Trade Profile – Imported Cut Flowers

January 28th, 2013

Often when we consider trade movements, it’s easy to focus on the “larger” movements, such as containers or bulk shipments. Sometimes we forget that there are other cargos in the system. With Valentine’s Day coming soon, we are starting to see the first of the seasonal peaks in cut flowers (the second peak occurs later this spring). Worldwide, the U.S. is the second largest import market for cut flowers, only behind the European Union.
In 2011, the United States imported $880 million in cut flowers (HSCode 0603), led by cut roses, general cut flowers, chrysanthemums and car-nations. On a year-to-date base, total flower imports are up 9.6% for 2012. Generally, flowers from Latin America arrive at the Miami Airport on cargo planes and are transloaded to refrigerated trucks for dis-tribution throughout the U.S. Miami handles roughly 82% of all cut flower imports, followed by JFK Airport and then Los Angeles International Airport. The largest cut flower supplier into the U.S. is Columbia, which exported products worth $562 million, followed by Ecuador ($147 million) and the Netherlands ($51 million). Customs and Border Patrol Agricultural Specialists (formally USDA APHIS inspectors) require that the flowers arrive pest free.


Since the 1980s, the strong growth of imports has caused domestic producers to shift away from competing directly with imported roses, etc., to specialty varieties, that either have new traits or colors. So when you are purchasing flowers this Valentine’s Day, you probably purchased a bouquet from Columbia or Ecuador that arrived through Miami before arriving in your city.

On a final note, I first started researching transportation early in my career while at LSU. (It was here that I got bite by the “transportation bug”!) The work culminated in a report, “Technological and Economic Factors in Landing Latin American Perishables,” (Department of Agricultural Economics Research Report No. 692, Louisiana State University Agricultural Center, September, 1992, written by Roger A. Hinson, David H. Picha, and Bruce Lambert).

 

Jan 2013 News Update

January 28th, 2013

 I had the pleasure of attending the Kentuckians for Better Transportation (KBT) meeting in Lexington recently. As always, attending state-specific meetings leads me to believe that more people are understanding transportation’s importance. My pre-sentation, “Trends in Global Waterways and Implications for Kentucky,” outlined how the world is looking at waterways for freight mobility and economic growth. Although the U.S. remains the largest inland waterway user in the world, we need to consider waterways as a part of integrated supply chains.
 Like most attendees, I spent my time at the annual meeting of the Transportation Research Board (TRB) running between presentations, committee meetings, and simply visiting during the breaks. I did participate in TRB Session 522: “Benefit Cost Analysis for Freight Projects: Moving Theory into Practice.” My presentation, focusing on Corps benefit-cost analysis and some thoughts on multimodal analysis, is posted on the ITTS website.

“The Heartland Intermodal Corridor: public private partnerships and the trans-formation of institutional settings” by Jason Monios and Bruce Lambert was published in the Journal of Transport Geography (Issue 27 (2013), pp. 36–45). The paper developed a framework to look at institutional settings and how they influence transportation through six key factors: reason for collective action, institutional setting (public sector), institutional set-ting (infrastructure), interaction between various parties, common sense of purpose, and leader firms. Research for this paper was conducted during the Heartland Cor-ridor Trip organized by ITTS in 2010.

Lambert’s Lagniappe (Jan 2013)

January 28th, 2013

New Year’s Resolutions…

After most of us finish New Year’s dinner, we begin think about what is ahead in 2013, and that often means a New Year’s resolu-tion. Generally, we pick resolutions that are fairly easy to define, such as stopping or starting some activity. Ultimately, one’s success depends on three things: Is there a clear, measurable outcome (lose weight or get to a certain weight)? What are we willing to give up to achieve that goal (will I work out or change my diet)? How will others respond in supporting these changes (do I stop the “cheesecake of the week” club meeting)?  Oftentimes, success depends upon long term visualization of how one will look, feel,  or act once the change is made.

