolling
November 10, 2008 By Paul Rosynsky Break Bulk News

Given the economic crisis in the U.S. and a devastating hurricane that ripped through

Texas earlier this year, it would be easy to believe that most shipping industries along the Gulf Coast are struggling.

Consumers aren’t buying as much as they once were, and Hurricane Ike damaged a key port that shippers depend on to ship roll-on, roll-off goods to and from the Gulf Coast.

But representatives from companies that are focused on the ro-ro sector of the shipping industry said their business continues to grow despite the gloom and doom being felt throughout the U.S.

Infrastructure building booms in Latin America, the Middle East and Asia coupled with a quick recovery from Hurricane Ike at a key ro-ro port in Texas have many ro-ro carriers cautiously optimistic that they might escape the downslide.

“The ro-ro business, over the last five to six years, has grown,” said John Felitto, executive vice president and deputy head of region Americas for Wallenius Wilhelmsen Logistics. “And our customers still see growth.

“The trade between the United States and Latin America remains strong,” Felitto added.

That optimistic view has Wallenius Wilhelmsen looking to add a third vessel to its direct service between the Port of Galveston and Latin America. The company is also looking for a possible expansion of its direct service between the port and the Middle East, Felitto said.

Currently, Wallenius Wilhelmsen has two vessels on its Galveston-to-Latin America service making two calls a month at the port. Typically, southbound vessels call at Galveston; Veracruz, Mexico; Manzanillo, Panama; Cartagena, Colombia; Puerto Cabello, Venezuela; and Rio Grande, and Santos, Brazil.

The company focuses on high and heavy cargo such as manufacturing equipment and construction vehicles, but recently added cars as a cargo when it replaced its older vessels with pure car-truck vessels.

WWL also boosted its trade with the Middle East from Galveston, placing two vessels on the route in the middle of the year with plans to possibly add a third vessel next year, Felitto said.

Cargo in the Middle East trade is similar to the Latin American trade, Felitto said, with construction and manufacturing equipment filling vessels.

Sailings eastbound call at Galveston, Jacksonville, Savannah, Baltimore, Jeddah, Jebel Ali, Dammam and Kuwait.

In addition, WWL has 21 vessels currently being built that will be added to the global fleet over the next four years.

Along with Hoegh Autoliners and “K” Line, WWL has made Galveston its ro-ro hub on the Gulf Coast and was pleasantly surprised when the port was able to service vessels just eight days after Hurricane Ike devastated the region on Sept. 13.

“We expected a much larger disruption but we didn’t see it,” Felitto said. “The speed at which they recovered, as well as the personal commitment (of port personnel), was amazing.”

Cathi Lee, a senior import coordinator for Hoegh Autoliners, agreed. “Texas should be very proud of the people who work there,” she said.

Lee said Hoegh Autoliners thought it would have to redirect a vessel bound to Galveston right after the storm, but the port was able to service the vessel at its scheduled call.

“We still called, which I was shocked about,” Lee said.

Hoegh Autoliners began a new service into Galveston two years ago with direct service from Korea and Japan through the Panama Canal. The vessels usually call at Galveston once a month and occasionally twice a month, Lee said.

Lee said the route is focused on imports to the U.S. but exports the occasional project cargo load.

Like WWL, Hoegh’s ro-ro cargo is dependent on heavy machinery and manufacturing equipment, Lee said.

“The service has been absolutely steady. If we can get more ships going we would certainly have the cargo for it,” she said.

Steve Cernak, executive director for the Port of Galveston, said a decision several years ago to focus on ro-ro cargo is now paying dividends.

The port has seen yearly increases in the amount of ro-ro cargo it receives for nearly a decade and, despite the storm, it will probably see an increase this year as well, he said.

In 2007, the Port of Galveston handled 243,431 tons of ro-ro cargo. As of August 2008, the port has handled 212,067 tons, a pace that could see it handling more than 318,000 tons by the end of the year.

“It has become one of our major opportunities,” Cernak said. “It was an opportunity for Galveston. Containers were supplanting ro-ro in other ports, so we went after the ro-ro.”

The focus on ro-ro also helped the port reopen more quickly than expected since cranes and warehouses are usually not needed for such shipments.

Cernak said a little bit of luck and pre-storm planning helped the port see a quick recovery from Hurricane Ike.

The luck came because some of the port’s critical infrastructure needed to handle ro-ro was spared by Ike; the planning came as the port board of trustees pre-authorized Cernak to spend roughly $55 million in repair contracts.

So far, Cernak said the port has spent about $10 million for emergency repairs. He predicted all $55 million will be used before the port has finished restoring itself.

In addition, he said, this money should be reimbursed by insurance.

Overall, estimates for total hurricane damage at the port have ranged as high as $500 million, including damage to the berm around the port’s dredge materials area on Pelican Island and possible washouts and below-waterline damage in some sections of the port.

However, “we’re probably at 60 to 70 percent operational right now,” Cernak said by cell phone. “It was just a matter of doing it. There were certain areas of the port that escaped damage and that is where we serviced the vessels.”

While the port’s main administration building saw significant damage, Cernak said most bulkheads remained intact, allowing the port to begin servicing vessels within a week of the storm.

“The critical operations, we were spared damage at those facilities. I guess you can say we were lucky,” he said. “But, for ro-ro, it is really just uplands and the water just passed over it.”

Officials at the Port of Gulfport in Mississippi can only wish that their complete recovery from Hurricane Katrina could have been as smooth. The port is still wrangling with many challenges. However, more than three years after Katrina, the port is operating its ro-ro facilities at 100 percent, said representatives of Crowley Maritime Corp.

Crowley makes three vessel calls a month at Gulfport, filling its ro-ro vessels with containers, road construction equipment and manufacturing supplies and machinery. The vessels work on Crowley’s North American to Latin American trade route.

From Gulfport vessels call Santo Tomas, Guatemala; and Puerto Cortes, Honduras. Crowley also offers overland service from the two Central American ports to El Salvador and Nicaragua.

Charlie Dominguez, Crowley’s vice president of sales for Latin America, said a booming textile manufacturing industry in Central America and basic infrastructure improvements have helped keep the service at capacity in 2008.

Crowley has also benefited from large construction projects in Panama, including the widening of the Panama Canal and construction of an oil refinery.

“I do not see the impacts of the global catastrophe of economics in our business yet,” Dominguez said. “But it is too early to make that call.”

Dominguez said he fears the global financial crisis could slow the pace of Central America’s infrastructure improvements.

However, Crowley’s trade routes servicing Gulfport also rely on perishable foods which are shipped in refer containers on trailers. Dominguez said he doubts food goods will see a decline.

“A lot of the things we move are food. Our feeling is that consumers will not stop eating,” he said. “I also still see a continued investment in energy production.”

As for Crowley’s Gulf Coast hub, Dominguez said the company could not be happier with Gulfport, which has struggled to recover from Katrina. “The port is fully functional,” although, he said, some of the improvements have occurred more slowly than expected. “We just got back this year to three sailings a week.”

While the Gulf region’s larger ports such as Houston and Tampa still handle ro-ro cargoes, those industry executives interviewed said smaller ports will soon have a monopoly on the trade.

Once the Panama Canal is widened and containerized cargo begins to flood the Gulf Coast ports, executives predicted smaller ports such as Galveston will see increased demand for ro-ro cargo.

“For the larger port authorities, it is easier to make decisions towards container operations,” Felitto said. “It is more profitable.”

Yet, Felitto said, there are profits available if a port focuses on a niche trade such as ro-ro.

“Like everything else, we found ports and port authorities that are ready and willing to accommodate ro-ro,” he said.

Cernak said he foresees Galveston receiving more business in the future but said the port will give first right of refusal to its current customers who want to expand before it brings in a new shipping line.

“We still have land available — but if your existing customers want to grow you look at them first,” he said.

Shipping project cargo by rail is expensive
October 13, 2008 – 11:03 am--> Journal of Commerce Break Bulk

There are three primary growth areas in BNSF Railway’s project cargo business, said Dave Garin, the railroad’s group vice president of industrial products. At the top of the list is equipment related to wind energy.

“We have considerable initiatives in blades, towers and other equipment, and they’re getting bigger and bigger,” Garin said.

As the national gross domestic product tripled capital investment over the past 30 years, investment in public water resources infrastructure decreased by 70 percent. The Army Corps of Engineers has a current backlog of more than 500 projects with a cost of about $38 billion. At current funding levels, it would take 25 years to complete the active projects.

The lack of funding for maintenance dredging has reached crisis proportions. The Harbor Maintenance Tax was created in 1986 specifically to fund dredging projects, but Congress must appropriate the funds annually. More than $1.4 billion was collected and put into the Harbor Maintenance Trust Fund in fiscal 2007, yet only $751 million was allocated to the Corps of Engineers for maintenance dredging.

