Archive for April, 2012

The Uncertain Future of the Export-Import Bank of the United States

April 24, 2012

On a trip to the Boeing airplane factory in February, President Obama called for the reauthorization of the Export-Import Bank, (often referred to as the Ex-Im Bank) stating it played a main role in helping to promote U.S. exports.

More than 75 years after President Franklin Roosevelt signed an executive order to create the independent federal agency, the bank’s future is in limbo. Congress must reauthorize its charter before May 31, when the bank is to reach its $100 billion lending limit, for it to keep operating.

PIERS recently exhibited at the Ex-Im Bank Conference in Washington, D.C. April 12-13, where former President Clinton delivered an insightful keynote speech.  His speech helped to further highlight the important role the Ex-Im Bank plays in helping businesses both large and small succeed in an increasingly competitive global economy. In an election year, at a time when job creation is a main concern of the American voter, Clinton discussed how the Ex-Im Bank is a driver of the U.S. economy.

“If America wants to lead the world in shared prosperity, a key component must be to increase employment in the tradable sector,” said President Clinton. “There is a whole raft of studies that show that Americans who work in the tradable sector of the economy are not only likely to get jobs with higher starting pay but also pay that increases with the growth of the companies.”

To effectively illustrate how important the Ex-Im Bank is to American businesses, the Seattle Times recently featured a story of a small exporter of floral greens, Janis van Well. Her $4 million company sends greens for bouquets to businesses in Germany, Japan, Canada, New Zealand and the Netherlands, and is one of 74 companies in Washington State that received help in 2011 from the Ex-Im Bank. Van Well takes comfort in knowing the government will protect her company’s losses for up to $1.6 million if any of her foreign customers don’t pay their bills.

If Congress fails to act, no state will be harder hit than Washington, one of the bank’s biggest beneficiaries and the nation’s most trade-dependent state, where one of three jobs is tied to international trade and 83,000 jobs are at stake.

Senate Banking Committee Chairman Tim Johnson, said failure to act by May 31 would favor foreign competitors over U.S. exporters and hurt the Obama administration’s goal of doubling U.S. exports by 2015.

“There is simply no good reason to oppose the reauthorization of the Export-Import Bank,” Mr. Johnson said at a committee hearing last Tuesday. Last year, the bank accounted for nearly $33 billion in export financing, which supported 290,000 American jobs, according to Mr. Johnson.

The current bill calling for reauthorization would extend the bank’s charter to 2015 and increase its lending authority from $100 billion to $140 billion.  House Republicans demanding for more transparency have been the primary obstacle to getting this bill passed despite mounting pressure to meet the May 31st deadline.

According to the Ex-Im Bank, U.S. exports have grown at an annualized rate of 15%, which is sufficient to meet President Obama’s goal of doubling exports by 2015.  To track the progress of U.S. exports by volume in addition to dollar value visit www.piers.com and ask for a free sample of our export data.

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U.S. Containerized Exports Jump 9.6% in February

April 19, 2012

After 1.9% growth in January, U.S. containerized exports leapt forward again in February, rising 9.6% year-over-year and 4% from the previous month. The total February volume was 1,014,176 TEUs, led by strong gains in paper and paperboard, building materials and refrigerated foods, and boosted by the depreciation of the U.S. dollar.

U.S. Containerized Export Volume in TEUs - February 2012

In terms of TEUs, paper and paperboard showed the greatest gains, but building materials grew by 280% over January, and frozen fish jumped 157%. Fabrics (including raw cotton) continue to decline, down 15% or 6,375 TEUs.

“The foreign exchange value of the U.S. dollar against a broad basket of currencies was down on January 31 by 2% over the value of December 30, 2011,” said Mario O. Moreno, economist for The Journal of Commerce/PIERS. “Manufacturing activity in China has been in contraction for four consecutive months, yet U.S. exports of key raw materials such as paper & paper board and raw cotton increased sharply, suggesting factory output will rebound soon.”

Northeast Asia held its position as the top destination for U.S. containerized exports, showing 12% Y-o-Y growth to 459,713 TEUs, which represents 45.3% of total export volume. Exports to the Caribbean climbed an impressive 49% and shipments to North Europe surprised with a rebound of 19%. Mediterranean volumes, however, fell 18%.

To learn more about the details behind each of these shipments visit www.piers.com.

Finding the Perfect Trading Partner

April 17, 2012

It’s no secret that in spite of the Obama Administration’s best efforts to boost exports, the U.S. still has a significant trade deficit.  In 2011 U.S. exports reached an all time high of $1.5 trillion, a 16.2% year-over-year increase according to U.S. Census data.  Yet, even this dramatic uptick in exports wasn’t enough to close the gap in the U.S. trade deficit which actually expanded to $-738 billion from $-646 billion in 2010.

The massive imbalance between U.S. trade with China is often to blame for this problem.  After all, China is by far the least balanced of all of the U.S.’s trading partners.  In fact, the U.S. trade deficit with China in TEUs (-5,923,053 TEUs) is actually greater than the total U.S. trade deficit (-5,444,757 TEUs) indicating that the U.S. actually has a trade surplus for total non-China waterborne shipments.

