Opportunities in the Ocean Freight Business and U.S. Ports

Opportunities in the Ocean Freight Business and U.S. Ports

Port View _Small

Over-capacity and falling rates define a struggling ocean freight market. According to industry analysts, the collapse in rates has not only been attributed to declining demand but also to over investment in shipping capacity by ocean carriers. Indeed, the introduction of new capacity has primarily been in the form of larger ships; however, the expected profits from these ships have yet to materialize. Meanwhile, investments in ports are underway to not only improve efficiencies but to also attract these “mega-ships”. While ocean carriers grapple with declining rates and profitability in addition to launching larger and larger ships, ports are undergoing their own transformation.

Top 10 US Ports

According to the Journal of Commerce, Los Angeles and Long Beach are the two largest ports in the US in terms of total TEUs for 2014. Along with Seattle/Tacoma, Oakland and other West Coast ports, 2015 was a difficult year due to a number of issues including prolonged labor negotiations, chassis shortage and preparations for handling mega-ships.

East Coast ports along with the Houston Port Authority appeared to benefit from West Coast labor issues and as a result, many ports reported record TEU throughput for the year. For example, the Georgia Port Authority noted an 11.7% year-over-year increase in TEUs for the Port of Savannah and the Virginia Port Authority recorded a 6.5% gain over 2014. In terms of total cargo, the Houston Port Authority also enjoyed a record year in 2015, moving 30.5 million tons of cargo at its facilities, surpassing the record set in 2014 of 30.3 million tons.

For 2015, it is likely the top 10 port ranking will not shift much despite the issues the West Coast ports endured during the year. Los Angeles and Long Beach will probably maintain the top two spots once again as over 40% of all Asian imports arrive at these two ports alone; however, East Coast ports are gaining ground and many of these ports have high expectations with the opening of the expanded Panama Canal later this year; but an even bigger question is, are the ports prepared for the mega-ships?

top 10 us ports infographicMake Way for the Mega-Ships

It appears the handling of mega-ships at US ports is going to be one of trial and error. The two largest container ships ever to unload in North America reached Los Angeles in late December. According to the Port of Los Angeles, the larger of the two ships, the CMA CGM Benjamin Franklin, stretched 1,300 feet — about as long as the Empire State Building is tall and approximately 1,500 longshoremen spent almost 56 hours moving nearly 11,230 containers on and off the ship before the visit ended Dec. 30.

Other US ports may not be as fortunate as Los Angeles to ably handle container ships of this size. Although the Georgia ports and Charleston ports have benefitted from record TEU volumes, neither are capable of handling these ships; but each of these ports has received funding for dredging projects while the Jacksonville port has received a financial commitment from the state government. Meanwhile, many bridges on the West and East coasts, such as in New York/New Jersey are too low or narrow to accommodate the mega-ships.

But as ports prepare harbors and structures to accommodate mega-ships, the question arises: do these ports have the necessary equipment and infrastructure in place for the loading, unloading and transport of increased container volume?

Investing in Efficiencies

As ports raced to prepare for the mega-ships, 2015 was also the year of efficiency improvements for many ports. For the Georgia Port Authority, investments were made to truck gates, container yard space, container handling equipment and ship-to-shore cranes. Meanwhile, the South Carolina Port Authority and the Virginia Port Authority improved truck turn times to support productivity of the trucking industry.

In an interesting move, to better compete against Canadian ports, the Seattle and Tacoma ports formed an alliance, Northwest Seaport Alliance, which aims to nearly double cargo volume by 2026.

Is It Enough?

The ocean freight market is changing rapidly – larger ships, falling rates, the opening of the expanded Panama Canal – to name just a few changes. But questions remain….

  • Are the top US ports really ready for the changes?
  • What will these industry trends mean for individual ports?
  • Will the changes affect the rankings of the top 10 US ports?

And as we enter 2016, not only is the ocean freight market faced with many uncertainties but new requirements such as SOLAS container weight verification will come into play effective July 1. Once again, more questions for a market that is still reeling from 2015. Will the Ports adapt?  It remains to be seen.

What This All Means For U.S. Importers & Exporters

As we have shown in previous posts, here at the Exporting Excellence™ blog, we really like macroeconomic data and all things related to international trade.  Investment in air and ocean port infrastructure is pretty much the perfect real world intersection of trade and economic data.

Opportunities abound for U.S. importers, exporters and their freight forwarders to take advantage of falling ocean freight rates.  Over 50% of U.S. import traffic comes from Far East Asia, and hence signing favorable contracts with steamship lines in Q1 2016 can yield considerable savings in terms of landed cost even over the already low pricing importers benefitted from in 2015.

Download the Top 10 Ports Infographic Now!

Download Top 10 Ports Infographic

For U.S. exporters a similar opportunity exists to lock in savings for the next 12 months.  As ocean freight contracts are typically renegotiated in March, the timing is right to forecast volumes for the year to come.  Some trade lanes are already showing signs of stability, such as trans-Atlantic services from the U.S. East Coast.  However, the arrival of more capacity, resulting from the expansion of the Panama Canal will continue to pressure rates especially for exports to Asian markets such as China.

Take a moment to look at your international business and invite your freight forwarder in on the discussion.  It’s likely that a little bit of collaboration now can save a lot of time, money and effort in the form of shopping for prices further down the road. Most importantly, take a moment to download our free infographic on the Top 10 US Ports!

