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Tighten Your Seat Belts; More Turbulence Ahead

By Karen E. Thuermer

Published in Air Logistics Management, October 2012


            Industry analysts predicted 2012 would be the turnaround year for air cargo. But as the year nears its last Quarter, the industry remains a victim of the global recession. In fact, if air cargo is an early indicator of the worldwide economy – it’s time to put another notch in those seat belts. No smooth skies appear on the horizon.

Tenuous economic indicators are everywhere. In North America, manufacturing continues to be sluggish and money remains tight. In Europe, the European Union’s unending financial woes and troubled currency show little resolution. Economic indicators depict a softening Chinese economy in response to slower global trade. And in Latin America, particularly Brazil and Argentina, inflation is escalating. These factors, combined with high fuel costs, diminished cargo volumes, the cost of security and other challenges, and it’s easy to understand why the industry is troubled.

          Meanwhile, shippers continue to adjust supply chains and inventory holdings so that, only in rare instances, do they require air freight.

          “Many are beefing up their stock because the cost of carrying inventory is cheaper than the cost of air freight,” says Matt Parrott, director of transportation at A.N. Deringer.

At the June International Air Transport Association (IATA) meeting in Beijing, IATA Director General/CEO Tony Tyler told attendees that profitability within the airline industry is already “balancing on a knife’s edge.”

“If the bottom line worsens by even the equivalent of just 1% of revenue, our $3 billion profit very quickly becomes a $3 billion loss,” he said.

The deciding factor will be what happens economically in North America, Europe and Asia-Pacific — the world’s most important markets that encompass over 86 percent air cargo hauled. Mr. Tyler sees the crisis in the EuroZone as the industry’s biggest and most immediate threat.

“If it evolves into a banking crisis, we could face a continent-wide recession – dragging the rest of the world and our profits down,” he said.

Europe‘s biggest airline, Air France-KLM, has already seen losses widen to EUR895 million for the three months ending June 30, more than quadruple of the EUR197 million net loss accrued in the year-ago period. Officials say this was largely due to payouts to redundant staff.

In its latest report, IATA indicates slower growth in both air travel and freight, but with considerable variation by region and market. July freight demand was 3.2% lower than it was in the same month last year. This is down on the 0.1% year-on-year growth rate of June. IATA attributes a large part of that decline to a comparison with a relatively strong July last year, yet states that overall the trend in air freight is weak, in line with subdued world trade growth.

North American airlines’ international traffic fell 2.1% year-on-year in July (after rising 1.6% in June) in part owing to decisions to trim capacity, particularly on the North Atlantic market. Compared to June 2012, demand contracted by 1.3%. The load factor was 86.7%, the highest among all regions.

Asia-Pacific carriers saw demand growth of just 0.9% in July. This is a major slowdown from the 5.8% recorded in the June year-on-year comparison. Moreover, compared to the previous month (June 2012), demand contracted by 1.3%.

“European airlines appear to be benefiting more than Asia-Pacific airlines from the recently stronger trade flows from West to East, while the Middle Eastern airlines continue to offer strong competition on long-haul markets,” IATA writes. “The downward growth trend began in the second quarter of 2012 and has now continued into the third.”

Against this backdrop, IATA indicates Middle East carriers experienced the strongest traffic growth at 11.2% year-over-year, although this was surpassed by a 12.4% rise in capacity. Compared to June, traffic rose just 0.1%. The region’s growth trends were impacted by Ramadan, which commenced in July this year.

Etihad Crystal Cargo experienced an historic 22% year-over-year growth in freight tonnes carried during the first half of 2012; revenues jumped 13% percent. The Emirates Group posted a net profit of $629 million in 2011– its 24th consecutive year of profit. Emirates added a staggering 22 new aircraft to its fleet, its highest in any single year, and ordered 50 additional B777-300ERs. It also added 11 new destinations and increased capacity to 34 cities, a record for the airline.

