2003 State of the Port Address

2003 State of the Port Address
Delivered to the World Trade Club of Greater New Orleans by
Gary P. LaGrange
Executive Director/CEO, Board of Commissioners of the Port of New Orleans
September 17, 2003 Plimsoll Club, World Trade Center

I can’t believe this is my second annual State of the Port address. It’s hard to believe that I’ve been here two years. It’s really gone by rather quickly, and there have been a good many accomplishments, I believe.

I’d be remiss if I didn’t take the opportunity at this point and time to introduce you to my Commissioners, four of whom are here today. I’m really proud of them, and I’d like them all to stand up and take a bow: Chairman David Guidry, past Chairman David Schulingkamp, Secretary/Treasurer Angus Cooper, and Commissioner Sammy Nunez.

As I said, it’s been an interesting and fast two years and a lot of things have happened. Beginning on the job September 10, 2001, it seemed like a really really nice day on that beautiful Monday. It changed a lot 24 hours later for all of us. Needless to say the priorities at the Port of New Orleans have changed 10-fold, 20-fold if you will in terms of what we know and what we do on a day-to-day basis with anti-terrorism issues, safety and security issues, and of course notwithstanding homeland security. Hopefully with our lawmakers out there pulling with us and alongside us for that regional homeland security office that we hope will be located in New Orleans. We really are excited and if I may borrow a phrase from A Tale of Two Cities, "It was the best of times and the worst of times."

I’m here to tell you today that after this past year, it certainly is not the worst of times. It is indeed the best of times. It’s the best of times for a number of reasons. First of all, there is geography. We’re so blessed with this beautiful mighty Mississippi River that connects us to 62% of the consumer-spending public in the United States.

That is a God-given gift that we’ve worked really hard to retain. In fact, we’re leaving this afternoon to go to Washington to try to confirm the funding for the Inner Harbor Lock, which is so key and paramount to the roles and issues of the Port of New Orleans. We know that geography is huge, but in the words of Mark Twain, "It is not a commonplace river, but on the contrary it is in all ways remarkable, and it is indeed a remarkable river." Houston has a ditch; we have the Mississippi River. Mobile has somewhat of a bay connected to a bayou; we have the Mississippi River. Gulfport has a one-way ditch; we have the Mississippi River. Tampa’s blessed with the Sunshine Skyway that delimits what can go in and out of Tampa. We can go on and on. Space and land limit Miami. What they do have is good, but it’s a huge limiting factor. The Mississippi River is a beautiful asset, and we’re quite happy to have it.

It’s also the best of times because of the general attitude of the community and the persona that makes up this community. We are partnering now where we’ve never partnered before – both publicly and privately. It’s a team building concept that has taken hold. We’re about to elect a new governor, and I think that trend and that notion will translate and transcend right into Baton Rouge where we’ll have a new spirit, a new day, and a new time. When I stop and think of the fact that of the top three or four leading candidates, all of them have been here to visit the Port of New Orleans. One of them has been an active player in our cruise ship industry. Another one of the candidates has been here not once but twice. And of the other two leading candidates, one has come and one has promised us as recently as yesterday that he’ll be here.

That’s a huge statement that a political candidate for governor of this state would take time out of a busy schedule, with less than a month to go before an election to come here to visit the Port of New Orleans. We’re very happy with that presence. In the words of Commissioner of Administration Mark Drennen, the largest economic development engine in the state of Louisiana is in fact the Port of New Orleans. That’s a heck of a statement. He said that, and I hope he never forgets it. I hope the next administration knows this.

It was the best of times and hardly the worst of times. Total general cargo this past year at the Port of New Orleans, not a negative, not a red number, up 3.2 percent. Not a significant spike, not a significant increase, but it’s up 3.2 percent. The mere fact that we can say our cargo is up again is huge. It’s dynamic and dramatic. Containerized cargo at the Port of New Orleans this year over last year is up 5.3 percent. Again not a dramatic number, but buckle up. Buckle up and hang on to your seat because we’re getting ready to take off.

