Expanding Exports. May 3, 2012

Transcription

1 Expanding Exports May 3, 2012

2 Today s Speakers Hayes Howard CEO American Shipper John Fornazor President Fornazor International Doug Gray General Manager, International Trade Operations Caterpillar Logistics Services Curtis Struyk President and CEO Carolina Ocean Lines; Co-founder of the U.S. Lumber Shippers Association John Wainwright Vice President Leggett and Platt Global Services

3 Agenda Introduction Export Rates and Capacity Agricultural Hurdles and Advantages Required Investment in Infrastructure Equipment And Space in the Current Export Market Critical Export Control Issues 3

4 Capacity vs. Rates Transatlantic 40,000 $1, ,000 30,000 25,000 $1, $1, $1, $1, TEU Allocated Capacity North Atlantic to North Europe Average FAK/FEU rate 20,000 $1, $1, ,000 $1,

5 Capacity vs. Rates E.C. South America 5,500 $2, ,000 4,500 $2, $2, $2, TEU Allocated Capacity North Atlantic to ECSA 4,000 $1, $1, Average FAK/FEU rate 3,500 $1, $1, ,000 $1,

6 Capacity vs. rates Transpacific 50,000 $3, ,000 $2, ,000 44,000 42,000 $2, $2, $2, TEU Allocated Capacity North Atlantic to Asia 40,000 38,000 $2, $1, Average FAK/FEU rate 36,000 $1, ,000 $1, ,000 $1, ,000 $1,

7 Agriculture Hurdles and Advantages John Fornazor President Fornazor International

8 Agriculture Hurdles and Advantages When do you actually have a sale? When do you cover your sale with your supplier? Price, quality and shipping terms negotiation Payment terms negotiation Contract issued Contract signed Hurdle 1 is complete Do we have a firm sale and should we purchase our goods? Maybe Things to consider before covering How well do you know the buyer? What s their history with you? What is the stability of the country you are selling to? Is the buyer a Trader? Is the buyer an end user with bricks and mortar? Hurdle 2 is complete When is payment structure in place and when do we purchase our goods? Deposit Letter of Credit Cash against documents Cash in advance Open account Hurdle 3 is complete, let s cover! So now we have a sale! 8

9 Hurdles Before, During and After The Sale Competition (Whole Grains and Proteins) USA EU, Australia, New Zealand, Uruguay, Canada, Brazil, Paraguay, Argentina, Peru, Chile, Mexico, India, South Africa, Thailand, Vietnam EU/USA Mad Cow Christmas Eve 2003 Regulatory Government Involvement USA DNA at Destination Registrations China 2 ½ years Thailand 1 ½ years Documentation Currency Fluctuation Anti-Dumping in China Claims Valid, Fraudulent, Insurance Rejection Letter, Shipped Weights and Analysis Timing Defaults Out of Contract, Government Restrictions, Lack of Dollars 9

10 Advantages EU Mad Cow 1986 Quality Weak Dollar Saudi Subsidies (April 8 NYT The Other Arab Spring) UAE Hay Tender Brand Protection with Registrations Export Import Bank of America Working Capital Program Established in 1934 to promote employment through US exports. Provides financial guarantees to lenders to in turn lend to financially challenged exporters. Ex-Im Bank s Working Capital Guarantee Program provides a 90% guarantee to commercial banks and other lenders on their loans to U.S. exporters to acquire raw materials, carry export related inventory and finance commercial terms on foreign receivables. Loans are fully collateralized by the export related assets Foreign accounts receivable at 90% Minimum 50% US content Payment terms up to 180 days Transaction approved by bank under its Ex-Im guidelines 10

11 Risk/Reward Iran The Market Tremendous market with 76 million people Considered a dry country with only 12% of its area cultivated More than 350 broiler breeding farms, 7 layer breeding farms, 17,000 broiler meat producing farms and 1400 table egg producing farms About 400 feed mills (nominal capacity of 4 million MT) Agriculture is 24% of the market Expecting 160,000MT of poultry meat production per month by summer of this year Iranian government is promising export rewards to boost poultry exports Strong desire from Iranian feed producers to buy USA product. The License to Sell Office of Foreign Assets Control (OFAC) The Risk Flow of funds Penalties Sanctions/World Events 11