Middle East carriers are also shaking up global alliances. In September, Qantas Airways announced that it was entering into a 10-year alliance with Emirates that will see Dubai replace Singapore as the stopover point for its European services. The deal, which severs ties with British Airways and the OneWorld Alliance, is part of an effort to shore up losses from the Australian carrier’s diminishing international business.

Emirates President Tim Clarke hails the agreement, calling it “perhaps the start of a new thinking as to how the airline industry understands traffic flows across the planet.”

Meanwhile, airlines continue to reduce capacity, a move that has stabilized load factors at relatively high levels and provided some support for profitability in the face of high fuel prices.

Some, like Lufthansa Cargo, have switched capacity to more profitable routes. Lufthansa Cargo changed capacities from Asia to North America and added new destinations such as Detroit. Air France has canceled freighter service to Shanghai and is now focusing on markets in West Africa, the Indian Ocean, North America, Mexico, and Japan.

Carriers continue to retire freighters or exit that segment of the industry altogether. Jade Cargo quit the market in June due to ongoing weak demand to and from China. Air France Cargo is disposing of one Boeing 747-400ER freighter, which will reduce its fleet to two 747-400s and two Boeing 777 freighters. That’s down from a 12 cargo aircraft in 2009.

This year Cathay Pacific pulled three 747-400BCFs from its service. Cathay Pacific Group slipped into the red for the first half of 2012, reporting a new loss of US$120.5 million. The carrier, however, is adding three B747-8Fs over the next several years, bringing a total of 10 B747-8Fs to its fleet. Also on order are eight B777 freighters, which are scheduled for delivery between 2013 and 2016.

“Carriers have no choice but to renew their fleets with more fuel-efficient aircrafts, and this will continue to create over capacity during this period of low market growth,” comments Christian Sivière of Import Export Logistics Solutions in Montréal.

Meanwhile flurries of airline consolidations continue to afflict the market. The latest example is the merger between Chilean airline LAN and its Brazilian counterpart TAM.

“Consolidation will continue, in view of the low profitability of the airline industry and the capital required to renew fleets and to stay in business,” Mr. Sivière states. “But so far, the impact of the crisis has far outweighed the impact of airline consolidation.”

Despite today’s gloomy conditions, IATA’s Tyler offers a positive spin by noting how airlines have improved their competitiveness over the last 10 years. “Load factors have increased by 9.2 percentage points, and fuel efficiency is up by 24%,” he says. “Some 1.2 billion more people and 16 million more tonnes of cargo will fly this year than in 2001.”

Projections indicate an even more robust picture. IATA expects that by 2030 some 5.9 billion people will take to the air and cargo could triple to nearly 150 million tonnes.

“We should be optimistic about such a future,” Mr. Tyler exclaims. “But there are no guarantees.”



Social Media Analytics

Written by Karen E. Thuermer

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MIT 2012 Volume: 16 Issue: 5 (June)

Social Media Analytics


Social media offers great opportunities for understanding the pulse of a population: reactions to events, opinions on important issues, political sentiment, calls for protests and much more. Social media also provides early alerts for defense, intelligence and homeland security analysts about potential crises such as the next Arab Spring, military conflict or natural disaster.

If there has been a recent event, and individuals who live in a certain region are now angry at U.S. troops, the extent of their anger or displeasure can increase or decrease over time. Knowledge of those ebbs and flows could help improve the safety of those troops.

“Those of us watching on TV may think it is not so bad, whereas social media may show some very influential individuals with negative perceptions who are influencing others to think as they think,” said Rebecca Garcia, director, SAS Federal National Security Group. “This could jeopardize the safety of U.S. personnel if they are not aware of this line of thinking.”

But the sheer volume of the data can make it difficult to process and analyze. “Additionally, the amount of noise in the data—information irrelevant to the problem at hand—can be staggering,” said Dr. Robert McCormack, associate director of the analytics, modeling and simulation division at Aptima.

Disentangling key memes of interest from the ocean of noise is a difficult undertaking. The overwhelming profusion of user-generated, publicly accessible content, like that from tweets, on blogs and in many online communities, demands an automated solution.

