Ports & Terminals

IRPT Webinars Show State Of Ports, Look To Future Development

An industry update and a look at how to grow future business at inland ports and terminals were focuses of webinars April 20 as Inland Rivers, Ports & Terminals Inc. took its conference learning online.

IRPT had originally planned its annual conference April 20–22 in Little Rock, Ark., but instead offered a series of free webinars as the coronavirus pandemic forced the cancelation of in-person gatherings. (Click here for coverage of a webinar on the Corps of Engineers’ Levels of Service regulation.)

Jeff Monroe, education director for the International Association of Maritime & Port Executives, was the featured speaker April 20, with sessions designed to orient port commissioners and directors, including information about their duties and responsibilities.

He began by giving an industry update, saying that it is important not to lose perspective of the global view while still attending to day-to-day operations. His list of commissioner challenges included understanding capital needs, sorting out what really affects the port and understanding competition, but he also said commissioners need to look toward the future.

“Probably the biggest [challenge] is finding opportunities, our business development, where do we go and how do we get there, really sorting through and prioritizing what we pay attention to, what we control, what we can’t control,” he said.

When looking at worldwide seaborne shipments, Monroe pointed to 2019 figures showing 13 billion metric tons of cargoes moved by water, up 3 percent from 2018. About 95 percent of the world’s goods move by water, he said.

In the United States, only 10 percent of all waterborne transportation tonnage is international trade, meaning 90 percent of shipments within the country’s borders are moving domestically. “Which means we’re our own best customer,” he said.

Of the top 10 ports by millions of metric tons moved, eight are in China, with the other two in Australia and the Netherlands. Most of that is moving by river systems because they don’t have the highway systems the United States has, Monroe said.

“They’re already doing container-on-barge over in Asia and in Europe, so we’re going to have to start catching up to them,” Monroe said.

Some of those foreign entities are beginning to invest in the United States, such as Singapore-based PSA Corporation, one of the leading container terminal operators worldwide, which bought Penn Terminals on the Delaware River last year, Monroe said.

The largest of the Western Rivers ports in the United States by cargo volume is the Port of South Louisiana, which was projected to move 307 million metric tons in 2019, up from 275 million metric tons in 2018, making it 16th largest by volume in the world. That makes it also the largest port in the entire western hemisphere.

Data from the U.S. Army Corps of Engineers for 2018, the most recent information available, showed the next three largest inland ports by volume in the United States are also in Louisiana, with New Orleans projected to move 93 million metric tons, Baton Rouge projected to move 83 million tons and Plaquemines 57 million metric tons. Outside of Louisiana, the top 10 inland ports/regions moving cargo by water continued as: Cincinnati, Ohio/Northern Kentucky, 38.5 million; St. Louis/Illinois, 38 million; Huntington Tri-State, 34 million; Pittsburgh, 22 million; Memphis, 11 million; and Mount Vernon, Ind., 10.3 million. All other ports in the United States moved fewer than 10 million metric tons of cargoes in 2018.

Container-on-barge service is likely to expand in the United States, led by carriers, Monroe said. It works best with non-time-sensitive cargoes, he said. Monroe added that, to be successful in moving containers by barge, ports should have a diversified mix of cargoes. He noted that the U.S. Maritime Administration has funding for shoreside equipment for container-on-barge service but does not provide operational funding. To have the best chance at funding, it is helpful to have a designated marine highway project.

“Container-on-barge does provide some opportunity if the right perspectives are in place,” Monroe said.

For it to be successful in the United States, shipping via container-on-barge needs to beat the price of trucking, including terminal handling costs, and generally the port needs to be tied together in some way with the destination of the cargo being shipped for it to be cost-effective.

Continuing to look internationally, the United States provides 67.7 percent of all cargo moving through the Panama Canal, but Monroe said he believes the Suez Canal opens up more opportunity for inland ports in the United States. It is cheaper to move cargo through the Suez because it can handle bigger ships, so per-unit cost is less expensive, he said.

Domestically, Monroe believes ports need to take better advantage of partnerships with rail networks.

“We are competitors with the railroad, but we’re also partners with the railroad when it is the right opportunity,” he said, adding, “The key factor we need to keep in mind is the river systems move north and south, for the most part. The rail systems move north, south, east and west, so we need to tie in if the right opportunity presents itself.”

Economic Trends

Economies in the United States, Europe and Asia were already sluggish before the coronavirus hit, Monroe said, pointing to the high number of empty containers being moved, but petroleum transload facilities had strong volumes and tanker rates were higher. Federal funds continued to be utilized for infrastructure improvements through BUILD grants, and ports continued master planning with an increased focus on federal funding, he said. Trade tariffs have continued to be an issue, although trade is increasing slowly with China.

