Archive for October, 2011

PIERS Economist Attributes Containerized Export Growth to Gains in Scrap Metals and Soybeans

October 25, 2011

According to Mario Moreno, PIERS/Journal of Commerce economist, U.S. exports continued their rise in August for the third consecutive month, bolstered by a debased dollar and rising incomes in key markets. PIERS data shows overall U.S. containerized exports grew 5.4% in August 2011 over August 2010 following a 5% advance in the previous month. Gains were led by an impressive 32% boost in scrap metals and a 119% jump in soybeans shipments.

The notable jump in soybeans is likely tied to declining container freight rates which prompts U.S. agricultural exporters to switch from bulk to container transportation. Also, showing gains were grains & flour products (+54%), poultry (+40%), and logs and lumber (+17%). On the downside, fabrics including raw cotton remained on its downward trend, losing 52% of its outbound volume. A severe drought in West Texas has adversely disrupted overall cotton production. Pet and animal feed exports dropped by just 4% in the month, following a 21% tumble in July.

On a regional level, exports to Northeast Asia led the gains, rising 9%, followed by Southeast Asia, up 12%. On the downside, exports to the Caribbean saw volume losses again, falling 5%. Exports to the Mediterranean declined 3%.

Looking at the data by individual countries, China led the gains driven by a strengthening demand for logs and lumber (+38%) and wood pulp (+62%). Wastepaper shipments to China also added to the gains but were small (+4%) compared to July’s 21% advance. Total exports to top market China surged 7%, while solid gains were also seen in Taiwan (+23%) and Korea (+12%).

Year to date, through August, overall U.S. containerized exports were up 8%. On a month to month basis, exports rose 1.2% in August over July. For the July-August period, total U.S. exports were up 5.2% over July-August 2010, in line with Moreno’s previous forecast for Q3:2011 of 6.3%. Moreno’s recent updated forecasts point to a 6% growth for full year 2011.



Imbalance in Trade Prompts Clever Solution for Empty Containers

October 20, 2011

Massive U.S. trade deficits with countries like China are still as prevalent as ever, resulting in one of the biggest hidden costs to the shipping industry– back-hauling of empty containers.

Drewry Shipping Consultants estimates that there were over 82 million port to port moves of empty TEUs worldwide in 2010.  The Port of Los Angeles alone reported 831,370 empty TEU shipments during the first half of 2011, representing over 42% of their outbound container traffic.  This should come as little surprise given the massive rift in the trade balance between the U.S. and China.  According to PIERS data, U.S. imports from China reached nearly 4.1 million TEUs in the first half of 2011, while exports during the same period represented only 1.2 million TEUs, (of which the Port of Los Angeles handled approximately 27% of this export traffic).

US-Trade-Deficit-With-ChinaTop US Ports Trading with China

While the U.S. trade imbalance is most prevalent among countries in Asia, this problem is not exclusive to westerly trade lanes, nor is it always the case that a lack of U.S. exports adds to the deficit. Michael McDaid of Sea Star Line noted, “There are approximately four full loads moving to Puerto Rico for every full container returning to the U.S.”

Assuming a conservative average cost of approximately $200 per TEU for each empty container move in North America (terminal fees, storage depot fee and dray), the cost to carriers to move empties out of North America alone would have exceeded $1.6 billion in 2009, representing over 8.2 million incidences of port to port empty container moves according to Drewry.

This estimate of carrier cost for handling empty container moves does not include additional costs for land-side repositioning, where relevant, or the additional time ships spend docked at a terminal while empty containers are loaded and unloaded.

Another important metric related to empty container back-haul is the carbon footprint associated with moving empty containers. Each empty container move involves fuel and electrical consumption by ships, terminals, trucks, and railroads. While the true environmental impact of empty containers is difficult to measure, shippers issuing quarterly sustainability report cards are likely to be sensitive to these issues.

