International Port Operations, a short primer

[northzax]

Ports are not under federal control, they are under the management of a local Port Authority (like the New York/New Jersey Port Authority, the same people who run the Port Authority Bus Station, runs the PATH trains, bridges and tunnels, JFK, La Guardia and Newark Airports and built the World Trade Center) The only federalized part of ports is security (Coast Guard) and Immigration (Border Patrol/INS) Port Authorities are usually quasi-public agencies with governing boards appointed by local municipalities and the state in question (in the case of New York/New Jersey, there is a 12 member board, 6 appointed by New York State and 6 by New Jersey) In almost every case, the Port Authority hires corporations to run the logistics by contract for much of their operations, they don't own construction companies, for instance, they bid out and hire construction companies (When we say NY/NJ PA built the GW Bridge and the Lincoln Tunnel, they didn't actually "build' them themselves, they hired firms to manage the construction, including subcontractors, within a financial framework (you get X dollars to build it, you must meet these expectations/specifications, using the following labour agreements,etc)

In the case of actual Ports, shipping is an extremely competitive business, Ports are self sustaining financially because they collect fees from shippers (you pay to dock, you pay to unload and reload, for instance) and these fees are huge, so the port that can handle the largest ships, and load/unload cargo the most efficiency will get the most ships through, and collect the largest number of fees. In the Port of New York/New Jersey, the biggest element is the Port Newark/Elizabeth Marine Terminal (which was the first containerized port, and as recently as 1995 the largest in volume in the world, last year, EMT moved over 100 billion worth of goods.) There are five private companies operating in PNEMT, including the late P & O Ports, which came late to the game and redeveloped the Port of Newark Container Terminal, a seperate teminal in Newark. P&O paid for the redevelopment of the terminal, which from being non-functional 10 years ago is now capable of transhipping one million containers a year. this terminal will now be operated by Dubai World Ports, it appears.

There have always been private contractors running port operations, who built all the wharehouses and wharfs? not the city (although they may have financed them) but individuals (or now corporations) who think they can run their wharf (now terminal) more efficiently than the next guy, taking business away from him or attracting entire new shipments.

If you are leaving from say, Rotterdam, it doesn't really matter whether you go to Boston, New York/New Jersey, Philadelphia or Baltimore cost wise, what you want to know is which port will get your cargo off the ship fastest and get your ship back on the water in the shortest period of time. So cities are competing with eachother, and inside ports, terminals are competing with each other for business as well, In Baltimore, there are 14 different terminals (with 7 different operators) competing for business. Some specialize in bulk goods, others in cars, others in containers. P&O operates the Seadirk, Dundalt and Port Locust terminals. Basically, for a fee, they do the loading and offloading of about 35% of the cargo, that travels through Baltimore. They don't own it, they have a renewable 6 year contract to operate it. they pay a fee to the Port of Baltimore and collect fees from shipping companies. If fact, the entire capacity of these terminals is tied up to several companies already, only three companies have exclusive access to Seadirk.

As for the labour question, the Port of Baltimore requires that all Stevedores at the port be certified by the ILA. So they couldn't hire non-union employees even if they wanted to, it's in their contract.

as to security, that is provided by the Coast Guard and Homeland Security and the Port itself, although the contractor usually hires private security for their operations as well. the Contractor doesn't inspect containers and ships, the Coast Guard does.

Now, we can discuss whether this is a good thing or not, but it has been standard practice around the world for a century or more, and in the US since basically the inception of ports.

[spindrifter]

1. This is the basic model

for some, but not all ports. Port of Seattle, for example, is a municipal corporation with its own elected commissioners.
I would add Customs to the "federalized" aspect of the ports, although, now Immigration, Customs and the Coast Guard are all different parts of Homeland Security.

[northzax]

2. good point. However, even in Seattle

every terminal save one (terminal 91 which handles Frozen Food and fish) is operated by private contractors. The Port of Seattle operates #91.


and yes, I neglected customs, thanks for the reminder.

[spindrifter]

6. Yes--all but one of the

operators, SSA, is foreign-owned. SSA is a privately held local terminal operator that does about $1 billion in business.

[Fla Dem]

22. NPR report on port and terminal management...good recap.

Posted this earlier today. It's a good overview of the port
/terminal management issue.

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=364&topic_id=524075&mesg_id=524201

[Rex]

3. Very informative, thanks.

The question IMO is not about how the ports work and function. The question around here is, does the UAE owning or leasing US ports make things better or worse for national security? So far, most reports seem to indicate that maritime ports are no more safe now than they were before 911. We still have the Coast Guard doing its job and supposedly the DHS as well. Looks like capitalism is being used against the US.

[northzax]

4. my point is that the terminal operators

have nothing to do with port security. That is provided by DHS through the Customs, Coast Guard and Immigration.

on edit: and, I keep hearing that the Ports have been 'sold' or will be 'owned' by Dubai World Ports. that's simply not true, what has been sold is a licence and a contract to operate a portion of the port for a period of time, nothing more, nothing less.

[spindrifter]

7. One problem is the length of time the operators

have contracted to do business at a particular port. The K's that we are talking about are for 30 years or so.

