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SOUTHERN CALIFORNIA PORT CHIEFS HAIL A RECORD-BREAKING 2018

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Archives, Dispatches, Global Trade Daily

SOUTHERN CALIFORNIA PORT CHIEFS HAIL A RECORD-BREAKING 2018

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During the annual “State of the Port” address at the Long Beach Convention Center in January, Port of Long Beach Executive Director Mario Cordero said cargo volumes broke records in 2018 despite China trade tariffs, as shippers raced to get goods in ahead of fee increases.

The Southern California port, which sees nearly 70 percent of containerized imports and 40 percent of containerized exports from China, topped 8 million TEUs for the first time in its 108-year history, marking its second record-breaking year in a row, according to Cordero, who noted container cargo totals were up 7 percent from the year before.

Among the projects he highlighted was a $1 billion port investment in a strategic on-dock rail program, which is part of a broader modernization program aimed at reducing port-related impacts to the environment. The on-dock rail site is expected to eliminate as many as 750 truck trips per one-mile train and also move Asia imports significantly faster than cargo routed through Gulf and East Coast ports.

In other good green news, the port continues to outperform 2023 clean air goals, even with cargo volumes at record levels, according to Cordero, whose port is testing zero-emissions machines and vehicles this year in conjunction with its ambitious Clean Air Action Plan.

Up the coast in San Pedro during the same month, Port of Los Angeles Executive Director Gene Seroka also called 2018 “another year for the record books” in his State of the Port report.

Seroka’s port moved 9.5 million TEUs, a 1.2 percent increase from 2017, and he pointed to the “strong collaboration” between longshore labor, terminal operators, harbor truckers and rail providers as being behind that success.

Among the major building projects completed were the $127 million on-dock rail yard at the Yusen Terminal and $15.6 million in Harbor Boulevard/Park Plaza improvements. With $80 million in grant funding, the port is actively involved in 15 zero and near-zero emission projects, including an electric-hydrogen fuel cell truck program with Toyota.

Investment in new digital technology will help terminals, truckers and longshore labor brace for more containers that are to arrive from bigger container ships, Seroka said.

American Airlines Cargo to Utilize New Service Between DFW and Dublin

Starting this summer, American Airlines will offer a new nonstop flight from Dublin to Dallas Fort Worth, directly connecting the two for the first time in the history of the world’s largest carrier.

The seasonal flight, which will operate from June 7 through Sept. 28 of this year, will be flown on cargo-friendly, fuel-efficient Boeing 787-9 aircraft. That should make it a welcome addition for the cargo community wishing to serve Texas, the second largest importing state in America, where the manufacturing sector is projected to continue growing in the coming years.

Customers with a diverse range of commodities are already expressing interest in the flight, according to American Airlines, which adds potential commodities include computer parts, medical devices, machinery, oil industry equipment, aviation parts and pharmaceuticals.

“This first, direct, scheduled service from Ireland to Texas will open up a number of new markets for both Irish and multinational exporters with freight destined for Dallas and beyond,” says Andy Cornwell, regional manager of AA Cargo-Northern Europe. American also offers flights from Dublin to Charlotte, Chicago O’Hare and Philadelphia, as well as seasonal service from Shannon to Philly.

Port of Seattle Aims to Heat Sea-Tac Airport Entirely with RNG

The Port of Seattle is pushing to make Seattle-Tacoma International Airport the nation’s first airport heated entirely by renewable natural gas. The port recently announced a Request for Proposals for RNG service to supply Sea-Tac’s boilers and bus fueling system, which is responsible for more than 80 percent of the port-owned emissions.

All of the current fossil natural gas would be replaced by RNG, which is also known as biomethane and is produced by the decomposition of organic matter, typically produced by landfills, wastewater treatment plants and food and animal waste digesters.

“The port can play a major role in creating a renewable natural gas market because we offer a stable, long-term use of gas,” says Arlyn Purcell, the port’s director of Aviation Environment and Sustainability. “If we can attract a project developer to supply the airport, this will spur more opportunities to feed the current gas pipeline with RNG rather than have landfills or digesters flare the gas on-site or allowing their methane emissions to escape into the air.”

The port previously adopted aggressive greenhouse gas reduction goals under its Century Agenda, with the aim to reduce greenhouse gas emissions from its own operations by 50 percent from 2005 levels by 2030, and to be carbon neutral or carbon negative by 2050. Ranked as the ninth busiest U.S. airport, Sea-Tac International served 46.9 million passengers and more than 425,800 metric tons of air cargo in 2017, producing a regional economic impact pegged at more than $22.5 billion.

Happy (Belated) Birthday, Team Worldwide

Winnsboro, Texas-based Team Worldwide, which bills itself as “a global yet locally-minded freight forwarder and 3PL company,” in January proudly celebrated is its 40th anniversary in the biz.

Father and son Joe and Bobby Brunson established Team Worldwide in 1979 as a small, regional freight forwarder in the Dallas/Fort Worth area. The company’s mission was “to develop a long-term relationship with each customer by providing a logistics network that offers a variety of innovative and reliable services now and for the future.” Under the third generation of family leadership, Team Worldwide remains committed to the same principles.

Of course, from humble beginnings Team Worldwide built itself up to the point where its corporate headquarters in Winnsboro boasts of more than 100,000 square feet of office and warehouse space, on grounds that accommodate a state-of-the-art data and technology center that supports 40-plus locally owned branches in North America and a global customer base.

“We appreciate this opportunity to say ‘Thank You’ as we celebrate 40 years of service,” says Team Worldwide. “We proudly remain large enough to serve you but small enough to know you!”

Trump has imposed tariffs on steel and aluminum shipments of export cargo and import cargo in international trade.
Archives, Features, Imports/Exports, In The News, International Trade

TARIFFS, TARIFFS, TARIFFS

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President Donald Trump’s recent tariffs on steel and aluminum, like his earlier tariffs on solar panels and washing machines, have tongues wagging from the Beltway and beyond. What we’ve done is present some choice words on the topic, including some that commend the Commander-in-Chief—and several more that … gulp … do not.

“We applaud the administration’s efforts to fix this problem.” -AFL-CIO President Richard Trumka

“We hope that eventually common sense will triumph. Unfortunately, the actions taken … by the American government do not seem to be headed in that direction. This is not the American people. We have to believe that, at some point, common sense will prevail. But we see no sign of that in this action … by the U.S. administration.” –Canadian Prime Minister Justin Trudeau

“We are not protectionists. We want a level playing field … The trans-shipments (of Chinese steel) that go on … we call it the whack-a-mole game. It’s time for whack-a-mole to end. It’s time for some fairness here. It’s past time.” -Dave Burritt, CEO of U.S. Steel Corp.

“Trade barriers make Americans as a whole poorer and they especially harm those already disadvantaged. Trade wars hurt everyone. They trigger retaliatory tariffs from our trade partners and that raises prices on American families who need affordable access to household goods. We urge the Trump administration to abandon these tariffs.’”  -Brian Schwartz, spokesman for the conservative billionaire Koch brothers’ network 

“China fired the first shots in this ‘trade war’ more than a decade ago when Beijing added more steel production capacity than it could possibly use. The flood of imports devastated our steel industry and distorted the global market. No one did a thing. Until now.” -Scott Paul of the Alliance for American Manufacturing

“We strongly oppose these new tariffs on steel and aluminum. Tariffs are a kind of tax increases foisted on all Americans. They wreak self-inflicted damage on our consumers, workers and businesses. Today marks a step back from a pro-growth agenda and we urge the Trump administration to reconsider imposing tariffs.”       -Americans for Prosperity Senior Policy Fellow Alison Acosta Winters

“For too long, our political leaders have talked about the problem, but have largely left enforcement of our trade laws up to the private sector. This is not what hard-working Americans want from their government.” -United Steelworkers

“Instead of addressing the real problems in the international trade of these products, [the] action targets America’s allies when we should be working with them to address the unfair trading practices of countries like China. … There are better ways to help American workers and consumers.” -House Speaker Paul Ryan (R-Wisconsin)

“I commend @realDonaldTrump for announcing his intent to take action to protect our steelworkers from countries, like China, that cheat on trade … For years, foreign countries have been dumping steel into our markets and costing our workers their jobs and suppressing their wages.” -Sen. Bob Casey (D-Pennsylvania)

“Tariffs on steel and aluminum imports are a tax hike on Americans and will have damaging consequences for consumers, manufacturers and workers. I will continue to push the administration to change course.” -Senate Finance Chairman Orrin Hatch (R-Utah)

“This welcome action is long overdue for shuttered steel plants across Ohio and steelworkers who live in fear that their jobs will be the next victims of Chinese cheating. If we fail to stand up for steel jobs today, China will come after other jobs up and down the supply chain tomorrow.” -Sen. Sherrod Brown (D-Ohio)

“We’ve been down this road before—blanket protectionism is a big part of why America had a Great Depression. ‘Make America Great Again’ shouldn’t mean ‘Make America 1929 Again.’” -Senator Ben Sasse (R-Nebraska)

“This is a big mistake. These tariffs will raise prices and destroy manufacturing jobs, especially auto jobs, which are one-third of all Tennessee manufacturing jobs.” -Sen. Lamar Alexander (R-Tennessee) 

“Time and time again I have voiced my concerns on steel and aluminum tariffs and the damage they will cause across many sectors of the economy. Agriculture in particular is likely to face harm from retaliatory action and the uncertainty that comes with it.” -Senator Pat Roberts (R-Kansas)

“The president’s rash actions again show that he has no real ideas about how to increase American manufacturing jobs. Slapping tariffs on three of our four largest trade partners would be bad enough, since retaliatory tariffs will erode demand for American exports. But the president incredibly is also acting without any plan to invest in American steel and aluminum workers here at home to take any advantage of this action. Canada is Vermont’s largest trading partner, and Vermonters stand to lose big under this ham-handed policy. Vermont brewers for example have told me that the uncertainty has already raised the price of their cans, and the promised EU and Mexican tariffs on U.S. cheese are another example of the reckless harm the president is risking for Vermont and the nation.” -Sen. Patrick Leahy (D-Vermont)

“The administration continues to unilaterally push forward with a protectionist trade policy that is not in America’s best interest. Once again, the president has moved forward with a policy impacting trade relations with some of our closest allies and trading partners without consulting Congress. A U.S. trade policy should be about setting strong standards, not on targeting allies under the false pretense, and against the interest of, national security. This tit-for-tat tariff-focused policy has real consequences, first and foremost through retaliation and the impact on down-stream industries and consumers, including rising prices of U.S. goods. While the president may not feel the impacts of these retaliations, U.S. farmers, workers, consumers and businesses will.’” -Reps. Rick Larsen (D-Washington) and Gregory W. Meeks (D-New York), co-chairmen of the New Democrat Coalition Trade Task Force

“These new tariffs will hurt our state, our energy industry, our economy. Not only does Texas import more steel and aluminum than any other state in the country but our two largest trading partners are Mexico and Canada.” –Rep. Beto O’Rourke (D-Texas)

“Initiating a trade war with our closest allies is a bad idea. As I’ve said before, we should be working with our allies instead of using an 18th century tool that has repeatedly failed in the past. I urge the administration to reconsider this decision.” –Rep. Will Hurd (R-Texas)

“I don’t know about you, but occasionally I like to crack open a cold one on a hot day. President Trump’s aluminum tariffs may raise the price of beer, just as we head into summer—costing you more at the store, and hurting the U.S. economy.” –Sen. Tim Kaine (D-Virginia)

“Tariffs raise taxes on Americans. Economic protectionism and other forms of central planning harm our economy and erode liberty.”           – Rep. Justin Amash (R-Michigan) 

“We think that’s going to put the industry in real peril. We were very excited by the tax bill, but it turns out the tax bill giveth, and tariffs taketh away.” –Jerry Howard, president of the National Association of Home Builders

“Our members could face having to pay double tariffs on some materials necessary to manufacture parts in the U.S. Industries like ours, which require long-term investments in facilities and employees, depend on regulatory and market stability. These actions have thrown all of that up in the air.” –Motor & Equipment Manufacturers Association

“Today’s White House announcement to unilaterally impose new tariffs on steel and aluminum imports from the European Union, Canada and Mexico will have a negative impact on every sector of the American economy. The downstream impact of these tariffs will raise the cost of doing business for thousands of American companies, including retailers, and will stifle efforts to expand and create jobs. Imposing tariffs raises the stakes for our allies to take retaliatory measures that will hurt America’s exporters while creating more uncertainty for American businesses. The administration has created a three-front trade war, targeting NAFTA, China and now the European Union, with no resolution to any of these disputes in sight.” -Retail Industry Leaders Association’s Vice President of International Trade Hun Quach 

“This is a $13 trillion complex economy. The idea that three or four politicians in Washington can laser beam and pick industries and specific folks as winners and losers in these tariff wars—it doesn’t work that way. We know that that is not economic freedom and that is not the way to prosperity.” –Stuart Varney of Varney and Co.