Various opportunities for minimizing the cost to carriers for empty container back-haul are currently either being explored or implemented to one degree or another, including: trans-loading, matching cargo to back-haul slots to reduce empty frequency, and active container-to-slot capacity management to avoid one-off ship moves dedicated to empty repositioning.

A more radical approach to reducing the energy, cost and effort to back haul containers to points of origin is the concept of folding containers.  One such design that was recently developed and is due to start CSC testing and certification later this year is New Jersey based startup Staxxon.  Over the last two years the firm has developed, prototyped, and patented technology that allows up to five empty ISO steel containers to be folded and “nested” so that the nested set can be moved in the same space as one standard dry 20’ or 40’ container.

While folding empty containers has been tried in the past and is also being developed by other companies, the approach used by Staxxon preserves the fundamental structural elements of the ISO steel container by folding from left-to-right (like an accordion) vs. the collapsing methods used by others.  This vertical design leaves each of the corner posts intact while folding to meet the current standards for racking, stacking, and related CSC test and certification requirements, which the company plans to start testing at Marine Container Equipment Certification Corp. in Farmingdale, New Jersey.

“If empty containers can be folded and nested at off-terminal storage depots, then moved in sets of 2, 3, 4, or 5 containers occupying the same space and dimensions as one container, container fleet owners and terminal operators could see as much as an 80% reduction in terminal ‘touches’ once the empty container nest is inside the terminal,” said George Kochanowski, CEO/Founder at Staxxon.  “Our target is for the incremental cost of container manufacturing, maintenance, and repair for Staxxon folding/nesting container technology to be recovered in as few as 12-18 nested container transits, depending on the terminal costs for the relevant trade lanes.”

Staxxon recently announced commercial production of 20’ standard dry containers based on its folding and nesting technology by New Jersey based Sea Box. The containers produced by Sea Box will be used to complete CSC certification at Marine Container Equipment Certification Corp. and commence non-commercial trials at marine and inland terminals as well as on container ships. The company closed a $1 million seed funding round in early 2011 and expects to announce a further round of funding in Q3 2011 that will enable commercial trials as well as development and production of 40’ standard and high cube prototypes that will use the Staxxon folding and nesting technology.

While the new folding/nesting concept from Staxxon sounds like it could be a win-win for carriers and terminal operators, the concept will likely live or die based on adoption and buy-in from all the parties involved.  Owners of container fleets will need to make a significant initial investment to realize future savings. While trucking and rail companies in the U.S. could be motivated by increased efficiency when evaluating the additional time to nest the folding containers, it is unclear how those receiving the nested containers overseas would respond to the additional burden of separating the nested containers.  Ultimately only time will tell, but whether it’s folding containers, trans-loading, or some other solution, as long as there are trade imbalances, carriers and terminal operators will continue to be challenged by empty containers.

State Governments “STEP” Toward Export Development

October 18, 2011

States around the country just recently gained access to funds for boosting state exports. Created by the Small Business Jobs Act, the recently launched State Trade and Export Promotion Grant (STEP) Program is designed to better fund small business exporting assistance programs. By increasing the number of small businesses that are exporting, and increasing the value of exports for those small businesses already participating in global trade, the government is working to give America a stronger competitive edge globally.

Here are the many ways states receiving federal funds through the STEP program can carry out export programs:

  • Implement foreign trade missions
  • Make foreign market sales trips
  • Subscribe to services provided by the Department of Commerce
  • Pay website transaction fees
  • Design international marketing products or campaigns
  • Exhibit at trade shows
  • Participate in training workshops or any other export initiative deemed appropriate by the SBA’s Office of International Trade’s Associate Administrator.

Many small businesses looking to take advantage of this funding need guidance when navigating through the global export economy. The STEP program outlines several ways priority may be given to certain applications, and gaining export market intelligence will be key to making a proposal stand out. For example, priority may be given to an applicant that promotes new-to-market opportunities to China. How can you find current data on the top companies exporting to China? What are the top commodities being exported?

