Freight and Logistics

January 13, 2011

California Exports Surging, but not adding to Job Growth

In November, Calilifornia posted its 13th consecutive month of year-over-year increases in export trade according to Beacon Economics, which analyzed foreign trade data from the U.S. Commerce Department. California businesses shipped abroad in November $12.49 billion in goods, exceeding by 14.1 percent the $10.95 billion shipped in November 2009. It was California’s best November ever in inflation-adjusted terms, Jock O’Connell, Beacon Economics’ international trade adviser, said in a news release.

The good news was tempered somewhat by the fact that California did not quite keep pace with the nation as a whole which boosted its merchandise exports by 19.4 percent. Also, California has a relatively high percentage of re-exports, which are items previously imported into the United States that have had no significant value added prior to being shipped abroad. “California’s numerous trading companies do a superb job sourcing goods from around the world and matching them with foreign customers,” O’Connell said. “That’s why California’s re-export trade leaped by 36.3 percent in November.” Exports of goods manufactured in California, meanwhile, increased just 6.7 percent. Overall U.S. manufactured exports, in contrast, jumped 16.7 percent, O’Connell reported.

California made up 11.1 percent of all U.S. merchandise exports in November, but just 9.6 percent of its manufactured exports, Beacon reported. California’s exports of nonmanufactured goods represented 12.4 percent of the nation’s exports of those goods, but fully 19.8 percent of the nation’s shipments of re-exported goods came from California.

As a result, California’s export trade has a less immediate positive impact on the state’s economy and on its propensity for job creation, O’Connell said. “California manufacturers have become exceptionally efficient in increasing output without adding new hires,” O’Connell said in the release. “And the goods they produce tend to be of increasingly higher value. That’s why it is possible for the value of our manufactured exports to rise without there being a commensurate level of job growth.”

That also explains why California lost 4,400 manufacturing jobs between November 2010 and November 2009, based on seasonally adjusted numbers from the California Employment Development Department, despite California adding 110,900 jobs overall, O’Connell said.

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September 2, 2008

Mexico moving forward with massive port at Punta Colonet

Mexico has open the bidding process for the huge new port complex being planned for Punta Colonet – currently a village about 150 miles south of Tijuana. This project is being designed specifically to compete with California ports, and the economic impact could be huge. The project bid is being structured as “joint port-and-rail project” and we don’t know the route of that rail road yet – it could point straight toward Texas and bypass California completely. As reported in the Los Angelest Times, however, its future of this project is anything but ensured:

Mexico’s government is setting sail with the largest infrastructure project in the nation’s history, a $4-billion seaport that it hopes will one day rival those of Los Angeles and Long Beach. President Felipe Calderon is scheduled to travel to northern Baja California today to open bidding on a development that his administration hopes will catapult Mexico into a major player in North
American logistics.

Plans call for the construction of a massive port in the tiny coastal village of Punta Colonet, about 150 miles south of Tijuana, along with new rail lines to whisk Asian-made goods north to the United States. Mexico’s aim is to snatch some Pacific cargo traffic from Southern California’s ports, whose growth is constrained by urban development and environmental concerns.

Punta Colonet is expected to have a capacity of 2 million shipping containers annually when it opens in 2014, Mexico’s transportation secretariat told The Times But officials envision it ultimately handling five times that amount. Last year, the ports of L.A. and Long Beach handled 15.7 million containers combined. The massive development is to be privately funded, with the first phase estimated to cost $4 billion to $5 billion. The government is expected to award the 45-year concession in 2009. A number of major players are expected to vie for the project, including Mexican billionaire Carlos Slim Helu, the world’s second-richest man. Slim’s infrastructure company, known as Ideal, has teamed with Mexican mining and railroad giant Grupo Mexico and New Jersey-based terminal operator Ports America Group to make a run at the deal. “We’ve spent a lot of years working on this,” said Miguel Favela, head of Mexican operations for Ports America. “It’s going to make Mexico . . . much more competitive.”

About 30 million shipping containers crossed the Pacific Ocean last year, a flow that increased about 10% annually in the last decade. A weak U.S. economy has slowed the trade, but experts predict it will rebound. With shippers increasingly worried about congestion at L.A.-Long Beach, Punta Colonet has emerged as an attractive alternative. It’s close to the United States. It possesses a wide, natural harbor. And it’s in a lightly populated area offering room for expansion. When Calderon visits the dusty hamlet of about 2,500 people today, he is expected to talk about the big changes in store. The village will need extensive upgrades to its roads, housing, electrical grid and water supply. State and local officials are planning for a city of about 200,000 to spring up around the port.

The changes envisioned are alarming environmentalists, who worry about the potential destruction of the area’s plants and wildlife. But the farmers who scratch out a living there are thrilled at the prospect. “What we need is employment for our kids,” said Jesus Lara, representative of several peasant landowner groups that are eager to sell. “Everyone is excited. Having the president come to your town is like winning the Lotto.”