We’ll talk about new Napoleon in just a minute. On the import side aluminum is up 42.3 percent, coffee’s up 17.1 percent, rubber is up 15.7 percent. Those aren’t small numbers. Iron and steel – believe it or not – on the import side are up 3.4 percent. That’s another dissertation into itself. As David Schulingkamp and Angus Cooper will tell you, the midterm anniversary of the 2001 steel tariff is only three days away, September 20^th. We’re all anxiously waiting to see what the administration is going to do in the way of making any announcements regarding 201. There are a lot of e-mails flying around and I don’t want to repeat any of them right now. Many of you have read them and it’s really interesting. We’re excited. On the export side, iron and steel are up 984.1 percent. That’s a dramatic percentage, but the absolute tonnage is not that significant or dramatic and there are reasons for that. You would expect the opposite of what happened on the import side to perhaps happen on the export side, particularly with market demand being what it is in Asia right now.

On the poultry side, up 24.5 percent and we’ll talk about Mark Blanchard and Gary Escoffier and New Orleans Cold Storage in just a few minutes. On the rice side, not a lot of tonnage, but up 64.1 percent thanks to a new concept that’s finally taking hold after many years which we’ll talk about momentarily as well, and that is a container on barge concept. Utilizing it ensures that more Louisiana homegrown products are shipped out of New Orleans, as opposed to as it has been in most recent times, Houston, Houston, and Houston. Wood pulp is up 325.1 percent. And finally, last but not least, logs and lumber are up 60.9 percent.

In terms of employment, the economic impact of the Port of New Orleans overall in the metro area of New Orleans equates to 60,088 jobs, and at the state level, throughout the entire state, 107,345 jobs. Earnings – let’s cut to the chase and get to the bottom line. Earnings locally here in New Orleans: $1.3 billion, at the state level $2.3 billion. Spending in the New Orleans metro area $7.3 billion, at the state level $13.4 billion. And finally, taxes paid – taxes paid is really interesting at the local level. The port industry, you as a maritime community contribute $138 million here in the metro area of New Orleans, and statewide you contribute $231.5 million. Yet, it’s like pulling teeth to get $5 million or $3 million or any crumbs out of the state of Louisiana and out of Baton Rouge on an annual basis. We sit here and was once told by officials in Baton Rouge, "for every dollar the Port of New Orleans puts up, we’ll gladly match it with a dollar." I’m here to tell you, that in another few short weeks, once we work out a few minor league last minute glitches, we’re going to open a state-of-the-art container terminal – the best of its kind anywhere in the United States. I didn’t say the biggest; I said the best of its kind anywhere in the United States at a cost of $106 million. Of that $106 million, the state of Louisiana contributed $5 million; the Port of New Orleans contributed $101 million along with the private entity, which I’ll get into in a minute.

You know I’m a big sports fan like many of you, and I like to think in terms of things that make people move, things that motivate people, things that are really significant in a way of understanding the world. Down here in south Louisiana and in the south, many of us draw back and relate with sporting events. Vince Lombardi said winning isn’t a sometimes thing, winning is an all-the-time thing. Well I’m not so sure that we can totally subscribe to that. We can strive for it, but you don’t win all the time. I’m preaching to the choir, all of you out there know that. It’s not whether you win or lose - it’s how you play the game. How you play the game is important but is about whether you win or lose; it is meeting an R-O-I. It is about the bottom line, it is about profit or loss, it is about creating jobs, it is about keeping people from moving out of the City of New Orleans or moving out of the State of Louisiana. And it’s not only about keeping them at home and not letting them move out, but how about an in-migration in bringing them back. What is there that we have to offer them? The answer is, it’s the best of times. There’s a lot and we’re just in that beginning stage right now. And it’s all about staying the course, ladies and gentlemen, its’ all about attitude. It’s all about attitude, and finally, it’s all about attitude. And that’s what’s changed.

The fact that we can now sit around the table with these white linen cloths and you can actually put your hands on top of the table and negotiate a business deal is absolutely heartwarming. Leaving your hands on top of the table where they belong is heartwarming and refreshing. That is new and that perception and notion that is starting to travel. It’s not just a perception and notion here in New Orleans or at the Port of New Orleans. It is a perception that is down in Brazil and the Mercosur countries as well. It’s in Peru. It’s a notion that is in Central America. It’s a notion that is in Mexico. It’s in West Africa and it’s in Asia. It’s in all the places that the Port of New Orleans and all of you here in the maritime industry do business.

