Port must look to marketplace, public to flourish
BY RON BRINSON
Predictably, port privatization is a broadening concept — and gaining traction in some interesting places. An Illinois-based firm soon will present a multibillion-dollar offer for operating rights to Virginia's state-owned cargo terminals.
Journal of Commerce editor Joe Bonney reported last week: "Virginia is among the most attractive U.S. port franchises for potential private investors. It has a 50-foot channel, good intermodal connections, room for expansion and has benefited from years of sound management. Once CenterPoint's offer is on the table, don't be surprised if others follow."
We might consider how the private sector views the Port of Charleston's real"value" these days.
There's no done deal in Virginia, but it seems Gov. Mark Sanford is right: "Privatization" strategies seem inevitable given the massive capital requirements of sustaining a modern port complex. And while Virginia's government prepares to entertain a bold new approach to port operations, the discourse in South Carolina drifts past the port system's real needs. It's become a gnarly intramural political fight about gubernatorial versus legislative controls. The debate is hammering South Carolina's marketplace image as a no-nonsense, no-politics port system.
Maybe it's time the governor and the legislature declare victory, shut down their edgy arguments — and demand the S.C. State Ports Authority do its job. Every issue that concerns the governor and legislative leaders can and should have been handled by the Authority. That includes testing of various privatization and operations models, and creating an advisory panel of port system users and maritime business operators. To a prospective bidder or a prospective user, South Carolina's port system should be market-ready. Clearly, it is not. For Charleston and Savannah, there's been a dramatic inversion of volumes and market shares. Several years ago, in a high demand market, Charleston ranked second among East Coast container ports. In 2008, in a low demand market, that ranking slipped to fourth.
Last year, Savannah maintained its second place East Coast ranking and fourth nationally, and its market share actually grew to 17.6 per cent.
Charleston's dropped to 11.1 per cent. That mouthful of statistics warns that resolving the Port of Charleston's real competitive weaknesses should be the state policy imperative. When carrier-driven container volumes are up, Charleston overachieves. When those demands decline, Charleston struggles to compete. Why?
The reasons are many and include inferior rail rates and Charleston's inability to foster efficiencies and economies at three separate terminals.In downturn markets, saving money delivering containers through another port means ships go there. Savannah's strengths too often are Charleston's weaknesses. The Ports Authority should document these realities, inform the governor, the legislature and the public, and seek help when solutions are beyond its control. The SPA board should welcome help from its allied maritime business industry, and the public. But this Board governs in virtual anonymity. Who among us can name all nine SPA members?
Most "public" meetings are held in the Authority's pint-sized board room. The great elixir for restoring confidence and credibility is transparency — the kind that exposes thoughtful citizens doing their best to achieve lofty performance goals. The Authority should encourage the public and its maritime business partners to attend and participate in its meetings. Conference rooms at Gaillard Auditorium or the North Charleston Convention Center would seem ideal meeting venues. Web-casting and broadcasting via statewide cable networks are proven amplifiers of public accommodation for port authorities meetings. Transparency's payoff is public support and credibility — and a port system that reflects public commitment.
Market forces have changed and privatization may be gaining traction — the Authority should reevaluate its Navy yard terminal project. At $800 million, this terminal would likely be the nation's most expensive terminal development project ever.
Many industry observers, including this writer, strongly supported the project as the port's one-and-only expansion option. But given the ultimate pricetag, the port's inherent competitive weaknesses should be resolved as an investment predicate.
Is it prudent to proceed without a clarified rail plan that assures equal competitive access for both trunk line railroads serving the neck area? Does the Jasper County project portend any effects on the market demands for this terminal? If privatization is a long-term policy prospect, how would the Navy yard terminal be priced in transition to a privatization model?
The Authority could risk getting pennies on the dollar. (There's precedent for a strategic review. In 1975, Gov. James B. Edwards ordered a comprehensive review of the Authority's Wando terminal project. The SPA cooperated fully.)
The Authority should clean up its relationship with North Charleston. Mayor Keith Summey clearly believes the Authority has balked at plans to develop Veterans terminal at the old Navy yard as a non-containership multi-purpose terminal. This perceived breach of expectations could lead to legislative initiatives to put North Charleston in the port terminal business.
To their credit, legislative leaders have rushed to the Ports Authority's assistance. But there's a baby in the bath water, and the politically-heated debate is souring South Carolina's image as a strictly-business port system competitor. The Ports Authority's strategic "rescue" is best formulated by market requirements. The Authority can provide the superior knowledge for this process and its governing board should now diligently assume that role.
Ron Brinson served as president/CEO of the American Association of Port Authorities from 1979-86 and president/CEO of the Port of New Orleans from 1986-2003. In 1974-1975, he served as special assistant to S.C. Gov. James B. Edwards.
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smp (anonymous) says...
The authority can't do its job because the executives at the port are corrupt and incompetent. Until they are gone no amount of tinkering with the form or business model will make the port successful.
March 14, 2009 at 9:19 a.m. ( permalink | suggest removal )
truthseeker (anonymous) says...
It is refreshing to finally see Ron Brinson cave on the navy base project. Common sense has finally arrived.
The SPA's volume was down a whopping 29.5% in February versus a year ago. This has failed to be reported by any Charleston newspaper or the SPA.
The Port of Virginia is going to receive a multi BILLION dollar deal from private developers for their port operations? HOLY COW - let's do that - that is no brainer- let's quit spending state money on port access roads etc. and turn our port operations into a positive cash flow operation while still handling the same amount of containers.
