There are two ways to run a port.
The first way is for government to own and manage the infrastructure – which is the “way it’s always been done” here in South Carolina.
The second way is for the state to retain ownership of the port infrastructure, but permit private companies to invest in and manage the facilities.
In case you’re keeping score at home, 45 out of the world’s 50 busiest ports use the latter model.
In fact earlier this week the Port of Long Beach – one of the nation’s largest, most prosperous ports – reached a 40-year, $4.6 billion lease agreement with Orient Overseas Container Line to manage a new 300-acre terminal. Under the terms of the deal, OOCL will invest $500 million in new cargo handling equipment – part of a long-term plan to dramatically expand capacity at the nation’s No. 2 port.
This is precisely the sort of agreement that pro-free market fiscal conservatives like S.C. Sen. Tom Davis have been pushing for the Jasper County port site – which is the last deep water port location on the Eastern Seaboard.
Unfortunately, South Carolina doesn’t permit such public-private partnerships.
Even worse, under the terms of the “Savannah River Sellout” that was negotiated in November by S.C. Gov. Nikki Haley’s appointees to the S.C. Department of Health and Environmental Control (SCDHEC), the state of Georgia will be dumping toxic sludge on this site for the next fifty years while taxpayers subsidize the expansion of the Port of Savannah.
Our state’s leaders – including House Speaker Bobby Harrell and Senate President Glenn McConnell – were specifically warned more than five years ago that South Carolina’s restrictions against free market investment were “counterproductive” and would “discourage investment” in our facilities.
They failed to heed those warnings, and while Haley came into office promising to restore our state’s competitiveness – she’s instead moved 180 degrees in the opposite direction, lending her support for government-funded port expansions in other states while choking off private investment and job creation here at home.
There is a way to make our state economically competitive … unfortunately, South Carolina’s failed “total state control” model of port management (and Haley’s pandering to moneyed interests in Georgia) is dooming our state to perpetual failure and squandering one of the nation’s most vital unused economic assets.
Thanks to Haley and other “Republicans” in Columbia, our state is slipping further beneath the waves at a time when we should be maximizing every competitive asset we have.
UPDATE: Yes, we have a bad habit of titling our articles with lyrics from Dr. Dre’s The Chronic. So sue us …
***
By ceilidh10 January 27, 2012 at 10:54 am
You cannot make this stuff up, can you ? SC is already at the bottom of everything in the USA. This brings us ever closer to the bottom rung of Hell, as Dante would say centuries ago.
What you are seeing is the maturation of the Republican Party in SC. Just like the Democrats, the GOP is splintered into special interests groups. There will be growing divisiveness as the GOP continues to mature and differentiate as various factions compete for attention and power. Throw in the historic Upcountry/Lowcountry divisions, and we shall see fireworks for decades to come.
And never forget the past or you are condemned to repeat it as Teilhard de Chardin (sp?) said a century ago. The GOP must implode and burn for the Phoenix of balanced government with Dems and Republicans sharing equal power to rise again. The future of SC depends upon balanced rule, not one-party rule.
The GOP shows us every day the damage inflicted by one party rule. The GOP can very easily repeat what the Dems did from 1876, with the Restoration of the Bourbons,i.e., the Hamptons, until the election in 1976 of Gov. Jim Edwards, when the state starting to shift Republican. The GOP is repeating the Democratic past.
Just my two cents from the City on The Hill in the beautiful Upcountry.
By Waterfront commentator January 27, 2012 at 11:12 am
APM Terminals, Inc., the marine terminal arm of Maersk Line, which is now a “third party MTO” (operates as MTO and stevedore for carriers other than Maersk) would JUMP at the chance to develop the Jasper Terminal.
http://www.apmterminals.com/
But of course, APM and other interested third-party MTOs would have to overcome the SPA’s hostility to “private enterprise.”
Once appointed to their SIX-year terms, SPA board members can be removed only “for cause,” and several of them have been re-appointed, ensuring there is no “new blood.”
To my knowledge, they are ALL opposed to “privatization.”
They are ALL appointed by the governor WITH CONSENT OF THE SENATE.
Suggestion: The Senate should not approve future SPA board appointees without holding hearings to determine if candidates support or oppose “privatization” as in Long Beach.
