Hyundai,

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SM
2001-2009
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finished goods, HMM understands the importance of ocean
transportation to your supply chain. Depend on us for reliable,
on time multimodal transportation service
Hyundai Merchant Marine. On time. Online.
YES, we’re here for small businesses.
YES, we’re here for big businesses.
YES, we’re lending to both.
At Regions, we’ve always put our customers first. And in tough Regions works for business.
economic times, that’s not going to change. We know that • Regions is currently ranked #3 on the list of Top
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© 2009 Regions Bank.

 Why did we get the
Best Seaport Award 13 times
in 14 years?
Hey, nobody’s perfect.

We’re striving for perfection every day—with our proactive

customer service, fast transit times, huge capacity, vast
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improvement. That’s why we’re so committed to smart
upgrades and expansion projects. We want to stay on the
forefront of goods movement. And on our winning streak.

www.POLB.com

©2009 The Port of Long Beach

Thinking outside the docks

 Inside
VOLUME 22 NUMBER 8
August 2009
16

FEATU RES E XE C UTI V E B R I E F I N G

10 Green Matters
COVER STORY: 12 Supply Chain Watch
13 Tradewinds
16 The Top U.S. Trade Partners
Our annual survey of the top U.S. trade partners and
our leading imports and exports.

COLUMNS
28 Taking Supply Chain Security
INSIDE WORLD TRADE
to the Next Level 8 Out with the Old,
Mobile security is playing a big part, in with the New
but it’s not a silver bullet. Turning the page at World Trade
By Dan McCue
while entering a new chapter of
28 world trade.
34 Staples Nails Sustainability
By Lara L. Sowinski
The office company’s embrace of
environmentalism is paying off.
By Gail Dutton SCI-FI
50 The Cargo-Screening
38 Is Trade with Cuba a Reality? Robotic Ferret
Recent developments in the Obama Scientists at the University of
administration could open the door wider. Sheffield, England unleash a new
By Dan McCue ‘animal’ for screening cargo.
34
By Jeremy N. Smith
REGION
44 NAFTA: Two Sides of the Coin
Mexican manufacturing bounces back while
Canada frets over U.S. protectionism.
By Lara L. Sowinski

TRANSLATION
47 Talk About a Tough Sell
Making the case for spending on translation 38
services in a slow economy.
By Jeffrey Jorgensen

WORLD TRADE, WT100 Volume 22, Number 8 (ISSN 1949-9159) is published 12 times annually, monthly, by BNP Media II, L.L.C., 2401 W. Big Beaver Rd., Suite 700, Troy, MI 48084-3333. Telephone: (248) 362-3700, Fax: (248) 362-0317. No charge for subscriptions
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 ®
INSIDE
WORLD TRADE
Group Publisher Tom Esposito
Publisher Sarah Harding
Managing Editor Lara L. Sowinski
Art Director Michael T. Powell
Contributing Writers
Mark Bernstein, Richard Barovick, Gail Dutton, Joshua Kurlantzick,
Andrea MacDonald, Clay Risen, Jeremy Smith, April Terreri, Amy Zuckerman

Grant Belanger
Ford Motor Company
WORLD TRADE MAGAZINE
EDITORIAL ADVISORY BOARD
Beth Enslow
Global Supply Chain Resiliency
Out with the Old,
Director South America Operations
Steve Palagyi
Director, Pacific Region
PRTM Consulting
Marsh, Inc.
Kurt Cavano,
Chairman and CEO,
TradeCard
in with the New
Erik Autor Frank Vogl,
Vice President and Vogl Communications,

A
International Counsel Washington D.C. s we turn the page The first argument states that most other
National Retail Federation at World Trade, countries have similar provisions. “But, since
Thomas E. Crocker
Co-Chair International Trade and
Susan G. Esserman
Chair, International Department Regulatory Group, Alston & Bird LLP you’ll notice that when did the fact that lots of folks do some-
Steptoe & Johnson aside from our new thing make it right?” she asks. Moreover, tax-
name—WT100—we’ve payer money shouldn’t be spent on foreign
SALES begun to make some products, and third, using American-made
Publisher
/West & Midwest Sales
Sarah Harding
216.991.4861
editorial changes too. inputs supports American jobs, say support-
hardings@worldtradewt100.com Our Policy Perspec- ers of the Buy American provision. “Cer-
National Sales Director-East Randi Giambruno tives column has been tainly, we all want to see full employment,
516.377.3906
giambrunor@worldtradewt100.com replaced with Green but there are four industries that the U.S. has
Inside Sales Manager/Print Vito Laudati Matters—a column historically protected through high tariffs and
630.694.4018
Fax: 248.283.6618 summarizing ‘green’ non-tariff barriers (such as quotas)—automo-
laudativ@bnpmedia.com LARA L. SOWINSKI news in the logis- biles, wearing apparel and textile products,
Asia Hong Kong Office tics sector as well as footwear, and steel and steel products. How
Publicitas
Wendy Lin broader sustainability initiatives. many of them are competitive in today’s
Tel: 852.2527.3525,
Fax: 852.2528.3260 Great Moments, which highlighted world market?” Ross responds. She adds
Director Custom Media Steve Beyer historical milestones in world trade, has that, “As to spending taxpayer money for
Tel: 847.516.1977, Cell: 630.699.7625
beyers@bnpmedia.com been swapped out for SCI-fi (the “SCI” these infrastructure projects, shouldn’t the
standing for Supply Chain Innovations), a goal be to get the best return on our invest-
OPERATIONS STAFF column profiling cutting edge, radical, and ment? All things being equal, including the
Production Manager John Talan, 248.244.8253 in some cases ‘still on the drawing board’ safety and efficacy of the finished product,
Marketing Coordinator Amanda Podina
Web Seminar Project Manager Danielle Belmont, 248.786.1613 developments and technologies that have shouldn’t we use the cheapest inputs, even
Reprint Manager & Cindy Williams
Trade Show Coordinator 610.436.4220 ext. 8516 potential for future supply chains. if they are foreign? Doesn’t the government
williamsc@bnpmedia.com
Group Audience Development Manager Christopher Sheehy In this month’s annual survey of the have a fiduciary duty to get the best bang for
Multimedia Manager
Corp. Audience Audit Manager
Katie Jabour
Catherine Ronan
U.S.’ leading trade partners and biggest the taxpayer buck?”
Postal List Rental Robert Liska, 800.223.2194 imports and exports, one thing stayed the And yet, just when it looks like rising pro-
robert.liska@edithroman.com
E-mail List Rental Shawn Kingston, 800.409.4443 same, however, and that’s Canada’s posi- tectionism is getting a foothold, our trade
shawn.kingston@epostdirect.com
Single Copy & Back Issue Sales Ann Kalb, 248.244.6499 tion as our top trade partner. We again relations with Cuba are showing the earliest
kalba@bnpmedia.com
consulted Coface for their assessment of signs of reparation, as contributing editor
WORLD TRADE HEADQUARTERS
the risk associated with these trade part- Dan McCue reports this month. President
600 Willowbrook Lane
ners and also added several new indices, Obama’s easing of family travel restrictions
Ste. 610 like the Heritage Foundation’s Index of and remittances earlier this year has given
West Chester, Pa. 19382
www.worldtradeWT100.com Economic Freedom and the World Eco- hope to many in the trade community that
nomic Forum’s Global Competitiveness the long-standing trade embargo will even-
CORPORATE
Ranking, to see how our top 15 trade part- tually be dismantled too.
ners fared on other fronts. Administrations change. Trade policies
CORPORATE DIRECTORS
It’s worth mentioning that our trade change. World trade (and World Trade)
Publishing Timothy A. Fausch relationship with Canada isn’t entirely rosy changes.
Publishing John R. Schrei
Audience Development Christine A. Baloga at the moment, with the ‘Buy American’ As always, we welcome your view. Drop
Custom Media Steve M. Beyer
Corporate Strategy Rita M. Foumia provision contained within the American us an email or visit us on Facebook and let
Information Technology Scott Kesler
Production Vincent M. Miconi Recovery and Reinvestment Act causing a us know what you see.
Finance Lisa L. Paulus
Creative Michael T. Powell bit of friction with our northern neighbor.
Marketing Michele Weston-Rowe
Directories Nikki Smith
Susan Kohn Ross, International Trade
Human Resources Marlene J. Witthoft Counsel with Mitchell Silberberg &
Conferences & Events Scott A. Wolters
Clear Seas Research John E. Thomas Knupp LLP addressed this issue recently,
BNP Media Helps People Succeed in Business with Superior Information calling into question the three arguments Lara L. Sowinski, Editor
BNP Media Corporate Telephone: 248. 244.6400
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8 WO R L D T R A DE 1 0 0 A U G U S T 2 0 0 8
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GREEN MATTERS
Port of Indiana
Handling Equipment
for Massive Wind Farm
The Port of Indiana-Burns
Harbor has begun handling
shipments of wind turbines
and blades, which will be used
to construct one of the world’s
largest wind farms in the north-
western part of the state.
T he Me adow L a ke W i nd
Farm—a 26,000-acre “clean
energy” project—could eventu-
ally contain 600 turbines supply-
ing power to more than 250,000
homes.
On June 1, the port received
the first shipment of generators
and hubs built by Denmark-based
Vestas Wind Systems. Later that
month, 94 blades measuring 132-
feet long by 10-feet high and
6-feet wide were unloaded at the
port, along with more generators
and hubs.
Cold-ironing for
Crowley at the
Port of LA
Crowley tugboats operating at
the Port of Los Angeles have
begun using newly installed
shore-side electrical power when
not on the job to cut fuel con-
sumption and reduce carbon
dioxide emissions. Shore-side
electrical power, also known
as cold ironing, is expected to
reduce Crowley’s carbon dioxide
emissions by more than 486,180
pounds in the first year alone,
while significantly saving on
fuel that was previously used to
run the tugs’ generators.
Crowley already has cold ironing
capabilities in Seattle, Jacksonville,
Pennsauken and Puerto Rico.
“We are very pleased to be a
part of this important green ini-
tiative with the Port of Los Ange-
les,” said Frosty Leonard, Crowley
manager of marine operations
in California. “Using shore-side
power is not only the environ-
mentally friendly thing to do, it’s
just good business.”
10 WO R L D T R A DE 1 0 0 A U G U S T
As an added benefit, Leonard
said shore-side power eliminates
the constant noise from the
engines that disrupts the crews’
rest periods and provides engi-
neers a quieter engine room in
which to work.
PepsiCo Opens
First Green Beverage
Plant in China
Beverage giant PepsiCo has
opened the first green beverage
plant in China that complies with
the Green Building Council’s Lead-
ership in Energy and Environmen-
tal Design (LEED) standards.
The beverage facility, located
in the western city of Chongq-
ing, “is important to the com-
pany’s ongoing strategy to
expand in emerging markets
and broaden its portfolio of
locally relevant products,” the
company said.
Compared to the average Pep-
siCo plant in China, the Chongq-
ing plant uses 22 percent less
water and 23 percent. To save
energy, 75 percent of the plant’s
indoor areas feature natural
lighting, including a skylight in
the packing area and warehouse,
while a roof garden insulates the
office building and saves energy
for cooling and heating.
Dow Chemical in Pilot
Project to Create Fuel
from Algae, CO2
Dow Chemical has announced plans
to partner with Algenol Biofuels in
a pilot project to use algae and
carbon dioxide to produce ethanol
fuel. The site of the project will
likely be located at Dow’s Freeport,
Texas facility.
The project will be based on
Algenol’s technology, which
mixes carbon dioxide and saltwa-
ter with algae in photobioreactors
to produce the biofuel.
Dow said the project aims for
“a breakthrough process for etha-
nol production” that does not use
food sources such as corn.
2 0 0 9
KCS Railroad Greens its Locomotives
Kansas City Southern railroad is adding 27 locomotives to
its fleet that utilize Electro-Motive Diesel (EMD) technology.
The locomotives minimize fuel consumption while maintain-
ing emissions compliance, producing 25 percent fuel savings,
50 percent lube oil reductions, and 70 percent reduction in
greenhouse gas emissions, which makes them U.S. Environ-
mental Protection Agency (EPA) Tier II compliant and eligible
for both state and federal funding as clean air projects.
Eleven locomotives will be in service on the Kansas City
Southern Railway Company network, while 16 locomotives
will be in service on the Kansas City Southern de Mexico,
S.A. de C.V.
The U.S. is the world’s top vessel’s total electrical energy
producer of corn-based ethanol, consumption, it can be combined
but critics say this diverts needed with other energy-saving mea-
food supplies and land resources sures to reduce energy consump-
for fuel, while raising food prices tion and limit the vessel’s carbon
on world markets. footprint.
NYK Vessel Gets its Green Technologies
Power from Solar to Comprise
The world’s first solar-assisted 40 Percent of
auto carrier, the NYK Auriga Siemens’ Orders
Leader, called the Port of Long Government economic stimulus
Beach last month with a ship- plans are expected to result in
ment of Toyota automobiles. 15 billion euros ($21 billion) in
According to NYK Line execu- orders worldwide between 2010-
tives, the shipment represents 2012 for Siemens, with about 40
the first step towards a distant percent of that amount for envi-
goal of developing a zero-emis- ronmental or “green” technolo-
sion vessel. gies, the company said recently.
The top deck of the NYK Auriga Already, the company’s pro-
Leader is equipped with 328 duction of such products as
solar panels. The panels generate low-consumption light bulbs
40 kilowatts of power that feed and wind turbines accounted for
into the vessel’s auxiliary engine, roughly 19 billion euros in Sie-
which in turn supplies the ship’s mens’ 2007/2008 fiscal year.
electricity and other internal Meanwhile, in 2011, orders for
power requirements. green products are forecast to
Although solar power accounts climb to 25 billion euros, Siemens
for only about 0.8 percent of the said. WT
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T R U C K I N G A I R O C E A N
SUPPLY CHAIN
AIR
Freight Demand
Stabilizing,
Says IATA
The International Air Transport
Association (IATA) said recently
that demand for airfreight has
begun to stabilize, with May’s
volumes posting a modest 3 per-
cent increase over April’s figures.
According to IATA, the latest
figures represent a “first sign”
of economic recovery in equity
markets.
Nonetheless, the industry
group says the long-term outlook
for airfreight remains grim.
“Even if we look beyond the
[economic] crisis, it is difficult to
see a return to business as usual.
This crisis is re-shaping the
industry,” stated IATA director-
general Giovanni Bisignani.
The impact of airline debt and
low asset prices will also delay
any recovery, according to IATA,
which estimates the industry
may lose $9 billion this year.
UPS, FedEx to
Trim Fuel Costs
United Parcel Service (UPS) and
FedEx have both announced fuel
saving measures that will not
only trim costs but boost sus-
tainability efforts too.
For its part, UPS aims to cut
its airline fleet’s greenhouse gas
emissions 42 percent from 1990
levels during the next decade by
using less fossil fuel in its jets.
The company operates the
world’s ninth-largest private air-
line fleet with 228 jumbo jets
in service and 314 more char-
tered aircraft. UPS is planning to
invest in more fuel-efficient air-
craft models, introduce biofuels,
reduce runway idling and opti-
12 WO R L D T R A DE 1 0 0 A U G U S T
T E C H N O L O G Y
mize flight routes, among other
things, to slash its fuel costs and
emissions of carbon dioxide and
other heat-trapping gases.
“Our customers are asking us
to do this and are looking for
green partners,” said Lynnette
McIntire, a company spokes-
woman. “We are a huge part of
their supply chain.”
On the other hand, rival FedEx
says it plans to get 30 percent of
its fuel from petroleum alterna-
tives by 2030. According to the
company’s CEO Fred Smith, FedEx
will soon switch from MD-11s to
Boeing 777s for its long-range,
international routes. The com-
pany will also phase-out Boeing
727s for 757 models, which are
47 percent more fuel-efficient.
Aviation accounts for about
10 percent of U.S. greenhouse
gas emissions from transporta-
tion, or about 2.7 percent of the
nation’s overall carbon footprint,
according to the U.S. Department
of Transportation.
OCEAN
Major Shipping
Lines Hike Asia-
U.S. Rates
The 14 shipping lines of the
Transpacific Stabilization Agree-
ment (TSA) say they will hike
rates by $500 per 40-foot con-
tainer on the eastbound Asia-U.S.
route to end a price war caused
by slumping demand, overcapac-
ity and “panic.”
The increase will take effect
on August 10.
Average revenue per container
dropped as much as $1,200 from
October to May, the TSA said.
“The lines are taking the
opportunity of the peak season
to reduce losses,” remarked a
shipping analyst. “That doesn’t
mean demand has come back.”
2 0 0 9
T R A D E F I N A N C E
Maersk to Open
Watch
Chassis Pool in
NY/NJ Region
Maersk Line is planning to open
a chassis pool in the New York/
New Jersey port region during
the third quarter—the first in
a number of sites the company
plans to unveil.
The NY/NJ location will offer
over 5,000 chassis, however
Maersk will eventually make its
total U.S. fleet of 90,000 chassis
available throughout the U.S.
The company said the new
business model for its chassis
fleet will fundamentally change
its carbon footprint. It estimates
that the program will cut carbon
dioxide emissions by over 4,000
tons a year when the program is
rolled out nationwide.
The U.S. Environmental Pro-
tection Agency’s SmartWay Trans-
port Partnership recommends the
use of common chassis to reduce
the environmental impact of
drayage. “According to SmartWay,
common chassis pools can help
trucking companies save fuel and
reduce greenhouse gas emissions
by minimizing unnecessary truck
movements and idling associ-
ated with switching chassis,”
explained Lee Kindberg, Maersk
Line’s environmental director.
RAIL
UP Investments
Boosting
Intermodal
Union Pacific Railroad says that
improvements on its network
over the past few years are help-
ing boost intermodal capacity
and on-time performance, which
is now at an all-time high.
According to the railroad,
recent routing upgrades have
3 P L W A R E H O U S I N G
reduced mileage and prevented
congestion in certain lanes, such
as a northern California-to-Dal-
las route that’s more than 1,000
miles shorter and takes 30 fewer
hours to travel through compared
with a previous route.
The Omaha, Nebraska-based
railroad plans to invest $1.7 bil-
lion during this year to strengthen
the track infrastructure across its
more than 32,000-mile system.
TRUCKING
Mexican Truck Ban
Costly for Some
U.S. Businesses
The U.S. government’s decision
this past spring to ban funding for
a pilot program allowing Mexican
trucks full access to U.S. highways
prompted Mexico to impose retal-
iatory tariffs on U.S. exports to
Mexico, which is making it costlier
for many U.S. businesses.
According to a report in the
Dallas Morning News, eighty-five
of the 90 U.S. exports targeted
by the retaliatory tariffs are
made or grown in Texas. And one
company, Dallas-based cosmetics
manufacturer Mary Kay, says the
tariffs are costing the company an
additional $450,000 each month.
Mary Kay has joined with other
companies to urge the Obama
administration to find a solution
that would allow Mexican trucks
back onto U.S. highways.
“Since the tariffs were
imposed, we have worked non-
stop to affect this issue,” noted
Anne Crews, Mary Kay’s vice
president for government rela-
tions. “This is having a real effect
on U.S. companies and needs a
quick resolution.”
Transportation Secretary Ray
LaHood has stated that he is
optimistic that a solution could
be found very soon. WT
 TRADEWINDS THE LATEST TRENDS IN THE WORLD OF TRADE

