An update from MGTA

Midwest Global Trade Association

World Trader

From the President

By Jason Lloyd, MGTA President

Jason LloydThe Heartland Shippers conference was recently held in Kansas City. Cargo Business News and the corporation organizations did an outstanding job organizing the entire event. The conference provided insight on how companies are doing business in the area and addressed logistic challenges. We heard from companies based in the area, from Hallmark to Garmin International. Many of the panels had interesting topics and provided a different look into solving problems with transportation. Next year the Heartland Shippers conference will be held in Fargo, North Dakota; the date has yet to be determined.

The MGTA has a lot to offer our members though networking events, seminars, and its cooperating organizations like Cargo Business News and AAEI. The AAEI 93rd Annual conference was held in Minneapolis the week of June 16. I was glad to see some of you at the conference!

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Upcoming Events

MGTA Golf Tournament

August 13, 2014
Crystal Lake Golf Course
Lakeville, MN
View details and register online

Thank You, Sponsors

Hole-In-One Sponsor
Hamburg Sud North America

Margarita Sponsor
Hyundai Merchant Marine

Cart Sponsor
Port of Seattle

Hole Sponsors
Bremer Bank NA
C.H. Robinson
Drinker Biddle & Reath
FOCUS Business Solutions
Hamburg Sud North America
Hyundai Merchant Marine
Neville Peterson, LLC
North Star World Trade
     Service

Bag Sponsor
Bremer Bank N.A.

Refreshment Sponsor
Port of Halifax

Putting Contest Sponsor
Zepol Corporation

Interested in Sponsorship?

View complete sponsorship information and register online

Be sure to lock in your sponsorship now before it sells out!


MGTA Member Networking Lunch

Tuesday, July 8, 2014
11:30 a.m.
Cooper Irish Pub
St. Louis Park, MN
View details and register online


MGTA Seminar: CBP Import Audit – Focused Assessment Changes

September 18, 2014
9:00 a.m. to Noon
Ewald Conference Center
Saint Paul, MN
View details and registration

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2014 TransPacific Freight Market Recap

By Kevin Johnson, Manager, Import Export Logistics, COE - Supply Chain, Best Buy Co., Inc.

The 2014 TransPacific ocean market faced many of the dynamics that were prevalent in 2013. Continued new vessel deployments into the Asia/Europe trade, some of them the hulking Triple E class, resulted in some existing Asia/Europe lane vessels re-deployed into the TransPacific in addition to new vessel deployments again resulted in more vessel capacity than the industry freight levels. Many Beneficial Cargo Owner (BCO) ocean contract rates ended up lower to flat compared to 2013 levels. Until the industry freight levels close in on the available vessel slot capacity, it will be an uphill battle for the ocean carriers to push rates up to compensatory levels where operations can be not only sustained but improved. Rate stability is something both shippers and carriers desire — but until this trade to vessel capacity delta is decreased, stability will be challenging. 

Meanwhile, the TransPacific air market has been stable for larger shippers with some recent volatility to the small and medium size shippers. A large factor that will certainly affect the TransPacific international air market is the possibility of an US West Coast ocean port strike when the International Longshore and Warehouse Unions (ILWU) contract expires June 30. More shippers are currently looking to move critical items via air as we approach June 30 and forward, in efforts to avoid cargo being held hostage on vessels waiting to call West Coast ports should a strike happen. Air rates will certainly see a significant increase in July if such a strike becomes reality.

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BNSF PNW Schedule Changes Impact Midwest Shippers and Intermodal Providers

By Mike French, Dart Transit Co.

The BNSF announced on April 24 schedule and transit time changes beginning April 28. Given the short notification of change, many intermodal providers and shippers were caught flat footed. Many orders had already been tendered and delivery appointments made based on the previous schedules.

Essentially the changes decreased the number of daily trains from six to four — a 33% decrease. Transit times between Seattle/Portland to St. Paul at the same time extended from 67 hours to 111-129 hours — a 40% - 52% increase depending on requested service levels. While schedule changes are common, these two changes combined have greatly affected available PNW intermodal services to shippers.

This means many shippers may no longer be able to utilize intermodal as an option for deliveries. Limited days and the longer transits means traditional order windows cannot be met. The changes are expected to force freight back on an already strained truck capacity market and increase transportation costs. One possible option for shippers is to increase inventories and carrying costs but, that may not be attractive when order windows and production schedules have long been set upstream and downstream in supply chains.

Another factor many shippers are focused on is their carbon footprint. When utilizing intermodal service vs. truck service generally, a shipper reduces its CO2e 1.032 metric tons per shipment, or 68% per load. The impact will be variable to each shipper if they are able to adjust their order windows and continue to use some intermodal services.

An added concern: shippers have been complaining to intermodal providers for some time about the inconsistency of the rail transit times out of the PNW. Many factors have been at play.

