Export experts

Export experts NEI program leverages ports, forwarders to facilitate foreign sales.

By Eric Kulisch

   The Obama administration wants to take advantage of U.S. port authorities' and freight forwarders' expertise in foreign trade and overseas contacts as part of its broad effort to double exports by the middle of the decade.
   Courtney Gregoire, director of the National Export Initiative, proposed partnering with the American Association of Port Authorities to develop best practices for ports to expand and improve their export promotion efforts. She pointed to the Trade Connect program at the Port of Los Angeles as a model for educating U.S. businesses on the export process and helping them find customers.
   Meanwhile, another Commerce Department official recently tried to enlist the support of the freight forwarder community to drive exports.
   Douglas Barry, a senior trade specialist for the U.S. Commercial Service, speaking at the April 6 National Customs Brokers and Forwarders Association of America conference in Phoenix, challenged the group's 900 members to each set a goal of obtaining 10 new customers this year, which would translate into 9,000 companies entering the export realm or expanding into a new market.
   'For many exporters ' particularly new-to-export firms and small-to-medium enterprises ' the help provided by seaport executives can be crucial,' Gregoire said in an address to AAPA's spring conference in Washington. 'They can help these exporters to identify overseas markets and trade leads, understand basic commercial transaction requirements, and address financing, insurance, trade documentation and risk mitigation issues. Such seaports help their exporters make the connections between trade promotion resources and overseas customers that can lead to an export success.'
   More than 75 percent of merchandise exports by volume and more than 36 percent by value move by ocean transport.
   Gregoire said the Commerce Department also can do a better job of including seaports in high-level trade missions by working through the AAPA to inform ports about upcoming events. The trade missions can help ports identify potential customers for businesses back home and develop relationships with foreign government and port officials that can facilitate cargo processing.
   Officials from ports frequently participate in trade missions organized by their state governments.
   The AAPA and many other freight industry stakeholders have provided input to the Commerce and Transportation departments, which have collaborated during the past two years on a series of listening sessions across the country to gather input on how to improve supply chain infrastructure so that exporters can be more competitive. The two departments plan to hold joint forums this year in port cities such as Los Angeles, New York and New Orleans. The lessons are expected to help the administration develop a national freight policy, which many business leaders would like to become part of the next surface transportation reauthorization bill.
   Gregoire said the Commerce Department is working closely with the DOT on the bill.
   But a national freight policy may not be ready in time. Leaders in Congress are expected to try and pass a bill by the end of the summer, although many Hill watchers are skeptical the long-term spending blueprint will make it to a vote this year.
   The outreach sessions are also important to demonstrate infrastructure needs in the backyards of lawmakers, who will decide on how much funding to provide, she told American Shipper after her presentation.
   The NEI, launched by Obama in February 2010, is a concerted, government-wide strategy to holistically address challenges faced by exporters, such as finding markets, access to credit, trade barriers, unfair foreign competition and slow economic growth.
   A Trade Promotion Coordinating Committee for 20 years has had responsibility for organizing executive branch export activities, but Commerce officials note that previous export promotion has been a part-time activity by some agencies instead of the full-time priority across the federal government that it is now.
   U.S. exports of goods and services increased almost 17 percent in 2010 to $1.83 trillion, the second-highest total ever and the largest year-over-year percentage change in 20 years.
   The rebound in the world economy increased demand for U.S. exports, but the NEI contributed to the positive results, Gregoire insisted.
   'What we think is truly remarkable is that export growth actually supported as much GDP growth as domestic consumption. And that's the first time on record that we're seeing a real balance in terms of how we're growing the U.S. economy,' she said in response to a question from the audience.
   Federal government support in the form of market research, financing and addressing market access barriers is critical in helping companies get started in international trade, she said. Only 1 percent of U.S. firms export and of that number, 58 percent ship goods to only one market.
   A large portion of the single-market exporters do business in Canada, so to double exports 'all we have to do is get those companies in Canada to go to one additional market,' Barry said.
   Maintaining double-digit growth in exports, he added, would also enable the country to double exports to $3.6 trillion.
   There are millions of businesses in the United States, but only 265,000 actually made an export last year.
   Part of the problem is that 87 percent of current export manufacturers don't have a written export plan, Barry said.
   A primary mission for International Trade Administration (ITA) officials is to help smaller U.S. companies navigate the maze of customs and bureaucratic issues that can impede trade, and make them more aware of existing assistance programs.
   Under the Commerce Department's Gold Key Matching Service, for example, companies can pay a fee for ITA staff to find foreign buyers and distributors for U.S.-made products.
   The administration also plans to elevate trade facilitation and logistics to the top of its trade agenda to help U.S. companies efficiently move their goods across borders to their customers, said Gregoire, a former aide to Sen. Maria Cantwell, D-Wash.
   Reducing regulatory burdens and improving global infrastructure, she noted, will be prime topics for the Asia-Pacific Economic Cooperation forum that the United States will host in Hawaii later this year.
   The Commerce Department last year began a partnership with UPS, FedEx and the U.S. Postal Service to help companies identify new markets and available public and private resources.
   'They're often the first point of contact for a small-to-medium enterprise that is just starting to export. We wanted to ensure those sales forces really understood the federal resources available to them when they talked to the client, so that a client who was stymied by a regulatory change over in Ireland didn't close up shop and say, 'I'm not doing international sales anymore,' ' Gregoire said.
   Part of the UPS and FedEx focus on exports is borne out of a desire to better utilize their cargo planes, which fly full of imported goods but are not as full on the outbound leg.
   New presidential leadership has stressed the importance of inter-agency coordination, she noted. The intent is to provide a suite of export services rather than isolated programs that companies have to track down at different agencies. Extensive outreach efforts are designed to demonstrate how the federal programs work together.
   'At the end of the day,' she said, 'it should be a one-stop shop for U.S. companies who seek exporting.'
   Efforts to increase awareness of the government's resources include the creation of the Export.gov portal for export-related content. Gregoire said the online site is designed to be customer friendly and organized by resources and services, not by agency or department.
   Among the available resources are 107 Export Assistance Centers in 49 states. Last year the Commerce Department assisted 5,500 U.S. companies in exporting for the first time, or increasing their overseas sales ' 85 percent of which are small and midsize businesses. The Small Business Administration also authorized more than 1,200 loans totaling $532 million to help companies export. And the Export-Import Bank helped finance $34 billion in export sales for 3,300 companies and it reduces transaction risk by guaranteeing payment from foreign customers.
   The Commercial Service, part of the ITA, is good at helping companies overcome their trepidation about doing business overseas, Barry said.   
   And, he noted, when it engages with manufacturers, the number of countries they export to significantly increases. Most clients are small enterprises with fewer than 50 employees and many are in 20 to 50 markets.
   'So there's a myth,' Barry said, 'that just because you're small you cannot have customers in those foreign markets.'
   Among the tools employed by the Commercial Service to educate domestic companies about export opportunities and services are weekly notices to trade associations, speakers who attend corporate events for customers and webinars.
   Barry said that his office is giving away the book, A Basic Guide to Exporting, to all companies that register online for a webinar.
   The administration has also focused on cross-training at the SBA, the ITA, the U.S. Trade and Development Agency and other agencies so employees can advise callers about the right resources to use, Gregoire said.
   'So all that the company hears is 'what can we do for you,' not 'can you try this other phone number?' ' she said.

