On June 16th, a hearing before the House Energy and Commerce Committee took place to discuss a new act that would put additional requirements on foreign manufacturers who import goods regulated by the Consumer Product Safety Commission, the Food and Drug Administration, and the Environmental Protection Agency. This act requires foreign manufacturers to register an agent in at least one state in order for them to accept responsibility for civil and regulatory claims.

The bill is a reaction to several import scandals, including moldy Chinese drywall and tainted Chinese pet food, where it was difficult to sue the companies at the heart of the issues. In effect, it opens up foreign manufacturers to civil and regulatory litigation in the United States. It will likely increase the cost of exporting products to the United States and make it harder for U.S. companies to find qualified suppliers.

This legislation is currently sponsored by 62 members of the House and 15 members of the Senate for a similar bill. While the bill has not yet passed, it could have major consequences for importers and manufacturers. According to many Congress watchers, passage is very likely.

How to use trade data to prepare for passage:

1. Because of the expense of maintaining an agent in the United States, smaller foreign manufacturers could be frozen out of trade. If your company uses primarily smaller manufacturers, you may need to search for new suppliers who are both financially stable and large enough to shoulder the burden of these additional costs. Searching for suppliers of specific goods and developing qualified lists of manufacturing prospects is simple with TradeIQ.


2. If you are an attorney with clients affected by a faulty imported product, finding the actual manufacturer can be difficult. With trade data, you can tie the importer back to the company that exported the goods to the U.S. and identify the parties involved in the transaction. Many of the attorneys who litigated imported goods scandals have done this with Zepol in recent cases.


3. If the imports of a non-registered manufacturer are not seized or blocked by U.S. Customs, there is an opportunity for industries to self police and ensure that all players are on an even playing field. This would require importers of the products to regularly track imports using trade data and report violations to Customs. Often there are rewards for companies that help in these investigations.

Last week, I spent three days in Portland at the Northwest Intermodal Conference discussing the future of trade for the Pacific Northwest. While many of this region's concerns are unique because of its location, there was an overall theme that applies to the entire country. Importers, the transportation companies that service them, and ports are wondering what the landscape of trade will be after the Panama Canal expands in 2014.

This expansion will allow larger vessels to transit the canal and could potentially change the face of trade for ports and carriers servicing the U.S. market. To prepare for this momentous event, several ports east of the Panama Canal have deepened waterfronts to allow larger vessels to service them, but many of the major ports are unable to do so because of financial and structural issues. This could therefore be a boon for some ports, but change very little for others.

On top of the details regarding where steamship lines will route their fleets, there are several other factors at play that could decide how shippers want their freight moved. First of all, the trend for the last 8 years has been for more all-water service from Asia to the East Coast. Even with the recession, market share for ports located east of the Panama Canal have consistently gained on their western rivals. Shippers want a more direct service and carriers are reacting by delivering consumer products and raw materials directly to the population centers on the eastern seaboard.



Secondly, 2009 was a disastrous year for trade and imports in particular, demand fell and lines pulled vessels out of service to reduce operating costs. However, as the economy recovers over the next 5 years, traffic will again increase to 2007/2008 levels, during which heavy port congestion was seen in the Pacific Southwest. This could lead to similar delays as in the peak years when shippers waited for their products to be unloaded. Problems at Long Beach and Los Angeles could be doubled due to additional regulations targeted at cutting pollution associated with transportation that add costs to importing containers.

Thirdly, on the flip-side, others assert that very little could change because of the dynamics involved with sending ships through the canal. Just because the vessels are larger, it does not mean more voyages will be able to be made. In addition, the ports they service will likely not be in the hearts of the population centers like New York and New Jersey because improvements are unable to be made. Ports on the Gulf Coast do not set up for efficient vessel routes or intermodal lanes when large lines, railroads, and trucking companies plan their strings and infrastructures.

Finally, manufacturing may slowly begin to move from China, which is more easily serviced via an east-to-west route to the Pacific Coast to countries in Southeast Asia like Vietnam, in which a west-to-east route through the Suez is viable to reach customers on the East Coast of the United States. Changing supplier locations and customer needs will dictate where lines position their routes.

There are many more facets to this discussion and answers to the questions will not be known until the trade picture clears up. Shippers will decide how lines move containers and lines will decide what ports are the best options for them. Zepol is here to provide the unbiased analysis of the available data from the U.S. government, but it is up to leaders at shippers, lines, and ports to forecast how these changes may affect their business, whether it is a gigantic or minor shift in trade. 