Those opposed should not be approved.
The SPA, with a “staggered board,” is a rogue state agency answering to no person.
No one governor really control the SPA.
The SENATE really controls the SPA by withholding SPA board member approval.
For a list of board members and their term expiration dates, call Byron Miller, SPA PR manager, at 843-723-8651.
SENATORS, DO NOT ALLOW SPA BOARD MEMBERS TO BE RE-APPOINTED.
START THE SPA HOUSE-CLEANING PROCESS NOW, BY INTERVIEWING, IN ADVANCE, PRO-PRIVATE-SECTOR CANDIDATES.
DO NOT LEAVE THIS UP TO OUR GOVERNORS.
THEY ALWAYS APPOINT THEIR “FRIENDS.”
By tomstickler January 27, 2012 at 11:17 am
Orient Overseas Container Line is a wholly-owned subsidiary of Orient Overseas (International) Ltd, based in Hong Kong, but with registry in Bermuda.
The Board of Directors:
Mr TUNG Chee Chen (Chairman)
Mr CHOW Philip Yiu Wah
Mr TUNG Lieh Cheung
Mr Kenneth Gilbert
Mr TUNG Lieh Sing
Prof Roger KING
Mr Simon MURRAY
Mr CHANG Tsann Rong
Prof WONG Yue Chim
Mr CHENG Wai Sun
Ah, so. Meet your future Chinese overlords.
By CNSYD January 27, 2012 at 12:46 pm
You hit the nail on the head. Lets turn over our ports to a foreign government like China. That makes perfect sense to Sic Willie. Even worse is that the only west coast drydock south of Puget Sound that can drydock a carrier is at Long Beach. Guess you really want the Chinese in charge of that.
By ? January 27, 2012 at 10:43 pm
You guys act like if we needed to take the port back for security reasons that the Chinese multi-national would be able to stop us.
lol…what a bunch of chicken little BS.
Just about any private company would do a better job than what’s going on now. We blew it when the UAE were interested.
By SCBlues January 27, 2012 at 11:30 am
The RepubliCONS that control this state never, ever do anything that benefits our state and our citizens.
And the band played on . . .
By norman January 27, 2012 at 11:33 am
SOS a legislative run state full of special interest elected politicians. No reason to do anything for the State or the citizens when I have to take care of my ego and my reelection donors.
By Waterfront commentator January 27, 2012 at 11:47 am
Dear tomstickler,
For more details, see
http://www.joc.com/portsterminals/port-long-beach-finalizes-40-year-terminal-lease-oocl
which states that OOCL, the steamship line, will indeed berth at that terminal, but that OOCL’s sister company, Long Beach Container Terminal, will operate it.
It also states,
QUOTE:
OOCL has called in Long Beach since 1969. Although the Hong Kong-based line will generate a large portion of the throughput through organic growth, OOCL would be hard-pressed to fill the terminal on its own.
Long Beach Container Terminal will look to OOCL’s partners in the Grand Alliance as well as to THIRD-PARTY BUSINESS, or possibly an additional partner, to fully utilize the facility, said Anthony Otto, LBCT president.
UNQUOTE.
[EMPHASIS ADDED.]
Your sarcastic description of OOCL/LBCT as “future Chinese overlords” is wrong-headed.
OOCL is a publicly traded company, on the Hong Kong stock exchange (see http://www.oocl.com/eng/aboutoocl/companyprofile/oocltoday/Pages/default.aspx?site=usa&lang=eng and http://www.ooilgroup.com/Pages/default.aspx), and different from many now-defunct U.S. liner carriers that existed on CDS (construction differential subsidies) and ODS (operational differential subsidies), this puppy receives NO subsidies from ANY government for ANY purpose.
I did business with this company for decades and assure you that it is making the Port of Long Beach a more competitive gateway than it was before. And it is investing 500 million U.S. dollars in this U.S.-based facility.
If anyone is taking a risk or gamble on this investment, it is certainly OOCL (think “FedEx”) and not the Port of Long Beach, which is a government entity (think “post office”).
By tomstickler January 27, 2012 at 2:08 pm
Just more “overlords”
LBCTI is a California corporation which is owned by the C.Y. Tung Group, a name synonymous with shipping since the earliest days of international trade. In the mid-1930′s, C.Y. Tung began his shipping empire in Hong Kong with four old Yangtze River steamers. Today the Tung Group is one of the largest shipping and financial multinationals in the world.