“Trade barriers make us poorer. Tariffs are a tax on American consumers, workers and businesses and undermine economic growth. They inflict the most pain on those who can afford it the least, by making everyday goods more expensive. They raise costs for U.S. exports which rely on imports in production, which makes them less competitive. And, of course, there are the costs from retaliatory tariffs imposed by our trade partners.” -Brent Gardner, chief Government Affairs officer, Americans for Prosperity; Nathan Nascimento, executive vice president, Freedom Partners; and David Velazquez, executive director, The LIBRE Initiative

“Republicans Fighting Tariffs was formed to remind everyone why the Republican Party is the party of free trade. Tariffs are regressive taxes on American businesses and families, repeatedly proven to be both harmful and ineffective. Free trade simply gets the government out of Americans’ daily transactions, producing strong businesses, good jobs, low prices and a thriving economy in the process. Implementing unwarranted tariffs is a direct threat to our growing economy and presence on the world stage. Republicans everywhere need to come together and tell Senate Majority Leader Mitch McConnell to allow a vote on the bill that would restore Congress’ constitutional trade power, save jobs and stop these tariffs.” -Scott Lincicome, senior visiting lecturer, Duke Law School and senior policy adviser, Republicans Fighting Tariffs

“The marine manufacturing industry relies on free and fair trade, which has been a hallmark of the American economy for decades. The NMMA and our members appreciate Congress’ leadership on this issue and stand ready to work with all stakeholders to secure substantive trade agreements that truly benefit American consumers, workers and businesses. We need the administration to recognize the negative effects of its current direction and focus on finding real, tangible solutions.” –Thom Dammrich, president, National Marine Manufacturers Association

“The Trump administration’s extension of its steel and aluminum tariffs to the EU, Canada and Mexico will do nothing to support national security, but rather will antagonize some of our key security partners. The economic impact of the tariffs themselves, combined with the expected retaliation, will harm the U.S. economy significantly. Instead of working with our allies on constructive ways to address Chinese protectionism, we are alienating everyone by going it alone and trying to take on the whole world. –Simon Lester, trade policy analyst, Cato Institute’s Herbert A. Stiefel Center for Trade Policy Studies

“[Trump] doesn’t have a strategy that’s going to lead to making American manufacturing great again. There will continue to be a series of tit-for-tat battles.” –Robert Scott, American Enterprise Institute trade expert

“There’s no question this is a hit to consumers. Sooner or later prices will reflect those increased costs of steel and aluminum.”  -Lawrence White, New York University’s Stern School of Business economics professor

“It’s clearly going to have a negative impact on all the users of steel throughout the economy. For every one job in the U.S. steel industry that could be protected by this tariff, there are about 80 jobs in manufacturing industries that use steel. If companies in those industries have to absorb greater costs incurred by the tariffs, they may respond by reducing employment or wages.” -Emily J. Blanchard, associate professor of business administration at Dartmouth University’s Tuck School of Business

“Canada could add a tax to Trump properties equal to any tariff unilaterally imposed by Washington. The European Union could revoke any travel visas for senior staff in the Trump organization. And the United Kingdom could temporarily close his golf course.”       -Canadian writer Scott Gilmore, in Maclean’s

US ports are handling more shipments of export cargo and import cargo in international trade.
Archives, Features, Global Logistics, Ocean Ports, U.S. Ports

SIZE MATTERS

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For an example of the crucial role large ports play in the United States, go back only as far as September, when Hurricane Maria devastated Puerto Rico. Florida’s Port of Jacksonville (JAXPORT) served as the main staging area for San Juan-bound relief carried by the likes of shipping companies TOTE Maritime, Crowley Maritime, Trailer Bridge and Pasha.

“Our top priority is ensuring the people of Puerto Rico have the resources they need to recover and rebuild both in the short and long term,” Rep. John Rutherford (R-Florida) told the Bradenton Herald at the time. “JAXPORT and the maritime industry in Northeast Florida are critically important to these efforts and have been for decades.”

Owning and managing three public marine terminals and a passenger cruise terminal, JAXPORT is also helping to lead the liquid natural gas revolution in the maritime industry, whether it be from the development of landside bunkering and liquefaction plants to multimillion-dollar investments in LNG-powered vessels.

Bigger is also better on the opposite end of the Sunshine State, where PortMiami saw containerized cargo traffic increase 18.5 percent in August over the same month the previous year, with a record-setting 99,546 twenty-foot equivalent units. “Our seaport has been steadily capturing new business thanks to more than $1.3 billion of completed capital infrastructure investments,” boasts Miami-Dade Mayor Carlos A. Gimenez. That work included dredging the shipping channel to -50/-52 feet, completing construction of a new port access tunnel to speed vehicular traffic on and off the port, purchasing four super post-Panamax cranes, and installing an on-dock rail link connecting Miami to 70 percent of the U.S. population in less than four days.

“The PortMiami team understands that the key to the port’s growth and success is largely dependent on our commitment to providing our partners with fast and reliable service,” says Juan M. Kuryla, the CEO of a port credited with contributing more than $41.4 billion annually to Miami-Dade County and generating 324,000 direct, indirect and induced jobs.

You want staggering numbers? A New Jersey Transportation Planning Authority study found the Port of New York and New Jersey was responsible for $25.7 billion in personal income and $64.8 billion in business income last year. Meanwhile, a separate New York Shipping Association report states that the same port accounted for more than 400,000 jobs and nearly $8.5 billion in federal, state and local tax revenue.

Those numbers don’t faze Molly Campbell, director of the Port Department of the Port Authority of New York and New Jersey. “The billions of dollars we’ve invested to raise the Bayonne Bridge, deepen port channels and expand our on-dock rail capacity have made this an attractive place for international shippers to do business and provided a substantial boost in the jobs and economic activity supported by this port,” she says. “Our goal is to continue to invest in infrastructure that will make this port the most attractive place for shippers to do business.”

Shippers are also attracted to the (relatively) nearby Port of Philadelphia, which in August achieved its highest monthly total of cargo handled ever, with 667,069 metric tons. PhilaPort’s 54,185 TEUs of container throughput and 109,604 metric tons of forest products also broke records the same month.

PhilaPort CEO Jeff Theobald credits a highly productive labor force, marine terminal operators and an improved perception of the port for the increased tonnage. “As we continue to upgrade our infrastructure and improve our systems,” he says, “the word is getting out. That’s why shippers are choosing PhilaPort as their preferred port.”

Port of Savannah saw container trade grow by 32 percent in October, with Garden City Terminal moving 410,000 TEUs, the highest total ever for a single month. “Since the opening of the expanded Panama Canal, Garden City Terminal has experienced meteoric growth,” says Georgia Port Authority (GPA) Executive Director Griff Lynch. “We’re now handling more ships, bigger vessels and larger cargo exchanges. By working more weekly vessel calls than any other East Coast port, and serving more neo-Panamax ships than any other port in the U.S. Southeast, Savannah has strengthened its position as a vital gateway to the global marketplace.”

More than $265 million in state funds and $127.8 million in federal funds are earmarked for a harbor deepening project to accommodate those big ships, but “the current proposal will not cover all the work that could be completed in a year,” according to GPA Board Chairman Jimmy Allgood. “We are working with our leaders in Washington in hopes that they will provide additional funds through the U.S. Army Corps of Engineers’ work plan.” Meanwhile, Allgood’s board just approved $42.27 million to untie road and rail congestion around Savannah’s docks—part of a larger $128 million Mega Rail Terminal project—and $13.2 million to expand the existing Gate 8 at Garden City Terminal. The goal, GPA officials say, is to not only expand the Port of Savannah’s on-dock rail capacity by 100 percent but position it to rapidly increase service to an arc of inland markets from Memphis to Chicago.

On the Left Coast, lemons that locals refer to as stringent air quality regulations are being turned into that lemonade everyone knows as economic stimulus. The NASCO shipyard in San Diego is building new LNG ships to replace their polluting diesel counterparts. Blame the success of the Pacific Rim’s mighty Ports of Los Angeles and Long Beach, where demands to reduce truck traffic forced the industry to look at alternatives.

Keeping containers on ships bound for ports closer to their final destinations—rather than on long-haul trucks clogging Interstate 5—is part of the U.S. Maritime Administration-promoted Marine Highway strategy being mirrored on the East Coast, where the Philly Shipyard in Philadelphia is building LNG ships to replace diesels and remove trucks from the I-95 corridor.

Another beneficiary in the quest for alternatives to the Ports of LA and Long Beach are their counterparts in the Pacific Northwest.The Port of Everett (Washington) Commission on Oct. 24 voted to collect bids for a $36 million South Terminal Modernization project. Coupled with the installation of double rail siding, modernizing will ensure the port is ready for the next generation of over-dimensional cargo, including aerospace parts for Boeing’s new 777X wide-body aircraft.

Calling it “a bold and momentous step,” Port of Everett CEO Les Reardanz likes where his seaport is positioning itself in the industry. “This is the largest capital project the port has undertaken since the construction of Mount Baker Terminal in 2005,” Reardanz says. “Staff has been doing a great job thinking strategically to phase, finance and permit this project in a way that delivers this project by December 2019.” Keep in mind that his port already supports nearly $30 billion worth of U.S. exports annually, making it the largest customs district in Washington state, where their regional transportation network supports more than 35,000 jobs and generates $313 million in state and local tax revenues.

Everett would have to double those numbers to approach the South Carolina Ports Authority, which owns and operates seaports in Charleston, Georgetown and Greer that handle international commerce valued at more than $63 billion annually. While receiving no direct taxpayer subsidy, port operations facilitate 187,200 statewide jobs and generate nearly $53 billion in annual economic activity.

That’s what happens when you’re home to the Southeast’s deepest port—and you don’t rest on that. On Oct. 30, after SC Ports had plopped down about $70 million for six new cranes to handle its record-breaking growth, CEO Jim Newsome announced the U.S. Army Corps of Engineers had awarded a second dredging contract for the Charleston Harbor Deepening Project that will ensure a 52-foot depth, the East Coast’s deepest. The next day, it was definitely a treat and not a Halloween trick when Newsome unveiled the Supply Chain Authority, an internal consulting service that has SC Ports sharing expertise in IT, operations, terminals and commercial and economic development with customers to improve their supply chains.

“Our port plays a key role in the supply chain by offering reliable, productive operations as well as flexibility to meet customer needs,” explains Barbara Melvin, SC Ports’ senior vice president of Operations and Terminals. “Because of our unique position, we provide more than seamless operations—we share insight, market information and alternative possibilities that can improve an international supply chain. The Supply Chain Authority goes beyond what the port can do for our customers to make the overall process of doing business easier.”

