U.S. Exports of Banking Equipment

U.S. Exports of Banking Equipment

Here’s What We’ve Noticed:

If you follow the world of online transactions and mobile payments, then you’ve heard about such important events as the IPO of Square, Inc. and the spinoff of PayPal from global ecommerce giant Ebay. While these startups and relative new comers to the financial markets are gaining market share the fact remains that banks continue to be the most important players in the global market for financial services, products, payment processing, and the like. So what exactly does this have to do with logistics and exports? check scannerCertainly there are the super high value logistics services of transporting currency, gold and other cash equivalents, but at Crescent Air Freight we’ve been seeing something more compelling in the banking business. Specifically we’ve experienced considerable growth over the past year in the export of banking equipment such as check scanners, ATM’s, money counters and the like. What is becoming clear from these traffic patterns is that the global banking industry is undergoing a huge change and new technologies threaten to disrupt financial business models as a growing percentage of populations in emerging markets reach middle class status. As such, the demand for banking equipment will increase in the years to come.

Emerging Markets

As the base of middle class consumers around the world expands, a variety of banking or commerce related products have seen their demand grow. Point-Of-Sale terminals for example have seen a sharp increase in demand over the past few years. Additionally, beyond payments, the proliferation of inventory management systems, loyalty programs and advanced vending machines has spurred demand for both software and hardware that is required to support such transactions. As such, Transparency Market Research forecasts point-of-sales terminals market growth to be at 11.6% annually from 2014 – 2020. Considering the market size was estimated to be $36.86 billion in 2013 there’s clearly a great deal of growth yet to come.

Aside from banking, retail and healthcare are two areas that are expected to continue to feed demand for point-of-sale and payment processing equipment. In terms of countries, U.S. exporters in this segment will find demand in many of the emerging markets of the world. According to The World Bank, cash demand in Europe is growing at 4.5% per year and within BRIC countries cash demand rates are growing at 11% per year. South Africa is another bright spot in terms of the demand for cash and banking equipment.

If cash demand is influenced by population then it stands to reason that China and India need to be at the very top of the list of potential growth markets for this sector. Indeed the number of ATM’s in China has tripled since 2009 making it the largest ATM market in the world.

India has also experienced rapid growth over the past decade, ranking as the world’s fourth largest ATM market in 2014, and trailing only China, the United States and Japan. However, as rural development increases in India and as cash demand increases proportionately, it is expected that India will surpass the United States as the second largest ATM market in the world.

In addition to ATM’s, we have observed (and U.S. export data confirms) growth in demand for U.S. exports for check scanners and money counters over the past year. In addition to emerging markets we have seen upgrade cycles and bank branch expansion in markets such as Qatar and the United Arab Emirates drive significant project demand in 2015.

The Trade Data

According to U.S. Census Bureau statistics, 2014 exports of point-of-sale equipment were valued at US$202.3 million which reflected a slight decrease from 2013 levels. The largest markets for U.S. exports in this category were Canada, Mexico and China.

ATM exports are even more appealing for U.S. companies and 2014 overseas sales stood at $103.80 million which was almost a 100% increase over 2013 levels of $50.7 million. Leading markets for U.S. exports of ATM’s were the Philippines, South Africa, and India.

The Outlook

The outlook for banking equipment exports will likely remain strong for several years to come. The combination of technology, population growth and increased global consumption will ensure a steady need for equipment to support all segments of this market and its transactions.

Banking equipment is of high value and generally has a long life cycle. Hence, its logistics and transport are similar in many ways to that of other capital goods such as oil & gas equipment or even sensitive electronics. A combination of direct flights and sailings, high quality trucking services and destination delivery options and a good system of tracking in transit will ensure that exporters get true value from the logistics process that supports their export sales.

 

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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.

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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.

The Pain of Demurrage Costs

The Pain of Demurrage Costs.

