CBP and GSA Announce Open Period for Submitting Donation Proposals to Support Port of Entry Infrastructure Needs

WASHINGTON— U.S. Customs and Border Protection (CBP) and the U.S. General Services Administration (GSA)  announced today the open period for accepting donations proposals through the Section 559 Donation Acceptance Program (DAP). Proposals may be submitted via email to559donationsacceptance@cbp.dhs.gov, now through 5 P.M. EST on December 23, 2014.

Pursuant to Section 559 of the Consolidated Appropriations Act, 2014, CBP and GSA are authorized to accept donations of real property, personal property (including monetary donations) and non-personal services from private sector and government entities. Accepted donations may be used for activities related to the construction, alteration, operations, and maintenance of CBP or GSA-owned ports of entry. CBP has posted the DAP proposal submission proceduresand question/inquiry process on CBP.gov.

CBP will evaluate proposals from private corporations, public entities, municipalities, port authorities, consortiums, and any other private sector or Government entity. Donation proposals will be evaluated based on their individual merit and ability to satisfy the evaluation criteria provided in theSection 559 Donation Acceptance Authority Proposal Evaluation Procedures & Criteria Framework. Please also note that CBP and GSA will only consider submissions that envision Federal ownership of the proposed donation.

CBP and GSA will be providing multiple opportunities to learn more about the DAP and proposal submission process, including addressing program-related inquiries received and hosting a live Q&A webinar scheduled for November 5, 2014. Details regarding the abovementioned information-sharing opportunities and the proposal submission period may be found on CBP.gov, which will continue to be updated as more information becomes available.

Public-private partnerships are a key component of CBP’s Resource Optimization Strategy, and allow CBP to provide new or expanded services at domestic ports of entry. Last year, CBP entered into Section 560 Reimbursable Services Agreements with the City of El Paso, Texas, The City of Houston Airport System, Dallas/Fort Worth International Airport, Miami-Dade County, and South Texas Assets Consortium. These locations have already benefitted from wait time reductions despite rising traffic volumes and the targeting of CBP services to address the specific needs of our partners.



China, Russia sign deals on energy, high-speed railways

There was an unveiling ceremony for the (Shanghai) Pilot Free Trade Zone’s new intellectual property office, in Shanghai, on Sep 26, with the deputy mayor, Zhao Wen, on hand along with other leaders, and representatives of institutions and companies.

In addressing the gathering, Zhao said that the office now shows the level of awareness of intellectual property rights in the zone and is an important step in its reforms and opening-up and keeping up with international development.

Even though this office is not all that big, it is China’s first office of its kind to handle this form of law enforcement on its own and is solely responsible for managing patents, brands, and copyrights and was established with Shanghai government approval in line with national and regional strategies.

There was also an intellectual property protection forum after the ceremony, with people from the city’s Intellectual Property Bureau, High Court, and Tongji University to discuss the current international and domestic situation in intellectual property management and protection.

US exporter concerns temper their enthusiasm about China

Despite all the headlines about growing political friction with China, U.S. business activity in Asia’s largest market has grown at an exceptional pace over the past decade.

In July, bilateral U.S.-China commodity trade amounted to $49.4 billion, more than twice the $20.2 billion recorded in July 2004. U.S. exports over that same period more than tripled, from $2.6 billion in July 2004 to $9.3 billion this past July.

The huge U.S. trade deficit with China has flattened in recent months, reaching $30.8 billion this July, barely higher than the $30.1 billion recorded in the same month last year. Meanwhile, U.S. commodity exports to China grew nearly 7 percent year-over-year, to $68 billion, up from $63.6 billion during the same period last year.

This surge of trade has been profitable for many U.S. exporters. Nearly 50 percent of respondents to US-China Business Council’s 2014 member-company survey reported double-digit revenue expansion in China over the past 12 months. Overall, 83 percent of companies that responded were profitable in China, a figure consistent with prior years, and 70 percent reported that their China operations were preforming better or the same as their overall global operations. In 2013, almost three-quarters of U.S. companies increased their revenues in China, while only 15 percent of those companies reported a decrease in those revenues.