For the amount of activity that happens daily, it’s amazing that Delaware’s Port of Wilmington has a reputation for chilling out, boasting the largest dock-side refrigerated complex in North America. Founded in 1923 at the confluence of the Delaware and Christina rivers, 65 miles from the Atlantic Ocean, the full-service, deepwater port and marine terminal is now the busiest on the Delaware River. Handling about 400 vessels and more than 6 million tons of import/export cargo annually, the Diamond State Port Corp.-owned and -operated seaport is also No. 1 on the continent for imports of bananas, fresh juice and juice concentrate.

And Port of Wilmington is positioning itself to get even bigger—and busier, with an envisioned expansion aimed at creating 5,000 new jobs. At press time, the state’s port corporation was mulling three proposals to privatize the existing facility on the Christina River, add a new container dock on the Delaware River and install a new logistics operation that would serve both. “There is growing optimism that this thing might work,” Secretary of State Jeffrey Bullock told the Delaware News Journal in November, when he divulged plans to take a final proposal to the state General Assembly in January. The once-in-a-generation opportunity is not lost on Delaware State Chamber of Commerce President Rich Heffron, who told the newspaper. “It is a huge deal.”

Perhaps nothing reinforces the bigger is better notion more than a port being hit at the beginning of the month with major adversity and then by the end of the month celebrating another major triumph. That’s what happened in November to the Port of Baltimore, which first learned Jacksonville, Florida-based CSX Transportation was withdrawing its support for the long-awaited Howard Street Tunnel under downtown, prompting state officials to cancel a request for $155 million in federal money for a project hoped to be a boon to the port.

However, by the end of the same month, the port was crowing about having set another cargo record, having handled more than half a million more tons in the first six months of the year than it ever had before. (8 million tons of cargo from January-September, as opposed to 7.5 million tons over the same period in 2016.)

“Port [of Baltimore] is the leading economic engine for the City of Baltimore and our state, and its continued success is further proof that Maryland is open for business,” tweeted Governor Larry Hogan on Nov. 16. “Our administration remains committed to ensuring that the port remains one of top ports in the nation.”

True that: Even before this year’s record growth, the port had leapt to become the fourth busiest port in the country in 2016, and it is now the nation’s busiest for farm and construction equipment and cars and trucks.

The latter cargo category explains the name the Grimaldi Group came up with for its new, 656-foot, Italian-flagged ocean freighter capable of holding 6,700 motor vehicles. “The professionalism and customer orientation of port director Jim White and his great team make Baltimore the easiest port to do business in the entire United States,” explains Andrew J. Abbott, president and CEO of Atlantic Container Lines, Grimaldi’s New Jersey-based subsidiary. “So, it only makes sense that the first Grimaldi ship to carry the name of a U.S. port is the Grande Baltimora.”

Consultant coaches companies on developing markets for shipments of export cargo and import cargo in international trade.
Archives, Features, Imports/Exports, International Trade

GO BIG OR STAY HOME

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Damon Claus formerly led global sales at 4moms, the Pittsburgh, Pennsylvania-based maker of technology-enabled baby gear such as infant tubs, swings and car seats. After helping 4moms break its products into more than 50 countries, leading a team of sales professionals around the globe and logging enough frequent-flier miles to redeem a first class ticket to Neptune, he left the company he’d been with for a half dozen years in June of 2016.

“I was looking for a change,” explains Claus over the phone from his new office in the Pittsburgh suburb Aspinwall. “My wife gave the final nudge. It was something I had talked about for a year, and she said, ‘If not now, when?’”

What Claus had talked about was starting his own global business development company. This past August, the Claus-founded Castus Consulting LCC—the hip kids just call it Castus—celebrated its one-year anniversary.

“It’s been an exciting year,” Claus says matter-of-factly, his shrug audible over the phone.

However, in those 12 months, Castus has created global business strategies for companies in the pet care, maternity and juvenile products categories, with a client roster that includes Petco, Prinsel, Milly Button, Spand-Ice, The Motherhood, Finn + Emma and Omnio.

If those sounds like the types of businesses that would be attracted to a consultancy that is honest and displays integrity, you should know that castus is Latin for “morally pure.” They are values Castus seeks from its clients and partners—as well as a willingness to work really, really hard.

And smart.

Knowledge is Key

Before the August 2016 Castus launch, Claus talked with people in a variety of industries—or as he puts it more simply, “I did a lot of homework and talked to a lot of folks.”

What he discovered was many wanted to tap into his knowledge base concerning taking a business global. Doing that with (and for) a single company had gotten stagnant, frankly. The idea of helping multiple companies in various sectors with several different key players “was really enticing to me,” Claus confides.

Fortunately for the Virginia Tech Hokie, his services would be offered during a perfect storm for U.S. businesses.

“The opportunities for companies to expand globally are better than they ever have been before,” he says. “With new markets open for trade, Castus can help companies of any size define a global sales strategy, implement a process and position the organization for sustained growth.”

But isn’t that what economic development offices around the country do? With incentives to boot?

Claus, who was fresh from speaking at a U.S. Department of Commerce forum, answers, “We go hand in hand with the U.S. Department of Commerce and other agencies all the way down to the local level. We offer a special value, a different type of value.”

The best explanation for that value came not from him but to him, courtesy of a federal official.

“Five of us met with the Department of Commerce in Pittsburgh, and I said I don’t want to be competition to them,” Claus recalled. “The lead guy in the Pittsburgh office came up with the best description. He said, ‘I really view you guys as players who can speak with experience, where we are really coaches.’”

Getting companies to accept coaching has been half the battle.

“With companies initially, we spend a decent amount of time just trying to encourage them to expand overseas,” Claus says. “The more established companies like Petco are very clear about their options; they just don’t know how to execute. The big difference with smaller companies is we engage them with a fair amount of education on the front end about where there is opportunity, what it is and why you should be investing in this kind of strategic development.”

If often takes a company like Castus or an executive like Claus to recognize a company’s global potential before the company does.

“The biggest misconception among business owners viewing this kind of development is one will say, ‘Yeah, I want to sell internationally, we have had a little success domestically, and our product can be taken to anyone and everyone.’ But we tell them there is a distinction between being a company that ships internationally and being a global company.

“In our terms, it is more strategic to take a long-term approach. It’s good to get cash in the door, and our clients and partners expect that, but we coach them not to jump at every opportunity. If you jump at everything, you will get burned. We have to get them away from chasing leads and instead plan for a long term growth opportunity.”

How They Do It

You are a typical client. Castus identifies prospects, negotiates partnerships and builds your global distribution network. How? By leveraging existing relationships, first-hand knowledge and insightful data to make informed decisions that should have you seeing new revenue right away.

Deciding to go global is one thing. Deciding where exactly to go on the globe is a whole different matter. Each market is vastly different, even when it comes to the regions within a single country. Castus helps its clients identify, research and target specific markets, channels and partners through a strategic and measured process that is built on data and personal knowledge, boasting that its valuable insights save time and money.

But besides looking out, Castus looks inward at its client companies—and most especially their sales forces. Many fledgling companies have terrific products that international customers would love to scoop up. The same companies often rely on young sales people who may be eager but need direction on how to find the right customers and close sales.

To help Claus on that end, he convinced his former 4moms colleague Julie Block to join him at Castus. “Her skill set is building business channels, leveraging her knowledge,” he says of Block. “Her skill sets made sense.”

Especially when you consider that while serving as national account manager at 4moms, Block used her expert store knowledge to disrupt the juvenile industry with buybuyBABY and Babies R Us. Between just those two chains, she visited more than 170 stores and pioneered and grew grassroots training and merchandising programs and is credited with doubling business between 2013 and 2015.

The Motherhood Inc., a Pittsburgh-based social media marketing company, and Millybutton LLC, a Sewickley, Pennsylvania-based maker of a clasp that helps breastfeeding mothers protect their clothing, are all in with Castus.

“Working with Castus is a true partnership,” says Cooper Munroe, the founder and CEO of The Motherhood. “Every step of the process, the Castus team is fully engaged and works tirelessly to understand every aspect of our business to help us succeed.”

Besides delivering The Motherhood “superior results,” Castus “is a lot of fun to work together, too,” Munroe adds.

“Castus helped us run numbers, establish MAP pricing and come up with a market strategy,” reports Millybutton CEO and co-founder Elizabeth Best. “[They] provided information on quality control, material testing, advised us on graphics for our website and put together a presentation that we can use to obtain funding and partnerships. We feel a lot more confident in our strategy and have defined goals because of Castus.”

Beyond Year One

With Claus’ proven success in breaking into international markets and Block’s understanding of U.S. retailers’ online and brick & mortar markets, strategies and distribution goals, both have plans to grow the Castus client roster in 2018 by offering increased professional training, team building and recruiting functions.

Having baby clothing makers, maternity product producers and The Motherhood in the fold is quite appropriate for a one-year-old. (And a large pet supply retailer like Petco doesn’t hurt either.) But Claus recognizes Castus can and must expand into other sectors to ensure long-term success. Is the company’s knowledge base applicable to vastly different industries?

“Yeah, that’s the belief,” says Claus with that happy-go-lucky shrug again. “Even if you are engaged at the local level in a service-based or non-consumer-based company, we offer services to clients to help structure their business development practices. We bring some strategy to what is otherwise a haphazard process. That’s the theory: that we bring priceless insight to our partners that can be transposed to any industry. So far it has worked very well.”

Looking at the ever-changing global landscape, he sees opportunities and challenges.

“From the challenge perspective, there is a fair amount of geopolitical uncertainty right now that has gotten people spooked. After the U.S. elections, we were in the middle of negotiating with a partner in Mexico, and they put in a full stop and said, ‘We really need to reevaluate what is happening.’ There is a lot of talk about that coming at you combined with people looking at Brexit and the instability in Asia.”

Yet even there, there is hope. Claus cites the fluctuations of the Mexican peso. With Donald Trump’s election, the value of the peso plunge. As we spoke, not even a year into the Trump presidency, the U.S. dollar had dropped 17 percent against the peso, and net long contracts on the peso had risen to the highest level since May 2013. Claus has a one-word reaction: “Amazing.”

“Initially, there can be a shock with geopolitics that runs through companies and markets,” he notes, “but then they realize life goes on, people buy things, and we’ve got to continue with business.”

As for opportunities, Claus casts his gaze at the Far East, among the many regions on the planet he has visited often as an international sales professional.

“We continue to see trends in China as a huge consumer market,” Claus says. “It’s fascinating that the last four years I have traveled there to try to build business there, I have watched businesses succeed and, in some cases, fail. But there are still great opportunities.”

Anywhere else?

“India is a really interesting region,” he replies. “It has a massive population with a huge disparity in wealth, but the small percentage of people with wealth is still a significant amount, and they have buying power. India and China are the regions we are helping our partners with.”

Especially when it comes to the latter, companies have to be smart going in, Claus cautions.

“You need to be really strategic about how you approach the China market. It is so fascinating. One specific thing in terms of the consumer market is the amount of buying happening online; it’s more than anywhere else in the world. Where it’s 10 percent of the transactions in the U.S. and 7 percent in the UK, it’s 44 percent in all of China.”

Is that due to a lack of products or preferences in purchasing online in China?

“It’s a mixture of both,” Claus answers. “The powers that be were against outside brands 7 to 10 years ago. It’s a testament to how fast technology has gone. Overnight, everyone had a cellphone and was able to buy stuff on Alibaba. The speed to which they have gone from having nothing to having everything is fascinating.”