Long Beach Container Terminal is one of two container terminals solely operated and called at by the OOCL and its Grand Alliance partners.
By ? January 27, 2012 at 10:47 pm
“Just more “overlords””
Then a wiki entry…..
Brilliant…I’m sure it sounded like an argument in your mind before you typed it.
By Joe January 28, 2012 at 11:44 am
What has gone wrong at the Port of Charleston that has caused it to drop from a top rated port to what I being told a backwater port? Just asking. The port was state owned and operated when it was doing great, but now it is not. Could it be some devious plan to sink the port and then bring in a private operator? Just asking.
Save the Savannah River snub-nosed surgeon by not dredging.
By Waterfront commentator January 28, 2012 at 5:51 pm
Dear Joe,
You say,
QUOTE:
The port was state owned and operated when it was doing great, but now it is not. Could it be some devious plan to sink the port and then bring in a private operator?
UNQUOTE.
Citroen, Peugeot and SAAB also once “did great” but then later “not great,” but all had “bad” boards of directors.
One of the most infamously bad (read lazy, inattentive, stupid) boards was that of Sunbeam, Inc. and its chairman, “Chainsaw” Al Dunlap. And then there was Enron, whose board AND external auditors watched the company slowly, methodically collapse.
The fate of the SPA is in the hands of the SPA board, which guides it with an iron fist.
One of the most important, strategically stupid things SPA’s board did was in 1996 to replace outgoing Executive Director W. Don Welch with an arrogant, hands-off staffer named Bernard S. Groseclose (formerly “Strategic Planning Mgr.) as President and CEO AND to promote another poor leader, L. Duane Grantham (formerly Sales Mgr.) as Vice President and COO.
Groseclose and Grantham had both competed internally for the top job for the six years leading up to Welch’s retirement, and had grown to hate one another. Billy Coleman of Greenville, then-SPA’s Treasurer, told me, “We thought certainly Bernie and Duane would get along.” Mr. Coleman later said that promoting both was a serious mistake.
In 1999 L. Duane Grantham, as SPA COO, signed a 30-year “profit-sharing license agreement” with a company owned by a convicted federal criminal, Warren F. Lasch, and shortly thereafter quit the SPA to work for an inactive Nevada-based “sister company” to that company called “Opportunity Research, Inc.”
The sleepy and politically-sensitive SPA board approved of the “license agreement” (and Grantham’s seemingly unethical behavior) after receiving threatening phone calls from Sen. McConnell, who wanted to “assist” Lasch, who was raising money for the Hunley submarine.
Shortly after this the deck gave way: SPA crane operators went on strike, joined the ILA Local 1422 union (complaint: working 70 hours a week), SPA’s board realized that Groseclose was incompetent, that nobody on the board or staff knew how to operate SPA’s marine terminals, Maersk Line (SPA’s biggest customer) pulled three of its eight services out of Charleston, the board finally fired Groseclose, replacing him with another nit-wit, SPA board member John “Fetch the Donuts” Hassell.
SPA’s board finally made a smart decision in hiring Jimmy Newsome — highly experienced and hands-on steamship executive — as President.
No, Joe, there wasn’t any conspiracy at the SPA, just stupidity, arrogance, laziness, unethical behavior, and a disdain for the private sector.
You can thank Gov. Haley and the S.C. Senate for adding to SPA’s board, last spring, two NEW “political” appointees with no shipping experience or expertise.
So the responsibility really resides with the S.C. Senate, which is supposed to “vet” these positions.
Sen. Grooms chairs the Transportation Committee but of course Sen. McConnell makes all final decisions.
Thank him.
By Luke January 28, 2012 at 6:08 pm
I have a cousin who works out there, it’s a union port. Thought that would cause you big problems? A union port can’t be doing something right can it?
By Waterfront commentator January 28, 2012 at 7:14 pm
Dear Luke,
You raise a critical point, and before answering directly it I make several comments.
First, all the major container carriers in all U.S. trade lanes have signed contracts with labor unions promising to use those labor unions for “deep sea” longshore work (loading and discharging vessels).
