A major port on the Mississippi River for almost two centuries (with active steamboats since 1818), it was once the fourth largest city in the USA and the gateway to the western territory to the United States after the Louisiana Purchase. Steamboats have been One hundred and ten years ago it hosted the World’s Fair and the summer olympics as the first non-European city to do so. The World’s Fair gave St. Louis it’s Forst Park, Art Museum, History Museum, and Zoo. It may no longer be in the top 50 cities by population size in the US, but it’s history as an important trade nexus should not be forgotten.
Category Archives: Global Trade
The Somali Pirate Song
Yesterday, we indicated that, with the current state of affairs, the limited Somali economy, and few options for many Somali men of working age, that Somali piracy is likely to remain strong for quite some time. Today we present one view of what you might hear if the Somali pirates were asked to put their story to song. SI thinks it might go something like this:
The Somali Pirate Song
I used to be a fisherman, and I made a living fine
I had a little cutter boat, and trawled the tuna fine
Government fell and though we tried, our borders were soon lost
The trawlers came and took our fish and we were at a loss
I looked for every kind of job, the answer always no
“Hire you now?”, they’d always laugh, “its the war, you know?”
The government, they can’t get the country under thumb
And I don’t want to get shot next time I take a run
And since no one gives a damn about this Mycenaean
I’m gonna be a PIRATE on the Ocean Indi-ian
And it’s a heave-ho, hi-ho, comin’ down the coast
Stealin’ oil and iPhones and all the modern gold
It’s a ho-hey, hi-hey merchants bar yer doors
When you see the power boat fleets
on Africa’s eastern shores!
Well, you’d think the local shippers would know that I’m at large
But just the other day I found an unprotected barge
I snuck up right behind it and I caught them unawares
I boarded their ship, ransomed it, and then I stole all their wares
A port outside of Cairo ends a mighty canal
Captains leave with so much fear that their crews have no morale
Cause they know that Pirate Big Mouth’s waitin’ at the pass
I’ll take the bridge and knock them cold and sail off with their gas
And it’s a heave-ho, hi-ho, comin’ down the coast
Stealin’ oil and iPhones and all the modern gold
It’s a ho-hey, hi-hey merchants bar yer doors
When you see the power boat fleets
on Africa’s eastern shores!
The merchant navy chased me, they were always at my throat
They monitored the shoreline with their little cutter boats
But cutbacks were a’comin’, and the sailors lost their jobs
So now they sail with me, they’re the modern Salty Dogs
An AKM, a skull-and-bones and pleasant company
I never pay salary tax and screw the TFG (Screw ’em)
Sailin’ down to Cape Town, the terror of the seas
If you wanna reach the FTZ, you gotta get by me
Cause it’s a heave-ho, hi-ho, comin’ down the coast
Stealin’ oil and iPhones and all the modern gold
It’s a ho-hey, hi-hey merchants bar yer doors
When you see the power boat fleets
on Africa’s eastern shores!
Well, Pirate life’s appealing but you just don’t find it here,
I hear in Bangladesh there’s a band of buccaneers
They roam the Bay of Bengal from Yangon to Colombo
And you’re gonna lose your cargo if you have to pass their gunboats!
Well, winter is a’comin’ with cruise ships on the way
My pirate days are over once they take over the bay
I’ll be back in spring-time, but now I have to go
I hear there’s lots of plunderin’ off the coast of Mexico!
Cause it’s a heave-ho, hi-ho, comin’ down the coast
Stealin’ oil and iPhones and all the modern gold
It’s a ho-hey, hi-hey merchants bar yer doors
When you see the power boat fleets
on Africa’s eastern shores!
With apologies to The Arrogant Warms from this Last Nova Scotian Pirate.
Will The Day of The Last Somali Pirate Come?
Doubtful.
Even though some somali pirates have been retiring, as nicely summarized in this recent article on Somali Piracy in The Economist, piracy is just too damn lucrative. Especially given the other employment options available to the pirates.