Enter advanced analytic technologies. These technologies help find important topics and trends and help those who have a need to know understand their impact on the population.

There are obvious global applications for social data analytics, as was evident with events last year in Egypt and Libya, as well as the natural disasters in Japan and Haiti. The first global news about the breach of Osama bin Laden’s Pakistan compound came from a neighbor’s tweets. Social media networks have provided original on-thescene reporting of planned protests, demonstrations and operations.

“This technology’s potential to harness the ocean of publically available information on the Internet makes it particularly useful in social media applications,” commented Sean Love, geospatial business development director for Northrop Grumman. “Being able to hone in on specific information on a specific topic, without having to wade through petabytes of data, saves a significant amount of time and allows end users to focus the majority of their time on the mission instead of on data mining.”

Such analytical technology must effectively manage social media data in all its forms, be it structured, unstructured and/or semi-structured, including both video and audio content.

“For military and intelligence applications, the same needs apply—all the way from the military recruiter, who finds publically available data on recruitment issues important, to the frontline soldiers who want to know what the current sentiment is toward U.S. military presence in a specific town or region,” said Tony Jimenez, president and chief executive officer of MicroTech. “Social media data requires analysis that is often beyond the capability of an individual or even a group.”

The issue is sifting through the plethora of data to get to actionable information.

In addition to public or external conversation information for operations, internal operations can benefit from social media analytics as well. The Pew Research Center’s Internet and American Life Project now indicates that 65 percent of all adult Internet users are now using social networking sites.

“The military is a very large operation and could certainly incorporate social media into reaching out and engaging with service personnel via this medium that is now becoming so prolific,” Jimenez remarked. “Analysis of service personnel concerns, trends and issues, in the proper mindset, could yield far greater efficiencies and mission success.”

Consequently, social media analytics provides yet another opportunity for increased efficiency and support of operations with information discovery from the wealth of publicly available data.

Search Algorithms

A number of companies currently offer advanced analytic technologies for social media.

Northrop Grumman, for example, offers a tool that uses algorithms to search through publicly available information and then narrows that data into predetermined subjects, categories and other criteria. “That information is then sorted, providing the end-user with data that is relevant, focused and manageable,” said Love.

Northrop Grumman’s tool is designed to alert officials of potential crises, conflicts and social trends.

Aptima is developing a technology called Epidemiological Modeling of the Evolution of Messages (E-MEME), which combines advanced analytic techniques from natural language processing (NLP) with core concepts from epidemiological modeling. E-MEME applies NLP methods to scour large sets of Internet data sources and documents, extracting the key memes and topics propagating through blogs, news sites and real-time social platforms like Twitter. These techniques are used to characterize and quantify topics being discussed, such as “protests” and “elections.”

Mathematical epidemiological models plot how such ideas proliferate and spread among populations both geographically and over time. “Epidemiology provides us a starting point for understanding the problem, as well as a wealth of models and techniques for formally analyzing the data,” McCormack said.

On one level, McCormack explained, the aim of E-MEME is to provide the intelligence analyst with better information on the current situation of interest based on what is happening in social media, blogs and news. “If they are interested in protests, for example, E-MEME will provide prevalence of that topic in the media broken down by several dimensions, such as locations, groups or media type,” he said.

In addition, E-MEME provides information on past trends on topics, allowing an analyst to see, for example, if talk of protests in a particular location is on the rise. “Beyond that, the epidemiologically based models will provide the ability to measure susceptibility of different populations to various memes, based on historical data and other factors,” he said.

Additionally, intelligence analysts will be able to perform “what if” analyses, such as measuring the potential spread of memes or the likelihood that a particular region will adopt an idea.

MicroTech, which offers solutions to establish an effective social media practice, has found it helpful to offer scalable social media solutions in several different sizes and configurations that address the wide array of needs and requirements across government agencies, using a number of different hardware/software apps.

“Social Recon Mobile offers essential social media capabilities and includes software and hardware on a portable, easily transferable cart for rapid deployment and virtually instant social media mining capability,” Jimenez said.

