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Washington Ports Go Against the Tide

by CNA Staff Tacoma
CargoNews Asia, October 1, 2007

Kayaker paddles near container ship with Mount Rainier in the distance The Pacific Northwest region of the United States, which is home to major Puget Sound container ports Tacoma and Seattle, is countering a national trend - it is boosting its global exports.

This is a welcome trend for a country which has a massive trade deficit, particularly with China, but this trend is not yet being seen in the rest of the country's ports where imports are continuing to increase with US companies shifting their sourcing to Asian countries.

The imports of the two Washington ports are far greater than exports but the first eight months' statistics showed a change in strategy. The Port of Tacoma's inbound container cargo showed a 2.6 percent growth to 456,487 TEUs in the January-August period compared with the same period the previous year but exports surged 27.9 percent to 282,388 TEUs. The Port of Seattle's first eight month figures showed a 2.4 percent rise in imports to 534,934 TEUs while exports were up 9.7 percent to 315,675 TEUs.

According to the Washington Council on International Trade (WCIT), one-third of Washington state's economic activity, one-third of its agricultural products and one in three jobs depends on international trade. And on a per capita basis, Washington is now the most trade-dependent state in the United States.

"When you take our total two-way trade volume - more than US$110 billion annually - and divide by our population of roughly 6.3 million, you get an annual two-way trade volume of more than $17,000 per person," WCIT president Bill Center said. States with a larger aggregate total such as California, Texas and New York, Center noted, have a per-capita volume of approximately $8,000.

In 2006 alone, Washington state exported $53 billion worth of goods to global customers, according to the World Institute for Strategic Economic Research, an international trade statistics database. Pacific Rim trade represented nearly half of the state's total exports at 24.5 percent. At the Port of Tacoma, the average annual export growth over the past five years is 14 percent.

"The growing markets, especially in Asia, particularly India, have more expendable income, are highly educated, and many have travelled or been educated in the United States," said Tong Zhu, the Port of Tacoma's director of commercial strategy. "They want US products."

But Zhu says success in the international marketplace is not as simple as offering up more of what's popular in the United States and expecting brisk sales.

"It's very important for us to keep innovation going and localise our products in terms of features, packaging to fit the needs of customers, and the suitability to the specific market," she explained. "For example, among the Japanese, Chinese and the Korean markets, there are great differences. So manufacturers can't consider the whole Asian market as one entity."

Brown & Haley, a leader in Tacoma confection exports, capitalises on these cultural nuances. Company executives know that the round pink Almond Roca tin - famous in the Pacific Northwest - must be packed in a gift box.

"Asian people, especially the Japanese, show honour and respect for their family through gift giving," explained Brown & Haley chief executive officer Pierson Clair. "Because it's difficult to wrap the classic Almond Roca tin, it is important for us to pre-box the tin so our Asian customers can give the gift in a way that honours their culture."

If an American manufacturer is going to compete, it must match the needs of the individual consumer in the specific country with the appropriate product.

For Brown & Haley, the sweetness level and premium nuts in Roca products are a natural fit.

"Asian consumers will not buy the typical American confection, but because they understand the health implications of nuts and prefer a less sweet taste, they're readily drawn to Almond Roca," said Clair.

At SuperValu International, the majority of the company's business - 70 percent -- is international distribution directly to overseas retailers, and the majority of that export business is supplying US products. To accommodate its mostly Asian international market with well-suited products, the company provides private labelling, customised product packaging and finely-tuned flavour profiles for products such as soft drinks as well as retailer education on US food trends. SuperValu director of export sales and marketing, Diane Maske, has seen what can happen when exporters don't do their homework.

"In American Samoa, I noticed that every retailer was carrying the home dry cleaner kit," she said of the slow-selling product. "Not only do the majority of people living there do not own washers and dryers, but they don't wear clothes that would require dry cleaning. Clearly, the exporter and the retailer didn't have good communication."

Exporting more of the Washington state economy's service know-how offers the next wave of opportunity, said the Port of Tacoma's Zhu. "Our trading partners have the hardware, but they need the software. We have been exporting our products, now there's a great opportunity in terms of exporting our services," she said.

Zhu sees a specific opportunity in China at airports, ports and throughout the logistics industry. Logistics is another area that helps export business stay competitive.

The Port of Tacoma's competitive freight costs and transit times to an expanding number of ports in Southeast Asia, China and India help Washington state businesses serve their customers quickly - while still remaining profitable.

"The port's surplus shipping capacity on the westbound trip creates an excellent opportunity for (American) exporters to get their products overseas at a highly competitive price," said Jack Woods, West Coast sales manager for the Port of Tacoma.

Woods agrees that soft skills of understanding diverse cultures and developing international marketing intelligence separate those who succeed in exporting versus those who do not.

"They want our products, but American exporters must understand the nuances to market, package, introduce and distribute them in a way that meets the consumers' needs."

In Washington state, the Puget Sound business community offers ample networking opportunities for exporters to hone their market intelligence. World Trade Center Tacoma, the Washington Council on International Trade, Washington-China Relations Council, World Affairs Council, Washington Department of Community Trade and Economic Development, and other organisations offer vast resources to help exporters stay on top of trends, changing regulations and marketing opportunities.

Customer service is a skill that translates well in any culture.

"International retailers are not just looking for product supply," explained Charles Witzleben, SuperValu International president. "They're looking for information, guidance and direction," he said. "As with any customer, they want excellent service."

CNA Staff Tacoma
Washington Ports Go Against the Tide
CargoNews Asia, October 1, 2007

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