An update from MGTA

Midwest Global Trade Association

World Trader

From the President

By Jason Lloyd, MGTA President

Jason LloydRecently, John Wilson was promoted within his company and moved to Atlanta. I wanted to thank John for his time with the MGTA and his leadership throughout the years. He has helped launch the new website, update the bylaws and working on many of the MGTA seminars over the years. We wish him the best in his new role.

Over the next few weeks and months, we have many great MGTA events; The Heartland Shippers Conference is in Kansas City May 13th and 14th, and the AAEI annual conference will be held in Minneapolis June 16th, 17th, and 18th. The Trusted Trader Program will be on May 22nd. For more upcoming events, please visit our website. I hope to see you at the Heartland Shippers Conference in Kansas City.

return to top

Upcoming Events

MGTA Seminar: The Trusted Trader Program – Getting the Most Benefit From Your Relationship with CBP

Thursday, May 22
1:00 to 4:30 p.m.
Ewald Conference Center
Saint Paul, MN

View details and register online to attend

The Trusted Trader Program is designed to create a holistic approach for importers to achieve trusted trader status. It incorporates the two “traditional” trusted trader programs – the Customs-Trade Partnership Against Terrorism (C-TPAT) and the Importer Self-Assessment Program (ISA). This holistic approach may have an effect on several CBP initiatives, including the Centers of Excellence and Expertise. During this program, a senior CBP official involved in the Trusted Trader Program and an importer who has achieved Trusted Trader status will discuss the ongoing development of this important initiative, as well as provide insights to its benefits and costs.

Sponsorship Opportunities now available for the MGTA Golf Tournament

MGTA Golf Tournament

August 13, 2014
Crystal Lake Golf Course
Lakeville, MN

Now accepting sponsors

View complete sponsorship information and register online

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

AAEI 93rd Annual Conference & Expo

June 16–18, 2014
Hyatt Regency Minneapolis
Minneapolis, MN

MGTA Members receive a DISCOUNTED rate to this national conference! Click the link below to find out how:

View complete details

return to top

Will Your Supply Chain be Affected by the ILWU Labor Contract Negotiations?

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

On June 30, 2014 the labor contract between the International Longshore and Warehouse Union (ILWU) and Pacific Maritime Association (PMA) is set to expire. The ILWU represents the Longshore labor working all US West Coast container and bulk ports and the PMA represents the port terminal operators and steamship lines calling U.S. West Coast ports. At stake is 68% of all US containerized import shipments as well as U.S. West Coast containerized export and bulk shipments.

The two sides will sit down at the negotiation table for the first time on May 12. While many trade organizations including the Retail Industry Leaders Association, National Retail Federation and Agriculture Transportation Coalition have pushed for the sides to begin negotiations sooner, the ILWU has refused strategizing the longer they wait, the more bargaining power they will have. Major negotiation topics include the ILWU’s newly applicable annual Cadillac health care tax under the Affordable Health Care Act estimated at $150 - $200M, all of which would be an additional cost not currently paid by the PMA. Also, chassis maintenance and repair at off-terminal locations as well as job jurisdiction over the port’s automated machinery repair.

Industry leaders predict the sides will not agree to a new contract by the July 1 deadline. Expectations are that the sides will agree to a post July 1 temporary contract extension and continue normal port operations until an agreement is reached. However, as the industry experienced in the ’02 ILWU/PMA contract negotiations, if ILWU workers stage work slow-downs resulting in significantly decreased productivity the PMA may lockout the ILWU bringing to halt maritime commerce across the entire US Western Seaboard.

US Import and Exporters should be actively looking at their supply chains and contingency planning to minimize supply chain interruptions that could result from the contract negotiations.

Unfortunately for many, there are few alternatives including utilization of US East Coast ports, Canada and Mexico ports in conjunction with rail and airfreight, all of which encompass many challenges minimizing the importer/exporter’s options.

