The DP World controversy could help our seaports

By James Aaron Cooke, Contributing Editor -- Logistics Management, 4/1/2006

I'm not the type of person who utters trite phrases just to boost morale—so I normally wouldn't use the phrase "every cloud has a silver lining." But I'll make an exception in the case of the Dubai Ports World controversy, which could prove to have a silver lining for America's harbors.

For the moment, the political firestorm over DP World, the Dubai-owned company that would have gained control over some U.S. port operations through its purchase of Peninsular & Oriental Steam Navigation Co., has subsided somewhat. As of this writing, DP World had announced that it would sell or spin off its U.S. holdings to avoid a showdown between President Bush and the Congress. Lawmakers, meanwhile, were considering passing special legislation to bar an Arab-owned company from operating port terminals. Bush, the champion of free trade, has threatened to veto such legislation.

The public outcry about turning over terminal operations to a Middle Eastern company caught everyone by surprise. Apparently, Americans and members of Congress are unaware that most port authorities merely act as landlords, and that they lease their waterfronts to ocean carriers and stevedoring firms. In fact, more than 60 percent of the container terminals at the nation's 10 busiest ports are to some degree managed by foreign operators—some of which are controlled by foreign governments.

Our citizens also don't seem to realize that federal agencies are ultimately responsible for port security. The question for them, apparently, was this: We wouldn't outsource baggage screening at airports to agents of a foreign country, so why do it at our seaports? But terminal operators do not inspect containers that are offloaded at ports; that job belongs to U.S. Customs and Border Protection, part of the Department of Homeland Security.

Still, I can understand why the DP World proposal was so alarming. Since 9/11, the Bush administration has made fear of terrorism the issue that trumps all other national concerns. In the Bush White House, fear of terrorism justifies trampling civil liberties and allowing the government to wiretap phones and intercept e-mails without a court warrant.

But if this whole controversy brings about an epiphany for the American public and Congress, enlightening them about the vital role that seaports play in the global supply chain, then the events of the past few weeks may well work out for the best.

For a long time now, the maritime industry has argued that our harbors deserve more federal funding, both to enhance security and to handle explosive trade growth. The American Association of Port Authorities has said that the country needs to invest more than $17 billion to upgrade and modernize port facilities to handle the surge in trade volumes and $3 billion to meet proposed federal requirements for cargo screening. Yet seaports have received little federal funding to date.

While Congress is wrestling with a ballooning federal deficit, lawmakers are cutting discretionary programs and making it tougher to find funding for anything other than the war in Iraq or Social Security. But if port security is indeed vital to our national interest—and the American public seems to have recognized its importance, thanks to the DP World affair—then we should urge the federal government to spend more tax dollars on safeguarding our ocean gateways.