Despite lingering Chinese hurdles that still must be cleared by U.S.-based companies trying to break into that market for the first time, opportunities abound, Claus insists.

“Made in the USA is still huge. Set aside the geopolitics the U.S. flag may now represent. The U.S. has long stood for high standards and quality craftsmanship.”

Claus need only look at one of his clients.

“A great example is Petco. Their food exceeds most human consumption requirements in many other countries. There are huge manufacturing companies in the U.S. and our consumer goods carry a lot of weight internationally.”

In Turn Around

Something unexpected has happened at Castus after one short year of a mission to help U.S. companies expand globally.

“We have found our services being sought in the reverse,” Claus reports. “Companies based overseas have asked us to help them break into the U.S. market.

“The United States is still the number one retail market in the world. That huge purchasing power is tough to navigate [for an outsider]. Helping them is a fair amount of our work as well, but it wasn’t part of our initial game plan.”

Like the companies Castus assists, Claus discovered previously unknown opportunities. He credits to “listening to potential customers.” Of course, being a good listener is what helped get his company off the ground a year ago.

Remember his wife telling him, “If not now, when?”

As Claus and his audible shrug put it: “I made a good career decision.”

Does Castus sound like a company your company should be talking to? Call them at (414) 522-7887 or visit castusglobal.com.

Auto manufacturing generates shipments of export cargo and import cargo in international trade.
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Best States For Autos

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“It’s morning again―for auto manufacturing in America,” begins the narrator as music plays from President Ronald Reagan’s famous 1984 re-election campaign advertisement. Morning in America 2.0 started showing up this past June, and like the original it aimed to make a political point. Produced by the Association of Global Automakers, a trade group that represents foreign car companies, the ad showed footage of Kias, Hondas, Nissans, Hyundais, Toyotas, Subarus and Volkswagens being assembled in the United States—to drive home the point that President Donald Trump’s promised trade tariffs would hurt American workers. America’s Big Three automakers (Ford, Fiat Chrysler and General Motors, all based in Michigan) also fret about Trump’s tough trade talk, as the president has threatened to impose a 35 percent tax on imports to the U.S. from Mexico, where each has plants and suppliers. Having seen their sales trend upward annually since 2011, the Big Three are loath to return to the American auto industry’s gloomy days. Neither would other domestic and foreign car makers and suppliers, nor the ports, plants, rail lines, truckers and logistics companies around the country they rely on. As our Best States for Autos roundup shows, it really is morning again for auto manufacturing in America.

1. Michigan

“The auto industry is doing great in Michigan,” said Governor Rick Snyder in June. The U.S. auto industry sold more cars and trucks in 2015 than during any prior year. Against analyst expectations, the industry broke that record in 2016 while logging a seventh straight year of rising sales. Now the world’s third biggest automaker behind Volkswagen and Toyota, Detroit-based GM led the American pack, followed by Ford and Fiat Chrysler. There are a whopping 975 auto manufacturing establishments in Michigan, where in 2014 the auto industry supported 532,000 jobs, according to a report by the Center for Automotive Research (CAR) in Ann Arbor.

2. California

Recently, for the first time in the era of the modern automobile, the most valuable U.S. car maker was not based in Detroit. Silicon Valley electric vehicle giant Tesla got the honors when it overtook General Motors. What makes that more poignant is that Tesla moved into a Fremont plant that GM abandoned. At its peak in 1979, the factory employed 6,800 workers through a GM-Toyota partnership. Tesla currently has 6,200 workers there, but the company recently submitted plans to the city of Fremont to nearly double the facility’s size to 10 million square feet and to ultimately expand the workforce to about 9,300. This is due to the EV maker’s plans to ramp up production of its more moderately priced Model 3. Meanwhile, Ford’s auto design headquarters is in Irvine, as is Kia and Mazda’s North American headquarters. Down the road in Fountain Valley is Hyundai’s and, in Cypress, Mitsubishi’s. State ports have been busy entry points for vehicles, particularly from the Pacific Rim, for decades.

3. Illinois

With 371 auto manufacturing establishments, according to CAR, Illinois has long been a strong part of the Midwest “Auto Alley.” Production records are being set at Fiat Chrysler’s plant outside Rockford and Ford’s Far South Side Chicago assembly plant and Chicago Heights stamping plant. Jacksonville Jaguars billionaire owner Shahid Khan’s auto parts manufacturing company Flex-N-Gate is opening a new facility on Chicago’s South Side, and China’s Yanfeng Automotive Interiors—the world’s leading supplier of instrument panels and cockpit systems, door panels, floor consoles and overhead consoles—has a plant coming to Belvidere. Some Auto Alley luster did dull for Illinois in 2015, when Mitsubishi pulled out of a factory in Normal that was the state’s second-largest at 2.3 million square feet. As was the case with Tesla in the former GM/Toyota plant in Northern California, electric vehicle startup Rivian Automotive saved the Normal factory from demolition and now plans to churn out EVs there starting in 2019. Sealing the deal for the San Francisco/Detroit company was Normal having retained a highly skilled and educated population that already fully embraced EVs, with more plug-ins per capita than any other community in the country. Kyle Ham, CEO of the Bloomington Normal Economic Development Council, told Selection Site magazine, “That was a deliberate approach by our community to become an EV town.”

4. South Carolina

According to the state Commerce Department, South Carolina is now home to nearly 400 companies in the automotive industry, employing 66,000 people. Since 2011, five international tire companies announced new plants or expansions in the state, which ranks first nationwide in tire exports. Mercedes-Benz broke ground last year on a $500 million assembly plant to build Sprinter vans in Ladson and just committed another $600 million to expand a Greer facility that makes sedans. Volvo is building its first North American plant in Berkeley County. Credited with bringing all of this about was South Carolina politicians and economic development officials traveling to Germany for years with promises of free land, tax breaks and employee training until finally landing BMW. Since the BMW auto plant opened in Spartanburg in 1994, the company has invested $8 billion in the South Carolina economy. BMW CEO Harald Krueger announced in June that his company will spend another $600 million to expand its Greer plant and $200 million more on workforce training, with plans to surpass 10,000 BMW employees in South Carolina. Small wonder the Port of Charleston is one of the country’s busiest vehicle ports.

5. Texas

Before Toyota officially opened its North American headquarters in Plano on July 5 (see the “Should I Stay or Should I Go?” main story in this Most Business Friendly States for Manufacturers’ package), the world’s second-biggest car maker was already long established in the Lone Star State. A Tundra truck first rolled off a San Antonio assembly line nearly 10 years ago. Before that, major auto industry operations in Texas were mostly limited to a General Motors plant in Arlington, where GM is now in the midst of a $1.4 billion expansion. Some experts believe Texas may soon land another automaker. As Brian Kelsey, founder and principal at economic research firm Civic Analytics, put it to Austin American-Statesman, “The industry’s future here appears to be bright.”

6. Tennessee

Tennessee has been Business Facilities magazine’s top state in automotive manufacturing strength for five of the past seven years. The Volunteer State’s

automotive manufacturing cluster includes three major assembly plants and automotive operations in 86 of 95 counties. Nissan’s North American headquarters is in Franklin, and its plant in Smyrna is the most productive in North America. General Motors has a factory in Spring Hill as does Volkswagen in Chattanooga. Transportation equipment is Tennessee’s top export.

7. Alabama

In terms of states with a larger share of auto industry jobs, Alabama has seen the fastest growth. Honda, Hyundai, Toyota and Mercedes-Benz build vehicles in the Yellowhammer State. The carmakers have been followed by a network of automotive suppliers, and combined they have made the industry among the most important of any in Alabama.

8. Indiana

Canadian auto engineering and manufacturing company Multimatic Inc. announced in June that by the end of next year, it will add 180 jobs in the Fort Wayne area and will have spent $40 million for a 125,000-square-foot factory to produce steel components for vehicle body structures. Multimatic already has a facility in Butler with more than 250 workers. Chinese auto suspension system maker BeijingWestIndustries announced in April its first U.S. production facility will be in Greenfield, and Japanese auto parts maker NTN has been announcing, breaking ground on and opening plants around the state all year.

9. Ohio

The Buckeye State can count 599 auto manufacturing establishments to the Hoosier State’s 519 in the CAR compilation. The auto industry is “thriving” in Ohio, according to JobsOhio, something Director of Automotive Jonathan Bridges attributes his state’s central location, educated workforce, competitive business climate and “an innovation ecosystem offering next generation resources and collaborative partners investing in ongoing connected and autonomous vehicle research, development and testing.”

10. Florida

It may surprise you that Alfa Romeo’s new line of premium, Italian made mid-size sedans–the 280-horsepower Giulia and Giulia Ti as well as the 505-horsepower Giulia Quadrifoglio—began arriving earlier this year via Grimaldi Lines to JAXPORT. After all, Jacksonville does not exactly scream, “Arrivederci, bambino!” The delivery does not surprise JAXPORT officials given their “longstanding partnership” with Alfa Romeo parent company FCA US. Florida is no U.S. carmaking giant, but JAXPORT is one of the nation’s busiest ports for total vehicle handling, having moved more than 636,000 in 2016. “What really sets us apart is our skilled labor force,” says Frank Camp, JAXPORT’s director of Non-Containerized Sales. “Our vehicle handlers are highly trained in the proper ways to protect vehicles in transit.” He also cites the top ro/ro carriers calling on Jacksonville, and three leading auto processors (AMPORTS, Wallenius Wilhelmsen Logistics and Southeast Toyota) occupying facilities on port terminals, in some cases as close as 100 yards from ship berths.

Articles on shipments of export cargo and import cargo in international trade.
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SALUD!

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Uncertainty about trade policy bleeds into this issue. What’s that? You want specifics? Here you go:

Uncertain American trade policy is key to our lead Trending item on July’s dysfunctional US-China Comprehensive Economic Dialogue. Over in Dispatches, the Internet Association offers things to consider while modernizing NAFTA.

Early in Donald Trump’s presidency, he hosted Harley-Davidson at the White House to celebrate a made-in-America brand. But as Will Swaim reports in his “Hog Heaven” feature, that produced some queasiness because Harley’s ambitions are global—even when it comes to acquisitions and manufacturing.

Tariffs imposed on foreign automobile manufacturers would seem to be intended to level the playing field for America’s Big Three automakers, but our “Most Business Friendly States for Manufacturers” sidebar “Best States for Autos” begins with Ford, Fiat/Chrysler and General Motors fretting over such tariffs being imposed on them for manufacturing done in Mexico and elsewhere around the world. This month’s book ends with a sobering reminder amid all this, as Looking Back columnist Kenneth Pomeranz detail how US “fair trade” laws actually led to the rise of offshore manufacturing.

But while Elaine Pofeldt’s Banking story examines export financing as Trump shakes up a trade world filled with financial institutions loathe to shakiness, experts Elaine interviews show you how to successfully navigate through it. Yes, friends, there are success stories out there. How else to explain the Port of Oakland setting an all-time record for June import volume—before the peak shipping?

Georgia and South Carolina ports set all-time record months for container volume in May.

Indeed, the East Coast is where it’s at these days thanks to the Panama Canal expansion, something Craig Guillot highlights in our annual big ship readiness update. You want numbers? As of May, Florida’s JAXPORT recorded an average of 21 percent year-over-year growth in Asian cargo volumes during each of the past five years. Look for more upbeat port news to come following this past spring’s federal funding approval for expansion and deepening at JAXPORT as well as the ports of Charleston, Philadelphia and others all along the East Coast. This is due, of course, to the arrival of Super Post-Panamax vessels, which recently prompted the Broward County Board of Commissioners to begin a $437.5 million expansion project to add new berths for larger cargo ships and install crane and rail infrastructure improvements to work those huge tubs.