 

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Amazon Gets Set to Disrupt the Freight Forwarding Market

Amazon Gets Set to Disrupt the Freight Forwarding Market

amazonAfter building an enviable fulfillment process and network, acquiring trailers to transport goods between fulfillment and sortation centers, dabbling in its own delivery services and dipping its toes in air cargo, Amazon is now eyeing the ocean freight forwarding market. 

Should other freight forwarders be concerned?

Freight forwarders are already facing a difficult market thanks to overcapacity, declining rates and a global economy that has remained in the doldrums for several years. However, as Amazon enters the NVOCC realm, there are bells going off in many freight forwarding offices.

Amazon is a monster e-commerce provider, an IT firm and a logistics provider. It is also a major customer of such delivery companies as FedEx, UPS and the USPS. In fact, according to some publications, Amazon is a $1 billion customer for UPS alone. $1 billion in transportation spend with UPS alone – that’s perhaps the main reason for building out its logistics and transportation network – costs are soaring – and so Amazon apparently has decided to bring it all in-house.

increase your airfreight revenuesDespite the precarious industry headwinds facing freight forwarders, Amazon’s NVOCC registry from the FMC depicts its Asian ambitions.  Amazon’s official name on the FMC’s NVOCC registry is Beijing Century JOYO Courier Service Co. Ltd. JOYO was a Chinese e-retailer acquired by Amazon in 2004 and also marked Amazon’s entry into China.

According to industry speculation, Amazon could provide freight forwarding services to Chinese companies looking to export products directly into its Fulfillment by Amazon (FBA) warehouses, or perhaps even “cross-dock” the goods to inject into Amazon’s US delivery network. In addition, Amazon could provide a service most other freight forwarders are unable to – limiting the number of cargo ‘handoffs’ within the supply chain as well as fully taking advantage of its strong IT capabilities to further automate the process.

Amazon will come up against stiff competition. Alibaba, China’s own monster e-commerce provider, IT firm and coordinator of logistics services, signed an agreement with China Shipping Group, its subsidiary, China Shipping Network Technology and sister company China Shipping Container Lines in 2014 to set up an integrated and cross-border logistics platform. The platform will allow for both China Shipping’s and Alibaba’s clients to use it for price inquiry, ordering, tracking and settlement.

The race is on between the world’s two largest e-commerce providers and logistics is where the competition will ultimately determine the winner and perhaps redefine a freight forwarding market in need of change.

The World Needed Another Article on Amazon’s Dominance?

We actually put this article together for a very different reason than to just comment on Amazon.  At Crescent Air Freight we are not only a freight forwarder and NVOCC, but we’re also a consolidator which means we do business with other freight companies.  Many of our industry customers are ocean freight forwarders, NVOCC’s and customs brokers who don’t have in house air freight capabilities.  In other cases we’ll work with freight forwarders who may be licensed for air freight shipping but simply don’t have access to the pricing that we do.  So in that respect, we see some significant value in what Amazon could bring to the logistics marketplace.

Here’s an example of how we cooperate with industry competitors and how Amazon could do the same:

unlock the airfreight business in your customer baseWe have an NVOCC client who has no air freight capability, but they have tremendous ocean freight volume from various U.S. exporters.  A small percentage of the business that their customers have requires air freight service, and our client was simply letting that traffic walk out the door as they were unable to service it themselves.  Crescent was able to put together a simple set of rate and booking procedures that effectively made us the outsourced air freight vendor for this client.  As a result they are now able to capture over $50,000 in annual net revenue from this activity alone.

Now imagine Amazon’s volume of container traffic from China to the United States alone.  By choosing to become an NVOCC instead of a BCO (Beneficial Cargo Owner), Amazon is clearly signaling that they intend to make money off the sale of ocean freight services.  So imagine, just as a consumer goes to the Amazon Marketplace and chooses from 10 different vendors of the Apple iPhone, your freight business can now get centralized access to 1 set of prices for containers from Shanghai to Long Beach (for example).  No more price fluctuations, no more bloated destination charges from multiple handling agents and warehouses, etc.  Just one simple price.  That’s the power of what Amazon’s entry can mean to the market for U.S. import logistics.

Freight forwarders will be mistaken to see this as competition.  Amazon has repeatedly shown that “coopetition” with small businesses and other vendors – including those who sell competing products – is integral to their business model.  We believe they’re going to harness their considerable buying power in the freight markets to do the same for container shipping from Asia to the United States.  And this is no small undertaking – Far East Asia supplies over 50% of U.S. imports!  Clearly Amazon sees vast potential to deliver savings and take a cut for itself.  So how is this not competition for forwarders?  Well, in simple buying & selling terms it has to be considered competition.  However, in terms of value added services, it’s actually going to be a benefit to freight forwarders and NVOCC’s.  Considering most forwarders, especially small to mid-sized ones, deliver unsurpassed service benefits to their clients that large forwarders and integrators don’t, the actual cost of freight is nowhere nearly as significant as one might think.  If you’re a small or mid-sized forwarder who continues to add value to your customer’s business, then Amazon is about to drive down costs and stabilize them for your benefit as well as for the benefit of your customers.  If you’re a freight forwarder who currently does not service China origin business, Amazon may just give you a chance to capture business you’ve been neglecting due to lack of access or in house capabilities in the way that we did for our NVOCC customer.

So we say, “Welcome Amazon”.  It’s going to be fun competing with you and growing with you.