Two PIERS products are uniquely suited to assist applicants. With a comprehensive, ranked view of international buyers and sellers, user friendly graphics and the ability to view Bill of Lading details by company, PIERS Prospects can help applicants isolate exporters in their specific states and search by county or zip codes to find small businesses that can benefit from their initiatives. Additionally, PIERS StatsPlus allows users to gain a global perspective on the flow of commodities to identify growth markets and monitor the risks of markets in decline for any of 20,000 product codes and over 170 countries.

“Thanks to key leaders at the State International Development Organizations (SIDO) working with State and Federal agencies, PIERS has been able to take part in supporting the National Export Initiative by helping state and county economic development executives find new export markets and foreign direct investment prospects,” said Wael Jarous, PIERS Vice President.

Ready to take the next “STEP?” Register for a free demo on each product and capitalize on this valuable opportunity.

PIERS Supports the World Trade Center Africa Initiative

October 13, 2011

Mochron Investments, the holding company of the World Trade Center Africa Initiative (an initiative which consists of the ownership and operation of a network of World Trade Centers in sub-Saharan Africa), is now using global trade intelligence from PIERS, the Standard in Trade Intelligence, to accelerate international trade with Africa.

A few visionary individuals supported by various governments and private sector companies across Africa and Europe, have embarked on creating successful operating World Trade Centers across Africa. These World Trade Centers function as an integrated Pan-African Network of centers of excellence with a common goal–to develop trade with Africa.

With the hub of The World Trade Center Africa Initiative in Cape Town, South Africa, the main purpose of the centers is to stimulate local economies and provide a platform for companies of all sizes to gain access to international markets. Mochron’s ultimate goal is to increase trade with Africa by 1%. This will potentially generate US$70 billion, which is three times the amount of aid Africa currently receives from the G8 countries.

The current countries that are benefiting from the World Trade Center Africa Initiative are; South Africa (WTC Cape Town and Johannesburg), Botswana (WTC Gaborone), Burundi (Bujumbura), DRC (WTC Kinshasa), Kenya (WTC Nairobi), Mozambique (WTC Maputo), Namibia (WTC Windhoek), Rwanda (WTC Kigali), Tanzania (WTC Dar Es Salaam), Uganda (WTC Kampala), Zambia (WTC Lusaka) and Zimbabwe (WTC Harare).

Top African Markets for U.S. Waterborne Exports

Top Sources of U.S. Waterborne Imports from Africa

The African Network of World Trade Centers forms sophisticated links between businesses across Africa that serve a diverse range of economic sectors. These sectors include: mining, energy, construction, agriculture, tourism, finance, communication, logistics, health, and technology.

It aims to support the Small Medium Enterprises of Africa, which is the primary economic driver to develop jobs and stimulate a consumer driven economy. These enterprises typically suffer from a lack of access to growth capital, a lack of understanding of, and access to international markets and frequently experience large corporate and foreign company exploitation. These are among the primary elements that The World Trade Center Africa Initiative seeks to address, thus helping the local companies to sell more of their products and services abroad. This will enable them to grow their businesses in the region of a World Trade Center presence and to employ more human resources in these regions. It achieves this objective by engaging with more than 300 other World Trade Centers globally and thereby developing new markets for its clients.

To support Mochron’s efforts, two key trade intelligence solutions from PIERS, PIERS Prospects™ and PIERS StatsPlus™ are being implemented across the centers as the basis for their strategic planning efforts. Using Prospects, the centers will gain access to actionable intelligence, which connects companies importing and exporting goods, as well those companies servicing importers and exporters. StatsPlus combines international trade statistics with market specific trade information to provide a global picture of commodities being traded as well as the companies importing and exporting them.