Given the long term question of building and maintaining public sector infrastructure (roads, bridges, locks, runways, etc.) it seems like the nation is struggling with its own  transportation resolutions for 2013. Last Saturday, CNN’s “Your Money” aired a discussion regarding the gap in infrastructure funding. As with most discussions on this issue, the  outcome remained unresolved. The benefits can be demonstrated, but we already have a mature system that works. How much more do we really need to invest?

What is clear is that people are expecting to see more demonstrated value for investment in transportation infrastructure, such as how new investments will produce broad benefits. In the future, performance measures should serve as important tools for prioritizing investments, especially from federal sources, although what measures will be used remains up in the air. For example, do we look at reducing travel costs or improving safety? Do we seek to minimize deviation from free flow conditions or simply to build out the planned network with more integrated intelligent transportation service options? How do we encourage economic competitiveness for domestic loads or exports? How will we fund these projects–through a gas tax, user fees, or some other mechanism? In all things, the ability to carry out any resolution seems to focus on defining, committing, and receiving support from others.
This year, like most people, I am trying to lose weight. (Unfortunately, I did well on last year’s weight gain resolution!) I have some definite steps in mind as to how I want to be at the end of 2013. I don’t think we can say the same regarding any resolutions about the transportation system for next January.

The Mississippi River and Low Water (Dec. Newsletter)

December 22nd, 2012

Today we are talking about record lows in the Mississippi River value with its implications on restricting shipping, while in the recent past we were talking about record high water.  In both cases, this complicates navigation, as mariners must respond  to changing waterway conditions.

While the Mississippi River is generally recognized as a key commercial corridor for the United States, it is normally not understood how that system relates to the modal systems until something happens that forces people to consider its importance to the nation. In the case of low water, navigation channels become both shallower and narrower.  This means that towing companies tend to load lighter or with less total barges, leading to additional costs to both barge operators and shippers.  In response to these lower levels, portions of the Pinnacles will be removed to allow for navigation.  A second rock removal project is planned to begin in February.

Regarding trade, the Mississippi River is a large gateway for U.S. exports, as agricultural products, petroleum products and chemicals comprise the bulk of the export traffic.  (Figure 1.  shows the sources exports that leave the Lower River, and each state’s estimated share of exports that depart from the Lower Mississippi River.)  However that corridor remains very dependent upon barge traffic to bring exports downriver (and imports northwards).  See my presentation on the Lower River.)

 

Exports by State of Origin, 2011 through the Lower Mississippi River, 2011.Mississippi River and State exports

 

 

 

 

 

For the months of December and January, the financial value in economic impact is expected to exceed $7 billion.     Reducing barge traffic generally results in some cargo switching to highways, and not railroads, as the alternative mode part based on studies conducted by the Corps of Engineers and others.  This implies that when a system fails, even partially, it can lead to large modal disruptions in other parts of the network.  There are also changing shipments of grain, such as inbound grain shipments arriving in Port Manatee, Florida.

In other ways, the Mississippi River seems to be part of a general sense of uneasiness in the transportation industry.  The Mayan Calendar predicted the end of the world.  While the world has not yet ended, the low water conditions on the Mississippi/Missouri Rivers, longshoreman/labor issues, changing in global markets, and unease in the domestic transportation volumes; suggest that the future will look different from the past.  In this regard, how do we manage these systems, recognizing that operational constraints may limit our ability to respond quickly, or in a way that is consistent with the previous operational framework?

Coal Exports (Dec 2012)

December 22nd, 2012

Over the past few years, United States coal consumption has declined steady from its 2007 peak (the US still ranks as the world’s second largest producer of coal).  While part of this decline could be attributed to changing domestic energy policies, the net effect is that coal producers must look for new markets to sustain mines.    For much of the world, coal remains an important source of electrical and industrial production, as net coal demand continues to increase.

In 2011, the US exported $16 billion dollars of coal, a record, and while Year to Date shipments in 2012 have declined slightly, but remain above historic levels.  (Energy Information Agency (EIA) estimates that coal shipments will decline in 2013, but remain above historic levels.)  The US ranked as the fourth largest coal exporter in 2010, behind Australia, Indonesia, and Russia.

