by Tad Thompson | July 22, 2014 | PRODUCE NEWS
A July 16-18 trade meeting to develop a weekly, direct ocean shipping line between the seaports of Veracruz, Mexico, and Philadelphia exceeded the expectations of many involved. This service might begin as early as the first quarter of 2015, according to Fred Sorbello, who recently stepped down from his role as president of Ship Philly First.
On July 22, The Produce News held a conference call with four leaders based in Philadelphia to discuss the meeting. All four were among the Philadelphia delegation in Veracruz. In this call were Carlos Giralt, Mexican consul of Philadelphia, Fred Sorbello, chief executive officer of Mullica Hill Group Cos., Miriam Borja-Fisher, senior business development manager, for Western Fumigation, Parsippany, NJ, and Debbie Byrne, global marketing representative for Holt Logistics Corp., Gloucester City, NJ. Borja-Fisher and Byrne comprise the marketing committee of Ship Philly First.
It was under Sorbello’s leadership that the Veracruz-Philadelphia work seriously began 14 months ago. He has coordinated with Giralt, who has taken a keen interest in developing a direct ocean route between Mexico and Philadelphia.
Ship Philly First is a non-profit, membership organization of private business owners who operate portrelated companies in the Delaware Valley, the Mexican consulate of Philadelphia, Philadelphia Regional Port Authority and ProMexico, the economic development arm of Mexico.
Lawrence (Larry) Antonucci Jr., who on April 1 became president of Ship Philly First, before the meeting told The Produce News that trade would “not just be perishables, but that would be a big part of it.” Antonucci said that 35 percent of all produce imported into the United States comes from Mexico. There
are also large volumes of imported Mexican beef, sugar, alcohol and chemicals. Key southbound commodities would be automobile parts and manufacturing equipment. There is a “maquila” trade with Mexican workers assembling auto parts from the U.S. These parts are returned to the U.S. for completion of autos.
Antonucci said this discussion began about a year and a half ago between Sorbello and Giralt. “Fred and Carlos are the real champions on this.”
Antonucci said that Ship Philly First promotes the port and brings business to Philadelphia. “We work with the PRPA and CBP (U.S. Customs & Border Protection) to make the port more competitive and enticing to bring cargo here.”
In the July 22 conference call, Sorbello indicated, “The meeting exceeded everyone’s expectations.” Sorbello indicated that the mission’s purpose was to go to Veracruz to facilitate trade and demonstrate to potential steamship lines that there is the business to justify a regular trade between Veracruz and Philadelphia. “The goal was to organize growers and shippers on both sides.” The welcome presented by the Mexican hosts was described by Sorbello as “red carpet. The dignitaries were VIPs from the (Veracruz) port authority and the state” of Veracruz. Sorbello was impressed by the number and size of the Mexican exporters who attended the meeting. He also appreciated that leading national Mexican radio, television and newspaper outlets were well represented at the conference, which was highlighted by port partnership signing between the ports of Veracruz and Philadelphia.
Borja-Fisher said the three steamship lines represented at the meeting were “Maersk and SeaLand, which is a brand new line service under Maersk; Mediterranean Shipping Lines and CMA, a French company. I believe they are, in that order, the top container lines in the world.”
Giralt said this commercial mission was successful in demonstrating to steamship lines “that three is a strong interest in exchanging products between the Philadelphia and Veracruz regions.” Giralt said the meeting built an energy for all parties to finalize the ocean service connection.
Sorbello said the Philadelphia interests would be meeting July 23 at Giralt’s Mexican Consulate office in Philadelphia to determine next-steps to move forward.
Sorbello indicated that the next broad, formal meeting of Veracruz-Philadelphia leaders will take place in October at the Produce Marketing Association convention in Anaheim.
Sorbello, whose cold storage business in Mullica Hill, NJ, is based on the meat business, said eight of Mexico’s 13 largest meat exporters were present at the Veracruz meeting.
Mexican exporters of onyx, marble and crafts were also present.
But fresh Mexican produce exports have always been the centerpiece for the Veracruz-Philadelphia effort. A Mexican lime association indicated its members would be interested in shipping a whopping 400 containers of limes a week on a 52-week basis to Philadelphia. “There is a lot of Corona out there that needs limes,” Borja-Fisher lightly added.
Byrne said that a Mexican avocado exporter has an interest in shipping 200 containers of avocados a week. “They have product and they have buyers. They need ocean service.” The Mexican potential for exporting products to the Philadelphia “exceeded my expectations overwhelmingly,” Byrne said.
Sorbello feels the work of Ship Philly First was ultimately an exploratory effort that will benefit the steam ship lines in opening a new trade lane. “There is not too much more we could have done” to show the ocean carriers the potential of a market that previously was untapped.
“When two countries say ‘We want and need this'” it is a powerful statement, Sorbello continued. “All of the Mexicans were really outspoken that they want to do business with Philadelphia. They understand our infrastructure and expertise. Philadelphia is first in class in the Northeast, and really, in the U.S.”
