Midwest Global Trade Association

World Trader

From the President: Hello Spring, Have We Met?

By John Wilson, MGTA President

John WilsonMGTAers, If you’re like me, you’ve likely been hosing off the Winter residue of salt and mud and shunning jackets despite 40 degree highs. Spring is a time of renewal and this April and May, MGTA importers, exporters, and service providers are renewing their ties in two unique ways.

April 17-18, MGTA is the host sponsor for Cargo Business News’ Heartland Shippers Conference in Minneapolis. Last year’s inaugural conference in Des Moines got the "heartland” discussion going. As the Heartland Shippers Conference discussion deepens here in Minneapolis and with each passing year, our collective transportation interests and voice will strengthen and become more influential. The conference agenda is packed with informative, interactive sessions and features keynote speaker Matt Rose, BNSF’s CEO. This conference rotates around the Midwest and won’t be back in Minneapolis for a few years, so don’t miss this one! Please visit mgta.org for registration details.

May 16 is your opportunity to ask what’s on your mind to a panel of global trade attorneys. Trade programs, compliance questions, regulatory changes — you ask, they tell! What’s more, following the session, our popular Paddelford boat cruise will depart down the Mississippi where you can network with the panelists and other attendees. Did I mention this cruise is catered?! Registration details coming soon to mgta.org.

It’s been a long Winter, so take these opportunities to jump-start your global trade objectives with these Spring events. We’ll see you there!

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Upcoming Events

Member Networking Lunch

The sequestration and effects on your global supply chain

Tuesday, April 9, 2013
11:30 a.m. – 1:00 p.m.
Cooper Irish Pub
St. Louis Park, MN
Details and Online Registration

2013 Heartland Shippers Conference

Heartland Shippers Conference

April 17-18, 2013
Minneapolis Marriott City Center
Minneapolis, MN

Special Rate for MGTA Members: $335. Download this form to register at the reduced rate.

The Heartland Shippers Conference is presented by Cargo Business News and the Midwest Global Trade Association, and supported by several other U.S. Midwest trade/shipper organizations.

The U.S. Midwest is home to major manufacturing, agriculture, and a significant consumer market of more than 66 million. Conversely, getting cargo in and out of the nation’s heartland is challenging for a variety of reasons, and the Heartland Shippers’ Conference will address these themes, among others pertinent to the global supply chain’s vital connection to the region and its developing infrastructure.

Dynamic networking opportunities include Cargo Business News’ popular Collaboration Dinners held in fine eateries conveniently located throughout Downtown Minneapolis, along with receptions and opportunities to meet and mingle with customers, prospects and service providers.

Cost

Individual registration: Conference registration - $395
Tables of ten: Conference registration - $3,700

Featured Speakers

  • Matthew K. Rose, Chairman and CEO, BNSF Railway
  • Walter Kemmsies, Chief Economist, Moffatt & Nichol
  • Tammy Nelson, Director Global Logistics, International Trade & License Compliance, Medtronic
  • Pete Mento, Director, Global Customs and Trade Policy, CH Robinson

Details and Online Registration

"Ask An Attorney” Seminar & River Boat Networking Cruise on the Mississippi

Thursday, May 16, 2013
Seminar: 3:00 – 5:30 p.m.
Cruise: 6:00 – 8:00 p.m.

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Sequestration to Dramatically Reduce Customs Manpower

From the Journal of Commerce

The federal sequestration could cut Customs and Border Protection's (CBP) manpower to the equivalent of about 5,000 agents over the coming months, a former chief of the staff of the agency said recently.

The agency has already begun reducing worker overtime and will begin furloughing its 21,000 Customs officers at ports, land borders and airports up to two weeks as soon as late April. The federal sequestration — which trims the agency's budget by about $955 million — highlights the needs for the CBP to find ways to use its funding more efficiently and find other revenue sources, said Thaddeus Bingel, a principal at Command Consulting Group.