So what’s wrong with this picture? Although most U.S. companies view China as one of their top-five markets globally, there has been a steady 30 percentage point shift over the past four years regarding how U.S. firms view their prospects in China’s market, said Erin Ennis, vice president of the USCBC. That shift has been in the direction from “optimistic” to “somewhat optimistic,” she explained.

And, although 50 percent of companies surveyed said they plan to increase resources in China during the next 12 months, that’s down from almost 75 percent of companies just three years ago. On the other hand, only 2 percent of U.S. companies said they would reduce their resources in China. The remaining respondents plan to neither increase nor reduce their resources.

Why have feelings cooled even a bit? Beyond such factors as rising costs and competition — from fast-growing operations in Southeast Asia and elsewhere — there is widespread insecurity about the policy directions the new Chinese government will take. U.S. companies “are particularly concerned with a lot of uncertainties in China,” Ennis said.

Key issues include rising costs; competition with emerging markets, increasingly productive Chinese companies within China; China’s spotty enforcement of intellectual property rights; local restrictions on foreign investment; and the uneven enforcement and implementation of Chinese laws. Susan Kohn Ross, an international trade attorney with Mitchell Silberberg & Knupp in Los Angeles, said that among her clients, concerns often focus on the Chinese government’s preferences for domestic industry, along with corruption and cybersecurity.

Many U.S. companies believe the conclusion of a Binational Investment Treaty between the two countries would help by establishing “rules of the road” for foreign investment in each other’s countries. The U.S. has such treaties with 42 countries, but none with China, and talks with the Asian giant are in the early stages. If China’s new leadership makes significant progress in implementing its market-based reforms and concludes a U.S.-China treaty that has a “strong outcome,” both countries will be reap significant benefits, Ennis said.

In the absence of a treaty, U.S. companies aren’t permitted to operate in many industries and sectors in China. In some others, Chinese regulations require that U.S. companies partner with domestic firms to operate. “If there is a strong outcome to these negotiations, that is a game changer,” Ennis said.

A successful treaty would level the playing field for U.S. and Chinese companies and provide meaningful market access for U.S. companies into China, she added. It also would remove many of the restrictions the Chinese government places on foreign companies, and would give stronger protections for U.S. companies that invest there.

The success of the upcoming treaty largely will be judged on the number and range of sectors China is willing to open to foreign companies. In a key move, China in 2013 agreed to use a “negative list” approach in which the terms of the treaty would apply to all sectors except those expressly excluded. That approach contrasts with China’s current investment approval framework, set up in the Catalogue Guiding Foreign Investment, which restricts foreign companies from participating in more than 100 industries and sectors throughout China, based on a “positive list.”

For all that, the success of the upcoming treaty remains uncertain. If the resulting negative list merely codifies existing restrictions, or it reduces the list of restricted sectors to an insignificant degree, or it removes only low-priority sectors, such a list — while “negative” — won’t be well-received by U.S. companies and will significantly reduce the chances of the treaty securing passage by the U.S. Senate, the USCBC argues in a recent report.

Another major area of concern is China’s growing level of competition enforcement. Is the country using legislation that is nominally aimed at eliminating monopolies to pursue goals that are essentially protectionist? According to a recent report by the U.S. Chamber of Commerce, China’s growing enforcement of its own 2008 Anti-Monopoly Law may violate World Trade Organization rules.

Although the law was intended to encourage competition, in compliance with China’s WTO commitments, a Chamber report warns that “if China applies the AML in a manner inconsistent with its WTO obligations, this would arguably constitute a violation of WTO law despite being imposed under the guise of competition law.”

In a letter, Jeremie Waterman, the U.S. Chamber’s executive director for China, and Sean Heather, vice president for its Center for Global Regulatory Cooperation, noted that “implementation of the AML provides an enormous opportunity for China to accelerate its economic transition by boosting competition and reducing the prominence of monopolies and oligopolies in its economy; increasing consumer welfare, choice and consumption; and stimulating market-driven innovation. In short, the AML has the potential to stimulate a new round of dynamic growth and efficiencies across all aspects of the Chinese economy — an outcome that would also contribute positively to U.S.-China relations.”

However, China’s enforcement of the AML “is not yet living up to this ideal,” they wrote. As the chamber report goes on to explain, “AML remedies often appear designed to advance (China’s) industrial policy and boost national champions.”

