Travel across the globe - Part 2
Global Trade through the Centuries
By Carla Reed
A winter’s day, on a deep and dark February – (apologies to Simon and Garfunkel) I left the shores of the USA and traveled to one of my favorite places – Puerto Rico. A stop over in Boston reinforced my pleasure in getting a break from the winter of 2006 – snow on the ground and disgruntled travelers, the latest victims of the ‘storm of February 2006’ the latest weather issue of the moment that the news headlines pronounced as the worst storm to hit the north east for blah blah years.
As the plane prepared for landing and slowed for the approach to the Luis Munoz airport, the sun shone brightly – reflecting off the waters of the many lagoons that separate the various locales of the San Juan metro area – Bayamon, Santurce, Condado, Isla Verde –words that now seemed familiar although I can barely pronounce them in a manner acceptable to those of the Spanish tongue. The plane banked and the Moscovo Bridge was brought to the forefront of my vision. The combination of USA and Puerto Rico flags that adorn the bridge signify the relationship between Puerto Rico and the United States – unified but separate.. The plane seemed frozen in preparation for the landing and my attention was drawn to a vehicle crossing the bridge. A Crowley Marine trailer - representing the symbiotic relationship between the USA and the Caribbean – partners in trade despite political and ideological differences.
Better known today for its beaches, its casinos and as a stopover for those reveling in the floating palaces of the cruise lines, Puerto Rico has been an important cog in the wheel of global trade for many centuries. . Beginning with the colonialisation of the New World by the Spanish, the inter-relationship between Caribbean nations and the Western World has always been important. The quest for new lands to explore, new products to meet the needs and desires of the European elite resulted in the discovery of Puerto Rico in the late 1400’s. (originally known as San Juan in honor of John the Baptist – the country and the natural port capital exchanged names in the 1500’s). The expedition into Florida by the Spanish centuries ago was launched from the ‘Rich Port’ of Puerto Rico – the home of the Spanish traders. For centuries Puerto Rico has been a center of global trade and commerce – this pride of the early conquerors and traders providing a gateway to the riches of the Caribbean – and later to Mexico, Central and Southern America.
Looking back into the romantic past of Puerto Rico brings us to the reality that not much has changed in the many years since Christopher Columbus established the Spanish as the new lords of the Caribbean. Over the centuries the freight and cargo that passed through the natural harbor of San Juan has changed in nature – from gold, agricultural products to the slaves that help create the economy that has been sustained until today. But not all the trade was legitimate. Piracy was a way of life in the Caribbean and fortunes were won and lost over the centuries – legitimate and illegitimate Many of these issues remain to this day – global trade, with its many challenges is still an issue. Piracy – with 21st century twists – remains a problem and the safety and security of the trade lanes that lead in and out of the Caribbean is a priority for all those who participate in the complex supply chain that energizes the Caribbean. Known by many as the ‘Third Border’ of the USA, the Caribbean region and Puerto Rico in particular provide a ‘soft underbelly’ for criminals and other unwanted elements who wish to establish operations and move product in and out of the USA. Despite the vigilance of the US coast guard and other agencies, the open waters, multitude of small islands and constant stream of small commercial and private water craft create an environment that is enticing to illegal activities. Smuggling and piracy have a major impact on legitimate enterprises – these are issues that can erode product integrity and brand leadership.
Fortified against intruders by the Spanish, San Juan provided a port and haven for Spanish commerce, and later the Americans of the New World. The US Coast Guard is the current guardian of this gateway in the Caribbean – and the access it provides to the USA mainland. A reassuring thought for those of us who value our place in the Land of the Free and the Home of the Brave!
My reason for this visit to Puerto Rico – a conference related to issues in global trade – occupied two full days but I found time on the week-end to visit the centuries old Forts of Old San Juan. An interesting fact: despite its fortifications, the role of San Juan during the Spanish Empire was more important from a strategic than commercial perspective. Many of the fabled treasure fleets of the Spanish Empire never stopped in San Juan in their voyages to Central and South America. These walls that have stood for centuries had an even more important role to play – they prevented the port and island of Puerto Rico from becoming a base for enemies from which to launch their attach against the Spanish colonialists.
(These fortifications have been put to the test by British, Dutch, French and finally the United States – protectors of this fortress since 1898 when the defenses of San Juan were formally handed over to the US Army.)
On a February morning in 2006, standing in the bastion of El Morro, from within whose walls defenders have waged many battles, I reflected on the news headline of the moment.
‘US port operations to be outsourced to a Dubai based company!!’
