BIS Issues New Audit Module: Export Auditing
GRVR Attorneys
You may or may not have heard of the Export Management System (EMS) Guidelines from the Bureau of Industry and Security (BIS). The EMS Guidelines give exporters templates to follow when designing and setting up export compliance programs. The problem is that the EMS Guidelines have not been updated in many years. That is probably why the BIS never promoted the guidelines as much as other programs and why the BIS recently pulled the EMS Guidelines from its website as it works to update them.
The BIS has updated one small, but important tool, of the EMS Guidelines: the export audit module. It is wise for exporters to use the audit module as a starting point. However, the audit module, like everything else in the EMS Guidelines, has a pro-government slant, a bias that exporters must take into account. The new audit module, plus a great deal more, will be covered in an upcoming webinar on Wednesday, April 15, 2009. Avoiding and Handling Export Violations webinar is $99 per access line. To register, go to: www.exportimportlaw.com/courseregistration.php
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Thanks to: GRVR Attorneys Gonzalez, Rolon, Valdespino, & Rodriguez, LLCDallas · Washington, DC · San Antonio · Mexico City · Sao Paulo, Brazil · Paris, FranceGRVR has for two decades delivered excellent legal representation to our clients. With offices in six cities, four countries, and three continents, we can fill your legal needs regardless of your location, (214) 720-7720 info@exportimportlaw.com www.exportimportlaw.com
Tuesday, April 14, 2009
Tuesday, March 24, 2009
Trucking Headlines: NAFTA trade rose 4.1% in 2008
By eTrucker Staff
Surface transportation trade between the United States and its North American Free Trade Agreement partners, Canada and Mexico, was 4.1 percent higher in 2008 than in 2007, reaching $830 billion, according to the Bureau of Transportation Statistics of the U.S. Department of Transportation. The 4.1 percent rate of growth was the smallest year-to-year growth rate since 2003.
BTS, a part of the Research and Innovative Technology Administration, reported that surface transportation trade with Canada and Mexico grew 8.6 percent during the first six months of 2008 compared to the same period in 2007. It declined 0.3 percent in the final six months and 9.4 percent in the October-to-December period compared to 2007. Total North American surface transportation imports rose 2.7 percent in 2008 from 2007, and exports rose by 5.9 percent during the same period.
In 2008, 86 percent of U.S. merchandise trade by value with Canada and Mexico moved on land. Total North American surface transportation trade value in 2008 was up 47.5 percent compared to 2003, and up 83.7 percent compared to 1998.
U.S.-Canada surface transportation trade totaled $537 billion in 2008, up 5.1 percent compared to 2007. The value of imports carried by truck was 6.0 percent lower in 2008 than 2007, while the value of exports carried by truck was 2.4 percent higher. Michigan led all states in surface trade with Canada in 2008 with $67.0 billion.
U.S.-Mexico surface transportation trade totaled $293 billion in 2008, up 2.3 percent compared to 2007. The value of imports carried by truck was 2.1 percent lower in 2008 than 2007, while the value of exports carried by truck was 7.8 percent higher. Texas led all states in surface trade with Mexico in 2008 with $94.1 billion.The TransBorder Freight Dataset is a special extract of the official U.S. foreign trade statistics. The data are obtained by BTS from the U.S. Census Bureau’s Foreign Trade Division.
By eTrucker Staff
Surface transportation trade between the United States and its North American Free Trade Agreement partners, Canada and Mexico, was 4.1 percent higher in 2008 than in 2007, reaching $830 billion, according to the Bureau of Transportation Statistics of the U.S. Department of Transportation. The 4.1 percent rate of growth was the smallest year-to-year growth rate since 2003.
BTS, a part of the Research and Innovative Technology Administration, reported that surface transportation trade with Canada and Mexico grew 8.6 percent during the first six months of 2008 compared to the same period in 2007. It declined 0.3 percent in the final six months and 9.4 percent in the October-to-December period compared to 2007. Total North American surface transportation imports rose 2.7 percent in 2008 from 2007, and exports rose by 5.9 percent during the same period.
