Napoleon Container Terminal should double cargo traffic

New Orleans CityBusiness, Oct 20, 2003 by Ellen Boyer

Like its namesake, the Napoleon Container Terminal at the Port of New Orleans is set to conquer new ground.

The Port unveiled the 60-acre terminal for the press and maritime industry officials last week. This is really the heart of trade, said Jan Tanner, president of the World Trade Club of Greater New Orleans.

The $101 million terminal should be operating at full capacity by mid-December after four years in the making. The terminal will be able to hold 400,000 containers, about 100,000 containers more than the Port took in during fiscal year 2003, when it moved 310,243 containers.

Port officials have long said capacity had to maintain the average level of 300,000 annual containers and get more cargo coming in. Now that the Port has increased capacity, officials are literally knocking on the doors of NYK Line, Evergreen Line, Hanjin Shipping and other shipping lines in Asia, said Gary LaGrange, executive director.

The Port's main goal is to achieve up to a 5% annual growth in cargo counts, said David Wagner, chief operating officer.

Keeping customers we have happy is very crucial in expanding, said Larry Collins, director of international trade development for the state Department of Economic Development. The Port will have a huge product to sell. We all know that container cargo generates more jobs than bulk cargo.

The Port needs a boost after suffering the second of two hurricanes in five years in 1999, Wagner said. The storms kept ships from reaching the France Road terminal and were diverted to Houston and other ports, Wagner said. Some never returned.

That translated into lost business as shipping lines reconsidered their long-term future at the Port, he said.

Other Gulf Coast ports have the same idea. New container facilities for Gulf seaports account for the largest share of capital projects among 51 American ports analyzed in a study by New York- based Fitch Ratings' October U.S. Seaports: Trade, Growth and Capital Plans. Of the roughly $15 billion in capital projects going on at those ports, Gulf port container facilities account for $3.8 billion.

The trend is dramatically shifting to container usage, said James Gilliland, analyst and director of Fitch Ratings. It's considered the cheapest way to ship goods, Gilliland said.

Really every major seaport is investing in container facilities. The gulf ports ... are just basically in a nutshell catching up with a trend, to make sure seaport business continues to flow through their ports, he said.

The Port of Houston Authority handled 1.6 million containers in 2002, according to Fitch Ratings, but the Port of New Orleans isn't a big container competitor with the Texan port, LaGrange said.

Houston's main business is containerized cargo while New Orleans' is loose, non-containerized cargo, such as steel and rubber, LaGrange said. Most cargo coming to Houston stays in Texas while New Orleans- bound cargo heads to 32 states, LaGrange said.

New Orleans could attract up to 800,000 containers annually in five to 10 years, LaGrange said, but Houston could be up to 2 million by then.

The Port of Houston Authority is working on the $1.2 billion Bayport Terminal Complex, a new container facility, according to Fitch Ratings. It will be able to move 2.3 million containers annually.

Adding to container counts is just a matter of beefing up trade, some officials say. That can come through the passage of the Central American Free Trade Agreement, said John T. Hyatt, vice president of imports at customs brokers The Irwin Brown Co. in New Orleans.

CAFTA is expected to reach Congress in January for a 90-day review period. Textiles and processed food industries will be watching the negotiations.

China and India have fully integrated textile industries whereas in Central American countries, they assemble other people's clothes. They need to provide a full package of operations, Hyatt said.

Financing is needed to do that, which could mean U.S. investors help Central American countries buy fabrics and materials needed to fully integrate their industries. Right now, interest rates are too high, Hyatt said.

CAFTA could be a significant impetus to push enough cargo traffic coming into, say, Napoleon Avenue, Hyatt said. That is, if the agreement calls for transparency of government operations and equal treatment for national and international investments, he said.

From a holistic standpoint, we see our trade with Brazil growing very rapidly, Collins said. The geography adds up. There's no Panama Canal and there is not much more time and routes (to take) to go to New Orleans versus going to other gulf ports.

High river pilot pay could still adversely affect cargo counts. The Public Service Commission has said pilot pay should be reduced in Lake Charles. The PSC is trying to determine what expenses pilots will be allowed to recover, said Brandon Frey, a staff attorney with the commission.

Until something gets resolved in the Lake Charles case, it is impossible to know what the commission is going to do relative to other pilot associations, Frey said. The PSC's expenses decision will apply to all river pilots.