America's seaports: trade winds blowing fair
The nation's seaports are riding a rising tide of international trade. From New york to Norfolk, from New Orleans to Galveston, and from Los Angeles to Seattle, seaports are buzzing with increased activity as the nation imports Japanese autos, West German steel, and foreign oil and exports grain, coal, and machinery. Some 90 percent of all imports and exports move through the seaports.
President Carter, in his State of the Union message this year, noted that 1 of every 7 US jobs in manufacturing now depends "upon our export performance," and that the country's exports of grains and manufactured items grew "by an unparalleled $35 billion last year, reaching a level of over $180 billion."
Further underscoring the importance of the nation's ports is a variety of recent Department of Commerce statistics: The port industry in 1977 (the latest year for which complete national figures are available) contributed about $30 billion to the nation's gross national product, added about $20 billion in personal income, and brought in federal taxes of $10 billion and state and local taxes of $4 billion. The industry employed more than 1 million people and handled a total of nearly 2 billion tons of cargo last year. The total growth rate in foreign and domestic tonnage handled over the past four years has been about 3.7 percent per year. Over the next 20 years, the Commerce Department estimates, the volume of US export-import bulk tonnage will more than double, to more than 600 million tons annually, or approaching 2 million tons per day.
Probably the greatest development for the seaports was the advent of containerization. This allowed companies to ship small items, such as electronic goods, in truck trailers that could be prepacked. It helped cut pilferage, loading and unloading time, and -- as a consequence -- the cost of shipping.
It also resulted in ports spending large amounts of money on new containerization facilities, making the port industry capital-intensive instead of labor-intensive. In the Port of New York alone, notes Clifford B. O'Hara, director of port commerce, containerization's share of port traffic has risen from virtually zero in 1966 to 75 to 80 percent today.
This surge has honed the ports' natural competitive nature. For Example, Baltimore, watching New York capture a greater share of the container market because of major capital expenditures 10 years ago, has embarked on an ambitious expansion program to try to catch up.
New Orleans, the nation's second-largest port, has also been spending heavily to upgrade its facilities after it fell behind other ports in containerization. Many other Southern ports are in the process of upgrading their facilities.
In the view of one Commerce Department official, the Southeastern and Southwestern ports will show the greatest growth, both because of rapid population growth in those areas and because of their large spending on containerization. Lower labor costs in these ports will be a significant factor in their growth, despite the fact that seaports have become capital intensive rather than labor intensive.
A key factor behind this change is the importance of efficient cargo handling on the docks to ensure that cost-conscious shippers can get their vessels to spend more time on the seas and less time at the docks.
The surge in shipping has also stimulated massive new investment in port facilities. According to a Department of Commerce survey, investment between 1973 and 1978 came to $1.68 billion, compared with $3.8 billion in the much longer period from 1946 to 1973. And expenditures through 1983 are expected to total about $3.371 billion.
Accompanying this growth, the ports have been facing a raft of problems. These include:
Labor issues. Despite major federal efforts at times to "clean up" the waterfront, organized crime has maintained a sizable influence on the unions that make up the bulk of the labor force on the docks. Anthony J. Tozzoli, director of marine terminals for the Port Authority of New York, says it is too early to tell if the "character" of the International Longshoreman's Union in New York has improved since the conviction last year of Anthony Scotto, its leader, on labor racketeering charges.
Another important labor problem, insurance executives point out, is the large number of workmen's-compensation claims filed by the maritime unions, particularly those in New York. To insure stevedores in the Port of New York costs $86 per $100 to payroll, compared with $32 per $100 of payroll on the Gulf coast.
According to John Buzbee, a director of Marsh & McLennan, the nation's largest insurance broker, it is nearly impossible to find an insurance company that wants to take the business, regardless of the premium. The result, he says , is that a lot of companies will not be able to stay in business in New York.
Dredging. There are uncertainties surrounding some 15 large dredging projects because of environmental concerns over where the "spoil," or dredged material -- some of which the Environmental Protection Agency says might be potentially hazardous -- will be dumped.
US Rep. John M. Murphy (D) of New York, chairman of the House Merchant Marine and Fisheries Committee, recently stated during a hearing that it is "critical" that this issue be resolved soon or many of the nation's ports will face a disruption in their traffic patterns.