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Saudi Arabia – Not Just for Oil

oil fieldsSaudi Arabia – Not Just for Oil

When one thinks of Saudi Arabia and international trade, oil typically comes to mind first, but times are changing. The price of oil has been on the decline over the past couple of years and as such Saudi Arabia has been diversifying its economy. As a result, opportunities exist for exporters.

Saudi Arabia is the 19th largest exporter and the 20th largest import market in the world. Among the top exports is of course, oil, but also plastics, metal goods, construction materials and electrical appliances. In terms of imports, the country’s leading commodities are vehicles, machinery, electronic equipment and pharmaceuticals. U.S. exporters of these products have found Saudi Arabia to be an excellent market for decades.

Trade Lanes

Diversification and Infrastructure

Diversification is important for Saudi Arabia in order to grow its economy and as such government investments in infrastructure and non-oil industries are on the rise. Not surprising, the construction sector is the largest driver of economic activity in Saudi Arabia after oil particularly as government-sponsored projects such as hospitals, specific industry-related economic hubs and infrastructure are driving most of this need.

Indeed, ambitious infrastructure projects are underway with five rail projects to connect not only the major cities within the country but also to serve as a link between the Red Sea and the Persian Gulf as well as with the six other countries of the Gulf Cooperation Council (GCC). This is an interesting development for many reasons, as the Arabia Peninsula is one of the only regions of the world that jumped to modern air and ocean ports infra structure without first developing a rail network. For U.S. exporters, especially those shipping to major inland points such as Riyadh (the nation’s capital), the presence of rail cargo could lower the cost of inland delivery substantially and increase delivery times.

Expansion plans are also underway at airports in Riyadh, Jeddah, Madinah, Nijran, and Tabuk primarily for passengers but will undoubtedly benefit cargo also.

Furthermore, ocean port projects include expansion of the country’s largest port in Jeddah, as well as improvements to ports in Jazan, Al-Madhaya and Fursan. Inland ports are also being built in specific industry-related economic hubs known as Economic Cities.

Along with infrastructure investments, Saudi Arabia has identified several industries for further development such as healthcare, life sciences, automotive, information technology, logistics, alternative energy and manufacturing.

Because of the high volume of imported automobiles and automobile parts, there are particularly high expectations to expand the domestic automobile manufacturing industry. Currently there is local production of light trucks only on a small scale by Isuzu, Daimler, Volvo and MAN. Tata, Jaguar and Land Rover are considering local assembly operations in Saudi Arabia.

In addition, Saudi Arabia is the world’s largest importer of defense equipment and as a result, the government is also working towards developing a manufacturing base for weapons parts and components.

Trade

The Department of Customs at the Ministry of Finance oversees all merchandise moving through Saudi customs ports. In addition, the Saudi Food and Drug Authority (SFDA) are empowered by the Saudi Council of Ministers to have a representative at eight Saudi ports of entry with Saudi Custom officials to regulate and control the entry of medical devices. As such, medical devices are only allowed entry into Saudi Arabia through the three major international airports, two seaports in Jeddah and Dammam, and three land entry points.

On the global front, Saudi Arabia joined the World Trade Organization (WTO) in 2005 and as part of this trade organization is committed to its rules including transparency in trade requirements and more accommodating to non-Saudi businesses. Being a WTO member, Saudi Arabia is expected to bind its tariffs on over three fourths of U.S. exports of industrial goods at an average rate of 3.2%, while tariffs on over 90% of agricultural products are set at 15% or lower.

Additionally, as a member of the Gulf Cooperation Council (GCC), Saudi Arabia applies an external tariff of 5% for most products, with a limited number of GCC-approved country-specific exceptions.

Despite being a member of WTO, Saudi Arabia still favors Saudi businesses. In addition, there are also concerns of counterfeit products. In some consumer goods, for example, it is estimated that as much as 50% of the entire Saudi market is counterfeit. In order to restrict the entry of counterfeit products, the Saudi Customs Authority now requires all imported goods to clearly display the “Country of Origin” or “Made in ….” on items in an irremovable manner.

So, Saudi Arabia is much more than oil. True, oil still remains a leading export commodity but the country is working hard to diversify from its dependence and as such suppliers of numerous industries such as automotive, pharmaceutical, consumer goods and manufacturing should benefit as this country opens its doors further to global trade.

Trade with the largest European Economy – Germany

Trade with the largest European Economy – Germany

germany importsAs one of the largest producers of automobiles, Germany offers great opportunities for U.S. automotive equipment suppliers. It is the largest European economy and the third largest export and import economy in the world. Centrally located in Europe, Germany’s 2014 GDP was $3.8 trillion with real growth rate of 1.6%.

Germany is home to such automobile manufacturers as Adam Opel AG, BMW, Daimler AG and Volkswagen. Besides being a large producer of automobiles, Germany also is the home to chemical conglomerates such as Siemens and BASF as well as to pharmaceutical companies such as Bayer. As a result these particular sectors of the German economy are especially well suited for export as well as for the import of inputs and raw materials from overseas markets such as the United States. For imports, automobiles and vehicle parts are the largest such commodities along with electronics equipment.

Trade lanes

  • Top export destinations from Germany are France, the US, UK, China and the Netherlands.
  • Top import origins into Germany are the Netherlands, China, France, the US and Italy

Infrastructure and Logistics

Germany has a well-defined and mature transportation infrastructure. It is home to Europe’s second largest container port, Hamburg as well as Europe’s largest inland port, Duisburg. In addition, the Rhine and Elbe rivers serve as major thoroughfares for barge traffic.

