New Orleans Hitches Future To Latin American Trade
After losing ground to Miami, port aims to revive as Southern hub
New Orleans Mayor Marc Morial looks south and sees a vast untapped gold mine that could provide a rich bonanza for the city and state of Louisiana.
The "mine" is the expanding Latin American economy - from Mexico to the southern tip of Chile. The main tool for excavating the treasure lies along 24 miles of the Mississippi River - the Port of New Orleans.
Trade with Latin America "could be the true engine of the 21st century economy of this city and this region," Mr. Morial says. "The port is an area where New Orleans has a strategic geographical advantage."
Morial and others here believe Latin America can have an impact on Louisiana in the 1990s similar to the effect Pacific Rim trade had on the Pacific Northwest in the 1980s. They view New Orleans as a gateway to this growing region, and they'll try to make the case for that distinction next week, when 34 finance ministers from Latin American countries convene here for the Summit of the Americas, May 17-18.
"We'll have an opportunity to show them what we have and what we can do," says Timothy Ryan, dean of the College of Business Administration at the University of New Orleans. "If we do it right it will be a positive sign to that part of the world that New Orleans is very much interested in their business."
Port authorities, however, have already been successful at carving out a Latin American niche, importing products such as coffee, rubber, wood, and steel. Trade with Latin America now accounts for about one-third of the port's total cargo volume, up from 23 percent 10 years ago. In 1995, trade with Central and South America grew 20 percent, while the nation's overall trade with Latin America grew 14 percent.
The increases are good news for a port that was once the leader in trade to Latin America, a position it lost to Miami in the mid-1960s.
Now efforts are under way to regain that status or at least chisel out a larger share of the Latin American market.
New Orleans lost its edge for several reasons. Trade from Cuba shifted to Miami when a growing Cuban community there became active in brokering trade and establishing banks. Also, in the late 1970s shipping companies grew more sophisticated at using rail as well as sea routes. Instead of docking at Houston and New Orleans, for example, ships stopped at other ports and sent their cargo by rail. And political and debt crises in Latin American nations interrupted trade with those countries.
"The port went from having guaranteed flows of business to having to compete," says Ron Brinson, chief executive officer of the Port of New Orleans. "It wasn't really ready."
THE port was technologically behind and financially in the red when Mr. Brinson took the helm in 1986. He launched $215 million in capital improvements, including new wharves. Antiquated grain-storage silos were modernized to sort and hold coffee beans that are brought in by container ships. The silos have helped transform operations for the coffee industry, which not long ago imported beans in burlap bags on pallets.
The port plans to pour in another $172 million over the next five years, including the construction of a $40 million cold-storage facility aimed at capturing a share of Latin America's fresh-fruit market. A special office of Latin American and Caribbean affairs - started eight years ago - is aggressively courting business.
As a result, the port has gone from losing money to making money. There are 300 employees versus 600 in the mid-'80s. Operating costs are less "because we run it like a business, and we've become more efficient," Brinson says. It vies with Houston for the No. 2 spot in the Gulf region.
Brinson and others say Latin America is ripe with opportunity as it sheds statist governments and becomes more industrialized.
"These countries are going to grow rapidly over the next 10 to 20 years, and they're going to require goods they can't produce in large numbers," Mr. Ryan says.
Despite its enviable facilities - the longest linear port in the world, serviced by six railroad lines - New Orleans still may have trouble passing Miami in Latin American trade, he says. Miami's "population and economic base is larger, so a lot of the goods that come in stay there, and that makes it cheaper to ship it through there."
Brinson remains optimistic. "When Cuba opens up ... and Mexico gets its act together, these will be cathartic events that will bring the hemisphere together. We'll be ready."