At Crescent Air Freight we spend a lot of time focusing on the hidden costs of logistics. We get clients and prospects to see what bad logistics can cost them far beyond the freight invoice by examining the impact on cash flow, profitability and brand equity. The concept is simple: poor logistics decisions (usually based on price alone) can result in delayed deliveries which can cause delayed payments, lost sales, and lack of product availability in overseas markets. However, there’s also a very real cash cost that comes with improper logistics planning and it’s known as demurrage.

demurrage costs

Demurrage, also known as detention, is a cost resulting from extended use of equipment, warehouse space, or other transportation resources. Basically, it’s a penalty charged for using someone else’s equipment or space. For example, railcars accrue demurrage if they are not unloaded in a timely manner; Vessels accrue demurrage if they are forced to wait at a port beyond a standard free time allotted by the port authority; Truckers charge detention when vehicles or drivers are made to wait for cargo pick up or discharge.

The problem that arises is when a demurrage or detention scenario arises, cargo owners often find their goods being held at ransom. Demurrage or detention charges are almost always expensive and your goods cannot be released until those charges are paid. Even worse, since such charges accrue on a daily basis, there’s very little room for negotiation and the final cost can change based on the time of receipt of payment!

NEW INCOterms CTAUnlike standard INCOTERMS which sets protocols for “who pays what”, the unfortunate reality is that demurrage costs are basically paid by the party who wants their goods so badly, they’ll even pay a penalty just to get them. Honestly, this can be avoided…it doesn’t have to happen. The solution to the problem, almost always lies in being prepared ahead of time and planning for eventualities. Matters like vessel detention or railcar detention tend not to be very relevant to the supply chains of our customers. However, port detention of export or import containers, airport storage of air freight shipments, and carrier demurrage charges for ocean freight containers gated out beyond “free time” are all examples of demurrage that occur on a daily basis. Obviously, this imposes heavy costs on cargo owners and can be avoided with better logistics planning.

Solutions to the demurrage/detention problem begin with the proper planning of a shipment and all the formalities associated with the arrival or departure of those goods. For example, we once had a client who wanted their export cargo out of their warehouse and into a container 7 days prior to the cut off date for a vessel headed to Australia. The problem was that the steamship line only allowed the container to be pulled out for loading purposes 5 days prior to the vessel cut off. Our client was unaware of the fact that they would have to pay a penalty for being 2 days too early. The solution was rather simple: we researched the details of the fees, calculated the cost of the extra storage and asked the client if they were willing to pay for it. Guess what happened? The client said “no”! They were very appreciative of us taking the time to research the cost associated with their plan and helping them to understand their true costs. However, had we not done this, it would have resulted in a few hundred dollars of charges that their trucker would have to pay upon returning the container. That’s right, the trucker would have been on the hook, and that’s one of the tricky parts of demurrage costs – it doesn’t just affect the cargo owner, but can also create headaches for their vendors or customers.

At other times, the problems can be caused by documentation mistakes in customs paperwork resulting in cargo being held at the port of destination. In such an instance, the delay might be caused by the exporter or importer of record, and it is the local customs authority that raises the objection, but the storage expense accrues at the airline terminal and often has to be advanced by the customs broker or trucker collecting the cargo at time of release. We once saw a client lose tons of a perishable food product in Turkey this way just because their logistics service provider at the time neglected to get documentation approved in advance of the shipment. That one step alone would have prevented thousands of dollars in unnecessary freight charges plus the confiscation of product.

Sometimes, the shipper can choose to take the cost of demurrage or detention as a cost of doing business. It can be strategic at times, although still a cost. Remember the client who tried to ship too early? Well, some months later they actually asked us to pull a container ahead of the free time allotted by the vessel operator just so they could have their product shipped out before the end of the quarter. In this scenario, it was actually beneficial for them to pay for detention rather than to have the good be in inventory at the start of a new month.