Thawing U.S.-Russia Relations other WTO member-nations

have a ways to go.
Bilateral trade between the
AMERICAN FIRMS SEEING SOME BUSINESS BREAKTHROUGHS U.S. and Russia amounted to
$36 billion last year, just 1 per-
Concerns over Russia’s red about 2,000 people in Russia The 1974 law limited trade cent of all U.S. trade..
tape and weak legal system has and has a presence in the coun- with Communist nations that
hampered U.S. investment in try for 130 years. restricted the emigration of
recent years, but a recent busi- Nonetheless, U.S. Secretary Soviet Jews, but remains on the
Paying for the
ness summit that coincided of Commerce Gary Locke said books due to lingering post- Highway Trust Fund
with President Obama’s meet- U.S. investment in Russia is “a Cold War disputes on trade SENATOR LOOKS TO ‘HEAVY USERS’
ing with Russian President fraction of what it could be” and other issues.
Dmitry Medvedev resulted in because of excessive bureau- Even still, Russia represents California Senator Barbara
several high-profile deals. cracy, which hampers trade. a potential goldmine for U.S. Boxer wants ports, railroads,
PepsiCo said it would boost That’s the reason cited by businesses and investors in the and trucking companies to be
investment in Russia by $1 bil- Swedish furniture manufacture health care, information tech- the primary source of funds
lion, bringing the company’s for deciding to postpone any nology, and energy conserva- for the Highway Trust Fund,
total outlay in Russia to $4 bil- new investment in Russia while tion sectors, among others, said which is expected to run out of
lion. It also opened a new bot- also shelving plans to open an Locke, adding that improved money as soon as August.
tling plant south of Moscow additional 30 stores there. commercial relations could “I’m not going to keep going
over the summer. Locke also said that Moscow help mend political differences back to the American public
Farm equipment manufac- should lift its restrictions on between the U.S. and Russia. on a gas tax. Let the heavy
turer Deere & Co. plans to U.S. poultry and pork imports Russia has also been trying users like the truckers step up
expand its operations in Russia to encourage the U.S. Congress for years to join the WTO, and to the plate, and we can work
by early 2010 with the support to repeal the Jackson-Vanik while negotiations have moved together,” Boxer said during
of the Russian government. amendment, a point of conten- forward somewhat with the a recent Senate Environment
The company already employs tion between the two countries. U.S., talks with the EU and and Public Works hearing.
In June, the Obama admin-
istration asked Congress to
extend the current highway
Transportation Services Index (TSI) program for 18 months to allow
time to find money to replenish
the Highway Trust Fund.
The federal Highway Trust
July
June
112.9 August
Fund was created in 1956 to
111.5 ensure financing and mainte-
110.8 September October
109.1 nance for the U.S. Interstate
108.0
November Highway System and certain
103.2
December other roads. Money for the
February
100.3 January
99.1
fund is raised indirectly via
97.8 March
April
May a federal fuel tax and related
95.6
94.6 94.0 excise taxes.
JUNE 2008 – MAY 2009
NAM Warns
Customs’ 10+2
The Freight Transportation Services Index (TSI) fell 0.6 percent in May to a level of 94.0
(2000=100), declining for the third consecutive month to the lowest level in 12 years, according
Will Cost Billions
to the U.S. Department of Transportation’s Bureau of Transportation Statistics (BTS) office. RULE SET TO TAKE
TSI is a single seasonally adjusted index of the month-to-month changes in the output EFFECT NEXT JANUARY
of services provided by the for-hire transportation industries, including railroad, air, truck, A survey conducted by the Cus-
inland waterways, pipeline, and local transit. toms and Border Coalition, a
group launched by the National

W W W. WO R L DT R A D E WT 1 0 0 .C O M 13
TRADEWINDS
Names
& News
Kurz, Widdows
Receive Awards
The United Seamen’s Service
(USS) 2009 40th Annual Admi-
ral of the Ocean Sea Awards
(AOTOS) will be presented to
Donald Kurz, President and
CEO of Keystone Shipping Co.,
headquartered in Philadelphia,
and to Ronald Widdows, Group
President and CEO of NOL (Nep-
tune Orient Lines) of Singapore,
parent company of American
President Lines (APL).
The maritime industry’s
most prestigious honors will
be awarded at a gala industry
dinner and dance to be held at
the Sheraton New York Hotel
and Towers, New York City, on
November 13, 2009.
Echo Global
Logistics’ Waggoner
Recognized
Echo Global Logistics, a technol-
ogy-driven transportation man-
agement firm, has announced
that CEO Douglas Waggoner
received the Ernst & Young
Entrepreneur Of The Year® 2009
Award in the Emerging Compa-
nies category in the Midwest
region. According to Ernst &
Young LLP, the award recog-
nizes outstanding entrepreneurs
who are building and leading
dynamic, growing businesses.
Association of Manufacturers
(NAM), finds that U.S. Customs
and Border Protection’s (CBP)
10+2 rule will end up costing
the U.S. economy more than
$20 billion annually.
“The potential impact of
this rule is huge,” warned John
Engler, president of NAM. “To
put the cost in perspective, it
is virtually the equivalent of
doubling the import tariffs that
manufacturers now pay to bring
14 WO R L D T R A DE 1 0 0 A U G U S T
MOL Appoints An
MOL has appointed Andrew An
to the position of assistant vice
president North America China
sales. An joined MOL’s Atlanta
office in 1997 as an account
executive, and has since served
in various sales assignments
throughout the country.
Ryan in New Role at
CEVA Logistics
CEVA Logistics has appointed
Matthew Ryan to the newly cre-
ated position of Chief Operat-
ing Officer. This role will focus
on ensuring CEVA continues to
provide industry leading opera-
tional and supply chain service
excellence.
Chipman Next CEO
for Grant Thornton
Stephen Chipman will assume
the CEO spot at accounting
firm Grant Thornton on Janu-
ary 1, 2010. Chipman was most
recently chief executive offi-
cer, Greater China Management
Corporation, responsible for
leading the development and
growth of services for Grant
Thornton in China.
TMCA Awards
Abernathy
The Transportation Market-
ing & Communications Asso-
products and components into
the United States.”
CBP’s Importer Security
Filing rule, known as 10+2,
requires importers to provide
10 data elements and ocean
carriers an additional 2 ele-
ments to CBP no later than
24 hours before ocean cargo
is laden on board a vessel des-
tined to the U.S.
The rule will be fully imple-
mented on January 26, 2010.
2 0 0 9
ciation (TMCA) has awarded
George Abernathy, executive
vice president and chief oper-
ating offi cer for Transplace,
as the “2009 TMCA Transpor-
tation Marketing Executive
of the Year.” This honor was
awarded June 2 at TMCA’s
Annual Conference in San
Diego, Calif.
Freese to Succeed
Newsome at
Hapag-Lloyd
Hapag-Lloyd, the German ocean
container carrier, announced
that Wolfgang Freese will suc-
ceed Jim Newsome as president
of Hapag-Lloyd (America) on
September 1.
Newsome will leave the com-
pany after 12 years to take a
new job as president and chief
executive officer of South Caro-
lina State Ports Authority.
Sky-Trax Chooses
McDonnell
William H. McDonnell has been
hired by Sky-Trax Inc. to serve
as the company’s Chief Finan-
cial Officer. McDonnell will be
responsible for the company’s
financial controls, financial
reporting, financial plan-
ning, day-to-day management
of financial operations, and
human resources.
At that time, CBP plans to
enforce the rule with penalties
of $5,000 per violation.
U.S. Logistics
Costs Dropping
FIRST TIME IN 6 YEARS,
FINDS CSCMP REPORT
The latest “State of Logistics
Report” released by the Council
of Supply Chain Management
Professionals (CSCMP) reveals
that logistics costs fell to 9.4
percent of U.S. gross domes-
tic product (GDP) in 2008—a
stark contrast to the previous 5
years that saw logistics costs rise
50 percent overall.
Inventory-carrying costs
experienced a 13 percent drop
in 2008, and were the driving
force behind the year’s decline
in logistics costs. The decrease
in carrying costs was due to both
a 2.2 percent drop in inventories
and an 11.2 percent decrease in
the inventory-carrying rate.
Since 1988, the report has
tracked and measured all costs
associated with moving goods
through the U.S. supply chain.
The report benchmarks key
metrics in logistics, such as trans-
portation and inventory-carrying
costs, freight volumes, and reve-
nues, giving practitioners a big-
picture view of the performance
of the supply chain process.
Commenting on the report,
Rick Blasgen, CSCMP president
and CEO, said, “The economy
will eventually recover, and when
it does, those companies that use
the statistics and industry insight
contained in this report will be
better prepared for the busi-
ness boom ahead. This research
details ways that company lead-
ers can capitalize on the recovery
when it occurs, such as restructur-
ing their distribution networks to
maximize efficiency and minimize
miles, investing in technologies to
facilitate ‘green’ transportation,
and improving real-time data
flows to increase visibility and
enhance productivity.”
Asia-Pacific
Primed for SaaS
STRONG GROWTH FORECAST
FOR ON-DEMAND APPS
A survey by Springboard
research shows that the Asia-
Pacific market for Software-as-
a-Service (SaaS) will grow from
$35 million in 2008 to $193
million by 2012.
 The survey revealed that
35 percent of the respon-
dents intended to purchase
SaaS-based ERP (enterprise
resource planning) in the next
12 months. Around 20 percent
of those surveyed were already
using SaaS ERP.
Analysts predict the SaaS
market to grow faster in Asia,
especially in the markets of
China and India, than in U.S.
or any Western market.
SaaS is a model of software
deployment whereby a pro-
vider licenses an application to
customers for use as a service
on demand.
Japan to Recognize
U.S. Trade Security
Programs
MUTUAL RECOGNITION WILL HELP
EXPEDITE CARGO CLEARANCES
Officials from Japan and the U.S.
have agreed to mutually recog-
nize their respective trade secu-
rity and facilitation programs to
expedite bilateral trade.
The U.S. trade security
and facilitation program is the
Customs-Trade Partnership
Against Terrorism program, or
C-TPAT.
According to Japanese offi-
cials, the mutual recognition
agreement is the second of its
kind for Japan and the fifth of
its kind in the world. The coun-
try already has a similar pact
in place with New Zealand,
while the U.S. has established
agreements with New Zealand,
Canada, and Jordan.
Tightening
Security at India’s
Top Box Port
RECENT SNAFUS HIGHLIGHTED LAPSES
Customs officials at the Port
of Jawaharlal Nehru—India’s
biggest container port—have
issued new security regulations
to improve container-screening
procedures.
The move follows a string
of incidents where containers,
specifically those identified for
scanning, evaded the customs
agency’s scrutiny. “It has been
noticed that sometimes con-
tainers, which are selected for
scanning, are not presented for
scanning and are being taken
directly to respective freight
stations without scanning.
This non-reporting of selected
containers to the scanners is
defeating the very purpose of
scanning in the heightened
security scenario,” customs
officials explained.
The new procedures stipu-
late that once a container is
selected for scanning, it will not
be exempted from the process.
India’s Port of Jawaharlal
Nehru handles nearly 60 per-
cent of India’s container traffic.
In fiscal 2008-09, total volume
handled by its three terminals
was 3.95 million TEUs, com-
pared with 4.06 million TEUs
the previous year.
Seizures of Fake
Goods Up 125%
in EU
MORE THAN HALF FROM CHINA
The European Commission
says the number of counterfeit
seizures jumped 125 percent
between 2007 and 2008, with
over half coming from China.
Customs officers seized 178
million counterfeit items last
year that were headed for the
27 nations in the European
Union, including CDs, DVDs,
cigarettes, and clothing.
In fact, CDs and DVDs
accounted for 44 percent of
confiscated items followed by
cigarettes at 23 percent and
clothing at 10 percent.
The Commission found that
more than half of the fake goods
confiscated in 2008 came from
China. Furthermore, a signifi-
cant portion of the confiscated
products were potentially dan-
gerous for European consum-
MARK YOUR
Calendar
SCOPE West
Las Vegas, Nevada
August 19-21
www.scopewest.com
Third International
Conference on Energy
Solutions for Transport
Reykjavik, Iceland
September 14-15
www.drivingsustainability.org
World Trade Magazine will be publishing announcements of forthcoming
global supply chain events in every issue. For inclusion, please forward
event details to laras@worldtrademag.com
ers, the governing body said.
Fake medicine came from
India, forged food and drink
products were from Indone-
sia, while the United Arab
Emirates was listed as the
main source of counterfeit
cigarettes, said officials.
EU, U.S. Challenge
China’s Export
Restraints
WTO CALLED IN TO INVESTIGATE
Trade officials from the EU
and U.S. have requested inves-
tigations from the WTO over
China’s export restraints on
several important raw materials,
including bauxite, coke, fluor-
spar, magnesium, manganese,
silicon metal, silicon carbide,
yellow phosphorus, and zinc.
China is a major global pro-
ducer of these raw materials.
According to U.S. Trade
Representative Ron Kirk, his
agency “is very concerned that
China appears to be restricting
the exports of these materials at
the expense of U.S. industries
that need these materials, and
their workers. This appears
to be occurring despite strong
WTO rules designed to disci-
pline export restraints.”
W W W. WO R L DT R A D E WT 1 0 0 .C O M
CSCMP Annual Global
Conference 2009
Chicago, Illinois
September 20-23
http://cscmpconference.org
Cool Logistics
Hamburg, Germany
September 28-30
www.coollogisticsconference.
com
For her part, EU Trade Com-
missioner Catherine Ashton
said, “The Chinese restrictions
on raw materials distort compe-
tition and increase global prices,
making things even more diffi-
cult for our companies in this
economic downturn.”
Athens Airport
Improving
Customs
Clearances
OLYMPIC GAMES PROVIDED THE PUSH
The Athens Airport is working
with the EU to improve cus-
toms clearances and automate
the cargo system to bring it up
to par with other European
airports.
“It is vital that we provide
a fast and flexible service to
encourage more freight traffic
at this airport,” said Vasiliki
Kalamara, who took over as
head of Airport Customs some
eighteen months ago.
Since the Olympic Games
four years ago, Athens Airport
has gradually introduced more
flexible procedures and oper-
ating hours, particularly for
freighters, which mostly oper-
ate at night. WT
15
COVER STORY

The Outlook for the

Top U.S.
Trade Partners
While the downturn in the global economy is affecting
trade partners across the board, some have higher
risk factors than others.