Social Recon MicroPodd includes an accompanying mobile MicroPodd component that affords greater storage and more capability. This option offers a plug-in solution to existing infrastructure.

“Analysts can easily monitor and track what you deem important from their current locations and workstations,” he said.

Social Recon MicroCenter is a permanent solution, custom built onsite, with additional social mining capability that allows a deep dive across the social media community.

“As data centers continue to be virtualized, consolidated and made more efficient, this option affords a decided competitive advantage to those leveraging their own facilities for the creation of the social media functionality,” Jimenez said.

Hosted Solution

Lastly, Social Media as a Service (SMaaS) offers a hosted solution that is unique from other MicroTech solutions. SMaaS can be tailored to fit the needs of an organization and the functionality needed, be it indepth search and discovery, concept analysis, targeted analytics, and/or system alerting—all on specific topics and issues of interest.

“It’s particularly useful if you’re moving more toward an IT management strategy that allows for maximum flexibility, or you’re unable to make an investment in new equipment,” Jimenez said. “We offer analytics services aimed at providing a detailed electronic narrative with reporting on a daily, weekly or monthly basis, highlighting topics and issues of interest to you.”

The MicroTech Social Recon products manage and parse through data in all its digital formats. This includes topics and related searches done without a requirement for manual tagging, and able to overcome linguistic and language issues presented through the increasingly interconnected world. “For example, people often use different words (different semantics and syntax) to express the same idea,” Jimenez explained.

This problem becomes especially pronounced in a social media environment like Twitter, where the language is more conversational, replete with familiar expressions, slang and varying emotional undertones like sarcasm, excitement and disappointment, and stated so briefly that context is difficult to discern. The issue can be especially challenging in multilingual countries where online data can be in a number of other languages.

“Our Social Recon analysis tools provide results that are understandable and actionable,” he continued.

The tools can immediately provide contact with those who raise concerns, as well as permit engagement with them via the same social media tool with which they used to comment or discuss a topic on the social web.

“Likewise, those who offered incorrect or negative comments can also be contacted using our Social Recon tools and become engaged in a dialogue on whatever issues arise,” Jimenez said.

The tool can also identify cluster areas where a popular belief may be incorrect or there may be a proliferation of misinformation.

SAS Social Media Analytics (SMA) provides ways to look at specific topics of interest, decrease the amount of irrelevant information, and include the sentiment of an individual or millions of people. The tool can take information from any number of blogs, Twitter, Facebook or other publicly available social media sites of interest. Queries for specific topics or keywords can be set by the analyst, and the tool will continue to provide information 24 hours a day.

“When the analyst arrives at work they have new, up-to-the minute information and continue to receive updates throughout the day,” Garcia said.

The SMA solution offered by SAS also allows for multiple individuals to interact with the data based on similar areas of interest. Analysts can further manage the data being received through tools that can refine searches on the fly as they see information that is more or less relevant to their needs.

“There is also the capability to geo-locate the information,” Garcia added. “SAS is partnering with AGI to provide geospatial information to users based on the location of the social media user. This can be a critical asset to the warfighter when trying to assess a threat to troops or rescue someone who is in trouble and is unable to utilize traditional communication channels.”

SAS can analyze sentiment in 28 languages natively, with the 29th language, Farsi, in Beta testing. Languages are not translated into English but are assessed in their native form, which provides much more accurate sentiment scoring. “This is critical when assessing possible threats, since changes in mood can be subtle,” Garcia explained.

SAS is working with existing customers to build mood states for those who need to know when subtle changes occur.

“It’s rare for a person to go from very positive to very negative sentiment based on a single event,” she remarked. “So mood states allow for assessment of changes in opinion or feeling towards a topic over a period of time. This can help personnel in other countries be better informed about how specific behaviors or actions could create a positive or negative response among the civilian population.”

The goal would be for military members to have more positive interactions with civilians based on greater insights into their culture or based on past reactions to similar interactions.

Open Source Pitfalls

The primary advantage of open source data is the rate at which it refreshes. New information is constantly available. By the same token, the sheer amount of available data is a challenge.