And, every once in a while, we get to see a cool scenario unfold where the shipper gets the last laugh. For example, at various times during the ISAF war effort in Afghanistan, ocean freight containers were delayed at the border crossing between Afghanistan and Pakistan. At certain times of heightened tensions, the delays stretched into weeks and demurrage applied to the shipping containers to the tune of thousands of dollars. The liners demanded these charges of truckers when the unloaded containers were brought back to the port and shippers, including many U.S. companies, were forced to pay penalties that were vastly more expensive than the cost of freight or even the merchandise itself. However, with some crafty logistics support on their side, some shippers simply decided to buy their own containers and ship them full of goods. The cost of buying a “shipper owned container” is higher than the cost of using one owned by the liner, but shipper owned containers are not liable to “in & out” demurrage costs. In effect the shipper’s were treating the containers as disposable and not bothered if they came back at all. This actually was the most cost effective solution to countering exorbitant detention costs that shippers were forced to pay.

These are just a few examples of how logistics costs can have a devastating impact on order profitability. However, the good news is that many of these problems can be avoided if your logistics service provider takes the time to understand your business, specific product requirements, and your import/export goals.

 

 

 

 

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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Exporting to Nigeria

Exporting to Nigeria

As part of our ongoing series of reports on the MINT countries, we turn our attention this month to Nigeria.  Along with Mexico, Indonesia and Turkey, Nigeria stands out as an economy offering strong growth rates and an increasingly favorable environment for trade and foreign investment. 

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Due to the recent updating of economic statistics, Nigeria now claims to have the largest economy in Africa with a GDP of US$504 billion.  What makes this adjustment in statistics significant, for U.S. exporters in particular, is the fact that Nigeria’s oil industry is no longer as dominant a sector of the economy as it once was.  Under old economic data, it was estimated that the oil industry accounted for 33% of the economy, whereas new data suggests that only 14% of the country’s GDP is derived from oil.  As a result, the Nigerian market offers a more diverse set of opportunities to American exporters.   

 

Despite the changes in economic output, Nigeria remains a challenging place to do business and in this report we highlight some of those issues and the impact they may have on U.S. exporters. 

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With a population of 170 million, Nigeria is the most populous nation in Africa.  Its recent growth has been derived from the services and international trade sectors.  Areas that offer strong growth opportunity for U.S. exports include the following:

 

Logistics and Trade Environment

 

Like most countries in Africa, Nigeria lacks good transportation infrastructure.  The impact on U.S. exporters can be observed in many ways:

 

  1. Nigerian airports are generally not well connected to the rest of the world.  Lagos, which is Nigeria’s largest city and commercial hub, is serviced by many foreign airlines, however frequency and number of carriers remains insufficient for the needs of the country.  As a result, U.S. exporters who rely on air freight should expect to incur substantially higher freight costs than they would for delivery to other equidistant export markets. 

 

  1. Nigeria’s ocean ports have long been considered an impediment to Nigeria’s international trade.  As a result, U.S. exporters can expect to incur high costs of container shipping which can have a significant impact on export order profitability.  In recent years, however, the government has committed to investing in new ports, and as a result progress has been made over the past decade.

 

  1. Nigeria relies heavily on trucking, but simultaneously suffers from poor road infrastructure.  As a result trucking and inland delivery costs are high as it can be difficult to reach final destinations that are away from the major cities or ocean ports.  Absence of a properly functioning rail system only compounds the problem as there is no means to achieve economies of scale with respect to ocean container transport inside the country.  Considering the difficulties associated with inland transportation in Nigeria, it is highly advisable for U.S. companies to ship on a door-to-(air)port basis, thereby leaving local customs clearance and delivery arrangements to the actual importer/end user inside Nigeria. 

 

  1. Customs regulations – Nigerian Customs have long been acknowledged as a barrier to trade.     U.S. exporters should take precautions to ensure that information on commercial documents such as commercial invoices, packing lists and bills of lading are accurate and consistent.  Discrepancies can cause Nigerian authorities to delay clearance of cargo upon arrival and can even result in confiscation of merchandise.  As a result exporters can face losses or reduced profitability in their export sales. 

