Florida stevedore, union want open competition for P&O terminals
Criticism of the proposed port investment by a sheikdom in the United Arab Emirates has centered on concerns that a foreign government could manage U.S. marine facilities as an instrument of foreign policy to aid a terrorist attack on the United States.
But in the eyes of some the real problem is foreign companies of any type controlling terminals they believe should be reserved for American businesses.
Rep. Clay Shaw, R-Fla., announced this week his intention to introduce legislation aimed at preventing foreign entities from operating U.S. seaports.
Shareholders of British firm Peninsular & Oriental Steam Navigation Co. recently approved the sale of its ports division, P&O Ports, to Dubai Ports World for $6.8 billion over a competing offer from a Singapore-government owned terminal operator. P&O Ports operates 29 container terminals and logistics operations in 19 countries. The current debate has focused on P&O’s container terminals located in six major ports: New York and New Jersey, Philadelphia, Baltimore, Miami and New Orleans. But P&O Ports North America actually operates at least 20 facilities in U.S. ports handling bulk, breakbulk and roll-on/roll-off cargo in places such as Port Arthur and Freeport, Texas; Baton Rouge, La.; and Gulfport, Miss. P&O also handles containers at the Port of Houston and has a container joint venture in Norfolk, Va.
In January, P&O signed a long-term lease to operate terminals at the Port of Tampa, including the recently completed Hooker Container Terminal. The deal was made possible after a U.S. company, Seattle-based SSA Marine, agreed to terminate its concession agreement for terminal space and stevedoring services, according to the Tampa Port Authority.
P&O recently renewed a contract with the Defense Department to load and unload military equipment at the ports of Beaumont and Corpus Christi, Texas.
All those operations would turn over to DP World once the sale is finalized.
Shaw said his legislation would require any marine facility at a U.S. seaport to be bought or sold by companies with at least 51 percent majority ownership by American citizens. A press release didn’t explain how an American company could sell terminal rights if they are in the hands of a foreign company, and a spokesperson did not return calls for comment.
Industry experts estimate that up to 70 percent of U.S. marine terminals are operated by companies from South Korea, Japan, Taiwan, Denmark, Singapore, China and other countries.
“To ensure the continued safety of our citizens, U.S. ports should be controlled by American companies, not foreign entities,” Shaw said.
“Commercial ports are used to send defense equipment” around the world, Sen. Robert Menendez, D-N.J., said Tuesday on PBS’ The Newshour with Jim Lehrer. “Imagine if a port operator decides to shut down operations if he doesn’t agree with U.S. policy.”
Menendez plans to co-sponsor a bill that would bar companies owned or controlled by foreign governments from operating U.S. port facilities.
Shaw’s approach is favored by the International Brotherhood of Teamsters and Eller & Co. Inc., a Fort Lauderdale, Fla.-based cargo handling company that has a 50-50 share of operations with P&O at the Port of Miami’s main public terminal.
The Teamsters, which has tried without much success to organize independent port drivers who shuttle boxes on and off the docks to warehouses for distribution throughout the country, called on Congress to block the P&O sale to DP World because of the “increased security threat of opening our nation’s ports to the UAE.”
Opponents of the sale say that the UAE served as operational and financial base for some of the Sept. 11, 2001 attackers, even though the Defense and State departments have emphasized that the Persian Gulf nation is a major ally in combating terrorism and supporting U.S. military forces in the region.
“There are three major, reputable U.S.-owned terminal operating companies that could bid on P&O’s U.S.-based assets if given the chance. They should be given that chance,” the Teamsters said in a statement.
In an interview, Teamsters spokesman Bret Caldwell identified those terminal operators as SSA Marine, Maher Terminals (which operates a terminal at the Port of New York-New Jersey) and Oakland-based Marine Terminals Corp.
“We know they would bid on the U.S. operations” if they were carved out from the rest of the deal with DP World, he said.
Officials at each company said it was premature to speculate on what interest, if any, they would have in the terminals if they became available. And Bloomberg News quoted a DP World spokeswoman as saying that the company has ruled out selling the U.S. ports to make the deal go through, although DP World said today it will delay taking over operations in the United States until the Bush administration and Congress can work out differences over approving the sale.
“We believe that these ports should be managed by American firms with America’s interest at heart,” Caldwell said, adding that if private firms are not willing to do so then public entities such as port authorities should run them.
“Foreign governments shouldn’t be operating these facilities. At least P&O had to answer to shareholders and as a private entity had some accountability built in,” he said.
The International Longshoremen’s Association took a more tempered approach, urging Congress to force the Bush administration to halt final approval until it conducts a more extensive investigation of the port sale’s national security implications.
The ILA represents workers who move cargo in ports along the East and Gulf coasts. Longshoremen’s unions have complained since 9/11 that security is lax at ports and that government attempts to require background checks on transportation workers could unfairly cause some workers with criminal records to lose jobs. Longshoremen argue that they have a vested interest in high security because they would be in danger if a terrorist attack were to occur in a port. Union calls for the government to require cargo handlers to inspect empty containers to make sure no weapons are being smuggled through a port are seen by some in industry as an effort to gain additional work for their members.
“The Teamsters and other unions have been the lone voices of concern about port security for the last five years. This is an egregious example of an administration that is not paying attention to port security on a daily basis,” Caldwell said of the DP World transaction.
One company that is willing to discuss the possibility of splitting off P&O’s U.S. assets from the rest of the transaction is Eller & Co.
Eller subsidiary Continental Stevedoring & Terminals., which is a joint venture partner with P&O at the Port of Miami Terminal Operating Co., filed suit in Florida last week asking a judge to block the sale because it is being involuntarily dragged into the deal to work for DP World. The Eller subsidiary handles cargo for P&O in Miami, and said it may seek more than $10 million in damages. It argued in court papers that the sale to DP World was prohibited under its partnership with P&O.
“Eller sees this as a national security issue” because the U.S. government would have a hard time ensuring a foreign government complies with port security rules, Joseph Muldoon III, an attorney representing Eller, told Shippers News Wire.
“It raises all sorts of questions such as sovereign immunity,” he said.
Terminals are required to develop vulnerability assessments and security plans in coordination with the Coast Guard that outline procedures for controlling access to the facility, verifying credentials of port workers, inspecting cargo for tampering, designating security responsibilities, training and reporting of all breaches of security or suspicious activity, among other measures.
“These documents are sensitive and shouldn’t be shared with a foreign government that could possibly be infiltrated,” Muldoon said.
Eller believes the solution is to put the Miami terminal and others in U.S. hands.
“The way out of this (dispute) is they should separate P&O North America from the deal,” Muldoon said.
“I’ve got to believe there are other private companies that are willing to manage these terminals if given the opportunity,” he said, while deflecting a question of whether Eller was interested in acquiring any of the properties itself.
Muldoon also said Eller did not find out about the sale of P&O's port operations until after the fact.
“It was totally done behind closed doors. Eller was not even aware of it until it happened” Nov. 23, Muldoon said.
North America only represents about 10 percent of P&O’s business, which means it wouldn’t hurt DP World to leave the U.S. facilities behind, Muldoon added.