Locke In L.A. Commerce Secretary Gary Locke spoke about opening doors to new markets, especially to Asia, during a March 29 address to the Asia-Pacific Business Outlook conference in Los Angeles, the second stop in a four-city NEI tour aimed at small businesses.

Locke

   Companies in the Los Angeles area exported more than $50 billion worth of goods in 2009, the third-largest metropolitan region for exports in the nation, according the department. Merchandise exports from Southern California ports, including products from around the country, increased 22 percent to $105.3 billion in 2010.
   The 'New Markets, New Jobs' campaign began in Minneapolis in February and Commerce Department officials were scheduled to visit New Orleans in April and Wilmington, Del., in May to educate businesses about available government services. The tour will stop in a different city each month of the year.
   Locke, who President Obama recently nominated to be the next U.S. ambassador to China, said exports lead to higher paying jobs and now account for 12.8 percent of gross domestic product, the highest share of the economy since 1929. Last year, U.S. exports to Asia surpassed those to Europe for the first time, he added. Merchandise exports to East Asia alone jumped 27 percent.
   'In a global economy where 95 percent of the world's consumers live outside U.S. borders, you've got to go where the customers are.
   'The more markets you are selling in, the more diversified your customer base is. That's why U.S. companies that exported a lot generally held up better than companies that didn't during the previous recession,' Locke said, according to his prepared remarks.

Matchmaker. The Port of Los Angeles has proved successful at opening export opportunities for U.S. companies by acting as a bridge to overseas markets and teaching local businesses how to navigate bureaucratic hurdles that make it difficult to sell in foreign markets.