China’s anti-monopoly law enforcement authorities — the National Development and Reform Commission, the Ministry of Commerce and the State Administration for Industry and Commerce — “rely insufficiently on sound analysis,” the report says. It argues, for example, that MOFCOM has established Anti-Monopoly Law remedies that create greater market concentration both within China and abroad, as well as “negotiate down prices on goods and IP (intellectual property) for domestic consumers/licenses,” in some cases to protect famous domestic brands.

Intellectual property rights, a major concern of foreign companies in China, “have been curtailed in the name of competition law, and AML enforcement suffers from procedural and due process shortcomings,” Waterman and Heather noted. The results have led to “growing concern about the quality and fairness of enforcement” of anti-monopoly law.

John Frisbie, president of the US-China Business Council, questioned whether the Chinese government is using the Anti-Monopoly Law to force lower prices rather than letting the “market play the decisive role,” a goal outlined in China’s new economic reform program. “The answers are not fully determined yet, but in at least some cases, USCBC sees reasons for concern,” he said.

Eighty-six percent of companies responding to the USCBC survey indicated they are at least somewhat concerned about the way the Anti-Monopoly Law has been implemented. China’s domestic media reporting, which has played up foreign-related investigations versus those of domestic companies, also is fueling the perception that foreign companies are being targeted disproportionately. Targeted or not, foreign companies have well-founded concerns about how investigations are conducted and decided. Widespread concerns include fair treatment and nondiscrimination, a lack of due process and regulatory transparency, lengthy time periods for merger reviews, and the process through which remedies and fines are determined.

According to the U.S. Chamber of Commerce report, some foreign companies accused of violating the AML have been pressured to “admit their guilt,” even though they weren’t allowed to view or respond to the evidence against them. Company representatives aren’t told why they’re under investigation or on what grounds an investigation has been launched, but that they will face a reduced penalty if they cooperate.

Many U.S. companies worry about whether China will use the Anti-Monopoly Law to protect domestic industry rather than to promote fair competition. Will the Chinese government use the AML to force lower prices, rather than let the “market play the decisive role” as enshrined in the new economic reform program?

If MOFCOM’s rejection of the P3 shipping network among Maersk Line, Mediterranean Shipping Co. and CMA CGM is an indication, it could be a troubling precedent. Ross, for one, wonders whether the Chinese government would have rejected the alliance had a Chinese carrier been one of its members.

Contact Alan M. Field at alanfield0@gmail.com.


E-commerce growth reshapes traditional supply chains

Shippers may have to start locating distribution centers closer to consumers, as growth in e-commerce is pressing retailers to deliver goods inexpensively and quickly, and challenging traditional logistics models.

Since 2000, growth in e-commerce has been significant, with a 19 percent compound annual growth rate through 2013, according to data from a recent survey conducted by consulting firm AlixPartners and presented by Stifel Transportation & Logistics Research Group. In the last two years, in particular, there has been a 45 percent increase in the average number of annual orders made online, with 50 percent of survey respondents now ordering online at least once a month.

E-commerce growth has sparked a need for free shipping and quick delivery services, as consumers “want it now.” In 2012, the average acceptable wait time for free delivery was 5 ½; in 2014, that number fell to five days, AlixPartners reported. A quarter of respondents in AlixPartners’ survey said they now expect free shipping in three days or less.

“This push for same-day or two-day delivery is making things more complicated,” Kurt Cavano, vice chairman and chief strategy officer at GT Nexus, told JOC.com. “With this spike in services like Amazon Prime, which guarantees two-day shipping, more retailers are moving toward that, too.”

When delivery to the home or office is not an option, 55 percent of survey respondents said they would opt to buy online and pick up at the store.

These e-commerce trends are putting pressure on traditional supply chains and the providers that support them, AlixPartners said. Traditional retail models involve inbound freight moving into one of potentially many regional distribution centers, with shipments then moved via private fleet or dedicated truckload to stores. However, with the growth of e-commerce, some retailers have established dedicated dot-com fulfillment centers, which then service the end customer via FedEx, UPS or the U.S. Postal Service. Many have moved into “even more varied and evolved models,” AlixPartners said, including fulflillment centers within distribution centers, and locating closer to the final mile customers to satisfy expectations for faster transit.