Its airport network consists of 23 airports that offer international service including Frankfurt which is the 9th largest airport in the world in terms of cargo with 2,132,132 tonnes moved in 2014.

Much of the cargo within the country is transported by truck as opposed to rail. As a result, because of the preference of truck, tolls are utilized. However, there has been an attempt to shift more cargo on rail to reduce emissions and road congestion.

The rail is operated by private operator, Deutsche Bahn, but receives government funding. With 37,900 kilometers of track it is one of the largest networks in the world. In recent years, Deutsche Bahn has been successful in extending its German network to China providing an alternative solution to that of air or ocean for shippers. For U.S. exporters the presence of such a well developed infrastructure means that the entire country is accessible for potential sales and distribution opportunities.

Because Germany is a member of the European Union, it follows European Union trade requirements in addition to its own requirements. The Integrated Tariff of the Community, referred to as TARIC (Tarif Intégré de la Communauté), is designed to show the various rules which apply to specific products being imported into the customs territory of the EU or, in some cases, exported from it. To determine if a license is required for a particular product, check the TARIC.

Some European directives to be mindful of include REACH, “Registration, Evaluation and Authorization and Restriction of Chemicals”, which requires chemicals produced or imported into the EU in volumes above 1 metric ton per year to be registered with a central database handled by the European Chemicals Agency (ECHA). Another directive, Waste Electrical and Electronic Equipment (WEEE), requires U.S. exporters to register relevant products with a national WEEE authority or arrange for this to be done by a local partner.

According to the US’ website www.export.gov , Germany’s regulations and bureaucratic procedures can be a difficult hurdle for companies wishing to enter the market. Complex safety standards complicate access to the market for many U.S. products. It is advised that U.S. suppliers do their homework thoroughly and make sure they know precisely which standards apply to their product and that they obtain timely testing and certification.

Goods imported into Germany from non-EU states are subject to an import turnover tax. The import turnover tax rate equals the value-added tax rates of 19% levied on domestic products and has to be paid to the customs authority.

A mature market, Germany continues to offer great opportunity for exporters particularly in automotive, chemical and pharmaceutical manufacturing. Be mindful of the intricacies associated with customs and duties within Europe and to Germany; otherwise enjoy the benefits this country has to offer.

Exporting to South Korea

Exporting to South Korea.

Earlier this year, here at the Exporting Excellence blog, we put out a lot of research on leading markets for U.S. exports. Examples included the Top 7 Markets for US paint coatings manufacturers, Top 6 Markets for automotive equipment exporters,  as well as the list of Top 10 markets for U.S. exports in general. What struck us as interesting is that for all the attention paid to Canada, China and Mexico one of the most important trading partners that the United States has is South Korea. Despite not being a very large country in terms of size or population, nor being in possession of abundant natural resources, South Korea has built itself into one of the most important economies of the world.

Screen Shot 2015-12-14 at 5.37.23 PM

South Korea’s ability to supply high quality inputs such as steel as well as finished products like automobiles is an excellent example of the depth of its industrial base. Meanwhile, South Korean demand for U.S. agricultural and consumer goods sets it apart from other trade partners as an excellent source of two way trade for U.S. companies.

South Korea’s trade and political stability, as well as its long history of friendly relations with the United States has resulted in the establishment of a Free Trade Agreement between the two countries. Known as the KORUS FTA, this agreement allows U.S. companies access to greater opportunities in the South Korean market than ever before. U.S. exporters of specialty chemicals, advanced automotive technology, agricultural products and wide array of commercial and industrial products can now sell product in South Korea free of tariffs (also known as duties and taxes) and quota (effective restrictions on nature and quantity of specific products). In 2014 $24 billion worth of U.S. exports benefitted from the FTA with South Korea and that number has grown in 2015 and will continue to grow.

The key benefit associated with a free trade agreement is an easier trade environment. South Korea proves this as it is not a difficult country to trade with. South Korean Customs and various government ministries are not unusually difficult to deal with when it comes to obtaining import permits and clearances. As a result, U.S. exports to South Korea do not find their landed costs inflated by duties or other bureaucratic formalities.

South Korea’s logistics infrastructure is amongst the best in the world. Incheon Airport services Seoul, which is the country’s largest city and capital. Ocean port facilities in Busan are world class and are serviced by most major steamship lines. Costs of logistics, however, can be slightly high. While South Korea has an excellent labor force, it also faces high labor costs and expensive facilities costs which can impact warehousing and storage. This can be acutely felt by importers of large air freight shipments, as they are subject to storage charges at Incheon airport 24 hours after cargo arrival. Hence, freight arriving on Friday night or Saturday is likely to incur an expensive bill for storage. This can have a significant impact on the profitability of export sales to this market.

Standard international trade practices apply when dealing exporting to South Korea. Exporters must furnish originals or copies of commercial invoices and packing lists for all goods being exported to South Korea. Exporters of foods and pharmaceuticals must also provide necessary licenses and permits from the Ministry of Health and Welfare in order to have their goods cleared for import into the country.

In our industry we always focus on the big guys: Canada, China, Mexico.. it’s refreshing to read about another market that perhaps was never considered . South Korea certainly fits that bill and is worth a second look when considering new markets for your company.

Top 7 Markets for U.S. Paint & Coatings Manufacturers

Top 7 Markets for U.S. Paint & Coatings Manufacturers

Why are we looking at paint you ask?  From the logistics perspective it’s a very interesting commodity actually.  To begin with, it’s liquid and hence dense.  Density is a crucial element in the logistics planning and handling process.  As we explained in this prior post, density has a direct impact on total landed cost.