This nearly happened this year when maintenance dredging in New York Harbor had been postponed because of the presence of PCBs, a chemical believed to be carcinogenic, in the bottom of the harbor. As a result, the Queen Elizabeth II was unable to make its normal call in New York Harbor. Only an emergency dredging permitted the luxury cruise liner to tie up at the city's passenger terminal. Still unresolved is the question of what to do with the spoil.
In hearings in Washington in March and May, scientific opinion seemed divided over the advisability of continued dredging of the harbor.
An EPA official, Dr. Frank Wilkes, stated that if the PCBs were dumped in the ocean after dredging it could represent "a potential health hazard."
However, other scientists said that the chemicals did not appear to enter the aquatic food chain and that dumping them would not constitute a danger if they were capped with a covering of sand.
Cost sharing. One of the most controversial issues for the seaports is the question of cost sharing. The Carter administration, in its review of the nation's water policy, decided to include seaports in the category of projects that must put up locally 5 percent of the cost of any new projects.
Since big dredging projects are expensive -- often running $100 million to $ 200 million -- the new cost rules are being challenged by the ports. Herbert Haar Jr., chairman of the American Association of Port Authorities' ad hoc committee on dredging, contends that the ports already foot 15 to 20 percent of the cost of large dredging projects, since they must supply right-of-way access to the ports, as well as a place to dump the spoil.
With some 10 dredging projects under consideration around the country, Mr. Haar estimates that local ports or communities would have to come up with about
He argues that when ports are developed it serves the national interest. In New Orleans, for example, where Mr. Haar is associate port director, he says 80 percent of all the traffic is national in nature, not local or regional.
He also says that larger ports would stand to benefit over small ports, since smaller ones would be unable to afford the 5 percent local funding, which must be contributed before the project's start-up.
It is the belief of the Carter administration that the benefits of navigational projects chiefly accrue to the local areas where they are done. It is known that government officials, particularly in the Office of Management & Budget, believe the 5 percent requirement gives a local community a chance to prove that it really needs a project. Otherwise, government officials argue, a community would accept money every time it was offered it.
Federal standards. The ports have also been affected by the proliferation of federal rules and regulartions. The Maritime Administration, an arm of the Commerce Department, made a study in 1978 on the effects of the federal rules and concluded that "the primary effect of these federal standards has been to place additional financial obligations on local public ports that are nonrevenue producing, but are required by law for social or environmental reasons." Nationally, the survey found, port expenditures to meet federal standards represented 8 percent of annual capital budgets and 6 percent of available operating funds of local public ports.
The Merchant Marine and Fisheries Committee has also asked the General Accounting Office to study the effect of federal rules on the ports, and according to one staff member of the committee, the preliminary report by the GAO indicates that "the federal government is not 'cutting' it."
Port activities are considered important business in Washington. In fact, the Port Caucus, made up of various congressmen who have an interest in seaport affairs, is probably one of the largest caucuses in Congress, with 134 members. The seaports also have their full-time lobby in Washington in the American Association of Port Authorities.
Ports have also discovered that Washington is full of programs that can be beneficial to port development. One Washington insider notes that an aggressive port director can apply for Economic Development Agency funds, Urban Development Action Grants from the Department of Housing and Urban Development, a planning grant under the Coastal Zone Management Act, dredging money from the house Public Works and Transportation Committee, and state participation funds. "A guy who knows the programs can get ecomic stimulus in a big way," he concludes.
The future is bright for the nation's ports, port officials believe, despite their hassles with the federal government. A Massachusetts Institute of Technology study, for example, says world coal production will triple by the year 2000. The Department of Energy estimates that US coal exports could amount to 100 million tons annually by 1990, adding an additional $5 billion on to the US balance of payments. Most of this coal would be shipped through the ports.
Grain traffic could also expand, despite the coolness that now exists between the United States and the Soviet Union -- one of the chief buyers of US grain. The Department of Agriculture is estimating that US grain exports will expand to 460 million tons by the year 2000, as against about 67.8 million tons in 1977. At $160 per ton, this could add another $80 billion to the American balance of payments.
To handle these increased orders for coal and grain as well as compete with other countries, ports say they have to deepen the channels leading to the docks. According to Mr. Haar, a deepening of the Mississippi River channel to let in ships with 50-foot drafts could reduce the costs exporting grain by $3.50 a ton. "This could make the difference between the US vs. Australia or Argentina getting a big order," he says. In fact, for each inch of additional draft over 40 feet, he figures, a ship can add another 250 tons of cargo. If one ship cn add an extra 30,000 tons of grain, it can carry an extra $7 million in cargo, cutting down on freight expenses.