Jeez, it sounds as if we should be giving more love to Florida—oh, snap, we do, as this is also our annual Florida issue, with Guillot’s report on the Sunshine State manufacturing more than tourism and Katie Kuehner-Hebert showing how Amerijet and Polk County’s Central Florida Development Council have helped make that happen.

Need some help making it happen for you? Check out our fifth annual “America’s 100 Leading 3PLs,” where Steve Lowery rounds up not only the third party logistics providers that meet your specific needs, but he includes advice from CEOs of some of this country’s top 3PLs. Kuehner-Hebert does the same with leaders of economic development corporations.

Success stories still abound in these uncertain trade days, as Peter Buxbaum proves in his look at air cargo growth to and from the Middle East. Also not to be missed are Jeff Atkins’ piece on using software to visualize you end-to-end supply chain, Iaz Putzger’s report on how rail availability makes ports more attractive and two more Guillot stories (someone’s angling for a raise) on the shipping companies and US ports leading the green movement.

Finally, I would be remiss were I to neglect what is deemed in Trending as “the greatest Global Trade story … ever!” It concerns the Maine Beer Box, which is a shipping container filled with brews and adorned with dozens and dozens of working taps, that just arrived in Iceland. Cheers!

@MatthewTCoker

Incentives to relocate companies and generate more shipments of export cargo and import cargo in international trade.
Archives, Features, Imports/Exports, International Trade, Site Selection

SHOULD I STAY OR SHOULD I GO?

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The CEO of an international chemical company is at a crossroads. One path leads right back to where the company was founded: Canada. The other points south, to the United States, where most of the company’s customers are located. Which road is best traveled?

Making a snap judgment based on loyalty or conventional market wisdom would be the worst thing to do, according to the experts we chatted up. Before making the ultimate relocation decision, our confused CEO must successfully complete a major self-assigned homework project, and turning in a crappy cardboard California mission or baking soda volcano won’t cut it this time.

Lesson one involves revisiting one’s original business goal, followed by calculating the return on investment (ROI) of each option. What would be the total cost of each option? What would be the total savings from each option? Keep in mind that recouping losses from a move can take years. By the same token, using the Canadian company’s quandary as an example, after recouping those losses being closer to customers can cause profits to soar higher than they ever would have in the Great White North.

While the core mission and ROI of a business are paramount, they are not the only factors to consider when it comes to relocation. Regulatory issues, tax rates, tax credits, utility costs and access to inland and ocean ports, international airports, rail corridors and Interstates all must factor into a manufacturing CEO’s ultimate call. And, speaking of calls, there are economic development corporations (EDCs) all over the U.S. just itching to get chief executives on the horn to boast about the business advantages of moving to their respective states.

Take Texas. It does not surprise Governor Greg Abbott that Chief Executive magazine again ranked the Lone Star State No. 1 for business in the United States. “The Texas model is proof that limited government secures economic liberty and encourages unlimited opportunity,” Abbott said on July 5, when his state celebrated another momentous relocation victory: the grand opening of Toyota Motor North America in Plano, where the world’s second largest automaker moved its vast operations on this side of the world from Torrance, California, where it had been for decades.

Abbott is keen to why Toyota joined Hulu, Jacobs Engineering, Mitsubishi Heavy Industries, Kubota, Jamba Juice, Sabre and many others who decided to “Go Big” in Texas (as the state’s current business-enticement motto goes). “Restrained government, lower taxes, smarter regulations, right-to-work laws and litigation reform, these are the pro-growth economic policies that help free enterprise grow,” the governor beamed.

“Amen to that, brother,” is essentially what Hudson Products CEO Grady Walker would say to that. At May’s announcement that the leading manufacturer of air-cooled heat exchangers and axil flow fans would be relocating its manufacturing plant from Tulsa, Oklahoma, to Rosenberg, Texas, Walker remarked, “Hudson Products had several options outside of Texas, but the pro-business climate in this state is second to none.”

Greasing the deal for Hudson was a Texas Enterprise Fund grant offer of $1,020,000. But that is money well spent considering the relocation is expected to create 150 jobs with a capital investment of more than $6 million, according to the Greater Fort Bend Economic Development Council. “The impact these 150 jobs will have on Fort Bend County is tremendous,” says County Commissioner Vincent Morales Jr. “We are growing the tax base, growing the job base and bringing more residents into west Fort Bend County who will live, shop and eat here.”

School is not out yet

An EDC making an offer a CEO can’t refuse means more homework awaits. “Go over the risks, resource demands, legal issues and other changes/requirements that the move to a new facility will entail,” advises California Manufacturing Technology Consulting (CMTC). “Including senior management or staff that are key to your operations in this review, can help you form a more complete picture of what the move will require.

“Also, be sure to double- and triple-check the new location to make sure that it has adequate resources such as power, gas, water, Internet access, roadway access, etc. Otherwise, you could end up moving your company to a new location that may not serve your needs as well as the previous location.”

As t’s are being dotted and i’s are being crossed, CEOs should see to it that all employees know about the intent to move. Then come the nuts and bolts of preparing documents, tooling, customer materials and, of course, products for a safe move to the new location. It is important to test production equipment once it has been re-installed and to perform a company-wide audit after moving in, according to the CMTC, which is based in Torrance (begging the question: How did you let Toyota get away?).

Location, location, relocation

Business incentives are great, as are skilled labor pools, close proximity to colleges and universities and a great quality of life for employees. But even if those factors combine to help create bigger, better and/or safer production, a CEO could be chasing new money after bad if their plant winds up in place with burdensome access to rail, airports, Interstates and ports (ocean or inland).

Louisiana-based offshore energy service and supply company Offshore Service Vessels was known as Edison Chouest Offshore last year when it began shipbuilding operations under the TopShip LLC banner in Mississippi. Receiving more than $36 million in state funding and tax incentives no doubt played a huge role in the decision to open in Mississippi, where as of January of this year 425 of a promised 700 TopShip jobs had been filled.

However, also key to the decision was the opportunity for TopShip to open at a new inland port where the former Ingalls Composite Facility had been, according to CEO Gary Chouest, who is the billionaire son of the company’s late founder, Edison Chouest. “The strategic location of TopShip will allow us to take advantage of the deepwater Port of Gulfport and their future expansion plans,” Gary Chouest said of the property the Gulfport authority acquired in March 2015.

Don’t tell him you can’t go home again.

“Born in Mississippi,” Chouest said at the time, “I am back home.”

America's Leading EDCs, Archives, Features, Global Trade Daily, In The News, News

THE GOVERNOR’S CUP

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We all know business can be as competitive as any full contact sport, but the most vigorous battles likely take place during the location process. That’s because of the immense economic impact each new employee brings to a given city, estimated to be between $500,000 and $700,000, and what local and state governments are willing to offer to attract job-creating companies such as yours.

From tax credits to job training to export assistance, incentives can and should be a big part of your site selection process. To help you get started, we’ve selected 31 incentives offered by economic development companies large and small from across America and compiled them into this report. So what city, county and state EDCs are making their governors proud and pulling the right levers to rack up jobs for their states? Read on and compare the areas that meet your needs with the tools they are offering your business to ensure success.

ADVANTAGE JOBS PROGRAM
Mississippi Works | mississippi.org

Businesses that create new jobs that meet or exceed the average annual wage of Mississippi or the county in which the company locates are eligible for a rebate of a percentage of payroll to qualified employers for a period of up to 10 years. The business must create 25 new, full-time jobs with annual wages that are 110 percent of the average for the state or county the company is locating in (whichever is less). Employee benefits not subject to Mississippi income taxes are excluded.

BUSINESS COOPERATION PROGRAM
City of San Diego, California | sandiego.gov

The cost of doing business in California can be staggering (just ask those brand-new Texans at Toyota). But San Diego believes at least part of that can be due to businesses paying out more than they really have to. The BCP was created to reduce the cost of doing business by preventing the annual loss of millions of dollars in sales and use tax revenue due to misallocation. Financial incentives available through the BCP encourage businesses with significant equipment expenditures to take part in the program to support proper allocation of sales and use taxes to the city. The BCP can provide a tax rebate of up to 50 percent of the local 0.1 percent use or sales tax paid in connection with San Diego-based operations.

BUSINESS DEVELOPMENT LOAN PROGRAM
Birmingham Office of Economic Development | birminghamal.gov

Birmingham’s loan initiative allows developers and entrepreneurs to apply for loans of $100,000 to $1 million for maximum terms not to exceed 24 months. Economic Development’s Revolving Loan Fund Program extends direct loans to businesses in the Alabama city for the purchase of land, buildings, machinery, equipment and new expansion. Industrial Revenue Bond Financing can be used for real property acquisition, construction or renovation of facilities or the purchase of equipment and machinery for eligible businesses.

CHOOSE AMARILLO
Amarillo Economic Development Corp. | amarilloedc.com

Amarillo maintains one of the most stable and affordable real estate markets in the nation. Commercial and residential values have climbed over the past four years due to a steady influx of relocating businesses and expanding companies in the Texas city. Amarillo Economic Development Corp. directs prospective businesses to CenterPort, a 440-acre business park, PRANA/Amarillo EastPort Business Park, Point West Business Campus and other commercial and industrial properties.

CONSUMABLES GROSS RECEIPTS TAX DEDUCTION
New Mexico Economic Development Department | gonm.biz

A seller can deduct 100 percent of receipts from sales to a manufacturer of tangible personal property in New Mexico that becomes an ingredient or component part of a manufactured product. The deduction applies to personal property incorporated into, destroyed, depleted or transformed in the process of manufacturing a product, including electricity, fuels, water, manufacturing aids and supplies, chemicals, gases, repair parts, spare parts and other tangible items. For components manufacturers, it’s a great reason to consider New Mexico.

CREATIVE CAPITAL
Tusla Economic Development Corp. | tedcnet.com

The northeastern Oklahoma city offers TEDC Creative Capital (a.k.a. non-traditional lending programs) to help entrepreneurs start or expand companies. Among those that can receive these direct loans, which the EDC partners with other financial institutions to provide, are small business projects that fall short of conventional lending standards. Special consideration is given to companies that locate in targeted areas and create and retain jobs as well as to entrepreneurs who have traditionally faced barriers to capital access.

DIRECT FINANCIAL INCENTIVES
McKinney Economic Development Corp. | mckinneyedc.com

Based on a business’ job creation, capital investment and impact on the north Texas city’s economy, McKinney EDC offers forgivable loans, tax abatements, emerging technology assistance—to go along with its enterprise zones, regional airport program and a triple Freeport inventory tax exemption. Those can be on top of state incentives such as grants, financing and various funds directed at attracting new or relocating companies. And those can be on top of guaranteed Lone Star State incentives like no personal income tax, no corporate income tax and business friendliness, pardner!

DIRECT INCENTIVE PROGRAM
City of Sugar Land Economic Development | sugarlandtx.gov

Cash grants are awarded to qualifying projects and companies in the eastern Texas city based on an applicant’s capital investment, financial stability, business history, status compared to others in that business sector and total expected job creation and wages. A performance agreement is required with the Sugar Land Development Corp., which can also steer applicants to tax abatements offered by the city and county, especially to new green-energy projects.

ECONOMIC DEVELOPMENT LOAN FUND
Salt Lake City, Utah | slcgov.com

By making loans to businesses, this fund aims to stimulate business development and expansion, create employment opportunities, encourage private investment, promote economic development and enhance neighborhood vitality and commercial enterprise in the Utah city. These loans are available to: startups, existing businesses, those relocating or expanding in SLC and companies impacted by construction. Loans can be used for: building retrofits, energy-efficiency upgrades, real estate acquisition, construction/tenant improvement, signage, retail presentation, display work, fixtures, furnishings, equipment, inventory, working capital and marketing.