He pointed to widening interest in river cruising, including from Viking, as holding promise, partially because of the deployment of smaller “niche” cruise vessels that attract more affluent passengers. Although questions about the cruise trade remain in the wake of COVID-19, a significant number of people may be interested in cruises on smaller vessels, which could help river cruising, Monroe said. He also expected to see new procedures and processes for overall cleanliness as well as dealing with health conditions. Many riverports are in towns that are very walkable, which is attractive to the cruise industry because it caters to senior adults, Monroe said. Impediments to river cruising will include aging locks and dams and weather, including fog, wind and periods of high and low water, he said.

Monroe projected that challenges to the maritime transportation industry  as a whole will come from imbalances in the economic and trade cycle, inadequate shoreside transportation structure, regulatory impacts, compliance issues and, overarching the rest, a lack of a national maritime policy strategy.

“When you don’t have a systematic transportation policy, what happens is every mode competes against every other mode,” Monroe said.

Instead of a comprehensive plan, he said, transportation strategy continues to be handled modally.

“The last time we had a systematic port policy in this country, Harry Truman was president,” Monroe said.

Specific to the inland waterways, several influencing factors in the coming months and years are likely to be regulatory, including Subchapter M, ballast water and air quality standards, as well as invasive species, including Asian carp, Monroe said. He also spoke about the importance of changes in coal demand and crude oil prices; impacts of the Panama Canal with high volumes of grain and bulk exports; issues with infrastructure, including aging locks and dams and extensive lock delays; and vessel fabrication and shipbuilding, noting that newer inland barge fleets are at historic highs over capacity.

The long-term economic impacts of the pandemic remain very uncertain, Monroe said.

“With all the other money going out right now, I’m not sure how sustainable a lot of these grant monies are going to remain, but we’ll see,” he said.

He said he believes it is likely it will take between 18 months and two years for the economy to recover in the United States and two years or more in Europe and China.

“We are going to recover, and that’s the important thing to keep in mind,” Monroe said. “It was strong before this hit. This was a big hit in the head, but it’s going to come back. What was happening before will restore itself.”

Looking ahead to the next decade, Monroe expects decreasing North American wheat exports, with China, Russia and India expanding regional supplies, although he believes other agricultural products, including soybeans, dried distillers’ grains and legumes, will continue to be strong markets.

Railroads will be working to ease extensive gridlock at key hubs and address equipment shortages, he said. A 60 percent growth in truck traffic is projected over the next 30 years, but also higher trucking rates due in part to fuel costs and emission controls and a lack of a sufficient number of truck drivers.

“There are not a lot of young people going into the trucking industry,” Monroe said.

He said new maritime hubs in the Caribbean, Africa, the Mediterranean and Asia could also impact trade, along with emerging markets in South America, Africa and India. Domestically, he expected continued growth on the Marine Highway System, which has 22 designated all-water routes.

To develop business, Monroe encouraged port commissioners to look at what the ports are moving now and the potential to move other products. Facilities can be very diversified, he said. In most cases, they are focused on moving bulk cargo, but more opportunities exist for those who are proactive.

“You can’t sit on your assets and expect business to come to you,” he said.

Opportunities

Potential sources of business development he named included: capturing cargo from congested surface modes; expansion of agricultural exports; expansion of energy exports; domestic connections to international gateways; lower-cost, environmentally sound transportation; strong agricultural production access; a wide source of petroleum, petro-chemical and neo-bulk commodities; the impacts of changing international opportunities; and cruising and tourism.

Although the tonnage of coal barged on the Mississippi River has continued to decrease, there is a continuing demand for metallurgical types of coal, including anthracite and lignite, he said. Agricultural products also remain a strong market, with 80 percent of the nation’s corn, 75 percent of its soybeans and 10 percent of its wheat produced in states bordering the Illinois, Mississippi, Missouri and Ohio rivers. Currently, Monroe said, grain, food and food products account for 20 percent of the Mississippi River’s total commerce.

Ports may also have operational opportunities in fleeting, vessel repair and fabrication and dismantling and scrapping antiquated barges to recycle the steel.

Regardless of their individual business pursuits, Monroe encouraged ports to invest in infrastructure, personnel and “the right consultants.”

“Remember that knowledge is the key to effective business development,” Monroe said. “If you’ve got effective data, you don’t spend a lot of time spinning your wheels.”

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