What’s Driving International Trade
In the Kansas City Region?
The Kansas City region will see substantial international trade growth.
KC is the fourth largest location nationwide for inbound containers.
Kansas City is looking at steady growth in trade as evidenced by its central US location, vital transportation links, affordable infrastructure costs, growing labor workforce, and a thriving industrial and manufacturing base.
With five Class I railroads, four major interstate highways, thriving river port and large trucking centers, Kansas City is ranked 2nd in the Midwest and 4th in the nation for inbound containers with a volume of some 225,000 TEUs (Twenty-foot Equivalent Units) in 2020, according to a recent study conducted by KPMG.
This portfolio includes containerized imports of consumer goods, commercial machinery and equipment and farming products destined for both local use and for customers in Missouri, Kansas, Nebraska and beyond. Kansas City customers include Ford, GM, Grainger, Bayer Crop Science and many others. Exported containers numbered 500,000 TEUs loaded with animal feeds, grains, meats, machinery and industrial goods - and empties returning to the Far East.
The KPMG report predicts that growth will reach 1.38 million TEUs by the year 2040. Leading the way for the movement of TEU growth is the fact that Kansas City is served by four intermodal rail hubs run by Kansas City Southern Railroad, BNSF, Union Pacific and Norfolk Southern. Either coast can be reached in a little more than two days from Kansas City. This is the primary reason so many national companies have opened large distribution centers in the Kansas City area. It is also attracting manufacturers, such as ALPLA Inc., North America, which is locating a 246,000 sq. ft. injection molding facility in Kansas City, Missouri due to open in the 4th quarter.
The impact of small to medium-sized exporters
Driving much of the growth in exports are the small to medium-sized enterprise (SMEs) which account for 98% of all exports and 33 percent of US exporting value, according to the US Census Bureau. They include machinery, agricultural & food products and industrial goods, among others.
A 2021 Regional Assessment conducted by the World Trade Center – Kansas City and the Mid-America District Export Council revealed that 70.2% of Kansas and Missouri companies surveyed had 100 or fewer employees, and 92.3 percent are considered SMEs according to the SBA. Many, if not most, of these SMEs include smaller exporters, companies such as Ultrax Aerospace, Labconco, DuraComm, Moridge Manufacturing and BioMicrobics, to name a few.
The assessment pointed out that 58.5% of the SMEs were direct or indirect exporters, with a large number, 41.6%, not exporting at all. Nearly 50% of the exporters shipped to 5 or more countries, with 32% exporting to 2 countries. A variety of reasons for SMEs not exporting were cited in the report including the fact that domestic sales were sufficient and that the cost of export transportation to overseas markets was an impediment, among others. In other words, a significant amount of export growth would be possible in the Kansas City region if even a small percentage of these non-exporting companies were to begin exporting at some level.
What the numbers reveal
The International Trade Administration (ITA) pegged 2020 Kansas City area exports at $7.9 billion versus 2019 exports of $7.6 billion. The numbers may not tell the real dollar amount because the ITA records the dollar amount of containers via ocean from the exit port versus where actual production takes place. This means that, although a Kansas City area manufacturer exports a given dollar amount bound for the Dominican Republic, the dollar amount cited by the ITA is actually a transportation amount recorded from the port of Miami, which in most cases states a lesser amount.
Expanding role for air cargo
Offsetting this accounting is an exporter trend to ship by air cargo during this supply chain crisis, and in many cases, for container loads by charter to ensure that their sorely needed goods reach the customer in a timelier manner. Shippers have turned to charter flights where time-sensitive transit is simply constrained beyond viability by the contraction of passenger aircraft capacity. These particular export figures may not be recorded by the ITA and are thus less likely to be reported unless picked by the US Census Bureau. Air cargo figures to play an expanded role in Kansas City’s growth in trade. While Kansas City International’s new passenger terminal is slated for opening in March 2023, air cargo expansion will take place on its present facilities.
UPS is expanding its presence with a 534,000 sq. ft. aircraft apron giving it enough space to park five wide-body cargo jets and a complete renovation of the existing 50,000 sq ft sorting facility. Its new state-of-the-art sorting equipment will increase package handling capacity from 1500 to 5000 packages per hour, according to information provided by Justin Meyer, Deputy Director of the KC Aviation Authority.
While Kansas City already ranks 2nd in the Midwest and 4th in the nation for incoming TEUs as more agricultural and food exporters realize the advantages of containerized shipments over bulk shipments, the number of outgoing containers headed for other ports will rise significantly.
Impressive growth predicted
As the KPMG study concludes in its forecast of imports + exports + empties: 2 million TEUs expected by 2032; 3 million by 2043; and 4 million possibly handled by area intermodal rail ramps by 2062.