“Without dredging, many port facilities and navigation channels would be rendered unsafe and non-navigable to users in less than a year,” the American Association of Port Authorities says.
The project cargo industry has largely been spared from negative impact of the nation’s aging inland waterways infrastructure, said Dennis Devlin, director of global projects and energy for BDP Project Logistics. Most project cargo moves inland by truck, and while ports continue to devote more resources to container operations, there are more marine terminals handling project cargo now than there were 10 years ago. The Gulf Coast ports of Houston, New Orleans, Beaumont, Freeport, Galveston and Port Arthur are adding breakbulk capacity or have the ability to do so, and there are many other options on both coasts.

Coordinating container and project shipments can be challenging. Vast amounts of ancillary equipment are needed to support projects, and much of it is containerized, including pipes, valves, pumps and instruments, Devlin said. BDP uses freight process management software from Houston-base HAL Inc. that is specifically designed to track all project-related cargo shipments door-to-door.

Although the nation’s marine ports have kept up with the demands of the breakbulk and heavy-lift industry, when the economy eventually improves, there will be an even greater demand for project cargo that could strain port capacity, said Frank Fogarty, senior vice president of sales and marketing for general stevedoring at Ports America.

Without a secure, ongoing source of funding for maintenance dredging and infrastructure upgrades, some of those ports could be at risk.

“If we don’t improve our infrastructure over time, we will put some ports out of business,” Fogarty said. “Shippers will be forced into less attractive or more expensive ports, and more cargo will have to go over land, further deteriorating our national infrastructure.”

Piping is the second leading growth area as the global boom in pipeline and drilling projects continues. Transmission and drilling pipes are getting longer and heavier, requiring temporary distribution sites across the rail network.�

The third growth category is refinery equipment such as reactors and specialized vessels. Project cargo falls under BNSF’s industrial products freight business, which also includes aircraft parts, military equipment and agricultural and industrial machinery. The industrial products business accounted for 24 percent of BNSF freight revenue in 2007.

Clearance is the biggest challenge in moving project cargo by rail. Finding the right combination of equipment and routes for rail and truck movements of oversize equipment is so difficult that some component manufacturers are designing and fabricating equipment with bridge and sidings clearance restrictions in mind. In some cases, manufacturers and project developers have invested their own funds to modify bridge clearances and other impediments along routes.
“They are making investments of a few hundred thousand dollars, but the equipment costs millions,” Garin said.

Shipping project cargo by rail is an expensive undertaking. Cargo of specified weights and dimensions must travel on specialized trains at slower speeds and often on longer routes. Union Pacific Railroad applies special train charges of $120 per rail mile to any excessive dimensional shipment, with a minimum charge of 200 miles, or $24,000, in addition to regular freight charges. Heavy-duty flatcar, detention, demurrage and other changes also may apply.
Under common-carrier obligations, railroads must accept project cargo, but all of the hurdles and requirements, including car availability, make it difficult for shippers, said Grant Wattman, director of logistics for global engineering and construction firm CH2M Hill and president of the Exporters Competitive Maritime Council, a coalition of project cargo stakeholders.

The already formidable challenge of moving oversize cargo over the highways is further complicated “with the trend of Class 1 railways refusing to accept oversize and overweight cargoes, which will force additional freight to the national highway system,” according to an ECMC report.

The trend is understandable given the disruptions associated with moving project cargo by rail compared with the smooth, profitable flow of containerized cargo. “If I was in their shoes,” Wattman said, “I would do same thing.”

– David Biederman

Both of our Houston warehouse facilities have been experiencing this increase also, especially with regards to material bound for energy projects.

Some Gulf ports bolstered by steel
October 20, 2008 – 11:49 am-->Journal of Commerce - Breakbulk

Despite a general drop in U.S. steel imports this summer, the Texas ports of Houston, Brownsville, and Beaumont will post increased year-to-year volumes thanks largely to a strong demand for steel used in energy projects in the U.S. and general building projects in Mexico.
But other Gulf ports were down — and some down sharply. The Port of New Orleans was hit hard with a halving of steel imports year-to-year through July 2008. Tampa dropped by nearly two-thirds year-to-year through the fiscal year ending in June.

“August was down more than we anticipated,” said David Phelps, president of the American Institute for International Steel. “But the truth is that the United States needs at least 30 million tons of steel imports a year and we expect to exceed that in 2008, so we’re talking about not a great year for imports but not a bad year either.”

However, AIIS forecasts increased imports in only three of 12 steel categories — structurals; oil- and gas-related pipe and tube; and “all other” pipe and tube — over the next three to five months. Other categories, including hot- and cold-rolled steel, slab and others, are expected to hold steady at best or decrease further.

Year-to-date figures for the country through August were down 10.8 percent, dropping to 21.2 million tons in 2008 from 23.8 million tons in 2007. From July to August this year, steel imports dropped 19.4 percent, or to 2.35 million tons from 2.91 million tons, according to the AIIS. August 2008 imports were down 11.4 percent compared to August 2007.

James M. Baldwin Jr., a former executive with steel carrier Forest Lines, said the current import situation is a function of the volatile global economy rather than anything ports are or aren’t doing. “The Port of New Orleans is really going to be singing the blues now, but it’s the market, not the port,” he said. “I believe we’re going to see an upswing in the fourth quarter, but it’s not going to pay for a real good dinner on a Saturday night.”

Indeed, New Orleans’ steel import tonnage figures have cratered year-to-year. AIIS figures show the port handled 1.8 million tons of imports for the 12 months ending July 2007, opposed to only 872,000 tons through July 2008. “That tells me that the New Orleans region is not seeing much demand for energy-related steel imports,” Phelps said. “Houston, on the other hand, is having a very good year.”

Robert Landry, director of marketing for the Port of New Orleans, said, “The weak dollar is just a real issue for us. “The other issue we are watching is the purchase of domestic mills by foreign concerns. We feel they may step up domestic U.S. production in order to avoid the increased transportation costs of importing steel.”

Despite those trends, Landry said, the port could show a strong fourth quarter. And, he said, “I’m willing to bet that September is one of our strongest months on steel in two years. We’ve had a lot more cargo than anticipated, and I’m very curious to see why that is happening.”
Port of Houston Authority figures show Houston imports up to 3.44 million tons from January through August 2008 from about 3.16 million tons January through August 2007 — a 9 percent increase, and just slightly behind the 2006 import totals for the same months. Nearly 300,000 tons of steel year-to-date were exported from Houston through August 2008, versus about 208,000 year-to-date through August 2007.

Brownsville also is having a very good year, said Antonio “Tony” Rodriguez, the port’s director of cargo services, because the port serves as a major gateway for steel bound for Mexican mills and building projects.

“We expect to be up over 1 million tons year-to-year by the end of the year,” Rodriguez said. “The Mexican economy is doing somewhat better than the American economy right now and there are a lot of big building projects near Mexico City.”

Brownsville saw 2 million tons of steel and other metal move into its port from January through August 2007 and is above that total year-to-date now, Rodriguez said. Exact year-to-year comparisons were not available, but port statistics show that the port is exceeding 2007 in the amount of iron and steel coils shipped as well as iron and steel slabs.

Energy-related steel imports have more than doubled at Beaumont, said John R. Roby, the port’s director of customer service. For the fiscal year ending in August, Beaumont counted 354,525 tons of imported steel, versus 169,798 for the same period last year. “The biggest driver has been pipe to be used in energy projects, particularly LNG projects,” Roby said. “We have a couple of LNG terminals and pipe-coating facility at the port where pipe is coated and then transported.”

At Mobile, James Lyons, director and chief executive of the Alabama State Port Authority, said steel exports are up and “that is a bright light.” Exports through the port will exceed imports this year. “Overall, imports are off a little but with around 600,000 tons in exports and imports we’re having a decent year,” he said. “We’re holding up reasonably well given the economy.”
Estimates of steel and iron imports through Mobile are 307,500 tons for the fiscal year ending Sept. 30, 2008 versus 442,300 tons a year earlier, port statistics show. Imports were nearly 564,000 tons during the 2006 fiscal year. Exports through the port in those same time periods have boomed, from only around 8,000 tons in 2006 to 141,000 tons in 2007 to an estimated 325,000 tons this year.

Tampa, too, saw a sharp decrease in imports through the fiscal year that ended June 30. Steel imports totaled only about 112,000 tons in fiscal 2008, down from 320,000 tons a year earlier. These comparison periods include portions of calendar year 2006 when steel imports were particularly high and do not reflect July or August 2008 tonnage.

“There definitely is a downturn in imports as a result of the construction downturn,” said Wade Elliott, senior director of the marketing division for the Tampa Port Authority. “We have seen an increase in recycled scrap for export.” The authority, which has scheduled the Port of Tampa Steel Conference for Feb. 16-17, 2009, hopes to benefit from expansions by Titan Metals and One Steel Recycling.