 

Nigerian customs duties can be as high as 30% of CIF value of merchandise and in special cases can even run as high as 100% as is the case with cigarettes for example.  U.S. exporters must be aware of this as it has a significant impact on landed cost of goods and can significantly impact the viability of export sales to Nigeria. 

 

Imports into Nigeria follow a system of prepaid duty collection whereby Nigerian importers are required to electronically file details of their import shipment and prepay customs duties to a bank which in turn will forward the duty to Nigerian customs.  Nigerian importers will receive a Single Goods Declaration which must be shown on shipping documents in order for the cargo to be cleared in Nigeria.  This is significant for U.S. exporters as it is necessary for shipping documents to bear this information in order for a shipment to clear customs upon arrival in Nigeria.  Failure to furnish this information will result is seizure of goods. 

 

Although exporting to Nigeria can be difficult at times due to the logistics requirements and sanctions, it can also be very lucrative for your business. The opportunity to “own a market” currently exists in Nigeria! If you haven’t already, you should make Nigeria a part of your international growth plans.

 

 

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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Container Info & Spec Sheet

 

 

 

 

Did we mention compliance is important?

Did we mention compliance is important? Armored Vehicle

In March we highlighted the Top 5 Export Markets for U.S. Made Defense, Emergency and Security Vehicles. Despite being a highly specialized segment of the automotive industry, in 2015 we at Crescent Air Freight are experiencing double digit growth in this market as well as in the export of parts and accessories of such vehicles.  While there are significant barriers to entry in the way of manufacturing capabilities and intellectual property, the fact is that growth creates opportunities for sales and also for compliance problems.  Here are some insights into the compliance requirements faced by exporters of security vehicles and their parts and accessories.

 

As we have mentioned in earlier posts, the major two sets of regulations governing the export of defense related equipment, including defense vehicles, are International Traffic in Arms Regulations (ITAR) and Export Administration Regulations (EAR).  EAR apply to products that are known as “dual use” items.  Some examples that come to mind include aircraft radar which can be used for either commercial or military purposes.  In the case of vehicles, a more relevant example would be an armored SUV.  Such vehicles are often exported to countries around the world, especially to countries where domestic law and order circumstances require such protection.  However, so long as such vehicle is not armed and contains no military hardware, it is likely to fall under EAR.  “Likely” is the key word here, as there are additional factors that go into considering which regulations apply.  While most manufacturers are aware of the applicable regulations, an experienced logistics provider with experience in defense related shipments can assist in making such determinations.

 

While EAR oversight falls under the Department of Commerce (and specifically the Bureau of Industry and Security) ITAR falls under the purview of the Department of State’s Directorate of Defense Trade Controls.  ITAR applies to military goods or articles and is highly relevant to the export sales of U.S. defense contractors.  In the security vehicles market ITAR regulations apply directly to exports to U.S. military or other military entities.  As with EAR, there are significant variations and clauses in ITAR that must be adhered to in order to maintain compliance.  In the case of the armored example mentioned above, ITAR would apply in place of EAR had the vehicle been outfitted with hardware to attach a weapon to it.  Here too, however, there are substantial variations to be considered for proper classification and while a manufacturer or distributor of such equipment must have a proper “in house” compliance process, and experienced logistics service provider can offer some guidance in the classification process.

 

MRAP InteriorIn addition to the classification of the vehicle or equipment, exporters must also be aware of whether or not the destination country falls under any restrictions or bans for defense or security trade, and this may even apply to countries through which the vehicle transits.  For example, a client of ours ships parts for MRAP’s and Humvees for the U.S. military in Afghanistan, under an ITAR license.  However, their license does not allow their goods to transit through Azerbaijan.  This is significant because the most cost effective routing for air freight to Afghanistan is via Baku, Azerbaijan.  In order to maintain compliance we devised a new routing for the client that allows their product to travel only through nations that are approved for such goods under ITAR regulations.  Regulations also apply to components attached to the vehicle, hence supply chain managers need to be aware of the country of manufacture of parts and accessories that they have sourced for the final product.