In 2008, 86 percent of U.S. merchandise trade by value with Canada and Mexico moved on land. Total North American surface transportation trade value in 2008 was up 47.5 percent compared to 2003, and up 83.7 percent compared to 1998.
U.S.-Canada surface transportation trade totaled $537 billion in 2008, up 5.1 percent compared to 2007. The value of imports carried by truck was 6.0 percent lower in 2008 than 2007, while the value of exports carried by truck was 2.4 percent higher. Michigan led all states in surface trade with Canada in 2008 with $67.0 billion.
U.S.-Mexico surface transportation trade totaled $293 billion in 2008, up 2.3 percent compared to 2007. The value of imports carried by truck was 2.1 percent lower in 2008 than 2007, while the value of exports carried by truck was 7.8 percent higher. Texas led all states in surface trade with Mexico in 2008 with $94.1 billion.The TransBorder Freight Dataset is a special extract of the official U.S. foreign trade statistics. The data are obtained by BTS from the U.S. Census Bureau’s Foreign Trade Division.
Monday, March 16, 2009
March 3, 2009 March 3, 2009 – 4:52 pm--> Breakbulk News
Great Lakes freighters may be looking at a late start to the 2009-10 shipping season, The Detroit News is reporting.
Shipping on Lake Superior officially begins when the the Soo Locks open March 25, but news reports indicate today that the national recession is hitting the shipping industry hard. Production drops have led to less material being moved.
Dale Hemmila, Cliffs Natural Resources district manager for public affairs, said the ore dock in Marquette’s Upper Harbor, owned by Cliffs, is ready to load ore once the season starts, but no vessels are on the shipping schedule yet.
Hemmila said less iron ore production from Cliffs does mean a lighter shipping season in the coming year. He said the company is projecting about 50 percent production in comparison to 2008, which is due to lower market demand. “It’s all market-driven, what we’ve seen over the last several months for iron and steel and all the commodities,” Hemmila said.
Shippers also told the Detroit News that they have been hurt by an undersized and aging fleet of U.S. Coast Guard ice-breaking vessels.
Matthew Anderson, vessel traffic watchstander in Sault Ste. Marie at the locks for the Coast Guard, said that some shippers are starting late, but they’ve said it’s more due to a poor economy than ice.
Thursday, March 12, 2009
Idle boxship capacity tops 1.1m teu
Janet Porter - Wednesday 18 February 2009 -- World Trade News
CONTAINER shipping faces at least another four years of misery, and probably more, as supply continues to massively out-strip demand. New figures from AXS-Alphaliner show that the number of unemployed boxships has soared over the past couple of weeks as lines continue to cancel services.
By the beginning of this week, an estimated 392 ships with combined total capacity of 1.1m teu were idle, according to AXS-Alphaliner. This represents a huge jump from 303 ships of 800,000 teu out of work at the start of the month, and figures from Lloyd’s MIU last week putting the amount of idle boxship capacity at almost 830,000 teu.
At 1.1m teu, the number of slots withdrawn from service equates to 8.8% of the total cellular fleet, way above the previous peak of 5% touched two decades ago when US Lines went bankrupt and its ships seized, and the 3.2% recorded at the height of the 2002 market slump.
The latest data includes 19 units with nominal capacity in excess of 7,500 teu.
With so much tonnage now either at anchor or in lay-up, AXS-Alphaliner estimates that demand would have to grow at an average of 15% over the next three years to restore equilibrium by early 2013.
That scenario seems totally unrealistic, with a slightly more probable growth figure of 10% pushing supply and demand balance back to 2014.
But the main container trades are actually seeing a drop in overall volumes at the moment, with little on the horizon to suggest any turnround in the foreseeable future.