Phelps of the AIIS said three major product areas that drive steel demand — automobiles, white goods and residential building — all are weak in the U.S. economy right now, even as oil- and energy-related projects remain white hot.

But it is not just the state of the immediate economy that is impacting imports, he said. Buying habits and inventory levels, coupled with the weakness of the American dollar, have an effect, as do the prices of domestic steel and of transportation.

Generally, steel buyers have a lot of inventory right now, Phelps said. “What we are seeing among buyers is typical when you have very high prices, such as we did in June and July,” he said. “Buyers sat down and took a deep breath, looked at their inventories and said, ‘Unless I need something immediately, I’m sitting on my hands to see where price goes.’ ”

“Steel is cyclical, and if somebody blinks on the buyer side, it could all jump again, just like that,” Phelps continued. “But any deal transacted today on imported (waterborne) steel won’t really arrive until December and January.”

In part, AIIS bases its slowing import predictions on falling imports from Canada, which have just a two- to six-week lag from order to delivery. Statistics show that imports from Canada into the U.S. fell to 463,000 tons in August from 657,000 in July — a good indicator of weakened import orders in the United States. Orders filed at the same time as the Canadian orders but from steel producers in other countries are still in transit on water routes and thus lag deliveries from Canada by three to five months.

Therefore, Phelps believes that weak imports from Canada now — on the two- to six-week delivery cycle — may foreshadow weak waterborne imports — on the three-to five-month cycle — through the rest of this year.

Imports from North American sources represented the largest declines in August, with imports from Canada falling by nearly 30 percent and from Mexico falling 27 percent (to 202,000 tons from 276,000) from July to August, Phelps said.

Based on AIIS forecasts, the trend of imports over the next three to five months will almost certainly drop in several categories, including hot-rolled and cold-rolled sheet, corrosion-resistant steel, wire rod and rebar. Only structurals and stainless steel have decent chances of remaining level.

Over the next two months, according to AIIS estimates, only oil and gas pipe and tube will be up with any degree of certainty, with other pipes and tubes showing a slight tendency to rise. Most other types of steel imports are expected to decline over both the two-month and three- to five-month periods.

John Anton, a steel industry analyst with the consulting firm Global Insight, said prices were the key reason for the rise in exports and the slippage in imports. “There’s a lot of countervailing forces. Imports should be rising because U.S. prices are higher,” he said. “Offsetting that is the fact that total volume will decline because of the weak economy, so imports are being buffeted by opposing forces.”

By Robert R. Frump, with contributions by William Armbruster.

Heavy Lift Markets

This article is of particular interest to us here at Dixie Cullen, as we're seeing a greater number of Project Cargo coming through our warehouse facility and are seeing more customers choose the direction of Break Bulk.

Project, heavy-lift markets on solid ground, Drewry’s Page says
October 16, 2008 – 3:28 pm-->By Peter Leach -- Journal of Commerce - Break Bulk

NEW ORLEANS — The project and heavy-lift sectors of the breakbulk shipping industry will fare much better during the current global economic crisis than either the bulk or the container sectors.

Even if breakbulk shipments of such commodities as steel and forest products suffer during the global economic slowdown, demand for vessel space for the components of heavy industrial projects in the developing world will remain strong, Mark Page, director of liner shipping for Drewry Shipping Consultants in London, told The Journal of Commerce’s 19th Annual Breakbulk Transportation Conference here on Thursday.

“It’s a tough time for shipping, but the breakbulk and project cargo sectors should hold up well,” Page said.

Demand will hold up particularly well for the new modern multipurpose vessels that are specially designed to carry project cargo. Demand for the older, less-specialized vessels will probably slow.

What is rescuing project cargo from the global downturn is the continuing growth of markets for projects with long lead times in China, India, the Middle East and Russia, which will continue to grow in 2008 and 23009, Page said.

Although project cargo carriers have been ordering new multipurpose vessels in record numbers in the last few years, there is no danger of overcapacity in this sector. That’s because there has been no scrapping of older vessels in the last few years, and the ratio of new orders to the existing fleet is far lower than the container fleet, for example.

In 2008, the multipurpose vessel fleet is expected to increase by 4 percent, while demand for capacity is expected to increase by 5 percent, Page said.

US influence in Latin America wanes
By FRANK BAJAK – Oct 11, 2008 World Trade Magazine

QUITO, Ecuador (AP) — In a matter of weeks, a Russian naval squadron will arrive in the waters off Latin America for the first time since the Cold War. It is already getting a warm welcome from some in a region where the influence of the United States is in decline.
"The U.S. Fourth Fleet can come to Latin America but a Russian fleet can't?" said Ecuador's president, Rafael Correa. "If you ask me, any country and any fleet that wants can visit us. We're a country of open doors."

The United States remains the strongest outside power in Latin America by most measures, including trade, military cooperation and the sheer size of its embassies. Yet U.S. clout in what it once considered its backyard has sunk to perhaps the lowest point in decades. As Washington turned its attention to the Middle East, Latin America swung to the left and other powers moved in.

The United States' financial crisis is not helping. Latin American countries forced by Washington to swallow painful austerity measures in the 1980s and 1990s are aghast at the U.S. failure to police its own markets.

"We did our homework — and they didn't, they who've been telling us for three decades what to do," the man who presides over Latin America's largest economy, President Luiz Inacio Lula de Silva of Brazil, complained bitterly.

Latin America's more than 550 million people now "have every reason to view the U.S. as a banana republic," says analyst Michael Shifter of the Inter-American Dialogue think tank in Washington. "U.S. lectures to Latin Americans about excess greed and lack of accountability have long rung hollow, but today they sound even more ridiculous."

From 2002 through 2007, the U.S. image eroded in all six Latin American countries polled by the Pew organization, especially in Venezuela, Argentina and Bolivia. (The others were Brazil, Peru and Mexico.) People surveyed in 18 Latin American countries rated President Bush among the least popular leaders in 2007, along with President Hugo Chavez of Venezuela and just ahead of basement-bound Fidel Castro of Cuba, according to the Latinobarometro group of Chile.
In three years of presidential elections ending last year, Latin Americans chose mostly leftist leaders, and only Colombia and El Salvador elected unalloyed pro-U.S. chief executives. In May, the prestigious U.S. Council on Foreign Relations declared the era of U.S. hegemony in the Americas over. And in September, Bolivia and Venezuela both expelled their U.S. ambassadors, accusing them of meddling.

Along with the loss in political standing has come a decline in economic power. U.S. direct investment in Latin America slid from 30 percent to 20 percent of the total from 1998 to 2007, according to the U.N. Economic Commission on Latin American and the Caribbean.

The U.S. still does $560 billion in trade with Latin America, but in the meantime other countries are muscling in. China's trade with Latin America jumped from $10 billion in 2000 to $102.6 billion last year. In May, a state-owned Chinese company agreed to buy a Peruvian copper mine for $2.1 billion.

Other countries are also biting into U.S. military sales in the region. Boeing Co. is vying with finalists from France and Sweden for the sale of 36 jet fighters to Brazil. Venezuela's Chavez has committed to buying more than $4 billion in Russian arms, from Sukhoi jet fighters to Kalashnikov assault rifles. In April, Brazil and Russia agreed to jointly design top-line jet fighters and satellite-launch vehicles, and Brazil is getting technology from France to build a submarine.
"Similar deals could have been made with the United States had it been willing to share its technology," said Geraldo Cavagnari, of the University of Campinas near Sao Paulo.

Last month, Russian Prime Minister Vladimir Putin offered to help Chavez develop nuclear power. Even Colombia, the staunchest U.S. ally in South America, isn't limiting its options. After expressing alarm about the Russian warships a week ago, its defense minister, Juan Manuel Santos, promptly headed for Russia himself to discuss "better relations in defense." Chavez says he expects to hold joint Russian-Venezuelan naval exercises as early as November.
Bolivia also is looking to deepen ties with Russia and Iran.

Although the Islamic republic's ambassador has yet to arrive in South America's poorest country, its top diplomat there announced Friday that Iran will open two low-cost public health clinics.

And while Bolivia's only announced Russian hardware purchase is five helicopters for civil defense, Moscow's ambassador told the AP — after Bolivia booted the U.S. ambassador — that Russia has every right to help Latin American nations arm themselves.
"We know of many historical cases of U.S. intervention in Latin American countries," said the diplomat, Leonid Golubev.

Thomas Shannon, U.S. assistant secretary of state for the hemisphere, wouldn't comment directly on whether the U.S. has lost influence in Latin America. But he added that there is no doubt that the U.S. still holds most of the military power in the Caribbean, and said it has no interest in reviving "Cold War rhetoric." Shannon also noted that overall U.S. aid to the region will reach $2.2 billion for 2009, to total more than $14 billion during Bush's presidency.
However, critics point out that roughly half that aid is for the military or counternarcotics, and that Washington sends more money annually to Israel alone. Even U.S. giving has been dwarfed by Chavez's checkbook diplomacy, which easily eclipses U.S. aid between outright gifts and discounted oil.