 

Irrespective of which license applies, and the fact that manufacturers and distributors are likely to maintain internal compliance programs, one of the most important steps of the defense export transaction that a logistics provider must demonstrate competence with is the proper filing of the Shipper’s Export Declaration (SED) – now known as the EEI.  While the EEI filing is required for all U.S. exports in excess of $2,500.00, there are special classifications for goods shipped to the U.S. military, foreign militaries and foreign governments, all of which are relevant to the export of security vehicles and other defense equipment. 

 

As political events continue to drive demand for U.S. made defense, emergency and security equipment the need for proper compliance is more important than ever before.  Crescent Air Freight offers its clients the resources needed to support their export business in defense and commercial trade.

 

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Top 5 Markets for U.S. Defense, Emergency & Security Vehicles

Top 5 Markets for U.S. Defense, Emergency & Security Vehiclesdefense vehicles

While U.S. trade in defense, emergency and security vehicles has seen a slowdown in recent years due to the end or drawdowns of overseas conflicts, the fact remains that these products enjoy substantial demand overseas, even in peace time.  Friendly nations continue to be buyers of U.S. defense and security vehicles in support of their domestic defense and law enforcement activities.  Additionally, emergency vehicles, such as ambulances manufactured in the United States, continue to enjoy strong demand overseas due to their capabilities and durability.  Lastly, despite drawdowns and withdrawals from conflicts in the past few years, the United States maintains a significant overseas defense presence that requires ongoing servicing and replenishment in the form of new vehicles and parts thereof.  The data on this market, sourced from the U.S. Census Bureau, requires some careful consideration as certain manufacturers may fall into categories that refer to their general defense business which often include categories aside from vehicles.  Meanwhile, a great number of exporters in this segment simply fall under the same classification of conventional heavy vehicles such as trucks.  At Crescent Air Freight, our expertise in the logistics of vehicles and parts thereof for defense, emergency and security vehicles gives us a unique perspective into the handling of these products as well as keen insight into the export markets and trade data that are truly relevant to this sector.  Based on NAICS code 336992, here’s a look at the top five markets for U.S. exporters of defense, emergency and security vehicles:

5. Australia – 2014 U.S. Defense, Emergency & Security Vehicle Exports – US $49MM

Signed in 2007, the Australia-US Defense Trade Cooperation Treaty has opened the door to expanded cooperation between the United States and Australia in the trade of defense and security related goods.  The treaty came into effect in May 2013, and a subsequent increase in shipments of U.S. made military vehicles has ensued.  U.S. exporters of such goods and related components will find easier trade and export control compliance procedures in dealing with Australia, which incidentally has also been a hot market for U.S. exports over the past decade.

4. South Korea – 2014 U.S. Defense, Emergency & Security Vehicle Exports – US $63MM

The United States has maintained a significant military presence in South Korea since the Korean War.  Export data will certainly reflect a bias towards the U.S. military business in the country, however, support for Korean defenses does offer significant opportunity for U.S. manufacturers of such vehicles as well as their components, spares and accessories.

3. Afghanistan – 2014 U.S. Defense, Emergency & Security Vehicle Exports – US $66MM

While combat operations in Afghanistan officially ceased at the end of 2014, the United States continues to be involved in training, equipping and generally supporting Afghan defense and domestic security forces.  Aside from vehicles themselves, we continue to see strong activity in the export of emergency and security vehicle parts such as engines, armor, body kits and affiliated products and believe this will continue for some years to come.

2. Israel – 2014 U.S. Defense, Emergency & Security Vehicle Exports – US $106MM

Like Australia and Saudi Arabia, Israel is neither a recent nor current “war zone” country, nor a place where U.S. combat operations take place.  As a beneficiary of U.S. military aid and cooperation, however, it is a market that is extremely friendly to U.S. exporters of defense vehicles and related components.

