Record year for Miami import-export trade, with changes afoot

By WorldCity Staff | February 23, 2013 |

Big changes are slowly taking place in how the products we use everyday are created and moved around the world. Along with a remaking of manufacturing supply chains is a never-ending chess game with U.S. ports in a struggle to maintain their importance for certain markets while trying to make inroads into developing economies.

Scott Miller, a longtime trade-policy expert with Procter & Gamble, talked about component trade

Scott Miller, a longtime trade-policy expert with Procter & Gamble now with the Center for Strategic and International Studies, talked about component trade. Photo: Carlos Miller

“What’s happening is… a larger share of the things that are traded are no long finished goods, they’re either components or parts,” said Scott Miller, a longtime trade policy expert for Procter & Gamble who’s now a senior adviser as the Center for Strategic & International Studies in Washington D.C.

“The classic story is Apple: Apple makes nothing, they invent, develop, design, and they have very sophisticated retailing and customer service.”

Meanwhile, 2012 was a banner year for the Miami Customs District, the region that stretches from Port St. Lucie to the Keys. WorldCity President and founder Ken Roberts ran through the region’s statistics at the first Trade Connections of the year on Feb. 15.

“The first takeaway is that Miami is in the top 10 [customs districts] for the first time,” he said. The move up is largely thanks to Latin America, Miami’s key trading partner, which emerged from the worldwide economic downturn mostly unscathed.

“There wasn’t a mortgage market down there and they were able to keep buying stuff” he said. Much of that “stuff” is consumer goods, Miami’s bread-and-butter business that help the region run a perennial surplus.

Despite reaching a record $124 billion in world trade Miami has also been losing some of its market share to Houston, which has the advantage of being a major energy hub.

For exports “if you look at Houston they’re at a record high percentage and we’re at a record low,” Roberts said. “On import side Houston’s been ahead of [Miami] since 2004.”

Meanwhile, Miller of CSIS noted that the way trade data is tracked today is flawed because it was created in an era when imports and exports were of completed goods, and not of component parts where value-added services also play a role.

That shift in the way goods are made came after a myriad of technologies, everything from high-speed communications to containerized cargo, lowered the cost of making a product around the world. The key to all of this is “vertical disintegration,” Miller said, which has allowed companies to outsource some elements of the manufacturing process to suppliers who know how to do those functions best.

“When I joined [Procter & Gamble] in 1978 we owned trees, a pulp mill process facility,” Miller said. Today they “still make Charmin and Bounty, they just don’t own trees, Procter & Gamble doesn’t own a pulp mill, other suppliers are more effective.”

In order to find even more efficiencies and cost-savings Miller said governments around the world will need to rethink their tariff strategies from the idea of selling things to focusing on making things together.

The “U.S.-Canada autopact was signed in 1952 [and today] nobody has any idea where a car is made today, the border easy to cross,” he said.

In this new, global manufacturing plant Miami’s role, Miller said, is a supportive function, especially when it comes to linking companies’ administrative, production and distribution functions with key markets throughout the hemisphere.

“You have the headquarter operations,” he said. “Miami supports the trade and services that are the glue that sticks these products together.”

Posted in Trade Connections