It is difficult to tell what Ron really believes should happen at our port. In one article he thinks Groseclose is doing a great job - in the next one not so hot of a job. In one article the navy base terminal is something we absolutely have to do regardless of the price and regardless of no viable rail option and today we should rethink it because if we spend 800 million dollars it might only really be worth peanuts.
There is no coherent voice on port strategy in South Carolina today.
March 14, 2009 at 9:59 a.m. ( permalink | suggest removal )
rollnwflo (anonymous) says...
The Jasper terminal, with closer access to I95 and better rail access should be the priority of the SPA. The authority should start thinking like a state agency rather than a Charleston agency. I know none of the SPA execs want to move to Jasper county and have fought this effort with tooth and nail (used the courtroom as well). Tough, they need to do what is best for the state.
March 14, 2009 at 10:34 a.m. ( permalink | suggest removal )
Horratio (anonymous) says...
Well that was intersting. Yeah truthseeker, Brinson flips back and forth so much its like he argues against himself from one editorial to the next.
The SPA executives are arogant, ruthless, and fortounatly for the community, incompetant. But smp, I wouldnt accuse them of being corrupt unless you know something to back it up. Well they do smack of a mini Enron at the state agency level if thats what you mean. I dont think some of the top dogs there were above lies and deceat as a way to get what they wanted. They should clean house. We'll see what the new guy can do. The SPA deserves better but no one can fire them.
Yeah rollnwflo, Jasper would be the best port expansion for SC but there is a powerful good ole boy network that has too much to loose here to allow that to happen. Too bad because Charleston could be a great Niche port but lacks the rail/highway/warehouse infrastucture to ever compete as a mega port and forcing us to do so will ruin our community.
March 15, 2009 at 12:19 a.m. ( permalink | suggest removal )
portster (anonymous) says...
Hey, "Truthseeker", you seem to read what you want to read and you, too. Horatio. I read this three times. Never says the SPA should kill your hated navy yard terminal, just that the SPA should be smart enough to think it through because of what's now happening with privtizing. So what's wrong with that? And look back over the other columns. He blames the legislatutre for making this the only place the SPA couild build. So who's flip-flopping? The main point is the one that the port has to figure out why it's getting its business plate cleaned by Savannah and they should be more open to the industry. Now, except for the fact nobody is calling for the end of the navy terminal yet, what's wrong with that? Come straight. Yall want only that the port be shut down in Charleston.
March 15, 2009 at 11:26 a.m. ( permalink | suggest removal )
jdargonaut (anonymous) says...
The poor people in the neck area are getting the short end of the stick again.
I say just close the darn thing. It is going to add more polution to our air anyway, not counting the increased noise.
Those poor people in the neck area don't deserve that at all.
We need to move industry out of that area. That includes the drug and prostitution industry.
We all need to help those poor picked on folks in the neck area.
Heck if they had there way, they would want the port to open up over near Bees Ferry. That way Mt. Bees Ferry will be able to hide the port operations.
It doesn't matter that there would be some major constuction efforts to be able to get the ships up there. Once that is done we can put our trash on barges and ship it somewhere that will take it.
Those poor people deserve a break.
It isn't their fault they bought property and a house there. It isn't their fault if they want to rent down in that area.
When we all get our stimulus checks that the president is giving us, we should all donate a little for the residents down there.
March 15, 2009 at 12:20 p.m. ( permalink | suggest removal )
jdargonaut (anonymous) says...
Sarcasm free of charge to most and I'll even pay for it for idiocy!
JDA
March 15, 2009 at 12:23 p.m. ( permalink | suggest removal )
truthseeker (anonymous) says...
I see the Virginia port deal could be worth 8.9 billion dollars over 60 years to the state of Virginia.
Portster- if you do not see Mr. Brinson's column as a graceful way to stop supporting building the white elephant navy base terminal , then let's just agree to disagree.
March 15, 2009 at 4:49 p.m. ( permalink | suggest removal )
portster (anonymous) says...
Truthseeker, I see that column as a forceful not graceful way of saying to the SPA Board to take some time and make sure it's right. Makes sense to anybody who READS it. Seems like you'd be cheerleading such comon sense. Who knows, the outcome of a review might be to scrap your hated project. The trick bag is the SPA Bd is probably too proud to take a deep breath like they did in the 1970s with the Wando project. They won't listen to a good old North Charleston man even if he's right. Let's all go to the next meeting and see if they have room for us. We could all lose our anonymity at once. That would be a kick.
March 15, 2009 at 7:27 p.m. ( permalink | suggest removal )
Horratio (anonymous) says...
Well I certainly don't want the port to shut down.
But I also dont want it to double in size here.
Its a great industry with lots of good people who count on it for a great livlihood. But its not without cost. And the bigger it gets, the greater the cost. And we have enough port here now.
And with Maersk,Evergreen, and the economy all slowing down, there is no need for expansion anyway. If there is a need for it in the future than lets put the expansion elsewhere(Jasper) to minimize any further negative impacts here and let the industry who wants it, pay for it.
March 15, 2009 at 10:51 p.m. ( permalink | suggest removal )
dawhetsell (anonymous) says...
Barges are the cheapest transportation. Ship containers to I-77 in Columbia and to Augusta by barges and save $200 to $400 per container to Charlotte and Atlanta. The inland railroad port in Santee is a joke. Why did MAERSK put a new port in Moble?
March 17, 2009 at 9:35 p.m. ( permalink | suggest removal )
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