[northzax]

8. the P&O contracts are six years

with a six-year option. Seems reasonable to me, long enough to give incentives to maintain the physical plant and short enough to hold them to account. The option, by the way, is mutual, but for the most part, if the Port doesn't renew them, they pay a pro-rated portion of certain physical plant improvement expenses (reasonable, to me)

I don't like 30 year deals, unless they are design-build-operate, giving the company time to recoup building costs.

[spindrifter]

10. Crane investments

can be huge for the container operators.

[MazeRat7]

5. Good post on the facts.

Unfortunately, there is way to much emotion and hyperbole surrounding this issue. Personally, I would rather P&O be bought by a US Company, but given that DP World and PSA were the only bidders, I prefer DP World. Bottom line, it really doesn't matter what company provides the logistical support. The security sucks now and is going to continue to do so until those US agencies responsible for that aspect of the terminals hatch a better plan. Until then, this is a great "political" issue - provided you ignore the facts.

MZr7

[northzax]

9. thank you. we can all discuss the implications of this deal

although we should have done it months ago while it was in the works, of course, but that's in the past. I just prefer we discuss it using actual facts, not innuendo and hyperbole (and I will take any correction given, as long as it is supported by some sort of reasonable documentation.

[Tom Rinaldo]

11. This is informative. My immediate questions involve this:

What type of detailed otherwise difficult to assemble information about the ins and outs of the operation of a port would a company holding this type of contract either obtain or learn through operations covered by the contract? What national security implications result if enemies of the United States (as in terrorists) managed to infiltrate the highest levels of those companies to gain access to that information?

For example I read something about advance notice of military transit being made available to firms in the role of the Dubai firm in question. It is possible it seems to me that staffing patterns, port blueprints, emergency response plans, and god knows what else may be available to these firms of a nature that otherwise would take risky on site surveillance at American Ports by Al Quada agents say to obtain.

[slipslidingaway]

12. Thanks! K&R n/t

[iconoclastNYC]

13. Any link to support any of this?

This is all unsupported oppinion.

[The Straight Story]

16. Might I suggest:

http://www.google.com/unclesam
Searches government websites

Things like this can help in analysis:
http://www.marad.dot.gov/marad_statistics/

Various ports also have their own sites and sub sites. Google em:
http://www.panynj.com/
Port Authority of New York

http://www.port-of-charleston.com/
Charleston, SC port, good site too.

[The Straight Story]

17. Also see here:

http://64.233.179.104/search?q=cache:TJZPyeVCTHQJ:www.worldbank.org/html/dec/Publications/Workpapers/wps2000series/wps2181/wps2181.pdf+how+are+seaports+run%3F&hl=en&gl=us&ct=clnk&cd=10&client=firefox-a
Which is the html version of this pdf on how ports are run:
www.worldbank.org/html/dec/Publications/Workpapers/wps2000series/wps2181/wps2181.pdf

[sandnsea]

21. No, this is exactly right

See my additional post, #20.

[Wordie]

14. What an informative post! Thanks for that, northzax!

So, what I glean from all that is this (please correct me if I've gotten any of this wrong):
1. The UAE company, Dubai World Ports, will not "own" the ports, as one frequently hears being claimed. This is more of a lease deal.

2. The deal does not involve entire ports, but only certain terminals within each of the ports. Those other companies will continue to have a presence in the ports in question.

3. There is no threat to American jobs in general, or union jobs in particular, as the deal requires the honoring of existing union contracts.

4. The security will still be provided by the United States entities, DHS and the Coast Guard.

It seems to me that without truly understanding the nature and scope of this contract, we can't analyze whether it is a good one or not. Without facts, we become too easy to manipulate, and everything has a tendency to devolve into emotionalism. I thank you for your factual contribution to the discussion.

[Wordie]

15. Kick...

[Oilwellian]

18. You left out two things

Osama's pals will become privy to our port security and Osama's pals have a history of doctoring shipping manifests to transport wmd components to you know who.

[Nothing Without Hope]

19. Thank you for this informative post. Can you suggest any online sites

that would discuss it further?

I am still concerned about the security issue.

[sandnsea]

20. Port Authorities also contract buildings, like the WTC

Should we outsource the construction and/or operation of the WTC to Saudi Arabia??

Same difference. And the answer would still be a resounding... HELL NO.

[Cleita]

23. So why can't an American company do this?

I'm never happy when foreign interests do business in our country that we should be doing ourselves. This involves more than Toyota building a factory in the USA to make cars that they will sell here. This involves our money flowing out of our economy and not back into it.

I lived in a country whose assets were being sucked dry by foreign companies running businesses that should have been run by the nationals of that country. The money flowed out and nothing hardly flowed back in keeping the country impoverished until one day the people elected a communist for President and kicked out all the foreign companies.

So our CIA went in, assassinated the President and set up a dictator more to their liking. Now it seems it's happening to us. Those global corporations have set up a dictator, George W. Bush, whom they like better than the American people's choice Al Gore. They too will suck us dry.

Oh, with me it's more this issue of foreign companies doing what we should be doing ourselves. I was aghast to learn that a British company was in there already and now ready to hand this over to a country, who I guess was the highest bidder. It really is even worse that this is a country who hates us, abetted the terrorists of 9-11 and have no concept of democracy as we know it.

[Wordie]

24. Kicking because everyone needs to understand how ports work...