Here’s to a quick and successful contract negotiation! Update to follow in the next edition…

return to top

Reshoring and Transportation

By Hillary Drake, Sr. Transportation Analyst, Andersen Windows

There’s been a lot of interest in reshoring and nearshoring in manufacturing over the last few years. After outsourcing to Asia, we’ve learned that outsourcing costs more than initially thought. Transportation costs fluctuate, supply chains can be disrupted, and it’s harder to respond to customer demand when you have two months’ inventory on the water.

Domestic and North American manufacturing both look more attractive than ever, and companies are starting to take advantage. It made the news that Apple’s opening an assembly plant in Arizona, but they’re far from the only ones. Prominent companies are starting to recognize the reputational and supply chain benefits of making product in the US.

Moving back to North America requires a different supply chain mindset than working in China. New material and transportation suppliers may need to be identified, inventory levels need to be reset, and lead times change, especially if you’re moving towards a just-in-time mindset.

If you’re planning a move, there are a couple primary considerations in selecting a site. First and foremost, what kind of facility and labor needs does your business have. If a manufacturing process requires a lot of water, Arizona probably isn’t a good choice. Second, what’s your time to market? If your primary sales are on the West Coast, it doesn’t make sense to manufacture in South Carolina.

All of that said, I’d also encourage you to look at proximity to rail options. Intermodal trailer and container on the rail is quickly becoming one of the most popular ways to move goods in North America, and the transit times are becoming competitive with truck in many scenarios. As the trucking market tightens, intermodal is going to pick up more and more business. A location with inexpensive real estate and labor may not be a good deal if it’s costly to move your raw materials and finished goods.

return to top


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


What do winter weather, oil-by-rail, lack of rail crews and historic crop yields have in common? – They are all being blamed for recent rail delays in the U.S. and Canada. The fact is that all of these dynamics have likely contributed to the current rail challenges. For example, this year’s Canadian crop is 50% higher than average and US yields are also up.  Further, through November the railways were efficiently moving grain, however, extremely cold temperatures have affected the normal operations of train movement. During the extreme cold, trains have to be shortened by up to 30% as the trains’ air brakes do not function as effectively in the cold temperatures.  North and South Dakota are also facing the new challenge of increased demand to move Bakken oil by rail and truck, subsequently leading to reduced capacity for grain.  At the moment some cars are arriving at loading facilities as much as seven weeks late, and there are no guarantees that service will return to normal in the near term.

Canadian Legislation

As the worst winter in memory hit the Canadian prairies, grain began to pile up at grain elevators, quickly reaching capacity due to infrequent rail.  In response, on March 7, 2014, through a federal cabinet order, Transport Minister Raitt and Agriculture and Agri-Food Canada Minister Ritz announced that railways will now be required to move a minimum of 500,000 tons of grain each per week (one million tons combined, or 5,500 cars each for Canadian National and Canadian Pacific) through to June 7. The Order also requires the railways to report to the Minister of Transport on weekly shipments   and creates direct legal obligations on railways and will result in penalties for non-compliance of up to $100,000 per day.

Non-grain shippers, including mining, fertilizer and lumber trade groups, lobbied hard but to no avail against the Order which, in their view, reserved an arbitrarily predetermined part of rail capacity for western grain. These provisions will now become part of the statutes of Canada in a framework that will allow their application in any future crop year.

US Legislation

On the US side, farmers and business owners in the Dakotas are calling on President Obama to help them get grain trains back on schedule so that millions of bushels of corn sitting in grain elevators and on farms will not  be wasted, and so that fertilizer supplies can reach needed areas in time for spring planting.  Additionally, coal producers have asked the U.S. Surface Transportation Board (STB) to investigate BNSF’s freight delays, fearing that some power plants may shut down in the summer months without reliable supplies. The STB held a hearing on the rail backlog on April 10, wherein it was noted that possible outcomes could be President Obama issuing an executive order forcing BNSF to reallocate some of its equipment and personnel from the Bakken oil fields in western North Dakota to move grain. On April 16, the STB did rule that through May 2014 BNSF and CP must provide weekly reports to the STB on their movements of fertilizer to ensure spring planting.  Some farmers are also calling for the approval of the proposed Keystone XL pipeline so that most North Dakota oil could be transported by pipeline instead of by rail.