Crescent Paint ImageAnother matter of interest for us at Crescent Air Freight is the fact that paints are almost always classified as hazardous materials which is something that requires special handling and attention.  Despite a standard set of international regulations, no two airlines handle the acceptance and transport of hazardous commodities in the same way, hence we’re always on our toes as we help our clients plan their export processes for paints. 

Lastly, paint is a product that crosses industry lines.  We ship it as a raw material for our automotive customers.  We also handle coatings for our clients who deal in various manufacturing industries such as boat building, construction materials and sometimes even foods.  Yes, foods!  Now there’s no paint in your food supply, but there are coatings and one such example is shellac.  Food grade shellac is what makes your kids candy shiny.  Without it, candy would be a lot less appealing to look at.  Meanwhile, it’s also a flammable liquid and hence hazardous. 

So plain old paint meets the needs of a lot of different industries and hence we felt it was important to take a look at this commodity and its value overseas.  Accordingly then, here are the top 7 markets for paints and coating as defined by the U.S. Department of Commerce’s statistics for 2014. 

 

  1. Canada – 2014 U.S. Exports of Paint & Coatings – $1,106,629,000.00

The logistics of shipping paint to Canada is rather simple since the overwhelming majority of shipments travel over the road.  U.S. exporters would do well to look at this market for its size and ease of trade and transport procedures. 

 

  1. Mexico – 2014 U.S. Exports of Paint & Coatings – $595,175,000.00

2nd place by a wide margin, but nothing to sneeze at, Mexico offers many of the exact same benefits as Canada.  Cross border trucking eliminates many of the logistics hassles that come with air and ocean freight transport.  Meanwhile, with industries as diverse as construction and automotive manufacturing, Mexico offers strong demand for U.S. made paints & coatings. 

 

  1. China – 2014 U.S. Exports of Paint & Coatings – $126,153,000.00

A country with an industrial base the size of China’s is going to consume a lot of raw materials.  Coatings and paints fit well here, especially where it comes to high end/high value products.  Exporters, however, need to be careful with logistics compliance as this market requires shipping by air or ocean freight and each of those modes has separate and unrelated procedures for compliance in both the U.S. and in China. 

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  1. United Kingdom – 2014 U.S. Exports of Paint & Coatings – $56,708,000.00

America’s biggest overseas export market, unsurprisingly, demands a lot of U.S. made paint & coating material.  Trade regulations are easy with the UK and hazardous materials shipping regulations are straightforward, meaning U.S. exporters can confidently add this market to their export business mix without worries over hazmat rejections, documentation errors and discrepancies, etc. 

 

  1. Japan – 2014 U.S. Exports of Paint & Coatings – $52,437,000.00

A popular destination for this commodity is Far East Asia.  Japan is the 2nd biggest Asian market for U.S. made paints and coatings.  Trade policies are generally stable, but the costs associated with shipping hazardous materials to Japan are often higher than other markets.  U.S. exporters should pay close attention to the landed cost of their goods when researching sales opportunities in Japan. 

 

  1. South Korea – 2014 U.S. Exports of Paint & Coatings – $45,850,000.00

Another vital Asian market offers U.S. exporters of paints and coatings great opportunities.  South Korea does have some logistics policies that can add on costs, especially when shipping by air.  For example, cargo arriving in Incheon Airport (Seoul) over the weekend accrues greater amounts of airport storage than cargo arriving on weekdays.  Also, costs of domestic trucking and handling of hazardous materials can carry significant premiums which can directly affect export order profitability. 

 

  1. Taiwan – 2014 U.S. Exports of Paint & Coatings – $42,118,000.00

Much like China, Taiwan’s industrial base has strong demand for high end inputs including paints and raw materials.  U.S. exporters will find Taiwan to be a good market in terms of size and trade policies.  However, shipping hazardous materials to Taiwan by air can be difficult.  The main airlines serving Taiwan often impose high premiums for flying such cargo, and on top of that we’ve even seen circumstances where cargo has been offloaded per pilot’s instructions despite proper compliance with regulations on the part of shippers and their freight forwarders.

 

In addition to these markets, there are terrific overseas export opportunities in countries such as Germany, Brazil, Australia and India to name a few.  At Crescent Air Freight, we have handled the needs of paint and other hazmat shippers for nearly 4 decades.  It takes experience to navigate the complexities of such international shipping transactions and we look forward to putting our capabilities to work for your export business. 

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JAPAN – Powering US Exports

Japan – Powering U.S. ExportsJapan export chart

While ample attention has been paid to BRIC countries and a new focus is developing on MINT countries the fact is that Japan has long been one of America’s largest trading partners.  In 2012 U.S. exports to Japan totaled US$116 billion and with a combined 2 way trade volume of $204 billion, Japan stands as America’s 4th largest trading partner as well as the 4th largest market for U.S. exports.

As we had highlighted in this recent post Japan is the 3rd largest market for U.S. medical devices and equipment exports and in fact, according to some estimates may even be the largest market for these U.S. manufactured products.  Not surprisingly then, products classified as “Optical and Medical Instruments” account for the largest amount of U.S. exports to Japan.  Additionally, U.S. exporters will find strong demand in Japan for aircraft and parts thereof, machinery, electrical machinery and meats.  Collectively these five categories account for the majority of U.S. exports to Japan.

