The Miami Customs District is accustomed to setting new trade records year after year, but commerce through South Florida has faltered during the past two years, and trade experts say things won't improve in 2015.
“It’s going to be a very tough first half of the year,” said John Price, managing director of Americas Market Intelligence at a Trade Connections event in Doral on Friday that was organized by WorldCity.
Friday was a busy day in South Florida trade circles. Assistant Secretary of State for Economic and Business Affairs Charles Rivkin also was in town, meeting with local business leaders and PortMiami executives to push the Obama administration’s trade agenda.
Last year, trade through the Miami district, which covers airports and seaports from Palm Beach to Key West, fell 3.89 percent to $115.93 billion, after dropping by 3.3 percent in 2013.
Price said he expects the numbers to be “even more dramatically negative in 2015.”
Why? Think the declining price of metals, lower oil prices and a stronger dollar that has cut into import demand in some countries.
Back in 2012, gold was the top import and export of the Miami district, but the price of gold has dropped and the value of gold imports and exports in 2014 showed double-digit declines.
Weak metal prices are expected to continue this year, Price said. And Brazil, which is perennially South Florida’s top trading partner, has economic problems. On Friday, Brazil’s currency, the real, dipped to a 10-year low of 2.8795 per dollar.
Brazilians’ free-spending ways in recent years have made them the top-spending international visitors to South Florida and Brazil has had a steady appetite for high-tech imports.
But Price said, “The Brazilians are tapped out” due to overspending and easy access to credit. “Brazilians are going to export much less of the high-tech products that move through Miami,” he said.
In general, Price said, the economies of Mexico and Central American and Caribbean nations, which are more tied to a recovering U.S. economy, will increase import levels this year.
But he pointed out that the Miami district is not a gateway for Mexico trade — although it is for commerce with Central America and the Caribbean. Customs districts that handle high volumes of trade with Mexico, such as Los Angeles and Laredo, showed growth last year.
Carlos Cubias, vice president of UPS’ U.S.-Mexico Trade Lane, said he sees Brazil, Colombia, and Chile as growth markets for UPS.
“Sometimes I wonder where Brazil is going,” Cubias said. But he added that its sheer size makes the Brazilian market too big to ignore.
The Miami Customs District, said Cubias, “should have interest in doing more with what comes off the ships.” He suggested more emphasis on warehousing and final assembly of products.
“It feels like we’re content with just unloading the ships,” he said. “If we create business, we create jobs and some of them are pretty good jobs.”
Rivkin said that the two trade pacts the United States is negotiating — the Trans-Pacific Partnership (TPP) with Asia-Pacific countries and the Transatlantic Trade and Investment Partnership (TTIP), a trade deal with the European Union — are also about jobs.
U.S. free trade agreements with 20 countries account for $22.8 billion, or 37 percent of Florida’s exports, and Florida exports supported an estimated 275,000 jobs in 2013, according to the Bureau of Economic and Business Affairs.
But South Florida’s trade tends to be North-South. No European countries are among South Florida’s top trading partners. And Chile, Peru and Canada are the only TPP members that fall in the Top 10 of the Miami district’s trading partners.
Rivkin said he agrees with PortMiami Director Juan Kuryla’s assessment that the port’s trade with Asia will greatly increase once the port’s dredging project to accommodate larger post-Panamax ships and the expansion of the Panama Canal are complete.
Small and medium-sized enterprises, which are so prolific in South Florida, he said have the most to gain if the new trade deals win approval. Smaller companies generally don’t have the resources or are unclear about the rules for navigating international trade, Rivkin said. Completed trade deals would help make the rules clearer for them, he said.
Rivkin said the United States hoped to close TPP negotiations first, and then TTIP, but he said the emphasis was on getting quality agreements, rather than the timing.
He called the two potential trade pacts once-in-a-generation opportunities to set the rules and push environmental and labor standards as high as possible. “If we don’t [set the rules] someone else will and they may not be to our standards,” Rivkin said.