Asian export ports are reporting a huge decline in outbound traffic as retail spending in the US and Europe remains in the doldrums, while recent statistics from the European Liner Affairs Association showed a steep decline in container line liftings towards the end of last year when the full impact of the credit squeeze hit economies around the world.
AXS-Alphaliner notes that its projections are based on the current fleet and orderbook, and an assumption that 160,000 teu per year will be scrapped, and do not allow for any possible newbuilding cancellations.
Maersk Broker is provisionally forecasting that at least 120,000 teu will be broken up this year, followed by 70,000 teu in 2010, but notes that the final figures for demolition activity are likely to be higher. The first month of 2009 saw just over 40,000 teu sold to breakers.
On the supply side, around 1.8m teu is scheduled for delivery between now and the end of the year, adding 14.6% to the fleet in 2009, followed by another 12.1% in 2010.
Contracting activity remains at a complete standstill, while the shipyards are keeping tightlipped about whether they have agreed to delay deliveries.
Negotiations continue, but most industry sources do not think any firm agreements have yet been reached, with the South Korean yards determined to make clients stick to the terms of their contracts despite enormous pressure from owners and their bankers to reschedule production programmes.
As banks try to find any loophole they can to extract themselves from credit agreements, some owners are now resorting to legal action to force the finance houses to keep to their contractual commitments.
Tuesday, March 10, 2009
HOMELAND SECURITY DEPARTMENT
World Trade News : Napolitano updates Congress on DHS' IT programs By Ben Bain Gov't Computer News Mar 02, 2009
Homeland Security Secretary Janet Napolitano told House lawmakers last week that the Homeland Security Department would not meet a deadline of 2012 that requires DHS to scan all cargo bound for U.S. seaports with non-intrusive imaging and radiation detection equipment before the cargo leaves for the United States. Napolitano also told a House panel that DHS would focus on improving intelligence sharing with state and local authorities.
The 100 percent scanning requirement has raised logistical, technological and diplomatic concerns from shippers, carriers, port and terminal operators, and foreign governments. The requirement was part of a 2007 law that allows the homeland security secretary to extend that deadline.
Napolitano also said she planned to make intelligence-sharing with state and local authorities a priority and wanted to focus on the more than 50 state and local intelligence fusion centers around the country.
The Bush administration designated the fusion centers as a central node for the federal government’s efforts for sharing terrorism-related information with state and local officials and Congress has designated DHS as the lead federal agency for that effort. The department is in the process of upgrading its platform for sharing sensitive but unclassified information with state and local officials.
“The fusion of information between the federal, state and local levels is what makes the intelligence gathering process critically valuable to preventing threats from materializing,” she testified. “Information sharing is also what makes response efforts effective.”
Napolitano also discussed a series of directives she has ordered to review DHS’ efforts in areas such as border security, risk management, information sharing with state and local authorities and cybersecurity, saying it was critical to involve the private sector in cybersecurity and she had instructed DHS officials to be sure the department was reaching out to private-sector groups.
Other information technology-related programs she touched on included the SBInet border security program, the Transportation Worker Identification Credential program and Real ID.
World Trade News : Napolitano updates Congress on DHS' IT programs By Ben Bain Gov't Computer News Mar 02, 2009
Homeland Security Secretary Janet Napolitano told House lawmakers last week that the Homeland Security Department would not meet a deadline of 2012 that requires DHS to scan all cargo bound for U.S. seaports with non-intrusive imaging and radiation detection equipment before the cargo leaves for the United States. Napolitano also told a House panel that DHS would focus on improving intelligence sharing with state and local authorities.
The 100 percent scanning requirement has raised logistical, technological and diplomatic concerns from shippers, carriers, port and terminal operators, and foreign governments. The requirement was part of a 2007 law that allows the homeland security secretary to extend that deadline.
Napolitano also said she planned to make intelligence-sharing with state and local authorities a priority and wanted to focus on the more than 50 state and local intelligence fusion centers around the country.