  • Delays due to needed maintenance on tracks have been of primary concern.
  • Congestion created in the Bakken Oil Patch due to increases in oil and fracking sand shipments sidelining trains in transit.
  • Delays happening with limited communication.

The new schedules are meant to provide a more consistent service offering. Unfortunately that has not been realized as of yet. We do expect service to improve as track improvements are completed. However with no other train options between the PNW and St Paul, you need to be prepared with a number of contingencies.

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Recap: MGTA Young Professionals Bowling Event

By Kylle Jordan, Trade Commissioner Assistant, Consulate General of Canada in Minneapolis

On May 1, the MGTA hosted a networking event for young professionals at Park Tavern in St. Louis Park. This event was the second of its kind — following last year’s event at Famous Dave’s — and was a great success! The MGTA took over four lanes of bowling with more than 20 young professionals in attendance. Attendees included long-time members, new members and not-yet-members from companies large and small, local and foreign (bonjour to our French visitor!). Great conversation and career advice changed hands, and we all learned that Gander Mountain employees are fantastic bowlers — congratulations again on the turkey! If you were unable to join us in May, keep your eyes peeled as the MGTA would like to put together another young professionals event sometime this summer, hopefully outdoors.

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Country of the Month: Brazil

Latin America’s largest and most populous nation, Brazil has large and well developed agricultural, mining, manufacturing and services sectors. It is a founding member of the Mercosur (composed of Argentina, Brazil, Paraguay, Uruguay and, since 31 July 2012, Venezuela) and the Latin American Integration Association (LAIA).

A series of successful economic reforms during the 1990s ended years of hyperinflation in the country. The current government, headed by President Dilma Rousseff, has pledged to step up the fight against poverty. President Rousseff, who has pledged to build on her predecessor’s work and provide financial assistance to the country’s poor, has seen her popularity plummet as the cost of living soars and the country’s economic growth slows down. Ms. Rousseff’s approval ratings dropped from 54.2% in June to 31.3% in July 2013, following a wave of nationwide demonstrations that brought millions of protesters onto the streets to demand better public services, an end to political corruption and the expense of staging the 2014 Soccer World Cup. However, her approval ratings have since started to climb back up, standing at 38%.

Since a slowdown in the early 2000s, the Brazilian economy has grown rapidly, albeit still slower than other Latin American economies. The Brazilian economy grew 5.2% in 2008 but contracted 0.3% in 2009 as a result of the global economic slowdown.

GDP grew by 7.5% during 2010 but slowed again sharply from 2011, growing by 2.7% in 2011 and just 0.9% during 2012, as local businesses struggled with rising business costs and an overvalued currency. However, the central bank has forecast improved growth of 2.5% during 2013. Unemployment stood at 6% in June 2013, up from 5.8% in May 2013 and the highest rate since April 2012. Income inequality and poverty remain pressing issues.

Liberalization of the economy helped Brazil to a record a trade surplus of USD $46 billion in 2006. However, the trade surplus narrowed from USD $29.8 billion in 2011 to a 10-year low of USD $19.4 billion in 2012, as a sluggish global economy curbed demand for Brazil’s exports and a trade deficit of USD $1.62 billion was recorded in the first nine months of 2013. This, together with an increase in capital outflows resulting from the global economic slowdown, caused Brazil’s current account deficit to deepen to a record USD $54.2 billion in 2012 and is now expected to stand at USD $75 billion in 2013, as the trade surplus narrows to USD $7 billion in the year.

Brazil’s main trading partners for imports are the European Union (20.5%), the United States (15.1%), China (14.5%),
Argentina (7.5%) and South Korea 4.5%. Brazil’s main trading partners for exports are the European Union (20.7%), China (17.3%), the United States (10.1%), Argentina (8.9%) and Japan (3.7%).

Main traded products/sectors – Imports

Manufacturing 55.0%, fuels and mining products 16.8%, commercial services (excl. travel and transportation) 12.0%, travel 6.9%, agricultural products 4.6%, transportation 4.6%.

Exports

Agricultural products 29.6%, manufacturing 28.7%, fuels and mining products 26.6%, commercial services (excl. travel and transportation) 8.2%, travel 2.2%, transportation 2.0%.

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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 thierry.ajas@randstadusa.com

July-August 2014

From the President

Upcoming Events

2014 TransPacific Freight Market Recap
By Kevin Johnson, Best Buy Co., Inc.

BNSF PNW Schedule Changes Impact Midwest Shippers and Intermodal Providers
By Mike French, Dart Transit Co.

Recap: MGTA Young Professionals Bowling Event
By Kylle Jordan, Consulate General of Canada in Minneapolis

Country of the Month: Brazil

 

Thank you Newsletter Sponsor: Port of Seattle

Annual Sponsors

Gold
Bremer Bank


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Focus Solutions


Silver
CH Robinson


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Drinker, Biddle, and Reath


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HMM


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King Solutions


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Zepol


Bronze
Bennett Jones


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Williams Mullen