“Parcel delivery companies need to make sure they have the capacity to handle e-commerce growth, but the real question is whether retailers can receive the products at warehouses and get them packaged quickly enough so that parcel delivery companies can make deliveries on-time,” Cavano said. “If retailers aren’t prepared, it’s not going to happen.”

Shippers are also starting to think more creatively about return shipping, Cavano said. For example, German e-tailer Zalando, which Cavano called the “Zappos of Europe,” allows customers to retrieve and return packages for free at thousands of locations at supermarkets, newsstands and gas stations, powered by logistics firm Hermes.

“The key is really good visibility into the supply chain,” Cavano said. “Without that, you can’t fulfill orders. You need to know where your products are when they’re on a ship on their way in, or when they’re already in your warehouse or stores, so that you can have the flexibility to deliver online, in a store or when customers ‘click and pick.’ ”

So far, traditional retailers have been busy and successful converting their business models to include Internet sales and tap into the new consumer omnichannel expectations. Companies from Macy’s and Nordstrom’s to medical supplier Medline have restructured their facilities and supply chains to accommodate the explosive e-commerce growth. In U.S. industrial real estate markets, developers are scrambling to keep up with demand for omnichannel and dedicated e-commerce fulfillment centers.

In terms of outbound logistics, aside from FedEx, UPS and USPS, no individual final mile companies have started to take meaningful share in the domestic ground market, although opportunities in this market are expected to continue to emerge, according to AlixPartners. As an aggregate, these individual final-mile companies now constitute 10 percent, compared with UPS at about 57 percent; FedEx, 26 percent; and USPS with 7 percent of the U.S. ground market.

“Carriers running a low-cost model should be able to differentiate themselves and build density faster and more easily,” Alix Partners said. “Ultimately, shippers prefer working with a limited number of carriers with scale, better technology, more financial stability, and, thus, more perceived service reliability and market longevity. As a result, consolidation among final-mile carriers should continue, and there may be opportunities for asset-light or non-asset-based brokerage/technology companies to build a successful super-regional platform.”

Contact Grace M. Lavigne at glavigne@joc.com and follow her on Twitter: @Lavigne_JOC.


GM to sink $14b into China over five years

Company to open five new plants, introduce new models in nation

General Motors is to invest $14 billion in China over the next five years and open five new manufacturing plants to increase annual sales in the world’s largest car market to nearly 5 million vehicles.

The company’s plans for China also include introducing 60 new models or revamped vehicles, including nine new models from its flagship luxury brand Cadillac, GM Chief Executive Officer Mary Barra said on Wednesday.

Barra, GM President Dan Ammann and other members of the company’s executive team gave a presentation to investors and financial analysts at a GM plant in Milford, Michigan, that centered on some of the company’s biggest initiatives to the end of the decade.

Tim Dunne, director of automotive industry analytics for global market research firm JD Power and Associates in California, said GM’s investment in China is necessary for the company going forward.

“This is a substantial investment in China,” Dunne said. “GM is still among those at the forefront in China in terms of annual vehicle sales volume. When people look at the company in China, everyone is expecting vehicle sales to grow there.”

GM was one of the first companies to establish a research and development center in China, so developing vehicles specifically for the Chinese market has also given the company “some cachet” with different entities in the country, Dunne said.

“GM and its competitors are investing in manufacturing, distribution, marketing and research and development. China is a hyper-competitive market, so you can’t let up because things can change very quickly,” he said.

It said recent data show that the company and its joint venture partners sold a record-breaking 3.1 million vehicles in China last year.

Barra said it is vital for the company to be at the cutting edge of technological integration when it comes to its new models, so that it can become the world’s “most valued automotive company”.

She said some of the high-tech advances the company plans to make – including the introduction of high-speed mobile broadband vehicle-to-vehicle connectivity in some models and a highly automated, hands-free highway driving technology called Super Cruise – “unlock so many things that haven’t been done in the past”.

Dunne, from JD Power, said he is intrigued by GM’s plans to introduce more technology into its vehicles.

“Nobody goes anywhere without being connected, so GM talking about introducing more connectivity in its vehicles is where the car market is going and it’s spot on,” he said.

Barra said she remains optimistic that the company will be able to leverage its potential into increased business in a number of markets.

