Playing to Win

Terry R. Head, PresidentInternational Association of Movers

• The largest international trade association and advocacy group for household goods forwarders, movers and service providers

• Founded in 1962 to represent the interests of military TSPs; broadened scope to include commercial business in 1970s

• Source of the largest networking opportunity for business development within the moving industry

• Membership includes 2,300+ companies and individuals in more than 170 countries and territories

IAM – Who We Are

IAM – We Are Not “Just Movers”

• Company Memberships: 2,076

– Core

– Governing

– Supplier

• Individual Memberships: 261

– YP

– Veterans

– Student

1,884

132

60

241

14

6

Total IAM Members: 2,337

U.S. Economy

U.S. EconomyMore Reasons for Optimism than Reasons to Worry

• Notion of a ‘double dip’ is dead – or fading away

– “Financial cliff” is looming

• Manufacturing rebounding – spurring recovery of freight

• On the front-end of an expansion cycle

– How long will it last?

• Improvements in stock markets (U.S. and foreign)

– Absent any sharp falls in European stocks

U.S. Economy

• U.S. economy – growth of less than 2% for 2012*

• U.S. domestic freight shipments hit a seven year high in December, but have slowed

• North American Free Trade (NAFTA)

– Up 27% from 2009

– Up 40.3% over recession levels of 2008

• 2011 surface trade – Canada / Mexico up 14.3%**

*Source: National Association of Business Economies

**Source: Bureau of Transportation Statics

If You Still Need Reasons to Worry ….

• Renewed European debt woes

– Greece, Portugal and Spain

– Ultimate fate of the EURO?

• Possible weakness in the U.S. economy

• Drought impacting food and gas prices

– Taking a bite out of consumers’ pocketbooks

• Slower corporate earnings growth and profit margins

– Down from near record levels

Global Trade In a State of Flux

• Growth in trade ($ value) will slow

– Less than 4% in 2012 vs. a 6.6% expansion in 2011

• Trade (volume) predicted to slacken to less than 5% in 2012 after expanding more than 6% in 2011

Source: The World Bank

U.S. Imports

• Up 10% year-over-year

– Retailers stocking up; driven by robust automotive and strengthening housing industries*

• U.S. international trade balance (goods and services)

– Improved to a minus $42.9 billion in June 2012 (May - $48 billion)

*Source: National Retail Federation

U.S. Exports

• 2011 started with a bang

– 6% increase to record volumes

– Fizzled out in 4th quarter

• 2012 projections ??

– Lowered from 4.3% to 3.5%

Source: National Association of Business Economics

Why Focus on the World?

Trade is to International moving

as

Home sales are to Domestic moving

Why Focus on World Economies and Trade?

Where Are the Markets?

• After Canada and Mexico

– European Union is the biggest U.S. export (and moving) market

• Everything is tied together by exchange rates

– (Value of the U.S. dollar) and the rate of economic growth in overseas markets

China Has Become a Key Player But ….

• Now the world’s 2nd largest economy (behind the U.S.), China is facing

– Slowest trade growth in two years - $3.6 trillion

– Sinking trade surplus – a 3 year low

– Growth in middle class = higher wages

The Jobs Are Moving

• Global “outsourcing trends” beginning to shift

• “Near-sourcing” – countries like Mexico / Canada

• “In-sourcing” – jobs returning to the U.S.

– 25,000 manufacturing jobs created in July

– Down from the 37,000 in March

Source: U.S. Department of Labor

Global Hot Spots for Moves

Global “Hot Spots” for Moves

• For decades – was U.S. to Europe / Europe to U.S.

– Then the BRIC’s: Brazil, Russia, India and China

• Emerging markets are next

– Emerging markets will grow 5.6% in 2012, far ahead of the 1.3% projected for the Advanced Economies

– Africa is leading the way – one-third of continent is considered “middle class” – tripled since 1980

– Recent trade agreements

• Columbia, Peru and South Korea

• China is leading the expansion of trade

• Chinese investments – rising to $50 billion by 2015

• China - African bi-lateral trade – $300 billion by 2015

AfricaThe Land of Opportunity / Risk

Africa (con’t.)

• Mining and natural resources main interests

• Agribusiness increasing import volumes

• USA falling behind China and Euro zone

– U.S. – African Growth and Opportunity Act (AGOA)

• African apparel suppliers increasing exports to U.S.

• Infrastructure and logistics lagging

Emerging Markets

• Long known for its precious metals

• World’s second largest gold reserves

• Trading and transit (and banking) gateway

– Particularly as Africa continues to expand

South Africa

Latin AmericaBrazil and Chile

• Slowing but continuing to grow faster than USA

Peru and ColumbiaThe “New Tigers”

• Growing at a faster clip than others in region

• Columbia’s economy grew 5.9% - Peru 6.9%

• Mining of natural resources driving factors

• Re-creation of the middle class

RussiaIt’s About Time!