As I said, in a few short weeks, as soon as a few minor league glitches are worked out, we will be opening the state-of-the-art Napoleon Avenue Terminal. We will be opening it with bells and whistles and everything else that we possibly can. As I said, it is a total investment of $101 million by the Dock Board. But on top of that, it’s another $15 million invested by P&O Ports for their equipment at the site, and another $8 million invested by Ceres Gulf. The two will jointly operate the facility, and it will really be something to see. With the capacity of almost 400,000 TEU’s, 20-foot boxes. It’s very high tech in nature. We invite all of you to come out and visit it. On the site alone, there are 12 miles of fiber optic cable. Think about that for a minute. It’s just going to be one facility that is second to none as far as we’re concerned in terms of having all of the state-of-the-art features. Truckers will have an appointment 24 hours before getting to the gate. It’s a lot of things that we will have that we haven’t had in the past, including the opportunity for those truckers to get in and out as quickly as they can; and possibly create an extra load at the local level with the independents and the others as well.

Some of the success stories that we have to talk about today being the best of times. In the last four months four significant things happened at the Port New Orleans. First and foremost was the first-ever opening of a dockside cold storage facility in the Port of New Orleans. Thanks to attitude and thanks to a public/private relationship between New Orleans Cold Storage and the Port of New Orleans. We have the greatest partners in the world with Gary Escoffier and Mark Blanchard operating that facility. We’re told off the record, so I guess I can put it on the record now. If business is good – and they’re busting the doors down – not only are they going to double their operation within two to three years as originally expected, but maybe within the first year of operations.

The second thing that has happened – I see Bob Fezekas out here, he was a big player and a big partner with us – in the last four months you might remember there was an independent truckers slow down. With the help of a lot of good people, including many of you in this room who all went to bat with us. And a great Dock Board commission went to bat to put people back to work. And it was done in such a manner that was totally legal and above board. Everybody’s back at work, and we think they’re happy. It’s not perfect but they’re back at work and they’re doing the things they’ve got to do.

The third thing that happened: it was the best of times, but before it was the best of times, it certainly was one of the worst of times. The Carnival Conquest left. It was the best of times because the Carnival Conquest came back where she rightfully belongs. And it was the worst of times because we all had to listen to the Mayor sing. That left a little bit to be desired!

And last but not least, just in the last two weeks: I can tell you that in 28 years as a port director, I’ve never seen such negotiations. The blood, sweat, tears and hours put in by Dock Board staff and commissioners in working on the most incredible lease with Universal Maritime APM/Maersk Sealand. And the reason that it’s most incredible is really a no-brainer. They are the largest container carrier in the world. The name Maersk Sealand is almost synonymous with the port industry, particularly the container industry.

In addition to the financial aspects of the lease, there are 75 to 100 direct jobs. What we stood to lose had they left is the good faith and credibility of the Port of New Orleans and the City of New Orleans. It just would have been one more opportunity for the naysayers out there to say, "They let another one go. Another one left New Orleans. Another one left the port." Those are the types of wins – as insignificant as they may seem to some of you – we have to amass and put together just like in any football schedule and any football game, one by one by one by one. You don’t win all ten, eleven, or twelve games at one time. You win them week by week, game by game. And that’s the attitude of this Dock Board and the staff at the Dock Board. We are going to win them one by one.

A couple of others, it was the best of times: In October, Nordana Line will start a new service to West Africa. Nissan automobile parts destined for a Renault manufacturing plant in Curitiba, Brazil are all coming to the Port of New Orleans. Renault’s Brazilian production facility manufacturing Nissan Frontier pickup trucks and the Xterra SUV is a part of an alliance between Renault and Nissan, and we’re happy about that. One of the largest textile manufacturers operating out of Mississippi also has announced to us unofficially they will begin a new service on the North-South service as well.

I’ve talked to you about New Orleans Cold Storage. We’re talking about a 160,000-square-foot facility. It’s huge, it’s beautiful, and again in talking to our good friends Mark Blanchard and Gary Escoffier, we believe that if their business strengths continue, particularly on a North/South axis and if a few other good things happen – not totally predicated on CAFTA, but somewhat predicated on CAFTA – a few good things are going to happen in the cold storage industry. Enough to where Mark and Gary tell me that they probably will look seriously at doubling their facility and their operation in the next two to three years. Guys, lock stock and barrel, you’ve got our support. Good luck on that.