His largesse has lured several longtime U.S. friends. Honduras' president, Manuel Zelaya, said last month that after pleading with Washington and the World Bank, he accepted $300 million a year from Chavez for agricultural investment to help fight rising food prices.
"Allies, friends, did not help me when I asked," he said.

Costa Rica's president, Oscar Arias, says Venezuela offers Latin America about four or five times as much money as the United States. Costa Rica has become the 19th member of Petrocaribe, through which Chavez sells Caribbean and Central American nations cut-rate oil at very low interest.

The diminished profile of the U.S. in Latin America comes after a history of welcomed influence dating back to President Franklin Roosevelt's "Good Neighbor" policy of the 1930s, which emphasized cooperation and trade over military intervention. There have been major bailouts, such as Washington's $20 billion rescue of Mexico in the 1994 peso devaluation crisis. As former Assistant Secretary of State Otto Reich noted, "We are the assistance bureau of first choice for the region."

But the U.S. has an ugly legacy of covert intervention in countries including Chile, Nicaragua, Guatemala and Cuba. Chile's center-left president, Michele Bachelet, was jailed and tortured by a U.S.-backed military dictatorship in the 1970s. She recently recalled telling Washington's ambassador to Chile an old joke: "Some say the only reason there's never been a coup in the United States is because there's no U.S. Embassy in the United States."

The United States has also long served as chief educator to Latin America's elite. Correa is among its presidents with a U.S. graduate degree — though that didn't stop him from accusing the CIA of infiltrating his military, or refusing to renew a lease for U.S. counterdrug missions to fly out of Ecuador.

With the U.S. facing its own financial crisis, it's unlikely to be able to leverage economic influence in Latin America anytime soon. Sen. Barack Obama's senior adviser on Latin America, Dan Restrepo, acknowledges that his candidate is essentially proposing a symbolic shift in style — albeit adding a special White House envoy for the Americas.

"Barack doesn't see the United States as the savior of the Americas, but as a constructive partner," Restrepo told the AP.

Reich, an adviser to Sen. John McCain who served three Republican presidents in the region, put it even more bluntly.

"No matter who is elected in November, there is not going to be any money for Latin America," he said. "Latin Americans expecting financial resources, any kind of help from the United States, they are barking up the wrong tree."

Associated Press writers Dan Keane in Bolivia, Eduardo Gallardo in Chile and Stan Lehman in Brazil contributed to this report.

** Basic Knowledge Required for Trading in Natural Resources
- Do You Understand the Flow of the Transactions and the Abbreviations? -
Mr. Tatsuya Oishi, President, Focus Business Produce, Inc.. with the Japan External Trade Organization

The TTPP Newsletter of September 2008 reported the frequent occurrence of trouble in transactions involving recycled materials, metal materials and other resources through the TTPP. To help keep you out of trouble over resource transactions and avoid unnecessary risks, I will explain the general flow of transactions in the resource trade and the main abbreviations used at that time.

International transactions in metal/mineral resources and food resources are characterized by the following three points: First, the sums involved are huge. For example, in term contracts (long term contracts continuing for a fixed period such as several months), sums of tens to hundreds of millions of yen are often seen. Second, specialized brokers or agents often act as intermediaries. Third, due to the large volumes, at the time of FOB contracts, space in specialized ships is sometimes arranged.

Resource transactions used to be generally conducted by specialized businesses.
In recent years, due to the increase in demand, easing of regulations, establishment of infrastructure and spread of the Internet, the environment is being laid enabling more traders to participate in resource transactions.

Along with the increased opportunities, beginners in the resource trade are exposed to greater risk of scams and other dangers.

Therefore, both the seller and the buyer have to reduce the risks by exercising greater caution in procedures compared with general container-based transactions. Seen from another perspective, it means that the seller determines how reliable the buyer is based on the buyer's familiarity with the complicated procedures of the resource trade. Let us introduce an example of the flow of a resource transaction.

[1] Buyer : Sends an LOI and BCL.
[2] Seller: Sends an FCO.
[3] Buyer : Signs the FCO and returns it to the Seller.
[4] Seller: Sends a draft contract to the Buyer.
[5] Buyer : Signs the draft contract and returns it to the Seller.
[6] Buyer : Requests a POP from the Seller.
[7] Buyer : Opens an SBLC or BG.
[8] Seller: Sets a PB.
[9] Seller: Loads and ships the product in accordance with the contract terms.
(Sometimes allows Buyer to witness shipment.) [10] Buyer: Sends payment in accordance with the contract terms.

The hardest things for beginners to understand are abbreviated terms such as LOI, BCL and FCO. Let us explain them next.


1) LOI = Letter of Intent This is a letter by which the Buyer expresses its intent to buy the product. It describes the name of the product, the product specifications and country of origin, quantity, term of the purchasing contract, desired price, terms of transaction (FOB, CFR, CIF, etc.), desired shipment date, method of payment and valid period of LOI.

On the other hand, the Seller's side will sometimes ask for disclosure of the Buyer's bank's name, bank account number, etc. and for its understanding of a "soft probe" so as to investigate the Buyer's ability to pay. A "soft probe"

means the procedure of contacting the Buyer's bank through the Seller's bank to briefly investigate the Buyer's ability to pay.

2) BCL=Bank Comfort Letter (Bank Capability Letter) This is a letter issued by the Buyer's bank to the Seller and certifies that the Buyer has sufficient ability to pay for the transaction in question. The BCL may be demanded by the Seller at the stage of the LOI, the time of signing the contract, etc. Several cases are possible.

3) FCO=Firm Corporate Offer (Full Corporate Offer) This is a formal offer by which the Seller proposes details of the transaction and the final price. If the Buyer accepts these terms, it signs the offer and returns it to the Seller. Next, the Seller sends a draft of the contract.
Depending on the transaction, the two parties will sometimes enter negotiations on concluding the contract directly without going through the FCO process.

4) POP=Proof of Product In the same way as the Seller thinks the Buyer's ability to pay is important, the Buyer finds it important to determine if the Seller really owns the products in question or has the right to deal in them. A document proving the ownership or right of trade of the product is called a "POP".

Specifically, this includes an export license issued by an official organization, a warehouse receipt and certification of results of inspection by an independent third party certification organization. However, it is essential to determine if the documents are genuine.

Further, as a method to ensure a more reliable progress in the process, sometimes a POF (Proof of Funds/document proving the Buyer's ability to pay) and POP are exchanged between the Seller's and the Buyer's banks.

5) BG=Bank Guarantee, SBLC=Stand By Letter of Credit, PB=Performance Bond
- A BG is, as the name implies, a bank guarantee. The bank guarantees that the Buyer will pay the debt to the Seller.

- An SBLC differs from a usual L/C (Letter of Credit) in that it is a special letter of credit with no terms requiring attachment of a bill of lading (type of clean letter of credit) and is considered a bank guarantee issued in the form of a letter of credit.

- In the event the Buyer defaults on its debt, in both a BG or SBLC, the issuing bank guarantees payment to the Seller.

- A PB is a proof of performance. It guarantees payment to the Buyer of a fixed percentage of the export price (for example, 2%) in the event of the Seller defaulting on the contract to export to the Buyer as contracted for. Due to this, if the Seller defaults on the contract, the Buyer can be compensated for the expenses required up to that point. Specifically, this is set by the
Seller for the Buyer in the form of a BG or SBLC.

There may be various other variations in the flow of transactions. Further, technical terms and other specialized terminology unique to the industry/ resource will also be used. Therefore, the most important point in resource transactions is sufficient understanding of the products. Can you completely understand the processes involved in a transaction proposed by a seller and do you really have a grasp over the potential risks behind the transaction? If you find this difficult, I recommend you should not let yourself get involved in such a transaction or you leave it to experts such as specialized trading companies.
Above, I explained part of the basic knowledge required for resource transactions. In actual transactions, be sure to check by yourself the flow of transactions and terminology unique to the individual industry and remember that only you are responsible for the transaction.

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TTPP News Back Numbers
http://www3.jetro.go.jp/ttppoas/mailnews/index.html
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Managing Your Customs Brokers
by Ruth Rodriguez, Attorney

If you are an importer, you probably rely heavily on customs brokers. You may not have the inclination or the resources to clear your own entries. Customs brokers can be indispensable for classification and other compliance areas. Some brokers also provide other services, including logistics and shipping. Brokers are highly trained professionals, having been vetted and licensed by US Customs and Border Protection (CBP). Using customs brokers (or other professionals, like customs attorneys) can help convince enforcement authorities that you are using reasonable care. Customs brokerage has existed as a profession for centuries, preceding the founding of our nation and proving itself essential to international commerce.

