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 Feature Industry Articles 
Tuesday, May 30 2017
Measuring Success - Assessing Ports Expansion 'Wins'

By Kurt Nagle, AAPA President and CEO

Success in meeting an organization’s improvement and expansion goals can be interpreted in many ways. The American Association of Port Authorities (AAPA) – the collective and recognized voice of ports throughout the Western Hemisphere – recently asked its member ports to answer the dual questions, “What is the biggest success of your port since the recession?” and “What obstacles did your port overcome to achieve this success?”  

The answers we received from a cross-section of AAPA’s member ports reinforce an industry saying, “If you’ve seen one port, you’ve only seen one port.” No two answers were quite the same, reflecting each port’s unique goals, objectives and obstacles. However, one theme was recurrent…even the toughest challenges are no match for persistence and dedication toward a favorable outcome.

AAPA’s member ports have achieved success in many different areas and collectively tell a success story for which they are deservedly proud. Here are just a few examples, focusing on two areas: Business Development and Infrastructure Improvements.

Success in Business Development
Port Everglades, on Florida’s southeast coast, is one of America’s most diverse seaports. It’s one of the top three cruise ports in the world, among the nation’s most active containerized cargo ports and South Florida’s main seaport for petroleum products, such as gasoline and jet fuel.

In fiscal 2014, Port Everglades exceeded one million TEUs (twenty-foot equivalent shipping containers) for the first time in its history, a milestone port officials attribute to continued growth in existing and new containerized cargo services.

“Changes in the shipping industry were the biggest hurdle to overcome to achieve this landmark, which we have maintained for the subsequent two fiscal years – keeping our containerized cargo over the one million mark for three years in a row.” -- Port Everglades  

Through the economic downturn, Port Everglades moved forward with capital improvements and expansion to ensure future growth in its container traffic. Florida’s government has allocated more than $125.1 million in state grants to the port’s expansion over the next five years.

The Ports of Indiana is a statewide port authority operating two ports on the Ohio River and one on Lake Michigan.  Situated on two major North American freight transportation arteries – the Great Lakes and the Inland Waterway System – Indiana’s three-port system serves among the world’s most productive industrial and agricultural regions.

“The last three years have been the best in our 55-year history, and we set new tonnage records in 2013, 2014, 2015,” the port wrote in answer to AAPA’s “success” questions. “Average annual growth has been 20 percent over the last three years, and we’ve set all-time records for shipments of steel, ethanol, minerals, grain and fertilizer.”

Its biggest obstacles have been the slumping steel industry and environmental pressures on domestic coal usage. The port said the key reasons for its success include diversification of cargoes and complementary business development efforts at the ports.

“A key driver for our business is having 3,000 acres of land located at the Crossroads of America that is served by water. Being able to access global markets by ship and barge from the Midwest provides significant competitive advantages for our customers.”

The port concluded: “We’ve been successful in attracting new businesses like POSCO, the world’s fifth largest steel producer, and millions of dollars of investments in business expansions from companies like Valero, CGB, NLMK, Steel Dynamics, Metals USA and Mill Steel.”

Founded in 1911, the Port of Grays Harbor is Washington State’s second oldest port district. While forest product exports remain important, the port now leads the U.S. in exports of American-grown soybean meal and is the #1 seafood landing point in Washington State. Its diversified cargo mix today includes automobiles, biodiesel and other liquid and dry bulk products.

Port officials cite the unprecedented growth experienced throughout the recession as its biggest success. “Being heavily dependent on exports, we were well positioned to take advantage of the trade opportunities when the dollar weakened during the recession. We experienced a 300 percent growth in tonnage and revenue during the recession by utilizing existing infrastructure, while having plans and permits for additional infrastructure investments in place.”

Citing development of major infrastructure projects, the port has recently built a new liquid bulk berth, performed cargo yard paving and added seven miles of on-dock rail. “The new infrastructure allowed us to enter two new markets, roll-on/roll-off and liquid bulk, and double the size of our existing agricultural products business,” said a port spokesperson. “The 300 percent growth in tonnage and revenue also presented some real challenges, creating a ‘new normal’ operating environment.”

The Cleveland-Cuyahoga Port Authority is Cuyahoga County, Ohio’s only local government agency whose sole mission is to spur job creation and economic vitality. The port is an economic engine for the Cleveland community, a key to Northeast Ohio’s global competitiveness and an important partner in building Cuyahoga County’s future.

Its primary objective has been to grow and diversify its cargo base, which it’s done by starting up the Cleveland-Europe Express (CEE), a bi-weekly scheduled liner service direct to Antwerp, and by growing its traditional trade. Consequently, the port’s general cargo volume has grown at a 10 percent compound rate for the last five years. The CEE is the only liner service for containerized and breakbulk cargo serving the Great Lakes.  

According to the port, the Great Lakes/St. Lawrence Seaway routing holds great potential to better serve North America’s heartland, but trade is impeded by a host of government policies and practices that create competitive disadvantages and badly needed reform. Therefore, the port made the decision to start a new ocean service from scratch, starting with the market research and service design, through chartering a ship, soliciting a new terminal operator, equipping the terminal with cranes and equipment, setting up cargo inspection with Customs and Border Protection, marketing to shippers and now transitioning the service to the private operator, which, according to a spokesperson, “is all rather unprecedented for a port authority.”

The Jacksonville Port Authority (JAXPORT), located in the heart of the South Atlantic coast in Northeast Florida, is a full-service, international trade seaport situated at the crossroads of the nation’s rail and highway network.  It owns, maintains and markets three cargo terminals, a cruise terminal and an intermodal rail terminal along the St. Johns River.