The labor organization on the USAG (U.S. Atlantic and Gulf), with a port range from Bath, Maine to Brownsville, TX, is the ILA (International Longshoremen’s Association). On the USWC (U.S. West Coast) it is the ILWU (International Longshore and Warehousemen’s Union).
The association representing the carriers is the Carriers Container Council, formerly the N.Y. Shipping Association.
The ILWU and ILA contracts are totally separate and don’t even have the same contract dates, which, of late, between the CCC and the ILA, have been extended several times by a year or so.
The infamous “50-mile rule” reserving container stripping and stuffing to the ILA was declared a violation of the Taft-Hartley Act by the National Labor Relations Board (NLRB), and in 1977 the Supreme Court upheld the decision. There was a tremendous amount of man-hours and money (excessive costs) in the 50-mile rule, and most shippers and consignees today perform all but absolutely-necessary stuffing and stripping at off-terminal, NON-UNION warehouses.
These warehouses are all over the countryside in Savannah — a well-run and visionary port — and fewer in Charleston — a poorly-run and “free-enterprise-hostile” port. Off-terminal warehousing capacity is a major consideration by shippers in port selection, another reason Savannah has a major advantage over Charleston, where land for warehouse construction is now overpriced and consumed by the home-building and retail industries.
In 1975, freight moving via SPA’s Charleston terminals was 50%/50% container/breakbulk, and the ILA had some 1,900 full-time employees (defined as any man with at least 800 hours, qualifying him for the ILA PVW, or pension-vacation-welfare program).
Today, freight moving via SPA’s Charleston terminals is 99%/1% container/breakbulk, and the ILA’s numbers have declined to less than 830 men. The role of the ILA has declined, and the portion of costs that shippers and carriers allow for “ILA costs” has also declined.
Should the SPA lease its terminals to third party “independent” marine terminal operators (MTOs), these MTOs will take over and replace with ILA union employees the following positions that the SPA now controls with non-union employees:
1. crane operators
2. toplifter operators
3. security guards
4. warehousemen
One may be alarmed that with the ILA in real “total control” of the terminals, the costs for handling cargo (costs in terms of TEUs) will increase and that the port will be “hostage” to the ILA. This is untrue.
Whereas there will be higher costs in the four categories listed above, the total cost PER TEU will decline because of improved efficiencies the MTOs will implement that the SPA will not, including greater flexibility (gate hours, truck dwell time, days worked in flextime). The freight forwarders and customs brokers using Charleston — those on the “front lines” — DESPISE the port. However, they will not say that to a newspaper reporter or out loud. They will, however, whenever possible, route their cargo via any other port whenever possible.
Finally, there IS competition between the ILA local in Charleston and the ILA local in Savannah. Both know that what freight one gets, the other misses. Kenneth Riley, the ILA’s president in Charleston, is not opposed to negotiating with steamship lines and allowing non-union workers (e.g., line handlers or non-container vessels using non-union labor) alongside his men. ILA labor in Savannah is a different story: intolerant and highly resistant to non-union labor. In the 1980s a non-union line handling company started up in Savannah and within six months, the owner’s home was destroyed by arson.
I once asked SPA Chairman Robert Royall if he had ever had lunch with the ILA and he replied, “Absolutely not. Why would I dine with those animals?” The SPA board’s ignorance of and hostility to the ILA has improved only marginally — they see Riley at the annual “State of the Port” address.
The world-class MTOs — all billion-dollar companies — that operate in Long Beach and elsewhere — know exactly what they’re doing, and can replace the SPA “in toto,” just like Duke Power (or another private concern) can and should replace Santee-Cooper (electricity not being a core competency of government).
None of this will happen, though, until the SPA’s board is replaced with people having SOME knowledge of the shipping industry. The lawyers, real-estate magnates, political consultants and bankers there now enjoy the status quo.
Takeaway: Do not let the Governor or the State Senate appoint or reappoint political friends to the SPA board. See Sen. Grooms bill — now law — defining what should be the competency of the SPA board.
The Governor and the Senate are completely ignoring this new statute, which is based on what former-SPA board treasurer Billy Coleman called in his letter to Sen. Grooms “the New Orleans Model.”
Pingback: F’Shizzle: Snoop Dogg Backs Ron Paul | My Blog