While the value of Japan as an export market has been well documented and established for decades, U.S. exporters need to look beyond market size and pay attention to key aspects of the trade process including logistics infra structure and trade practices and the implications of these matters on landed cost.

As a country with significant land and size constraints, as well as a dearth of natural resources, Japan faces very high costs of real estate and raw materials.  As a result costs of warehousing, labor, fuel and other inputs of the logistics process are high.  U.S. exporters should be aware of this, especially when selling goods on a Door-to-Door basis.  While Japan has excellent infrastructure, services such as trucking are very expensive and can have a significant impact on order profitability.

Similarly, with warehousing, Japan lacks the square footage that American companies are used to and this makes itself evident in terms of high storage costs.  U.S. businesses who are required to arrange storage of raw materials or finished goods inside Japan must carefully consider these costs when evaluating the viability of an export sale to this market.

U.S. exporters must also be aware of Japanese customs regulations.  While Japan is a great market with significant potential, it has also been traditionally highly protective of its local industries.  As a result, exporters must ensure proper compliance procedures are being followed not only by themselves but also by buyers, distributors or their subsidiaries in Japan.

In order to maintain compliance with Japanese customs regulations, U.S. exporters must ensure that their customer has secured the necessary import permits from the Director-General Japanese Customs.  Once an import permit has been established, exporters must ensure that all shipments are accompanied by a Commercial Invoice, Bill of Lading or Airway Bill, Certificate of Origin and Packing Lists.

For exporters dealing in goods that are licensed, a copy of such licensing and/or original documentation is required.  Similarly, goods that qualify for duty exemptions or rebates should be accompanied by statements of reduction and any supporting paperwork that may apply to WTO trade, non-WTO trade and the General System of Preferences.  Failure to comply with these requirements can result in goods being detained or even confiscated upon arrival in Japan which can have a severe impact on order profitability and repeat or long term export sales in the country.

Fortunately, Japan has world class transportation infrastructure.  Hence while the cost of doing business may be high, the ability to physically access all major markets exists, and is highly efficient.  Japan’s ports, and in particular Yokohama are amongst the biggest in the world in terms of container shipping volume and offer state of the art handling.  Japanese airports, similarly boast world class handling, and both Tokyo (Narita) and Osaka (Kansai) are amongst the biggest airports in Asia in terms of cargo throughput.

Japan’s market size and spending power, as well as recent government initiatives to boost consumer and public spending will ensure it’s position as a growth market for U.S. exporters for years to come.  With this potential comes a great number of opportunities to meet market need and with nearly four decades of exporting experience to Japan, Crescent Air Freight has consistently ranked amongst the premiere logistics service providers on the U.S. to Japan trade lanes.  We welcome the opportunity to put our considerable experience in Japan to work for your export and import business in this dynamic market.

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The Top 7 Markets for U.S. Medical Equipment Exports

The Top 7 Markets for U.S. Medical Equipment Exportsmedical bed

The category defined as Medical Devices or Medical Equipment is a broad one.  The U.S. Department of Commerce assigns 5 NAICS codes to this market, and digging into the specifics of each classification reveals several sub sectors and categories.  According to 2012 estimates, the United States market size for medical devices and equipment stands at $110 billion, and U.S. exports of such products were valued in excess of $44 billion.  The United States enjoys a tremendous advantage in this industry over other nations largely due to its advanced R&D capabilities in both the public and private sectors.  Based on data from the United States Bureau of Census covering several NAICS codes, here are the top seven export markets for U.S. manufactured medical devices and equipment for 2014:

7. China – 2014 Medical Devices & Equipment Exports – US$1,520,069.00

It’s rare that China is not at the very top of a list of export or import markets, especially where it comes to trade with the United States.  Nonetheless, with a burgeoning population, China’s potential as a market for U.S. made medical devices and equipment will remain strong for years to come.  The sub sector of “Surgical and Medical Instruments” stands out as the largest category of U.S. exports to China at $762,943,000 in 2014.

6. Germany – 2014 Medical Devices & Equipment Exports – US$2,267,567.00

Europe’s largest economy offers exporters of Medical Devices and Equipment a strong, stable environment for international sales.  While the current strength of the U.S. Dollar against the Euro may pose some short term challenges, higher value products from the United States will continue to enjoy demand and a trade friendly environment in Germany well into the future.

5. Mexico – 2014 Medical Devices & Equipment Exports – US$2,281,228.00

As we highlighted in a recent post, Mexico is a great trading partner for the U.S. as it serves as a source of two way trade.  Surgical equipment, appliances and supplies accounted for nearly 55% of U.S. medical equipment exports to Mexico in 2014.

4. Belgium – 2014 Medical Devices & Equipment Exports – US$3,405,914.00

One of 3 European markets on this list, Belgium has long been a standout market for U.S. made medical equipment.  Surgical instruments, appliances and supplies alone represent an annual export opportunity of $3.3 billion for U.S. companies.

3. Japan – 2014 Medical Devices & Equipment Exports – US$3,560,670.00

Japan ranks as the fourth largest market for U.S. exports as we detailed in a recent post here on the Exporting Excellence™ blog.  According to some measurements, it may even be the biggest export market for U.S. made medical devices.  As home to an aging population and a culture uniquely devoted to caring for its elderly, Japan will continue to be a source of export growth for U.S. manufacturers of medical devices and equipment for years to come.

2. Canada – 2014 Medical Devices & Equipment Exports – US$3,564,214.00

America’s largest export market overall stands to see a similar standing across specific industry segments as well.  Canada offers U.S. medical equipment manufacturers a diverse market, as no specific subgroup of medical devices and equipment accounts for more than 39% of the aggregate exports of this commodity.

