Gateway City/Trend: Cellphone exports to Brazil, Colombia dip

Imagine needing a room large enough to hold $2.99 billion in cellphones. It’s a safe bet you don’t, and neither does South Florida — at least not at one time.

But that is the value of the cellphones and related equipment shipped from South Florida through the first eight months of 2015, a nation-leading total. Despite the size of that number, it is also the first year since 2011 that the total for the first eight months of the year has dipped below $3 billion, according to U.S. Census Bureau data.

That’s a 12.31 percent decline from 2014 for South Florida’s second-most-valuable export. Overall exports from South Florida are down 7.94 percent through August, the most recent data available. This is the second installment of a series of stories on South Florida’s most valuable exports; it follows a similar series on the leading imports and the leading trade partners.

While those cellphones didn’t have to all be in one place at one time, at one point most of them were in a room of sorts — most likely a warehouse in Doral, often safe from duties and tariffs within the confines of a foreign trade zone.

Because South Florida leads the nation in cellphone exports, the largest distributors in the world have regional offices here, including Ingram Micro, Tech Data and home-grown powerhouses Intcomex and Brightstar, as well an assortment of medium-sized and niche players.

South Florida leads the nation because Latin America has a thirst for the mobility that smartphones offer, and is benefiting from the life-changing opportunities these handheld devices bring, the current economic and political climate in Brazil, Argentina and Venezuela notwithstanding.

That doesn’t just affect cellphone distributors. Two weeks ago, our company, WorldCity, held one of our monthly forums on mobility in Latin America, with panelists representing the three primary pieces of the puzzle: ESPN Latin America, a content provider; Brightstar, the cellphone distributor that has diversified beyond that into insurance, finance and other areas; and Telefonica, the Spanish giant that is the leading or No. 2 carrier throughout much of Latin America.

Bottom line: The smartphone continues to be disruptive to many business models at the same time it is opening doors for consumers and businesses.

Penetration of the smartphone — as opposed to the simpler feature phone — has basically doubled throughout Latin America in the last two years. In Costa Rica it is above 75 percent, the highest for the region. In just two years, ESPN Latin America’s digital content has soared from 19 percent on mobile devices to more than 40 percent.

U.S. rank: It makes sense that South Florida — and more specifically Miami International Airport — would lead the nation in cellphone exports. Cellphones are largely manufactured in Asia. The phones that will come to the United States, largely, are those for American consumption or those bound for Latin America, which does not have extensive direct connections to Asia for this kind of trade. Phones bound for Latin America all too often end up in Doral, where, because they are altered in some fashion — a battery is added, software is added, etc. — then count as a U.S. export.

Nationally, the United States’ exports of cellphones and related equipment this year totals $22.74 billion. Cellphones are now the fifth most important export from the United States, up from No. 7 last year at this time. More valuable than computer chips, medical instruments, computers, medicine, gold and diamonds. A decade ago, cellphone exports ranked No. 12. And, importantly from a South Florida point of view, those exports are up for the sixth consecutive year. The 2015 total is a 6.17 percent increase.

SOUTH FLORIDA COMPETITION

While South Florida is losing market share — falling from 18.21 percent of all exports in this category two years ago to 1.314 percent this year — the issue is not one of competition, per se. The biggest gains are coming from Los Angeles, New Orleans and Anchorage.

Los Angeles is shipping primarily to Hong Kong, with almost 40 percent of the total, and other Asian nations. Its top-ranked Latin American nation outside of Mexico, with which South Florida doesn’t really compete, is Brazil at No. 14. New Orleans is shipping everywhere except Latin America (outside of Mexico). Brazil ranks No. 13 for New Orleans. Anchorage is also shipping to Asia, with 75 percent headed to Hong Kong.

▪ Export markets: South Florida’s primary concern with these exports is not competition so much as it is political and economic instability in Brazil and Venezuela — and a surprising drop in exports to Colombia.

Exports to Brazil are down 26.68 percent, and Brazil still accounts for 14.95 percent of the total. South Florida shipments of cellphones to Venezuela have fallen 92.34 percent in the last three years. Colombia, which slipped behind Brazilian neighbor Paraguay to rank No. 3, is down 38.91 percent from 2014.

▪ South Florida trade: But while this is the first year since 2011 that exports have dipped below $3 billion through the first eight months of the year, it is also the fourth highest total on record for that same time period. South Florida exports of cellphones and related equipment — it can include some landline phones and equipment required for both types of phones to work — did not top $2 billion through August until 2010. Just two years later, in August 2012, the total was $3.35 billion.

IMPORTANCE TO SOUTH FLORIDA

Cellphones became the second most valuable export from South Florida in 2010, the year they surpassed — in a telling sign — computers. For two years after that, gold became a more important export but cellphones have ranked No. 2 since 2013.

Coming next: While the cellphone has surpassed the computer locally and nationally as a leading export, it remains the third most important South Florida export.

This story was originally published November 1, 2015 at 2:00 PM with the headline "Gateway City/Trend: Cellphone exports to Brazil, Colombia dip."