“While technologies are being developed to ‘slim down’ how much data an end user is faced with, the data set is growing exponentially every year so those technologies must adapt to keep pace with that,” Love said.

Additionally, given inequalities in access to technology, social media does not necessarily provide a representative picture of the population at large. Some of the specific issues currently being addressed in the research community include analysis of multiple foreign languages and the unique idiosyncrasies of particular types of social media.

With respect to analysis of foreign languages, at a basic level the statistical techniques used for deriving topics are language independent.

“But, there are definitely difficult issues that arise when dealing with foreign languages,” said McCormack. “Tools like Google Translate and Yahoo! Babel Fish can give you a rough sense of the discussion, but fail to convey the more subtle nuances of more idiomatic languages.” This is an active area of research across the NLP community.

Spelling and lexical variation across different forms of media also poses a significant challenge. In Twitter especially, misspellings, abbreviations and stylistic spelling variations all make standard normalization techniques difficult. Automated clustering techniques become necessary in this case.

Garcia adds that there are other issues as well, such as how individuals can create new identities on blogs, Twitter or other sites. Individuals or groups can mask their identity and location based on security settings.

“Anyone can say anything about any person or subject, and it does not have to be accurate or true,” she said. “This type of information source requires confirmation and careful assessment of possible impacts if the comments are found to be even partially untrue.”

There are also the challenges of perception. Many individuals can witness an event and perceive very different things based on their angle of observation and personal bias.

Since social media is a forum where there is no real filter for bias, angle of observation or desire to mislead, Garcia noted, such a powerful tool must be used prudently. The analyst must make value judgments based on his or her experience, understanding and knowledge.

Social media is one data source, and is not more definitive than any other single source of data. It may be less definitive, depending on the reliability of the individual who is providing the information.

“Since that could be anyone in the world, the veracity of comments will likely be as divergent as the honesty of each individual on the planet, and still relies on our ability to correctly interpret the message,” she said.

Future Direction

Over the next five years, there will be a large number of new tools and approaches to leveraging that ever-increasing data set as more and more customers latch on to social media exploitation as a viable means for information gathering and analysis, Love predicts.

Jimenez contends that mobile and social applications will continue to grow and devices with increased capabilities will proliferate. “Augmented reality capabilities, such as geographical knowledge augmentation—where for example you can hold your phone up and see what stores, restaurants, and/or installations are in a certain direction— exist now, but they will become far more accurate and useful as the industry matures and evolves,” he said.

Social media is also starting to penetrate the enterprise. Organizations are implementing social communication tools both internally and externally in an effort to be better informed and break down silos that hinder growth and efficiencies. Organizations experiencing demographic changes and shifts to younger generations have already adopted these types of tools as a method to engage and communicate in ways that these individuals have already adapted and understand.

McCormack contends that as the Department of Defense and intelligence community move into more open source analytics, there will be an increase in demand for advanced analytics capable of answering both strategic and tactical questions.

“In terms of technology, we’ll start seeing increases in the use of distributed and cloud computing for dealing with the massive amounts of real-time streaming data,” McCormack added. “Adapting the analytic techniques, from the statistical language models to the dynamic trend analysis models, to these environments will likely be an active area of research.”

Finally, a lot of current work is focused on retrospective analysis of events in social media (such as the Arab Spring), due to the nascent analytical techniques.

“The true test of these tools in the next five years will be to see if they can usefully predict trends in social media before they become yesterday’s news,” he said. ♦

Up in the Air

As appeared in FDI magazine, December/January 2012


By Karen E. Thuermer



When the Hesse Administration High Court in Germany put an end to scheduled nighttime flights at Frankfurt Airport, the news came as a big blow to Lufthansa Cargo.  The carrier had planned for 10 night flights on its winter schedule, beginning October 30.

Karl Ulrich Garnadt, Chairman of the Executive Board and CEO of Lufthansa Cargo, sees the resulting consequences for the carrier as “quite severe.”

“We don’t know how our customers will react, but we expect a double digit impact,” Mr Garnadt says.