But whether Punta Colonet turns out to be lucrative for Mexico won’t be known for years. Competitors up and down the Pacific coast are in the midst of major upgrades. Panama has begun a $5.3-billion expansion of its landmark canal. Canada’s Prince Rupert port in British Columbia began speeding containers to the American heartland by rail last year and is planning a major expansion. Little of the cargo bound for Punta Colonet will stay in Mexico, making the port vulnerable to the whims of shippers, who can choose other routes to the U.S.  “Nothing is guaranteed,” said Asaf Ashar, research professor with the National Ports and Waterways Institute in Washington. “It’s a big risk.”

Building a seaport from scratch would be difficult enough. But the overland transportation piece is likely to make or break Punta Colonet. The deal is being structured as a joint port-and-rail project,
requiring terminal operators, railroads and construction companies to team up in consortia to win the bid. The railroad’s ultimate route and U.S. crossing points will depend on which railway operator is chosen and how it manages to link up with existing rail networks on both sides of the border.
Union Pacific Corp. of Omaha and Fort Worth-based BNSF Railway Co. control the U.S. side of the tracks at most of the key U.S.-Mexico border crossings. Striking a deal with one of those companies to get the cargo to the American side will be crucial, said Paul Bingham, managing director of the global trade and transportation practice for Global Insight, a Massachusetts-based consulting firm.

“They have the ability to essentially choke off that port,” Bingham said.  BNSF spokesman Patrick Hiatte said Wednesday that the company was “very interested” in the Punta Colonet project. He declined to say with whom the firm might collaborate to make a bid. Union Pacific could not be reached for comment. The company earlier had teamed with Hong Kong-based Hutchison Port Holdings to make a run at the project, but that alliance dissolved last year.

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May 19, 2008

California agricultural products face shipping squeeze

Big farm products exporters are finding it more difficult and more expensive to ship their products overseas. The problem apparently is a result of high fuel prices a weakening economy- which is buying fewer foreign products resulting in fewer empty containers are heading out of U.S. ports. As reported in Sacramento Bee:

As the weak dollar makes the fruits of California farms ever more attractive to overseas buyers, big exporters like Sacramento’s Blue Diamond Growers are finding it tougher to get their products to far-off customers. The high price of oil and shifts in the global balance of trade have made space on container ships hard to come by. Cargo rates are up sharply. Delays of several months have become routine.

“It’s really put a crunch on U.S. ag exporters,” said Tammy Rossi, Blue Diamond’s manager of logistics and operations, as a forklift driver parked the last of 22 tons of almonds in a shipping container at the company’s

If all goes well, the 40-foot-long box will sail from the Port of Oakland through the Golden Gate on Monday and reach Germany 30 days later. A tangle of economic trends, however, has made the journey from Sacramento to Hamburg far less routine than it was just two years ago. From 2001 through 2006, a growing trade imbalance meant more and more containers reached U.S. ports full but left empty. Cargo carriers hungry to fill their ships offered rock-bottom prices and quick service to exporters.

“If the alternative is to send an empty container back, you put your hands on any customer you can,” said Asaf Ashar, co-director of the University of New Orleans’ National Ports and Waterways Institute. But the tide has shifted. The slumping U.S. economy has lowered demand for imports, while booming global demand for food commodities has boosted exports. The weak dollar, which has lost 24 percent of its value against the euro since early 2006, has made imports more expensive for U.S. buyers and exports cheaper for customers abroad.

As a result, fewer empty containers are heading out of U.S. ports. “The market power is changed,” Ashar said. “Shipping lines are putting the squeeze on (exporters) now.” The base cost of shipping a 20-foot-long container – the industry benchmark – from the Port of Oakland to Europe has risen 25 percent in the past year to around $2,500, according to David Enberg, a manager with the freight-forwarding firm EFI Logistics. He expects prices to rise another 20 percent by year end.

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September 27, 2007

Menlo Worldwide opens European headquarters in Amsterdam

San Mateo-based Menlo Worldwide LLC, a provider of logistics, transportation management and supply chain services announced the opening of its new European headquarters in Holland. According to the San Jose / Silicon Valley Business Journal, Menlo, a subsidiary of Con-way Inc. the 70,000-square-foot facility is near Amsterdam’s Schiphol Airport:

The center is Menlo Worldwide’s fourth-largest of eight distribution and logistics centers in Europe serving customers in the high-tech industry as well as other markets, the company said. “As the center of an extensive network connecting the rest of Europe, Amsterdam is a crucial market for Menlo and our customers,” said Gert Askes, managing director of European Operations. “The proximity of this new facility to the airport and customs is ideal and allows us very fast turnaround times. It is also a state-of-the-art building, perfectly suited to support the requirements of our high-tech clientele.”

