Ports & Terminals

Optimism, concerns expressed at AAPA’s Tampa gathering

While showing optimism in general, a diverse group of ocean transportation leaders speaking at the American Association of Port Authorities’ Planning for Shifting Trade Conference have some genuine concerns as well.

“Pretty optimistic” was the two-word outlook for 2018 given by both Bill Rooney, vice president of strategic development at leading ocean freight forwarder Kuehne + Nagel Inc., and Jeroen Brenters, South branch vice president of independent ocean carrier firm Zim USA.

But both also indicated apprehensions, as did other speakers on the same panel and presenters in additional sessions at the Jan. 30-31 gathering, hosted by Port Tampa Bay.

“We’re encouraged, because global growth is pretty strong just about everywhere in the world,” said industry veteran Rooney, who went on to cite concerns including the “real problem,” especially in the U.S. Southeast, of reduced trucking capacity brought on by the recently implemented federal electronic logging mandate for drivers; continuing efforts of ocean carriers to extricate their companies from chassis provisioning; and lagging port productivity.

Rooney said beneficial cargo owners and other buyers of services, such as Kuehne + Nagel, are now seeking direct relationships with terminal operators “for their own self defense” to address issues at ports.

Challenges are being posed by new technologies, increased vessel sizes and greater requirements for supply chain velocity, according to Rooney, who said the longer transit times – with fewer direct port calls and more relays – that go along with the bigger ships operated by consolidated carrier entities squarely conflict with the demand for speed. He nonetheless predicted a drop in ocean rates to follow February’s celebration of Chinese New Year.

Zim’s Brenters, however, commented, from the ocean carrier perspective, “We need the rates to go up.”

Although a 17 percent rebound in ocean rates was enjoyed industrywide by container lines in 2017, Brenters said carriers must further charge more to cover rising fixed expenses such as bunker fuel costs and vessel chartering rates.

While Brenters said Zim offers many BCOs “a way to diversify risk as the fourth option” to the three major carrier alliances, he said he remains concerned about the impacts of newly ordered megaships with capacities of as many as 22,000 twenty-foot-equivalent units and cascading of not-quite-so-large but still super-big vessels to ports that may not be equipped to handle the whopping bursts of container flow they deliver.

Doug Wray, vice president for commercial national account management for No. 1 U.S. terminal operator and stevedore Ports America, said that, whereas he sees 2018 being “a good solid year overall,” he views the continuing consolidation of ocean carriers as a challenge and pondered who will bear the cost of infrastructure for handling larger vessels. He said port terminals must expand gate hours and implement further automated systems, and he added that he anticipates the fallout of three or four more container lines within the next 24 to 36 months.

Ceres Terminals Inc.’s director of strategic planning, Doug Hansen, said he sees “a positive 2018,” but commented, “Consolidation is a concern, not a worry, but it can really impact a port.”

Speaking on the same panel, two top port executives also expressed optimism – and concerns.

Will Friedman, president and chief executive officer of the Cleveland-Cuyahoga County Port Authority and chairman-elect of AAPA’s U.S. delegation, said he is particularly troubled by the prospects of tariffs on import steel, the leading commodity at the Port of Cleveland, while diversification efforts at the Lake Erie port continue.

AAPA’s chairman of the board, Steve Cernak, chief executive and port director of Port Everglades, in South Florida’s Broward County, said he sees “steady performance, perhaps some slight growth” in 2018, which he observed is already off to a good start, but he remarked, “It’s a real challenge on us all to meet the infrastructure needs.”

Another Florida seaport head, A. Paul Anderson, president and chief executive officer of conference host Port Tampa Bay, in his opening remarks, pointed to the importance of port leaders ensuring that makers of laws and policies are aware of the needs of ports.

A. Paul Anderson, president and chief operating officer of Port Tampa Bay, says the port industry faces significant political challenges. (Photo by Paul Scott Abbott, AJOT)
A. Paul Anderson, president and chief operating officer of Port Tampa Bay, says the port industry faces significant political challenges. (Photo by Paul Scott Abbott, AJOT)

“Political challenges are significant, not just this year, but every year,” Anderson said, noting that port leaders have a more difficult job in influencing decisions than counterparts in more widely visible transport modes.

Citing disruptions caused in Florida in September by Hurricane Irma, Anderson said, “People don’t realize how important ports are until they stop receiving goods.”

After hearing the chairman of AAPA’s Canadian delegation, Denis Caron, president and chief executive officer of New Brunswick’s Belladune Port Authority, detail Canada’s aggressive port infrastructure program, Edward L. Mortimer, executive director for transportation infrastructure at the U.S. Chamber of Commerce, quipped, “I wish I could tell you our government had a major plan.”

Whereas U.S. President Donald Trump, a few hours after Mortimer spoke, vaguely referenced a proposed $1.5 trillion U.S. infrastructure plan in his State of the Union address, Mortimer noted that an infrastructure bill was yet to be introduced in Congress, even though Trump had promised to offer one in his first 100 days in office.

Edward L. Mortimer, executive director for transportation infrastructure at the U.S. Chamber of Commerce, cautions that the United States is in danger of losing its leadership position in world trade. (Photo by Paul Scott Abbott, AJOT)
Edward L. Mortimer, executive director for transportation infrastructure at the U.S. Chamber of Commerce, cautions that the United States is in danger of losing its leadership position in world trade. (Photo by Paul Scott Abbott, AJOT)

Mortimer said the United States must swiftly address its $2.5 trillion infrastructure deficit or else it will fall from its role as the leader in world trade.

“We now are operating on 20th century infrastructure in a 21st century economy,” Mortimer said, adding that the full benefits of recently enacted tax reform can’t be realized without massive infrastructure improvements.

Mortimer said the U.S. Chamber’s four-point infrastructure proposal calls for raising the federal excise tax on fuels for the first time since 1993, leveraging federal money (including that in the Harbor Maintenance Trust Fund) to advance much-needed projects, streamlining permitting processes and expanding the workforce to perform the work.

AAPA’s president and chief executive officer, Kurt Nagle, said port authorities and private-sector partners have $155 billion poised for capital investments between 2017 and 2022, but, while some aspects of the new tax reform may help spur port projects, $66 billion in additional federal support is necessary to accomplish the most critical projects in and around U.S. ports.

Among conference speakers calling for the private sector to be further engaged in addressing port infrastructure was Franc J. Pigna, managing director of Aegir Port Property Advisers, a Coral Gables, Florida-based consultancy, who said, “The most radical solution that is evolving is the privatizing of the port authority itself.”

Paul Scott Abbott
Paul Scott Abbott

GULF CORRESPONDENT

Contact Author

For more than a quarter of a century, Paul Scott Abbott has been writing and shooting images for the American Journal of Transportation, applying four decades of experience as an award-winning journalist.
A graduate of Northwestern University’s Medill School of Journalism, with a master’s magna cum laude from Trinity Evangelical Divinity School, Abbott has served as president of chapters of the Propeller Club of the United States, Florida Public Relations Association and Society of Professional Journalists.
Abbott honed his skills on several daily newspapers, including The Cincinnati Enquirer, The Richmond (Va.) News Leader, Albuquerque Journal and (South Florida) Sun-Sentinel, and was editor and publisher of The County Line, a weekly newspaper he founded in suburban Richmond, Va.
A native Chicagoan, he is a member of American Mensa and an ever-optimistic fan of the Chicago Cubs.

© Copyright 1999–2024 American Journal of Transportation. All Rights Reserved