Outlook brightens for New Orleans

Outlook brightens for New Orleans

Having weathered a difficult 2003, the Port of New Orleans is looking forward to better times next year. Steel and containers are expected to lead the rebound.

Steel imports, once nearly half the port's general cargo, plummeted by 44 percent in 2001 in anticipation of President Bush's tariffs. With the lifting of those tariffs on Dec. 4, the port expects shipments to increase in 2004, though not immediately. The port also is counting on business from the new Napoleon Ave. Container Terminal, whose opening has been delayed by software glitches. The terminal, which has been handling about 30 percent of its intended cargo in a 60-day trial since Nov. 5, is expected to be fully open by Jan. 5.

"I think we bottomed out this year," Port Executive Director Gary LaGrange said in an interview. "While some of the port's cargo has paralleled the global economy, we have seen a tremendous surge in the cruise industry, which has kept us in the black."

There were other bright spots this year. The port's first dockside cold storage facility opened on schedule last summer and generated volume that exceeded forecasts. Several breakbulk cargoes have increased in volume, including imports of rubber and wood pulp and exports of steel coils and lead.

Although the steel tariffs have been repealed, LaGrange warned that steel imports won't flood back into the port overnight. "It will take some time, probably six months before we see anything from it," he said. "We hope imported steel volume returns to normal levels in the future as the marketplace responds to the decision."

LaGrange said, though, that he expects 2004 to be a good year for the port. "With indications that the U.S. economy is rebounding, the president's action bodes well for the Port of New Orleans in both the short and long term."

While steel imports nose-dived this year, steel exports took off. During the first eight months of 2003, steel exports totaled 418,250 tons, up from 24,239 tons a year earlier. Imports, meanwhile, fell to 1.3 million tons from 2.2 million.

Imports of rubber, coffee, aluminum rods and pipe, truck parts and textiles also increased during the first eight months of this year. Exports of tin plate, vegetables, rice, wood pulp and lead wire also climbed. Declines were posted for imports of steel, forest products and zinc, as well as for exports of frozen meat, synthetic resins and copper anodes. Copper imports fell nearly 88 percent after a major shipper moved the point of entry to Panama City, Fla.

During 2001, the port posted a net loss of $5 million as the global economy slowed and steel imports fell to less than 2.9 million tons in anticipation of the March 2002 tariffs. Since then, the port's revenue has been flat. LaGrange expects port profits to climb next year.

"Our game plan is to diversity," he said. "Project cargo is one, containers will be enhanced, cruises will be up, steel will come back. The reason this port survives is because of its diversity. When one commodity goes down, the others hold us up."

David Wagner, chief operating officer at the port, said even the expected rebound in steel isn't likely to immediately match the boom years of 1998 (7.8 million tons), 1999 (4.3 million) and 2000 (5.2 million). "Exports have helped stabilize overall steel cargo, but we are still down dramatically from 1998-2000," Wagner said. "Somewhere there should be a level that is better. We should be at about 50 percent more than we are handling now."

The Port of New Orleans' revenue loss from the downturn in steel imports might have been offset with revenues from more containers if the Napoleon Container Terminal had opened on schedule last spring. Construction was completed and the port's six new rubber-tire gantry cranes were in place, but terminal operator P&O Ports still had problems with the terminal's computer software. P&O Ports operates the terminal with NYK's Ceres Terminals.

Port officials hope the new 60-acre terminal, which will have capacity of 400,000 TEUs a year, will produce growth in New Orleans's container volume, which has been at about 300,000 TEUs a year for the last decade.

When Mediterranean Shipping Co. and the CP Ships subsidiaries move from the port's 30-year-old France Road Terminal to the new Napoleon terminal on the Mississippi River, they will be able to carry more cargo because they won't have to negotiate the Mississippi River-Gulf Outlet canal. The canal has an official depth of only 36 feet, and constant silting often prevents vessels from loading to capacity.

Competition, however, will be stiff. Houston, which handles two-thirds of the Gulf's container traffic, is moving forward with plans for its new Bayport terminal (See article, Page 24). Nearby Gulfport, Miss., also has plans to expand. New container terminals also are planned at Texas City, Texas, and Mobile, Ala.

LaGrange said more traditional breakbulk cargoes are being carried in containers. "What you can put in containers today is different from 10-15 years ago," he said.

Maersk Sealand last month launched a weekly liner service to Progreso, Mexico, and Puerto Limon, Costa Rica, to compete for the region's growing apparel manufacturing trade. Port officials say another liner service could be announced next month.

Although computer problems have delayed the opening of the new Napoleon terminal, the port is counting on the terminal's automation to boost efficiency. P&O Ports has developed a gate entry management and wireless access and tracking system that allows the operators to partially automate the handling of container transactions and effectively manage larger cargo volumes. TransCore has installed a wireless access and tracking system, which relies on the same radio-frequency identification technology that is used for electronic toll collection.