Knatz

   Trade Connect began about five years ago in response to direction from the Los Angeles Harbor Commission to focus more on exports, Executive Director Geraldine Knatz said in an interview.
   Port traffic at U.S. ports in recent decades has been unbalanced towards imports because of larger trends in the global economy.
   Knatz said the program has:
   ' Helped buyers in India find American high-quality Pima cotton and a California wine.
   ' Matched a Japanese trading company looking for frozen French fries with a Los Angeles food supplier that now has a two-year contract.
   ' Connected a Chinese natural food store with a natural food supplier in Southern California.
   ' Introduced Boyd's Coffee to agents in Japan and China. 'Boyd's has been in business more than 100 years and this is the first time they're looking at going overseas,' she said.
   ' Connected a buyer for paper mills in Japan with a scrap tire disposal firm that now exports the old tires for use as a clean power source in factory boilers.
   ' Helped a California company that received a contract to supply building materials to the U.S. Army in South Korea by finding cheaper transportation on vessels that haul steel to the United States and previously returned home empty.
   Some of the port's marketing staff that normally would be stationed overseas was dedicated to work on trade facilitation for business in Southern California, the port director said. Their efforts led to an ongoing series of workshops, sponsored by Gregoire's ITA, designed to introduce companies to the basics of exporting, including market research, costs, risk mitigation, trade financing, insurance requirements, documentation and logistics.
   Knatz said the port tries to find other local sponsors, such as a bank or association of freight forwarders, for each event, some of which target specific audiences in ethnic areas of town or a manufacturing area like the San Fernando Valley. Marketing officials from the Los Angeles World Airports often participate too. Her staff takes leads gathered at the workshops and follows up with one-on-one counseling for companies.
   Trade Connect also organizes local conferences about trade opportunities in specific countries such as Japan, Korea and India, Knatz said.
   And the Port of Los Angeles is taking a new approach by trying to facilitate trade for vertical markets. The first effort, she said, is designed to support the fashion industry, which has a significant manufacturing presence in Southern California.
   Businesses within the Los Angeles Customs District export about $4 billion of garments per year, about one-tenth the amount that is imported, she said.
   After reaching out to the California Fashion Association, port officials realized that local apparel makers were not taking advantage of foreign trade zones and that they faced some unique challenges, including difficulties selling products in China, Knatz said.
   A foreign trade zone is a designated area where foreign and domestic merchandise is considered to be outside the country, or at least, outside of U.S. Customs territory. Certain types of merchandise can be imported into a zone without going through formal Customs entry procedures or paying import duties. Customs duties and excise taxes are due only at the time of transfer from the FTZ for U.S. consumption. If the merchandise never enters U.S. commerce, and is exported, then no duties or taxes are paid on those items.
   On April 12, the Port of Los Angeles hosted a special workshop along with UPS and a local law firm to deal with fashion export issues. It covered trade assistance programs and protecting intellectual property rights. Information provided included:
   ' Labeling, testing requirements and regulations.
   ' Contact information for the U.S. Commercial Consulate in various countries of interest.
   ' Contact information for export finance assistance.
   ' International distribution solutions for apparel manufacturers.
   On top of all that, Knatz said the Los Angeles port authority also brings in local businesses to interact with foreign trade delegations that come to tour the port so that the contacts they make extend beyond port staff.
   Another good marketing tool, she said, is Facebook. The Port of Los Angeles has a Facebook page and Knatz's personal page is linked to that of the port. Many overseas buyers and other parties seek information about business opportunities through the social media site and the port has put someone in charge of handling all Facebook messages.
   'I'm amazed at how many things come at us through Facebook. If you're not on Facebook as a port, there could be leads you're missing,' she said.
   Four types of U.S. products in demand by foreign buyers, based on recent canvassing of overseas markets, are composite car bodies, components for environmentally friendly refinery upgrades, sensors and software for monitoring water usage for farms and vineyards, and solar powered water purification systems for rural markets, Knatz said. The port plans to follow up on those leads and match them with suitable U.S. manufacturers.
   Knatz said there are no guarantees that any of the deals brokered by the port will directly result in cargo being moved through its terminals. Some business is likely to come the port's way, she added, but that's not the point of the effort.
   'That's part of our economic development role. If we connect a company and they go out of another port, I don't care,' she said.