It’s something that we’ve never had before, a dockside freezing facility. The daily freezing capacity is in excess, and I want you to think about this for a minute, 800,000 pounds of fresh products daily. The facility is currently approved for handling poultry exports to Russia, and of course it’s located on the Mississippi River Gulf Outlet. Again, this is a first that we’ve never had before. It also provides us with options and opportunities to do something with the old cold storage facility in the uptown area and upriver from here. And we have plans right now; in fact we will be presenting a proposal to the Dock Board probably at the next meeting, which will generate additional revenue in the way of deferred income and some improvements to the Dock Board. We’re excited about that.

Osprey Lines is now servicing the Port of New Orleans and they’re serving it in the coastal vain. A U.S. flag carrier, it’s everything; it’s the bread and butter with a little whipped cream or something on top. They’re doing New Orleans to Houston and New Orleans to Baton Rouge. It’s a service that’s just beginning. And I see a lot of great hope for the future of Osprey Lines. Rick Couch is one heck of a guy to work with. He’s very aggressive, very progressive, and he doesn’t know how to say no, he goes after it. Those are the types of people who are the hallmark and slowly but surely will blend this port into what we want it to become. Good people are coming back into this community and are spending time here.

Pacorini USA is another, it is the best of times. They’re currently involved right now in the largest project cargo move ever in the Port of New Orleans. A 12.5 million pound coal mining apparatus is being assembled at Jordan Road and will be shipped out to Australia, from Ohio to Australia – via the Port of New Orleans – where it will be put to use in the mines of Australia in October 2004.

The cruise industry - you know we like to think in terms of diversification and trying to bring to a port much like a portfolio, your own private investment. The Dock Board understands and appreciates that you simply can’t put all of your eggs in one basket. In the ideal world, theoretically in between the ivory tower and some form of academia, you might say, well, 25% ought to be cruise industry, 25% ought to be container, 25% breakbulk, and 25% industrial activities and industrial uses and nontraditional sources of revenue. Unfortunately, we’re not in a classroom somewhere; this is the real world. We do have a situation, though, where we are attempting to diversify and the cruise activity in this port is now roughly up to 8% of our revenue.

The container activity in this port is quite substantial and is growing all the time. We’ve got some real people that are really seriously interested in this new facility. We’re anxiously waiting to see what Max Sanders and the folks over at APM are going to do with the retrofitting areas at France Road now that they’re staying.

Breakbulk, as we’ve said many times before, always has been and will continue to be the backbone of the Port of New Orleans.

And then on the nontraditional side of things, things that we’re really getting in to because we have to get in to - if we’ve got to park cars to earn the revenue to build a Napoleon container terminal, we’re parking cars. We’re gonna do whatever we have to do to find that revenue generator.

The Norwegian Dream will make her first sailing here on November 2. It’s a beautiful ship that’s actually going to have five ports of call on a seven-day cruise. As I said, the Mayor sang, the Conquest came back. She’s here to stay. She’s home on a five-year contract. Carnival’s Holiday is about to be scaled up. She’ll be replaced by a much larger ship, which carries 1,100 more passengers than the Holiday carries. She’ll still continue to do her five four-day itineraries. The Grandeur of the Seas is coming back in a couple of weeks. She’ll be here for 28 weeks in a row. We’re trying to put a package together right now which will have the Grandeur of the Seas here on Friday night, which will be conceivably the last night at sea, so that the passengers can disembark on Friday night go into the French Quarter. Or go to the D-Day Museum, do the things they like to do, get back on the ship, spend the night and disembark the next day, on Saturday. If we can do that, Royal Caribbean tells us they will come for 52 weeks out of the year, not 28. So, that’s significant to us if we can pull it off.

Today, our staff is in South Florida. They’re calling on the offices and knocking on the doors of Holland American, Princess and Celebrity Cruise Lines. We’re really excited about them. We’ve gotten verbal commitments across the table from Princess and from Holland American, and we know that it is just a matter of time before they deploy their two ships over here.