For this year’s snapshot of the risk factors associated with the top U.S.
trade partners, we again turned to Coface, a world leader in trade-
credit information and protection, for their expertise and analysis.
The sobering news is that the 2008-2009 credit crisis, defined as a sub-
stantial rise in corporate defaults stemming from an economic shock, is
quite serious, with simultaneous recessions in the world’s three major
industrialized regions: Japan, Western Europe, and the United States.
Furthermore, dwindling demand coupled with a credit crunch brought
on by the banking crisis is a vicious cycle that can only be broken by
a restoration of confidence, according to Coface. On a better note, the
credit crisis should end by late 2009, Coface believes, and if the global
economy has indeed reached the proverbial ‘bottom’ and has begun to
stabilize, then we can say with assurance that we are setting foot on the
path to recovery. –Lara Sowinski, Editor

16 WO R LD T RADE 1 0 0 A U G U S T 2 0 0 9
W W W. WO R L DT R A D E WT 1 0 0 .C O M 17
Canada TOP 15 U.S.
The economy sagged slightly in the second half of 2008,
a trend expected to continue in early 2009 before giving
way to a period of stabilization and then a modest recov-
TRADE PARTNERS
(total goods imported/exported
ery toward year-end. The economic decline is attributable in 2008; US$ billions)
to persistently poor export performance—with a quarter
of Canada’s growth dependent on economic conditions
in the United States—and the downturn of investment. Country Value
Although consumption has shown some strength, it has
not sufficed to reverse the negative trend. 1. Canada $596.9
Exports will continue to decline due to weaken- 2. China $409.2
ing demand from the United States for manufactured
products, the Canadian dollar depreciation against the 3. Mexico $367.5
U.S. dollar notwithstanding. Amid falling world prices, 4. Japan $205.8
meanwhile, raw material sales will decline more sharply
in value than in volume. 5. Germany $152.3
Investment will in general also trend down. Corporate 6. United Kingdom $112.4
investment will suffer from both sluggish demand and
less favorable credit conditions. The downturn will be 7. South Korea $82.9
sharper in the western provinces—especially Alberta—
8. France $73.2
which have suffered most from the bursting of the raw-
materials speculative bubble. The collapse of oil prices 9. Saudi Arabia $67.3
will moreover likely jeopardize several oil shale explora-
tion and exploitation projects.
10. Venezuela $64.0
Households are expected to invest slightly less on 11. Brazil $63.4
housing but that trend will be unlikely reach the pro-
portions observed in the United States thanks to a more 12. Taiwan $61.6
tightly supervised system of financing and the absence of 13. Netherlands $61.4
past excesses. Sharp declines could nonetheless develop
in major western urban areas. 14. Italy $51.6
Consumption by households will likely manifest some 15. Belgium $46.4
strength reflecting their generally good financial health Source: U.S. Census Bureau
and limited indebtedness, the continued growth of real
wages, and an unemployment rate that, although rising, ural
social measures (education, subsidies to rural
remains at historically low levels. Public spending is sim- populations, housing aid, etc.). The plann
ilarly expected to remain an anchor of economic stability is intended to avert a severe-slowdown
thanks to the public sector’s good financial health. scenario that could cause a significant
upsurge of payment defaults and an
China increase in social unrest.
After peaking in 2007 with 11.9 percent annual growth, Despite the fiscal stimulus, the risk off
the Chinese economy cooled in 2008 amid a slowdown payment failures in particular sectors willll
of exports and domestic demand. Export growth slowed nonetheless remain substantial. Low-end nd
somewhat mainly as a result of sagging demand from extiles,
export sectors with tight margins, like textiles,
industrialized countries, which absorb 46 percent of shoes, and toys, suffered from the acceleration of the
total sales abroad. Consumption declined, meanwhile, yuan appreciation in the first nine months of 2008, the
essentially as a result of growing inflation in 2008 and rise of wages, and problems with product quality. Sectors
rising unemployment. Furthermore, a slowdown of like automotives and property where sales transactions
investment is partly attributable to the narrowing of cor- are commonly made on credit have also been in diffi-
porate margins, particularly in sectors with overcapacity culty. According to Coface monitoring records, payment
(steel, car industry, real estate, etc.). behavior has been deteriorating—a trend likely to worsen
To deal with the slowdown, the government has in 2009 as the economic slowdown tightens its grip.
adopted a more expansionary monetary policy. Since late
2008, officials have similarly shifted gears on exchange Mexico
rate policy to foster stabilization or depreciation of the Affected mainly by the economic recession in the U.S.
yuan and bolster export sectors in difficulty. And with along with the international financial crisis, Mexico is
the leeway afforded by low public sector debt (15 per- expected to suffer a severe economic downturn in 2009,
cent of GDP) and a high savings rate, the government has despite fiscal stimulus measures taken by the govern-
decided to implement a $586 billion fiscal stimulus plan ment. Monetary authorities will also experience difficul-
devoted to major infrastructure projects—with invest- ties in controlling inflation, attributable mainly to the
ments in transportation and electricity, reconstruction of peso depreciation and pessimistic expectations.
areas devastated by the earthquake, among others—and Public debt remains moderate with its foreign com-
W W W. WO R L DT R A D E WT 1 0 0 .C O M 19
COVER STORY

TOP 15 COUNTRIES TOP 15 COUNTRIES

FOR U.S. IMPORTS FOR U.S. EXPORTS
(total goods imported in 2008; US$ billions) (total goods exported in 2008; US$ billions)

% of Total % of Total
Country Value Imports Country Value Exports
1. China $337.8 16.1% 1. Canada $261.4 20.1%
2. Canada $335.6 16.0% 2. Mexico $151.5 11.7%
3. Mexico $215.9 10.3% 3. China $71.5 5.5%
4. Japan $139.2 6.6% 4. Japan $66.6 5.1%
5. Germany $97.6 4.6% 5. Germany $54.7 4.2%
6. United Kingdom $58.6 2.8% 6. United Kingdom $53.8 4.1%
7. Saudi Arabia $54.8 2.6% 7. Netherlands $40.2 3.1%
8. Venezuela $51.4 2.4% 8. South Korea $34.8 2.7%
9. South Korea $48.1 2.3% 9. Brazil $32.9 2.5%
10. France $44.0 2.1% 10. France $29.2 2.2%
11. Nigeria $38.1 1.8% 11. Belgium $29.0 2.2%
12. Taiwan $36.3 1.7% 12. Singapore $28.8 2.2%
13. Italy $36.1 1.7% 13. Taiwan $25.3 1.9%
14. Ireland $31.6 1.5% 14. Australia $22.5 1.7%
15. Malaysia $30.7 1.5% 15. Switzerland $22.0 1.7%
Total, Top 15 Countries $1,555.8 74.1% Total, Top 15 Countries $924.2 71.1%
Total, All Countries $2,100.4 100.0% Total, All Countries $1,300.5 100.0%
Source: U.S. Census Bureau

ponent in decline. But improvement in public
na
finances, still dependent on oil revenues, will
re
require further efforts on reform of both the
t system and the state-run oil company
tax
PEMEX. It will thus be a very slow pro-
cess. With a steady decline in oil produc-
tion compounded by the fall of oil prices
and the downturn of exports to the U.S.
a transfers from emigrant workers, the
and
ex
external account deficit will widen. To cover
ve large and strongly growing financing
its very
needs and also to compensate for a significant drop
in foreign direct investment, Mexico will have to turn
not only to international financial institutions, but also
to financial markets, though at a high cost. But the stable
and moderate level of short-term debt and the flexibility
of the exchange rate will tend to mitigate, albeit increas-
ing, liquidity crisis risk. The relatively modest size of the
banking sector has moreover sheltered it from exposure
to risks resulting from the sub-prime crisis in the U.S.
After the adoption of a limited reform of PEMEX in
2008, modernization of the economy continues to come
up against strong social and political resistance. Too,
the climate of insecurity and violence resulting from
the organized criminal activities associated with narcot-
ics trafficking moreover constitutes a challenge to the
20 WO R L D T R A DE 1 0 0 A U G U S T 2 0 0 9
authority of President Felipe Calderon, whose success
will partly depend on improvement in this area.
In this context, the business environment leaves room
for improvement and the credit crunch handicaps com-
panies. Large private firms are faced with the drying up
of international liquidity. The difficulties faced by the
textile, clothing and shoe industries are, however, the
traditional ones and result from an inability to compete
with their Asian rivals.
Japan
The spectacular fall of economic growth during the
first quarter of 2009 (down an annualized 14.2 percent
quarter-on-quarter and down 9.1 percent year-on-year),
resulting from the decline in both exports and invest-
ment, bears out that of all industrialized countries Japan
will likely suffer the most severe recession this year with
GDP contracting by 7 percent. The lack of reaction by
companies in failing to reduce their stocks and costs in
the fourth quarter of 2008 paved the way for the fall of
corporate profits to their lowest level since 1983. They
will therefore have to revise their investment projects
downward and adjust production. But production
could, however, benefit temporarily from a technical
recovery: The vast economic support plan implemented
by China and focused chiefly on investment will likely
TOP 100 U.S. IMPORTS & EXPORTS
(goods traded in 2008; in US$ millions)

Top 50 U.S. Goods Exports Top 50 U.S. Goods Imports

Commodity Exports Commodity Imports
1. Vehicles $32,341 1. Crude oil $110,014
2. Electrical machinery $27,752 2. Vehicles $69,829
3. Airplanes, engines, and parts $27,443 3. TVs, VCRs, etc. $40,719
4. General industrial machines $17,995 4. Electrical machinery $37,171
5. Specialized industrial machines $17,340 5. ADP equipment and office machines $31,965
6. Petroleum preparations $14,704 6. Petroleum preparations $28,539
7. Scientific instruments $14,007 7. Clothing $23,834
8. Chemicals - plastics $13,586 8. General industrial machines $22,672
9. Chemicals - organic $12,007 9. Chemicals - medicinal $19,434
10. Chemicals - medicinal $11,619 10. Chemicals - organic $16,254
11. Power generating machines $10,711 11. Power generating machines $15,954
12. ADP equipment and office machines $9,746 12. Natural gas $12,798
13. Metal ores and scrap $8,836 13. Specialized industrial machines $12,368
14. Chemicals - n.e.s. $8,454 14. Scientific instruments $12,250
15. Gold, nonmonetary $8,196 15. Iron and steel mill products $10,856
16. TVs, VCRs, etc. $8,145 16. Furniture and bedding $10,789
17. Soybeans $6,434 17. Metal manufactures, n.e.s. $9,783
18. Metal manufactures, n.e.s. $6,145 18. Airplanes, engines, and parts $9,222
19. Iron and steel mill products $5,641 19. Toys, games, and sporting goods $8,056
20. Corn $5,110 20. Vegetables and fruits $7,346
21. Paper and paperboard $4,774 21. Textile yarn, fabric $7,275
22. Vegetables and fruits $4,196 22. Gem diamonds $6,699
23. Textile yarn, fabric $4,011 23. Chemicals - plastics $6,319
24. Chemicals - inorganic $4,006 24. Footwear $6,292
25. Wheat $3,931 25. Paper and paperboard $5,835
26. Chemicals - cosmetics $3,712 26. Chemicals - inorganic $5,052
27. Meat and preparations $3,543 27. Plastic articles, n.e.s. $5,043
28. Plastic articles, n.e.s. $3,158 28. Aluminum $4,269
29. Pulp and waste paper $2,668 29. Chemicals - n.e.s. $4,256
30. Animal feeds $2,618 30. Fish and preparations $4,002
31. Basketware, etc. $2,474 31. Basketware, etc. $3,924
32. Gem diamonds $2,292 32. Copper $3,603
33. Coal $2,112 33. Rubber tires and tubes $3,270
34. Aluminum $2,085 34. Chemicals - cosmetics $3,099
35. Printed materials $2,032 35. Artwork and antiques $3,052
36. Artwork and antiques $2,015 36. Metal ores and scrap $2,931
37. Chemicals - dyeing $2,006 37. Jewelry $2,868
38. Metalworking machines $1,954 38. Platinum $2,861
39. Mineral fuels, other $1,951 39. Metalworking machines $2,860
40. Natural gas $1,946 40. Wood manufactures $2,819
41. Records and magnetic media $1,734 41. Chemicals - fertilizers $2,644
42. Furniture and bedding $1,653 42. Gold, nonmonetary $2,495
43. Toys, games, and sporting goods $1,620 43. Lighting and plumbing $2,385
44. Jewelry $1,605 44. Travel goods $2,296
45. Cotton, raw and linters $1,593 45. Records and magnetic media $2,181
46. Chemicals - fertilizers $1,503 46. Cork, wood, and lumber $2,039
47. Cork, wood, and lumber $1,419 47. Liquefied propane and butane $1,751
48. Copper $1,327 48. Optical goods $1,711
49. Fish and preparations $1,309 49. Printed materials $1,704
50. Rubber tires and tubes $1,261 50. Meat and preparations $1,596
Source: U.S. Census Bureau

W W W. WO R L DT R A D E WT 1 0 0 .C O M 21
COVER STORY

TOP 10 U.S. FOREIGN TRADE GATEWAYS

(by Value of Shipment, in US$ billions)

Water Value Air Value Land Value

1. Los Angeles $180.2 1. New York (JFK) $161.2 1. Detroit, MI $136.6
2. New York-New Jersey $165.2 2. Chicago O'Hare $86.6 2. Laredo, TX $110.4
3. Long Beach $147.1 3. Los Angeles $79.6 3. Buffalo-Niagara Falls, NY $78.6
4. Houston $114.6 4. San Francisco $61.6 4. Port Huron, MI $77.1
5. Charleston $60.9 5. Anchorage $45.3 5. El Paso, TX $49.1
6. Savannah $49.6 6. Dallas-Fort Worth $41.5 6. Otay Mesa, CA $30.7
7. Norfolk $49.5 7. New Orleans $41.1 7. Hidalgo, TX $21.9
8. Baltimore $42.0 8. Atlanta $35.4 8. Champlain-Rouses Pt., NY $21.5
9. Seattle $37.6 9. Miami $34.5 9. Nogales, AZ $18.2
10. Oakland $34.8 10. Cleveland $27.3 10. Blaine, WA $17.9
Source: U.S. Department of Transportation, Bureau of Transportation Statistics

enable Japanese
J mechanicals and metal processing
sect to limit the deterioration of their busi-
sectors
ne activity. That temporary relief from the
ness
o
overall trend will, however, remain marginal
since Japanese exports to China correlate
with Chinese exports to the U.S. and Euro-
pean Union.
The improvement in consumer con-
f
fidence recorded in May was largely
att
attributable to various stimulus measures
imple
implemented by the government in the second
quarter particularly
quarter, p for purchases of vehicles and
home furnishings. Despite these measures, household
consumption—already relatively flat before the crisis—
will decline in 2009 (down 2 percent), undermined by
the rise of unemployment (5.9 percent) and the decline
in disposable income (with financial assets constituting
70 percent of net wealth), and savings are expected to
increase to 7.6 percent of disposable income.
Germany
Undermined by the marked weakening of exports, the
German economy slipped into recession in spring 2008,
a trend expected to continue until autumn 2009 with
a timid recovery possibly developing thereafter. Persis-
tently sluggish household consumption will provide
little backup support to the economy.
In the context of a severe slowdown of the world econ-
omy and trade, exports, which had been the main growth
engine (41 percent of GDP) until early 2008, are now
proving to be the main vector of the recession. Half capi-
tal goods (including automotive vehicles) and half con-
sumer goods, the export trend reflects both the end of the
investment boom in emerging and raw material producing
countries and the downturn of household demand from
the major European and American trading partners.
Faced with stagnating exports, eroding margins, and
22 WO R L D T R A DE 1 0 0 A U G U S T 2 0 0 9
tightening credit, German industry will likely put its invest-
ments on hold. Nonetheless, household consumption will
make a slightly positive contribution to growth despite the
drop in capital goods purchases like automotives.
In this context, corporate payment behavior, while sat-
isfactory in 2008, could deteriorate in 2009 particularly in
sectors heavily dependent on exports, like automotive and
aeronautical subcontracting, textiles and clothing, mari-
time and river transport, and,to a lesser extent, metallurgy,
chemicals, and industrial capital equipment.
United Kingdom
With the growing impact of the financial and property
crisis on household and corporate spending, the eco-
nomic downturn will intensify in 2009.
Households have been facing a rapid decline in home
prices, which could ultimately fall 30 percent, and tight-
ening credit conditions with their debt representing 170
percent of disposable income. A slumping employment
market and the concomitant rise of unemployment—not
only in financial services and construction but also in
other sectors—will also be a drag on the economy.
Only foreign trade is expected to make a slightly posi-
tive contribution to GDP growth, thanks to the drop
in imports. Exports, meanwhile, are also expected to
decline, but to a lesser extent, due to the sluggishness
of foreign demand despite a weakening pound sterling,
since a high proportion of sales abroad involve special-
ties, like pharmaceuticals, software, and IT services that
are by nature relatively insensitive to price fluctuations.
In a deteriorating environment, corporate health has
been weakening, particularly in construction, property
services, transport, machinery rental, distribution (home
furnishings, automotives, consumer electronics, cloth-
ing), and outbound tourism: all sectors suffering from
the defection of consumers. The highly competitive
retail sector has been the riskiest of all. Greater London,
ON THE TOP OR IN THE TANK?
Here’s How Our Top Trade Partners Stack Up on Other Indices

World Economic Forum’s

Heritage Foundation’s 2008-2009 Global Transparency International’s 2008
2009 Index of Economic Freedom Competitiveness Ranking Corruption Perceptions Index