Talking Up Exports. Los Angeles is not the only port actively trying to broker export deals for U.S. companies.
   The Port of Oakland, for instance, recently organized a regional export initiative and has taken several other steps to support export trade in Northern California.
   On April 15, the port, along with the city and Chamber of Commerce of Oakland, hosted the second annual MegaRegion Summit to help local businesses explore opportunities for export growth. Officials from the ITA and the Bank of America, a sponsor, spoke at the event.
   Earlier, the Port of Oakland held a half-day symposium in partnership with China's largest port group to raise awareness of U.S.-China trade issues and provide networking opportunities for business leaders that could lead to export or import deals.
   Last November, the port entered into a partnership with China Merchants Holdings International to strategically market and develop supply chain products for U.S. exports, particularly agricultural commodities and perishable products.
   China Merchant Holdings, publicly listed on the Hong Kong stock exchange, owns subsidiaries that operate container, bulk and general cargo terminals throughout China, as well as logistics parks, airport cargo handling and port transportation companies, and a major manufacturer of ocean containers. It handles about 50 million TEUs per year.
   The collaboration is focused on developing high-quality temperature-controlled warehousing and transportation services to help preserve and speed up perishable exports to China.
   Oakland is a key gateway for U.S. food products, including fruits, nuts, vegetables, meats and wines.
   The 'Blueprint for China' event was designed to help U.S. businesses understand market developments in China, such as the growing middle class and new consumption patterns, as well as the logistics challenges there, said Jahan Byrne, the port's business development executive.
   Attendees learned, for example, that electronics contract manufacturer FoxConn is migrating from South China and putting a huge facility in the central Chinese province of Chengyu as part of the government's Go West strategy, which creates new challenges for moving fresh food and supplies to a region with limited logistics infrastructure, Byrne said.
   Also in November, the port held events in Hong Kong and Chengdu, the world's second-fastest growing city, to help promote U.S. exports to Chinese companies. The events were co-sponsored with the U.S. Foreign Agricultural Service and the California Agriculture Export Council.
   The Port of Oakland also held an invitation-only conference, in conjunction with the Commerce Department and FedEx, on March 31 to discuss export opportunities in South Korea as the United States moves closer to possible ratification of a free trade agreement with the Southeast Asian nation.
   In a move that bears potential resemblance to Oakland's tie-up with China Merchant Holdings, the South Carolina State Ports Authority in mid-February announced a cooperative agreement with Hong Kong-based Dandong Port Group Co. Ltd., to boost trade, particularly in agricultural commodities, between the state's ports and ones in North Asia.
   Dandong Port, one of the largest emerging ports in China and the closest one to North Korea, is the dominant soybean import port in China. It is also an entry port for Mongolia.
   Joint marketing, business development and information sharing are among the stated ways the two groups plan to cooperate. The agreement is less concrete at this point than the one Oakland struck with China Merchants since it only commits the sides to explore further cooperation. The key to making the relationship work is putting more infrastructure in place in both places to handle soy shipments, said James Newsome, the state ports authority's president and chief executive officer, at a late-March freight industry conference in Arlington, Va.

Engaging Forwarders. Barry revealed that the NCBFAA has applied for a grant through the Commerce Department's Market Development Cooperator Program to help forwarders that belong to the organization link customers to new markets outside the United States.
   The department anticipates having a total pool of $2 million to $4 million to award this cycle, according to information on its Web site.
   Trade associations and other non-profit business development groups compete for the awards from the ITA by demonstrating how they can spur overseas sales and leverage the agency's services. Two-thirds of the project costs must be borne by the grantee, either through cash or an in-kind match. Recipients pledge to sustain the projects for two or three years. Federal funding can range up to $500,000.
   In September, the Commerce Department awarded $1.7 million in five grants to:
   ' University Health System Consortium, Oak Brook, Ill.
   ' National Chamber Foundation (part of the Chamber of Commerce) in Washington.
   ' World Trade Center San Diego.
   ' Industrial Fabrics Association International, Roseville, Minn.
   ' Independent Film & Television Alliance, Los Angeles.
   Training and marketing help for forwarders is justified, he said in an interview, because many of them are naturally focused on the import side of their business that involves customs brokerage given the great imbalance in the past between imports and exports.
   Forwarders can make a big difference because they are the lynchpin for facilitating shipments, and will play a bigger role as export growth is poised to surpass imports, which will help the U.S. trade deficit, Barry said.
   'So who's in a better position to persuade their current customers and their new ones to either export for the first time or increase the number of markets they're in?'