Economic Backbone: Transportation and Trade
The President's impact on trade and transportation in Florida
A by-the-numbers look at the Florida Department of Transportation’s proposed five-year work program beginning with the fiscal 2017-18 year, which starts July 1.
$45.6 billion – The cost of the five-year plan, a state record
10. 8% – Increase over last 794 – Lane miles of new roads year’s work program
34. 9% – Increase over the work program in 2011-12, the first year under Florida Gov. Rick Scott.
FDOT’s proposed work program includes:
794 – Lane miles of new roads
8,372 – Lane miles of resurfaced road
88 – New bridges
181 – Repaired bridges
Source: Florida Department of Transportation
How will Trump’s trade policies affect Florida?
One of President Donald Trump’s first acts as president was to withdraw the United States from the Trans-Pacific Partnership free-trade agreement, and he has vowed “America First” trade and foreign policies that could include initiatives such as new and higher tariffs on imports.
What impact might the Trump administration have on international trade in Florida?
“There does seem to be a decided turn away from trade, toward a more inward-looking approach to the international economy,” says Jim Bacchus, a former congressman and former chairman of the appellate body of the World Trade Organization who now chairs the global practice group at Greenberg Traurig. “To the extent that that becomes policy, that will not be helpful to Florida. Not at all. The ever-growing volume of regional and global trade investment involving our state is indispensable to the continued growth of Florida.”
Felicia Leborgne Nowels, a partner at Akerman who focuses on international trade and Customs law, says some Trump administration trade policies could prove beneficial for Florida. For instance, she says Trump’s stated preference to negotiate individual bilateral agreements with countries — rather than region-wide or continental pacts such as the TPP — could ensure a greater focus on specific economic sectors that are important in Florida, such as agriculture, whose needs may have been sacrificed in larger negotiations. She also says the Trump administration could prove helpful to Florida businesses by more aggressively enforcing anti-dumping policies.
“Although human nature tends to get nervous with change, I think change is good,” Nowels says. “And I think that, particularly when it comes to trade agreements, the time is ripe for a change.”
There is still uncertainty about how effectively Trump will transform his campaign rhetoric into government policy. Bacchus says American consumers generally still support free trade; a February survey by the Wall Street Journal and NBC News found that 43% of Americans believed free trade helped the country, versus 34% who said it hurt the country. The findings were an almost-exact reversal from March 2016, in the midst of the presidential campaign.
“Despite all the political rhetoric going the other way, and all the proposed policies going the other way, Americans at the grassroots are coming to appreciate the value of trade to them and their daily lives,” Bacchus says. “The politics that are prevailing now are on the edges of the American economy and are not part of the broad mainstream.”
Thoughts Florida’s Deepwater Ports on Trade
Jim Bacchus is the former chairman of the appellate body of the World Trade Organization, the seven-judge court of final appeal in Geneva, Switzerland, for cross-border trade disputes. Bacchus was twice appointed to the court by consensus of WTO member countries and twice chosen as chairman by his colleagues. He was the only North American on the body during his two terms on the WTO appellate court.
Here are some of his observations about trade in Florida:
“Florida is not a place of uncompetitive industries or a challenged, smokestack industrial base. Florida is a state that is much engaged in the world as a conduit and a crossroads for trade.”
“Florida is a force in exporting. Our merchandise exports have grown three times faster than our GDP in recent years.”
“Politicians in both parties often forget that trade is about imports, in addition to exports. And imports also create jobs. Imports help our economy by increasing competition, lowering prices for consumers and, often forgotten, lowering prices of inputs into our own production so our producers can be more competitive worldwide and also in the United States.”
“Generally, trade in goods has been slow and slowing in recent years. That’s a big challenge in the global economy and it’s especially a big challenge now when so many countries, not just the United States, are tempted to turn inward and away from the further benefits of globalization. In contrast, trade in services and digital trade has grown 45-fold over the past decade. Services and digital trade are exploding.”
“Tourism is a form of international trade. It’s a way in which we collect money by providing services. We don’t think of tourism as an export, but it is — it is simply that the foreign tourists come here and hand us the money instead of us having to go and get it.”
Florida’s Airports ...
Miami International Airport handles about 80% of all air imports and exports between the U.S. and the Latin American/Caribbean region. The airport is No. 1 in the nation in international freight and second in international passengers. ... Volaris, WOW air and Meridiana added service to Miami in the early months of 2017. MIA’s total of 107 carriers is the most at any U.S. airport.
Fort Lauderdale-Hollywood International Airport reported that traffic was up nearly 10% in early 2017.
... The airport has more flights to Cuba than any other. ... In 2016, Emirates Air- lines and seven other airlines started new or additional flights, including Allegiant, Delta, JetBlue, Norwegian, Silver, Southwest and Spirit.
