Ship traffic climbs, but hurdles remain

Thursday, October 12, 2006

By Scott Sternberg

Despite losing a quarter of its facilities during Hurricane Katrina and seeing a significant drop in container traffic, the Port of New Orleans is keeping afloat by clinging to imported steel while it awaits the cruise industry's return to the city.

Though the port has regained 94 percent of its pre-Katrina activity, the amount of general cargo is still down almost 4 percent, and container traffic is down 39 percent. The port's business also is suffering because the Mississippi River-Gulf Outlet is essentially closed for business, and shippers located on the Industrial Canal are struggling.

But spirits at the port aren't lagging. A nationwide steel boom and jumps in lumber and rubber imports are all helping the port stay at or near pre-Katrina levels for the time being, said the port's president and chief executive, Gary LaGrange.

"We're very fortunate that the global economy came for us when we were really in need," LaGrange said.

Steel has always been New Orleans ' saving grace, said Dave Schulingkamp of MBLX and BargeLink, two companies that manage cargo such as steel by barge through the inland river system.

"There's no question that steel has been the bread-and-butter cargo of this port since the '50s. It's nothing new," said Schulingkamp, who also a former chairman of the board of the Port of New Orleans . The port "is the most efficient way to get imported steel."

Thirty-one percent of all steel coming into the United States goes through the Port of New Orleans , LaGrange said.

Although LaGrange said he expects the steel boom to continue perhaps as long as three years, Schulingkamp said he has seen a small dropoff in demand, and American Institute for International Steel President David Phelps said some "softening" of the market would occur later in the year.

"Some people are reporting some minor declines," Phelps said. "Right now consumption appears to be good. Imports are high and prices have not come down. They have stabilized."

Phelps and Schulingkamp agreed that those "general economic factors," not the perception of New Orleans after the hurricane, would be what continues to keep steel coming into the port.

A cost to MR-GO closing

However, LaGrange is worried about the seven companies remaining on the Industrial Canal , which are now unable to bring in deep-draft ships via the Gulf Outlet, the Industrial Canal 's connection to the Gulf of Mexico . MR-GO, as it is called, hasn't been dredged since it was blamed for some of the post-Katrina flooding in the devastated St. Bernard Parish and Lower 9th Ward.

LaGrange says the federal government has a "fiduciary responsibility" to make sure those companies, which have invested millions of dollars in the area, have a viable deep-draft access point to the Gulf.

New Orleans Cold Storage, for example, is trucking poultry from its Jourdan Road location on the MR-GO to the Mississippi River at a cost of $8 a ton, an expense they didn't have before.

The port has been subsidizing rent for companies in similar situations until the situation is resolved. If it comes down to relocating those businesses, the government should bear the expense because it chose to close MR-GO, LaGrange said.

"The companies that are stranded on the back of the Industrial Canal have 9,000 indirect employees and 1,000 direct employees," LaGrange said. "This city needs every job it can get."

Cruise ship renaissance

Though the cruise ship industry is just starting to return, LaGrange and Robert Jumonville, director of cruises and tourism for the port, expect the industry to rebound with a boom.

The port's $37 million Erato Street cruise terminal is "almost finished" and should be ready in mid-October, LaGrange said, and it recently received a thumbs-up from U.S. customs officials.

The terminal will feature a 1,000-car parking garage, used primarily by Carnival Cruise Lines, which is set to return its ship Fantasy in October, just after Norwegian Cruise Lines ' ship Norwegian Sun returns Oct. 15. Royal Caribbean Cruise Lines will return its Grandeur of the Seas ship on Dec. 2.

And Carnival recently announced it will begin sailing the Carnival Triumph from New Orleans starting in August 2007.

Princess Cruises also will test the New Orleans market, sailing from the city for three cruises aboard the Golden Princess in December.

LaGrange said the goal is to have five or six home-ported ships. Bringing cruise ships back to the city is imperative because cruise passengers spend about $300 dollars a day when they're in the city, LaGrange said.

"We're such a great European-type city. It's two vacations in one," LaGrange said. The port also is working with Harrah's New Orleans Casino to look at capitalizing on the city as a casino destination.

'Nontraditional' projects

LaGrange said he is optimistic about the port's other "nontraditional" possibilities, such as commercial and public development along the river where traditional port infrastructure once operated.

In August the New Orleans City Council endorsed a cooperative endeavor agreement between the port and the city in August that essentially would open the east bank's riverfront between Jackson Avenue and the Industrial Canal for commercial, retail and residential development, as well as parks and other green space.

LaGrange said that in cities such as Cleveland, Ohio, New York and San Francisco, hotels, parks and playgrounds provide visions of "a beautiful future."

"There are things out there like hotels that go hand in glove with port activity," LaGrange said. "We're looking at giving the river back to the people."

LaGrange said the port released a request for proposals "to the world" to see whom the area could attract for development.

"Every day I look out my office and see an employee parking lot. And we're not making one red copper penny off an employee parking lot," LaGrange said. "That's valuable land and we should do something with it so people can get a little bit closer to the port and understand what Uncle Johnny does when he goes to work."