12 Required Investment in Infrastructure Doug Gray General Manager, International Trade Operations Caterpillar Logistics Services

13 Investment in Infrastructure is Required Crumbling infrastructure ranks U.S. behind Barbados U.S. infrastructure lagging far behind Europe Published 2 May 2011 America s transportation infrastrucutre is quickly falling behind the rest of the world as roads continue to fall into disrepair, railroad lines age, and airports become more U.S. infrastructure woes: A roadblock to growth U.S. infrastructure crumbling DRINKING WATER Poor infrastructure fails America, civil engineers report Study: $2 trillion needed for U.S. infrastructure 13

14 Investment in infrastructure is required 350 Trend Growth Rates (%) GDP Indices: 1968= Infrastructure GDP Infrastructure $2 trillion underinvested

15 Which is the developing country? Beijing Dubai Washington, D.C. 15

16 Intermodal Operations Caterpillar U.S. container imports and exports move predominantly through intermodal operations We import & export roughly 40% of our U.S. TEU volume through the port of Montreal Why? Solid public/private partnership focused on managing a high velocity and consistent operation to support supply chain stability We see serious progress in Norfolk to get to Montreal-like operations The approach has to be focused on a holistic supply chain solution with all parties focused on the same goal 16

17 Equipment And Space in the Current Export Market Curtis Struyk President and CEO Carolina Ocean Lines; Co-founder of the U.S. Lumber Shippers Association

18 Availability of Equipment and Vessel Space Equipment Ports Inland depots Chassis management Vessel Space Idled Vessels Slow motor Capacity 18

19 Ocean freight rates Immediate & long term Fluctuation Impact of volatility on tight profit margins Service contracts 19

20 Critical Export Control Issues John Wainwright Vice President Leggett and Platt Global Services

21 Understand Critical U.S. Export Control Issues Understand if your product is subject to restrictions on where it can be exported to and if a license might be required. ECCN Export Commodity Classification Number CCL Commerce Control List Understand who your product cannot be sold to or who you should not be doing business with SDN Specifically Designated Nationals DPL Denied Persons List Export Administration Regulations (EAR) govern US export rules BIS Bureau of Industrial Security (Part of the Department of Commerce) Implications of the U.S. Anti-boycott Regulations are also critical to understand 21

22 Understand the Responsibilities and Risks inherent in International Sales Transactions Delivery to your Carrier is delivery to yourself act accordingly The Meaning and Responsibilities of INCOTERMS are critical to understand for both the Buyer and the Seller They establish what each party is responsible for depending on the term used Delivery to your Carrier is delivery to yourself act accordingly If you are selling on a landed basis understand the difference between VAT (Value Added Tax) and Duties as well as the potential tax liabilities to your Company 22

23 Understand the Responsibilities and Risks inherent in International Sales Transactions Acting as Importer of Record (IOR) into a foreign jurisdiction frequently requires that person or entity to be registered as taxable operating entity within that jurisdiction A representative or sales office might not be sufficient Beyond Tax Liabilities there might be other risks to your Company in terms of product liability, intellectual property as well as even getting paid Get formal agreements drafted and signed before shipping Understand currency risks before making an agreement Structure the transaction with the knowledge that international collection is much more difficult and costly 23

24 Be Familiar with International Supply Chain Security Programs The U.S. has been a leader in supply chain security programs culminating in the C-TPAT (Customs-Trade Partnership against Terrorism) program These programs will require that yourself as well as all other agents that you use in shipping product to your foreign customers are following certain standards in regards to supply chain security. These programs are all concerned with lessening the likelihood of legitimate international cargo being tampered with. 24

25 Be Familiar with International Supply Chain Security Programs Photo placeholder Many other countries now have similar programs (SAFE Framework) and frequently Customers are requiring that their suppliers are following these programs requirements. AEO Authorized Economic Operator PIP Partners in Protection SES Secure Export Scheme STP Secure Trade Partnership 25

26 Q&A Thank you for participating in this session. We would like to take your questions now. For more information, you can contact today s speakers: Howard Hayes hh@shippers.com Doug Gray Gray_Douglas_W@cat.com John Wainwright john.wainwright@leggett.com John Fornazor john@fornazor.com Curtis Struyk cstruyk@carolinaoceanlines.com