1.The Netherlands – 2014 Medical Devices & Equipment Exports – US$3,929,604.00

Despite a strong presence in the global pharmaceuticals marketplace, The Netherlands looks abroad for its medical equipment and device needs and the U.S. has been the primary beneficiary of this search.  As with all European markets, an aging population has a strong impact on domestic demand for healthcare related products.  As we mentioned with Germany, current strength of the U.S. dollar may cause a short term decrease in sales opportunities, however medical goods tend to be better protected from such market events due to necessities.  U.S. exporters would be well served by focusing on this market as part of their future international sales strategy.

There are several other major markets that didn’t make the top seven list here based on specialization.  For example, the category described as Opthalmic Goods enjoys strong demand in Australia, France and the United Kingdom.  Similarly, “Dental Lab Products” enjoy strong demand and growth in Italy and Spain.  Newer or smaller volume exporters should consider developing sales in Saudi Arabia, Singapore and Switzerland all of which offer strong demand for all categories of U.S. medical devices and equipment, but do not have the scale that comes with the top seven markets in this list.

Irrespective of the market or category, a capable logistics service provider is required to facilitate the shipment and overseas delivery of goods such as medical devices and equipment.  From domestic compliance to international customs clearance, Crescent Air Freight offers the depth of expertise and skill to meet the demands of exporters while maintaining focus on reducing the hidden costs and inefficiencies that can come with the process.  We look forward to assisting your business in its international expansion today and for the long haul.

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Top 11 Export Markets for U.S. Oil and Gas Industry Equipment

Top 11 Export Markets for U.S. Oil and Gas Industry Equipment

Screen Shot 2015-08-30 at 5.47.22 PMDespite significant drops in global oil prices, demand for energy supplies remains strong.  While the supply of crude oil dominates industry and world news headlines, there are several industries ranging from chemicals to transportation services that are directly impacted by the flow of oil and gas.  We at Crescent Air Freight follow this industry closely as it directly affects many of our customers across a range of business segments from compressors to spare parts, valves and pumps and others.  Based on the general classification from the United States Census Bureau, here are the top markets for U.S. “Oil and Gas Field Machinery & Equipment” as defined by NAICS code 333132:

11. Colombia – 2014 Oil and Gas Field Machinery & Equipment exports: US$196,361,000

Beneficiary of a Free Trade Agreement with the United States since May 2012, Colombia’s oil & gas sector relies heavily on U.S. manufactured equipment to help meet its growing energy needs.  Exporters, however, should be very careful with commercial and shipping documentation to ensure compliance with local customs procedures.

10. United Arab Emirates – 2014 Oil and Gas Field Machinery & Equipment exports: US$285,467,000

Home to the vast oil reserves of Abu Dhabi and trade friendly distribution “mega hub” Dubai, the UAE has been an ongoing buyer of American made products for the oil & gas industry.  The presence of major oil industry players such as Halliburton and proximity to the world’s largest oil & gas producing markets ensures that American businesses will continue to find the UAE to be a growth market well into the future.

9. United Kingdom – 2014 Oil and Gas Field Machinery & Equipment exports: US$218,238,000

America’s single largest market for exports amongst the European Union member nations, and home to vast reserves of North Sea oil, the United Kingdom proves its worth as a solid market for U.S. exports in the oil and gas industry.

8. Canada – 2014 Oil and Gas Field Machinery & Equipment exports: US$301,898,000

As we had highlighted in our list of Top 10 Markets for U.S. Exports, Canada is the # 1 destination for U.S. exports overall.  The country has been in the midst of an oil boom over the past decade and will continue to offer American exporters of oil and gas equipment, services and affiliated products, opportunities close to home.  The Canadian Energy Research Institute estimates the country will see over $500 billion in new investment over the next 25 years, ensuring excellent opportunities for industry suppliers for years to come.

7. Angola – 2014 Oil and Gas Field Machinery & Equipment exports: US$326,030,000

In 2013 Angola ranked as the 71st largest market for U.S. exported goods (source: Office of the United States Trade Representative).  An OPEC member since 2007, Angola derives nearly 45% of its GDP from oil production.  All of this combined with a strong rate of economic growth spells good opportunity for American businesses.

6. Brazil – 2014 Oil and Gas Field Machinery & Equipment exports: US$367,223,000

While a great deal has been made of Brazil’s use of ethanol to achieve energy independence, the fact remains that the world’s 5th largest country does have significant oil reserves and demand.  When it comes time to get the crude “out of the ground” or process its natural gas, Brazil looks to U.S. companies to provide key equipment and technologies to support its energy sector.

5. Russia – 2014 Oil and Gas Field Machinery & Equipment exports: US$395,135,000

Recent political developments have resulted in the enforcement of significant trade sanctions against Russia.  U.S. exporters must exercise caution in dealing with this market for the foreseeable future.  On the upside, however, when sanctions end, business comes roaring back.  Until then, however, there’s always…

4. South Korea – 2014 Oil and Gas Field Machinery & Equipment exports: US$477,029,000

Another country on this list that enjoys a Free Trade Agreement with the United States, South Korea purchases significant volumes of oilfield products and services from the United States.  A favorable trade environment and strong political ties have made this country a Top 10 trading partner for the United States and growth opportunities will exist in the energy sector for years to come.