But none of this means that you give your customs broker carte blanche. A customs broker is your agent. When the customs broker makes a mistake, it is your mistake. When the customs broker violates the law, the law presumes that the customs broker is acting at your company's behest.

Hiring a customs broker does not insulate you from liability. It only extends the avenues for enforcement officials to tag your company for errors and violations. If errors and violations are uncovered, the importer-broker relationship may turn adversarial, with one party blaming the other. Some customs brokers feel that they owe a greater allegiance to CBP than to the importer. In the end, if you chose the wrong broker, you (not your broker) can lose out on the duty-free savings from programs that you did not know about, you are likely to pay hundreds of thousands, or even millions of dollars, in fines and penalties, and you are likely to pay similar amounts in administrative costs and fees to resolve the violations.

Thus, a hands-off approach is calamitous. You must remain actively involved with everything your customs broker does on your behalf. The best way to do this is to limit the number of brokers you hire, restrict the terms and duration of the powers of attorney you grant, create Standard Operating Procedures (SOPs) for your brokers, and supervise and audit broker performance.

Limit the Number of Customs Brokers. Use a customs broker as liberally as you need to, but limit the number of brokerage firms you hire. Having too many brokers is a sign that you do not control your brokers.If you do not know how many brokers you are using or who they are, you may be in even bigger trouble. There are ways, with the help of an attorney, to find out who is making entries on your company's behalf.Once you know who your customs brokers are, trim them to a manageable number. Find out what each broker is doing on your company's behalf. You may discover that you are paying more than one broker to do the same task. You may also find a disparity in the fees you pay different brokerage firms. You may find out that there are individuals and departments within your company that hire customs brokers when they have no authority to do so. All this information will enable you to negotiate for better terms with the brokers you do retain, and to create company policies limiting who can hire brokers.With all this information in hand, start revoking the powers of attorney of customs brokers that you do not need.

Sign Better Powers of Attorney. Revisit the contracts and powers of attorney for those brokers you intend to retain. It is tempting to sign the "industry standard" power of attorney or contract, but the terms and conditions may not serve your company well. There may be exculpatory clauses, limitations of damages, and other language that is suspect. Many importers sign unlimited powers of attorney. That is a big mistake. This is your power of attorney. You are the principal. You decide what the customs broker can and cannot do when representing you. Also consider limiting the duration of your powers of attorney. Avoiding "standard" forms will benefit both parties. It will force you into a dialogue with your broker, and the expectations of both parties will be revealed with clarity and reduced to writing.

Create Standard Operating Procedures (SOPs) for your customs brokers to follow. Make sure that your brokers are contractually obligated to follow your SOPs. How much, if at all, you involve your broker in developing your SOPs is a matter of choice and comfort level.

Audit your customs brokers for compliance with your SOPs. No one in your company should ever say anything like, "We don't worry about that (e.g., classification). That's what we have a broker for." There are many ways to audit your customs brokers, and your review does not have to be incredibly intrusive or prolonged. But in the end, be brutally honest in grading your customs brokers. Your customs brokers should certainly not be reluctant to cooperate, having agreed to your SOPs.

Get a good lawyer Hire a seasoned lawyer to help your company foster a mutually beneficial relationship with your customs brokers, someone who is responsible primarily for protecting your company's interests.

---------------------GRVR Attorneys has represented both customs brokers and importers for two decades. Several of our attorneys have also passed the customs broker exam and have worked in logistics and transportation.

Understanding and Complying with the New Foreign Trade Regulation (FTR) Requirements:

Starting October 1, 2008, the Census Bureau will re­quire mandatory filing of export information through the Automated Export System (AES) or through AESDirect for all shipments where a paper Shipper’s Export Declaration is required. Penalties may be imposed for the delayed filing, failure to file, false filing of export information, and/or using the AES to further any illegal activity. Also, all AES filers will face new filing deadlines by mode of transportation for reporting export information. For more information, visit www.census.gov/foreign-trade/aes.

It is imperative you understand these new requirements to avoid possible penalties and seizure of your commodities. To this end, the U.S. Census Bureau’s Foreign Trade Division and the U.S. Commercial Service are offering a series of webinars designed to educate U.S. exporters on these new regulations. Webinar topics will be divided into five modules:

Data Elements covers the mandatory, conditional and optional fields in AES.
Filing Requirements covers who, what, when, and how to file export transactions.
Parties to an Export Transaction & Their Responsibilities covers each party’s responsibility as it relates to a standard export and routed export transactions.
AES Overview provides highlights of the AES.
Informed & Enforced Compliance covers topics such as penalties, mitigation, voluntary self-disclosure and corrections. Register at www.export.gov/logistics/aes/doc_eg_aes.asp

AN UNTAPPED MARKET
September 8, 2008 J. JOSEPH GRANDMAISON Shipping Digest Online

Most Americans reading this column probably aren’t doing business in Africa. That is a shame because export opportunities in Africa are real and growing, and U.S. companies ought to be entering these markets now as African countries are developing their infrastructure and industries.

Over the years that I have served as a board member of the Export-Import Bank of the United States and have spoken with government and business leaders from all over Africa, it has become clear to me that too few U.S. companies are marketing in Africa. African contracts are often awarded to competitors from other countries at least in part because no U.S. companies have bid on them. That is unfortunate because Americans have a reputation for providing superior quality and for upholding their contracts. African project sponsors and other buyers are favorably disposed to U.S. companies – when there are some.

Here are the facts: The African continent is growing economically because of political stability and economic reforms in many countries. In 2006, the economy of all of sub-Saharan Africa increased 5.5 percent. In fact, 23 African countries expanded at a rate faster than 5 percent, and only Zimbabwe failed to grow.

Since the inception of the African Growth and Opportunity Act, U.S. trade with sub-Saharan Africa has increased from $29 billion in 2000 to more than $71 billion last year. AGOA provides beneficiary countries in sub-Saharan Africa with liberal access to the U.S. market and also contributes to better market opportunities for U.S. companies. In 2007, U.S. exports to sub-Saharan Africa totaled $14.4 billion, which is more than double the amount in 2001. Today 40 sub-Saharan African countries are eligible for AGOA benefits. AGOA is fostering an improved business climate in Africa and expanded U.S.-African trade.

Africa’s strong economic growth is producing a rising demand for equipment and services, as well as consumer products. Some of the sectors with substantial potential include oil field development, electric power generation, transportation, health care, telecommunications, computers and software.

Ex-Im Bank, the official export-credit agency of the U.S., has a congressional mandate to assist U.S. exports to sub-Saharan Africa, and we have increased our financing for these exports. We have seen a shift in demand for our products from short-term export-credit insurance (typically used for raw materials, spare parts and consumer products) to medium-term credit and long-term project and structured finance (typically used for capital goods and services).
In fiscal 2007, Ex-Im Bank authorized $442 million in transactions to 18 sub-Saharan African countries. Much of this financing assisted Boeing’s exports to African airlines, but it also supported exports of U.S. equipment and technology to African oil field and oil-storage projects, manufacturing and fishing companies, among others.

One market serving as a model for Ex-Im Bank financing in Africa is Nigeria. With oil sector revenue and the reform of its banking sector in 2006, Nigeria’s economy is growing considerably. Development of the power and transportation sectors, including ports, roads and airports, is particularly urgent.

To help U.S. exporters in Nigeria, Ex-Im Bank established a special delegated authority facility that now includes 14 Nigerian banks. This facility is making $1 billion in financing available for Nigerian buyers of U.S. goods and services.

The Nigerian model has been emulated with Ex-Im Bank’s new special delegated authority for the African Export-Import Bank, which can now provide up to $40 million in Ex-Im Bank-backed short-term and midterm financing. This facility serves as a marketing tool to promote the purchase of U.S. goods and services virtually throughout the continent.

Earlier this year, Ex-Im Bank also opened for medium-term financing in the public and private sectors in Angola, where opportunities in the oil, gas and mining sectors are enormous. We want more U.S. exporters to take advantage of these developments.

We advise companies to focus on markets where opportunities for their sectors are greatest. The U.S. Foreign and Commercial Service, www.export.gov/africa, is an excellent resource, and its Country Commercial Guides are invaluable. We also recommend participation in the Corporate Council on Africa’s 2008 U.S.-Africa Infrastructure Conference in Washington, D.C., on Oct. 6-8, 2008, http://www.africancl.org/.

Lastly, we invite those U.S. exporters seeking financing for their African contracts to contact Ex-Im Bank, www.exim.gov/products/special/africa. We can do more for U.S. exporters in Africa. We’ll help you realize the opportunities in this vast untapped market.

