U.S. Seaports need more outside investment, says shipping analyst

Patrick Burnson, Executive Editor -- Logistics Management, 12/28/2007

POTOMAC, Md.—Can U.S. seaports profit by permitting private investors to take a stake in their operations? At least one prominent shipping analyst believes so…if it’s not too late.

“Investment by carriers in port facilities appears to be a growing trend,” said C. Kenneth Orski, a principal with Urban Mobility Corporation (UMC), a Washington-based consultancy established in 1982.

As reported here yesterday, NYK announced that it would be spending substantial sums to improve and enhance terminal operations in China, and Orski believes that U.S. ports should ramp up their efforts to attract similar funding.

"Maersk has done the same in Portsmouth, (Virginia),” said Orski.

Still, he noted, in the great majority of cases, major improvements and expansion of physical port capacity and their intermodal connectors currently falls on the shoulders of local tax payers.

“That notion -- that local tax-supported bonds should finance port expansion -- is sometimes being challenged, as shown by a debate in Texas over who should bear the cost of improvements to the Port of Houston,” noted Orski.

Orski is the editor/publisher of Innovation Briefs, an intelligence newsletter addressing transportation management and technology transfer issues.

The challenge of expanding port and intermodal infrastructure is resonating strongly with operators, shippers and investors alike, said Orski, who observed that former Department of Transportation Secretary Norman Mineta addressed the issue at a recent Infocast conference in Coral Gables, Florida.

“The conference took place against a background of forecasts that predict a veritable ‘tsunami’ of maritime cargo swamping U.S. port facilities in the years ahead.,” he said. “In the past five years container trade in North America has increased at an annual rate of 6.8 percent.”

While NYK’s investment in China represents a huge cultural shift, Orski is somewhat skeptical that the same kind of tolerance will prevail here.

“Will the port dialogue include foreign investors?” he asked. “The Dubai Ports World episode cast a deep shadow on foreign purchases of sensitive U.S. assets.”