"Our ability to process increasing volumes of trade at seaports in the midst of all these problems really does present some challenges," he told attendees of the American Association of Port Authorities' spring conference in Washington.

Although Customs funding has increased in recent years, the gains haven't been able to keep up with the growing demand for security, salaries, and other related expenses eat up more of the total budget, he said. Salaries and related expenses took 87 percent of total Customs funding in fiscal year 2012, a 10 percent increase from the same period 3 years prior, Bingel said.

The growing costs connected to staffing are leaving less money for new technology, modernizing facilities, and other infrastructure projects. Through a Continuing Resolution, the House provided $9 billion for Customs salaries and expenses through the end of September.

"That's a $300 million increase over the fiscal year 2012, but that is really not keeping pace" with needs, Bingel said.

He said pre-inspection cargo clearance pilots, trusted trader programs, increased trust in trading partners, and filing automation are helping the agency make the most of its limited resources. But it won't likely be enough, Bingel said.

Increasing the pre-inspection of imports at the country of origin is one way to speed the processing of goods cost-efficiently, as is changing how containers are scanned. A straddle carrier with radiation detection capabilities, for example, could help ports by "scanning containers as they lie instead of as they go out the door," Bingel said.

He said scanning technology used by Customs at ports is done by people on-site, but technology enables the analyzing of scans to be done thousands of miles away and more efficiently. That would allow the agency to better manage its time because there would be less downtime waiting for cargo - the remote location would be receiving scans from various locations.

Bingel encouraged stakeholders to push Customs to adopt user-based concepts. He pointed to how the Transportation Security Administration relies on the cargo shippers to conduct the scans according to the agency's standards and then share the images with government officials. Customs runs a program where smaller airports pay for agents to provide international passenger processing; Bingel said a similar approach to cargo could be adopted at seaports.

"I know you don't want to pay for something that you get not for free but at a reduced cost today, he said. "But if the tradeoff was that by paying for those dedicated resources, you knew you could process the volume at the level you want to process, it might make sense for some of you."

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Study: Oil Industry Economic Impact Pegged at $30B

By Associated Press

The economic impact of North Dakota’s oil industry has increased nearly sevenfold between 2005 and 2011, from $4.4 billion to $30.4 billion, according to a study from North Dakota State University.

The study, sponsored by the North Dakota Petroleum Council, estimates each barrel of oil produced in North Dakota generates about $150 in economic activity.

The oil industry accounted for nearly 41,000 full-time jobs in 2011, about 9 percent of the state’s workforce, the study said. The oil industry accounted for only about 5,000 jobs in 2005, when North Dakota’s oil boom was in its infancy.

North Dakota currently trails only Texas in oil output. The state has risen from the ninth biggest oil state just six years ago, with improved horizontal drilling techniques in the rich Bakken shale and Three Forks formations in the western part of the state.

Gov. Jack Dalrymple said the study validates the contribution to North Dakota’s economy. But the economic benefit has come with increased crime, shortages of housing, greater costs for road repairs and other infrastructure improvements in oil-producing counties in western North Dakota, he said.

"Oil and gas has had a very significant impact on our state’s economy,” Dalrymple told The Associated Press. "No question, there are some challenges.”

Dalrymple’s $12.8 billion budget proposes that $532 million in oil tax revenues be given to oil-producing counties over the next two years for infrastructure improvements and other projects impacted by oil development. The Republican governor’s plan also includes 171 new state employees, including more law enforcement, court, health, and regulatory workers to monitor the growing energy industry. It includes about $1 billion for road work in western North Dakota.

Dalrymple spokesman Jeff Zent said the governor’s budget also allocates $214 million in so-called energy-impact grants to communities affected by oil development.

Senate Minority Leader Mac Schneider, D-Grand Forks, said the governor’s budget doesn’t go far enough in addressing the impacts that have come with oil development.