The reduced ability to move grain is having negative consequences for business and travel. Redfield Energy of SD has reportedly been forced to run its ethanol plant at 60 to 90 percent all winter and has no plans to run at full speed anytime soon due to continued delays and uncertainty with rail service. Grain elevators located off the class 1 rail lines, such as the rail lines owned by Twin Cities & Western Railroad Company, have been told that they cannot even place any new car orders until August due to congestion on the main rail lines. Heavy freight traffic has bogged down passenger trains west of St. Paul forcing Amtrak to cancel five runs of the Empire Builder between St. Paul and Spokane, WA.

Railroads are facing greater freight volumes in nearly every category this year, encouraging most to invest in new track and equipment. Since harvest CN has added 1,000 hopper cars and are using management to supplement train crews. Additionally, in 2014, CN will acquire an additional 45 new high-horsepower locomotives and will have another 500 hopper cars coming on stream.  However, increases in technology and innovation will likely continue to produce higher yields forcing the rail lines to adapt to this “new normal.”

return to top

Country of the Month: Ukraine



Ukraine was the center of the first eastern Slavic state, Kyivan Rus, which during the 10th and 11th centuries was the largest and most powerful state in Europe. Weakened by internecine quarrels and Mongol invasions, Kyivan Rus was incorporated into the Grand Duchy of Lithuania and eventually into the Polish-Lithuanian Commonwealth. The cultural and religious legacy of Kyivan Rus laid the foundation for Ukrainian nationalism through subsequent centuries. A new Ukrainian state, the Cossack Hetmanate, was established during the mid-17th century after an uprising against the Poles. Despite continuous Muscovite pressure, the Hetmanate managed to remain autonomous for well over 100 years. During the latter part of the 18th century, most Ukrainian ethnographic territory was absorbed by the Russian Empire. Following the collapse of czarist Russia in 1917, Ukraine was able to achieve a short-lived period of independence (1917-20), but was reconquered and forced to endure a brutal Soviet rule that engineered two forced famines (1921-22 and 1932-33) in which over 8 million died. In World War II, German and Soviet armies were responsible for some 7 to 8 million more deaths. Although final independence for Ukraine was achieved in 1991 with the dissolution of the USSR, democracy and prosperity remained elusive as the legacy of state control and endemic corruption stalled efforts at economic reform, privatization, and civil liberties.