In 2016, JAXPORT marked a record-setting year for containerized cargo. The Asian container trade, the fastest growing segment of JAXPORT’s container business, grew nearly 20 percent over the prior year. The port also recorded double-digit growth in automobile imports, up 19 percent, in which more than 636,000 vehicles moved through its facilities, making it one of the nation’s busiest ports for vehicle handling.

“These successes are a direct result of strong business development efforts, long-term and successful relationships with tenants and shippers, as well as award-winning customer service through the supply chain." -- JAXPORT

Success in Infrastructure Development
Port Saint John, in New Brunswick, is Canada’s third-largest port by tonnage and has a diverse cargo base, including dry and liquid bulk, breakbulk, containers, and cruise. Its biggest success has been achieving government funding support for the CDN$205 million, seven-year modernization project for its West Side Terminals, and partnering with DP World to become that location’s terminal operator for 30 years, which began in January 2017.

“We announced our intentions publically in January, although we worked internally and with our stakeholder community on the project concept from 2011 onward,” said a port official.  “Success is evident, particularly from July 2016 onward, when the moment caught with investment by both public and private sectors.”

The path to achieving success and support for the West Side Modernization Project included a targeted five-year plan that involved many individuals in the port, from business development and marketing to engineering, operations and planning, and included significant government relations and stakeholder and community engagement work.   

Southern California’s Port of San Diego is the fourth largest of California’s 11 ports. It oversees two marine cargo terminals, two cruise ship terminals, 20 public parks, the Harbor Police Department and the leases of hundreds of tenant businesses around San Diego Bay.

Investing in infrastructure is always important, and the Port of San Diego used the slowdown in activity from the economic downturn to work on research and strategic planning. When the recession ended, it was positioned to modernize its cargo facilities based on best practices and industry needs.

“The port has successfully moved forward a proposal to redevelop our main marine terminal to maximize the terminal’s cargo potential, create additional well-paying jobs and increase the overall economic impact the port’s maritime trade industry has on the San Diego region,” said a port spokesperson.

In late 2015, the port was awarded $10 million by the U.S. Department of Transportation’s TIGER program for this project. The port anticipates starting construction this summer.

“We had to overcome many obstacles, including a lack of awareness among the public about the economic importance of cargo handling to our region. We also had to overcome the significant funding requirement, which is why the federal grant is so important. We will continue to work collaboratively with surrounding communities to achieve understanding, buy-in for a plan to mitigate impacts, and public support for this regional project,” said the port.

Already one of Chile's largest, the Port of Valparaíso is still in expansion mode. Over the past decade, and especially during the last five years, it has experienced some major successes. One of the biggest has been consolidation of its logistics model, which involves coordinating operations between its terminals and the extended logistics and support area (Zona de Extensión y Apoyo Logístico, or ZEAL), located uphill from the city. This has allowed the port to handle three million more tons of cargo than projected early in the bid process while also reducing costs by US$52 million annually, lowering ground transportation wait times by 70 percent, and preventing 500,000 truck moves per year through city streets.

This system has received several awards, as well as the recognition from entities such as the Organization of Economic Cooperation and Development (OECD), International Association of Cities and Ports (IACP), and the Organization of American States (OAS). It was further strengthened in 2014 with the Port Community System (PCS) Port Logistics System, under the Port Logistics System, or Silogport... the first of its kind created in Chile.

“Considering that the implementation of this system was a radical shift in the port’s operating model, one of the major challenges was to convince users and overall logistics community (auto terminals, exporters, land transportation providers, customs agents and operators, among others) about the benefits of this new system. This led to the creation of a set of service attributes, which have guaranteed its success to date.”  -- Port of Valparaíso

The Port of Vancouver USA, located on the upper deep-draft portion of the Columbia River in Southwest Washington State, is an economic engine for the entire Southwest Washington region. The port provides quality jobs, international trade connections, a strong industrial land base and economic stability by producing revenue to the state and local services.

The West Vancouver Freight Access Project, which began in 2007 and expected to be complete this year, is the largest capital project in the port’s history. The project was designed to reduce rail traffic congestion by 40 percent, lowering costs for U.S. manufacturers and farmers, making them more competitive in global markets.

This project required adding new infrastructure through existing developed areas including existing rail lines, active industrial property and land owned by other entities. Success of the project required partnership with local governments, BNSF Railway and existing port tenants. The project required creative engineering and construction due to its location along the Columbia River and underneath the existing Columbia River rail bridge, built in 1908.

While inspiring, these are just a few of the many examples of port success stories that AAPA collected. They reinforce the results of a survey the association conducted in 2016, in which U.S. ports identified nearly $155 billion in infrastructure investments they and their private sector partners plan to make through 2020 to improve freight transportation and cargo handling.

To keep the economy moving and help companies compete in world markets, the federal government must make investments today to build America’s 21st century seaport infrastructure. Currently, freight connections to U.S. ports are falling behind 21st century needs, putting jobs at risk and reducing America’s global competitiveness.

In the U.S. and throughout the Americas, it’s vital that investments in transportation infrastructure be recognized as an effective utilization of limited government resources, paying dividends through increased trade, jobs and tax revenues.

About the Author:
American Association of Port Authorities (AAPA) President/CEO Kurt Nagle has a master’s degree in economics and over 30 years experience in Washington, DC, related to seaports and international trade. Prior to joining AAPA in 1985, he was Director of International Trade for the National Coal Association and Assistant Secretary for the Coal Exporters Association.

Founded in 1912, the American Association of Port Authorities is a trade association representing more than 150 public port authorities in the United States, Canada, the Caribbean and Latin America. In addition to ports, Association members include more than 335 sustaining and associate members representing firms and individuals with an interest in the seaports of the Western Hemisphere. For more information, call Aaron Ellis at (703) 684-5700.

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