As per the Economist article, the average ransom for a ship between 2005 and 2012 was $2.7 Million. Each pirate involved in the hijacking received between $30,000 and $75,000, with a bonus of up to $10,000 for the first man to board a ship and for each man who had their own weapon. Think about that. On average, one hijacking earned a man more than he would earn from a full time job in the US (where the average man earns approximately $45,000 a year). Now it is true that pirates are charged considerably more for loaned goods and services than they are worth and often have to pay $20 for $10 of mobile-phone airtime, but even at 100% mark-ups, pirates are still earning a hundred times more from a single hijacking than they would earn otherwise in a country where the average income is in the dollar-per-day range.
And it’s not just pirates, and the financiers that organize the missions, that make a killing. Cooks (who feed the crews), pimps, lawyers, merchants (who can provide banknote checkers to detect counterfeit), militia (who control ports and can provide details of cargo and patrol somewhere else on the day of the attack), and even government officials (who can look the other way when ransoms are illegally being flown into a country) also make off quite well. Piracy is a thriving business sector in Somalia, adding 50 M to 100 M annually to an economy that legitimately produces less than 1 Billion in GDP. With no employment opportunities that are nearly as lucrative and no sector with the possibility to create the same level of wealth in the country as piracy, it should be pretty obvious that piracy is not going away any time soon.
Especially since many men don’t have any other choice. Many pirates used to be fisherman, an age-old family trade passed downed from their fathers and grandfathers, and they were happy with that life. They learned to cast nets, pull them up, sort the fish, and go to the market to sell the fish for a modest, but acceptable, price at a very young age. But then, as explained in this article on “Terror on the Seas” on realtruth.org, in the early 90’s, civil war broke out, the government collapsed, and maintaining order became impossible. The borders, and the territorial waters, went unprotected and foreign fishing trawlers emptied the waters unchallenged. The once tuna-rich waters were now as fish-free as a dead pond and the fishermen had to do something (or starve). They tried to form their own coast guard, but how much can a few fisherman with the odd dinky do to protect a 2,000 mile coastline against large international vessels. They tried, but up against improbable odds, got desperate, and aggressive – eventually storming a vessel and demanding money for its release. The ransom was paid, and they realized they had found a new livelihood which was not contained to fishing vessels. After all, who has more money, a small fishing company or a large international oil company?
What else are the pirates supposed to do? They can’t fish, there’s only so much farmland available in a country that is mostly desert and semi-desert, and it’s not exactly an outsourced manufacturing or service center. As one pirate said in a 2008 Newsweek article, “… when evil is the only solution, you do evil. That is why we are doing piracy. I know it is evil, but it is a solution.” Until they have another viable option, another solution, piracy is going to remain strong.
Duty Drawback – The Devil is in the Details
Duty Drawback, granted under section 313(a) of the Tariff Act of 1930, as amended in 19 U.S.C. Section 1313(a), costs North American business up to 2.4 Billion a year [Source: Neville Peterson LLP] because the process is so convoluted that most business would rather lose the money owed to them then try to navigate through a process which seemingly requires truckloads of paperwork and which can take 6 months or more to resolve. Why is it so difficult? The US has had 224 years to make it so (as it was the second law passed by the first Congress way back in 1789).
Even though the goal of duty drawback is to promote U.S. business development by allowing a company to secure refunds for products that were exported, the government considers this drawback a privilege, and one that has to be earned (through a rigorous filing process).
Duty drawback is further complicated by the fact that claims are not just limited to importers, manufacturers who purchase imported products for use in their manufactured goods that are to be exported and exporters who purchase products made from imported merchandise are also eligible to make drawback claims, because drawback is paid to the exporter (under the assumption that the importer they bought the goods from charged the buyer enough to make a profit, and thus recovered the duty in this way), who has to have proof that the product is eligible for duty drawback. For a product to be eligible, it has to be an imported product on which duty was paid and which was subsequently substantially transformed and then either exported within five years of import, rejected upon import, or unused and exported or destroyed within three years of import.
What is a substantial transformation? It is one that is complicated, requires money and labour, and results in a new and different product, which has a new name, character and usage. Detailed documentation of the process may be required in filing the claim.