EXPORTECH
Wisconsin Economic Development Corp. | wedc.org

Delivered by a partnership of the Wisconsin Economic Development Corp. and the Wisconsin Center for Manufacturing and Productivity, this export acceleration program helps companies expand their global market reach by marrying them with coaches, consultants and experts on the ground in various international markets. Does it work? Graduates have achieved international sales increases averaging $600,000–$900,000 within 12 months of completing ExporTech.

FREEPORT EXEMPTION
San Antonio Economic Development Foundation
| sanantonioedf.com

The City of San Antonio, Bexar County that encompasses the south Texas city and some independent school districts allow a personal property tax exemption to companies that deal with goods in-transit or inventories used in manufacturing. To qualify, inventory must be used to assemble, store, make, process or fabricate, and it must be transported to destinations outside Texas no later than 175 days after the date acquired in or imported into the state. The city also offers bonds and tax breaks as well as specific incentives for companies in industrial districts, certain sub-zones and its foreign trade zone.

FREE SHOVEL-READY LAND
GoTopeka Economic Partnership | gotopeka.com

Free land in the northeastern Kansas city’s industrial parks is offered to qualifying companies. The package includes a 10-year, 100 percent property tax abatement on real property as well as other incentives, and the sites have all utilities in place. Site selection assistance earned Topeka a spot on Global Trade’s 2015 list of “America’s Best Cities for Global Trade.”

GOVERNMENT PROPERTY LEASE EXCISE TAX
Arizona Commerce Authority | azcommerce.com

Established by state law as a redevelopment tool, the excise tax aims to reduce a project’s operating costs by taking the place of real property tax. It is granted based on a building’s type of use and is calculated on the structure’s gross square footage. The excise tax rate can be abated for the first eight years after a certificate of occupancy on the building is issued if the property is located within a Central Business District and a Redevelopment Area.

HIGH IMPACT PERFORMANCE INCENTIVE GRANT
Enterprise Florida | enterpriseflorida.com

These grants are provided to pre-approved applicants in advanced manufacturing, clean energy, corporate headquarters, financial services, life sciences, semiconductors and transportation equipment manufacturing. Within three years of approval, these projects must be created in Florida, have at least 50 new full-time equivalent jobs (or 25 if it’s a R&D facility) and have made a cumulative investment in the state of at least $50 million (or $25 million if it’s a R&D facility).

HOOSIER BUSINESS INVESTMENT TAX CREDIT
Indiana Economic Development Corp. | iedc.in.gov

The non-refundable corporate income tax credit is aimed at businesses that support jobs creation, capital investment and improvement of the standard of living for Indiana residents. The incentive is calculated as a percentage of the eligible capital investment to support the project. It can be certified annually, based on the phase-in of eligible capital investment, over two full calendar years from the commencement of the project. To be eligible, the project must be economically sound and result in net new jobs that were not previously performed by the applicant’s employees.

INCUMBENT WORKER TRAINING
CareerSource Broward | careersourcebroward.com

On its incentives page, Greater Fort Lauderdale Alliance (gflalliance.org) refers to Broward’s WorkForce One providing the Employed Worker Training Program, but the names have actually changed to CareerSource Broward and Incumbent Worker Training (IWT) respectively. Businesses that have operated in Broward County, Florida, for at least a year can acquire a grant to upgrade the skills of full-time employees and/or reimburse the company for training-related costs. CareerSource can also help tap into the knowledge of a network of experts in various industries.

INDUSTRIAL ASSISTANCE FUND
Utah Governor’s Office of Economic Development | business.utah.gov

If your business has received a commitment for incentives from a local government entity in Utah, don’t stop there. You can also tap into this fund if your business creates at least 50 jobs with wages 110 percent of the average in the specific urban or rural county it is located in. The company must also be stable, profitable and competing with other locations. You remain eligible if you also receive other state incentives.

INDUSTRIAL REVENUE BONDS
Albuquerque Economic Development | abq.org

Developers or companies can enjoy significant real and personal property tax abatement and compensating tax exemptions through IRBs. Essentially, instead of buying a property directly in the New Mexico city, the Albuquerque City Council or Bernalillo County Commission is the owner that leases the property to the pre-approved company, which buys that property at the end of the lease. The tax savings continue to flow after the purchase, and the property owner can later arrange for an IRB for a subsequent buyer. Equipment can also be acquired under an IRB through the state’s Manufacturing Investment Tax Credit.

INNOVATION
VOUCHER
PROGRAM

Minnesota
Department
of
Employment
and
Economic
Development
|
mn.gov/deed

The pilot program provides up to $25,000 in financing to help small businesses purchase technical assistance and services necessary to advance research, development or commercialization of new or innovative products and services. Qualifying companies receive vouchers that can be redeemed with approved public universities, colleges, technical schools and nonprofits in Minnesota.

INVESTARK
Arkansas Economic Development Commission | arkansasedc.org

Sales and use tax credits are available to businesses that are established in Arkansas for at least two years and have invested at least $5 million in a single plant location or equipment for new construction, expansion or modernization. But the business must first receive AEDC approval as well as a direct-pay sales and use tax permit from the state. The InvestArk credit is earned in the year the eligible expenditure is made and can be applied against the business’ state direct-pay sales and use tax liability in the year following the year of the expenditure. Unused credits can be carried forward for up to five years.

LAND, BUILDING AND EQUIPMENT ASSISTANCE
Cedar Hill Economic Development Corp. | cedarhilltx.com

Assistance with land, buildings, equipment, facilities, improvements and expenditures is offered to new businesses in the northeastern Texas city. You must be purchasing build-to-suit property with an assessed valuation of at least $3 million for land, building and equipment. Or you must have an employee base of at least 25 full-time jobs (with benefits) or 50 part-time jobs.

MERCER COUNTY INDUSTRIAL GROWTH FUND
Penn-Northwest Development Corp. | penn-northwest.com

Administered by the PNDC in partnership with the Shenango Valley Enterprise Zone Corp., this multimillion-dollar fund can be accessed by new and expanding value-added industrial, manufacturing, warehouse, distribution and advanced technology firms in Pennsylvania’s Shenango Valley and Mercer County. Eligible users can use the funds for: land acquisition, preparation and associated expenses; building acquisition, renovation or additions; machinery and equipment purchases (new and used); and limited working capital, soft costs of engineering and legal fees.

MICHIGAN MANUFACTURING TECHNOLOGY CENTER
Michigan Economic Development Corp. | michigan.org

Accredited by the International Association for Continuing Education and Training, the MMTC offers direct technical assistance so small and medium-sized manufacturers and food processors can learn the best manufacturing practices and technologies. This includes assistance in product and process innovation, lean manufacturing and continuous improvement, quality systems, ISO 14001, costing systems, management training, matchmaking and business development services.

NO TAX ON MANUFACTURING EQUIPMENT
Virginia Beach Department of Economic Development | vbgov.com

The only place in the Commonwealth to eliminate the tax on machinery and tool equipment, Virginia’s southernmost city offers the incentive to manufacturers without applications or approvals being necessary. Combined with other state and local incentive programs—including grants and state corporate income tax credits designed specifically for Port of Virginia users—Virginia Beach is extremely cost-competitive for manufacturers directly engaged in global trade.

OHIO INTERNATIONAL MARKET ACCESS GRANT FOR EXPORTERS (IMAGE)
Ohio Development Services Agency | development.ohio.gov

Designed to increase exports and create jobs, IMAGE grants help small businesses promote their products and services in international markets. This includes: trade show registration fees; printing costs for trade show materials; booth space rental, design and construction; and freight costs to ship a booth and materials.

PAYMENT IN LIEU OF TAX (PILOT)
Economic Development Growth Engine (EDGE) for Memphis and Shelby County | growth-engine.org

Projects involving large capital investment and high levels of job creation in Memphis or Shelby County that surrounds the Tennessee city may qualify for the PILOT property tax freeze. Approval is based on a variety of performance standards, including the number and type of jobs created, annual base wage, capital investment in real and personal property and the project location. Property taxes are frozen at the pre-development level.

PENNSYLVANIA INDUSTRIAL DEVELOPMENT AUTHORITY
Pennsylvania Department of Community & Economic Development | dced.pa.gov

Low-interest loans and lines of credit are offered to eligible businesses in manufacturing, industrial, agricultural, research and development, hospitality, defense conversion, recycling, construction, child day-care, retail and service, export and computer-related service enterprises. The assistance can be used for land and building acquisitions; construction and renovation costs; machinery and equipment purchases; and working capital and accounts receivable lines of credit. Repayment terms are up to 10 years for machinery and equipment purchases and 15 years for land and building acquisitions and construction/renovation projects. Working capital and accounts receivable lines of credit have one-year terms that are renewable.

PUBLIC-PRIVATE PARTNERSHIP PROGRAM
Dallas Office of Economic Development | dallascityhall.com

Companies considering a relocation/expansion or new commercial development in the north Texas metropolis may be eligible for a grant in lieu of tax abatement or to defray such project costs as land purchase, building costs, public infrastructure costs, development fees, right of way abandonment fees, loan guarantees, training costs, relocation costs and more.

QUALITY JOBS TAX CREDIT
Georgia Department of Economic Development | georgia.org

This tax credit rewards companies that within a 12-month period create at least 50 jobs that pay wages at least 10 percent higher than the average of the Georgia county the company is locating in. The amount of the credit escalates the higher that percentage over the county average is. For instance, a job that pays 110 to 120 percent of the county average can earn a company a $2,500 credit for five years, 120 to 150 percent gets a $3,000 credit, 150-175 percent earns a $4,000 credit, 175-200 percent shoots to $4,500 and 200 percent or greater enjoys a $5,000 credit. Companies that do not qualify for this incentive can still receive a regular old state job tax credit.

TAX EXEMPT BOND FINANCING
City of Marietta, Georgia | Marietta.gov

Marietta offers bond financing for qualifying businesses locating or expanding in the Georgia city. This tax-exempt financing reduces local ad valorem tax assessments, and the resulting property taxes increase in benefit based upon the level of investment and the length of the leaseback program. Financing industrial projects using private activity bonds can lead to cost savings and additional benefits over traditional debt instruments. The Marietta Development Authority can also assist in finding developed industrial sites and navigating the government permitting/approval process.

TEXAS ENTERPRISE FUND
TexasOne | texasone.us

Cash grants are awarded to projects that offer significant projected job creation and capital investment and have a single Texas site competing with another viable out-of-state option. Since its inception in 2004, the TEF has awarded over 100 grants totaling more than $500 million across a wide variety of industries and projects. But don’t worry about breaking the Lone Star State bank: The funding model ensures Texas receives a full return on its investment. n

Archives, Features, Global Trade Daily, News, Stories

13 Logistics Industry Thought Leaders

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What does it mean to be a thought leader? The term has become common corporate-speak for just about anything involving advice on how to do business, but we set out to look for the executives who have ushered in new eras, quickly and creatively adapted to changing landscapes, and reinvigorated age-old challenges with innovative thinking and focused approaches. We invited 3PLs to submit candidates, and of the entries collected we found 13 that, in our opinion, were out in front.

These thought leaders range in style and substance—from Bradley Jacobs of XPO Logistics who, as a highly successful career CEO, saw a fragmented industry ripe for consolidation; to Kristy Knichel of Knichel Logistics, who takes employee treatment seriously, and to the next level. Others have accomplishments that illustrate points in their careers when they led their teams into uncharted territories and left behind a road map for others to follow. In all cases, there is something to be learned that you can bring to your own operation. 

