LONG BEACH, Calif. (Sept. 17, 2008)—A sluggish economy, high shipping costs and border security were the hot topics at the Footwear Traffic Distribution and Customs (FTDC) conference held at the Hyatt Regency in Long Beach, Calif., Sept. 14-17. Hosted by the Footwear Distributors and Retailers of America (FDRA), the event took on a decidedly dark tone as speakers forecasted rough waters ahead for the retail sector.

Mary Jo Muoio of Barthco Trade Services discusses new port security measures.

Photos: FDRA

The audience of more than 100 attendees was repeatedly warned of fuel cost increases ahead in shipping, international economic turmoil and a Chinese economy destined to overpower our own. “There’s turmoil globally, not just in the U.S.,” said Robert Sappio, senior vice president of TransPacific Trade for APL Ltd. “Consumer confidence is down everywhere, and Europe has had significant deterioration in retail sales.” Because of that, shipping, like so many other industries, has seen a commensurate downturn in traffic. “Global containerized trade will slow this year, and recover possibly in the middle of 2009. But for the end of this year, we’ll see negative growth, and the numbers for next year are likely to be 0 to 3 percent.” He warned that, though some in the audience complained about high bunker fees, shipping companies currently lost money on fuel costs. He added that, in the future, rate hikes would be necessary to stay in business.

Though the dropping dollar has created a greater demand for U.S.-made product, that positive has created challenges of its own. “Exports from the U.S. are through the roof, but people are having a hard time getting shipping containers,” Sappio explained. He also noted that, with oil prices still high, some carriers are turning to “slow steam” shipping to save fuel (a slower pace can reduce fuel usage by 20 percent), but that such methods created lengthy delays.

Jon Nelson of Nordstrom asks questions at a session.

John Ochs, managing director of APM Terminals, Los Angeles, addressed some of the increased security measures being taken at the nearby ports, where every container is now being driven through a radiation portal monitor (RPM) and regular visitors require a fingerprint scan and card for entry. He also reviewed how the Clean Air Action Plan recently instituted in the region would ban access to trucks 20 years and older. John Jurgutis, program manager of the Secure Freight Initiative of the U.S. Customs Border Protection department, explained how the SAFE Port Act mandated by Customs and Border Protection (CBP) works, walking the audience through the “10+2” security initiative.

While Mary Jo Muoio of Bartco Trade Services acknowledged that the process to enter a U.S. port was a bit unwieldy, she cautioned that, “Customs says this process is likely to be applied to other forms of transit in the future, so you should really build flexibility into your methods, so that when that day comes, you can easily adapt to the changes.”

Attendees take a coffee break and network at FTDC.

The FDRA’s own president, Peter Mangione, also addressed the group on the topic of China’s growing economy and its impact on the footwear sector. He pointed out that China has been the principal reason behind U.S. inflation in large part due to the growing country’s increasing demand for commodities. Noting that the country’s economy is likely to be double that of the U.S. by 2050, he also explained that growth is no longer China’s sole goal, as the worsening environment and widespread corruption are urgent problems that the government is increasingly seeing a need to address.

Despite the forecasts of doom and gloom, attendees kept their spirits up. “This is the first FTDC I’ve been to, and the speakers have been fantastic,” said Joshua Klein of Eastland Shoe Corp. “It’s also been a great networking opportunity.”

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