Southwest Florida ports are scrambling to soak up container traffic from East Asia. The fast-growing import business opens up new opportunities, but it also raises an interesting question: Do we have anything we can send back in those containers?
Since China joined the World Trade Organization, the number of container ships squeezing through the Panama Canal has multiplied. However, mainly due to the 94-year-old bottleneck in Panama, by far most container traffic from East Asia to the United States ended up at West Coast ports. Earlier this year, Panama decided to expand the canal, and that has sent cargo ports along the United States’ eastern seaboard racing to add container capacity.
Tampa and Manatee, the two U.S. ports closest to the canal, want to be at the forefront. The Manatee County Port Authority recently signed with a Canadian company to bring the first mobile harbor crane to Port Manatee, an important first step in expanding the small port’s container cargo capacity. The bigger Port of Tampa is one step ahead: Already last year, it secured a shipping line, Israel’s Zim Integrated Shipping Service, for biweekly container service from Shanghai. In September, the port received a $10.4 million state grant that will allow an expansion of its container terminal, thus supporting the growth of Zim’s Asia-Gulf Express (“AGX”) service.
Zim’s service is great news for exporters in Southwest Florida—or rather, it would be great if manufacturers here were to produce anything of tangible value to China.
All right, Florida merchandise exports to China have been rising at a fast clip, from $330 million in 2004 to $488 million in 2006; China climbed from rank 15 to rank 9 on Florida’s export destinations during that period. But a closer look at what we are sending to China reveals a Third World scenario: While they send us PCs, plasma TVs and sofas, we are a raw materials provider. China’s biggest interest by far in Florida is fertilizer. The second-ranked good the Chinese are buying from us is—oh, boy!—waste metal. And No. 3 is, you may have guessed it by now, waste paper and scrap cardboard. The closest we got to being a provider of value-added goods to China was a measly $18 million worth of massage devices and medical instruments last year. Except for the medical equipment, none of this is of use for Zim Shipping, because you don’t need containers for fertilizer and scrap metal. Bulk ships will do that job.
It’s the massive import trade that really convinced Zim to include the Gulf and Port of Tampa in its global routes. As of last year, China sent Florida 10 times more stuff than we were shipping back. Wal-Mart and other retailers in Florida soaked up the lion’s share of $5.1 billion worth of—in order of value—computers, briefcases and suitcases, appliances, furniture, office machines and many more manufactured goods made in China.
Profit margins are slim in the shipping business. So how does Zim avoid letting their ships steam back empty? The Israelis are sending their 3,000-ton container vessels on a kind of tramp mission. After the stop in Tampa, the ships go on to Mobile, Houston and Kingston, the big trans-shipment hub in Jamaica, before heading back to Shanghai via the canal. Zim also included in its AGX rotation two ports in Korea.
The point this elaborate port rotation makes is that anyone in Southwest Florida who might want to ship a few containers to Shanghai should be a very, very welcome customer for Zim.
For a while it looked like the expansion of low-budget airlines in Europe provided an opportunity for smaller destinations in Florida such as Sarasota-Bradenton to directly tap into foreign tourism. But—alas—within the last couple of months, the name of the European airline game has become consolidation.
One event that could have made a big difference was a Ryanair announcement in March that it was planning to get into the transatlantic business. The Irish no-frills carrier, which grew from zero to become Europe’s third-largest airline within less than a decade, made noises about scouting for secondary airports in the United States as destinations for cutthroat-priced flights. But according to people close to the airline, Ryanair executives now say there won’t be any transatlantic flights “for at least two or three years.” And, reportedly, one executive also dropped the word “never.”
This setback comes on the heels of Condor and LTU, two German carriers that competed over Florida destinations, falling under the same ownership of Thomas Cook AG/Air Berlin. The fallout of this merger is already being felt at one smaller airport in Florida: Condor pulled its flights from Frankfurt out of Fort Myers this winter season, apparently in order to avoid cannibalizing sister LTU’s nonstop flights.
For the larger, merged airlines, Florida is just one token in the global air travel game. And that’s bad news for us in Sarasota-Bradenton.
“For the west coast of Florida, I do see it as a problem as there are other locations worldwide with higher yields,” says Steven Knackstedt, a Fort Myers-based airline consultant.
To be sure, European airline consolidation has actually helped big airports here. Thomas Cook apparently decided it would make more sense to compete with Europe’s second-largest airline, Lufthansa, at larger destinations in Florida. That’s been particularly good for Orlando International Airport, which recently not only added Condor and Lufthansa, but also British Airways and Aer Lingus flights. The big guys are battling it out at big airports.
“It’s the old ‘You do something to me, I will make it painful for you,’” Knackstedt says.
But there is one exception to the consolidation-victimizing-small airports rule. On Nov. 3, the small Melbourne International Airport on Florida’s east coast really earned its middle name by welcoming its first once-weekly nonstop flight from Berlin. The folks at Melbourne spent hundreds of thousands of marketing dollars through German startup tour operator M-Touristik. Apparently this type of commitment convinced LTU it was worth the risk of deploying an airbus A330-200 and a few employees to this hitherto unknown destination.
Hats off to Jim Weston, a consummate sailor and corporate executive for whom the “way” often was more important than the “goal,” a citizen who served both the U.S. Navy and the Sarasota Friends Meeting, the local branch of the pacifist Quakers.
Jim died after a brief illness Aug. 23, and many businesspeople in Sarasota, where he spent his last 27 years, will be missing a role model.
In his youth, Jim Weston joined first the merchant marine and then the Navy. After the Korea war, he got an MBA, and eventually went on to work 13 years in Mexico, representing U.S. consumer product companies.
At Jim’s memorial service, Argus Foundation President Kerry Kirschner reminisced about their Head ‘n’ Shoulders adventures in Mexico. When Revlon introduced dandruff shampoo to the Mexican market in the 1970s, Jim quickly saw the product wouldn’t sell among the poor majority. He suggested to headquarters to repackage it in small pouches. But he was brushed off: “Why would we want to sell to poor people?” was the rhetorical response.
Yet the country’s reality in the early 1970s was one of mostly poor consumers, a near-complete absence of chain retailers and still rare television consumption. So Jim went on to create distribution networks and advertising that would be tagged as “guerrilla marketing” today.
“We sent out vans with loudspeakers to small towns,” Kirschner said. “And we would sell one bottle at a time to street vendors. They would refill it in small plastic bags, and one bottle would be good for 30 customers. We also showed movies in the town square, with a Revlon commercial halfway.”
Retirement in Sarasota didn’t mean sitting still to Jim. A few years ago, he joined with John Hartman and David Melville to start a venture called OceanGrown. Based on a technology that produces fertilizer solution from seawater and the minerals it contains, Jim and his partners developed the product to the point where the company is now beginning to sell the plant fertilizer.
I wish the company all the best.
Johannes Werner is a Sarasota-based business journalist who has worked in Europe, Mexico, the Caribbean and the United States. He is the editor of Cuba Trade & Investment News and hosts the Florida-Caribe radio show on WSLR 96.5 FM. His column, “Outside In,” won the Florida Magazine Association’s first-place Charlie Award for best column in a trade/technical magazine in 2007.