Country Index Country Ranking Country Index

1. Canada Free 1. Germany 7 1. Netherlands 7
2. Japan Mostly free 2. Netherlands 8 2. Canada 9
3. Germany Mostly free 3. Japan 9 3. Germany 14
4. UK Mostly free 4. Canada 10 4. UK 16
5. France Mostly free 5. UK 12 5. Japan 18 (tied)
6. Netherlands Mostly free 6. South Korea 13 6. Belgium 18 (tied)
7. Belgium Mostly free 7. France 16 7. France 23
8. Mexico Moderately free 8. Taiwan 17 8. Taiwan 39
9. South Korea Moderately free 9. Belgium 19 9. South Korea 40
10. Saudi Arabia Moderately free 10. Saudi Arabia 27 10. Italy 55
11. Taiwan Moderately free 11. China 30 11. China 72 (tied)
12. Italy Moderately free 12. Italy 49 12. Mexico 72 (tied)
13. China Mostly unfree 13. Mexico 60 13. Saudi Arabia 80 (tied)
14. Brazil Mostly unfree 14. Brazil 64 14. Brazil 80 (tied)
15. Venezuela Repressed 15. Venezuela 105 15. Venezuela 158
(Note: Hong Kong ranked first on this index, and North Korea last) (Note: The U.S. ranked first on this index, and Chad last) (Note: Denmark, New Zealand, and Sweden tied for first on this index, and
Somalia last)

with the preponderant role played by finance and con-
struction, will be the hardest hit metropolitan area.
The positive factors are few in number but nonetheless
noteworthy: the pound sterling depreciation benefiting
exporters, public sector support for short-term financ-
ing, the ongoing preparations for the 2012 Olympic
Games, and an acceleration of public infrastructure and
housing programs benefiting construction.
South Korea
Despite adoption of expansionary monetary and fiscal
policy, economic growth slowed in 2008 due mainly to
sagging domestic demand affected by the rise of infla-
tion, deterioration of the labor market, and bursting of
speculative bubbles in the stock, property, and credit
markets. The rationing of credit also undermined
investment by smaller companies. The chaebols, South
Korea’s family-controlled conglomerates, remained
solid, however, benefiting from sufficient resources to
continue investing. Exports decelerated to industrialized
and Asian countries—which represent, respectively, 35
percent and 47 percent of sales abroad.
In 2009, the economic slowdown could intensify, with
domestic demand remaining flat. Consumption could
decline again amid a negative wealth effect linked to
the collapse of the property and stock markets and the
rationing of credit, with household debt representing
140 percent of disposable income. Moreover, compa-
nies also burdened with heavy foreign currency debt will
suffer from the credit crunch. Construction, automotive,
and ship owners will again be the sectors to suffer most.
In addition, the export slowdown is expected to con-
tinue, particularly in electronics. Therefore, corporate
payment behavior could deteriorate in 2009.
France
The contraction of economic activity in 2008—down a
marked 1.2 per cent in the fourth quarter—will continue
in 2009 with a further decline of 2 percent expected.
Industrial production will likely continue to fall, notably
affected by the automotive sector’s difficulties. To cope
with the decline in demand from the main European
trading partners (the EU provides a market for 65 per-
cent of export sales and Germany 14 percent) and from
domestic customers, companies will go on postponing
investments and adjusti ng their costs. Explosive growth
of unemployment, erosion of financial assets, and limited
increases in wage will prompt households to keep their
W W W. WO R L DT R A D E WT 1 0 0 .C O M 23
COVER STORY
buying in check and to replenish emergency savings.
Exports will tread water, particularly in the automo-
tive and intermediate goods sectors. The current account
deficit will nonetheless narrow with sluggish household
consumption and the drop in investment undermin-
ing imports. The public sector deficit will widen sig-
nificantly, (to a negative 5.3 percent) as a result of the
economic downturn and the rescue measures taken by
the government: bank-financing guarantees, support to
companies and sectors in difficulty, and public invest-
ment spending. Public sector debt will grow meanwhile
to nearly 74 per cent of GDP.
Saudi Arabia
Driven by booming oil prices, the revenues raked in these
past years have facilitated implementation of vast infra-
structure projects, an increase in oil production capacity, a
reduction in government debt, and a build-up of financial
assets. The kingdom is now in a very strong economic
and financial position expected to allow it to cope with
the consequences of the world economic crisis that began
to appear in 2008 with the fall of stock market indices
and capitalizations, the drop in oil prices from July on,
in conjunction with a shortage of liquidity and a weak-
ening of foreign demand. In this context, strong growth
in the first half, buoyed moreover by a sharp increase
in oil production, subsequently gave signs of slowing
down, particularly in the petrochemical and oil sectors.
The economic downturn and the credit crunch affected
household consumption and prompted private investors
to cancel or postpone some projects. With inflation easing
late in the year, officials took measures to increase liquidity
and to stimulate the economy. Bank deposits, meanwhile,
are guaranteed by the government.
The leading OPEC oil-producing country, Saudi
Arabia wiwill likely continue in 2009 to make the most
of the adjustment effort for the downward world-
de
demand trend. Oil production could thus
d
decline compared to 2008.
The business climate improved with
Saudi Arabia’s admission to the WTO
late 2005. But, it continues to suffer from
persistent weaknesses in governance terms.
T performance of companies could suffer
The
fro
from the economic slowdown with deteriora-
tion of their payment behavior, not unlikely in
view of ttheir traditional vulnerability to a downturn
of barrel prices.
With barrel prices substantially below their average
levels in 2008, a decline in hydrocarbon production will
likely result in a sharp drop in export earnings and fiscal
revenues, which still derive mainly from oil.
Venezuela
GDP growth is expected to collapse in 2009 with world
oil prices and national production falling. The priority
given to redistribution of oil export earnings to the detri-
ment of productive investment has moreover jeopardized
growth sustainability.
Meanwhile, ill-advised fiscal and monetary policies, in
conjunction with inadequate production capacity, have
24 WO R L D T R A DE 1 0 0 A U G U S T 2 0 0 9
kept inflation very high despite price controls. In view
of the resulting huge differential in inflation between
Venezuela and its main trading partners in conjunction
with falling oil prices, a devaluation of the bolivar in 2009
seems necessary. However, the government is still seeking
to delay the timing of a move that will only fan the flames
of inflation even more.
The trade surplus is expected to shrink markedly
as a result of the decline in oil prices, the stagnation of
production, the slowdowns affecting the main trading
partners, and the country’s dependence on imports of
consumer goods.
In addition, the “21st century socialism” advocated
by President Hugo Chávez has resulted in growing eco-
nomic interventionism by the State, nationalizations, and
increased barriers to private initiative in an unpredict-
able business environment. The President’s victory in
the February 2009 referendum reinforces his position
in allowing him to stand again for the late 2012 presi-
dential election. Before that date, the November 2010
parliamentary elections will be a new test for President
Chávez, whose popularity could be undermined by a
prolonged deterioration of the economic situation.
Brazil
After remaining strong in 2008, (and exceeding the 5 per-
cent rate targeted by Brazil’s Growth Acceleration Program),
the economy will suffer a very sharp contraction in 2009,
dragged down by the effects of the world economic and
financial crisis, despite government stimulus measures.
Weaker export performance attributable to the
marked deterioration of the international environment,
in conjunction with import vigor, is expected to exacer-
bate the current account deficit. Liquidity crisis risk will
increase due to the very sharp growth of already large
external financing needs. Although foreign direct invest-
ment should cover nearly half of those needs, Brazilian
companies will experience greater difficulty in obtaining
financing abroad in 2009 than in past years.
Overall, companies are being hampered by credit
restrictions (particularly small- and medium-sized enter-
prises) and/or the exchange rate trend in regular busi-
ness transactions, or due to debt contracted in foreign
currencies, and their payment behavior will likely suffer
in consequence. Some sectors continue to face chronic
difficulties, such as garment and footwear industries,
which are grappling with foreign competition. In other
sectors, the more difficult economic conditions have
taken their toll on agribusiness, the mining and steel
industries, construction, automotives (car makers, parts
manufacturers, dealers), and mass distribution (particu-
larly in home appliances and information technology).
Taiwan
After the strong 5.7 percent growth achieved in 2007,
and even stronger 6.3 percent in the 2008 first quarter,
the Taiwanese economy slowed dramatically for the
remainder of the year. This slowdown is mainly attrib-
utable to the weakening of foreign demand, particularly
from China, Hong Kong, and above all, the United
States, the island’s main trading partner, considering that
it is the ultimate re-export destination for about 70 per-
cent of Taiwan’s exports to mainland China. Electronics
exports, representing 76 percent of Taiwan’s GDP, and
tourism have particularly suffered. Domestic demand
has also sagged with several adverse trends undermining
consumption: the upsurge of inflation (with the island
importing all its energy and food), the negative wealth
effect associated with the fall of stock market prices, and
the rise of unemployment. Meanwhile, tightening credit
conditions and dimmer sales prospects have prompted
companies to postpone investments. Despite adoption of
more expansionary policies, both monetary (interest rate
reductions) and fiscal, the slowdown will likely tighten
its grip on the economy in 2009 amid weaker perfor-
mance by industrialized and emerging Asian economies.
Taiwan’s economic growth could thus be negative in
2009. In this context, corporate payment behavior has
continued to deteriorate and the narrowing margins of
Taiwanese companies will bear watching.
Netherlands
Production and exports continued to deteriorate in the
first quarter of 2009 with full year growth expected to
contract 4.7 percent. Given its open economy, the coun-
try is very dependent on demand from its four traditional
trading partners (Germany, Belgium, France and the
UK). Exports and investment will continue to decline,
down respectively16.2 percent and 14.7 percent. With
wage growth remaining very moderate and unemploy-
ment rising, the contraction of the disposable incomes of
private individuals compounded by the erosion of their
financial and property asset values will prompt house-
holds strained by very heavy debt (170 percent of dis-
posable income) to cut back considerably on spending.
The plans for rescuing the banking sector and stimu-
lating the economy in conjunction with a slowdown
in revenues from gas will wipe out the fiscal surplus
the country has run since 2005 and increase the debt,
nonetheless expected to remain relatively low (nearly 60
percent of GDP). Bankruptcies accelerated these past
months, surging 96.4 per cent in the first quarter.
The global credit crunch will further undermine
weaker companies in the manufacturing sector, par-
ticularly electronics, information technology, and metal
processing. Smaller companies that are reliant on the
domestic market could be hurt by the slowdown in
household consumption.
Italy
The sluggishness that began to grip the Italian economy
in 2007 has continued with growth likely to slacken for
most of 2009 before giving way to a timid recovery.
Household consumption is expected to remain on
even keel despite the large wage increases won in 2008
and the fall of prices for energy and, to a lesser extent,
food. Nonetheless, households will be facing higher
unemployment, reflecting the stagnation of job creation
and the growth of the working population. Although the
government has provided underprivileged households
with cards for making purchases at reduced prices and
extended family allowances to wage earners with tem-
porary employment contracts, they should not expect
significant aid from a government that has made a com-
mitment to Brussels to bring public sector finances back
into balance by 2010.
Although the competitiveness of exports p is
expected to stop deteriorating thanks to the
light weakening of the euro against the
dollar and the moderate growth of the he
cost of labor in phase with productiv-
ity gains, sales abroad will be unlikely
to show any sign of recovery before
end 2009. They will be faced with
weak demand in developed countries,
their primary market.
Investment will only grow in the he
public sector thanks to the accelerated rated
t t
use of European subsidies for infrastructure,
research, and environmental protection. Companies
meanwhile will make further reductions in spending
amid sluggish demand, tightening credit, and a drop in
profitability.
Moreover, corporate payment behavior, already below
the world average, has deteriorated further. The benefit
derived from the euro depreciation, if sustained, and the
fall of prices for energy and raw materials, are being can-
celled out by the drop in demand.
Belgium
The economic downturn that began materializing during
the fourth quarter of last year will continue in 2009 and
growth will contract by 1.9 percent. The decline in
demand from the main trading partners (with the Euro-
pean Union representing over 73 percent of Belgium’s
export market), under way since the third quarter of
2008, will continue to undermine the country’s exports,
which have also become less competitive due to high
payroll costs (and are above the euro zone average).
Industrial production will continue to fall, down
about 4 percent, a trend that will only exacerbate the
decline of the production capacity utilization rate,
already down sharply in the fourth quarter of last year.
Corporate investment will slow, also down about 4
percent, especially with the severe shocks that battered
the banking sector in 2008, which prompted banks to
tighten loan conditions.
On a positive note, Belgium is a highly multicultural
and multilingual country that enjoys a unique geo-
graphic location and the presence of European insti-
tutions, which have been assets to attracting foreign
companies and developing foreign trade. The country
is also at the heart of a major economic region and serves
as the crossroads of many channels, whether road, rail,
or water transport. WT
Risk assessments were excerpted from the Coface Handbook of Coun-
try Risk 2009. Additional information is available online at www.
trade-safely.com.
For reprints of this article, please contact Cindy Williams
at williamsc@bnpmedia.com or 610-436-4220 ext. 8516.
W W W. WO R L DT R A D E WT 1 0 0 .C O M 25
 In today’s economy, reliability can take you places.

Reliability is the key to success in the global marketplace. As one of the most established logistics companies
in the world, OHL leads the way, with locations in dozens of countries. From transportation and warehousing
to import and export services, duty drawback and freight management, our team of skilled professionals
can deliver your goods as well as peace of mind. We have the flexibility to adapt to any distribution needs,
with dynamic solutions and innovative value-added services. Today more than ever, you need the reliability of OHL.
©2009. OHL, the OHL logo and “Count on us.” are the trademarks of Ozburn-Hessey Logistics, LLC.
www.ohl.com/countonus or 800-401-6400
SUPPLY CHAIN SECURITY
Taking Supply Chain
Security to the Next Level
Mobile technology is playing a big part,
but it’s not a silver bullet. BY DAN MCCUE
T
echnology, mobile and otherwise, has had a pro-
found effect on the transparency of supply chains
on the local level.
With little effort, and real-time GPS technology,
logistics managers and fleet operators can easily see if a
truck full of cargo has stopped for a suspicious amount
of time, or been diverted from its planned route.
Using simple push-talk phone technology, the man-
ager can then quickly determine whether a problem
exists or whether the driver is either stuck in traffic or
gamely trying to avoid it.
As for the drivers themselves—a case in point being
drivers for the Coca-Cola Bottling Company—wireless
receipt printers help them avoid going back and forth to
their trucks to complete a client’s order.
Some estimates suggest that simply cutting out that
single trip to the truck allows Coke’s route managers to
squeeze in as many as four additional stops per day.
28 WO R L D T R A DE 1 0 0 A U G U S T 2 0 0 9
On the other end of the supply chain spectrum, bar
code and RFID technology has allowed major food com-
panies to track dangerous or spoiled cargo back to its
specific source, limiting their exposure to losses due to
massive recalls.
“The applications and benefits of technology to
supply chain management are endless,” said Mike Ter-
zich, senior vice president of sales and marketing for
Zebra Technologies, the Chicago-based manufacturer
of thermal transfer bar code printers and related label
design software.
But if such applications appear to have revolutionized
supply chain management over the past decade, many
experts concede much, much more has to be done in the
realms of both technology and information sharing to
truly ensure door-to-door visibility of the world’s goods
and raw materials.
Key to understanding the true impact these technolo-
gies are having on supply chain transparency is to con-
sider them as they exist in the real world: As both vast
global networks and as more localized entities.
Scott Szwast, global freight services marketing man-
ager for UPS, said regardless of how complex it becomes,
a supply chain is always—in essence—goods in motion.
A key ingredient to real-time visibility
“The ability to monitor these goods in real-time is criti-
cal, both in terms of business planning and security,”
Szwast said. “This real-time visibility would, of course,
be virtually impossible without mobile technology, which
has simplified processes and allowed for greater supply
chain optimization. And of course, the more simplified
your processes, the easier they are to secure,” he said.
What that means to people like Zebra Technologies’
Terzich, whose company has been expanding its portfo-
lio to include RFID technology and software intended to
addresses issues ranging from counterfeiting and diver-
sion to food safety, is that they are constantly trying to
fill a niche where people want to know more, and know
it more quickly.
“Part of it stems from the fear of terrorism, part is
borne of the desire of high-branded companies to pro-
tect their corporate image—and in the process the jobs
of their employees—from knockoffs, and part of it stems
from retailers and end users of the goods in transit, who
are seeking a higher level of confidence in the quality of
the products they receive,” Terzich said.
Between the terrorist attacks of Sept. 11, 2001 and the
global economic crisis, which led to the current decline
in world trade, some 48 million containers moved
through global supply chains annually, Terzich noted.
Technological solutions have inspired governments
and supply chain mangers in the private sector to look
beyond the basic desire to understand what’s in a con-
tainer, where it has been and where it is going, and to
continually look for new ways to facilitate and expedite
global trade.
UPS’ Szwast pointed to the Automated Commercial
Environment (ACE) established by U.S. Customs and
Border Protection as “a great example of government
providing a framework for further connectivity and auto-
mation” for supply chain processes.
ACE, which has been rolled out over several years,
has transformed the processing of cargo from a ship-
ment-by-shipment approach to an accounts-based
system. At the same time, Customs has created a cen-
tralized Web portal to connect the agency more directly
with the trade community.
Over time, ACE has enabled the agency to compile
profiles of all importers and exporters, as well as their
shipment and payment activity.
“UPS pioneered a system in 2002—prior to ACE—
called Target Search to assist the Customs officials
inspecting shipments coming through Worldport, UPS’s
largest international air hub in Louisville,” Szwast said.
“Target Search provides electronic information to Cus-
toms officials so that they can effectively target and select
shipments for inspection ahead of time, expediting the
customs clearance process.”
Zebra Technologies
Of course, developing a synergy with Customs offi- Zebra Technologies’
cials is one thing, but what about sharing the cost? At mobile printers work
the very least, what about spreading the cost of security on-site and on-demand
across an organization? for increased flexibility
Fortunately, Szwast said, many of the same technolo- and efficiency.
gies are employed on both the security and operational
side of the equation.
“For example, at UPS our small package and ground
freight drivers both use a wireless handheld computer
that is key to tracking the goods being moved,” he said.
“The device—called a Delivery Information Acquisi-
tion Device or DIAD—scans a barcode when the driver
makes a delivery and, virtually in real-time, uploads that
data to a mainframe where it is available to the customer
for security and visibility purposes.”
Szwast adds, “The same is true of a comprehensive
portfolio of visibility systems that UPS makes available
to customers.”
Looking at the trade equation from a broader perspec-
tive, Szwast said standardization of processes and tools
in support of international trade has been a key enabler
of the growth in international commerce.
“Incoterms are a great example of that,” he said,
referring to the standardized international commercial
terms promulgated by the International Chamber of
Commerce.
It’s not one-size-fits-all
But not everyone agrees that the wider proliferation of
technology over the past decade has made international
logistics quite so supple.
Among those with a deep perspective and perhaps
a dissenter’s view on the global supply chain is David
Fairnie, director of security for DP World, one of the
largest marine terminal operators in the world with 49
marine terminals and 12 new developments across 31
countries.
W W W. WO R L DT R A D E WT 1 0 0 .C O M 29
SUPPLY CHAIN SECURITY