Dubai, the capital of the tiny but economically powerful United Arab Emirates, has spawned many a commercial venture of global proportions – the latest of which is the acquisition by Dubai Ports World (a state-owned business) of Peninsular and Oriental (P&O), long a symbol of British power and influence in the world of maritime trade. This is the latest in the death knolls of the British Empire – God Save the Queen!. But this time it touches a nerve – and causes the American nation to catch a collective breath!
Outsourcing has long been the last resort of the incompetent – somehow less of a painful experience when the outsource partner is an ally – after all, the British are pals, aren’t they? The changing of the guard (forgive the pun) in this particular instance can not be tolerated – irrespective of commercial intentions or benefits, the pain of the World Trade Center (falling under the jurisdiction of the Port Authority of New York and New Jersey) has created a raw nerve, irrespective of your point of view.
The primary focus appeared to be concern that the gateways to US commerce could now be manned (or at the very least managed by) members of a foreign nation. Or is it the fact that the United Arab Emirates are a potential host country to enemies of the State? The debate, irrespective of viewpoint, provided a welcome relief from the saga of Vice Presidents and their hunting escapades!
Returning home from my visit to the Caribbean, I found that coverage of the issue had extended to my local printed press – a medium that normally appears more concerned about local issues than affairs of State. In fact, the coverage that continued well into the work week was very enlightening. It was reported that foreign national involvement in port operations was not limited to the East Coast . The Port of Los Angeles – responsible for handling a large percentage of US foreign trade - was home to port handling operations by several ‘foreign’ enterprises. (Rumor has it that approximately 50% of these companies have roots in China – what a surprise!). Another report indicated that CSX (with operations in most major US ports) had sold stevedoring operations to the same UAE based organization that was now stealing the headlines – in fact, this took place almost a year ago – a fact that went unnoticed at the time.
The debate and speculation continued – however it seems that most of those verbalizing their outrage at the situation appear to have missed the point. What should be of greater concern is the fact that key operations, whether they relate to port security, government and governance, or manufacture of goods and chattels, are all game for the lowest bidder – no matter where they call home. Price pressure, response to union demands, environmental issues – whatever the reason for the trend to ‘outsource’ – the reality is that these decisions are being made by US citizens. This is no ‘invasion of the border’ – any enterprise that sets up operation in the USA – or moves the US operation overseas, is doing so openly and with invitation. And not from a select few – demand for more and more consumer goods, at lower and lower prices, is driven by the man (or woman) in the street. Environmental activists are pacified when chemical plants are closed down and moved offshore – for some reason the fact that the rivers that they are now polluting are located in another continent seems to appease their collective conscience. Is this an unstoppable trend? Will the continent of North America one day be devoid of all manufacturing, and the major concern relate to what flag is flown by the ‘keeper of the gate’?
Fortunately there are still companies who prefer to keep regional operations regional, responding to the needs and wants of a demographic that can be reached within a day’s drive. Then there are those who understand the need to be part of a global economy, but ensure that the moral issues are well covered when extending their supply chains across global borders. Actually, the same rules apply whether you are sourcing from Asia or Arkansas – the major difference is that it is easier to play by the rules when your partners are across the State – not across the globe. And the game is getting harder to play. Regulatory officials in the US are getting tougher – enforcing legislation put in place to ensure that trade is not only free and fair but safe. Consider:[1]
► C-TPAT
► CSI
► Free and Secure Trade (“FAST”)
► Importer Self Assessment
► Trade Act of 2002
► Marine Transportation and Security Act
► Bio Terrorism Act
► Known Shipper Rule
► Sarbanes-Oxley[2]
As the mariners of old noted on the edges of their maps depicting trade routes of ancient times – ‘There be Dragons!”.
Ignorance is no defense in the eyes of the law – a statement that is all too true when it comes to international trade. So what to do? Obviously it is important to ensure that the supply chain is safe and secure – however, it is not enough to depend on third parties. As the expression goes – the buck stops with the importer – or something similar. Freight forwarders, carriers and agents have a critical role to play – however it is imperative for the brand master – or whoever the final consignee is – to monitor their own supply network – up close and personal.
- Get to know your suppliers – and their supplier’s supplier – after all this is a chain of chains.
- Leave nothing to chance – ensure that documentation is accurate and in compliance with US rules of origin
- Global finance is tricky – international commerce demands an audit trail for every transaction – make sure that this does not lead to murky waters – or worse still, those who launder their money in them
- If in doubt – don’t!
After all, we do not want to be in the position of having to close the stable door once the horse has gone – who knows, it may be a Trojan Horse.