Airlines serving Tampa International Airport have recently added non-stop flights to Seattle, San Francisco, New York City and Salt Lake City. The airport expects to serve about 19.5 million passengers this year, a record.
Orlando International Airport, the state’s second-busiest with more than 40 million passengers, is developing a south terminal with 16 gates serving international and domestic flights.
... and Seaports
Royal Caribbean Cruises announced in March that it will send its 5,494-passenger Symphony of the Seas, now under construction, to PortMiami beginning in November 2018. The ship will be slightly larger than Royal Caribbean’s Harmony of the Seas, which is based at Port Everglades and is currently the world’s biggest ship. The Symphony’s arrival will coincide with the opening of a new, custom-designed cruise terminal at PortMiami.
Ten tons of snow peas grown in Guatemala were unloaded at Port Everglades on Feb. 2, immediately trucked to Miami and then flown to Amsterdam as part of a new ocean-to-air trans-shipment program. The program was developed in partnership between Customized Brokers, a subsidiary of Crowley Maritime, and Miami International Airport, which obtained approval from the U.S. Department of Agriculture and U.S. Customs and Border Protection to coordinate ocean ships of produce from Latin American markets through Port Everglades and onto cargo planes in Miami headed for Europe or Asia. The goal is to get produce to market more quickly and to expand distribution areas for growers.
Port Tampa Bay hopes to reach 1 million annual cruise passengers for the first time in 2017, driven by a growing drive-in market and refurbished older ships that can slip beneath the Sunshine Skyway. Cruise lines are sending an increasing number of smaller ships. Seven ships are being homeported in Tampa this year, either for seasonal or year-round service.
“Our No. 1 priority is export diversification. Small companies tend to export to one, two, three markets at the most — often in the same region. So they tend to be more vulnerable than their larger peers to regional downturns or market- specific downturns.”
— Manny Mencia, senior vice president for international trade and business development, Enterprise Florida
Florida exports more than $500 million a year worth of perfumes, $300 million a year worth of makeup, skin-care and nailcare products and approximately $200 million a year in human blood, animal blood, antisera and vaccines.
Trade is Big in Florida ...
$142.8 billion – Total merchandise trade (imports plus exports), down 2.9% from 2015
$67.9 billion – Value of exports, down 7.3% from 2015 primarily because of a strong U.S. dollar and sluggish markets in key Latin American countries
$74.9 billion – Value of imports, up 1.4% from 2015
2.5 million – Number of jobs international trade supports in Florida, according to estimates by the Business Roundtable. Nearly one in four jobs in the state is dependent on international trade.
61,000+ – Number of Florida companies that export, ranking the state second behind California (75,722) in the number of exporting businesses
95%+ – Percentage of Florida’s exporting businesses that have 500 or fewer employees. Those small- and medium-sized companies account for about two-thirds of Florida’s exports, roughly double the national average.
Trade is Lopsided in Florida ...
52% – Percentage of all Florida exports sent south: Roughly 30% goes to South America, 12% to the Caribbean and 10% to Central America.
About 17% – Percentage to Asia
16% – Percentage to Europe
12% – Percentage to North America (Canada and Mexico)
2% – Percentage to Africa
1% – Percentage to Australia and Oceania
More companies with large distribution needs are moving into central Florida.
“X” increasingly marks the spot for retailers and shipping companies that are looking to establish distribution hubs in Florida.
That’s “X” as in the intersection of I-4 and Florida’s Turnpike in central Florida, home of the fastest-growing industrial market in the state, says David Murphy, a senior vice president at commercial real estate services and investment firm CBRE Group.
Retailers and shipping companies are building large distribution hubs along those two corridors, in a region roughly bordered by Ocala in the northwest, Daytona Beach in the northeast, the Four Corners region in the southwest and south Orlando in the southeast.
FedEx, AutoZone and online pet retailer Chewy have all opened or announced large warehouses in Ocala, while Trader Joe’s has set up a hub in Daytona Beach. Amazon and Walmart are among those that have set up shop in the Four Corners, where Lake, Orange, Osceola and Polk counties come together.
“You’re seeing large distribution centers popping up all along that X,” Murphy says.
Driving the development, Murphy says, is “the Amazon effect,” in which retailers are racing to cut their delivery times as much as possible.
“In the old days, people were fine waiting a week for two for their item. Today, if you can’t provide that item either right now or within 48 hours, people are going to go to the next service provider,” Murphy says.
As they make central Florida a hub, companies are also searching for larger spaces. Typical demand for industrial space has ballooned from between 30,000 square feet and 50,000 square feet a decade ago to between 150,000 square feet and 300,000 square feet. The biggest users want 500,000 square feet or more. A general rule of thumb is 3:1 — for every 1 square foot of warehouse space a company needs, the site itself has to be 3 square feet to accommodate things like employee parking and tractor-trailer storage.