1.Saudi Arabia – 2014 U.S. Defense, Export & Security Vehicle Exports – US $253MM

Saudi Arabia is an excellent market for U.S. vehicles and related components in the commercial and defense sectors.  At Crescent Air Freight we have seen continuous and sustained demand for U.S. manufactured components of security vehicles ranging from sirens and light bars to engines, ambulances and armored vehicles for several years.  While there are some concerns about future growth in this market as a result of declining oil prices, it is clear that Saudi government expenditure on its defense and security sector will continue to be a high priority for many years to come.

While we’ve only highlighted the top five markets for U.S. defense, emergency and security vehicles there is significant opportunity for American companies in this sector to export to high demand markets including Canada, Colombia, Egypt, Iraq and Tunisia to name but a few.

At Crescent Air Freight we have developed a range of services in support of our clients who export security vehicles and parts thereof.  We provide U.S. shippers a complete package of services including trade and finance compliance, consolidation and proper shipping procedures and even final delivery solutions.  If you have any questions regarding these overseas markets, or procedures for shipping these goods internationally, please visit our website at www.crescent1.com or contact us at cargo@crescent1.com.

Container Info & Spec Sheet 

 

 

 

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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Exporting to Russia

Exporting to Russia

EU-27_exports_to_Russia,_2010

In our series on emerging markets, Crescent Air Freight has focused on the significant growth potential of Brazil, India, China and the Middle East. Collectively, these markets are the most prominent “hotspots” for U.S. importers and exporters as ranked by several different market surveys and research sources. This month’s focus is on Russia. Russia’s acceptance into the WTO in 2012 has made it a more attractive market for consumer goods that will continue to grow for U.S. exporters in years to come.

Russia has positioned itself well in terms of logistics and transportation infrastructure and continues to invest heavily in these sectors. As a result U.S. exporters will find Russia to be one of the easier markets to work with in terms of inland distribution and delivery. Some service areas are still in need of improvement, for example, small packages and B2C deliveries continue to have challenges with cash on delivery terms (COD) meaning it may not be easy for companies to simply send a package of merchandise to their final customers. In this way logistics companies can add great value by offering consolidation services and local customs clearance and deliveries of large lot shipments which can then be distributed locally.

Russian customs is embarking on a program of electronic document transmission, which is designed to expedite customs clearance and can make the customs entry process much simpler in years to come, especially for air cargo shipments. This development promises to reduce shipment-processing costs that will have a direct impact on landed cost and increased order profitability.

Russia’s rail network has long been a source of pride within the country and the government is currently investing heavily in developing its Trans-Siberian Rail Line. As a result, exporters shipping cargo in ocean containers will find greater access to farther regions of the country. This development offers opportunities for U.S. exporters to improve their sales by reaching a larger customer base in a more economical manner.

Russia’s import requirements include the following:

  1. Commercial Contracts between exporter and local importer must be provided to Russian customs at time of import. Distributorship agreements, for example, substantiate a local companies ability to import goods from overseas.
  2. Commercial Invoices and Packing Lists. These must be checked for consistency and errors to ensure goods are not held due to discrepancies.
  3. Transport Documents such as airway bills or ocean bills of lading are required and must be consistent and free of errors or discrepancies.
  4. Certificates of Origin are often required and can be prepared by most logistics service providers.
  5. Certificates of Conformity may be required and must be prepared by a manufacturer or exporter of merchandise.
  6. Sanitary Certificates, if applicable, are relevant to exports of food products and agricultural goods.

Transporting goods to Russia, however does come with its share of challenges. As we have mentioned in previous posts even minor discrepancies such as a weight difference between shipping and commercial documents can cause Russian customs to place an import shipment on hold. It’s rare for this type of problem to arise in the United States when importing from overseas and hence companies who trade with markets like Russia could easily find themselves with goods stuck or even seized at a destination causing significant cost overages or even loss of product and export sales.

In 2013, the United States imported $26 billion worth of products, mostly petroleum and industrial goods from Russia, while it recorded exports to Russia of $11 billion. As we have shown throughout our Emerging Markets Series, having a relationship with the right Logistics Service Provider can help increase revenues by introducing you into these markets of opportunity. Will Russia be on your import/export list for 2014/2015?