To file a claim on the product that was substantially transformed, the filer needs to prove that the resultant product contains an imported product on which duty was paid. This requires an exact paper trail that documents the product, either by batch, lot, or serial number that was consumed and the product that was produced. If the merchandise that was imported is then exported or destroyed within three years in an unused state, the organization is also eligible for drawback. In this situation, the organization will need to keep a paper trail that proves the unused merchandise that was exported or destroyed was the same merchandise that was subject to an import duty. Finally, an organization also has the option of rejecting import merchandise that does not conform to specifications, that was shipped without its consent, or that was determined to be defective, and file a drawback claim on this merchandise, but to do so the merchandise must be returned to customs. Unless the merchandise has no resale value, this is generally not a good option.
Unless the claim is for goods imported from Canada or Mexico under NAFTA, which has its own drawback filing process, the steps involve:
-
- applying for a ruling
this provides an organization with permission to submit a claim, and will generally require that the organization provide a detailed description of the process that demonstrates it substantially transforms the product on which the organization is intending to file a drawback - file the claim
including all of the paperwork required, which, at a minimum will require the following for proof of import- Customs Form 7501
- Commercial Invoice
- Documentation necessary to support use of products in a substantial transformation manufacturing process
- Waste summary documentation for any products discarded
- Certificate of Delivery
- applying for a ruling
and, at a minimum, the following for proof of export
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- export declaration
- invoice
- bill of lading
- purchase orders and receipts from the customer
And it will take time. As the CBP site says be aware the process of filing for drawback can be involved and the time it takes to receive refunds can be lengthy. But if you do a lot of exporting, the cashflow could make even a six month wait worth it.
Will Supply Management Save the US Economy? Part III
It’s hard to say, but Supply Management could be a contender. Why?
Supply chains are more global, more interconnected, more complicated, and more prone to significant disruption than ever before — and the successful management thereof is more difficult than ever before. It requires a jack-of-all-trades that is also a master of one (trade called Supply Management). Only the best of the best of the best with the right education, experience, and EQ can manage these beasts of our own creation that are more fearsome, and ferocious (when a disruption occurs) than the great hydra of myth. And most of these people are in the US — which started the outsourcing craze in the 80s, learned the hard way when they skipped over the frying pan and into the fire, and then, as they learned the errors of their hasty ways, started institutionalizing knowledge and building best practices to help them cope, and, in the long term, succeed.
In order for the US to remain competitive, now that Europe is getting into the global supply chain game in a big way and taking advantage of their closer proximity to Asia, the current outsourcing destination of choice, and Africa, the future outsourcing destination of choice, the US is going to have to step up its supply chain game and produce more supply management leaders. This is going to require more thought leaders, more educators, and more institutionalization of knowledge and best practices. In other words, the US has to create the ability to not only produce supply chain leaders on demand, but produce world-class supply chain leaders.
Once the US has the ability to create the best supply chain leaders on a regular, and repeatable, basis, it doesn’t have to stop when the US’ needs for leaders are fulfilled. It can keep producing leaders because the entire world needs supply chain leaders, and if other countries can’t produce supply chain leaders of the same caliber (and, right now, many can’t), they will need (consulting) leadership and the US could produce the leaders to fill that gap. This has the potential to create millions (upon millions) of consulting jobs. There are over 100 Million businesses in the world, and over 10M of these are mid-sized businesses which, if they are not going global today, are likely to be going global tomorrow, and they will need help at all levels of the supply chain. That’s a lot of consulting that needs to come from somewhere. The US could produce those consultants and establish an industry around them.
And this is an industry the US could own. The continual improvement in automation technology essentially ensures that manufacturing will continue to move to lower cost locales and continual improvement in global telecommunications infrastructure essentially guarantees that customer service, data processing, and even programming will continue to move to lower cost locales as well. And even though Peter Drucker invented modern management consulting, Europe has caught up and the US really has no advantage here. In the knowledge-driven future, global leadership will be reserved to those disciplines where a country has the most advanced knowledge, and this is one area where the US has, and can continue to have, leadership.
So will Supply Management save the US Economy? I don’t think anyone can say for sure, but if the right focus was applied, in addition to saving companies hit hard by the economy by taking cost out of (and putting quality into) their supply chains, Supply Management has the potential to do the same for the economy as a whole. But will anyone realize this (before it’s too late)?