The Bush administration designated the fusion centers as a central node for the federal government’s efforts for sharing terrorism-related information with state and local officials and Congress has designated DHS as the lead federal agency for that effort. The department is in the process of upgrading its platform for sharing sensitive but unclassified information with state and local officials.
“The fusion of information between the federal, state and local levels is what makes the intelligence gathering process critically valuable to preventing threats from materializing,” she testified. “Information sharing is also what makes response efforts effective.”
Napolitano also discussed a series of directives she has ordered to review DHS’ efforts in areas such as border security, risk management, information sharing with state and local authorities and cybersecurity, saying it was critical to involve the private sector in cybersecurity and she had instructed DHS officials to be sure the department was reaching out to private-sector groups.
Other information technology-related programs she touched on included the SBInet border security program, the Transportation Worker Identification Credential program and Real ID.
Monday, February 23, 2009
February 19, 2009 – 3:34 pm-->By Janet Nodar Breakbulk News
While speakers at the 20th annual Tampa Steel Conference differ on their estimates of just how much the federal stimulus package will affect the steel industry, they agree that it is intended to “light a spark” rather than effect a rescue.
Mario Longhi, president and CEO of Gerdau Ameristeel, estimated that $70 billion of the $800 billion stimulus package will be relevant to the steel industry, including about $29 billion for transportation infrastructure, about $13.5 billion for building and repairing federal buildings and public infrastructure, about $18 billion for water-related projects and about $10 billion for rail and mass transit.
But he said this falls far short of the annual $225 billion that the National Surface Transportation Policy and Revenue Study Commission says would be necessary for each of the next 50 years to ensure that U.S. infrastructure in these categories keeps up with estimated capacity and maintenance needs.
The steel industry must grapple with the same challenges or opportunities facing the nation as a whole, Longhi said, including supporting global trade rules and restoring financial stability, which no stimulus package can do alone and which cannot happen until credit markets ease and bad assets are identified and made transparent.
Murat Askin, general manager of SteelOrbis Americas, said that these are “the worst possible times” in the steel markets. Few if any analysts predicted either the price explosion or the price crash of 2008, he said. Gloomy signs include the contracting U.S. economy, Europe’s highly leveraged banking system and what appear to be growing problems in the Middle East, including high steel inventories and cancellation of planned projects.
By Askin’s count, the stimulus package will mean about $85.7 billion in infrastructure spending that will result in $2 billion to $3.85 billion in steel purchases over perhaps two years, enough to increase U.S. production only 1.68 to 3.17 percent. However, the stimulus bill also encourages business investment in plants and equipment and includes tax cuts that may encourage spending, provisions for energy-efficient school modifications and other projects that may spur steel production.
Lewis Leibowitz, a partner with the law firm of Hogan & Hartson, said the stimulus bill’s goal is to find a way to use public spending to “light a spark” and trigger private investment. The U.S. is on the cusp of major changes, he said, as the government struggles to right the banking, housing and automotive sectors. “What we do should create jobs throughout the economy, not just in one sector,” he said.
Leibowitz pointed out that steel exports grew 20.8 percent last year to 13.5 million tons. CAFTA and NAFTA countries accounted for almost 10 million of those tons. “CAFTA is one of the fastest-growing markets for U.S. export steel.”
Panama, Colombia and Korea are also potential growth markets for U.S. steel exports, although protectionist policies designed to shelter the U.S. steel industry from imports will hurt this potential.
Despite the global downturn, Dusseldorf-based ThyssenKrupp is proceeding with multibillion-dollar investments in a greenfield Brazilian slab mill and a greenfield carbon and stainless mill in Calvert, Ala.
At full capacity, ThyssenKrupp expects to import some 4 million tons of slab through Alabama from the Brazil mill annually, said Bob Holt, vice president of sales and marketing for ThyssenKrupp Steel USA.