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March 27, 2007

DHL opens distribution center in Riverside

“DHL said it has opened a new international gateway in Riverside to boost service to and from Asia-Pacific and the western United States. The newly expanded operation will come online with the arrival March 27 of a flight from DHL’s Central Asia SuperHub in Hong Kong into the facility. A total of seven domestic daily flights and one international flight are scheduled. The Plantation-based company invested nearly $3 million at its West Coast Distribution Facility in Riverside, Calif., adding on-site offices specifically for providing customs processing and clearance functions related to DHL international shipments upon arrival.”

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March 23, 2007

Avery Dennison buys New York logistics firm for $1.3 billion

“Avery Dennison Corp. said it has agreed to acquire Paxar Corp. in a deal worth $1.3 billion. The boards of the two companies approved the deal and agreed that Pasadena-based Avery will pay $30.50 per share in cash, a 27 percent premium on the White Plains, N.Y. company’s March 22 closing price. Avery said Thursday that the acquisition will expand its retail information services sector, which includes Avery’s radio frequency identification label business. Avery also expects to save $90 to $100 million in synergies between the two companies and provide the office supply and label making giant with improved access to Asian markets. Paxar did about $900 million in sales in 2006. Avery did $5.6 billion.”

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Panther Expedited Services buys Integres Global Logistics

“Integres Global Logistics has been bought by Panther Expedited Services Inc., Seville, Ohio-based Panther announced Wednesday. Panther is the largest independent provider of shipment delivery services in North America, according to the company. Gold River-based Integres Global Logistics is an online air freight and logistics service provider. Integres employs 83, with 61 employees at its headquarters in Gold River. The company says it can deliver up to six expedited freight-shipping options online in seconds. Terms of the deal were not immediately disclosed.
The combined company creates the industry’s largest full-service ‘premium logistics provider,’ Andrew Clarke, president of Panther, said in a news release.”

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March 22, 2007

‘Inland Port’ proposed for Antelope Valley

“Seeking a solution to L.A’s congested freeways, a county official has proposed creating an “inland port” in the Antelope Valley where big rigs would pick up goods transported there by rail instead of driving to seaside ports. The idea by Los Angeles County Supervisor Michael Antonovich aims to shift a significant chunk of the 22,000 truck trips made each day in and out of the ports of Long Beach and Los Angeles to the county’s rural outskirts on the 5, 14 and 15 freeways. Goods would be hauled from the L.A. and Long Beach ports on existing train tracks to the Antelope Valley, where they would be loaded onto trucks bound for markets nationwide. ‘An inland port would reduce truck-related congestion and pollution throughout the county,’ Antonovich said. The Metropolitan Transportation Authority board, where Antonovich also has a seat, is exploring the inland transfer station along with other plans to move products through the county’s highways, railways and ports as part of a statewide program to increase commerce while creating as little pollution as possible.”

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February 14, 2007

ILOG buys Chicago supply chain vendor

“ILOG Inc. said Tuesday it acquired supply chain vendor LogicTools Inc. for about $15 million. Gentilly, France-based ILOG – which has U.S. headquarters in Mountain View — said the acquisition of Chicago-based LogicTools is two-thirds in cash and one-third in ILOG stock.”

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February 13, 2007

Tesco distribution center in Riverside delayed but progressing

“Permit and planning problems have held up construction of a sprawling Riverside distribution center for supermarket giant Tesco PLC and two suppliers. But the British retailer says the delays won’t significantly affect its billion-dollar U.S. plans. One of the world’s largest grocery companies, Tesco doesn’t operate any U.S. stores right now. But it intends to open 100 to 150 in 2007 and 2008, and compete with Vons, Ralphs, Albertsons, Stater Bros., Traders Joe’s and others.”

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Newell Rubbermaid to Lease 407,000 Square Foot Facility in Victorville

“Atlanta-based Newell Rubbermaid recently sighed a 10-year, 407,612 square foot lease agreement on a facility at the Southern California Logistics Airport (SCLA), a master-planned 8,500-acre multimodal transportation hub supported by air, ground and rail connections in Victorville, Calif. The build-to-suit bulk distribution facility for Newell Rubbermaid is the first of several warehouse and distribution buildings to be developed during Phase I construction at the logistics center. “

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February 11, 2007

Baja California plans for a mega-port gets snaged

“A Baja California legislative panel has publicly rejected plans for the development of a megaport at Colonet, saying state government officials have failed to live up to promises to provide details of the massive project… The port is expected to cost as much as $9 billion and be as large as the Port of Los Angeles and Port of Long Beach combined. Although federal officials have begun courting global port and rail development companies and state officials reportedly have drawn a master plan, little information has seeped into the public domain.”

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February 9, 2007

BNSF Railway and Victorville to Explore Rail Project

“Victorville, Calif., city officials recently approved a Memorandum of Understanding (MOU) with the BNSF Railway Co., setting the stage to explore development of a major intermodal logistics facility at Southern California Logistics Airport (SCLA) in Victorville… According to city officials, the rail complex is a solution to the growing distribution needs and supply chain congestion of Southern California. SCLA will benefit the regional transportation system by offering rail, ground and airfreight distribution.”

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