SEA ISLAND — The 45th annual Georgia Foreign Trade Conference kicked off its first day Monday with speaker after speaker stressing the same theme: The need to upgrade America’s ports is becoming critical.
“Our harbors and ports have been significantly neglected for a long time,” said Lt. Gen. Thomas P. Bostick, Chief of Engineers and Commanding General of the U.S. Army Corps of Engineers.
“While we’re getting traction in our effort to focus attention on our ports and harbors, the real challenge remains funding,” he told several hundred senior-level shippers and maritime executives from across North America assembled in the ballroom of The Cloister resort.
Bostick said the Corps is authorized for about $60 billion in projects each year, many of which involve ports, but only about $2 billion in funding is appropriated.
“We don’t need to wait for a disaster — whether it’s natural or economic — to get our waterways in better shape,” he said.
As for Savannah’s harbor deepening project, Bostick was optimistic.
“It’s still going to take a lot of teamwork, but we are very, very close to where we need to be,” he said, adding that the Corps stands ready to move once the project receives the necessary funding.
U.S. Sen. Johnny Isakson and U.S. Rep. Jack Kingston agreed that all eyes would be on the White House budget request for fiscal 2014, due from the president in the next few weeks.
“The Savannah Harbor Expansion Project was authorized by Congress with a budget of $240 million in 1999,” Isakson said. “Now, 14 years later, one of the final steps will be to go back to Congress to have the project authorized at the current cost of $650 million.
“But, if the president puts funding in this upcoming budget, that won’t be necessary.”
With the Savannah Harbor project, Kingston said, everybody wins.
“It’s hard to argue with a benefit-to-cost ratio of $5.50 for every dollar spent,” he said.
U.S. ports and their respective landside connections move 90 percent of America’s cargo, said maritime economist Bill Ralph of R.K. Johns and Associates.
“By 2017, world trade will reach more than 188 millions TEUs,” Ralph said. “And, by the early 2020s, we can expect to see ships with a capacity of 10,000 TEUs or more calling on the U.S. East Coast.”
A TEU is the equivalent of a 20-foot container.
“We are a maritime nation,” he said. “Ports, harbors and waterways need to be more vocal and visible to get the investment they need.”
Focus on chilled cargo
At a later break-out session, carriers and shippers discussed issues involving one of the fastest-growing segments of the industry — refrigerated containers.
Participants on the carrier side were Wolfgang Freese, president of Hapag-Lloyd Americas; Frank Baragona, president of CMA CGM America; and Bill Woodhour, vice-president of trade and marketing for North American sales for Maersk Lines. Representing cargo shippers were Ulises Carrillo, vice president of global logistics for Dole Food Co.; and Fred Cox, manager of international logistics for JBS USA, representing the largest beef, second-largest poultry and third-largest pork producers in the U.S.
Conventional refrigerated cargo ships continue to lose market share to refrigerated containers, Freese said, adding that the refrigerated container trade is expected to grow 22 percent worldwide from 2012 to 2017, with U.S. growth even higher at 28 percent.
“We’ve seen a technical revolution in the new refrigerated containers,” he said. “But that comes with a price.”
Freese estimated that one new 40-foot refrigerated container costs $18,000, while a 40-foot standard container costs about $4,000.
Baragona, whose shipping line represents the third-largest fleet of refrigerated containers in the world, said the cost of the container is the tip of the iceberg.
“Huge imbalances in exports compared to imports result in very high repositioning costs,” he said.
Nevertheless, more than 23 million tons of perishable food cargo is transported by sea, he said, most of it in refrigerated containers.
Maersk’s Woodhour said costs have prompted his company to introduce a new rate structure this year to ensure a sustainable future for that part of the business.
“There’s no doubt it’s a great and growing segment,” Woodhour said. “But it’s also extremely expensive.”
Not surprisingly, Carrillo and Cox shared a different take on the issue, putting their focus on service and communication while acknowledging that pricing is a major player.
Carriers, for example, need to be sure they are delivering consistent and reliable schedules and transit times, Carrillo said.
“It’s not all about price,” Cox added. “If rates go up, service has to follow.
“Time and again, we see customers picking a carrier based on service rather than price.”
BREAKOUT
45TH ANNUAL GFTC
The 45th annual Georgia Foreign Trade Conference continues today with Georgia Ports Authority Executive Director Curtis Foltz providing an update on GPA’s sustainability initiatives, followed by a round table on how the industry implements environmental improvements. A second round table will focus on what top executives consider when making strategic location decisions.