"This welcome development has come with impacts in our communities that policymakers have yet to get a handle on,” he said. "Those of us in the Legislature must do a much better job of addressing the infrastructure needs and quality of life challenges facing western North Dakota.”

Ron Ness, president of the North Dakota Petroleum Council, agreed that the state faces challenges keeping up with record oil production.
"But every one of those challenges presents an opportunity,” Ness said.

The $30,000 study, by NDSU research scientist Dean Bangsund and assistant professor Nancy Hodurand, has been published every two years since 2005. It examines gross business volume of oil and gas production, exploration, refining, payroll and other activity.

Ness said 2011 was a big year, but it was dwarfed by last year’s production.

"2012 was a very, very big year,” he said.

North Dakota oil drillers produced a record 243 million barrels of crude in 2012, up more than 90 million barrels from the previous record set in 2011. North Dakota produced an average of 768,850 barrels of oil daily in December 2012 compared to an average of 104,256 barrels of oil daily in December 2005, according to statistics from the state’s Department of Mineral Resources.

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MGTA Young Professionals Meeting in February

By Hillary Drake, Andersen Windows

We had a great turnout for the first Young Professionals Meet Global Trade Leaders event. In spite of below-zero temps, about 25 young and young-at-heart professionals came out to network and enjoy apps at Famous Dave’s in Uptown. Rachele Hepburn from C.H. Robinson did a great job organizing the event.

Local companies were well-represented. Jared Burgess of C.H. Robinson, Brad Dyer of Livingston International, Maria Casci-Stoltzmann of 3M, and Kevin Johnson from Best Buy were on hand to talk about their experience and answer questions from up-and-coming trade professionals. Questions like, "should I get my broker license?” and "how did you end up in your current position?” were hot topics of conversation.

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MGTA Indexing Seminar

By Jason Lloyd, TSC Container Freight

The MGTA hosted an Indexation in Container Freight seminar on February 28. The seminar introduced the concepts and practices associated with Index Linked Service Contracts (ILSCs). It also provided an explanation of how these available tools are able to help manage exposure to freight rate volatility. Dave Briggs from TSC Container Freight, along with David Barns and Ben Gibson from Clarksons Securities presented the material.

It was a successful seminar that provided details on how companies are able to benefit from indexation, hedging and fixed rate contracting. For more information, please feel free to contact Jason Lloyd. David Briggs will also speak about freight indices at the Heartland Shippers Conference.

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Hours-of Service Legal Battle Continues

By Tom Sanderson, Posted on Transplace Blog

The federal Motor Carrier Safety Administration (FMCSA) has dug in its heels and insists on implementing the new hours-of-service (HOS) rules on July 1, despite the nearing conclusions to the ongoing legal battle seeking to set aside the new rules. The new rules are expected to reduce effective trucking capacity by 3-5% as a result of lower driver and truck utilization. The primary cause of the decline in utilization is the 34-hour restart provision that requires two consecutive rest periods between 1:00 a.m. and 5:00 a.m. once per week. The productivity damage from this rule is estimated to require 100,000 more truck drivers, who in addition to being very hard to find are unlikely to be as safe as the veteran drivers on the highway today. An additional impact of this rule will be to flood the highways with trucks on Monday at 5:00 a.m. which will obviously lead to more accidents, not less. There is no scientific evidence to support the idea that this rule will reduce highway accidents. The new requirement for a mandatory 30-minute off-duty break, excluding all on-duty non-driving activity, before driving 8 hours is also being contested by the American Trucking Associations (ATA.