A Layered Approach to Security

David Fairnie, director of security for DP
World, likes technology, but doesn’t subscribe
to the notion that any one tech tool will pro-
vide complete transparency to a supply chain
or even an individual facility.
carriers to electronically
submit to Customs a total of
12 data elements including
manufacturer, seller, consoli-
dator and buyer information,

U.S. Customs and Border Control

Nor should it, he said.
“Whatever individual technology you’re talk-
ing about, I think of it in terms of being part of
what Michael C. Kostelnik, Commissioner with
U.S. Customs and Border Control, described as
the layered defense system for supply chain
security and transparency,” he remarked.
“Yes, if a technology makes you feel that
your supply chain is more transparent, use it,
but also recognize that there are other layers,
some of which you can put into place yourself,
and others that for which you need to rely
on others.”
In Fairnie’s view, true supply chain trans-
parency and, by extension, security, can only
be achieved through the combined efforts of
the public and private sector.
“For instance, one layer is U.S. Customs using
risk assessment engines to identify where the
high-risk containers are and targeting those
containers for inspection,” he said. “Now,
that requires information to feed the engine,
so another layer of protection for the global
supply chain is the 10+2 rule that the U.S. has
introduced, which requires importers and ocean
as well as the container staff-
ing location and container
status messages.”
The next layer is inspec-
tions of cargo containers using
X-ray and other screening that
searches for weapons of mass
effect. Then there’s the utili- CBP Air and Marine Assistant Commissioner Michael C. Kostelnik advocates a
zation of e-seals, RFID, and multi-layered approach to supply chain security.
the like. Only then does the
use of mobile devices, GPS, and other technolo- ments are in line with the company’s goals.
gies come into play. “The first thing you have to do is analyze
“There is no silver bullet when it comes to your situation and determine what you really
protecting the world’s supply chains,” Fairnie need to do,” Fairnie said. “One mistake people
said. “I think there needs to be a combination make is they throw money at technology and
of several, and I also think there is a value come away frustrated. Personally, I think it’s
to identifying solutions that not only meet a poor choice to just automatically reach for a
requirements on security, but also add value technology solution.”
in terms of velocity and transparency.” He explained, “What we found at DP
While some still argue against revising World is that it was not cost effective to
their technology regime, citing fears that just rely on technology,” he continued. “The
such investments will drive up shipping costs most cost effective approach is to invest a
or slow cargo movement times, Fairnie said bit in people and then to invest in technol-
paying attention to what one’s actual needs ogy as a tool, or extension of the human
are is the best way to ensure future invest- side, of your operation.”

“To be perfectly honest, in my opinion and experi-
ence, I’m not sure technology has improved the visibility
of global supply chains,” said Fairnie from his office in
Dubai. (DP World is part of the Dubai World, a holding
company controlled by Dubai’s royal family.)
“While there are a wealth of technologies out there,
we haven’t seen one technology emerge that’s been
wholeheartedly embraced and adopted by logistics play-
ers,” he said.
Fairnie believes one of the barriers to coming up with
a one-size-fits-all supply chain technological solution is
that there’s always more to using technology as a tool
than simply taking it out of the box.
“Before you get to the point [of selecting a techno-
logical solution to your supply chain challenges] you’ve
really got to look at your people. ‘Do you have the appro-
priate people in the right positions?’ And only then look
at the technology itself to determine whether it is appro-
priate to the environment, which in our case is heavy
industry and dealing with trucks passing to and from
our gates. The last step—before purchase and attempted
implementation—is to then look at your processes.”
He continues, “In the latter case, what you need to
look at is how we apply technology and our people in
such a way that not only protects our assets, but adds to
the value of our operations.”
30 WO R L D T R A DE 1 0 0 A U G U S T 2 0 0 9
As an example, Fairnie pointed to gate operations.
In recent years, international legislation has mandated
greater control over the access people and vehicles have
to port terminals. Of course, a guard could check the
ID of every individual who seeks access to the terminal,
“but that’s a laborious process that would slow the flow
of commerce,” he said.
Technology then must have a role, whether it’s a
simple badge system or one that incorporates biometric
information. But at a time when companies are striving to
get everything they can from their supply chain dollars,
is it worth the expense to go as high-tech as possible?
DP World didn’t just implement a biometric system
at its gates and leave it at that. Its tech people realized
that the cards could be a valuable tool for monitoring
employee time and attendance.
“That’s what I think of when I think of security tech-
nology having a value-added role,” Fairnie said. “You’ve
implemented a security measure that also serves a pay-
roll function, ensuring that you’re not paying individual
employees too much or too little.”
Another example Fairnie pointed to revolved around
security surveillance.
“Companies that make up the global supply chain
spend an awful lot of money on health and safety,” he
said. “They invest in education, safety equipment, train-
SUPPLY CHAIN SECURITY
ing, and yet many of them still have acci-
dents, lost-time injuries and fatalities. It’s
a byproduct of an industry where you are
always trying to do things quicker and
faster. And of course, it’s human nature to
say, ‘Well, what is the chance, really, of that
container hitting me on the head?’”
Nonetheless, “What we’ve found is that
unless you truly follow up on this training,
much of these investments are wasted,”
Fairnie continued.
“What we did at DP World was to use
our integrated security system as a means
of advancing our health and safety objec-
tives,” he explained. “From a security point
of view, we need to know what’s happening
at the perimeter of our facility, and so we
have cameras and sensors that are looking
for nefarious acts, and feed information to
our command and control center.”
“However, we realized that this doesn’t
have to be the focus of our system 100 per-
cent of the time, and in fact, we could get
more from the equipment by using it to
identify when unsafe or unhealthy practices are occurring,
and then reacting to it, by either contacting the person on
his mobile device or actually responding to the scene.”
When an unsafe practice occurs, such as in the case
of a worker wandering into an area restricted to heavy
equipment, the individual will be briefed on what they’ve
done wrong, and be asked to sign a note promising to
not to do it again. The information is then turned over to
DP World’s Health and Safety Department, which then
schedules the individual for retraining.
“A single fatality can cost a company as much as $5
million, according to the insurance industry, and that’s
not counting accident related delays and other intan-
gibles,” Fairnie said.
But if a company’s failing to grasp the most compre-
hensive and cost-effective applications of technology is
one barrier to greater transparency of the global supply
chain, it is not the only one.
“In simple terms, everyone is waiting for U.S. Cus-
toms to make a determination on what it believes the
desired technology to be, and that’s preventing their
adoption in the private sector,” Fairnie said. “That’s
because uncertainty over what the standard will be has
a direct correlation to the ability of the manufacturer to
mass produce it at the price that makes good business
sense to those engaged in moving cargo.”
According to Fairnie, “Until somebody mandates the
use of a particular technology, whether it is an RFID or
some other e-seal technology, movement in this area is
going to be somewhat slow.”
And, while the Automated Commercial Environment
(ACE) might be working well in the U.S., at least for UPS,
Fairnie believes that on a global scale there’s a lot of infor-
mation that’s being generated by logistics operational pro-
cesses worldwide that is simply being underutilized.
“If you could suck this information up and feed it
into a global information hub, it could then be used in a
32 WO R L D T R A DE 1 0 0 A U G U S T 2 0 0 9
UPS
coordinated manner by governments Scott Szwast, global
and individual agencies to provide a freight services
better assessment of the risks that are marketing manager, UPS.
out there,” he said.
At present, two separate consortiums—the Smart
Container Management Transportation Consortium
(SCMTC) and the Integrity Project—both funded by
the European Union in partnership with China, are
evaluating differently approaches to creating just such a
common user platform or information sharing exchange
for governments, trading partners or both.
The integrity project, for instance, is looking at sig-
nificantly improving the reliability and predictability of
door-to-door container chains through the development
of a so-called “Shared Intermodal Container Informa-
tion System.”
In concept, authorized companies and authorities
would have access through the system to planning and
status information of selected transports.
Research funded by the SCMTC is ultimately
intended to overhaul the door-to-door container trans-
port chain on a worldwide basis, creating a more efficient,
market-driven and secure cargo movement process.
But that’s not to say everyone is one board when it
comes to the question of seeking a greater level of trans-
parency in the supply chain through the implementation
of technology.
In fact, Earl Agron, vice president of security at APL,
a wholly owned subsidiary of Singapore-based Neptune
Orient Lines, a global transportation and logistics com-
pany engaged in shipping and related businesses, said
there is little justification from either a business or security
perspective for real-time visibility at the container level.
“Today, ocean carriers, within hours of a container
status change, record location data in their proprietary
systems and make that data available to their customers,”
Agron said. “The supply chain security benefit of real-
time container visibility is negligible.
 Further, he said, security must be risk-based. driving up the cost of shipments and without slowing cargo
“One size does not fit all,” he emphasized. “People, pro- movements?
cesses and training are the three keys that should receive “This is the million dollar question,” he said. “We always
initial focus,” Agron said. “We must also employ overlap- need to balance security with trade or we might cripple the
ping layers of security. Realizing the adversary is adapt- economic system we are trying to protect. Probably the
able, the private sector should not pour all of its resources best means of improving security is increased collaboration
into one expensive technological solution thinking it is the between the private and public sectors at both the local, fed-
silver bullet. I have seen few technological security gad- eral and international levels.”
gets that can be justified solely on security benefits,” he This again gets back to the concept of getting everyone
continued, echoing the perspective described by Fairnie, on the same page when it comes to implementing technol-
that, “The ideal solution is one that provides an enterprise ogy and crafting an international technology standard.
with dual benefits—a commercial return on investment Fairnie said without an international standard or a com-
and improved security.” pliance requirement for a specific piece of technology, like
In fact, Agron believes that advocates for end-to-end e-seals on cargo containers, people simply don’t see why
supply chain visibility through technology or other means they have to go to the trouble of securing such items.
are missing the point. “As we’ve seen in the past,” he said, “when the U.S. gov-
“End-to-end visibility does not provide improved ernment says, ‘This is what we want,’ then the industry is
security in and of itself,” he said. “In addition to detection quick to comply.”
achieved through technology, response to any alert must To some, however, “mandate,” is a dirty word—a stick
also be possible to achieve improved security.” brandished without the industry having even been offered
“What security is gained if, for a carrot as enticement.
example, a gadget sends an alert “Enticements?” Fairnie said.
that a container door is opened International standards “Actually, I think there’s a fairly
but no immediate response by law good one: customs facilitation.”
enforcement is possible?” he said.
must be in place for Fairnie holds that in addition
“Similarly, since containers can be technology to be to transparency what people want
breached in less than 15 minutes, most in their supply chains is veloc-
what security benefit is gained if a truly effective. ity, and one of the biggest inhibi-
visibility gadget detects a 30-minute tors to making supply chains move
delay due to traffic congestion?” faster is the requirement for U.S.
In addition, “Think of all of the nuisance alarms requir- Customs checks in the name of national security, and U.S.
ing attention that would be created,” Agron added. “If only Treasury checks, as a means to tracking what kinds of goods
10 million of the world’s container fleet send data once are coming across the border.
every hour that is almost a quarter billion messages every “If U.S. Customs could reward investment in technology
day that needs to be analyzed. I am afraid we would be and a demonstrated commitment to greater transparency
making the haystack so large that the probability of missing with a faster transit time through the inspection process,
a threat would actually increase. This is one of the biggest that would be a big incentive,” he said. “At the same time,
issues in applying technological security solutions at the I think they’d have to respond to those who haven’t taken
container level.” steps to make their supply chains more transparent by
But, Agron was far from complacent. In point of fact, saying, ‘In your case, we need to check every box.’”
he does believe that since supply chains initiate and tran- Despite all this, Fairnie grew somewhat introspective
sit through multiple sovereign nations, “an economic and when asked if the proliferation of technology over the past
interoperable international security standard is required. several years has made the supply chain more secure.
Without one international standard, the effectiveness of any “In my personal opinion? The answer is ‘No,’” he ven-
technology would be undermined,” Agron said. tured finally. “No, we are not in a secure world. In regards
To get there, however, would be solving a whole host of to visibility, and speaking in general terms, as a terminal
daunting challenges. Agron, for instance, sees the prolifera- operator, we don’t know what’s in the box when we accept
tion of mobile phone, GPS and other technologies as adding it—other than what’s listed on the manifest.”
more risk to the global supply chain because as the use of “If you don’t have some electronic or other means to
technology expands, so too does the number of people who verify the contents, you can’t know, definitely, that some-
have access to sensitive commercial information. thing else hasn’t been stuffed in the box. Right now, there’s
“Information security becomes a critical risk that must still a lot of reliance on simple trust.” WT
be carefully addressed,” he said. “Passwords, computer
viruses, stolen laptops and lost thumb drives can result in Contributing writer Dan McCue lives in Charleston, SC where he
serious security breaches that could result in significant writes frequently on global trade, foreign direct investment, and
direct and consequential damages.” port-related issues.

Keeping costs in check

But even in light of those concerns, Agron said there’s a
broader question that has to be addressed—how does one
create greater supply chain security without substantially
For reprints of this article, please contact Cindy Williams
at williamsc@bnpmedia.com or 610-436-4220 ext. 8516.
W W W. WO R L DT R A D E WT 1 0 0 .C O M 33
SUPPLY CHAIN SUSTAINABILITY
Staples Nails
Sustainability
The office products company’s embrace of
environmentalism is paying off. BY GAIL DUTTON
I
n 2000, Staples was picketed by the Dogwood Alli-
ance and other forestry groups, which claimed it had
insufficient recycled content in its paper products.
The action left Staples execs surprised. Environmen-
tal responsibility, they believed, had always been part of
their operations.
In an effort to bridge the disconnect, Staples sat down
with non-government agencies, suppliers and customers
to formalize its environmental and social responsibility
stances and to find ways to further improve them. The
result has been a winning situation for all parties and,
for Staples, a sustainability commitment that permeates
every aspect of its $23 billion operations.
With operations in 27 countries, and an even larger
supply chain footprint, ensuring sustainability through-
out the enterprise is no small task. Nonetheless, “We’re
trying to weave in sustainability ethics into the way we
think about business,” emphasizes Mark Buckley, vice
president of environmental affairs. Buckley focuses
upon four key areas: increasing the availability of eco-
friendly products, making it easier for customers to
recycle, boosting energy efficiency through renewable
power, and providing environmental education for its
customers.
Sustainable products
“These values are important to us,” Buckley says. To
instill these values throughout the organization, Staples
looked first to its own Staples-branded products, focus-
ing upon paper and forestry products. Since deciding
to increase the percentage of recycled paper used in its
products, recycled paper content increased from below
10 percent to about 30 percent today.
Staples also involved the forest owners and the paper
34 WO R L D T R A DE 1 0 0 A U G U S T 2 0 0 9
mills in its efforts to increase sustainable practices.
Although it doesn’t own timberlands or paper mills, it
began buying products only from suppliers who do not
accept old growth trees at their mills and are a member
of the Paper Working Group, which is dedicated to con-
serving forests by developing ways to evaluate the envi-
ronmental performance of paper manufacturers.
Staples also is taking its message of sustainability
to timberland owners. It is working in the southeast-
ern United States with Georgia Pacific and the Forest
Stewardship Council (FSC) to encourage small land-
owners to certify their forests as sustainable by cre-
ating a market for products from sustainable forests.
The goal is to convince private tree farmers that they
can increase their return on investment by certifying
their forest practices as sustainable. One hallmark of
the certification program, Buckley says, is selective
logging rather than the clearcutting that is considered
more effective in the western U.S. A pilot project is
beginning now, with six or seven landowners and a
few thousand acres of forest. “Our challenge,” Buckley
says, “is being able to (extend sustainability) practices
from the shelf to the stump.” Already, Staples offers
nine Staples-brand products certified by the Forest
Stewardship Council. Its goal is to sell primarily FSC-
certified paper by 2010.
Staples’ commitment to recycled content extends to
binders made with recycled plastic, furniture made with
post-consumer recycled steel and nontoxic and bio-
based cleaning products, both for its house brand and
from outside vendors. The company now offers about
3000 products that it considers environmentally friendly,
including recycled paper, non-toxic cleaners and Energy
Star-compliant office products.