The top markets for U.S. coal in 2011 are presented below, but the growth in coal demand in China (which traditionally sources coal from Indonesia and Australia) continues to increase.  The EIA projects that China will build the equivalent of the US electrical capacity base within fifteen years, making the demand to secure coal reserves a priority, but this also increases competition for other major coal consumers.  (This summer, India’s Abhijeet Group and Kentucky-based Booth Energy Group and River Trading Co., signed a 25 year agreement to ship 9 million tons of coal annually from Appalachia to India.

TOTAL ALL PARTNER COUNTRIES Value

Share

Brazil

1,715

10.7%

Netherlands

1,536

9.6%

Japan

1,182

7.4%

Korea

1,138

7.1%

Italy

985

6.2%

Ukraine

974

6.1%

India

927

5.8%

China

883

5.5%

United Kingdom

790

4.9%

Canada

728

4.6%

Other

5,109

32.0%

Total

15,967

 

While coal is mined throughout the United States, the top five coal producing states (and their relative share) are Wyoming (40%), West Virginia (12%), Kentucky (9.9%), Pennsylvania (5.4%) and Texas (4.2%).  While Western Coal is largely consumed within the Eastern United States, being blended with Eastern Coal to meet emission standards, most of the export coal comes from the Eastern U.S.

What does this mean for transportation?   Based on the Shipment of Origin, the top states for export shipments are West Virginia (33%), Pennsylvania (17%), Alabama (14%), Louisiana (10%), and Virginia (8%).  Of these top export regions, West Virginia led all states in net growth, with an almost doubling in the value of coal exports between 2010 and 2011.   (The shipment of origin for exports is based on where the product began its international move.  If coal was shipped to an export facility and blended, etc., it would be reclassified at the site where the storage and other activities began.)  The regional tie of Appalachian coal to export markets is also highlighted by top gateways for US coal being Norfolk, Baltimore, Mobile and the Lower Mississippi River.  (While there are plans to develop a mega bulk loading facility in the Pacific Northwest for mostly Western Steam coal, local groups are fighting the terminal’s development.  In part, shippers are also looking to expand coal exports from the lower Mississippi River.)

At the same time, most of the nation’s coal shipments move on rail, followed by barges, beyond drayage movements on truck.  (The 2007 Commodity Flow Survey indicated that railroads handled 92.5% of the coal shipped on a ton-mile ranking, while waters and waterway intermodal accounted for 5% of the nation’s ton-miles.)  For both rail and water, coal remains a large commodity, and if either mode is unable to handle coal shipments (as demonstrated by the current low water conditions), this may result in enormous costs to utilities and other users, especially if these shipments are routed to trucks.

Lambert’s Langiappe (Dec Newsletter)

December 22nd, 2012

Over the past few years, there has been a barrage of pundits predicting that transportation infrastructure needs will lead to a widespread collapse of the American economy.  In some cases, it is  discussed in regards to animal images: such as “cooking the frog”, where gradual increases in temperature result in the frog’s demise, “Chicken Little”, where the sky is falling, or that of the “elephant in the room”, a problem so big that it is ignored.

While reflecting upon what is the true way to discuss the future of transportation, I was petting my three legged dog, Mr. Sweetie.  (Yes, that’s his name, and no, he is not named after me.  My father, a veterinarian, rescued Mr. Sweetie after being injured in a car accident.  Mr. Sweetie’s front paw was beyond repair, which resulted in my father amputating Mr. Sweetie’s limb.)  Mr. Sweetie quickly adjusted to life on the farm, and while he can not run as fast as the other dogs, he gets around fairly well.  In this regard, transportation is something like Mr. Sweetie: “We will never have the full dream of unlimited mobility with little costs”, just as Mr. Sweetie remains unable to run as fast as the other dogs.  Mr. Sweetie has adjusted to his limitations, and in many ways, we adjust to our own limitations concerning mobility.

This does not mean that we can not expect more of our transportation system.    When I was younger, the future was to be like the Jetsons’, with its world of flying cars (and traffic jams).  At the same time, there were discussions on the ability of going anywhere in the U.S. as the interstates were connecting America.  Transportation changed not only the U.S. but the global economy.  But these changes also mean that more challenges lie ahead of us.