After Russia, the Ukrainian republic was the most important economic component of the former Soviet Union, producing about four times the output of the next-ranking republic. Its fertile black soil generated more than one-fourth of Soviet agricultural output, and its farms provided substantial quantities of meat, milk, grain, and vegetables to other republics. Likewise, its diversified heavy industry supplied the unique equipment (for example, large diameter pipes) and raw materials to industrial and mining sites (vertical drilling apparatus) in other regions of the former USSR. Shortly after independence in August 1991, the Ukrainian Government liberalized most prices and erected a legal framework for privatization, but widespread resistance to reform within the government and the legislature soon stalled reform efforts and led to some backtracking. Output by 1999 had fallen to less than 40% of the 1991 level. Ukraine's dependence on Russia for energy supplies and the lack of significant structural reform have made the Ukrainian economy vulnerable to external shocks. Ukraine depends on imports to meet about three-fourths of its annual oil and natural gas requirements and 100% of its nuclear fuel needs. After a two-week dispute that saw gas supplies cutoff to Europe, Ukraine agreed to 10-year gas supply and transit contracts with Russia in January 2009 that brought gas prices to "world" levels. The strict terms of the contracts have further hobbled Ukraine's cash-strapped state gas company, Naftohaz. Outside institutions - particularly the IMF - have encouraged Ukraine to quicken the pace and scope of reforms to foster economic growth. Ukrainian Government officials eliminated most tax and customs privileges in a March 2005 budget law, bringing more economic activity out of Ukraine's large shadow economy, but more improvements are needed, including fighting corruption, developing capital markets, and improving the legislative framework. Ukraine's economy was buoyant despite political turmoil between the prime minister and president until mid-2008. Real GDP growth exceeded 7% in 2006-07, fueled by high global prices for steel - Ukraine's top export - and by strong domestic consumption, spurred by rising pensions and wages. A drop in steel prices and Ukraine's exposure to the global financial crisis due to aggressive foreign borrowing lowered growth in 2008. Ukraine reached an agreement with the IMF for a $16.4 billion Stand-By Arrangement in November 2008 to deal with the economic crisis, but the program quickly stalled due to the Ukrainian Government's lack of progress in implementing reforms. The economy contracted nearly 15% in 2009, among the worst economic performances in the world. In April 2010, Ukraine negotiated a price discount on Russian gas imports in exchange for extending Russia's lease on its naval base in Crimea. In August 2010, Ukraine, under the YANUKOVYCH Administration, reached a new agreement with the IMF for a $15.1 billion Stand-By Agreement. Economic growth resumed in 2010 and 2011, buoyed by exports. After initial disbursements, the IMF program stalled in early 2011 due to the Ukrainian Government's lack of progress in implementing key gas sector reforms, namely gas tariff increases. Economic growth slowed in the second half of 2012 with Ukraine finishing the year in technical recession following two consecutive quarters of negative growth.

Exports - commodities: Ferrous and nonferrous metals, fuel and petroleum products, chemicals, machinery and transport equipment, food products

Exports - partners: Russia 25.6%, Turkey 5.4%, Egypt 4.2% (2012)

Imports: $89.71 billion (2012 est.); $85.67 billion (2011 est.)

Imports - commodities: energy, machinery and equipment, chemicals

Imports - partners: Russia 32.4%, China 9.3%, Germany 8%, Belarus 6%, Poland 4.2% (2012)

return to top

Global Job Trends: Improving Job Market in the U.S., Stagnant GDP Growth Rates & Sluggish Employment Growth in Developing Countries

By Thierry Ajas, Executive Recruiter, Randstad Professionals

An Improving Job Market in the U.S.: Fewer Americans filed applications for unemployment benefits at the beginning of April than at any time since before the last recession, indicating bigger gains in hiring will soon follow.

Jobless claims decreased by 32,000 to 300,000 in the week ended April 5, the least since May 2007, seven months before the worst economic slump in the post-World War II era began, a Labor Department report showed today in Washington. Another report showed rising gasoline prices were hurting consumer sentiment.

A drop in firings signal employers are optimistic sales will pick up following a weather-related slowdown at the start of the year, which will pave the way for bigger increases in employment as demand rebounds. More jobs and growing incomes would help lift confidence and provide a spark for consumer spending, which makes up the largest part of the economy.

All in all, the jobless rate held at 6.7 percent last month as an increase of about 500,000 people into the workforce was matched by a similar gain in employment, last week’s report also showed.  U.S. economic growth is projected to reach 2.7 percent this year, according to a Bloomberg survey of economists, supporting the Fed’s outlook that the economy has improved enough to continue unwinding its bond-buying program.

Employment outcomes continued to show almost no improvement in most developing countries over the second quarter of 2013 as gross domestic product (GDP) growth rates stagnated. Employment growth took a modest hit, dropping to 0.9 percent, while the unemployment rate barely moved. Real wage growth was the only outcome showing improvement, but the 3.2 percent growth rate found in the second quarter of 2013 was practically half of the rate for 2012.