And finally the last one I want to talk about – we don’t talk about often – Delta Queen Steamboat Company. Delta Queen just made a hallmark announcement that they will maintain a 365-day presence operating out of the Port of New Orleans. They will always have one ship here. And the notion again, let’s do what the deep draft cruise ships are doing. And that is simply to sail for four days and allow our passengers three days in the City of New Orleans, with their cash and with their plastic. So, that’s a lot more business that’s going to be generated between those three vessels; not only with us, but the hotels and motels, restaurants, and everybody else in the city.

We’re on the verge of starting construction on a new cruise ship terminal at Erato Street, which will have a 1,100-car parking garage with it. Carnival has asked us to try to complete this by the end of 2004. We think that is going to be huge. It’s going to be everything we need to show the cruise ship industry how serious we really are with future expansion.

And finally, we’re in the designing and planning stages for the Bywater area. There aren’t a lot of areas, for safety reasons, that we can go with the cruise industry. We know that the demographics tell us that the pasture’s going to be within six to twelve blocks of the area that they want to get to. Bywater is the next call for us. There’s a lot of synergy going on there right now, there’s a lot of things with the Port of Embarkation. All of you have heard the stories and rumors.

There’s also a lot of thoughts and a lot of concepts about what MARAD can and can’t do. I am going to find out more tomorrow on my visit to Washington whether or not they will consider moving to the Westbank, to allow us to take over the two berths where the two lay berths are now for the cruise ships.

Just the day before yesterday, in a meeting with the Mayor, he said he had full faith and credit and plans to put $22 million into the extension of the Riverfront streetcar line with RTA on Esplanade down to Poland Avenue where it will form a complete loop. We’re partnering with the City, we’re partnering with the private enterprises, and we’re partnering with Carnival and all of the cruise ship folks. And it’s just that type of thing that we go back to – it’s the best of times because for the first time ever the attitudes are right and the partnering capabilities are there.

The growth of the cruise ship industry. Why do we keep hanging our hat on it? Why do you keep hearing stories about it? First and foremost, let me begin by telling you that in 1993 approximately 80,000 passengers embarked and disembarked here at the cruise terminal in New Orleans. Next year’s projections in 2004 are at 800,000 passengers on and off of those ships. Now what does that mean? The North American cruise industry last year alone generated $20.4 billion in economic activity. Of that $20.4 billion, an estimated 9.2 million passengers took cruises worldwide, a 9.8% increase over 2001. Of those 9.2 million passengers, 7.5 million came from the United States. These are the numbers that tell us why we need to pursue that effort. On the U.S. average port call, direct passenger spending last year was $82 per passenger. We know that generates $180,000 for one ship call in direct spending not putting the multiplier to it. In Louisiana, what does that mean? How does that translate in the Port of New Orleans? $158 million added to the state’s economy through direct purchases for 2003. Direct and indirect employment, you wonder what the cruise ships employ, about 2,284 Louisiana workers, $80 million in total wages paid to Louisiana workers by the cruise ship industry. An average annual wage income, here is the best part of it, the average annual wage income wasn’t $18,000, it wasn’t $20,000, or $24,0000. It was $35,000 a year. Those are statistics from the International Council of Cruise Lines, a group that we know and trust very much.

In summation to all of you here, I’m a little remiss. I want to thank all you for coming out to this wonderful luncheon today and partaking in what we believe is the biggest, the best, and the greatest economic engine in the state of Louisiana in the eyes of a lot of people. We understand. We know and we appreciate that it is a lot of hard work on the part of a lot of people. None of you are immune from that. All of you in this room are working day to day in this capacity.

I’m going to embarrass myself right now by asking all of the staffers from the Port of New Orleans to stand up, and let’s give them a round of applause. I want to say publicly, one more time, thank you ladies and gentlemen at the Port for being there, always being there. This means a lot to the community and to all of us for you being here today.

I thank you for the opportunity to be your Port Director for two years. It’s been the greatest two years of my life, and one last quote, I’ll borrow one from Lou Gehrig. What did Lou Gehrig say? "Today, I consider myself to be the luckiest man on the face of the earth." This is a dream job for me, and I love every minute of it. I love these guys that I work with. They’re great. They’re always there in a support role, and I am the luckiest man on the face of the earth. I thank all of you for allowing me to continue to serve on your behalf, and we look forward to bigger and better things for next year’s report.

Thank you.

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