Like the customers they service, transportation service providers also utilize trade data to perform competitive analysis at both an aggregate and detailed level. In a business as competitive as transportation services, any advantage is important, but concrete information received from trade data allows users to deliver results from their competitive intelligence efforts. Below I describe two ways that some of Zepol’s 3PL, NVO, and Carrier subscribers are using trade data to derive business intelligence.

First, at the detailed level, individual sales representatives and managers with access to trade information have a distinct advantage. In practice, this requires researching accounts before making sales calls to understand all the details about a company’s import activity. One of the key elements that should be examined at this time is who the importer’s current transportation service providers are.

One of the ways that this information appears in the trade data is as a notify party on the manifest. It will often show what transportation service provider a company is using, but this is not required. The other element seen in the data for a shipper is the SCAC (Standard Carrier Alpha Code) shown in the Carrier field. This shows which company transmitted the manifest to the Automated Manifest System. Most of the time, this will be a NVOCC or Steamship Line, but will provide insights into what competitors an account executive is up against.

Secondly, at the aggregate level, executives and marketing personnel within 3PLs, NVOs, and Carriers will look at the rolled up information to make strategic decisions. They will analyze the market shares for specific parts of the market. For example, how market share growth trends for specific trade lanes or for all of the accounts in a geographic region helps leaders to adjust where they target their marketing and sales. Other companies will view how well they compete for a specific Line or even on the vessels operated by a Carrier.

While aggregate and detailed level competitive intelligence can significantly improve sales conversion rates and effectiveness of strategic decisions, it is important to note that the level of user penetration in your organization must be vast to feel the full affect. Many companies will attempt to save money by limiting the number of users in their company, but this only reduces the total effectiveness of your intelligence program and diminishes total ROI.

I would like to thank everyone who downloaded our 2009 Ports Report. We have received some great feedback and I wanted to answer a couple of the common questions that we have received.

1. Where did we source the data from?
   
   We derived all of data in the report from our trade tools, TradeIQ and TradeView. Below is an explanation of where each of the trade data metrics are from:
   
   
   • TEU (Twenty-foot Equivalent Unit) – This information is derived from U.S. Customs data. While not a data field that is received from Customs, Zepol uses a proprietary formula to compute the most accurate TEU counts in the industry. Zepol ensures that both FCL and LCL shipments have accurate TEU values.
     
     
   • Value of Imports – This data is from the U.S. Census Bureau’s trade statistics (HS6 Port dataset). Zepol takes the data released by the U.S. government to show the total value of imports for specific ports.
     
     
   • Number of Bills of Lading – This is the count of Bills of Lading for a specific port from U.S. Customs data. This is the count of all Bills of Lading (FCL and LCL) that list the U.S. port.
     
     
   • TEU Trend – Last 12 months of shipments by TEU from U.S. Customs data for the Port.
     
     
   • International Ports Pie Chart – This list the top international ports listed in U.S. Customs data for the port. The international port is the last port shipments left from before reaching the United States. Top 5 are shown along with an aggregation of the other.
     
     
   • Top Five Products by Containerized Value – Top 5 6-digit HTS Codes reported by the U.S. Census Bureau from shipments arriving in containers.
     
     
   • Five Key Importers – This will show five of the key importers for the port as they are listed in the U.S. Customs data that Zepol receives. This does not mean that they are necessarily the biggest importers to that port, but some of the bigger names. Some companies will not be listed because of confidential treatment of their shipment records.
     
     
   • Top Carrier Partners – Top carriers shown on importer’s Bill of Lading records by the SCAC submitted on U.S. Customs records. This is sorted by TEU volume.
   
   
2. What shipments were included in this report?
   
   All shipment records were included in this report. Zepol did not filter out empty containers or remove Bills of Lading that remained on the vessel. This can create an overstatement for some ports’ TEU volumes, particularly Seattle and Tacoma.
   
   
3. Why did you not group the ports of Newark and New York?
   
   Zepol chose not to group the ports of Newark and New York because the U.S. Customs data that we receive lists them as two separate ports. While they are under the same port district, they each have individual port codes.
   
   
4. Why do you require registration for the report?
   
   Zepol is asking for individuals to register to download the report because we wanted to gauge what industry the readers of this report represent in order to create informative reports in the future. We will also be able to notify registrants of new reports we create on other metrics from our data sets. To register and download this report, please click here.
   
   
5. If I have additional questions, who can I contact?
   
   Please email support@zepol.com or call 612.435.2191 Extension 2 and we will answer any questions you have.