Miami’s air and seaports have had a great year so far. Next year may be less rosy.
By Alice E. Ancona
“Numbers don’t lie,” so the saying goes. Perhaps not, but they don’t tell the whole story. And the story really does matter when you are trying to get a better understanding of trade.
There is one month left in 2022 and it’s been quite a post-pandemic recovery. The year began hopeful as we looked to the next normal. It didn’t take long, however, before the headlines focused on a soon-to-come global recession, the war in Ukraine, the rise in energy prices, and more supply chain challenges. Yet trade continued strong and recovered in many sectors.
How we trade and who we trade with as a result of the pandemic has certainly changed. 2022 seemed to challenge us further. The recent DHL Trade Growth Atlas report notes that global trade has surged 10 percent above pre-pandemic levels – which is shocking considering the unfathomable drop in global trade due to COVID and the incredible strains on global supply chains as economies came roaring back to life.
While it’s inevitable that trade will slow down (and the DHL Trade Growth Atlas reports that it expects a slow-down towards the end of year and into 2023), trade will still grow. There are certainly challenges ahead: recession fears still loom, inflation is here, and high energy prices are lighting up economic indicators like a Christmas tree. And if that is not enough, to borrow from Game of Thrones, “Winter is Coming.” All these factors will have an impact on trade internationally and locally.
The most recent figures are nonetheless strong. Through the first half of the year, both Miami International Airport and Port- Miami recorded record growth in imports and exports. As a trade hub and a dominant logistical conduit to global trade flows, Miami benefited from a global trade surge.
The pace for Q1 and Q2 was astonishing at PortMiami, with exports growing at over 28 percent and imports growing at over 14 percent – well above pre-pandemic levels. Q3 marked a slight (and expected) slow- down, but traditional export trading partners saw strong growth overall – mostly in Latin America, with Dominican Republic leading the pack, followed by Peru and Colombia. Honduras and Panama also stood out and contributed to the increase in exports.
Short-term external factors contributed to Latin America’s strong performance the first half of the year. The war in Ukraine and prolonged Chinese shutdowns created a mini commodities boom in Latin America. This, along with increased tourism flows, fueled economic activity in the region.
Unfortunately, this growth is likely short-lived with inflation and energy prices eating away at gains as well as the recent elections in Colombia and Brazil adding to Latin America’s “pink tide.” The Economic Commission for Latin America and the Caribbean (ECLAC) indicated in an October press release that growth is forecasted at 3.2 percent for 2022, above what was foreseen in August. But the organization expects deceleration next year in Latin America and the Caribbean with growth for 2023 projected at 1.4. Such deceleration is likely to impact trade between Miami and the region.
Miami International Airport (MIA), meanwhile, is in a class of its own. Pre- COVID, MIA was responsible for ap- proximately half of the state of Florida’s exports by value. It entered 2022 with some incredible rankings. Among U.S. Airports it ranked: first for international freight, first for international passengers, fifth for total cargo (freight + mail), and fourth for total freight. Among airports worldwide it ranked: ninth for international freight, eleventh for international passengers, eleventh for total cargo (freight + mail), and tenth for total freight.
For MIA, the growth story has been on the export side, up approximately 20 percent. Countries with year over year growth have been Brazil at 24 percent, Colombia at over eight percent, and UK and Argentina at above six percent. Imports have decreased by about 20 percent with top sources being Colombia, China, Chile, Singapore, and Costa Rica. The decrease in MIA’s imports when compared to last year are due to a decrease in imports from Germany, France, and Singapore, as well as a decrease in imports of specific products such as vaccines, blood, and other life science related items that were part of COVID driven trade.
Trade flows are still adjusting to a post-COVID world. Post-BREXIT UK is creating an interesting trade opportunity for the U.S. as the EU is no longer an open trade destination for UK exports. As this trade corridor develops further, U.S. exports to the UK are likely to grow. MIA seems to be capturing some of this flow. Several other European countries have also shown interesting growth on the export side. While not dominant partners for the port, exports to Poland rose more than 500 percent, Georgia about 20 percent, Greece about 13 percent, and Italy at over three percent. To be seen is whether these trade flows are fleeting or sticky.
Nonetheless, with the holiday driven trade rush well in the rear-view mirror, trade will certainly be slowing down. Inventories are full and inflation is already putting a damper on consumer spending, cutting orders by the big box retailers. 2023 will not experience the trade boom that 2022 did. The post-COVID trade rush has already tapered off, and things are settling into the new normal. Trade lanes will continue to shift; as the saying goes, change is always certain.
Alice E. Ancona is the Senior VP and COO of World Trade Center Miami.