He sees the provisional night-flight ban in Frankfurt as a drastic signal for the German logistics industry.

“As an export world champion, Germany is reliant on dependable connections to ship airfreight to destinations around the globe,” he says. “Frankfurt Airport plays, in that respect, a highly important role since around 40% of German exports are transported by air.”

 Mr Garnadt also predicts the decision will impact companies in Frankfurt and the Rhineland industrial area that depend on night flights to give them a competitive logistics solution.

 “By loosing night flights, the quality of Frankfurt as a logistics hub will have an impact on investment decisions by companies,” Mr Garnadt proclaims.

Airports are economic drivers, and those handling cargo are powerful engines for local economic growth, particularly in attracting manufacturers and logistics operators who depend on fast transport service.

         This fact is so poignant that Dr. John Kasarda, professor at the Kenan-Flagler Business School at the University of North Carolina-Chapel Hill, has named the concept “Aerotropolis” to describe an aviation-oriented economic region that has an airport as its cornerstone.

         Two cities in the United States exemplify this point: Memphis, Tennessee, home to Federal Express; and Louisville, Kentucky, the world hub for UPS.

         FedEx has grown into a worldwide power, and its Memphis hub has made the city a magnet for businesses that thrive on time-critical transportation. From Memphis, FedEx can deliver to any North American location within 24 hours and to most major global cities within 48 hours.

         Among the companies locating in Memphis to capitalize on these advantages are Johnson & Johnson and Pfizer. Both have major logistics centers in Memphis.

         Zappos.com, one of the largest on-line shoe stores in the world, moved its fulfillment center in 2006 to Louisville to be close to the UPS world hub.

That hub, dubbed Worldport, currently turns over 130 aircraft and processes around 1.5 million packages a day.  

 “From there, and with the help of UPS, we were able to serve areas with population density, and the US lower 48 states with next day or two day delivery,” says Craig Adkins, Zappos.com vice president of services and operations.

As a result, Zappos sales grew from $597 million in 2006 to $840 million one year — an amazing 40 percent jump.

          Nevertheless, Dr. Kasarda points out airports in the US are treated as nuisances to be controlled, unlike their counterparts in Asia and the Middle East where they are regarded primary infrastructure assets for their cities and nations to compete in the globally-connected, speed-driven economy. 

Florida Biotech Leaping Fast

 By Karen E. Thuermer

As appeared in FDI magazine (June-July 2011)

 Florida Governor Rick Scott wants to catapult his state to top status for biotech. 

 The Sunshine State already has the second fastest growing biotech industry in theUnited States.

 Florida  first rose to national prominence as a biotech hub in 2003 when the Scripps Research Institute announced it would build a major new campus in South Florida. Today, Scripps occupies 30 acres (120,000 m2) adjacent to the John D. MacArthur campus of Florida Atlantic University inPalm BeachCounty. 

 Scripps’s presence inFloridahas resulted in Max Planck Florida, Sanford-Burnham, VGTi and many more biotech companies locating to the state to conduct cutting edge research. In fact, since 2007, the number of biotech companies in Florida has more than doubled, resulting in biotech employment increasing 150 percent.

 Florida continues to see big growth. In 2009,San Diego’s Burnham Institute for Medical Research opened its new $85 millionFlorida satellite laboratory in Orlando’s new “medical city” in Lake Nona. 

 The master planned community encompasses 7,000 acres and features Nemours Children’s Hospital, M.D. Anderson Orlando’s Cancer Research Institute, Orlando VA Medical Center, University of Central Florida’s new College of Medicine and Health Sciences campus, Burnham Institute for Medical Research’s east coast campus, and a University of Florida research facility.

Governor Scott expects new biotech and pharmaceutical companies to sprout around the medical facilities and employ more than 30,000 people with an $8 billion economic impact.

“We have all of the elements,” he adds.

 These include competitive labor costs, low taxes, and reduced regulation.

Florida has no personal income tax, compared to an 8% tax or more in many other life science states. Governor Scott is also eliminating its business tax, now at about 10%.