Sorbello said the simplest math shows a 10 to 18 percent savings in transportation cost of shipping by sea from Veracruz to Philadelphia. But this doesn’t take into account that sea containers are allowed to carry 63,000 pounds of product, versus 42,000 for overland trailers. That additional factor greatly works to the advantage of sea freight.
Furthermore, Sorbello said that large U.S. retailers such as Walmart and Costco are always concerned about food safety and product security. Those interests, Sorbello notes, are much better-served by sealing a container at a Mexican shipping point for shipment directly to Philadelphia, versus the interfering steps of border inspections and trading drivers.
Giralt estimates that about 40 percent of the fresh produce production areas in Mexico could benefit from this new transportation link. All of the growers in the Yucatan peninsula, and producers in central Mexico, as well as Mexico’s southeastern states could use this new ocean link. He said new highway construction
in Mexico works very efficiently to the advantage of shipping through Veracruz.
The Philadelphia delegation toured the Veracruz seaport, which is enjoying a $4 billion infusion to have an infrastructure comparable to any other in the world, Giralt said. In November 2014 an initial cold storage, named “Friopuerto” will open. Borja-Fisher said Friopuerto would be about 50,000 square feet. But such construction will undoubtedly vastly accelerate as the Philadelphia ocean link materializes. It is unclear how break-bulk cargo would fit into a scheme that is oriented to container ships.
Sorbello said ProMexico coordinated the Veracruz meeting. Martin Caro, deputy trade and investment commissioner for ProMexico has been an active committee member with Ship Philly First. ProMexico collected strong statistical trade data that will be critically important as steamship companies analyze this new service, Sorbello said.
Several other groups have made failed efforts to create direct ocean trade with Veracruz. But Sorbello said the Philadelphia effort has been a success because of the strong involvement from state and regional political leaders, as well as business leaders.
Antonucci said the preliminary plan is to involve at least two vessels that would make the rotation between Veracruz and Philadelphia.
Sorbello indicates that Pennsylvania, New Jersey and Delaware, the three states with access to the Delaware River has a combined $10 billion in annual export trade with Mexico. Pennsylvania alone exports $3.4 billion in goods to Mexico on an annual basis. Furthermore, if ships, not trucks, come into Philadelphia, it benefits the entire port community of terminals, customs brokers and labor.
Antonucci notes, “A lot of our customers are already buying from Mexico.”
Tom Holt III, in business development for Holt Logistics Corp., Gloucester City, NJ, said his group was work with Ship Philly First “to canvas potential cargo opportunities. As trade increases and truck work rules tighten up it makes sense to have an all water service to Philadelphia for reefer cargo as well as dry
cargoes.” Holt indicated on July 16 that for Mexican exporters there is a benefit to ship by sea to Philadelphia because “this is the hub for produce in North America. The Delaware River is the largest importation port for produce by almost two times” in terms of value.
Holt added that no Philadelphia seaports currently handle Mexican produce and added that Mexico is the largest exporter of produce to the United States.
“Our customers are pretty excited to see if an all-water route will work,” said Chris Ryan, business development manager, perishables, for OHL International in Philadelphia.
Ryan notes that stricter “hours of service” rules for over the road truckers “is limiting their time on the road. An all-water service is becoming a viable option. And it leaves a smaller carbon footprint.”
Also commenting on the Veracruz trade mission prior to the meeting was Dominic O’Brien, senior marketing representative for the Philadelphia Regional Port Authority. O’Brien indicated in an email to The Produce News, “We are excited about this trade mission for several reasons.
“We want to give Pennsylvania exporters a better, less expensive, cargo transportation option. One goal of this trade mission is to establish a direct, all-water link between the Port of Philadelphia and the Port of Veracruz, Mexico. Most Pennsylvania exporters to Mexico currently pay a lot of money (and experience a lot of headaches) trucking their cargo all the way down to the Texas border, where it waits in long lines, before traveling on roads down through Mexico. We can provide a better solution via a container steamship line which will save the Pennsylvania exporter a lot of money, provide better cargo visibility, and give a more dependable link with buyers in Mexico.”
O’Brien continued: “…The entire program will be set-up by our partners at the Mexican government’s international business office: they work with Mexican companies seeking high-quality Pennsylvania manufactured goods and agriculture products, and they are working to increase two way trade with Pennsylvania via the Port of Veracruz. Like us, they want a better cargo shipping option for their companies.
“The trade mission will give Pennsylvania exporters an in-depth, on the ground knowledge of the important, and growing, Mexican market. Mexico is the USA’s number two trade partner; currently over $3 billion of exports go from Pennsylvania to Mexico. We are confident we can increase that number and get more export sales for Pennsylvania companies.
“Finally, leading supply chain service providers from the Philadelphia region will be going on this trade mission, including some of the largest freight forwarders and warehouse companies in the USA. Leading global shippers and steamship lines are also involved. This will give the Pennsylvania exporters that you work with excellent contacts and lessons in ‘best practice’ in cargo transportation,” O’Brien concluded.
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