In this same period, decreases in employment growth were more pronounced in East Asia and Latin America, where employment growth was halved. Real wage growth also dropped by half in these regions, while in East Europe and Central Asia, real wage growth stumbled to 2.9 percent. Overall, the slowdown in economic growth and in employment that started in the second half of 2012 continued unabated through the second quarter of 2013, driven by weak GDP growth and uncertainties regarding the pace of recovery in the developed world.
Regionally, comparing the second quarter of 2012 with the second quarter of 2013, East Asia sustained relatively high GDP growth, but this was driven mostly by China and the Philippines, each with growth rates surpassing 7.5 percent. In contrast, both Thailand and Indonesia saw declines in GDP growth (from 4.4 to 2.9 percent and from 6.3 to 5.8 percent, respectively), leaving the region overall with a GDP growth rate of around 6 percent. This was not the case with employment growth or with unemployment. While unemployment barely budged, employment growth plummeted from an average of 4 percent in the second quarter of 2012 to 1.7 percent in the second quarter of 2013. Although employment stagnated or declined, real wages appear to have grown in most East Asian countries. Indonesia was the exception: after a period of high real wage growth between 2011 and 2012, wages adjusted downward from 17.1 percent in the second quarter of 2012 to -1.4 in the second quarter of 2013.

Europe and Central Asia present a mixed picture with respect to GDP growth. While around half of the countries—Kazakhstan, Lithuania, Moldova, and Turkey—showed increases in GDP growth, growth in the other half weakened, with Armenia, Belarus, and Ukraine actually contracting. The employment growth rate remained low throughout the region at 1 percent. Compared to the second quarter of 2012, the unemployment rate improved slightly for the Europe and Central Asia region over the same period in 2013. Overall, real wage growth showed significant declines, dropping from 9.7 percent in the second quarter of 2012 to less than a third of that rate (2.9 percent) in the second quarter of 2013.

In the Latin America and Caribbean region, GDP growth declined in all countries except Brazil, leading the regional average to drop from 4.6 to 3.4 percent. Mexico was hit strongest: GDP growth dropped from 4.5 percent in the second quarter of 2012 to 0.5 percent in the second quarter of 2013. The region’s employment growth rate also fell substantially, from 3.3 to 1.4 percent. The regional unemployment rate decreased marginally from 6.7 percent in the second quarter of 2012 to 6.3 percent in the second quarter of 2013. Real wage growth accelerated in many countries in the region, except for the Bolivarian Republic of Venezuela, Mexico, and Peru. The average value, however, declined from 3.3 percent in the second quarter of 2012 to 1.6 percent in the second quarter of 2013, reflecting the drop registered by the Bolivarian Republic of Venezuela, where real wages contracted in the second quarter of 2013.

Finally, the South African economy showed signs of further deterioration. GDP growth decreased from 2.9 in the second quarter of 2012 to 2.3 percent in the second quarter of 2013. During this period employment growth also fell from 2.5 to 2 percent, and the unemployment rate grew from 24.9 to 25.6 percent. The largest decrease in employment-related outcomes was registered by the real wage growth, which plummeted from 6 to 1.2 percent.

This article contains information obtained from the following sources:  a) The March 2014 issue of Job Trends, a regular series monitoring labor markets in developing countries. It is a collaborative effort between the Human Development Network (HDN) and the Poverty Reduction and Economic Management (PREM) Network of the World Bank. This note was prepared by Gabriel Lara Ibarra, Ghazala Mansuri, David A. Robalino, and Michael Weber; b) An article by Victoria Stilwell titled “Fewest Firings Since 2007 Mar U.S. Job-Market Gains” and published in Bloomberg News on Apr 10, 2014.

return to top

Panama Canal Expansion Back Underway

By Cherish Willis, TSC Container Freight

In October of 2006 the citizens of Panama voted to expand the Panama Canal in order to maximize Panama's strategic location as an international maritime hub by doubling the capacity of the canal allowing for more and larger ships to transit.The five year $5.2 billion expansion project began in 2009 with hopes of completion to coincide with the famous canal's centennial anniversary in August 2014.Cost overruns and delays eventually pushed the target completion date back to June 2015.