“Interaction with customers is changing, and how they want to buy cars and interact with the vehicles are very important trends,” Barra said.

“Every chance to connect with a customer is an opportunity to build a stronger relationship.”



FACT SHEET: Unlocking Economic Opportunity for Texans Through Trade

The United States trade agenda will unlock opportunity for Texas workers, farmers and ranchers, and businesses – strengthening the American middle class

In 2013, Texas exported a record-breaking $279.7 billion Made-in-America goods to the world – supporting 1.1 million jobs. Texas is the largest exporter of cotton in the United States.  In 2012, Texas exported $1.6 billion worth of cotton – 25% of all U.S. cotton exports.  Trade is a key driver of Texas’ economy, and President Obama’s two highest trade priorities, the Trans-Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (T-TIP), will give Texas and the United States enhanced access to three out of Texas’ largest five export markets – Mexico, Canada and the European Union. What’s more, T-TIP will include Texas’s top 3 sources of foreign investment: the United Kingdom, France, and the Netherlands (as of 2011, the latest year available).

Exports Support Jobs in Texas and Across the United States

  • In 2013, Texas goods exports reached a record-breaking height of $279.5 billion, an increase of 183%, or $180.6 billion, from its export level in 2003.
  • 1.1 million jobs were supported by Texas exports in 2013.
  • In 2011 (latest year available), over one-fourth (26.1 %) of all manufacturing workers in Texas depended on exports for their jobs.
  • Total exports from Texas helped contribute to the record-setting value of U.S. goods and services exports in 2013, which reached $2.3 trillion.
  • Nationally, jobs supported by exports reached more than 11 million in 2013, up 1.6 million since 2009.
  • Every billion dollars of U.S. exports of goods supported an estimated 5,400 jobs in 2013.
  • Jobs supported by goods exports pay an estimated 13% to 18% above the national average.

Exports Sustain Thousands of Texas Businesses

  • A total of 40,737 companies exported from Texas locations in 2012. Of those, 37,921 (93.1 percent) were small and medium sized enterprises with fewer than 500 employees.
  •  Small and medium-sized firms generated nearly one-third (30.6 percent) of Texas’ total exports of merchandise in 2012.

Texas Depends on World Markets

  • Texas’ export shipments of merchandise in 2013 totaled $279.5 billion.
  • The state’s largest market was Mexico. Texas posted merchandise exports of $100.9 billion to Mexico in 2013, representing 36.1 percent of the state’s total merchandise exports.
  • Mexico was followed by Canada ($26.1 billion), Brazil ($10.9 billion), China ($10.8 billion), and the Netherlands ($9.5 billion)
  • Texas’ exports to our 20 existing trade agreement partners cover 60% of Texas’ overall exports ($168.8 billion).
  • The state’s largest manufacturing export category is petroleum and coal products, which accounted for $60.6 billion of Texas’ total merchandise exports in 2013.
  • Other top manufacturing exports are electronic products ($48.2 billion), chemicals ($47.9 billion), machinery ($30.0 billion), and transportation equipment ($24.4 billion).
  • Texas is the country’s 6th largest agricultural exporting state, shipping $6.5 billion in agricultural exports in 2012 (latest data available according to the U.S. Dept. of Agriculture).[1]  Texas was the largest state exporter of cotton ($1.6 billion), beef and veal ($855 million), hides and skins ($431 million), and the 6th largest exporter of poultry ($323 million).

Texas Will Benefit from the United States Trade Agenda

  • The Obama Administration’s top trade priorities are the negotiations for a Trans-Pacific Partnership with the Asia-Pacific Region and the Transatlantic Trade and Investment Partnership with the European Union – two state-of-the-art agreements that will unlock opportunity in the United States by fostering economic growth, supporting jobs, and bolstering our competitiveness.
  • Three out of Texas’ top five export markets will be covered by the Trans-Pacific Partnership (Canada, and Mexico), and the Transatlantic Trade and Investment Partnership (Netherlands), making it easier for Texas workers, farmers and ranchers, and businesses to sell more Made-in-America exports to Texas’ main customers.
  • 54% of Texas’ exports ($150.5 billion) already go to TPP countries.
  • 11% of Texas’ exports ($29.7 billion) already go to T-TIP countries.

