Business Monday

Bright spots are hard to find in first-quarter trade data

ROBERTS
ROBERTS

The bright spots aren’t easy to find in the first-quarter trade statistics the U.S. Census Bureau released last week, either for South Florida or the United States at large. An ancillary and fair question is this: Are we entering, or are we in, a new era of trade?

According to the Census data, South Florida’s trade with the world was down 3.27 percent while U.S. trade was off 3.07 percent.

While these are small percentages, what they portend is potentially greater.

WHAT’S AT STAKE

What is at stake for South Florida is that trade has not fallen three consecutive years in the more than two decades of the modern era of globalization and trade, but unless things pick up quickly, that is precisely what will occur. (The modern era is generally pegged to the late 1980s, when the Soviet Union collapsed and China began its market reforms and opening.)

For the United States, it would represent another year for trade to fall just shy of the $4 trillion mark. It finished 2014 at $3.97 trillion, was above $3.8 trillion the two previous years and just below $3.7 trillion the year before that.

Context matters here. U.S. trade with the world first topped $1 trillion in 1993. It took 11 years, until 2004, for $2 billion to be breached. But the United States surpassed $3 trillion much more rapidly, just three years later, in 2007.

If this is a new, slower-growth era of international trade for the United States, that means airports and, in particular, seaports along the Eastern Seaboard and across the nation that have invested or are investing heavily in infrastructure will be competing more fiercely for a pie that is increasing only moderately in size, at best.

That certainly includes PortMiami and Port Everglades but also Miami International Airport. While MIA’s expensive infrastructure improvements are less cargo-specific than at the seaports, the airport benefits greatly from so-called “belly cargo” for revenue.

BELLY VS. CHARTER

Belly cargo flies with passenger flights, on a space-available basis amidst all those suitcases, and adds greatly to profitability for both the airlines and the airports. Of course, MIA is buffeted more than most since freighter cargo – imports and exports flying in aircraft without passengers – is disproportionately more important at MIA than many other U.S. airports. About 80 percent of all cargo tonnage at MIA flies on freighters, according to recent MIA figures.

What else lies in the first-quarter numbers?

While trade fell $923.71 million in the No. 12-ranked South Florida Customs district, it fell more than $1 billion in No. 1 New York City, No. 2 Los Angeles, No. 4 Detroit, No. 5 Houston, No. 6 New Orleans, No. 11 San Francisco and No. 31 Port Arthur, Texas. The losses in just three Customs districts alone was essentially equal to the losses suffered by the entire nation: New Orleans trade was off $11.74 billion, Houston $8.90 billion — both oil-related — and Los Angeles $8.23 billion.

The bright spots are No. 3 Laredo, Texas, the leading gateway for U.S.-Mexico trade; and No. 7 Chicago and No. 9 Atlanta/Savannah — both increasingly dominated by China trade, the first by air and the second by ocean. The latter two are certainly benefiting from shippers looking to be less dependent on Los Angeles, even before the summer slowdown. Trade for all three is more than $3 billion about the first quarter of 2014.

In South Florida

Back in South Florida, big losses in trade with No. 1 Brazil, No. 2 Colombia and No. 10 Costa Rica — down from No. 4 one year ago — obscure at least one bright spot: Germany. South Florida trade with Brazil, Colombia and Costa Rica is off $1.46 billion — all South Florida trade is off just $923.71 million — but Germany is rallying. Germany, long one of the United States’ top trade partners and a staple of South Florida’s top 20, fell out of the top 20 in 2014 for the first time since 2008.

Thus far in 2015, however, its trade with South Florida is a record $616.29 million, up 45.44 percent and lifting Germany back into the top 20, at No. 15. Imports from German ports are up 74.35 percent, largely on the strength of yachts and other larger boats. One year ago, the total for the first quarter was $1.09 million. The first quarter of this year, the total climbed to $168.98 million and became the leading German import.

Interestingly, this is new business for Miami and the United States, rather than a shift in a trade route or supply chain, which is more common with large increases or decreases. Larger boat shipments — 26 feet and above, essentially — have moved up seven positions to rank as South Florida’s seventh most important import so far in 2015, growing more in value than any other import and more in percentage than any in the top 15.

Bright spots are, indeed, challenging to find. Four of South Florida’s top five imports are down in value and eight of the top 10 exports.

As to whether the newly released statistics foreshadow a new era in U.S. trade, I will tackle that in more detail next week.

Ken Roberts is the founder and president of WorldCity, a Coral Gables-based company. He can be reached at kroberts@worldcityweb.com.

First-quarter trade: the leading U.S. Customs districts

Change

March 2014 YTD

Total Trade

March 2014 YTD

1-year change

1-year change

10-year change

10-year change

All Districts

$ 911,988,266,527

-$28,885,546,052

-3.07%

$317,486,620,644

53.40%

1

1

New York City

$ 92,663,459,826

-$1,155,363,898

-1.23%

$29,596,700,514

46.93%

-1

2

Los Angeles

$ 90,137,904,056

-$8,227,289,348

-8.36%

$24,564,656,897

37.46%

0

3

Laredo

$ 68,820,205,552

$3,286,483,475

5.01%

$36,232,907,812

111.19%

0

4

Detroit

$ 58,937,999,262

-$2,335,341,652

-3.81%

$3,637,217,764

6.58%

0

5

Houston-Galveston

$ 52,350,349,051

-$8,899,504,826

-14.53%

$22,813,426,950

77.24%

0

6

New Orleans

$ 49,385,238,006

-$11,735,825,621

-19.20%

$18,843,783,355

61.70%

0

7

Chicago

$ 48,113,950,944

$3,048,758,294

6.77%

$23,235,153,359

93.39%

0

8

Seattle

$ 36,973,539,295

$1,038,671,020

2.89%

$15,171,961,311

69.59%

0

9

Atlanta/Savannah

$ 36,770,562,030

$3,898,218,870

11.86%

$20,261,027,613

122.72%

1

10

Cleveland

$ 30,591,414,076

$1,285,291,500

4.39%

$14,132,378,642

85.86%

-1

11

San Francisco

$ 27,757,846,811

-$2,718,934,646

-8.92%

$4,498,899,936

19.34%

0

12

Miami

$ 27,291,903,997

-$923,713,063

-3.27%

$12,019,265,100

78.70%

1

13

El Paso

$ 21,579,408,535

$297,906,549

1.40%

$9,926,322,874

85.18%

-1

14

Buffalo

$ 21,161,828,106

-$263,321,464

-1.23%

$2,404,350,972

12.82%

2

15

Charleston

$ 18,997,125,091

$1,927,877,652

11.29%

$7,130,401,310

60.09%

SOURCE: WORLDCITY ANALYSIS OF U.S. CENSUS BUREAU DATA

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