Value of Miami area trade slipping in 2013 on lower gold prices, Venezuela woes

::cck::9348::/cck::

Despite robust growth for the past few years, the dollar value of trade through the Miami Customs district likely will decline in 2013.

Through the first 10 months of the year, total trade was down 2.18 percent to $100.26 billion compared to 2012, and the Miami district dropped two notches to 12th place among customs districts nationwide, according to a WorldCity analysis of the latest Census data.

Still, those attending the import-export forecast at Trade Connections Dec. 11 were optimistic that 2014 will be a better year. When WorldCity President Ken Roberts polled attendees, most gave 2014 six to seven points on a scale of 10, with 10 being excellent.

The Miami district has perennially had the largest trade surplus in the nation, but buoyed by strong aircraft exports, the Seattle Customs District is expected to edge out Miami in 2013.

During the recession, strong gold prices helped boost not only the Miami district’s exports but also its imports.

But plummeting gold prices this year have been largely responsible for a 37.08 percent drop in the value of gold exports moving through the Miami district. Consequently, total trade with Switzerland — one of the main recipients for Miami gold exports — also fell.

Switzerland, which was the district’s third most important trading partner in 2012, slipped to 10th place for the first 10 months of 2013.

During the same period, total trade with Brazil – the Miami district’s top trading partner — grew by 2.95 percent to $14.1 billion, despite Brazil’s slowing economy.Aryam Vázquez, senior Latin American economist for Oxford Economics. Photos by Carlos Miller

But there are a few red flags on the horizon. Brazil has been “underperforming for the last couple of years,’’ said panelist Aryam Vázquez, senior Latin American economist for Oxford Economics.

The Brazilian growth model, with government intervention throughout the economy, is not yielding the desired results and the country needs “deep, structural adjustments,’’ he said. Taxes, education and social security are all in need of reform, said Conway.

Another trading partner that has seen a reversal of economic fortunes is Venezuela, where the policies of its leftist government have led to soaring inflation, widespread shortages and stagnation.

As recently as 2008, Venezuela was the Miami district’s second most important trading partner. But through October, Venezuela’s trade with the Miami district was off 13.7 percent. With $4.74 billion in trade during that period, Venezuela now ranks fifth among Miami’s trade partners.

Vázquez said he’s most optimistic about prospects for Mexico, Colombia, Chile and Peru, whose trade with the Miami district grew 46.4 percent through October.

In the current economic environment, Miami’s entrepreneurial bent is an advantage. Rather than giant import/export operations, trade in the Miami district is largely handled by more agile small and medium-sized companies, said panelist K.C. Conway, chief economist/USA for commercial real estate giant Colliers International.

Looking ahead to next year, he said, shippers are concerned that California ports could be shut down during contract talks with unions. Some companies are preemptively planning to move cargo through other ports rather than risk having their ships tied up by a strike in 2014.

Too many East Coast ports vying for Panama Canal megaships?

Conway, who writes quarterly North American office, industrial and port analysis reports, fielded questions related to the expansion of the Panama Canal and its impact on Florida ports.

There’s competition up and down the East Coast, as ports race to be big-ship-ready by the time a third set of locks is completed in Panama in 2015. Wider, deeper and longer locks in Panama are needed to accommodate newer ships called “post-Panamax,” that can carry as much as three times the cargo of vessels that now ply the canal.

But Conway said, “One of my major concerns is that on the East Coast, we’ll end up with an over-supply of post- Panamax-ready ports. There’s not going to be a quadrupling of cargo.’’

K.C. Conway, chief economist/USA for commercial real estate giant Colliers International.At most, he said, post-Panamax ships will only want to call on three ports, as they travel up the East Coast – otherwise, it isn’t efficient or economical.

Despite Savannah’s success as the fourth busiest container port in the United States and its plans to dredge to 48 feet, Conway said he doesn’t think that Georgia port will be a stop for the megaships. Generally, ports need a draft of 50 feet to handle post-Panamax vessels, and Savannah, a river port, will have to rely on the flow of tides to get the extra two feet needed for a fully loaded big ship.

“Savannah will never be post-Panamax-ready,’’ Conway said. “It can be a top 5 port and grow, but it won’t be a post-Panamax port. Savannah has everything you want except a natural ocean port.”

If he had to pick winners at this point, Conway said, Charleston, S.C.; Norfolk, Va. – already big-ship-ready, and PortMiami, which has begun to dredge its shipping channel to a depth of 50-52 feet and already installed huge post-Panamax cranes, would be the front-runners as the three East Coast ports of call.

“Everyone else will have to find a different shtick,’’ he said.

And Florida ports shouldn’t be looking at how they can compete against each other in a post-   Panamax era, Conway said, but rather how they can complement each other.

Trade Connections is one of six events series organized by WorldCity to bring together executives on international business topics. The trade series is sponsored by PortMiami, Banesco, Miami-Dade Aviation, American Airlines Cargo and Seaboard Marine.

The next Trade Connections is set for Feb. 21 on the release of annual import-export data. 

::/introtext::
::fulltext::::/fulltext:: ::cck::9348::/cck::