Gavin Carter, Executive Vice President of PIERS said, “The formation of this partnership between PIERS and the World Trade Center Africa Initiative complements our other ongoing initiatives in emerging markets and partnering with economic development organizations. Over the past year, PIERS has been focusing heavily on understanding new problem domains and developing technology and solutions to help address these. Africa’s growing role is at the forefront of these developments, which makes this partnership not only rewarding, but exciting as well.”

Julius Steyn, CEO of Mochron Investments said, “This collaboration between the strategic partners – PIERS and Mochron Investments, will propel Mochron Investments and the World Trade Center Africa Initiative to new heights and will significantly aid in reaching Mochron’s 1% goal for increasing trade with Africa.”

Learn more about how PIERS can help grow your organization.  Register for a product demo today.

Obama’s Jobs Plan Means Good News for the Transportation Industry

October 11, 2011

A recent Bloomberg News Survey of 34 economists concluded that President Obama’s proposed jobs plan would boost the U.S. GDP 0.6 percent in 2012.

As reported last week by PIERS’ sister company, The Journal of Commerce, the Bloomberg study said Obama’s plan would save or create hundreds of thousands of jobs and spur new short-term infrastructure spending, boosting economic growth overall by 1 to 2 percentage points.

Averting a recession means good news for any industry, but it’s especially good news for the transportation industry. Here’s why:

  • Allocations for infrastructure. The president proposed $50 billion in new spending on transportation systems, including state allocations for road, bridge and airport work plus more funding for intercity passenger rail upgrade. This type of upgrade usually aids freight rail traffic as well.
  • Replenishment of the Department of Transportation’s TIGER grants. TIGER grants (stands for Transportation Investment Generating Economic Recovery) have included port projects such as on-dock rail or marine highways, plus intermodal hubs and freight short line improvements. TIGER grants have faced a shrinking annual budget since they were introduced in the 2009 stimulus law.
  • Seed money for a new, independent National Infrastructure Bank. The plan asks Congress to put $10 billion aside to make loans for projects such as toll roads or bridges that could be repaid with interest and fund more projects. This portion is facing push-back from the trucking industry, which typically favors use of fuel taxes to pay for highway construction, rather than road tolls.

How are you tracking the effects of current events on your business? Open up markets and track trends using PIERS intelligence to keep up.

Once Competitors, PIERS Study Shows NVOCCs and Ocean Container Lines Working Together

October 5, 2011

The Journal of Commerce’s Peter T. Leach once again has shed light on the inner-workings of two of the transportation industry’s most robust markets—Non-vessel-operating common carriers (NVOCCs) and ocean container lines.

Using data from the recently-released PIERS NVOCC Market Report – Import Market Dynamics 1H-2011 vs. 1H-2010, Leach describes how the once uneasy competitors for cargo bookings are cooperating more than ever. Container lines once opted for contracts with larger U.S. shippers but are now looking to sell space to NVOCCs to fill bigger, newer ships.

Total volume shipments that non-asset-owning freight forwarders handle for U.S. importers grew 5.6 percent in the first half of 2011, compared with 4.2 percent in volume moving under traditional arrangements between carriers and shippers. PIERS began tracking figures in 2006, showing a particular acceleration during the global trade downturn and through the recovery. During the five-year period analyzed, the annual average growth in the value of the import cargo booked through NVOCCs was 0.6 percent, while the value of total trade declined at an average annual rate of 3.7 percent.

Major industry players weighed in on the report in Leach’s article. “When shippers scrambled for additional capacity, they turned to NVOCCs, who cemented relationships with the shippers,” said Phillip Damas, division director to Drewry Supply Chain Advisors.

Greg Johnsen, EVP of marketing and sales at GT Nexus said, “Once NVOs have found their way into selling space to larger shippers, they tend to be more inventive.”

“I believe it has more to do with small shippers finding it very difficult to interact directly with carriers. As a consequence, small shippers are increasingly turning to the forwarders,” said Lars Jensen, chief of maritime market research firm SeaIntel.

The full report is available for purchase online for $99. Join us on Facebook, LinkedIn and Twitter to discuss these findings.

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