Recycling
Ink cartridge recycling is available in all of Staples’
stores. “We work with two suppliers,” Buckley says, to
collect and remanufacture cartridges. Remanufacturing
involves extracting ink, reusing parts whenever possible,
refilling the cartridges, testing them to ensure they meet
OEM standards, and grinding up failed cartridges for
the secondary plastics market. “The goal is to minimize
waste,” he stresses.
To that end, Staples’ American stores also accept elec-
tronic waste, including cell phones, mice, keyboards,
printers, computer, monitors, fax machines, and simi-
lar equipment. The small devices can be recycled at no
charge, but printers, PCs and other large items incur a
$10 fee. The items are bagged and delivered to Staples’
recycling partner, which then destroys the data on the
hard drives and separates them into their component
parts for reuse or recycling.
Its internal recycling program encompasses plastics,
fluorescent lamps, paper and cardboard, as well as the
ink and toner cartridges and personal electronics col-
lected from customers. In 2007, the internal program
collected 34,000 tons of cardboard and mixed paper
and 300 tons of plastic film in the U.S.
Transportation
Delivery truck fleet efficiency is an important part of
business too, Buckley adds. “Mike Payette, manager of
fleet equipment, has taken a very proactive approach,”
Staples’ Stats
• 2008 Sales: $23 billion
• Operations: 27 countries on 5 continents
• 3000 products with recycled content
• Nearly 24 million ink and toner Staples’ DC in Killingly,
cartridges recycled in 2007 Connecticut boasts a
• 2 million pounds of e-waste were 74,000-square foot solar
recycled in 2007 photovoltaic system that
• Electricity usage was cut 15 percent per produces enough energy to
square foot between 2001 and 2007 cleanly power 14 percent of
• 540,000 gallons of diesel was saved through the facility’s needs.
fleet fuel efficiency improvements
Buckley points out. At Payette’s urging, Staples bought
two diesel-electric hybrid trucks from Isuzu that are cur-
rently being tested in the Staples fleet. “He’s a pragmatic
Yankee from Vermont,” Buckley summarizes. “Mike is
very interested in alternative fuels and alternative drive
trains. He wasn’t content to wait for production vehicles
to come online, so he went to Isuzu in 2006” to add
speed regulators to Staples trucks, limiting them to 60
miles per hour. “Mike wouldn’t take ‘no’ for an answer
from Isuzu,” Buckley recounts. In the end, Staples got
its speed regulators. Then, “We put a sign on the back
of the trucks telling motorists the lower speeds weren’t
the fault of the drivers.”
As a result of these efforts, “Staples saved 540,000
gallons of diesel, reduced its costs by $2 million and
reduced greenhouse gas emissions by 12 million
pounds,” Buckley declares.
Ocean freight and intermodal transportation are also
on Staples’ radar, with the goal of enhancing transpor-
W W W. WO R L DT R A D E WT 1 0 0 .C O M 35
SUPPLY CHAIN SUSTAINABILITY
Evans Network Finds
‘Green’ in Load Matching
What started out as a straightforward solution to reduce empty trailers
for a customer has turned into a national environmental initiative for
the Evans Network of Companies, a Pennsylvania-based logistics and
transportation company.
It all began a little over a year ago, when Evans Network began looking
into the containers being imported and exported through the Port of NY/
NJ by Van Heusen. Simply put, the goal was to match up freight on both
inbound and outbound moves to reduce empty containers being moved
back and forth from Van Heusen’s facility in central Pennsylvania.
“We ended up matching about 43 percent of the loads, saving
roughly 10,000 gallons of fuel, and reducing about 222,000 pounds of
CO2,” says Gerard “Gerry” Coyle, Vice President, Marketing and Agent
Development, for Evans Network. Naturally, this prompted Coyle and
Evans Network’s president and CEO, Albert Evans, Jr., to think on a
bigger scale.
The Export Coordination/Optimization-Match (ECO-Match) was the
result, and it’s already underway at the ports of New York/New Jersey,
Philadelphia, Charleston, and Savannah.
Thinking back to the first load-matching program with Van Heusen,
Coyle can’t help but ponder the impact on a national scale.
“There are about 22 million containers that come into North Ameri-
can ports annually. Can you imagine if we were able to match 43 per-
cent of those loads?” he asks. The answer: “We would save billions of
gallons of fuel and billions of tons of CO2 in the atmosphere.”
tation effectiveness while lowering costs. To do this,
Staples encourages its stores to place larger orders and
to accept deliveries three times per week rather than five,
and shares the savings with the stores, Buckley says.
“We believe we all need to learn how to do business in a
carbon constrained environment,” he says.
Electricity
Energy efficiency concerns aren’t limited to the fleet.
“Staples has twenty-four solar energy projects that pro-
36 WO R L D T R A DE 1 0 0 A U G U S T 2 0 0 9
duce 4.5 MW of energy, with 150 more projects in the
pipeline,” Buckley elaborates. The projects were devel-
oped in cooperation with Sun Edison, which installed
turnkey solar systems on roofs of Staples’ buildings.
“There is no capital investment,” by Staples, he under-
scores, but the company has signed a 20-year purchase
agreement, obligating it to buy energy from this system.
From Buckley’s perspective, “This is a long-term
hedge…” against soaring energy rates. Energy costs
were lowered, he explains, because this arrangement
“leveraged pricing through aggregated loads and more
open competition.” And, he adds, the solar energy gen-
erated correlates to peak demands, thereby reducing the
energy purchased from conventional power sources in
Staples’ own facilities. By shifting some of its load to
solar, Staples is able to “…reduce its base building load,
so we pay less for additional power,” he explains. In all,
renewable energy accounted for 20 percent of Staples’
energy purchases in 2007.
Aside from lowering energy bills and reducing the
load from conventional power generation plants, the
solar program also benefits the accounting department.
Some 200 energy bills and contracts are aggregated
into one bill and one contract, streamlining bill paying
and contract management, he explained at the World
Resource Institute’s sustainable Energy Summit in 2004.
The company broke ground on its first LEED-certified
green retail store in 2008.
Education
Staples works closely with its suppliers and its facilities
throughout the world to help them find ways to opti-
mize operations, given their own situations. Since 2000,
Staples has formed numerous collaborations to further
sustainability efforts across its enterprise, and regularly
audits its suppliers to identify areas of their own opera-
tions that Staples believes need improvement. Impor-
tantly, Buckley says the company will also share its
expertise to help suppliers achieve the desired results.
Business and consumer education is another point
in Staples’ sustainability endeavor. Staples was a char-
ter partner in “Earth 911 Business” to help its cus-
tomers get the information they need to make better
decisions and therefore improve their own sustainabil-
ity efforts. The company partners with Earth Force to
bring environmental education to teachers and stu-
dents in several U.S. communities, in an attempt to
enhance their engagement with environmental issues
by deepening their understanding of the global envi-
ronmental situation.
Staples also collaborates closely with the U.S. EPA on
e-cycling, and with the World Resources Institute, the
Green Power Market Development Group, and many
other non-governmental organizations on other environ-
mental and sustainability issues. Notably, the company
has formed alliances with several environmental firms,
including the two groups that organized the pickets nine
years ago.
“We’re not alone,” Buckley points out. Its deep involve-
ment with environmental causes has gone a long way to
removing any doubts about the company’s sincere com-
mitment to sustainable business practices. “This is hugely Buckley underscores. “It’s good if Staples’ sustainability
important,” Buckley stresses. “The commitment to sus- and ethics programs move the market in the right direc-
tainability throughout the enterprise will give us a com- tion,” he says,” but the programs all have to pass the
petitive advantage, and it’s also the right thing to do.” usual return on investment hurdles.” WT

Ethics Gail Dutton is a World Trade contributing editor. She is a veteran writer
The result of this enterprise-wide emphasis on sustain- who specializes in the intersection of business and technology.
able practices affects more than environmental concerns
and is reverberating throughout the supply chain. Buck-
For reprints of this article, please contact Cindy Williams
ley reports that Staples now gives preference to suppli-
at williamsc@bnpmedia.com or 610-436-4220 ext. 8516.
ers that can deliver goods with greater recycled content
or that are proactively looking at their
own operations to increase their own
sustainability. For example, suppli-
ers of large volume paper products,
including copier and printer papers,
are strongly encouraged to complete
COSCO Delivers
an environmental survey. That survey
will become one of the criteria consid-
2 Weekly Sailings to Prince Rupert
ered, in addition to their bids, before
contracts are let. It also means that
Staples is looking for suppliers nearer Prince Rupert
their major distribution centers in an
effort to minimize shipping costs.
Another key component of sustain-
ability involves maintaining global
ethical standards. Staples launched
its worldwide anti-corruption focus in
2007. Expressed in simple language, Direct calls from
the program clearly explains what is North China East Canada
East China Prince Rupert
expected. As suppliers embrace these
South China Midwest US
standards, personal and corporate
exposure to corruption charges are
reduced, and trust is enhanced among
suppliers and between suppliers and
their clients.
Much of that trust is built upon the
relationships that are formed through
face-to-face meetings and workshops,
as well as Staples’ commitment to
source products ethically. In 2007, the
company conducted more than 375
social accountability audits at 300 fac-
tories throughout the world to ensure
that they meet the expected standards.
COSCO is the first carrier to provide two sail-
“Staples will work with suppliers to
ings weekly from China and Yokohama to
help them improve,” Buckley empha- Prince Rupert. COSCO has listened to the
sizes, sharing best practices and work- market feedback and based on the success of
ing as closely as needed. one weekly service, COSCO has introduced a
The goal is to create a common lan- second weekly service. COSCO will now ship
guage throughout the enterprise and COSCO Container
Hong Kong, South China, East China and Lines Americas, Inc.
the supply chain,” he explains. “IBM North China cargoes, including Yokohama to
is a good example. It added Green Six North America via Prince Rupert.
Sigma consulting to its operations and 100 Lighting Way
Shorten your supply chain, reduce your over- Secaucus, NJ 07094
lowered the defect rate and optimized
head and experience the congestion-free port Tel: 800-242-7354
productivity. That shows companies
of Prince Rupert, COSCO and the CN Rail. Fax: 201-422-8928
can do the right thing for the business
Timothy E. Marsh www.cosco-usa.com
and for the planet. They’re not dia-
metrically opposed.” Vice President North American Sales SHIP WITH CONFIDENCE.
Staples’ program is ambitious, tmarsh@cosco-usa.com SHIP WITH COSCO.
but it all has to make business sense,
W W W. WO R L DT R A D E WT 1 0 0 .C O M 37
U.S. TRADE POLICY
Is Trade with
Cuba a Reality?
Humanitarian shipments were allowed under the Clinton
administration, now a new President could open the door wider.
BY DAN MCCUE
J
ust days after President Barack Obama announced
a minor thaw in the longstanding estrangement
between the United States and Cuba, Jack Maybank
Jr. stood before an audience of entrepreneurs gath-
ered at the College of Charleston in South Carolina
and warned them not to misinterpret the opening as a
newfound bridge to business relations with the United
States’ most notorious neighbor.
Yes, he acknowledged, the Obama administration’s
gambit may indeed have been the first step in a long
journey toward a normalization of relations—with all
the implications of commercial exchange those relations
imply—but the fact of the matter is that scores of U.S.
companies have been doing business with Cuba for
years. With the appropriate product, the opportunities
are now, he explained.
“Right now, at least 150 companies in 35 states are
doing business with Cuba, thanks in large part to a loos-
ening of the trade embargo during the Clinton years with
regards to agricultural products,” the president and CEO
of Charleston-based Maybank Industries said.
38 WO R L D T R A DE 1 0 0 A U G U S T 2 0 0 9
In fact, it was the announcement of President Clin-
ton’s decision regarding the embargo—a decision to
allow the sale of products that fell into a very loosely
defined category of “humanitarian” agricultural prod-
ucts—that inspired Maybank’s late father, Jack Maybank
Sr., to throw caution to the wind in 2000 and make a
little history of his own in U.S.-Cuba relations.
For six years beginning in 2002, Maybank Shipping
effectively cornered the market of moving goods (nomi-
nally lumber and newsprint) to Cuba through a string
of U.S. ports extending from Jacksonville, Florida to
Corpus Christi, Texas.
From then until roughly two years ago, when the com-
pany became Maybank Industries and the family sold
off its shipping component, the family-owned business
made nearly monthly trips to Cuba.
“Given the location of our operations, Cuba was a
natural place for us to grow,” Maybank said.
A photograph taken the day Maybank’s first vessel
arrived at the Port of Havana on July 11, 2002, reveals
how extraordinary a relationship it was: An American flag
flies over El Morro Castle, adjacent to the
harbor; it was the first time the stars and
stripes had done so since 1961.

Seizing an opportunity
The elder Maybank first learned of the
slight loosening of the longstanding
embargo over Easter weekend in 2000.
Within days, and not knowing a soul in
the Communist country, Maybank set
out for Cuba and waited several days
before finally connecting with Pedro
Alvarez, chairman of the Cuban food
import company Alimport and the gov-
ernment official in charge of trade.
Maybank’s decision to jump on the
opportunity was a master stroke. Alva-
rez, and Cubans generally, it turned out,
place a tremendous amount of weight on
personal contact and in doing business
face-to-face.
“What we found was that when
it comes to doing business in Cuba,
everything revolves around friendship,”
the younger Maybank said. “The folks
at Alimport know their clients, know
their clients’ wives, and remember
birthdays.” Mendez said the goods and infrastructure are already in Jack Maybank, Jr.,
“The other thing is that you can’t do anything over place in the U.S. to slake pent up demand for new cars president and CEO of
the phone or through e-mail, in large part because the and other products. Charleston, SC-based
communications network is not the best there. They like Thus far, President Obama has lifted longstanding Maybank Industries, shakes
to see you, and they love to negotiate,” he continued. restrictions on family travel and remittances to Cuba—a hands with Cuban leader
The forum at which Maybank spoke was co-sponsored significant shift in U.S. policy—but is waiting to see Fidel Castro.
by the College of Charleston’s School of Business and how Cuba responds to a host of human rights and other
Economics and the South Carolina World Trade Center. issues before making further changes with respect to the
More than three dozen entrepreneurs ranging from trade embargo.
property developers and entertainment industry con- “That saddens me, and it’s not just because I am a
sultants to, in one case, a retired Ph.D. considering the Cuban-American,” Mendez said. “I honestly believe
start of a second career, crowded a conference room at that we are sacrificing our economies, jobs and eco-
the College’s Tate Center for Entrepreneurship, for the nomic development to a policy [the embargo] that has
day-long session. not worked.”
Maria Conchita Mendez, another speaker on the day’s “Once the embargo is lifted there are going to be tre-
panel and director of Latin American trade and develop- mendous opportunities in textiles, construction materi-
ment for the Alabama State Port Authority, said she also als, electronics, communications and appliances,” she
sees Cuba as both a missed and future opportunity. added. “You’re going to see a country go through a mas-
She spoke from a unique perspective: Born in Cuba, sive reconstruction process, and one for which they’ll
she came to the United States immediately after the revo- need many goods and many products.”
lution. Today, she regularly sees cargo leaving her port
for her home country, as the island nation is already Ala- Easier said than done
bama’s top customer for poultry products. But that’s not to suggest that getting involved in trade
But its Mendez’s contention, given how close Cuba with Cuba—even under the auspices of selling or moving
is to the U.S.—a mere 32 hours by cargo ship—that sev- agricultural humanitarian aid—is easy now or will be
eral more shiploads of goods could be making their way easy later, when and if the embargo is lifted.
weekly through the Port of Alabama, if only the embargo Maybank said despite President Clinton’s loosening
was lifted and U.S. exporters could offer Cuba and its of trade policy with Cuba, it was still enormously dif-
consumers a variety of goods. ficult for Maybank Shipping to actually carry out a trade
Pointing to economic development successes Ala- transaction.
bama and the entire Southeast has enjoyed in recent To begin with, U.S. banks were, and continue to be,
years—luring Hyundai, Kia, Nissan and Toyota plants, forbidden from doing business with Cuba under threat
not to mention foreign-based companies making every- of being cut off from access to the Federal Reserve. That
thing from agricultural machinery to fiber-optic cable— meant that to do a transaction and deliver its cargo,
W W W. WO R L DT R A D E WT 1 0 0 .C O M 39
U.S. TRADE POLICY

Maybank Shipping had to work with third-party, inter-
national banks, which added to the cost of the individual
transactions.
Even then, U.S. rules forbid companies doing busi-
ness with Cuba to extend credit to its trading partners.
The U.S. government does not want any U.S. entity in
a credit arrangement with Cuba because if there’s a dis-
pute or disagreement over payment, there’s no way to
enforce it through American courts.
Everything must be handled on a cash-on-delivery
basis, and unlike traditional trade shipping, where ships
ideally discharge cargo and pick up some more at each
port of call, nothing can be moved from Cuba—even if it
is destined for someplace other than the United States.
“There’s no question, you have to be committed,”
Maybank said.
He then launched into an anecdote to illustrate
his point. A Maybank barge had pulled into port in
Cuba, and a Cuban inspector had come aboard and
certified the cargo, a requisite step before payment
is approved. But before payment could be handed
over and the unloading of the vessel begun, it was
learned that the bank handling the transaction had
been blacklisted by the U.S.
“It’s something that happened from time to time,
whenever the U.S. deemed that a bank was ‘doing busi-
ness with the enemy,’” Maybank said. “Basically, it meant
that we were left hanging, and suddenly had to scramble
and line up another bank.”
While Maybank scrambled, his vessel was stuck at the
dock and the clock was ticking on the fees it would be
required to pay for its space at the wharf.