The Alabama mill will produce 4 million tons of carbon steel annually and 1 million tons of stainless steel at full capacity, Holt said. Carbon will be in production in 2010, while the stainless side has been deferred for 1 ½ years because of the recession. The Alabama mill will produce finished coils aimed for the southeastern U.S. and Mexico markets, he said. Approximately 39 percent of that output will be geared for the automotive industry, including German automakers located in those key regions.
Friday, February 20, 2009
Obama unlikely to repeal 100% box scanning law
Justin Stares, Brussels - Friday 9 January 2009
THERE is little chance of a repeal of US 100% box scanning legislation under president Barack Obama, the World Customs Organisation heard today.
The newly elected Democrat president is not expected to work as hard to oppose the unpopular law as the administration of Republican president George Bush, diplomats heard in Brussels.
The anti-terrorism measure, due to come into effect in 2012, would require all US-bound containers to be scanned prior to ship departure. It has triggered protests from trading partners, in particular the European Union, who say the US is exporting its security concerns at the expense of shippers across the globe.
Mr Obama’s precise position on the law is still unknown since he is not reported to have made reference to it during his election campaign. But WCO executives, who have been lobbying US lawmakers, say the incoming president is unlikely to fight an initiative backed by a Democrat-controlled Congress.
“As for a repeal, we will not see that,” WCO director Michael Schmit told customs ambassadors from around the world at Friday’s New Year’s gathering. The best that could be hoped for was a delay in implementation “beyond 2012”, he said.
“[President] Bush fought against the law,” Mr Schmitz said. But while the US administration had been effectively lobbied, Congress had on the other hand “heard very little”, he said.
This message was reinforced by the newly elected WCO secretary general Kunio Mikurija. “Congress is key,” he said. “Security should not be used as a new barrier [to trade]. We have to convince the US Congress to review the legislation on 100% scanning.”
The WCO, which is pushing for the blanket scanning plan to be replaced by a risk-based system, said it would wait for US appointments to be confirmed, such as that of Secretary for Homeland Security, before resuming its lobbying campaign. Congressional committees, particularly the trade committee, are being targeted as potential allies. The ways and means committee, which has already asked for a postponement to the scanning law, is also expected to lend support.
Within the US there is opposition to trade security legislation on cost grounds. A separate anti-terror measure aimed at the supply chain, known as the “10+2” law, comes into effect later this month and is expected to cost $20bn to implement, the Brussels gathering heard. Shippers will from January 26 have to inform US Customs and Border Protection of new consignment details, such as the container stuffing location and the identity of the stuffer. Financial penalties will apply for non-compliance.
Experts say 100% scanning would be even more costly. Pilot projects at a variety of ports have shown it is technically feasible but would cost up to $100 per box.
Moreover, many in the supply chain industry believe that if implemented it would do little to improve US security.
At the same time, there are hopes some ports would be exempt. “I think this law is more likely to happen under Obama than before,” said the Israeli ambassador to the WCO. “But ports in Europe will probably be alright.”
The European Sea Ports Organisation said it believed “high volume” scanning, not 100% scanning, would be the most likely outcome.
Justin Stares, Brussels - Friday 9 January 2009
THERE is little chance of a repeal of US 100% box scanning legislation under president Barack Obama, the World Customs Organisation heard today.
The newly elected Democrat president is not expected to work as hard to oppose the unpopular law as the administration of Republican president George Bush, diplomats heard in Brussels.
The anti-terrorism measure, due to come into effect in 2012, would require all US-bound containers to be scanned prior to ship departure. It has triggered protests from trading partners, in particular the European Union, who say the US is exporting its security concerns at the expense of shippers across the globe.
Mr Obama’s precise position on the law is still unknown since he is not reported to have made reference to it during his election campaign. But WCO executives, who have been lobbying US lawmakers, say the incoming president is unlikely to fight an initiative backed by a Democrat-controlled Congress.