International Investment Creates Jobs in Texas

  • In 2011 (latest year available), foreign-controlled companies employed 460,100 Texas workers. Major sources of foreign investment in Texas in 2011 included United Kingdom, France, Switzerland, and the Netherlands.
  • Foreign investment in Texas was responsible for 5.2 percent of the state’s total private-industry employment in 2011.

Texas’ Major Metropolitan Areas Benefit from Exporting

In 2013, the following metropolitan areas in Texas recorded goods exports:

  • Houston-The Woodlands-Sugar Land ($115.0 billion)
  • Dallas-Fort Worth-Arlington ($27.6 billion)
  • San Antonio-New Braunfels ($19.3 billion)
  • El Paso ($14.4 billion)
  • Austin-Round Rock ($8.9 billion)
  • Beaumont-Port Arthur ($8.2 billion)
  • Laredo ($5.6 billion)
  • McAllen-Edinburg-Mission ($5.3 billion)
  • Texarkana ($158 million), portions of this MSA are shared with one or more other states
  • Brownsville-Harlingen ($4.6 billion)

[1] Estimates of State exports of agricultural products by the U.S. Dept of Agriculture and goods exports by the U.S. Dept of Commerce are based on different methodologies and are not directly comparable.



Home Depot opens second fulfillment center dedicated to e-commerce

Home Depot is expanding its brick-and-mortar infrastructure to support growing online sales.

The $78.8 billion retailer, No. 3 in the JOC’s ranking of the Top 100 U.S. Importers, on Thursday opened the second of three massive distribution centers dedicated to e-commerce sales.

The 858,953-square-foot direct fulfillment center in Perris, California, follows a 1.1 million-square foot DFC Home Depot opened in Locust Grove, Georgia, this February. A third e-commerce DFC, a 1.6 million-square foot facility, will open in Troy, Ohio, next year. With the three DFCs, Home Depot will be able to 90 percent of goods ordered online to almost any U.S. location, whether a store or home delivery, within two days.

That will cut Home Depot’s standard shipping time by one to three days. Centralized e-commerce fulfillment also will help the retailer improve supply chain utilization, reducing overall transportation costs.

E-commerce still represents a small percentage of Home Depot’s total sales, about 4 percent in the second quarter, but the retailer’s online business is growing fast. Online sales rose more than 38 percent in the second quarter, and 40 percent in the first quarter. In 2013, online sales rose 50 percent to $2.3 billion, about 2.9 percent of total revenue.

Home Depot’s total sales were up 5.7 percent in the second quarter at $23.8 billion, and rose 4.4 percent for the first six months of 2014 to $43.5 billion.

The new fulfillment network is part of a broader interconnected retail and supply chain strategy the home improvement retailer is hammering together. Home Depot will spend $300 million this year on the fulfillment centers, mobile technology used by employees in stores to help customers, facility enhancements and a warehouse management system.

Each of the e-commerce DFCs will stock more than 100,000 individual products or stock keeping units, far more SKUs than are stocked in Home Depot stores.

“We want to be able to serve our customers wherever they shop,” whether online or in one of Home Depot’s 2,264 retail stores, Mark Holifield, senior vice president of supply chain, told JOC.com at the opening of the Locust Grove DFC. “That entails leveraging all of our inventory, leveraging all our transportation and distribution assets,” he said.

“Our transformation in supply chain has been one of the great drivers of value in our business,” Chairman and CEO Frank Blake said at the Goldman Sachs Global Retailing Conference Sept. 4. “we are transferring product that had been delivered by our vendors to product that we will deliver,” Blake said, according to a Seeking Alpha transcript.

Growing online sales are already changing the mix of products offered in stores, Blake said. Home Depot is reducing the amount of floor space dedicated to patio sets, for example, which customers are customizing and buying online. “That allows for greater productivity in the space in the store and actually less of an overall inventory commitment,” Blake said.

The online and in-store retail channels are increasingly interconnected in other ways. Half the retailer’s customers go to HomeDepot.com to research products before heading to a store, and one-third of online orders are picked up at a physical store, Holifield said.

Contact William B. Cassidy at wcassidy@joc.com and follow him on Twitter: @wbcassidy_joc