A Change in the U.S. Trade Policy BY THEODORE R. POSNER

The hallmark of the Bush administration trade
policy was the pursuit of new bilateral free
trade agreements (FTAs) between the United
States and other countries.
When the Administration took office in Janu-
ary 2001, the United States had FTAs with three
countries: Israel, Canada, and Mexico. Over the
course of eight years, the administration contin-
ued or began negotiations with 24 countries. It
concluded FTAs with 16 of those countries and
brought FTAs into force with 14 countries.
The heavy emphasis on the pursuit of FTAs
was signaled clearly by President Bush’s first
trade representative, Robert B. Zoellick, just
two months into the administration. Thus, the
annual Trade Policy Agenda issued in March
2001 announced, “[O]ther countries have
been moving forward with trade agreements
while America has stalled. We cannot afford
to stand still or be mired in partisan division
while other nations seize the mantle of leader-
ship from the United States.”
To lay the groundwork for catching up in
the trade agreement race, the Bush Admin-
istration set as one of its “top priorities”
in 2001 (which it achieved in August 2002)
the establishment of new “trade negotiat-
ing authority”—or what is popularly known
as “Fast Track.” This was an understanding
with Congress whereby the President would
pursue particular objectives in trade agree-
ments, and Congress would give legislation
implementing the resulting agreements an
‘up-or-down’ vote, with no amendments, and
within a set time period. (The lifespan of
Fast Track legislation has passed; currently
it is not operative and there has not been
much mention of its revival).
Today, eight years later, the Obama Admin-
istration has set itself on a very different
course. Thus, the annual Trade Policy Agenda
issued by the Office of the U.S. Trade Rep-
resentative on March 2, 2009 states, “[W]e
will consider proposals for new bilateral and
regional agreements when they promise to
deliver significant benefits consistent with our
national economic policies. If new negotiating
authority is required, we will seek that from
Congress.”
The contrast—a certainty that if we don’t
negotiate more FTAs we will lose “the mantle
of leadership” versus an openness to “consider
proposals” for new agreements—is stark, but
not surprising. For at least two reasons, it would
have made no sense for the Obama administra-
tion to continue the steady pace of FTA negotia-
tions that marked the last eight years.
First, the support of Congress (and, in authority deal altogether, amending House
particular, the House of Representatives) rules to make the implementing legislation
for new FTAs is weak. Legislation to approve ineligible for Fast Track treatment.
the U.S.-Central America-Dominican Repub- Moreover, even if the Obama administra-
lic FTA passed the House by only a single tion wanted to continue the FTA negotiation
vote in July 2005—and only after a scene marathon, it is not at all clear whom it would
on the House floor that the Washington negotiate with. FTAs are complicated deals.
Post described as “resembl[ing] the wheel- To comport with World Trade Organization
ing and dealing on a car lot.” Two years (WTO) rules, they must eliminate barriers to
later, Congress approved the U.S.-Peru FTA substantially all trade in goods and services
only after the parties amended the agree- between the parties. The United States his-
ment (originally concluded in April 2006) torically has gone even further in its FTAs.
to accommodate changes including worker Among other things, it has insisted on open-
rights, environmental protection, intel- ing markets for government procurement and
lectual property rights, and port security, investment, establishing detailed disciplines
among others. And, in April 2008, when on the protection of intellectual property, and
President Bush sent the U.S.-Colombia FTA committing not to relax labor or environmen-
to Congress, the House dispensed with the tal standards in ways that might distort trade
Congressional-Executive trade negotiating and investment.

40 WO R L D T R A DE 1 0 0 A U G U S T 2 0 0 9
 “The longer it took to line up another bank, the more
expensive that delivery was becoming,” Maybank said.
“And we couldn’t pass the costs on to Cuba, because the
delay wasn’t Cuba’s fault.”
While some challenges could be resolved and con-
signed to experience, others recurred. One of those was
the matter of documentation. The United States has
strict rules when it comes to documenting a shipment
to Cuba, and requirements that reams of documents be
filed with multiple federal agencies.
Among the documents Maybank Shipping had to
secure before sailing to Cuba was a temporary export
license—not for the goods it was carrying, but for the
ship itself, which technically, was being exported to
Cuba as part of the transaction.
That license needs to be renewed every year. Then,
the shipping line had to secure a State Department
license to cover the ship’s crew, and only then could it
begin filing documentation for the voyage with the U.S.
Department of Commerce and the U.S. Coast Guard.
“And you absolutely have to have all of your docu-
mentation in order at all times,” Maybank said.
Jake Colvin, vice president for Global Trade issues at
the National Foreign Trade Council, a Washington D.C.-
based think tank and trade advocacy organization, said
these requirements are part and parcel of “the most com-
prehensive group of sanctions the U.S. places on trade
with any country in the world.”
“And, so strident has the U.S. been in trying to enforce
this embargo that it has even attempted to enforce it in
other countries where it has no legal jurisdiction,” he
said. “As a result, the EU and Canada, among others,

an end, what will take its place as the hall-
mark of U.S. trade policy for the next four
to eight years?
It is difficult to discern an answer from
the current administration’s first Trade Policy
Agenda. That document says a lot about
themes the administration will emphasize,
but much less about concrete initiatives it will
undertake. For example, it expresses a com-
mitment to enhancing “social accountability
and political transparency,” using trade as a
policy tool for advancing energy and environ-
mental goals, and being “a strong partner to
developing countries.” However, it says little
about steps the administration will take to
fulfill these commitments.
Here are three possible trends (by no means
mutually exclusive) to look for as the Obama
administration’s trade policy evolves:
The universe of countries that are will- • First, look for a greater emphasis on reg-
ing and able to negotiate an FTA with the ulatory cooperation outside the context
United States that would provide commer- of formal trade agreement negotiations.
cially meaningful benefi ts and that would Governments—particularly major trad-
not run up against insurmountable obstacles ing partners, such as the United States
is relatively small. Several negotiations that and the European Union—can provide
began during the last administration with a substantial economic benefit to their
high hopes on both sides are now in nego- suppliers of goods and services by recog-
tiation limbo. The fate of the negotiation nizing one another’s regulatory schemes
of a Transpacifi c Strategic Economic Part- or by avoiding costly and unnecessary
nership Agreement—an exercise begun last regulatory divergences in the first place.
year involving the United States and Brunei, Opportunities for cooperation may occur
Chile, New Zealand and Singapore (known in areas such as consumer product safety,
as the “P4”), and possibly other Asia-Pacific financial services, and many others.
economies—also is uncertain. • Second, look for negotiation of inter-
A key question then for the Obama national agreements that focus less on
administration, and in particular, for U.S. market access (i.e., the elimination of
Trade Representative Ron Kirk, is this: If the tariffs and other barriers to trade in
era of the FTA negotiating marathon is at goods and services) and more on pro-
visions to bolster the enforcement of
existing disciplines. A case in point is
the Anti-Counterfeiting Trade Agree-
ment that the United States and Aus-
tralia, Canada, the European Union,
Japan, Jordan, Korea, Mexico, Morocco,
New Zealand, Singapore, Switzerland,
and the United Arab Emirates began
negotiating in June of last year. That
agreement aspires to promote greater
cooperation and stronger enforcement
in the area of intellectual property
rights protection, and building on disci-
plines agreed to in the WTO Agreement
on Trade-Related Aspects of Intellectual
Property Rights.
• Third, to the extent that international
agreement negotiations do seek to
expand market access, look for them
to focus on individual sectors rather
than broad swaths of the economy. An
example is the U.S. and EU proposal on
negotiation of an Environmental Goods
and Services Agreement in the context
of the Doha Round of WTO negotiations.
While any market access negotiation will
encounter obstacles, those obstacles are
likely to be lower for a sector-specific
negotiation than for a comprehensive
free trade agreement negotiation.
Theodore R. Posner, former director of inter-
national trade and investment at the National
Security Council, is a Washington, D.C.-based
partner with Crowell & Moring LLP’s Interna-
tional Trade Group where he focuses his practice
on international arbitration, strategic counsel-
ing, and national security reviews.

W W W. WO R L DT R A D E WT 1 0 0 .C O M 41
U.S. TRADE POLICY

have adopted ‘blocking legislation’ to preserve the rights Friedman said. “Not that it should dissuade you from
of companies within their border to trade with Cuba.” your interest in Cuba, but it’s something you should be
aware of and pay attention to.”
Know the culture
But if logistics and the teeth of the current embargo are Where there’s a will, there’s a way
daunting, Douglas Friedman, director of the College of Jake Colvin said he believes that in many cases, untan-
Charleston’s Latin American and Caribbean Studies, gling ownership claims will “ultimately come down to a
said those still wanting to do business with Cuba need matter of money.”
to overcome one more hurdle: the potential of misunder- “If there is a political will, a way will be found to
standing Cuba’s history and culture. resolve those issues,” he said.
And as anyone experienced in international com- Colvin also said an immediate and full lifting of the
merce knows, getting to know the culture of a new trad- embargo is too much to expect in any event. For the
ing partner is a key prerequisite to a successful business moment, it would be enough for President Obama to
relationship. send a message to Congress that he wants to lift the
While most businessmen and women today view travel ban.
Cuba through the prism of the Cold War and the nearly “Cuba is an easy opportunity to show that there has
50-year reign of Fidel Castro, Friedman said anyone been a change in U.S. policy, and the prospects for
traveling to Cuba will find that the average Cuban on the change have never been better,” Colvin said.
street doesn’t quote Karl Marx “Right now, we have people
so much as Jose Marti, the 19th like Republican Congressman
Century poet and journalist who Henry Brown co-sponsoring a
was a leading figure in Cuba’s Once the trade freedom-to-travel bill, and he’s
bid for independence from Spain not the usual suspect. In fact,
in the late 1800s. embargo is lifted he’s anything but…but the fact
Don’t be surprised either, he he’s more receptive to a thawing
warned, to find that resentment
there are going to be is a signal of the direction we’re
of the U.S. goes back equally as tremendous moving in,” he continued, before
far. “Hard feelings toward the adding, “of course, lifting the
U.S., and particularly U.S. busi- opportunities for travel ban itself will be a major,
ness interests, were not cemented major development in the drive
with Fidel Castro; in fact, they U.S. companies. toward an expanded trade rela-
go back to the island’s first two tion.”
wars for independence, a period “After all, the one thing we
during which U.S. interests all want as Americans when we
began to take a very large stake in the Cuban economy,” travel is access to products and foods and the like that
Friedman said. we are familiar with,” Colvin said.
After the United States helped defeat Spain in 1898, Maybank said the first step for anyone contemplating
Cuba’s independence leadership was ignored during the getting involved in the Cuban market is to secure a visa
subsequent peace talks and the island effectively became to attend the annual Havana Trade Fair, which is typi-
a possession of the U.S., with its right to intervene in cally held in late October or November.
Cuban affairs being written into the country’s Constitu- “You’ll have to secure permission to attend through
tion, and the U.S. being given preferential treatment in your state’s Department of Agriculture, but the Cubans
the Cuban market. really respond to the efforts you’ve made if you attend,”
“So, you’ll be dealing with a country where U.S. Maybank said.
economic and political interests had an overwhelming “The other thing is, attending the fair will provide you
influence for decades,” Friedman said. “That is, until the with a real dose of reality,” he said. “It’s easy to romanti-
most recent revolution, which wasn’t a socialist revolu- cize a market that most U.S. companies have been shut
tion, but rather a nationalist movement…it was a revolu- out of, but the reality is, while the United States doesn’t
tion about sovereignty.” have an open trade relationship with Cuba, many other
Castro, of course, did embrace Socialism in the wake countries do.”
of his seizing control of the Cuban government in 1959, “Our niche, if you will, is our proximity,” Maybank
and that—as well as the early twists and turns in Cuban said. WT
history—will lead to several complications as the U.S.
begins to move further toward normalized relations. Contributing writer Dan McCue lives in Charleston, SC where he
The biggest complication will be property rights, writes frequently on global trade, foreign direct investment, and
Friedman said. The U.S. still recognizes the property port-related issues.
and ownership rights—both commercial and private—of
the individuals who held title to buildings and real estate
prior to Castro’s revolution.
For reprints of this article, please contact Cindy Williams
“That’s an issue that absolutely has to be addressed at williamsc@bnpmedia.com or 610-436-4220 ext. 8516.
before full normalization of the relationship can occur,”
42 WO R L D T R A DE 1 0 0 A U G U S T 2 0 0 9
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REGION:
N A F TA
NAFTA: Two Sides of the Coin
T
Mexican wo years ago, it looked like Mexico’s domi-
nance of low-cost manufacturing would be
manufacturing lost forever to China. But as transportation
and production costs have risen, China has
is making a become less of a bargain for many firms—Amer-
ican and foreign—who are now taking a second
comeback while look at the U.S.’ southern neighbor.
Last month, South Korea’s second-largest elec-
Canada raises tronics manufacturer, LG Electronics, announced
concerns about plans to expand production at its Reynosa, Mexico
maquiladora, creating 1,200 new jobs in the pro-
proliferating cess. In addition, the company will invest $100 mil-
lion over the next three years in Mexico to increase
trade barriers. annual production to $4 billion by 2012.
LG currently operates three facilities in
BY LARA L. SOWINSKI Mexico: a plant in Mexicali that manufactures
LCD and plasma televisions, which will be con-
solidated with the Reynosa plant, and another in
Monterrey for manufacturing refrigerators and
microwave ovens.
Other companies with maquiladora operations
in Reynosa have also announced expansion plans
this year. German medical products company
BSN Medical said in April that it was moving
163 jobs from a facility in Florida to Reynosa;
jukebox manufacturer Rowe International Corp.
announced a relocation of 100 positions from its
Michigan facility to the city; while Corning Cable
Systems has also shifted some production there.
44 WO R L D T R A DE 1 0 0 A U G U S T 2 0 0 9
At the same time, Sony is boosting its work-
force in Tijuana by 1,500 positions, although the
news was tempered somewhat by the company’s
decision to close an LCD television manufactur-
ing plant in Mexicali—one of five plants being
shuttered worldwide. Nonethless, Mexican offi-
cials are encouraged by the move, which repre-
sents a $10 million investment for Tijuana and an
expansion of the company’s workforce to 5,000
employees from 3,500 by year’s end.
Likewise, Mexican manufacturers are beginning
to feel more hopeful about the economy as the steep
declines in output have begun to level off.
“The most critical part of the slump has
passed,” said the corporate treasurer for Mexico
City-based Industrias CH SAB, the country’s
largest steelmaker, last month. The company’s
customers include Caterpillar, U.S. Steel Corp.,
and Honda Motor Company.
Rafael de la Fuente, an economist with BNP
Paribas in New York, remarked that a recovery in
U.S. manufacturing, which declined in June at its
slowest pace since August, will dramatically help
Mexican manufacturers of steel, petrochemicals,
and other goods because the trade ties between
Mexico and the U.S. are so deep: Last year, 80
percent of Mexico’s $291 billion in exports were
destined for the U.S.
Ready for a recovery
The current economy notwithstanding, there
has been a noticeable rise in activity along the
southern border as companies prepare for a
return of robust business, while transportation
providers and governments are at work making
sure the infrastructure is in place to handle the
long-awaited uptick in trade.
Grayling Industries, an Alpharetta, Georgia-
based manufacturer of asbestos abatement
equipment, such as gloves and decontamination
units, assembles the majority of its products in a
60,000 square foot, ISO-certified maquiladora in
Juarez, Mexico. Most of the material used for its
products comes from the U.S. and is shipped in
full trailers and ocean containers, or by LTL, to
its Juarez plant. Approximately 80 percent of the
finished products are then sold to U.S. custom-
ers, representing about 600 full truckloads that
cross over into El Paso, Texas each year.
According to Carlos Rubio, director of finance
and operations for Grayling, the company turned
to technology enhancements to optimize its
supply chain and weather the recession.
“We started asking ourselves, ‘How can
we use technology to increase cash flow,
reduce costs, and create a win-win situa-
tion for ourselves and our suppliers?’”
Grayling began with its freight company,
ProLogistics, which rented a warehouse
in El Paso, Texas to better manage Gray-
ling’s freight and inventory under one roof.
The next step, says Rubio, was to find a
Web-based system that could interact with
Grayling’s ERP, “and I ended up finding
SmartTurn.”
SmartTurn’s Web-based, on-demand
inventory and warehouse management
solution was a perfect fit for Grayling and
the payoff was substantial, resulting in real-
time visibility of what was in the El Paso
warehouse at all times, and overall cost
savings for Grayling of $83,000 a month
due to improved operations along with a
one-time savings of $300,000 to $400,000,
estimates Rubio.
In the meantime, key transportation
arteries between the U.S. and Mexico are
also getting upgrades. For starters, a new
international bridge between Mission,
Texas and Reynosa, Mexico is scheduled
to open in October. The $168 million
Anzalduas International Bridge will be one
of the newest and largest southern border
crossings, and equally important, will con-
nect with I-69, which will eventually con-
nect trade routes from Mexico and Latin
America to the U.S. and Canada.
In order to strengthen its cross-border
capabilities, C.H. Robinson, one of the
largest non-asset-based 3PLs in the world,
announced last month that it had acquired
certain assets of International Trade & Com-
merce (ITC), a U.S. customs brokerage
company specializing in warehousing and
distribution, headquartered in Laredo, Texas.
The acquisition adds to C.H. Robinson’s
presence in Mexico, where the company
maintains offices in Mexico City, Guadala-
jara, Monterrey, and Nuevo Laredo.
On the rail side, officials from Union
Pacific Railroad and U.S. Customs and
Border Protection (CBP) opened a new rail
inspection building in Eagle Pass, Texas.
The building will provide CBP officers with
a one-stop location to process information
and inspect incoming cross-border trains.
At the same time, Ports America offi-
cials are hoping a new Pacer International
service will boost business at the Puerta
México Intermodal Facility in Toluca,
Mexico. In May, Pacer launched six-day
Mexico’s Economic Outlook
Simply put, the current business environ-
ment in Mexico remains tough, according
to Atradius, the global trade credit insur-
ance firm.
“Operating in an economy heavily
dependent on trade with the U.S., busi-
nesses in Mexico have been hurt both by
the devaluation of the Mexico peso against
the U.S. dollar and shrinking exports to
Mexico’s main commercial partner. Sec-
tors that are particularly affected include
automotive components and assembly
operations, as well as consumer electron-
ics and similar segments undermined by
weakening U.S. consumer spending,” said
the firm.
Nonetheless, the future looks a bit
more promising. “Mexico’s financial posi-
tion remains solid in the short-term as the
government has run a prudent fiscal policy
in recent years, reflective of the country’s
investment grade ratings and reinforced
by a newly granted $47 billion credit line
a week direct rail service to and from the
terminal to handle automotive, third-party
domestic, and other trans-border traffic.
The non-stop, in-bond service parallels
Pacer’s existing PacerMex ramp points
throughout the U.S. and eastern Canada.
Operated by Ports America, the Toluca
terminal is designed to handle 150,000
containers and 2 million tons of cargo
annually. The facility has direct access to
Kansas City Southern de México S.A. de
C.V.’s “N” line.
The benefits of shipping by rail are not
lost on Steve Hamilton, CEO of Chem-
Logix, who believes that intermodal
inbond transportation is the best way to go
when moving freight between the U.S. and
Mexico, given the heightened safety con-
cerns brought about recently by the illegal
drug traders and cargo thieves, as well as
customs delays and poor road conditions.
“Intermodal inbond transportation
offers a safer, greener, and more cost-effec-
tive alternative to trucking,” says Hamil-
ton. “It basically means putting goods in a
container and shipping via rail from a U.S.
point to a Mexican point (or vice versa)
without stopping at the border.”
Transit time via rail between Chicago
and Mexico City is about four to six days,
by the IMF that was provided under very
flexible terms.”
Furthermore, “The Mexican government
has injected substantial stimulus into the
domestic economy, equal to a projected
1.5 percent of GDP for 2009, in order
to dampen the impact of the slowdown.
However, the longer economic conditions,
and oil prices, remain depressed the more
difficult the situation will become for
Mexico’s finances.”
For more information, visit Atradius at
www.atradius.us.
says Hamilton, which ends up being about
the same as trucking.
“For over a year, ChemLogix has suc-
cessfully used this mode of trans-border
transportation for bulk commodities in
tank containers as well as traditional pack-
aged freight in box containers. In addition
to providing an easier option for transport-
ing cross-border deliveries, intermodal
inbond is much kinder to the environ-
ment,” he explains.
Raising concerns in Canada
By contrast, security issues like those
expressed by Hamilton have not been a
factor when it comes to trade between the
U.S. and Canada, as experts emphasized
in a recent report commissioned by the
Brookings Institution that criticized the
manner in which U.S. officials apply a “one
size fits all” approach to border security.
“We need a constructive way to dis-
tinguish Canada and Mexico in terms of
policy,” stressed Christopher Sands, a
senior fellow at the Hudson Institute.
There’s “no denying that the border is
less efficient than it was before,” agreed
David Bradley, CEO of the Canadian
Trucking Alliance. Worse yet, the ineffi-
ciencies are being masked by lower trade
W W W. WO R L DT R A D E WT 1 0 0 .C O M 45
R E G I O N: N A F TA