• World’s 9th largest economy

• Joined World Trade Organization (WTO)

• U.S. – Russian trade bill

– Repeals “Cold War” trade barriers

– Establishes Permanent Normal Trade Relations (PNTR)

Asia

• Generates 1/3 of global GDP

• Purchases 1/4 of American exports

• U.S. trade with Asia – over $1 trillion in 2011

Asia (con’t.)

• Home to U.S. commercial and strategic allies

– South Korea

• Recent Free Trade Agreement (KORUS-FTA)

– 95% bilateral free trading in five years

• Sets stage for South Korea to join Trans-Pacific partnership

Emerging Markets ….. Keep your eye on them!

Indonesia“The New China”

• Resembles the BRIC countries

• Fourth most-populous nation

– Behind China, India and USA

• Abundant natural resources

• Low labor costs = low cost manufacturing

Turkey“Still the Crossroads of the World”

• Best (geographically) positioned country in the developing world

– Europe’s three-quarter billion consumers, and the export markets of Russia, Central Asia and the Middle East

Mongolia“Poor Little Rich Nation”

• Landlocked between China and Russia

• Abundance of natural resources

• Economy grew 17.3% in 2011 (vs. U.S. at 1.7%)

• Growth turbo-charged by foreign investors

1. United States

2. United Kingdom

3. Singapore

4. China

5. Switzerland

6. India

7. Germany

8. Hong Kong

9. Japan

10. Canada

Where Will People be Moving To and From?“Top Ten” Most Popular Relocation Destinations

What Percent of U.S. Employees Relocate to Each Country?

U.K24%

Germany16%

China12%

Australia 6%

France6%

Switzerland5%

Netherlands5%

Japan5%

India4%

Singapore4%

Malaysia3%

Brazil3%

Belgium3%

Italy2%

Israel2%

U.K

Germany

China

Australia

France

Switzerland

Netherlands

Japan

India

Singapore

Malaysia

Brazil

Belgium

Italy

Israel

The Who and What of Future International Moves

• Younger employees willing to take on overseas postings, particularly in emerging markets

• Many companies combining overseas jobs with charitable projects

– IBM – 1,200 employees – 100 projects – 23 countries

– FedEx – Global Leadership Corp. works with Peace Corps

• Relocation trends showing shorter time periods for international assignments and short-term projects

– Probably smaller shipments

In What Will They Be Living?With Trends for Shorter Postings and More Assignments to Emerging Markets We Will See:

• Long-term or extended stay hotels or temporary housing

• Serviced (semi or fully) furnished apartments

• Rotation in and out of corporate housing

• Packaged home furnishings

– Smaller quarters and shipments of personal things

– Creating the need for long-term storage?

Government Impacts

U.S. Government (DOD) Moves Shifting

• Withdrawals from Iraq, Kuwait, Afghanistan

• 2012 / 2013 European drawdown of troops levels

• Increased presence in Pacific Rim, i.e., Korea, Guam and Australia

• Overall reductions in all military services

– Reduce forces by 123,900

– Goal: down to 2.15 million by October 2017

Other U.S. Government Impacts on International Moving

• Increased focus on international rogue movers

– FMC I-27 investigation – “Barrel Trade”

– MOU – FMCSA and Federal Maritime Commission

– Enhanced – licensing process and bonding

– New MAP-21 Highway Bill – increased bonding for forwarders and brokers – raised from $10,000 to $75,000

• Coordinated effort – consumer protections

– Trade associations, Federal, State and local (regulatory) agencies – also looking for ways to generate revenue

Other U.S. Government Impacts on International Moving (con’t.)

• Security – “screening vs. scanning”

• Advance manifest filings / reviews

• Personal Identity Information (PII)

– Data-mining and sharing of information

– Movers getting blame!

• C&BP – intensive customs exams

– IAM data collection and advocacy

Moving Forward

Other Things to Watch Going Forward

• Rising oil prices – inland and ocean bunker

– Barrel of oil: June 1998 - $14 / June 2012 - $82

• Renegotiation of ILA Port labor contracts

– Potential work-actions or strikes

– Push traffic from East to West coast

• Agent / drivers – shortages in capacity

– Expanded use of “containerization”

• Expansion of the Panama Canal in 2014 may change U.S. Port Gateways – transit times

IAM 50th Anniversary Annual Meeting

October 10-13, 2012

Gaylord National Hotel and Convention Center National Harbor, Maryland (Washington, DC)

“Celebrating the Past…. Moving Forward Together”

www.IAMovers.org

Thank You!