Business Monday

Gateway City/Trends: Gold, computer chips dragging down local trade

Ken Roberts
Ken Roberts

If you were looking for something to cheer you up, you are probably not in the right place. The new monthly trade data is out and the results are not good and getting worse.

South Florida trade is down 6.46 percent through August of this year, according to the latest data from the U.S. Census Bureau. Just three months ago, trade was down but only 4.67 percent. Last month, it was down 5.08 percent.

A little more context is in order before I tell you what’s going on. South Florida remains on track to see its trade decline for an unprecedented third consecutive year, at least in what is often called the “modern era” of trade. That’s the quarter century since the fall of the Berlin Wall and Soviet empire and Deng’s increased opening of China to the Western world.

Even though U.S. trade is also falling this year — unprecedented in the modern era without a significant external shock like the Sept. 11, 2001, terrorist strikes or the 2008 global recession — South Florida trade is falling about a third faster.

U.S. rank: Nevertheless, South Florida remains the nation’s No. 12-ranked Customs district among the roughly four dozen in the country. Among the top 15, there is only a little movement, with Houston, New Orleans and Buffalo, New York, each falling one in rank.

All three, and particularly the first two, are energy-led, and that is a sector in extraordinary disruption. The stunning 47.56 percent decrease in the value of imported oil this year and the 31.32 percent decline in gasoline and other refined petroleum exports says it all.

Houston, which just a decade ago had the nation’s fifth-largest trade deficit, is on track this year to have the nation’s largest trade surplus. It’s a stunning reversal.

South Florida, which for many years led the nation with the largest trade surplus, is on track to register its smallest surplus since 2007, as its Chinese imports continue to swell relative to its overall trade and its exports to Latin America and the Caribbean find themselves undercut by currency and economic woes in the region.

South Florida trade: Breaking it down, South Florida’s exports are off 7.94 percent, falling below $40 billion through the first eight months of the year for the first time since 2010. Exports are down 17.32 percent from the peak year, 2012.

On the import side of the ledger, it’s not quite as bad, though there is certainly no room for merriment. South Florida imports to the world are down 4.56 percent, and the performance, while not great, is only the lowest total through August since 2011.

In dollar terms, South Florida’s trade through August stood at $71.48 billion, down $4.94 billion. Exports totaled $39.54 billion, off $3.41 billion. Imports totaled $31.95 billion, down $1.53 billion.

Breaking it down further, the problems lie in four key areas: computer chip imports, gold imports and exports, refined petroleum imports, and aircraft and aircraft part exports.

Computer chip imports have fallen from South Florida’s fourth most valuable import one year ago to No. 127 this year, right behind olive oil. This is largely the result of an Intel supply-chain transition from Costa Rica (through Miami International Airport) to Malaysia and Vietnam (through Anchorage, Alaska, Los Angeles and, to a lesser extent, Cleveland). Imports of computer chips into South Florida are down 98 percent this year.

Gold imports and exports are off a combined $2.20 billion this year, when compared to this time last year. That’s almost 45 percent of the total decline South Florida is suffering this year. Just three years ago, gold trade in South Florida totaled $9.42 billion through August. Much of that gold from being mined in Mexico and Colombia and shipped via MIA to Switzerland. This year, that total is $4.12 billion. Paradoxically, this is good news: As investors and others have lessened their skittishness about the global economy and lessened their desire to hold gold, both the demand for it and the price per ounce have dropped. Selfishly, however, that’s not good for South Florida trade. Gold is South Florida’s top import and fifth-ranked export.

Refined petroleum imports are down 22.58 percent this year, a not-insignificant slide, but a slower “leak” than the national rate. U.S. imports of refined petroleum are down 34 percent this year. Most of the refined petroleum entering South Florida, most likely from Venezuela, finds its way to Port Everglades and a foreign trade zone environment to avoid or delay duties, depending on whether the fuel is used for international flights — making it duty-free — or domestic cars or planes, in which case it is “duty-able” once it leaves the FTZ. Refined petroleum is South Florida’s No. 2-ranked import, behind gold.

The fourth and final significant factor in South Florida’s trade woes is aircraft and aircraft part exports. South Florida’s leading exports have fallen 17.83 percent, or more than double the overall decline for South Florida exports this year. The $749.93 million decline is second in size only to gold’s $1.15 million drop. Brazil is the primary South Florida market, and exports there have fallen almost $700 million from 2014. On the national level, exports of aircraft and aircraft parts have increased 5 percent, with South Florida falling to No. 8 nationally. As recently as 2014, it had ranked No. 5. Seattle, home to most of Boeing’s manufacturing, is by far the largest exporting Customs district.

Coming next: Exporting is key to South Florida trade.

Reach Ken Roberts, president of World City, at kroberts@worldcityweb.com. Twitter: @tradenumbers.

South Florida trade falling faster than national average

Change

in rank

August 2015

YTD

Total

trade

August 2015

YTD

1-year

change

1-year

change

10-year

change

10-year

change

All districts

$ 2,500,968,900,473

-$121,580,489,512

-4.64%

$834,405,618,429

50.07%

0

1

Los Angeles

$ 259,939,557,086

-$15,296,293,358

-5.56%

$70,698,438,493

37.36%

0

2

New York City

$ 247,429,173,270

-$8,066,455,758

-3.16%

$74,048,941,573

42.71%

0

3

Laredo

$ 189,437,811,429

$4,953,798,546

2.69%

$99,008,229,786

109.49%

1

4

Detroit

$ 162,623,351,620

-$10,386,997,984

-6.00%

$13,423,213,164

9%

-1

5

Houston-Galveston

$ 138,324,555,884

-$34,977,551,301

-20.18%

$50,450,683,855

57.41%

1

6

Chicago

$ 132,168,292,307

-$1,891,644,454

-1.41%

$62,257,501,004

89.05%

-1

7

New Orleans

$ 130,839,961,081

-$24,083,280,963

-15.55%

$45,627,803,405

53.55%

0

8

Seattle

$ 102,486,449,709

$1,583,542,928

1.57%

$39,074,002,357

61.62%

0

9

Atlanta/Savannah

$ 100,509,484,284

$7,323,700,495

7.86%

$53,444,295,900

113.55%

0

10

Cleveland

$ 85,609,278,642

$160,600,367

0.19%

$40,526,162,949

89.89%

0

11

San Francisco

$ 78,951,250,538

-$5,861,079,851

-6.91%

$15,081,769,178

23.61%

0

12

Miami

$ 71,484,808,114

-$4,937,385,728

-6.46%

$29,245,208,876

69.24%

1

13

El Paso

$ 63,686,988,216

$3,051,366,037

5.03%

$32,196,713,919

102.24%

-1

14

Buffalo

$ 58,819,203,010

-$3,050,349,203

-4.93%

$8,823,344,344

17.65%

0

15

Charleston

$ 53,650,183,004

$4,359,613,864

8.84%

$21,335,087,758

66.02%

Source: WorldCity analysis of U.S. Census Bureau data

  Comments