The ATA filed suit in February 2012, seeking to overturn the new rules. In January of this year, with oral arguments expected to be heard in March, the ATA requested that the FMCSA delay implementation of the new rules pending the outcome of litigation. The ATA cited the industry’s $320 million cost of training, software updates, and other conversion expenses, which will be totally wasted if the court sides with the ATA and overturns the new rules. The Commercial Vehicle Safety Alliance requested the same delay as ATA, saying law enforcement agencies preferred to avoid "potentially duplicative and unnecessary training.” The FMCSA refused to delay implementation stating that it believes the rule is valid and not likely to be delayed if ATA asked a federal court to impose a stay, or court-ordered delay. It is unfortunate that the FMCSA chose a line of reasoning based on the legal ability of the ATA to get a stay rather than on the pragmatic view that we are so near a court decision that it makes no sense for carriers and law enforcement personnel to spend money on a HOS change that may not happen.

In oral arguments on March 15, the ATA accused the FMCSA of overestimating the societal benefits of the regulatory changes by misinterpreting scientific studies to justify HOS restrictions. The existing rules have proven very effective in improving highway safety and there is no evidence that the new rules will lead to fewer accidents. The FMCSA argued that it is not the court’s duty to weigh in on simple scientific disputes and that the Agency acted reasonably in establishing the new rules. Shipper groups NITL and NASSTRAC are supporting the ATA’s position as is the Owner Operator group (OOIDA).

Arguing for even greater restrictions on truck drivers, Public Citizen attorney Scott Nelson argued the FMCSA abandoned its legal responsibilities when it kept the daily driving limit at 11 hours. "The agency acted irrationally by failing to follow its statutory duty by increasing per shift driving time” from 10 to 11 hours, in 2003.

The FMCSA is claiming to be the reasonable voice in the middle of two extremes. While science is not on their side, the court may see leaving the rules as revised a reasonable middle ground. That would be very unfortunate for both highway safety and logistics costs and service levels.

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Country of the Month: United Arab Emirates

from BBC News and State Department

  • Full Name: United Arab Emirates
  • Population: 7.9 million (UN, 2011)
  • Capital: Abu Dhabi
  • Largest city: Dubai
  • Area: 77,700 sq km (30,000 sq miles)
  • Major language: Arabic
  • Major religion: Islam
  • Life expectancy: 76 years (men), 78 years (women) (UN)
  • Monetary unit: 1 Dirham = 100 fills
  • Main exports: Oil, gas
  • GNI per capita: US $40,760 (World Bank, 2011)

US-United Arab Emirates Relations

The United States has had friendly relations with the United Arab Emirates (U.A.E.) since 1971, following its formation and independence from the United Kingdom. The two countries established formal diplomatic relations in 1972. The U.A.E. plays an influential role in the Middle East, and is a key partner for the United States. The United States and the U.A.E. enjoy strong bilateral cooperation on a full range of issues including defense, non-proliferation, trade, law enforcement, energy policy, and cultural exchange. The two countries work together to promote peace and security, support economic growth, and improve educational opportunities in the region and around the world. U.A.E. ports host more U.S. Navy ships than any port outside the United States.

U.S. Assistance to the U.A.E.

The United States provides no development assistance to the U.A.E.

Bilateral Economic Relations

The prosperity of the U.A.E. is based in large part on the country's vast oil and gas reserves, and it is one of the United States’ single largest export markets in the Middle East and North Africa region. More than 750 U.S. firms operate in the country. Many U.S. companies, drawn by strong logistics and transport industries, use the U.A.E. as a regional headquarters from which to conduct business throughout the Middle East, North Africa, and parts of Asia. The U.S. and U.A.E. have entered into a Trade and Investment Framework Agreement, establishing a formal dialogue to promote increased trade and investment between the two countries.

The U.A.E.'s Membership in International Organizations

The U.A.E. and the United States belong to a number of the same international organizations, including the United Nations, International Monetary Fund, World Bank, and World Trade Organization.

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Do you know an MGTA member who was recently promoted or hired to an import/export company? Know of a member who recently got married or had a new addition to the family? Share the good news with your industry colleagues by emailing jlloyd@scoular.com.