J. Joseph Grandmaison is a board member of the Export-Import Bank of the United States.

Wood Importers' Alert -- New Declaration Requirement
GRVR Attorneys - Oct Newsletter

The latest Farm Bill imposes new requirements on wood importers, a group that may be much larger than you might think. Importers of plants and plant products are now required to certify that their products do not come from illegally harvested trees or plants. Specifically, importers must file a declaration regarding the species and country of origin. The world's forests are being cut down illegally to supply the US domestic market. (See, for example, Brazil's government has been named as the worst illegal logger of Amazon forests by one of its own departments). US wood and furniture manufacturers, environmental groups, and labor unions inserted into the Farm Bill an amendment to the Lacey Act, our country's oldest wildlife protection statute.

Customs and Border Protection and the Agriculture Department's Animal Plant Health Inspection Service (APHIS) will enforce the new law. Importers must start filing declarations by December 15, 2008, unless federal regulators and industry representatives can negotiate an extension or a tiered phase-in, which appears likely. Flooring, furniture, paperboard and plywood are clearly covered, but the new law may cover importers of many other products containing wood or plant material. The law does not specify how importers should certify their products, but it is clear that violators face huge penalties and the danger of shipment seizure.

MANUFACTURED GOODS EXPORTS UP
September 22, 2008 Shipping Digest Online

U.S. exports of manufactured goods in July were up 22 percent over July 2007, bringing the total for the first seven months of the year to $669 billion, a 16 percent increase over the same period last year, according to Frank Vargo, vice president for international economic affairs at the National Association of Manufacturers.

Manufactured imports rose 8 percent in July and are up 7 percent for the year. The $933 billion import tab resulted in a $264 billion deficit, 15 percent lower than in the first seven months of 2007.

The surplus with U.S. partners in the North American Free Trade Agreement and other free-trade partners totaled $8.1 billion in the first seven months of the year, for an annual rate of $14 billion, Vargo said.

“Many people have been led to believe we have a terrible trade position with our FTA partners and are unaware that our manufactured goods trade with them is in surplus,” Vargo said. “And that’s a shame, because if they knew, they would join the NAM in asking Congress to pass the remaining FTAs so we could have our exports increase even more. The lesson is clear – free-trade agreements are the solution, not the problem.”

Costa Rica seeks more time – again – on CAFTA
By Gillian Gillers Tico Times Staff ggillers@ticotimes.net

For the second time, Costa Rica is seeking to extend its deadline for entering the Central American Free-Trade Agreement with the United States (CAFTA).

Vice President Laura Chinchilla met with Peter Brennan, the chargé d'affaires at the U.S. Embassy, on Friday to request more time to enter the pact, according to the daily La Nación.
Chinchilla said the country would miss its Oct. 1 deadline after the Supreme Court on Thursday struck down an intellectual property law designed to put Costa Rica in compliance with CAFTA.
“We are convinced – and this is the message that we want to give Costa Ricans – that we will still be able to enter CAFTA,” Chinchilla said at an Thursday night. She then turned to a soccer metaphor: “In the last few minutes of the game, we have been dealt a yellow card. We don't think it's a red card.”

The Constitutional Chamber of the Supreme Court (Sala IV) found that lawmakers had failed to consult indigenous groups when debating the bill, as required under a 1989 United Nations convention. Lawmakers must now fix their error and pass the bill again.

The proposal was the last of 13 bills required for Costa Rica to enter CAFTA, which was ratified in a national referendum last October. After lawmakers missed a Feb. 29 deadline for passing the bills, Costa Rica's trading partners granted the country a seven-month extension.
Chinchilla said the administration will decide how much more time to request once the Sala IV releases its full ruling. The other CAFTA signers – the United States, Guatemala, El Salvador, Honduras, Nicaragua and the Dominican Republic – have all entered the treaty.

Latin America on Target to set more records

We, at Dixie Cullen, have seen a large increase in the volumne of equipment and material coming through our warehouse facility for export packing bound for Latin America.

TRADE WITH LATIN AMERICA ON TARGET TO SET MORE RECORDS September 1, 2008 LETICIA LOZANO from Shipping Digest

Rapid economic growth spurs demands for U.S. importsSoaring energy and food prices, the worst housing slump since the Great Depression, a credit crisis, job cuts: It all may be enough to tip the U.S. into recession this year, if we aren’t already there. But the “flu” in the world’s biggest economy is causing little more than the sniffles in Latin America, where growth remains strong and a weak dollar is driving trade between the U.S. and South America.

With Latin American banks having little or no exposure to the U.S. credit crunch, and with the region’s strong domestic currencies, a China-driven commodities boom, high foreign investment levels and fiscal discipline, trade is robust — despite soaring oil prices, rising freight costs and Latin America’s congested ports.

“We haven’t seen impact from the U.S. slowdown,” said Alvaro Espinosa, general manager at the Port of San Antonio, Chile, which sends 16 percent of its exports to the U.S. and where U.S. imports represent 25 percent of all imports. “In the first five months of this year, we’ve seen a 15 percent increase in container shipments, so at least at the first reading, there is no talk of a U.S. recession here.”

Such optimism may be dampened in the coming months if the relentless increases in oil prices continue and as U.S. manufacturing activity falls. Consumer spending is weakening now that the fiscal stimulus checks have mostly been spent.

Overall U.S.-South American trade is nevertheless growing at historic levels, with Chile and Peru benefiting from free-trade deals. U.S. exports to Central and South America reached a record $107.5 billion in 2007, and imports hit a record $134.8 billion, according to the U.S. Census Bureau. Those records will probably be smashed this year. U.S. exports in the first six months of the year totaled $66.8 billion, while imports totaled $80 billion.

Despite the slowing U.S. economy and world oil prices, exports to Central and South America in June were a record $12.9 billion, compared with $8.7 billion in June 2007. Imports totaled $15.7 billion, compared with $10.7 billion in June of last year.

Brazil is enjoying a boom time as its middle class swells and the country enjoys an unprecedented stretch of economic growth coupled with low inflation and a strong currency. Foreign investment doubled to $35 billion last year, the economy grew 5.4 percent, and trade with the U.S. totaled $50 billion. The economy is set to grow 4.5 percent this year.

“The stronger buying power of Latin American currencies, particularly the Brazilian real, and the abundance of petro-dollars in Venezuela have generated a significant increase in export liftings compared to a year ago,” said Frank Larkin, senior vice president at Hamburg Sud North America, the U.S. subsidiary of the German shipping line Hamburg Sud.

Soaring economic growth in Argentina, Peru and Venezuela is also spurring demand for U.S. imports in those countries.

Despite the bitter anti-U.S. rhetoric of President Hugo Chavez, Venezuela is increasingly dependent on U.S. imports and, as the government nationalizes large chunks of the economy, its exports beyond oil are few.

“The downside of that shift is the need to continually reposition empty boxes,” Larkin said. “On the export side, the Venezuelan container market, for example, is virtually all inbound, and those boxes, once emptied, must then be repositioned to match up with export opportunities in other markets.”

Changes to customs laws in Brazil and Colombia this year also have made life difficult for shippers. Both countries now require cargo heading for their ports to be documented 48 hours prior to the vessel’s first Brazilian port call. Failure to do so can mean cargo confiscation or denial of berthing.

“These new mandates are very rigid and unfortunately conflict with the realities of modern just-in-time shipping,” Larkin said. “If manifest information is submitted to (Brazil’s) Siscomex Carga and then changes or additions need to be made, fines of $3,000 per incident can be imposed and cargo delivery can be further delayed.”

Such measures have increased costs for shippers having to rehandle and work export documents, Larkin said.

Supercharging Your Chinese Supply Chain

Managing an efficient supply chain is critical for global success. Whether you are sourcing products from China or managing export operations, Supercharging Your Chinese Supply Chain focuses on the Chinese side of your import/export transaction and will deliver the tools and information you need to successfully manage your supply chain.

Presented by Shawn Levsen, UPS International Account Executive, this session will cover the key players in the Chinese supply chain including how to choose the right service provider, a review of Chinese export regulations and customs procedures and a detailed overview of the flow of goods and documents. This session will help you improve efficiency, lower risk and increase the profitability of your global supply chain.

Join us on Thursday, September 18th at the Plaza Club San Antonio. Register now!
Next Session - Global Marketing: Managing Your Global Distributor
Developing a win-win relationship with your global distributor is critical to successfully expanding into new markets and growing your company's international sales. Managing Your Global Distributor covers all the important factors that you need to consider while selecting and working with an international sales and marketing partner.

Presented by Jacob Nammar, International Sales Executive, this seminar will guide you through the process of choosing the right distributor, creating a solid contract, complying with legal requirements, and establishing the different methods of monitoring your agreement. This session will help you successfully manage your global distributor in a way that will lower risk, improve relationships and increase sales for your company.

Join us on Thursday, October 16th at the Plaza Club San Antonio. Register Now!