This trade deficit comes at the expense of ocean carriers, ports, 3PLs and others involved in moving cargo who are tasked with the unfortunate responsibility of having to send empty containers back to their original destination to support inefficient trade lanes.  Maersk Line alone estimates they spend nearly $1 billion each year moving over 4 million empty dry and reefer containers; a cost they look to significantly reduce through a program called “NOR” for “Non-Operating Reefers”.

But what about the countries that have a nearly perfect trade balance with the U.S.?  By focusing their efforts on countries where the trade balance is nearly perfect, transportation companies who effectively penetrate these markets could provide their services without the additional cost associated with moving empty containers…well at least theoretically.  So assuming this dream scenario is actually possible, what countries would be good candidates?

Using PIERS Data we took a look at the U.S.’s major trading partners (over 100,000 TEUs in 2011) and ranked each country according to their 2011 trade balance as a percent of the country’s total trade in TEUs.  A ranked list of the 10 most balanced trading partners based on their trade balance to total trade ratio is below.

US-Trade-Balance-to-Total-Trade-Ratio

South Korea surprisingly tops the list at number one.  Imports of auto parts and tires from South Korea which totaled 89,346 and 60,709 TEUs in 2011 respectively, were in part offset by U.S. exports of scrap paper (60,265 TEUs) and scrap metal (58,902 TEUs).  The Netherlands, which followed in a close second, was led on the import side by strong beer imports (59,755 TEUs) and offset by a number of strong U.S. exports including automobiles (7,039 TEUs), and chemical products like prepolymers (8,694 TEUs) and chemical wood pulp (8,584 TEUs).  Other countries rounding out the top ten include Israel, Hong Kong, Belgium, Brazil, United Kingdom, Philippines, India and Taiwan.

Looking to find your perfect market?  PIERS data provides the insights you need to locate buyers and suppliers based on specific trade activity.  To learn more register online for a free demo.

Spotlight on Southeast Asia: Bright Spots for Asia’s Trade-Dependent Economies

April 11, 2012

Economists are saying recent trade data from places like South Korea, Taiwan and Singapore have shown signs of economic stabilization in the region.

Reports from Reuters showed exports from Singapore, often a bellwether for trade in that region, recovered strongly in February, providing an early sign the picture could brighten for Asia’s trade-dependent economies. Singapore’s trade for example is three times the size of its own economy.

Singapore’s non-oil domestic exports surged 30.5% in February from a year earlier, helped by a recovery in electronics and a continued strong performance in pharmaceuticals. Exports had fallen 2.4% year-over-year in January, partly due to the early Chinese New Year holiday. PIERS economist, Mario Moreno recently reported on the more widespread effects of the early Lunar New Year on containerized U.S. imports earlier this month.

Combining the data for the first two months of the year—to strip out distortions caused by the later Chinese New Year—non-oil domestic exports rose nearly 13% from a year ago. Electronics exports leapt 23.3% in February after a fall of 10.9% year-on-year in January. Singapore’s domestic exports of electronics fell 13% last year, hurt by falling demand for semiconductors, but the chip industry is rebounding.

According to PIERS data, U.S. imports from Singapore remain mostly positive and relatively stable, compared to the rest of the world.  With the exception of a large year-over-year spike in January 2011, U.S. imports from Singapore have followed a far less dramatic trajectory than non-U.S. trade.  By contrast Singapore’s total February exports surged 30% Y-o-Y while exports to the U.S. rose a modest 5.3%.

When it comes to predictions about the directionality of the trade and economy, economists say it’s still too early to tell. Like much of the rest of the world, trade could be affected by the euro zone’s growing economic instability. How do you plan to keep track? PIERS solutions provide the support needed to accurately track vital trade intelligence around the world. Contact us today to have a PIERS solutions expert show you more.

Early Lunar New Year Contributes to Drop in U.S. Containerized Imports, Volume Down 5.8% in February

April 3, 2012

U.S. containerized imports in February fell for the first time in four months on a year-over-year basis, sliding 5.8% to 1,193,157 TEUs as demand for furniture, toys and footwear declined on early closing of factories in China and soft consumer spending. The month-to-month drop was even more dramatic, as February imports plunged 18.6% from January.

U.S. Containerized Imports

While the timing of the Lunar New Year holiday, and related factory closings, made accurate Y-o-Y comparisons difficult, the 18.6% tumble from January suggests weakening volume, said Mario O. Moreno, economist for The Journal of Commerce / PIERS. Prior to the slide, furniture, the largest import commodity group, had been leading an import surge.

February imports from Asia tumbled 10% Y-o-Y, after a 3% increase in January. Moreno noted that his first quarter forecast of 1% growth in trade from Asia might be a bit optimistic.

“Overall demand for imported home goods remains relatively modest as the pace of home sales recovers at a stubbornly slow manner,” Moreno said. “Meanwhile, consumer spending rose faster than incomes in February, mainly at the expense of savings, which raises a concern for the sustainability of spending in the long run.”

To uncover the details behind these shipments including information specific to individual companies, commodities, or geographic regions visit www.piers.com and register for a free demo.


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