volumes brought about by the global reces-
sion, he said, and will resume full-force
once trade volumes return to normal. “Cre-
ating a more secure, efficient, and flexible
border will require the restoration of a risk
assessment focus, real value-added ben-
efits from participation in low-risk trade
programs, appropriate levels of inspectors,
and strategic investment in infrastructure—
and not just bricks and mortar, but systems
as well,” Bradley explained.
And if concerns over tighter border
security aren’t enough, the ‘Buy American’
provision contained within the American
Recovery and Reinvestment Act (ARRA)
has rankled trade interests on both sides
of the border. In June, Canada’s 13 consul
generals met with American reporters to
express their growing anxiety about the
legislation, which has already canned a
number of Canadian contracts, partly over
confusion about what’s allowable and
what’s not under the provision.
Specifically, while the provision states
that stimulus money can only be spent
on American-made iron, steel, and manu-
factured goods, there is an exception for
countries (like Canada) that have an inter-
national trade deal with the U.S. However,
the provision has caused some confusion
for states and municipalities that, of course,
aren’t covered by trade deals, and are there-
fore left wondering if they can buy only
wholly U.S.-made products. News reports
state that in various U.S. cities, mayors
have canceled contracts or questioned
bids. At a Marine camp in California, for
instance, wastewater equipment made by
IPEX, a Canadian firm, was ripped from
the ground.
“The last thing I want to do is start a trade
war, but I’m afraid it’s already begun,” said
the mayor of Halton Hills, a western suburb
of Toronto. In June, Mayor Rick Bonnette
convinced the Federation of Canadian
Municipalities to pass a resolution saying
that, in 120 days, towns and cities could
begin barring materials from any nation that
refuses goods from Canada.
Indeed, worries about the growing pro-
tectionism in the U.S. are going to be high
on the agenda when the “Three Amigos”—
President Obama, Mexico’s Felipe Calderon,
and Canadian PM Stephen Harper—hold
their traditional trilateral summit, which is
tentatively scheduled for the second week of
August in Guadalajara.
Nonetheless, the undeniable strength of
the U.S.-Canada trade relationship under-
lined by the massive exchange of goods and
services between the two countries isn’t
about to disappear anytime soon. As evi-
dence, over the summer, Southwest Airlines
took its first step into international cargo
operations with Canada’s WestJet, with ini-
tial service starting with four cities: Calgary,
Edmonton, Toronto, and Vancouver.
“While we eventually hope to be able to
transport cargo throughout both airlines’
entire route network, this initial phase will
only allow for the export of cargo from the
U.S. to Canada,” stated Southwest. “West-
Jet makes for a natural first partner for our
entrance into international cargo ship-
ments given our positive working relation-
ship and eventual plans to offer passenger
code-share service with the Canadian air-
line,” the carrier added. WT

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46 WO R L D T R A DE 1 0 0 A U G U S T 2 0 0 9
TR A N S L ATI O N
Talk About a Tough Sell
W
Making the case hy should we translate? Many market-
ing executives, directors of business
for spending development, documentation manag-
ers, and technical writers ask or are
on translation asked this question. Although most technical
writers and a growing number of marketing exec-
services in a slow utives are aware of compelling reasons to trans-
late, communicating and justifying those reasons
economy. in budget meetings can be a challenge.
BY JEFFREY JORGENSEN Given the current economic downturn, some
companies are finding it more difficult to view
translation of their materials as being cost benefi-
cial. Every company has its eye on the bottom line
and every penny must be saved. Translating a com-
pany’s materials for its international markets may be
viewed as a luxury that fails to escape budget cuts.
Not all English is the same
Because English has become a widely spoken
language in business, decision makers may
assume that translation into the reader’s target
language is not necessary. Yet even if your readers
have a working knowledge of English, their level
of comprehension of the language and range of
vocabulary can vary widely from user to user.
Often when business leaders assume that cus-
tomers or users speak English, they are referring
to a person with whom they conduct business
and who is located somewhere within the Euro-
pean Union. In such cases, these users generally
speak British English, not U.S. English, and may
need to spend considerable time looking up
simple terms that are well-known in U.S. Eng-
lish but that have an entirely different meaning
in British English. For example, the “hood” of a
car in Great Britain is referred to as a “bonnet,”
while a “hood” in U.S. English is an article of
apparel worn over the heading and not a piece of
equipment that must be secured before operating
a motorized vehicle.
Moreover, the customer contacts with whom
business leaders generally communicate may
have a higher level of understanding of English
than the user of your technical documentation.
Business leaders can often form impressions of
the end user based on their interactions with
upper management colleagues in the customer
or distributor organization.
For example, assume your company has made
a sale to a client in Germany who speaks excel-
lent British English. It is not reasonable to expect
that the customer contact who signed the sales
agreement will be the person who will be read-
ing your company’s technical manual. Rather, it
is the machine operator who will use the docu-
ment and that reader may have no knowledge of
English. Or, if the machine operator is accus-
tomed to speaking British English, the user may
become confused by the many differences in
terms between U.S. and British English.
Professionalism is key
A common misconception that some business lead-
ers hold is that the customer or distributor organi-
zation will have the time and resources to translate
your company’s operating manuals. Not only do
customers not have the time, skills, and resources
to perform this task, but placing such expectations
on the customer can demonstrate a lack of profes-
sionalism on the part of your firm as well as a lack
of concern for the customer’s needs.
In addition, if the customer or distributor
does translate your content, they may choose
to translate only the “high points” and miss
important instructions that will ensure the
correct operation of your product. In one
case, such a translation resulted in a 350-page
manual of important material being distilled
into a document of roughly 35 to 75 pages for
W W W. WO R L DT R A D E WT 1 0 0 .C O M 47
TR A N S L ATI O N
use by the machine operator. The results
of such abridged translations are that
content is incorrect and incomplete, and
your customer service department will
see an increase in requests for support.
Other considerations
Even if you know that your target audience
speaks English, be aware, too, that certain
regulatory requirements may dictate that
you translate your post-sales material into
the target language for the countries into
which you will ship your product.
For example, some members of the Euro-
pean Union may require that a foreign man-
ufacturer translate post-sales material and
packaging into the local language in order
to market their goods in those countries.
Meanwhile, experience has shown that
customers make buying decisions based
not only on the features of the equipment
they purchase but also on their ability to
properly use the equipment. For example, a
customer may purchase your product over
a competitor’s the first time they decide to
make such a purchase.
However, if the customer is unable
to install or properly use the equipment
because the operating manuals are not
properly translated or are not translated at
all, you can expect to lose their repeat busi-
ness. The next time the customer wishes
to purchase your product, they will recall
their dissatisfaction with the guides that
accompanied your product and choose
your competitor’s offering instead.
Some companies will also ensure that
their marketing materials are translated cor-
rectly and are localized for the culture in the
geographic areas where the product is sold.
However, once the sale has been made, end
users can become dissatisfied with the qual-
ity of the post-sales materials if those docu-
ments are not properly translated.
The result is that customers will form
impressions about your company’s commit-
ment—or lack of commitment—to customer
quality and satisfaction and choose not to
buy your product the next time around.
To develop brand loyalty, it is important to
evaluate whether you are offering not just a
high quality of translated marketing materi-
als, but also that you translate the materials
you provide post-sales.
Cultural respect = increased sales
In today’s economy, retaining valued and
established customers is vital to generating
more sales and providing you with leads to
48 WO R L D T R A DE 1 0 0 A U G U S T 2 0 0 9
other companies that can use your goods or
services. Taking care of your existing custom-
ers on the post-sales side is critical to retain-
ing their business in this highly competitive
global market. When you consider the cost
of translating your marketing or operational
materials for international markets, be espe-
cially careful not to neglect your post-sales
relationship with your customers.
If yours is a manufacturing company
that truly wants to penetrate, capture,
maintain, and grow its market share in a
foreign market, you should look carefully
at creating brand loyalty by ensuring cus-
tomer satisfaction. If you do not have your
operational manuals professionally trans-
lated for the target market, you may be fail-
ing to demonstrate to your customers that
Proper translation of
an operating manual
assures safety and
a positive customer
experience.
you understand and respect their culture.
By making sure your materials are prop-
erly translated and that your customers in
those foreign markets can use and maintain
your equipment, you demonstrate the same
respect for their culture that you demand
for your own. When you provide complete
and correct translations of your operational
materials, you demonstrate that you appre-
ciate your customers and begin to create
brand loyalty.
Safety first
More and more U.S. companies are realizing
that for a safer work environment within their
overseas operations they need to have their
safety materials translated. In some cases, a
senior member of the management team that
is native to the local culture has performed
the translations. However, even if the engi-
neer within the local manufacturing facility
is a native speaker, the industrial safety mate-
rial in your documents may not be translated
correctly and may not be easily or properly
comprehended by the local worker.
The consequences of failing to translate
such important safety material can be seri-
ous, from a personal injury viewpoint as
well as a legal standpoint. Incorrect trans-
lations, or a total lack of translations, can
jeopardize the safety and lives of workers
and leave your company open to litiga-
tion that can have serious financial conse-
quences for your firm.
Even those materials you produce for
distribution within your company should
merit analysis for possible translation. For
example, a U.S. construction company
with a large Spanish-speaking work force
recently elected to translate all of the safety
materials they distribute to employees.
The benefits of investing in profes-
sional translations of these materials was
soon realized when the company reduced
employee down time by 20 percent and
significantly increased productivity. Simple
procedures that had been missed before
because of a lack of understanding by the
employees are now being performed when
needed. Over time, with their employees
having a better understanding of safety
issues and procedures, the company
should also expect to see a reduction in
their insurance premiums.
The success this company has achieved
has been so great that they are now in the
final stages of preparing all employee ben-
efit guides for translation. The company
believes that if its employees can read about
their employee benefits and obligations in
their native language, they can better under-
stand the benefits and requirements, make
greater use of the benefits available to them,
and take greater ownership for their roles in
the company. All of this equates to a more
involved and more productive employee.
The bottom line
In today’s economy, every company across
the globe is looking at its bottom line and
trying to find ways to control and lower
their costs. Before you decide to eliminate
translation costs from your company’s
budget, consider the consequences your
decision will have on customer loyalty,
compliance with regulatory requirements,
worker safety, legal liability, increased calls
to customer service, and overall customer
satisfaction. The short-term savings of
eliminating translations can have serious
effects on customer perception and satis-
faction and can ultimately cost your com-
pany much more in the long run. WT
Jeffrey Jorgensen is National Account Manager for
International Communication by Design, Inc.
Advertisers’ Index NEED
NAME PAGE NAME PAGE
REPRINTS?
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Positive Performances
Think Posit ive… Be Posit ive… S h are Your Posit ive News

>Good News!
World Trade 100 is pleased to announce a new feature online that will publicize
“Positive Performances”. Every week on our website at www.worldtradewt100.com,
we will highlight an example of a supply chain sector service provider that is displaying:

STRENGTH STABILITY CONFIDENCE

IN THE FUTURE
To send in your good news, email Lara Sowinski, Editorial Director, at laras@worldtradewt100.com.

PositivePerformancesHouseAd_0709.indd 1 6/30/09 11:25:18 AM

W W W. WO R L DT R A D E WT 1 0 0 .C O M 49
SCI-FI
S U P P LY C H A I N I N N O V AT I O N S
BY JEREMY N. SMITH

rret”
“fe
ic
bot
Ro

WHAT: Cargo-screening robotic “ferret.”

WHY: Smugglers use cargo containers to hide drugs, weapons, and even other human beings.
Detection is costly, slow, dangerous, and often ineffective, combining sniffer dogs, explosives
scanners, carbon dioxide probes, and heartbeat monitors. By contrast, the University of
Sheffield, England-designed robot quickly, safely, and comprehensively “ferrets” out illegal
items, often without the need to even enter or unpack containers.

HOW: Combining new laser and fiber optic sensors for the first time, the foot-long ferret
attaches magnetically to a container’s interior, then automatically explores its contents for
contraband. While current scanners suggest only a shipment’s shape and density, the robot
will identify specific substances—e.g., ordnance, explosives, and pharmaceuticals. Key to the
technology are probes that are able to detect even minute “fingerprints” of illegal goods—
including the carbon dioxide that naturally accompanies human trafficking. Funding comes
from the United Kingdom’s Engineering and Physical Sciences Research Council (EPSRC), a
government agency for practical scientific research and training.

CAVEATS: Prototypes will take three years to complete and test. The first widespread
deployment is not expected until 2014.

QUOTE: Project Leader Dr. Tony Dodd, Department of Automatic Control and Systems
Engineering, University of Sheffield: “It’s essential we develop something which is simple to
operate and which border agents can have total confidence in.”

MORE INFORMATION: EPSRC

http://www.epsrc.ac.uk/PressReleases/robotferret.htm

50 WO R L D T R A DE 1 0 0 A U G U S T 2 0 0 9
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