“As for a repeal, we will not see that,” WCO director Michael Schmit told customs ambassadors from around the world at Friday’s New Year’s gathering. The best that could be hoped for was a delay in implementation “beyond 2012”, he said.
“[President] Bush fought against the law,” Mr Schmitz said. But while the US administration had been effectively lobbied, Congress had on the other hand “heard very little”, he said.
This message was reinforced by the newly elected WCO secretary general Kunio Mikurija. “Congress is key,” he said. “Security should not be used as a new barrier [to trade]. We have to convince the US Congress to review the legislation on 100% scanning.”
The WCO, which is pushing for the blanket scanning plan to be replaced by a risk-based system, said it would wait for US appointments to be confirmed, such as that of Secretary for Homeland Security, before resuming its lobbying campaign. Congressional committees, particularly the trade committee, are being targeted as potential allies. The ways and means committee, which has already asked for a postponement to the scanning law, is also expected to lend support.
Within the US there is opposition to trade security legislation on cost grounds. A separate anti-terror measure aimed at the supply chain, known as the “10+2” law, comes into effect later this month and is expected to cost $20bn to implement, the Brussels gathering heard. Shippers will from January 26 have to inform US Customs and Border Protection of new consignment details, such as the container stuffing location and the identity of the stuffer. Financial penalties will apply for non-compliance.
Experts say 100% scanning would be even more costly. Pilot projects at a variety of ports have shown it is technically feasible but would cost up to $100 per box.
Moreover, many in the supply chain industry believe that if implemented it would do little to improve US security.
At the same time, there are hopes some ports would be exempt. “I think this law is more likely to happen under Obama than before,” said the Israeli ambassador to the WCO. “But ports in Europe will probably be alright.”
The European Sea Ports Organisation said it believed “high volume” scanning, not 100% scanning, would be the most likely outcome.
FMCSA issues rule to improve intermodal equipment safety
The new regulations make intermodal equipment providers subject to the Federal Motor Carrier Safety Regulations (FMCSRs) for the first time, and establish shared safety responsibility among intermodal equipment providers, motor carriers, and drivers.
The Trucker News Services12/17/2008
WASHINGTON — New rules issued today will significantly strengthen safety requirements for intermodal container chassis, the special trailers that hold cargo containers when they are transferred from ship or rail to truck for final delivery, announced John H. Hill, administrator of the Federal Motor Carrier Safety Administration (FMCSA), and published on the Federal Register.
“We want to ensure that every piece of equipment traveling on our highways is operating safely,” said Hill. “These new rules will bring new safety and enforcement focus on the chassis and equipment used to haul goods on our nation’s roads every day.”
The new regulations make intermodal equipment providers subject to the Federal Motor Carrier Safety Regulations (FMCSRs) for the first time, and establish shared safety responsibility among intermodal equipment providers, motor carriers, and drivers.
Beginning in December 2009, intermodal equipment providers must have in effect regular and systematic inspection, repair, and maintenance programs for intermodal chassis; they will also need to track defects reported and repairs made. By December 2010, each intermodal provider is required to identify its equipment with a USDOT number. FMCSA’s final rule also outlines inspection requirements for motor carriers and drivers operating intermodal equipment.
Intermodal equipment providers will be subject to on-site reviews to ensure compliance with the new rules. Penalties for violating these rules range from civil fines to a prohibition on providing or operating intermodal equipment found to pose an imminent hazard.
The final rule on this Intermodal Chassis is available for review here.
Barb Kampbell of The Trucker staff can be reached for comment at barkkampbell@thetrucker.com.
The new regulations make intermodal equipment providers subject to the Federal Motor Carrier Safety Regulations (FMCSRs) for the first time, and establish shared safety responsibility among intermodal equipment providers, motor carriers, and drivers.