First Saltie Arrived Friday; Earliest Ever

The first ocean-going vessel of the 2013 shipping season arrived in the Port of Duluth-Superior on Friday, March 29, the earliest a saltie has ever arrived in the Twin Ports.

The Federal Hunter, flagged in Hong Kong, is pulled under the Aerial Lift Bridge on Friday afternoon. The arrival beat the previous record — the LT Argosy's April 1, 1995 arrival — by three days. It's also more than a week earlier than last year's first saltie.

The Federal Hunter began her current voyage in Germany and dropped off cargo in Quebec before heading to Duluth-Superior. She docked at the CHS elevator in Superior to load 15,000 metric tons of wheat, and departed late Monday, April 1. She'll pick up another 5,000 tons of wheat in Thunder Bay before delivering the cargo to France and the United Kingdom.

The Port Authority welcomed The Federal Hunter and its 22-member crew with a first-ship ceremony on Monday.

A sister ship, the Cyprus-flagged Federal Elbe, arrived Saturday and will likely sit at anchor for a day or two before loading.

The 2013 shipping season began March 20 when the Mesabi Miner left the Twin Ports with coal bound for Marquette. The Soo Locks, which allow ocean-going vessels to reach Lake Superior, opened March 25.

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MGTA Member Spotlight: Mark Toth

Longtime MGTA Board member and Past President, Mark Toth, has a new position as Administrator of the Greater Metropolitan Area Foreign Trade Zone #119 (GMAFTZ). This is a contract position through his company Logistics Guy, LLC to grow the Foreign Trade Zone, educate about the benefits, and promote job growth through this cost savings program. The territory for the zone is Isanti, Chisago, Sherburne, Wright, Anoka, Washington, Ramsey, Hennepin, McLeod, Carver, Scott, Dakota, Sibley, Le Sueur, and Rice Counties. Zone #119 has operated since July 24, 1985.

Additional zones in Minnesota are

  • Duluth Seaway Port Authority #51
  • International Falls [The Koochiching Economic Development Authority (KEDA)] #259

A Foreign Trade Zone (FTZ) is the U.S. version of an international Free Trade Zone. An FTZ may be used to store foreign or domestic goods, re-package materials, assemble products, or manufacture. Goods may also be re-exported without paying Customs duties. Participation in an FTZ helps companies gain two major benefits: Duty minimization and ease of distribution.

There are basically two types of FTZs:

General Purpose Zone: Always located near a Customs Port of Entry, a General Purpose Zone (GPZ) offers leased storage or distribution space in general warehouse buildings. A GPZ may be used on an occasional or long-term basis.

Single Purpose Zone: Many times, distance from a General Purpose Zone prevents a company from participating in the benefits of a GPZ. Individual companies may apply to the U.S. Department of Commerce to designate their facility as a Single Purpose Zone or Subzone.

According to Mr. Toth, "The Zone has not been marketed and utilized to its potential. This is an exciting opportunity.”

More information about Foreign Trade Zones and how they save a company money; Mark Toth can be reached at 612-460-8684 or toth@logisticsguy.com.

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March/April 2013
Volume 10, Issue 2

From the President: Hello Spring, Have We Met?

Upcoming Events

Sequestration to Dramatically Reduce Customs Manpower
From Journal of Commerce

Study: Oil Industry Economic Impact Pegged at $30B
from the Associated Press

MGTA Young Professionals Meeting in February

MGTA Indexing Seminar

Hours-of Service Legal Battle Continues
By Tom Sanderson, Posted on Transplace Blog

Country of the Month: United Arab Emirates
from BBC News and State Department

First Saltie Expected Friday; Earliest Ever

MGTA Member Spotlight: Mark Toth

Annual Sponsors

Gold

Bremer Bank

Silver
CH Robinson
SilverDrinker, Biddle, and ReathSilver
Focus Solutions
Silver
HMM
Silver
King Solutions
Silver
Neville Peterson, LLP
SilverZepolBronze
Williams Mullen

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