3. China – 2014 Oil and Gas Field Machinery & Equipment exports: US$503,942,000

Trade compliance issues are to be noted, as well as some difficulties with customs procedures, which we detailed in this recent article.  Nonetheless, China is the biggest overall market in Asia and not surprisingly this applies to the oil and gas industries as well.

2. Saudi Arabia – 2014 Oil and Gas Field Machinery & Equipment exports: US$587,509,000

The conversation on oil, gas and energy begins and ends here.  To say Saudi Arabia is a key market for the oil and gas business is to overstate the obvious.  Luckily for American exporters in this field, Saudi Arabia remains the place to look for growth.  Despite recent drops in oil prices Saudi Arabia has maintained, and slightly increased, its annual budget for 2015 and the energy sector will be the prime beneficiary of this spending.

1.Mexico – 2014 Oil and Gas Field Machinery & Equipment exports: US$842,216,000

As we detailed in this recent blog post Mexico is a great market for two way trade with the United States.  A beneficiary of the North American Free Trade Agreement, Mexico looks to the United States to service the needs of its growing energy demands.  U.S. companies enjoy the ability to reach most parts of Mexico by overland transportation services, and NAFTA enables a smooth and orderly flow of goods thereby minimizing potential customs or regulatory problems.

Rope BailerKeep in mind that these figures only refer to one classification of oil & gas industry equipment.  As energy is a massive industry, so too are the product classifications.  Exporters must take the time to learn about compliance issues and regulatory concerns for their specific product line.  Logistics companies can help by applying their considerable market knowledge and expertise.  U.S. companies are also advised to check with the U.S. Department of Commerce for market and compliance data relevant to their specific products.

 

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Top 10 Markets for U.S. Exports

Top 10 Markets for U.S. ExportsScreen Shot 2014-05-22 at 12.51.06 PM

At the Exporting Excellence™ blog, we’re all about international trade.  International trade does more to create jobs, promote cultural ties, create an interchange of ideas, transfer technology and promote understanding throughout the world than any other means of diplomacy, foreign aid, statecraft, etc.  Most of all, international trade is a great enabler of economic growth and wealth creation for all countries of the world.  While we have posted content about specific markets on this blog, we’d also like to introduce a series of lists that outline the best markets for U.S. exports in general and by specific industry.

The proof is overwhelming: export sales can grow your business far more than local sales.  After all, why limit yourself to your zip code when you can literally sell to the world.  Here then, is a look at the top 10 markets for U.S. exports:

# 1 – Canada.  Value of U.S. exports purchased in 2013: US$301.6  billion. Exporters of automobiles, trucks and accessories thereof take note: Canadians love large and midsized cars and trucks made in the USA.

#2 – Mexico.  Value of U.S. exports purchased in 2013: US$226.1 billion.  America’s neighbor to the south is well situated to engage in two-way trade with all NAFTA countries as we detailed in a recent blog post.  U.S. exporters of industrial machinery, agricultural products and dairy products will find a great deal of opportunity in Mexico.

# 3 – China.  Value of U.S. exports purchased in 2013: US$121.7 billion.  See, it’s not a one way street!  While China does supply an enormous amount of manufactured goods to the United States, American companies exporting agricultural products and hi-tech equipment are going to see growth in China for years to come.

# 4- Japan.  Value of U.S. exports purchased in 2013: US$65.2 billion.  Japan has a diverse consumer market as demonstrated by the fact that U.S. exports of medical instruments, aircraft equipment and industrial machinery are in high demand.  Japan, like China, is a good market for U.S. technological goods and services.

#5 – United Kingdom.  Value of U.S. exports purchased in 2013: US$56 billion.  See how trade works?  Not only political allies, but also major trading partners, the U.S.-U.K. relationship remains one of the closest in the world on so many levels.  U.S. exports of agricultural products as well as foods continue to enjoy growth in the U.K. despite the economic turbulence of recent years.

# 6 – Germany.  Value of U.S. exports purchased in 2013: US$44.2 billion.  Technological goods, pharmaceuticals and medical equipment from the United States are in high demand in Germany.  It is the strongest of Europe’s economies and should be a key part of your Europe export strategy.

#7 – Brazil.  Value of U.S. exports purchased in 2014: US$44.1 billion.  We profiled Brazil in a recent blog post as it offers great potential for U.S. exports.  Machinery and aircraft equipment account for the lion’s share of Brazilian imports from the U.S.  Tourism also remains a growth sector with substantial interest from U.S. tourists and investors.

# 8 – The Netherlands.  Value of U.S. exports purchased in 2013: US$42.6 billion.  U.S. exporters in the fields of “Clean Tech”, medical equipment, and biotechnology will find The Netherlands to be an attractive market with strong growth potential.

# 9 – South Korea.  Value of U.S. exports purchased in 2013: US$41.7 billion.  Along with Canada and Mexico (NAFTA), South Korea is one of the few countries that shares a Free Trade Agreement with the United States.  Opportunities abound for companies exporting aircraft related equipment and for providers of research and development services and technology.

# 10 – France.  Value of U.S. exports purchased in 2013: US$31.8 billion.  Known for their rich artistic tradition, ironically, French imports of U.S. artwork exceed $200 million annually.  Industrial goods such as specialty chemicals and high technology equipment from the United States enjoy strong demand in France as well.

Sources for this list include the U.S. Commerce Department which publishes superb trade data available at no cost to U.S. businesses. 

Additional country data was obtained from the U.S. Bureau of Census, and Inc. Magazine.