Despite these concerns of building out the nation’s infrastructure, 2012 was a positive year in the transportation industry on a legislative front.  The passage of MAP-21 shows the willingness of legislatures to talk about highway and transit needs, while assisting state/local investments.  The bill began a process of considering the need to improve freight movement on the nation’s highways and through major facilities.  Also, discussions on the Water Resources Development Act have begun.  In sum, the need for addressing transportation is slowly becoming seen as a question of improving America’s economic fortunes (although funding issues continue to stifle the debate…).  Ultimately, whatever the future of transportation becomes in twenty years, one thing is clear: there will still be mobility needs not addressed and people will adjust accordingly, just as Mr. Sweetie has in response to his own limitation.

 

What Is “National Economic Development” Benefits

December 22nd, 2012

When the Corps of Engineers considers a navigation project, the focus is on improving the net benefit to the nation that this project may generate.  As such, the Corps will develop a without project condition, which serves as a baseline for additional comparisons.  Once traffic flows, cargo, and costs are a developed, the Corps will begin estimating the benefit of various projects, including both their related costs and benefits, including changing traffic volumes and costs.  In this context, the Corps, with a focus on the net benefit to the nation, constructs estimates of the National Economic Development benefits from a project.   (For example, putting in a project in one location that will influence an existing Corps project would be seen as simply a transfer between regions, and not necessarily a net benefit to the nation if the Corps now must build, operate and maintain two projects were the one existing project was sufficient.)  

The use of the Benefit Cost Ratio is to demonstrate if there is actually a net benefit for doing a project, namely that the benefits being considered are better than the costs. (Basically, for every dollar invested in a project, the project will return an anticipated return, such as a BC ratio of 2 suggests that for every one dollar invested, the nation would receive two dollars in benefits.) However, the evaluation of Benefit Cost ratios alone may not necessarily result in the best project being built from a national perspective.   Based on the following figure from IWR Report 09-R 3 three projects are considered.  Most people would say that Project A, with the higher Benefit Cost Ratio, should be selected.  However, the Alternative A has both a relatively lower Benefits than the other alternatives, despite its lower cost.  Alternative C, with its higher benefits than either Alternative A or B, generates the largest net economic return, and would be selected by the Corps of Engineers.

  

In many ways, the Corps includes many of the same elements used in highway and other infrastructure projects, with the basic steps of estimating costs and benefits.  The differences center upon: the focus on national, rather than regional, benefits, managing not only the determination of what project is needed but the construction of that project at the same time, and the inability to consider as wide a range of benefits as is traditionally done in other infrastructure BC analysis.  In sum, the Corps studies tend to be more broad and complex than other infrastructure investments, especially given that the project estimates are used throughout the entire review process and once approved, determine the project’s scope and budget.

 

 

December 2012 What’s New

December 22nd, 2012

What’s News

 

Over the past few months, I made several presentations, ranging from importing cargo from China for a class at LSU, and a presentation for the University of Wisconsin on the importance of the Mississippi River http://www.ittsresearch.org/adobe/final%20for%20webinar%20on%20Mississippi%20River.pdf .

While at the AASHTO annual meeting, I spoke on the importance of Benefit Cost analysis for maritime studies and thoughts on linking corridor planning efforts to the proposed MAP-21 provisions.  http://www.ittsresearch.org/adobe/Can%20We%20Plan%20Together.pdf

ITTS submitted comments for the “Interim Guidance on State Freight Plans and State Freight Advisory Committees” as released by US DOT.  You can access all the comments on the guidance at http://www.regulations.gov/#!docketDetail;dct=FR+PR+N+O+SR;rpp=10;po=0;D=DOT-OST-2012-0168

I spoke at the Mississippi Water Resources Association (MWRA) on the value of waterways. http://www.ittsresearch.org/adobe/Economics%20of%20Waterways-mwra.pdf

Finally, work continues on organizing the ITTS/MAFC in Louisville, March 12-14.  I hope to see you there!!