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JEFF SILVER
CEO and Co-founder
Coyote Logistics | 10 Years

After co-founding the American Backhaulers logistics company in 1984 and selling what had become North America’s second-largest freight brokerage in 1999, Jeff Silver took a hiatus to return to his alma mater, the University of Michigan, to receive his MBA. He next ventured to MIT to earn a master’s in Engineering in Logistics. Armed with an advanced education and industry experience, Silver joined his wife Marianne in co-founding Coyote Logistics in 2006 with four employees. It’s now one of America’s leading 3PLs and Silver is a recognized industry leader. He launched Coyote as “a whole new type of 3PL” that “would therein change the industry.” Coyote’s technological advances brought previously unavailable capacity to the market, something Silver credits to his MIT education and hit-and-miss experiences at American Backhaulers. Silver now sees only a silver lining ahead. “This is an incredible time to be in the logistics industry. We are on the cusp of a new era of automation that will bring rapid change from the warehouse and loading dock to the road. These will be big changes, and we all need to be ready for them, thinking about how things will work for our customers’ supply chains but also about the challenges we will face as humans do fewer of the more mundane, repetitive tasks that automation will take over. We will all need to be smarter.”

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THERON NEESE
Vice president, Distribution and 3PL Services
Cardinal Health Integrated Logistics | 16 Years

Cardinal Health has a large customer that faced a significant regulatory challenge a couple years ago: Their highest volume product was facing additional regulatory scrutiny, and that impacted their quality release cycle and limited the available supply. Under Theron Neese’s thought leadership, Cardinal worked closely with the client to respond to an unpredictable release cycle and deploy inventory to key locations throughout the country. “We quickly shifted from a deployment strategy that had inventory in nearly 40 locations across the country to one that continued to service the entire country from just five locations,” Neese recalls. “This required continuous communication and flexibility to ensure that critical national customer demand was met. We helped them through the crisis and we were able to assist them in normalizing their supply chain again.” With more than 15 years of experience in distribution, manufacturing, packaging and 3PL services, Neese is regarded as a strong leader with excellent financial, analytical and problem-solving skills. His secret to executing a lean transformation of Cardinal Health? “First and foremost, it always starts at the top,” he says. “Complete buy-in from the C-level and a clear vision as to why the organization is embarking on a lean transformation is critical. The transformation must include employees down to the floor level; this pushes accountability through the entire business.” accountability through the entire business.”

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PHILIPE GILBERT
Regional CEO, Americas
DB Schenker | 3 Years

Before becoming DB Schenker’s Regional CEO, Americas, in March 2015, Philipe Gilbert spent two years as Regional CEO, Europe West, which had him in charge of a logistics network encompassing France, Italy, Spain, Portugal, Morocco, Mauritania and Angola. “I spent six years traveling the African continent,” he observes. “I learned to understand, audit and report on our logistics activities in remote places where political unrest is the norm. I learned how ingenuous and adaptable humans are in their ability to move freight in that beautiful and often harsh landscape. Not only did I learn how to operate businesses for the export of raw materials and the import of manufactured goods, but I also learned how to facilitate food related donations and the importance of effective aid logistics to help people survive.” In those 24 months, he took the company from break even to profitability, so what is the secret for this thought leader with 28 years of logistics experience? Continue learning. From Gilbert’s experience on the African continent, he brought to his current role trust in human ingenuity, a willingness to adapt to the changing situations and a strategy of spreading the risks. “Out of 10 countries in Africa, one will be in turmoil. What you might lose there you make elsewhere.”

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MIKE KUKIELA
Vice president and general manager, Logistics
Schneider Logistics | 12 Years

Mike Kukiela credits his training and experience in the U.S. Army with instilling in him a disciplined approach to risk assessment and vision alignment with a crisp delivery of objectives. Add to that Kukiela’s 12 years with Schneider, and it is small wonder he has displayed the creativity and bold vision that make him a thought leader in a complex and ever-changing industry. “In addition to monitoring industry regulations, the Schneider Logistics leadership team is continuously monitoring the activity within our portfolio,” he explains. “With superior platforms, we have an ability to foresee trends across modes of transportation, industry verticals or shipping regions. That knowledge is then converted to value for our customers.” Of course, it also helps greatly if you enjoy what you do. “I love interacting with our customers, suppliers and the logistics professionals within Schneider,” confides Kukiela. “Continuous communication strengthens the strategic relationships, increases our knowledge sharing and promotes an environment of innovation and continuous improvement.” One way he does this? Walk the lines. “A former military mentor shared this with me as a junior officer. You cannot fix what you do not see and you cannot capture on an advantage if you’re behind a computer all day.”

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ALLAN J. MINER
President
CT Logistics | 32 Years

In 1984, Revenge of the Nerds came out. Coincidentally, that’s when Allan J. Miner joined CT Logistics. The digital revolution now has nerds running the world—and CT Logistics’ mid-’80s embrace of technology led to it becoming a stalwart in the industry and Miner a thought leader (but not a nerd). CT’s FreitRater software, whose first version was introduced commercially in 1986, is a flexible global freight management system with more than 800 data elements to support and produce valuable business intelligence with complete visibility. Since then, FreitRater has been upgraded and expanded to stay ahead of industry standards. “Because of our commitment to unique and customized solutions for each client, CT has been able to accelerate FreitRater’s application growth over the decades because of each client’s individual and unique needs,” says Miner, who also created CT’s annual FreitRater User Group Conference, now in its eighth year, to bring every user together in an open forum of learning and collaboration. “This open forum delivers to clients exactly what they need,” Miner says. “Each year CT sees the pulse of the industry through our clients’ experiences.” So what does he see happening 10 years from now? “Expanded Internet connectivity through personal/mobile devices which connect the entire supply chain for complete visibility, real-time status and informational data knowledge.”

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DOUG WAGGONER
Chairman and CEO
Echo Global Logistics | 10 Years

Since becoming CEO of Echo Global Logistics in 2006, Doug Waggoner has built the 3PL into a “one-stop shop” that provides comprehensive transportation services to its clients. Through his expertise in computer programming, less-than-truckload (LTL) shipping and acquiring stuff—namely 20 3PLs, many of which had built a specialized focus on modes and services such as intermodal, refrigerated truckload, heavy haul & over-dimensional, and hazmat shipping. “Technology has always been at the core of everything we do,” Waggoner says. “To move more than 12,000 shipments a day, we have to rely on best-in-class technology. The key to building great technology is to always keep shippers and their needs in mind. Our goal is to use technology to simplify the daily tasks and complexities associated with shipping and logistics.” It’s a strategy that pays dividends for clients. Take Action Gypsum Supply, an independent distributor of building materials that used to have its manufacturers manage its inbound shipments and simply roll the shipping fees into the price of the product. “When Echo came on board and started managing Action Gypsum’s inbound and outbound freight,” Waggoner says, “we used our large carrier network to provide our client with significant cost savings and increased margins, which Action Gypsum then used to gain a competitive advantage in the building materials industry and grow its business.”

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KRISTY KNICHEL
President and CEO
Knichel Logistics | 13 Years

Kristy Knichel is an industry thought leader due to the unconventional yet effective strategy she employs at the logistics company that bears her last name: treating all employees like family. Her company’s retention rates are incredibly high, as is morale—and profits. When her company started in 2003, revenue was at $2 million. At the end of 2015, it was near $50 million. “Happy employees equate to happy customers, so keeping employee morale high is a big initiative for us on an ongoing basis as it directly impacts our bottom line,” Knichel says. “All employees are kept abreast of company financials so that they are aware of how we are performing as a group, which is very engaging. In regards to monetary perks, we give annual bonuses and have implemented incentive plans that are performance based. Throughout the course of the year, the company distributes tickets to Penguins, Pirates and Steelers games and we also have a yearly tradition of celebrating customer service week by dedicating the entire week to rewarding our staff with games, food and prizes. I maintain an open door policy, so another large piece to keeping my employees happy is to listen to their opinions and suggestions and put their good ideas into action.” 

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ALAN AMLING
Vice president, Supply Chain Solutions
UPS | 23 Years

Alan Amling began his UPS career in 1982 as a seasonal employee and has since worked as a feeder, package loader, new product developer and e-commerce, marketing and global logistics guru. As vice president, Supply Chain Solutions, Amling is an industry thought leader and 3D printing pioneer. In January, he presented a panel at the 2016 Consumer Electronics Show on “3D Printing and Its Industrial Potential,” where contributors discussed the key challenges and opportunities of the technology. “My mantra is ‘learn and adapt,’” Amling says. “In a world of rapid change, businesses need to get products in front of customers early, running through multiple learn-and-adapt cycles to ensure what they’re building provides real value for their customers.” He advises jumping into 3D printing now—lest you be sorry later. “What company doesn’t have at least some inventory that hasn’t turned in a year or more? Virtualizing that inventory to print on demand is a low risk way to start.” While industrial 3D printing is off and running, Amling does not see it taking over traditional manufacturing in the next 10 years, but “it only has to capture a small percentage to have a material impact. Consider how disruptive e-commerce has been to traditional retail and it’s only about 7 to 8 percent of total retail.”

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DAVID PEREIRA
President
Trinity Logistics | 19 Years

Some are still licking their scars from the monster U.S. West Coast port strike of 2014-15, but David Pereira’s thought leadership allowed his logistics company to escape with barely a scratch. That is because, long before International Longshore and Warehouse Union workers walked off the job, Trinity Logistics had already partnered with major air carriers to charter flights into Los Angeles, and by the time the first ships began anchoring off of L.A. and Long Beach ports, Trinity was moving (and kept moving) more than 100 tons of cargo per week into the USWC market. “Many of our clients were in desperate need before the final agreement was reached but with our forward thinking and understanding how the negotiations typically panned out, we were able to deliver product on time and keep our clients supply chain moving during an extremely difficult time,” Pereira recalls. Such forward thinking is born out of his No. 1 goal since founding Trinity Logistics in 1997: always have the client’s best interest in mind, a notion Pereira instills throughout his global organization. “As a service organization there is nothing more important than listening to your clients. You can only achieve this with human intervention, building relationships and creating trust.”

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TOM SANDERSON
CEO
Transplace | 13 Years

With more than three decades of experience in the logistics technology, 3PL and transportation industries, Tom Sanderson has become a thought leader by looking at the big picture. He focuses on technology, the economy, legislative changes, fuel and freight rate fluctuations and transportation regulations to maintain an ongoing commitment to passing value to Transplace customers. Then he boils all these topics down on the “Transplace Blog.” You read that right: This CEO is a blogger. “Our customers asked us to keep them informed on a more frequent basis than our quarterly business reviews,” Sanderson explains. “A blog is an excellent way to communicate more frequently and allow the customer to read what they want when they want it. Not all CEOs would want to write their own blog. I try to stay on top of economic and regulatory activity that impacts freight transportation, and since I am on top of it anyway, it is not that hard or time consuming to write posts about the material. The key is to have a great intern or research assistance to help gather the data and present it in an easy-to-read chart. It all comes down to customer satisfaction and revenue growth. If customers get value from the blog and it helps us convert prospects to customers, then it is definitely worth the CEO’s time.”

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ELIJAH RAY
Executive vice president, Customer Solutions
Sunland Logistics | 3 Years

Elijah Ray is the Dr. Phil of logistics and supply-chain management. Early in Ray’s 25-year career in the industry, the thought leader recognized how easily and often shippers and providers became misaligned and the negative effects it had on both parties. So he developed a Relationship Management Process that helps shippers and providers remain aligned both strategically and tactically and to ensure there are multiple levels of relationship owners (strategic, business and operational) in the organization to promote active listening and win-win results. “Companies have to be intentional about managing relationships with strategic customers and suppliers such that it becomes second nature to everyone in the organization,” Ray says. “In other words, there is a culture centered on creating effective interactions with people and organizations. Most organizations that are focused on growth and capturing market share have processes to sell and procure but how many companies invest time training leaders how to manage relationships?” Ray has seen companies that have worked together for up to 20 years headed for Splitsville. “Part of managing relationships is to understand that conflict does occur in strategic relationships and it has to be managed. Companies that understand the ‘storming’ process know that when you get through it, partners can become stronger and more fruitful.”

