Barriers Block Miami Cargo Industry Growth
Written by Scott Blake on June 21, 2012
By Scott Blake
With all the talk of how big international trade has gotten in Miami, you might think there aren’t many obstacles to doing business.
Although Miami has developed into a national leader in international cargo transport, a variety of trade barriers still hamper the industry from growing even more, according to Miami cargo industry leaders.
Those barriers include an over-stretched federal customs system, high tariffs on US goods entering some big overseas markets, tightened export financing standards, outdated policies limiting perishables trade and a road system reaching its capacity.
"Currently, Customs and Border Patrol’s automated import entry system is outdated, worn out and stretched beyond its limits," said Jose Perez-Jones, senior vice president at Miami shipping company Seaboard Marine.
In addition, Mr. Perez-Jones said, compliance and enforcement processes are not handled uniformly, creating complications.
"Goods are detained and seized, often with limited explanation, only to be released months later with exorbitant storages charges," he added. "Shippers are choosing to move cargo through alternative ports with more flexible transshipment enforcement policies."
Mr. Perez-Jones was among the speakers during a forum last week at Port Miami titled "Breaking down Barriers to International Trade." The session was the finale in a series of events, called Miami’s World Trade Month, highlighting the industry’s accomplishments and challenges.
Industry leaders say eliminating trade barriers will be a key to maximizing the economic benefits of about $2 billion in capital improvement projects underway or planned at Port Miami, in addition to major investments made in the past to support cargo operations at Miami International Airport.
Already, Port Miami and Port Everglades near Fort Lauderdale rank among the top 12 cargo container seaports in the US, while Miami International ranks first in the nation and 10th worldwide in cargo business among airports, said Lenny Feldman, a Miami lawyer specializing in customs and international trade law.
Miami’s trade numbers could be even better if some persistent barriers are eliminated, said Mr. Feldman of law firm of Sandler, Travis & Rosenberg.
"Congress had held hearings on customs trade modernization, facilitation and enforcement, yet laws and policies still restrict legitimate trade and transshipped cargo," he added.
Without more staffing at federal agencies, future growth in trade could be jeopardized, said Barbara Pimentel, executive vice president of the Florida Custom Brokers and Forwarders Association.
"With the increase of freight on the horizon and current staffing issues at federal agencies, which are already lean, these issues are critical," Ms. Pimentel said.
"If an increase to the staff levels is not addressed," she added, "we will not be able to maintain the level of efficiency needed to retain current business and we should forget about bringing in new business."
In addition, tariffs continue to be an obstacle to establishing new trade flows of US products to overseas markets, said Tom Kennedy, CEO and president of the South Florida Manufacturers Association.
"Although we understand the need for tariffs in poorer developing countries," Mr. Kennedy said, "we believe that advanced developing countries should reduce those rates, which can exceed 10%. Those countries principally include China, Brazil, India and Taiwan."
Also, he added, "Florida needs a workforce better prepared to allow manufacturers to grow their business. In this time of high unemployment, the manufacturing sector struggles to fill technical positions to enable them to compete on the world stage."
Meanwhile, experts say, the recent reauthorization of the Export-Import Bank of the US has enabled continued financial assistance for small businesses involved in trade. However, they say, other banks remain reluctant to approve financing loans due to tighter capital requirements, lack of loan guarantees and increased regulation.
David Schwartz, executive director of the Florida International Bankers Association, said small and mid-sized exporters — often with less than $1 million in annual sales and perhaps only 10 or fewer employees — are difficult to approve for loans because they are considered "higher risk for loan default."
Also, he added, their sources of repayment — the receivables — end up in a foreign country.
"The availability of loan guarantees, such as the Florida Export Finance Corp., the [Export-Import Bank] at the national level and other loan guarantee programs, are not adequate to meet the demand," Mr. Schwartz said.
Regulation of perishables shipping is another barrier, industry leaders say.
Currently, millions of dollars of produce entering the US is prohibited from entering through Florida ports due to regulations designed to protect US and especially Florida agriculture from harmful plant insects and diseases, said Jay Brickman, vice president of government services for shipping services and logistics firm Crowley Maritime Corp. in Miami.
Since such regulations were set up decades ago, Mr. Brickman said, "there have been significant changes in technology, which should now permit the entry into Florida ports of the prohibited produce."
Interested parties have formed the Florida Perishables Trade Coalition, which has been lobbying federal and state authorities for "cold treatment" protocols for Florida ports designed to rid incoming produce of agricultural threats.
A meeting was scheduled for today (6/21) to review the coalition’s recommendations, based on US Department of Agriculture standards, with the Florida Department of Agriculture, Mr. Brickman said.
Moreover, Mr. Feldman said, the US Food and Drug Administration plans to establish a screening facility in South Florida for perishables, although additional staffing is needed to address holds and exams.
Carmenza Jaramillo, US executive director for Proexport Colombia in Miami, called for a food irradiation plant in South Florida. She said more than 40 countries have approved applications to irradiate and sterilize various foods.
Road and facility capacities are emerging as another trade barrier, experts say. As international trade has increased in South Florida, they say, roads are reaching their capacity and additional distribution centers, including inland locations, are needed to accommodate increased cargo flow.
"When combined with the projected increase in day-to-day traffic, the ability of the transportation system to handle efficiently and safely even a small increase in freight traffic is significant," Ms. Pimentel said.
"In an economy organized around fast and reliable delivery of goods," she added, "congestion is a huge variable in the cost of business and economic development."
Furthermore, she said, "the lack of distribution-style facilities and commercial land for future development along key freight corridors will likely play a big role if we want to attract the "big-box stores’ to call Florida their home base."To read the entire issue of Miami Today online, subscribe to e -Miami Today, an exact digital replica of the printed edition.