Schedule of Events
09.18.08 Supercharging Your Chinese Supply Chain
10.16.08 Global Marketing: Managing Your Global Distributor
11.13.08 Using Letters of Credit in China
01.22.09 Doing Business in Vietnam
02.12.09 Discovering Business Opportunities in Colombia
03.12.09 International Trade & Protecting Your Intellectual Property
04.16.09 Importing Food Products into the U.S.
06.11.09 Doing Business with Korea

For more information, please visit our website at www.texastrade.org
Become a Sponsor!

Registration
www.texastrade.org11:30 am to 1:00 pmIndividual Rate: $25
Seminar Location
Plaza Club San Antonio 100 W Houston St. #2100 San Antonio, TX 78205

For More Information
E-mail: barbara.mooney@utsa.edu Phone: 210.458.2470Web: www.texastrade.org

Deficit Shrinks as Exports Surge

DEFICIT SHRINKS AS EXPORTS SURGE
August 25, 2008 Shippers Digest

The U.S. trade deficit dropped 4.1 percent in June despite soaring prices for imported oil. Goods exports increased 5.1 percent to $118.6 billion, compared to $114.3 billion in May and $99.1 billion in June 2007.

Exports of manufactured goods were 17 percent higher than in June 2007, according to the National Association of Manufacturers.

“Manufactured goods exports are growing more than twice as fast as imports of manufactured goods, and as a result the manufactured goods trade deficit is falling,” said Frank Vargo, NAM’s vice president for international economic affairs. “June’s manufactured goods trade deficit in fact was 9 percent lower than it was a year ago.”

Exports of automobiles, parts and engines grew by $576 million, while imports grew by $60 million. U.S. exports of food, feeds and beverages rose by $853 million, while U.S. imports of the same products fell by $144 million. Exports of capital goods excluding autos rose by $1.2 billion in June, while imports fell $1.4 billion.

Goods imports were up 2 percent because of the increase in oil prices, which averaged $117.3 billion. Non-oil imports fell.

Including services, the deficit shrank to $56.8 billion, according to the Commerce Department. However, when adjusted for inflation, including oil prices, the real trade deficit fell by 10.3 percent in June to $39.1 billion, the lowest level since December 2001.The trade deficit with OPEC countries grew to a record $18.1 billion, while the politically sensitive U.S. trade gap with China rose to $21.4 billion, up from $21 billion in May, but not up much from the $21.2 billion deficit in June 2007.

The total U.S. deficit with all countries in the first half of the year was $394 billion, up from $376.2 billion in the first six months of 2007.

Close Relations with EU Boost Export Opportunities

TRANS-ATLANTIC TIES: CLOSE RELATIONS WITH EU BOOST EXPORT OPPORTUNITIES August 11, 2008 WILLIAM ARMBRUSTER Shipping Digest

Despite growing economic integration, U.S. companies still face some entry barriers Europe is often an afterthought in many trade circles. It shouldn’t be. The U.S. relationship with the European Union is a partnership between equals, with enormous amounts of trade and investment that bring substantial economic benefits to people on both sides of the Atlantic.
For example, U.S. merchandise trade last year with the 27 members of the European Union totaled $600 billion, a 47 percent increase over the $409 billion in two-way trans-Atlantic trade in 2003.

Much of that trade is between parent companies and subsidiaries on the other side of the pond. That’s largely because of the huge levels of foreign direct investment — an even bigger indicator of economic integration than trade statistics alone would indicate. As of the end of 2006, U.S. companies had invested about $1.1 trillion in the European Union’s 27 member states, while EU companies had invested about the same amount in the United States. U.S. companies employ about 7 million people in the EU, while European companies employ about the same number in the U.S.

For example, Siemens, the German conglomerate, employs about 70,000 people in the U.S., according to Kathryn Hauser, executive director of the Trans-Atlantic Business Dialogue.
“The similarities (between the U.S. and EU) are obvious. The U.S. and Europe are very large markets, have people with very similar values, high quality standards and regulations on things that matter to consumers, such as food safety,” Hauser said.

The TABD is a private-sector group that seeks to establish a trans-Atlantic market with the freest possible exchange of goods, capital and people between the U.S. and EU.
A barrier-free market would make it easier for all companies, especially small and medium-sized enterprises that don’t have a lot of resources, she said. The cost of complying with some current regulations is “really, really high” for them, she added.

Hauser cited mutual recognition of security programs and accounting standards, and a task force aimed at easing restrictions on business travel, as examples of cooperative steps that will benefit companies on both sides of the Atlantic.

The EU’s creation of a single market means that U.S. exporters no longer need to tailor a product to meet regulations and standards in each country. Rather, said Gary Litman of the U.S. Chamber of Commerce, “it’s the EU market. That reduces the cost of entry for American companies tremendously.”

Litman, the chamber’s vice president for Europe and Eurasia, said the adoption of the euro by 15 EU members — the U.K. is the most notable exception — has helped U.S. companies. The euro is “simple, uniform and transparent,” he said.

Calculating costs and pricing was far more challenging before the introduction of the euro.
Without the euro, the dollar would be overpriced relative to the individual currencies of some eurozone countries, such as the Spanish real, he said.

The strong euro — the flip side of the weak dollar — has boosted U.S. exports by making them more price-competitive in the EU. Last year, they totaled $247 billion up from $214 billion in 2006, a 15 percent increase. The pace has been slightly less robust thus far this year, perhaps reflecting the spread of the U.S. economic slowdown across the Atlantic. Still, U.S. exports in the first five months of 2008 were up 14 percent, totaling $117.3 billion, compared with $103 billion in the same period last year.

Paul Dyck, the Commerce Department’s deputy assistant secretary for Europe, said he expects U.S. exports to Europe to continue to grow at double-digit rates next year.

The strong euro has taken its toll on European exports in other markets, such as Asia and Latin America, because European goods are too expensive compared to U.S. goods.

Meanwhile, the weakening of the dollar has led to a surge in acquisitions of U.S. businesses by bargain-hungry foreign companies. In a blockbuster deal last month, InBev, a Belgian brewery whose brands include Bass and Beck’s, bought Anheuser Busch, maker of Budweiser, the icon of the U.S. beer industry.

Besides acquiring U.S. companies, European companies, including IKEA, BMW and Michelin, have been busy building U.S. factories or expanding their existing manufacturing operations to take advantage of lower costs in the U.S., as well as to be closer to their customers and to cut transportation costs.

“I think there has been an amazing number of advances in terms of economic integration,” said Kimberly McLaughlin, director of EU affairs for the U.S. Council for International Business.
The size and wealth of the EU member states, which have a combined population of about 500 million, make Europe an attractive market for U.S. entrepreneurs, Litman said. “If you have a new idea, a new product, energy and passion, you are no longer confined to the U.S. market. You can count on a very sophisticated, very deep European market with high expectations of value, quality, product safety, and with very substantial purchasing power,” Litman said.

U.S. exporters will also benefit from the EU’s new customs code, a step that will simplify various procedures and introduce a paperless environment. Some of the code’s provisions took effect on June 24, while others will be phased in over the next several years. The provision regarding customs charges, for example, will not take effect until Jan. 1, 2011.

Overall, the best opportunities for U.S. companies in the EU are at the upper end of the technology scale, according to the U.S. Department of Commerce. “U.S. goods are well regarded, and demand is driven more by quality and performance than by price,” the department said in its country guide for the EU.

The guide warns, however, that the single market is not a uniform one. “The market of the European Union is a differentiated one, with each member state market having supply, distribution, demand, cultural and legal characteristics that merit individual attention. Specific tactics for market entry or expansion should be considered for each country,” the guide observed.

Moreover, implementation of many European Commission directives is up to individual countries.

The EU country guide contains a wealth of information and can be found on the Web site for the U.S. Commercial Service, Commerce’s export arm. The Web site, www.export.gov, also has country guides for each member state, detailing the best prospects, the investment climate and other economic, political and commercial information for the country or countries of interest.
The EU is currently facing an economic slowdown, although it may not be as severe as in the United States. Growth in the eurozone was probably flat in the second quarter, but is expected to rise to 1 percent in the second half of the year, said Michael Andrews, chief economist for PIERS, a sister company of Shipping Digest.

Andrews attributes the slowdown to the spillover effects of the U.S. housing and credit crises, in addition to surging oil and food prices. Moreover, the European Central Bank has been raising interest rates in an effort to curb inflation — a move that also has a depressing effect on economic growth.

The slowdown in the U.S. may limit the growth in EU exports to the U.S. Surprisingly, however, in dollar terms, EU exports to the U.S. grew in 2007 and in the first five months of this year. Exports to the U.S. last year totaled $354 billion, up from $330 billion in 2006. And in the period from January through May 2008, imports totaled $154 billion, compared with $141.8 billion in the same months last year. As a result, the U.S. deficit with the EU fell by a relatively small amount, dropping from $38.6 billion to $36.8 billion. The deficit last year was $107 billion.