Government, The Gas Tax and Fixing Potholes

December 21st, 2012

A recent 9 to 5 Cartoon lists two drivers in  a car, driving around potholes.  (http://www.gocomics.com/9to5/2012/10/20)  The punchline is that you can now adopt a pothole by contacting Lessgovt.org.  There are several things about the cartoon that I find intriguing.  One, the question of tolling and who owes a road, and secondly the costs associated with maintaining the roadway.  As discussed in many places, transportation suffers from the “Tragedy of the Commons”, where multiple users do not see how their individual actions can change the net use of a common asset.

Anyway, just a funny comic, but one that I think illustrates the tradeoffs we face when considering the fiscal cliff.

Some Articles of Interest…Dec 10th.

December 10th, 2012

To all…

1.  Here is a report from the Federal Reserve Bank in San Francisco that highlights the return on public spending in Transportation. http://www.frbsf.org/publications/economics/letter/2012/el2012-35.html They suggest that current multipliers for highway spending are too low, considering the long term effects that these projects have on local communities.  They suggest that multipliers should be higher than the tradition 1-1.5 used in economic models, suggesting that they should be more like 2 or higher.  The report they cite at the end of the article calls for the multiplier to be higher.  As the role of Benefit Cost analysis and Value Engineering remains an evolving tool at DOT, it will be interesting to see how these play out…

2.  The economic data remains mixed as the CASS Freight Index was down for November. (http://www.logisticsmgmt.com/article/november_cass_freight_index_data_sees_declines_in_shipments_and_pricing_fro/)  The irony is that throughout 2012, we have seen mixed economic signals, and recently the OECD revised their forecasts for 2013 downward.  While we should rejoice about 2012 ending, we may not necessarily be jumping for joy that 2013 is here…

3. MAP-21 called for more work on freight advisory councils.  Here is a nice plug for KY from inbound logistics.  http://www.inboundlogistics.com/cms/article/kentucky-racing-toward-logistics-leadership/ There is some need to figure out how to work with advisory groups, as the MAP-21 guidance recommends this for freight projects, but it unclear if they really considered the various nature of freight advisory councils at the state and local level.  Clearly, the role of state freight advisory councils were not necessarily the catalyst behind Georgia’s agreement to expand the Port of Savannah http://www.ajc.com/news/news/state-regional-govt-politics/deal-reed-say-savannah-port-expansion-a-priority/nTLzB/ .  And a recent commentary about how supply chains are becoming more important to a business’ bottom-line.  (http://blogs.dcvelocity.com/technology/2012/11/how-important-is-supply-chain-just-ask-apple-and-citi.html)

4.    Rail Intermodal trying to get under the 500 mile radius.  (http://www.dcvelocity.com/articles/20121116-ntermodal-struggles-to-crack-short-haul-market/?utm_medium=email&utm_campaign=Insider+2012+Dec+7&utm_content=Insider+2012+Dec+7+CID_f2f87f8a6a4007c67f45aa44c0b4e416&utm_source=Email%20marketing%20software&utm_term=Intermodal%20struggles%20to%20crack%20short-haul%20market) While rail intermodalism is growing, the question of can rail compete for shorter haul moves has been problematic. Traditionally, anyone said that rail can not be competitive for anything less than a day’s drive by truck, but there are some markets where short haul rail intermodal does exist.  For the Southeast, this is actually a reality, as Railroads have explored more intermodal terminal development in the region, especially tied to mainline container routings.

4.  Tolling versus fuel taxes?  The Reason Foundation came out with a new report that suggests this may not be as burdensome as first proposed and should be considered for future infrastructure funding.  http://reason.org/news/show/1013148.html

5.  The USDOT Office of Inspector General released its FY2013 Top Management Challenges.  While not necessary program based, they do show the direction that the OIG is hoping to move in 2013, especially regarding program oversight.  http://www.oig.dot.gov/sites/dot/files/DOTs%20FY%202013%20TMC.pdf

Here are the priorities…

•           Ensuring the Next Generation Air Transportation System Advances Safety and Air Travel

•           Enhancing FAA’s Oversight and Use of Data To Identify and Mitigate Safety Risks

