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Front Page » Top Stories » South Florida Exporters Are Being Pressured On Several Fronts

South Florida Exporters Are Being Pressured On Several Fronts

Written by on April 24, 2003

By Frank Norton
Miami International Forwarders felt economic pressures mounting and decided it wouldn’t be able to survive independently much longer.

Hit by the severe slump in the exporting business and rising costs of increased Homeland Security measures, the 53-year-old freight forwarder and customs broker found itself increasingly pinched by global competition.

Add it all up, and MIF decided there was only one real way to survive. Earlier this month, Miami International Fowarders, which pulled in $23.6 million in revenues last year, sold its assets and operations to Eagle Global Logistics, a multinational based in Houston with 2002 revenues of $2 billion.

"In the increasingly global marketplace, we’ve had to compete with multinationals that are 100 times bigger than us," said Jose Aguirre, vice president of Miami International Forwarders. "We saw that trend continuing and decided the best way to compete was to become part of them."

It’s a scenario that could repeat itself several times over in the coming months for many South Florida exporting companies who are getting hit from many directions.

Other freight forwarders and customs brokers, already financially stretched from drastic falls in trade with South America last year, say additional costs related to new security rules are pushing many to the brink of bankruptcy.

"We’re definitely in a survival-of-the-fittest mode," said Roger Madan, chairman of the Florida Customs Brokers & Forwarders Association, "and a lot of the smaller and weaker companies won’t be able to make it."

Although Mr. Aguirre’s firm had become one of the largest freight forwarders in South Florida, the company was small by global standards. Miami International had earned a strong presence in the Caribbean and Latin American markets – which was exactly what the much larger Eagle was seeking.

Although tougher security requirements did not necessitate the merger into EGL, they perhaps hastened it, Mr. Aguirre said.

Those rules require more rigorous shipment tracking and advance notice on import cargoes, measures that can be more difficult for smaller trade and shipment companies that do not have a global network.

"It’s just one more scenario where a global company would have an advantage over a network of independent agents," Mr. Aguirre said. A huge company such as EGL can more effectively integrate multiple business functions into moving goods down a supply chain.

"That means from the factory in China to the importer’s warehouse in South Florida," Mr. Aguirre said. "When you’re global, like Eagle, it’s the same company working at both ends on the same computer system, so there are more opportunities for quality control."

Merging with EGL also will facilitate compliance with the kind of security measures that recently cost his company about $25,000.

The company’s name, workforce and operations will remain virtually unchanged in Miami except that it will have access to EGL’s global network.

While globalization has forced regional players to compete against larger multinationals, Mr. Madan said, homeland security is pushing the entire field to unprecedented security-cost levels.

Based on those facts, Mr. Madan said, Miami International’s merger makes good survival sense because the cost of doing business is rising and many smaller companies are struggling to learn the ropes of the new rules.

"I consider MIF the last of the great local Miami forwarders," said Mr. Madan, majority owner of Air Marine Forwarding Company and Air Marine Customs Brokers, both based in Miami.

Others – like John Abisch, president of transport company Econocaribe Consolidators in Miami – said homeland security rules have complicated the transport supply chain. For instance, Mr. Abisch said, there is a new rule that requires shippers abroad to report the details of US-bound cargo to US Customs agents 24 hours before it is loaded onto a vessel – an unprecedented advance-notice requirement.

In some instances, compliance has delayed shipments as much as 48 hours, Mr. Abisch said. "If you’re moving waste paper, two days is nothing. But if it’s millions of dollars of electronics, it’s a problem," he said, adding that more frequent and rigorous container inspections at home have added to port delays.

He said many added costs will likely get floated downstream and appear at the consumer level.