The Trucker News Services12/17/2008
WASHINGTON — New rules issued today will significantly strengthen safety requirements for intermodal container chassis, the special trailers that hold cargo containers when they are transferred from ship or rail to truck for final delivery, announced John H. Hill, administrator of the Federal Motor Carrier Safety Administration (FMCSA), and published on the Federal Register.
“We want to ensure that every piece of equipment traveling on our highways is operating safely,” said Hill. “These new rules will bring new safety and enforcement focus on the chassis and equipment used to haul goods on our nation’s roads every day.”
The new regulations make intermodal equipment providers subject to the Federal Motor Carrier Safety Regulations (FMCSRs) for the first time, and establish shared safety responsibility among intermodal equipment providers, motor carriers, and drivers.
Beginning in December 2009, intermodal equipment providers must have in effect regular and systematic inspection, repair, and maintenance programs for intermodal chassis; they will also need to track defects reported and repairs made. By December 2010, each intermodal provider is required to identify its equipment with a USDOT number. FMCSA’s final rule also outlines inspection requirements for motor carriers and drivers operating intermodal equipment.
Intermodal equipment providers will be subject to on-site reviews to ensure compliance with the new rules. Penalties for violating these rules range from civil fines to a prohibition on providing or operating intermodal equipment found to pose an imminent hazard.
The final rule on this Intermodal Chassis is available for review here.
Barb Kampbell of The Trucker staff can be reached for comment at barkkampbell@thetrucker.com.
Tuesday, January 06, 2009
MEXICO TO CUT TARIFFS ON INDUSTRIAL PRODUCTS
December 23, 2008 from Shippers Digest
December 23, 2008 from Shippers Digest
Mexico will cut tariffs on capital goods and other industrial imports to lower costs for Mexican manufacturers who have been hurt by the recession in the United States, Finance Minister Agustin Carstens announced. The cuts are aimed in particular at the maquiladora factories that assemble goods near the border, using components imported from the U.S., and then re-export higher-value-added products back to the United States. The government plans to cut tariffs on up to 5,000 different classes of goods between 2009 and 2012. "These measures are timely, taking into account the difficult economic context we currently face," Carstens said. The United States buys 80 percent of the country's exports, so slumping demand for Mexican exports have taken a heavy toll on Mexico’s economy. Mexico's industrial sector has not recorded any growth since May and productivity growth has not grown in 2008. By lowering the cost of key imported components, the measure could raise the productivity and competitiveness of Mexican manufacturers. The Mexican government projects that GDP growth in the country will fall to 2 percent in 2008 and drop even further to 1.8 percent in 2009. Some private-sector economists are predicting that the country could face a sustained recession
Tuesday, December 02, 2008
Negotiating Next Year’s Trucking Contracts - Setting the Stage for LTL Pricing, Service, & Capacity
Thursday, Dec. 4, 2008 1:30 PM EDT
Only a couple days left to register - SIGN UP TODAY!
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.
View Event Fees
View Event Summary
View Event Agenda
Register for Teleconference
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.
View Event Fees
View Event Summary
View Event Agenda
Register for Teleconference
Monday, November 24, 2008
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.
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.
Friday, November 21, 2008
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/.
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/.
Tuesday, November 11, 2008
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.
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.
Wednesday, October 22, 2008
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
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
Tuesday, October 21, 2008
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.
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.
Monday, October 20, 2008
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.
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.
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.
Friday, October 10, 2008
** 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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- 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.
[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.
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.
===============================================================================
*******************************************************************************
TTPP News Back Numbers
http://www3.jetro.go.jp/ttppoas/mailnews/index.html
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Tuesday, October 07, 2008
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.
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.
Monday, October 06, 2008
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
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
Friday, October 03, 2008
AN UNTAPPED MARKET
September 8, 2008 J. JOSEPH GRANDMAISON Shipping Digest Online
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.
Wednesday, October 01, 2008
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.
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.
Tuesday, September 30, 2008
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.”
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.”
Monday, September 29, 2008
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.
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.
Tuesday, September 09, 2008
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.
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