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BRADLEY S. JACOBS
Chairman and CEO
XPO Logistics | 4 Years

Brad Jacobs is a career CEO who has founded five companies, including three world-class publicly traded corporations across three industries: transportation and logistics, equipment rental and waste management. Each became a billion dollar or multi-billion-dollar enterprise. But don’t call this thought leader old school. “Technology has the power to disrupt our industry in the best possible ways,” says Jacobs, who predicts artificial intelligence and nanotechnology will transform how goods are stored, handled and delivered. “Our commitment to technology is pervasive across the company,” he says. Proprietary technology facilitates omni-channel distribution, reverse logistics, lean manufacturing support, aftermarket support, supply chain optimization and transportation management. Logistics technology tracks billions of inventory units at any given moment. Even in the last mile business, “we hold the patents on industry-leading software for real-time workflow visibility and customer experience management. This gives us a competitive advantage in the last mile space,” Jacobs says. Technology gives XPO an edge in customer satisfaction as several hundred suggestions for enhancements that come each day are tracked via the cloud through to the moment they are rolled out as upgrades. “The evolution of supply-chain services will be driven not solely by what customers need,” Jacobs says, “but as much by the technologies developed to meet those needs.”

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BRIAN ALEXANDER
Executive vice president
Unyson | 10 Years

Unyson Executive Vice President Brian Alexander has been at the forefront of providing innovative solutions that generate supply chain savings, which are then passed on to customers. Alexander is a thought leader because he challenges his team to work cohesively with their partners in promoting healthy change management necessary to realize supply chain improvements. Through Unyson’s advanced optimization techniques and management of big data, the company is now able to enhance customers’ supply chain visibility and push real-time tracking while greatly increasing control over their transportation network. They have traded exchanging Excel spreadsheets for systemic interfaces as well as routine button-clicking for exception-based work queues. This has come about due to Alexander’s support for leveraging best practices across different supply chain verticals that are aimed at exceeding industry standards. The environment created out of this is largely due to Alexander’s unique vision and leadership, including the creation of proprietary technology that: (1) condenses the supply chain by reducing latent communication and shortens the decision-making process; (2) uses complex logic to automate key business processes allowing employees traditionally viewed as “operators” to function more like analysts, further feeding the ecosystem of innovation; (3) revolutionizes tracking solutions by giving customers unprecedented visibility to their dynamic supply chain. 

Archives, Features, Stories, Uncategorized

Sizzling Overseas

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That a cowboy fell in love with cast-iron cooking on a Nevada cattle drive and went home to evangelize about a Tennessee-made dutch oven may not sound that unusual until you learn the cowboy is a former advertising executive from Tokyo.

Hitoshi Kikuchi had been working with advertising and public relations giant Dentsu when he left stuffy board rooms for dusty trails. It was on one in Nevada where he met “Blacktop,” a trail cook who was using a Lodge Cast Iron dutch oven. Kikuchi fell in love with the outdoor cooking style at that moment and thought it would be a great fit back home. Given Japan’s crowded conditions, people could get out with their families in wide open spaces and cook together.

Fast forward 18 years and Lodge now finds itself “very strong at the moment” in Japan and growing elsewhere in Asia, according to Bob Kellermann, CEO of the company his great-grandfather Joseph Lodge founded in South Pittsburg, Tenn. (population 3,200), in 1896.

Kikuchi went on to write a five-page letter to Lodge Cast Iron saying he wanted to form the Japanese Dutch Oven Society and promote the brand in his country. He visited Tennessee the following Christmastime, “which ruffled my wife’s feathers a little bit,” Kellermann confides, “but when he came over that first time, she became enamored with him. He has been here several times, and I’ve been to Tokyo several times.”

Indeed, Lodge recently hosted four Japanese visitors at the company’s headquarters about 25 miles west of Chattanooga, two of whom were from its Tokyo distributor. The affinity for Lodge products spread from Japan to elsewhere on that side of the world, according to Kellermann.

“We are also doing extremely well and seeing a growing demand for Lodge cookware in South Korea, Taiwan and even the Philippines,” he says. “We have a really growing Asian business, more so than any other international market.”

What does he attribute that to?

“They appreciate our quality cast iron cookware in general; the longevity, versatility and value,” he says.

“A lot of Asian markets see U.S. brands as iconic because of the quality,” agrees Lee Riddle, Lodge’s director of Divisional Sales.

“Lodge is a popular brand, both domestically and internationally. That has really added to the traction of Lodge in Asia.”
Thanks to Kikuchi, Lodge first became associated with outdoor cooking in Japan, but in the years since has evolved to consumer kitchenware there, Kellermann says.

“Our goal is to get a Lodge cast iron skillet in every home in Japan,” he says. “That’s a big goal, and it’s not going to happen anytime soon, but we’re getting traction with kitchenware.”

Lodge actually sells to 50 different countries, with international business accounting for 5 to 6 percent of total sales. The CEO wants to push that to 20 percent while maintaining healthy domestic sales.

“We hope to get to 10 percent in the coming years,” Kellermann says of international sales.
How?

“Some of the same things we’ve been doing, better understanding the markets where we are selling to distributors, more multinational use and care information that can help the end user, like how to clean it, how to use it,” explains Bob Wilkerson, a Lodge salesman who Kellermann credits with being at “ground zero” when it comes to exporting.

“We’ve developed a lot of videos for our market here, and we’re adding Japanese subtitles,” Wilkerson continues. “It reinforces what we do here and encourages the end users to buy another piece. A lot of time we’re marketing to or networking with influencers like chefs, writers, food networks. That also happens in Korea and Japan, exposure of the brand to the folks who are going to buy at the markets.”

Don’t count Lodge out when it comes to its lofty export goals. The company recently received a 2015 Presidential “E” Award for Exporting.

“We are very proud of that,” Kellermann says. “Andy Collier of the U.S. Commercial Service Division of the Department of Commerce’s national office has been an ally for some years. He has been very helpful in all the little peculiarities. He nominated Lodge and the rest is history.”

Kellermann and his wife Cheryl made the trip to Washington, D.C., to receive the award from Secretary of Commerce Penny Pritzker.

“I think they said 25 different manufacturers represented $4.2 billion in sales,” Kellermann notes. “I wondered, ‘Why the hell are we in with this crowd?’ Harley Davidson was the only brand name I recognized, and they’ve been exporting for 100 years. … I was very proud and honored to be in that crowd.”

HARD BOILED Bob Kellermann is the 4th generation CEO of Lodge Cast Iron, and has been with the company for 46 years.
HARD BOILED Bob Kellermann is the 4th generation CEO of Lodge Cast Iron, and has been with the company for 46 years.

Lodge officials will likely be rubbing shoulders with successful American exporters for decades to come. For the past 10 years, the company’s products came in trilingual packaging, primarily in English, secondarily in French and Spanish. Kellermann says the company’s global spread has it adding Japanese, Korean, Chinese, Russian and German languages to its care and use packaging.
Another “real bright spot,” according Riddle, is the Netherlands, something he credits to a solid distributor.

“At the end of the day, if you do not have a good distributor, it is not going to help any,” Riddle says. “Also, there is some foundation in cast iron in that particular geography (northwestern Europe).”

Putting the Dutch in American-made Dutch ovens came after an experience similar to that of the the Japanese cowboy (kaubooi). Among the folks from the Netherlands whom Lodge representatives met one year at Ambiente—the Frankfurt, Germany, housewares show that is the largest on the globe—was a chef who had come to the States to work at John Folse Cajun Food in Louisiana.

“He became attuned to cast iron, understanding how versatile it is,” Riddle says of the Dutch cook, who is now a Lodge distributor. “That’s been an attribute.”

Not bad for a company that truly embodies the word “family.” Besides Kellermann’s direct tie to Joseph Lodge, Riddle is a fifth generation member of the Lodge family. That’s not the only reason his company elders can call him “kid.” Having started his business career with Pepsi, Riddle has “only” been at Lodge for eight years. Wilkerson is going into his 23rd year with the company. Kellermann has been there 46 years.

The CEO describes South Pittsburg as “a beautiful little town,” and given his company’s 120-year reign, many of the townsfolk do or have worked there. Lodge employs 285 “dedicated” employees, many of whom are second- and third-generation workers, according to Mark Kelly, the company’s marketing manager, who adds their “25-year club” boasts 25 to 30 employees. (Hang in there, Wilkerson!)

“This is such a neat place,” Riddle says. “Everyone loves it. You can move boulders when you have that. Everyone knows how well we value employees. It’s just a great place; everyone has a lot of pride here. We are very blessed.”

Those happy employees have rolled with constant changes, innovation and expansion. According to Kellermann, “Lodge has four basic principles that have been key to our success over the last 120 years: 1) an unwavering commitment to quality; 2) innovation; 3) reinvestment, and 4) dedicated employees.”

The company essentially “reinvented ourselves” in 2002 with the introduction of foundry seasoned cast iron, “which was a game changer,” according to Kellermann, who did concede to some initial bumps adapting to the new technology. Not that the dark days lasted long. “We just recently completed the most ambitious expansion in our company’s history,” notes the CEO, adding that Lodge is already growing out of that expansion.

The upswing has prompted Lodge’s recent hiring of a social media manager, who has established platforms on Twitter, Facebook and Pinterest not only to keep the public up on the products but to help with the recruitment of up to 150 new employees for the expansion.

“We’ve used Facebook in a 50-mile radius to send out announcements that we are looking for new employees,” Riddle says. “Through Facebook, there has been a tremendous response. For millennials, that is where the workforce is going to be.”

He also mentioned that Lodge bought a 3D printer so the product development team can bring new products to market quicker.
But perhaps the biggest existential change for Lodge has been importing enamel cast iron and accessories from China, which came after serious soul searching by a company that is all about high quality products.

“We have two suppliers there who follow our exact quality specs,” Kellermann says. “We do not take a chance with quality when it comes to products. We’ve sent a quality team to China and we have third-party inspections. All these things are in place. We are not going to put our name on anything that doesn’t meet our exact quality standards.”

Was it difficult giving up direct control?

“There was for sure a learning curve. I remember the first containers we had shipped here, before third-party inspections, we discovered defects that we were dealing with here on delivery instead of it having been corrected before it got here.”

“We now visit suppliers at least twice a year,” Riddle says. “It is all inspected prior to going out the door. That is invaluable to have in place. It gives us the insurance that it meets our expectations. It is working very well for us.”

“We have an advantage on the manufacturing side that we are not just an importer,” Wilkerson adds. “Because we are cast iron manufacturers, we know and set the standards of everything we import.”

The same cannot be said for everything everyone else imports, according to Kellermann.

ALL IN THE FAMILY Lodge employs nearly 300 workers, many of whom are second- and third-generation.
ALL IN THE FAMILY Lodge employs nearly 300 workers, many of whom are second- and third-generation.

“We see a lot of cheap stuff come in from China at discount prices,” he laments.

Think about it: If manufacturers in the Far East are sending crappy products to the U.S., they are likely selling them at home as well. That kind of quick-buck, short-term thinking likely created the market among countrymen, especially in growing middle classes, for high-quality products like Lodge Cast Iron’s.

“This was an eye opener for me, even five years back,” Kellermann says. “The worldwide public consumer still respects the Made in USA symbol. Consequently, we’ve been advised to put the flag on everything, to let them know it is made in the USA. They love it; it goes back to the cowboy days.”

He obviously means before Hopalong Kikuchi moseyed over the Pacific.