He has also streamlined government, reduced burdensome regulations, and reorganized the state’s economic development agency. For example, Florida has recently eliminated duplicative oversight of medical device manufacturers.

Through our efforts, I am confidentFloridawill be the number one place to start, grow or move a business,” he says.

Apparel Coalition Calls for TPP Trade Agreement

By Karen E. Thuermer

As appeared in the American Journal of Transportation (AJOT)

In what may seem as an usual bi-partisan effort for Washington, D.C. these days, 30 members of  the U.S. Congress – 15 House Democrats and 15 House Republicans –recently sent a letter to Ambassador Ron Kirk, U.S. Trade Representative, urging that the United States adopt a new approach on apparel trade in order to seek a high-standard Trans-Pacific Partnership (TPP) agreement that promotes U.S. jobs and innovation, creates new trade and investment opportunities, and that is consistent with the business realities, production, and global value chains of the 21st Century.

The Trans-Pacific Partnership (TPP) Agreement, also known as the Trans-Pacific Strategic Economic Partnership Agreement, is a multilateral free trade agreement (FTA) that aims to further liberalize the economies of the Asia-Pacific region. It is currently being negotiated among the United States and eight other partners: Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore, and Vietnam.  

The TPP Apparel Coalition would like to see the TPP include additional Asia-Pacific countries in successive clusters to eventually cover a region that represents more than half of global output and over 40 percent of world trade.

South Korea has requested to join the TPP after the signing of the US-South Korea FTA.

The goal of the TPP Apparel Coalition is to seek a TPP agreement that creates opportunities to maximize innovative strengths and generates U.S. jobs along the full range of activities that American firms and American workers do to bring a product from its conception to the final customer. This includes activities such as design, production, marketing, distribution, retail and support to the final customer.

Currently, textiles and apparel are treated differently than other products. The Coalition maintains that Restrictive rules such as the “yarn forward” style rule of origin, which require all the materials that go into a garment to originate and be assembled in a TPP country to receive tariff-free treatment, are unworkable in today’s global value chains.

Past FTAs with TPP countries have shown that such an “all or nothing” approach does not spur new U.S. exports or new apparel trade, it says.

In fact, according to a Coalition position paper, because consumers today expect a wide variety of fashionable apparel, flexibility in sourcing is vital to meet design specifications and consumer demands.

“While scrutiny in very specific cases may be warranted, applying such constraints to all textiles and apparel goes beyond supporting the domestic industry, rather it actually reduces export opportunities in the region, and artificially increases prices for consumers during a time of global economic distress,” the paper says.

 In addition, nearly 70 percent of all duties collected by the United States, the largest importer of apparel among TPP countries, from TPP nations are on apparel imports.

“Changing these rules is important for the exchange of concessions from the other participating nations on new market access for U.S. exports of industrial goods, services and agricultural products, and strong intellectual property rights and investor protections,” it says.

The TPP members have set a goal of reaching the outlines of an agreement by the APEC Leaders’ meeting in Honolulu in November.

Nine rounds of negotiations have taken place so far between TPP partner nations, with the latest – the ninth round, held in Lima, Peru in October. 

The United States is participating in the TPP because leaders see it as the best vehicle to advance U.S. economic interests in the rapidly expanding and growing Pacific region. 

Not only would a TPP agreement create and retain U.S. jobs, the Coalition maintains, it would promote innovation and competitiveness, encourage new technologies and emerging economic sectors, increase the participation of small- and medium-sized businesses in trade, support the development of efficient production and supply chains that include U.S. firms, encourage firms to invest and produce in the United States, and promote regulatory coherence and cooperation among the TPP members.

The Coalition sees this as significant since in 2010, U.S. consumers spent nearly $340 billion on new clothes and shoes. This translates to Americans purchasing an estimated 20.5 billion garments and 2.3 billion pairs of shoes last year.

“While the United States accounts for one-quarter of the world’s overall apparel and footwear retail sales, the U.S. represents just five percent of the world’s population,” its website reports.

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