“If you live on the East Coast of America, it's cheaper to ship goods to Dubai than to California. That's nuts,” says Scott Heintzelman, vice president of finance and administration at Franklin County-based Martin's.
It's also a natural result of importing more than we export. Containers come here full, and some leave empty — but because a little money on the return trip is better than none, the outgoing rates can be pretty attractive. If Shanghai to Harrisburg costs $5,000, says Patrick Glavce, Harrisburg to Shanghai might cost as little as $1,000.
Glavce, president of Warwick Township-based PNG Logistics Co., says the same principle applies domestically. Cleveland gets a lot of shipping activity, so sending something there from here might cost only $600 but a reverse trip could cost upwards of $1,400.
Generally, Glavce notes, the bigger the trade imbalance, the better the shipping rate. But other costs, such as duties and taxes, also vary and need to be considered.
For instance, he says, exporters are paying a lot of attention to negotiations in a proposed free trade agreement with the European Union in which the U.S. is seeking to eliminate tariffs and other duties and charges on trade in agricultural, industrial and consumer products.
Martin's had to adjust its rolls to export them to the Middle East and Europe. Here, it ships them fresh; to take the rolls abroad, Martin's had to develop a flash-freezing process.
And then, for each new country it had to make sure it complied with labeling laws and other restrictions. Turkey, for example, has an especially strict ban on genetically modified food, scrutinizing not only the products but also the entire supply and delivery chain for each ingredient.
“There were moments when we wondered if we were crazy,” says Heintzelman. “Trying to buy a product that's GMO-free, with zero traceabliliy, is very difficult in the U.S.”
But the company persisted, and while it is not yet “minting money abroad,” Heintzelman is excited about the future of Martin's exports. He thinks Thomas L. Friedman got globalization right in “The World Is Flat.”
“You can't just say 'my market' and draw a circle around your operation. You have to look globally,” says Heintzelman. “I think you won't be in business long if you put your head in the sand.”
Getting a boost
No matter how low the shipping costs, successful exporting requires finding a market for the goods. That's where Martin's has gotten a massive hand from Shake Shack, which uses Martin's rolls for its burgers. With origins in a hot dog cart in New York's Madison Square Park, Shake Shack has become so popular with Americans and foreign visitors alike that opening locations abroad was a natural development.
Shake Shack wanted to keep using Martin's, and Martin's was up for the ride. Now, Heintzelman says, the company gets requests all the time from other restaurants abroad, because the soft texture Martin's is known for stands out in cultures accustomed to crusty Kaiser rolls. It is investigating those possibilities and, depending on how things go, may also eventually consider selling in stores there.
Not all businesses will get that kind of gift-wrapped invitation to foreign markets, but Brigg Lopez-Martinez, CEO of MIC International Trade Consulting Inc., wants them to know that help is available. A for-profit company, MIC focuses on Latin America and has conducted many trade missions — but beyond that, Lopez-Martinez says, state and federal programs also seek to help encourage international trade.
The market's not just for big companies, he says, citing government data showing that companies with fewer than 500 employees represent nearly 98 percent of all exporting companies and are responsible for more than 32 percent of all U.S. exports.
Heintzelman said well over 1,000 people make their living from Martin's products, roughly half of them Martin's employees and the rest independent distributors working up and down the East Coast.
“My encouragement to all small and mid-size companies is to consider exporting,” Lopez-Martinez says. “International markets are looking for innovative products, products that bring not only the quality but also a price point that is attractive.”