Zergratran's new Panama Canal 'alternative' – pull the other one
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It’s good news for the US and it’s latest trading partners. From the third quarter of next year, the US’s new free trade agreements with Panama, Colombia and South Korea should come into effect, a move which is expected to generate $12 billion in new US exports. The agreements are the US’s first since 2007, (although the deal with South Korea has been in negotiation since 2006). Passed by the US last week, it still needs ratification in Seoul. But the two nations seem to have overcome the big stumbling blocks, which include the auto trade, and the treaty should see the elimination of 95% of each nation’s tariffs in the next five years.
The sea ports are already rubbing their hands in glee. West coast ports are hoping to enjoy a boost machinery and car exports. Meanwhile the port of Miami, whose $6.86 billion trade with Colombia is expected to increase “exponentially” as the agreement with Colombia sees tariffs end immediately, is warming up for the widening of the Panama Canal in 2014.
But it’s not just sea freight that will see a boost.
For the edification of its readership, The Loadstar trawled through the commodities listed to find out the affect on air cargo. All 389 pages of it – and that was just Colombia’s agreement. Like a wedding list that got out of control it notes absolutely everything. From lavatory seats to reptile leather (not fancy), merry-go-rounds, to every sort of chemical you’ve never heard of. (Although one does wonder how strong the US-Colombia market is for ice and field hockey gloves (no tariff), or kohlrabi (20%).) But yes, the market for flowers, fish, high-tech, textiles should all see a boost. The question is whether it will be sustainable in the long term.
US exports have certainly been improving, and Asian nations in particular are finding themselves with a desire for American perishables, especially fish. Great for air freight, you might say.
Well, yes and no. Fish are on the move – modally speaking. Live lobsters are already going by ship. And more species are to follow. During Chile’s salmon crisis, US importers needed new sources, and found them in northern Europe. BA and Lufthansa enjoyed an immediate boost – and then came the ash cloud. Although only mildly affected, the potential threat to the supply chain galvanised fish shippers into seeking alternative transport options. And then Maersk stepped in. The Danish shipping line giant has, in conjunction with a university, developed packaging that allows it to transport farmed salmon in reefer containers, extending the shelf life for another 11 days. And it’s super-chilled salmon service is likely to be trialled by other products, including cut flowers and other perishables.
Still, for now and the next few years, air freight will continue to enjoy the bulk of the perishables business, and with the new free trade agreements, all carriers, both air and sea, should see a nice boost to business. Add to this last week’s news about Brazil’s technology deal to encourage Foxconn and others to set up shop there, and the Americas looks like it will have a few more opportunities coming its way.
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