The canal expansion was further delayed early this year when work on the project was stopped by the new locks contractor Grupo Unidos por el Canal, S.A. (GUPC), a consortium formed by Sacyr Vallehermoso, S.A (Spain), Impregilo, S.p.A. (Italy), Jan de Nul Group (Belgium) and Constructora Urbana, S.A. (CUSA) (Panama).The GUPC group manages the largest part of the project in a $3.1 billion construction of new locks on both ends of the canal.This group demanded Panama pay the consortium an extra $1.6 billion for cost overruns. Panama refused stating the “sole purpose” of the GUPC claims were to force negotiation outside the terms established in the contract and demand additional funds from those agreed in the contract. Work slowed to a crawl in January 2014 before eventually stopping completely for two weeks in February.
The Panama Canal Authority (ACP) received first notice of the consortium's intent to suspend work in a letter issued by GUPC on December 30, 2013, citing a clause of the contract which allows for work stoppage when the employer has failed to issue payment.The ACP refuted this claim with a statement contending payment is routinely issued within 15 days of invoice receipt, well ahead of the 56 days allowed in the contract.The ACP determined the claims of the contractor were not valid and lacked any legal basis. falling outside of the legally binding contract.The ACP also claimed the contractor failed to follow the claims and conflict resolution mechanisms established in the contract to support the claims. On January 16, 2014 the GUPC reiterated their intent to suspend work on the project beginning January 20.As negotiations proceeded, production levels on the project slowed to 25% over the next two weeks before stopping completely on February 5th.Another two weeks of negotiations passed before enough progress was made for work to finally resume on February 20.

A final agreement was reached on February 27th and signed into effect by all parties on March 20th.The agreement fell within the terms of the Contract for the Design and Construction of the Third Set of Locks, and does not include any payment for claims. GUPC's claims must be processed through the mechanisms within the contract. The price of the contract remains the same and is not modified by this agreement. The final agreement provides that:

  • the contractor finishes the work by December 2015.
  • the contractor must deliver the12 lock gates currently in Italy to Panama by December 2014, transported in staggered shipments.
  • GUPC will pay US$100 million and ACP will advance US$100 million (guaranteed), which will enable works to regain a normal pace.
  • The moratorium for the repayment of advances may be extended until 2018, subject to fulfillment of certain milestones and other conditions.

The ACP expects the GUPC to recover 100% activity in the work of the third set of locks in April.

Alhough the dispute was short lived the long term outlook is looking to cost the government $230 million to $400 million a year in additional revenue that the expansion was projected to generate.

Meanwhile, multibillion-dollar investments have been made both in Panama and abroad to accommodate these large vessels known as Panamax ships. Ports around the world are feeling the competition, particularly those capable of handling the new generation of super-size container ships, in order to stay ahead of their rivals for the available freight handling contracts and the rush to compete is proving a bonus for those involved in supplying container and mobile harbor cranes as well as reach stackers and ancillary equipment.


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

May-June 2014

From the President

Upcoming Events

Will Your Supply Chain be Affected by the ILWU Labor Contract Negotiations?
By Kevin Johnson, Best Buy Co., Inc.

Reshoring and Transportation
By Hillary Drake, Andersen Windows

By Kylle Jordan, Consulate General of Canada in Minneapolis

Country of the Month: Ukraine

Global Job Trends: Improving Job Market in the U.S., Stagnant GDP Growth Rates & Sluggish Employment Growth in Developing Countries
By Thierry Ajas, Randstad Professionals

Panama Canal Expansion Back Underway
By Cherish Willis, TSC Container Freight



Annual Sponsors

Bremer Bank

Focus Solutions

CH Robinson

Drinker, Biddle, and Reath


King Solutions

Neville Peterson, LLP


Bennett Jones

Williams Mullen