Drayage Drivers - endangered species

Over the past few months, many of our customers have seen delays in getting their cargo out of the port facilities after the ship finally arrives. So we thought that this article might make for some interesting reading.

endangered species

Economic and regulatory pressures are making it tough for port drayage drivers to earn a living. If they turn in their keys, who will haul the containers? By Toby GooleyFrom the June 2008 issue

Drayage drivers are the unsung heroes of our nation's import-dependent economy. They wait in long lines to pick up and drop off the millions of ocean containers that pass through U.S. ports each year. They spend long days shuttling containers between ports, intermodal terminals, and shippers' premises.

Most are owner-operators who work as independent contractors for small, locally owned trucking companies. Typically, they bear the cost of operating and maintaining their tractors, and they have no health insurance or pensions. Many are immigrants whose legal status is not always clear. And if anecdotal evidence is correct, more and more of them are turning in their keys, parking their trucks, and walking away from what has become a pretty shaky way to make a living.

These hardworking drivers are becoming an endangered species. If enough of them decide to get out of the business, something else will become endangered: ready availability of service at prices exporters and importers are willing to pay.

Hard timesLike everyone else who buys or sells transportation services these days, drayage drivers are trying to cope with unfavorable economic conditions and regulatory changes. One of their biggest worries is the cost of diesel fuel. An early 2007 survey of drayage drivers serving the ports of Los Angeles and Long Beach found that fuel costs ate up more than one-third of independent owner-operators' gross incomes. At the time of the survey, diesel was $2.87 a gallon; with prices now exceeding $4 a gallon in Southern California, that percentage unquestionably is far higher now.

Because drivers typically are paid by the trip, port congestion can be an enormous drain on income. A 2007 study of drivers at the Port of Seattle found that a local one-way haul paid $40 to $50 on average, and round trips were about $80. To make any sort of living at those rates, drivers need to make at least a couple of round trips daily. But just a few years ago, drivers in LA/Long Beach were lucky to make two turns in a day.

The situation has improved considerably, thanks in part to the PierPass appointment system, and night and weekend hours at container terminals. "Productivity has improved by approximately 50 percent since PierPass and extended gate hours went into effect," said Rick Wen, vice president, business development for Hong Kong-based container line OOCL, in a recent address at the Coalition of New England Companies for Trade (CONECT) Annual Northeast Trade and Transportation Conference. At that event, which was held in Newport, R.I., in March, he predicted that port congestion was likely to ameliorate even further as the U.S. economy slows down and import volumes decline. But long wait times could return if LA/Long Beach dockworkers and management continue to disagree over proposed changes in labor scheduling, or if they fail to sign the next labor contract by the July 1 deadline.

Port congestion has had other consequences for companies that hire drayage drivers. When container traffic shifts away from congested ports and spikes in other parts of the country—as it has at East and Gulf Coast ports and inland intermodal parks in the past few years—there may not be enough drivers ready to go to work when shippers and carriers need them.

In rural Chambersburg, Pa., for example, carriers are desperate for drayage drivers at the intermodal rail terminal that opened there last year, said Ken Kellaway, executive vice president of RoadLink USA, North America's largest intermodal company. Speaking on a panel with Wen, Kellaway said that carriers are trying to get people off their farm tractors and into trucks. Shifts in port usage patterns have made planning and scheduling difficult for drayage companies, he added. "Where do we need more trucks and drivers? The East Coast or the West Coast? We don't really know because [demand] keeps changing."

Regulatory burdensFederal, state, and local regulations are adding to drayage drivers' frustrations. The Transportation Security Administration's Transportation Worker Identification Credential (TWIC) program, now being rolled out at ports nationwide, is almost certain to push thousands of drivers off the docks. TWIC is designed to limit port access by requiring anyone who works at or conducts business at a port to have a biometric identification card that includes detailed information about the holder. Only U.S. citizens are eligible for the IDs, which require a background check and fingerprinting.

So far, said Kellaway, the TWIC acceptance rate for drayage drivers is 96.7 percent. That sounds good—until you learn that an estimated 20 percent won't even apply because they know they won't pass. He and many other industry observers predict that upwards of 200,000 drivers nationwide will drop out of the business for that reason alone.

The regulatory pressures just won't let up. In California, current and proposed clean air regulations are likely to burden owner-operators and small trucking companies with so much additional cost that they may not be able to afford to stay in business. The Clean Truck Program, included in the San Pedro Bay Ports Clean Air Action Plan (CAAP), requires a phased implementation of new or retrofitted low-emission tractors by Jan. 1, 2012. Few owner-operators— or small truckers, for that matter— can afford to pay or borrow $50,000-plus for a new tractor or even $15,000 to retrofit their current vehicles. Although grants and loan programs are being developed to help defray the cost of updating an estimated 16,000 vehicles, they may not be enough to bridge the gap.

The clean air plan also requires drivers who do business at Long Beach to be either employees or contractors of port-approved trucking companies, known as "Licensed Motor Carriers" (LMCs). The Port of Los Angeles will adopt an even more restrictive policy. LA will require all drivers to be employees of approved carriers that own the tractors—no contractors allowed. Port of LA officials say their approach will ensure a more stable, more economically viable workforce with compliant vehicles. But there's a potential fly in that ointment: An economic impact analysis of the Clean Truck Program found that so many owneroperators would quit if forced to give up their independence that a significant capacity shortage could result.

To someone who often doesn't make a whole lot more than minimum wage and typically has neither health insurance nor a pension, the costs and hassles involved in hauling containers simply aren't worth it. By Kellaway's estimate, the average drayage truck generates $100,000 annually, but the driver clears just $7 an hour. The 2007 Port of Seattle survey bears that out: Respondents worked 11 hours per day to earn an average annual income of $31,340 per year, after deducting truck-related expenses. A similar survey of drivers in Southern California came up with an even lower figure. (See the sidebar titled "portrait of a drayage driver.")

Struggle for survivalAlthough the pressures and problems are greatest in Southern California, similar scenarios are playing out nationwide. Is there any remedy? It's difficult for even technologically sophisticated companies with strong service networks to get premium rates, so raising drivers' per-trip rates is not an option, Kellaway said. RoadLink, which formed its network by consolidating many of the larger regional intermodal companies around the country (including Kellaway's own Boston-based company), is instead trying to help drivers reduce their costs. Those initiatives include help with vehicle financing, using RoadLink's technology to reduce empty miles, and creating a buying cooperative for fuel, tires, and parts. All together, he estimates, those initiatives cut drivers' annual costs by anywhere from $2,000 to $5,000. Whether such programs will be enough to keep drivers in their cabs for the long term is uncertain.

And it's not just the drivers who are an endangered species. The small trucking companies whose employees and independent contractors serve importers and exporters also are disappearing. Most of them, Kellaway said, are "mom and pops" that have no succession plans—"their kids don't want to take over the business."

The potential loss of drayage capacity as small truckers close up shop and independent drivers park their trucks permanently is a genuine threat to international supply chains, Kellaway argued. "Intermodal drayage companies [do business with] multibillion-dollar companies, and every single one is dependent on small local drayage companies that don't have long-term prospects for survival," he said. "We've got to figure out how to correct this ... or the current business environment could force their extinction."

portrait of a drayage driver
The drivers who shuttle ocean containers to and from ports work hard for their money, as a March 2007 report on truckers serving the ports of Los Angeles and Long Beach attests. The report, prepared by CGR Management Consultants for the Gateway Cities Council of Government, includes these statistics:
The vast majority of port drayage drivers are independent owner-operators (IOOs). Some IOOs work as contractors for local trucking companies.
The average tractor operated by IOOs is a 1994 model purchased for $21,500.
The average IOO survey respondent grosses $73,900 per year. Fuel costs eat up more than one-third of that revenue—more than $25,000 on average. (Note: These figures were based on a cost of $2.87 per gallon, the price of diesel at the time the report was prepared. Diesel currently exceeds $4 per gallon.)
The average net income reported by IOOs is $29,600, a figure the researchers believe may be overstated.
IOOs worked 50.7 hours per week on average.
Port drayage drivers who are full-time employees of local trucking companies earn an average hourly rate of $16.13 and receive limited benefits.
Nearly 90 percent of the interviews with IOOs who contract with trucking firms were conducted either partially or entirely in Spanish.
To read the report, Survey of Drayage Drivers Serving the San Pedro Bay Ports, go to www.gatewaycog.org.

Another report on drayage drivers is Big Rig, Short Haul: A Study of Port Truckers in Seattle, which was based on a 2007 study conducted by the nonprofit organization Port Jobs. The report is written in a very accessible, nonacademic style. Especially interesting are the personal profiles of individual drivers and the challenges they face. The full report can be found at www.portjobs.org/bigrig_shorthaul.pdf.