•           Overseeing Administration of Key Transportation Assets To Ensure Their Success and Sustainability

•           Strengthening Existing Surface Safety Programs and Effectively Implementing New Safety Requirements

•           Maximizing Surface Infrastructure Investments With Effective Program Oversight and Execution of New Legislative Requirements

•           Adequately Overseeing Administration of High Speed Intercity Passenger Rail Grant Funds

•           Strengthening Financial Management Over Grants To Better Use Funds, Create Jobs, and Improve Infrastructure

•           Ensuring Effective Management of DOT’s Acquisitions To Maximize Value and Program Performance

•           Managing and Securing Information Systems To Efficiently Modernize Technology Infrastructure and Protect Sensitive Data From Compromise

 

6.  Some information on local deliveries.  Inbound Logistics describes how firms are starting to look at local deliveries beyond just rush hour concerns (http://www.inboundlogistics.com/cms/article/urban-delivery-getting-into-the-grid/) and the focus on integrated logistics means that firms are still trying to better manage expedited services to maintain costs and inventory levels (http://www.inboundlogistics.com/cms/article/expedited-transport-its-all-in-the-timing/).  This is different from this report about FedEx changing its business model (http://www.dcvelocity.com/articles/20121112-at-fedex-say-hello-to-the-next-40-years/?utm_medium=email&utm_campaign=Insider+2012+Dec+7&utm_content=Insider+2012+Dec+7+CID_f2f87f8a6a4007c67f45aa44c0b4e416&utm_source=Email%20marketing%20software&utm_term=At%20FedEx%20say%20hello%20to%20the%20next%2040%20years)

7.  Webinar

(SR500) NHI Innovations: GIS Tools for Linking Transportation and Natural Resource Planning

Date/Time:  12/20/2012 2:30 PM – 4:00 PM Eastern Time

http://www.nhi.fhwa.dot.gov/resources/webconference/web_conf_learner_reg.aspx?webconfid=25385

 

8.  I also found the following Patagonia recommendations for Christmas (http://www.lifeedited.com/patagonia-to-shoppers-dont-shop-if-you-dont-need-to/) :  Consider the following:

  1. Reduce. Do I need this?
  2. Repair. Can I fix what I already have?
  3. Reuse. If I can’t repair the thing I want to replace, can it be sold to someone who wants it or used somewhere else like a charity?
  4. Recycle. Can the materials of my old thing be remade into something else?
  5. Reimagine. Can we change global consumer habits to create a sustainable planet?

Does this sound like a good investment strategy for public infrastructure:

  1. Reduce: Deobligate state roads to local/private jurisdictions where appropriate
  2. Repair: Fix the system
  3. Reuse: Can we rehabilitate, put in ITS, etc., to improve throughput
  4. Recycle: Reusing materials and improving roadway assets
  5. Reimage: Can we find another use or mode that can work in this corridor?

 

9.          Department of Transportation is launching a new National On-Line Dialogue focused on the asset management requirements in MAP-21 for public transportation providers. The National Online Dialogue is open from December 12, 2012 to January 4, 2013 and can be accessed at http://tam.ideascale.com/

Questions to consider:

  • How should FTA define State of Good Repair?
  • What elements should be included in a Transit Asset Management Plan?
  • How will I know my Transit Asset Management Plan meets FTA requirements?
  • What triggers when I have to revise my Transit Asset Management Plan?
  • Should FTA tailor Transit Asset Management Plan requirements to accommodate different sized transit systems to avoid the “one size fits all” approach?
  • What kinds of technical assistance should FTA offer to aid transit agencies in meeting these requirements?
  • How should the requirement for state of good repair performance measures be implemented and integrated with the new MAP-21 performance-based planning process?
  • Other topics you believe should be considered as we prepare the TAM rulemaking.

10.  Finally, while I enjoy Christmas music, I get tired of hearing the same songs ad nauseam.  The following site contains Christmas Sharity materials (http://ernienotbert.blogspot.com/ with links to other sites) which are generally, older public domain versions. Although some are bad (you have been warned!), and some are quite good, you won’t hear these versions at every store or on the radio.