Long-Term Infrastructure Gridlock....... Short-Term Congressional Vision!

Now that we have pushed DP World aside, and are now trying to legislate ourselves into a transportation quagmire, with no real US-based organizations able to manage our port network…lets take some stock in our transport infrastructure situation.

You know what really scares me? It is the inability of our transportation infrastructure to keep up with the normal day-to-day strain, pressure imposed on the basic links. Our highways, waterways, railroads and aviation networks are simply not keeping up with these ordinary demands.

A report by the American Society of Civil Engineers, paraphrased here, stated; "In 2005, here's what our infrastructure report card looked like: our aviation system got a D+; navigable waterways a D-; roads a D, and rails a C-.”

Granted, I had a few semesters in college with no better grades, but this the USA we are talking about!

Have we've reached gridlock yet? No…but if we don't do something about it, it's only a matter of time. Why? It's just a simple matter of supply and demand baby! On the supply side, we have four million miles of public roads and bridges. More than 5,200 airports, 163,000 miles of railroad, 9,000 commercial docks, wharves and piers.

That infrastructure is valued at $2.2 trillion dollars, representing 7 percent of all fixed assets in the U.S. But even all these assets aren't enough. Because of the growth in global trade, demand is rapidly outpacing supply! Think China…think India…

So, it's only going to get worse, as ocean cargo volume is expected to double by 2020. And yet, few U.S. ports have channels deep enough to accommodate the largest ocean-going container ships. Our inland waterways that help move goods within the country are also aging and leveraged. Nearly half of the locks on these inland waterways are obsolete, and can’t accommodate any volume!

Back on terra firma, things aren't any better. We depend on trucking to transport 90 percent of the products made or shipped in the U.S. But trucks are increasingly stuck in traffic, going nowhere fast and burning fuel at record costs. Between 1970 and 2003, vehicle travel on highways shot up by 161 percent! What do you think the response was to this increase in traffic from our government? New road mileage increased by only six percent! SIX!

In America's 85 largest metro areas in 2003, 54 percent of travel involved heavy to extreme congestion, up from 20 percent in 1982. Road congestion costs the U.S. economy more than $63 billion every year, and the price tag is going to go up. Road use is expected to increase by nearly two-thirds in the just the next 20 years. We can’t catch up to this exponential growth, no matter how much we spend!

The story sounds familiar on the railways as well…where rail freight tonnage is expected to increase by at least 50 percent by 2020. The U.S. rail system is experiencing unprecedented volume of international freight. In fact, half of all rail intermodal traffic today is international. That's four-and-a-half million trailers and containers. To put that into perspective: In 1980, domestic and international traffic combined equaled three million trailers and containers. WOW! No wonder the rail operators respond to our needs at a snail’s pace!

We simply can not wait on this….or, as a nation, go on like we are! We need to move forward now, we need to step up and make a serious commitment to attack this challenge! The federal government spent about $91 billion on transportation construction in 2004, but we need a new approach. Spending money on our infrastructure is not just the simple answer. Throwing just money at it won’t work. We need to target that spending strategically, using a holistic strategy, with a focus on the long-term.

Holistic? Oh no, not this classic word again!

My meaning is to take into account how all the air, ground and water-based systems work together, and increasing the integration of all these different modes of transport. For example, all the port capacity in the world won't prevent bottlenecks if there isn't enough rail freight capacity on which to unload the ocean shipments. This has to be done on the West Coast, East Coast, and Gulf port gateways!

If we are going to maintain our place as a leading economic nation in the world of trade, we have to have the best infrastructure! We should ask ourselves, whether we're in the public or private sectors: Are we willing to stand by and watch as we slide into gridlock? Or are we willing to take the necessary steps today to ensure a vibrant economy tomorrow? Do we really have a choice?

No, we don’t. We should be focused on these infrastructure issues in Congress, instead of creating a steady stream of reactionary legislation to the DP World debacle. I’m starting my letter writing campaign today…

Let's Put The DP World Deal To Rest

The Quick Read on the DP Deal

When DP World, a United Arab Emirates-based company, abandoned its effort to take over some operations in six major U.S. seaports today, it marked the end of what was a growing political disaster for the White House. For more than two weeks, President Bush’s team had been defending a deal that would have put an Arab company in charge of ports in Miami, New York and several other major cities. And each day, Bush was waking up with fewer allies. The company’s decision offers a face-saving way out for the White House. The President had promised he would veto any bill that blocked the deal with the Dubai company, but as congressional opposition grew, he was faced with either abandoning his veto threat or risk having Congress override the first veto of his presidency. Here’s a short primer on how the political deadlock over the ports deal was ultimately resolved.

Who killed the deal?
A group of lawmakers from New York, led by Republican congressman Peter King and Democratic Senators Hillary Clinton and Chuck Schumer, initially attacked the port deal. But the real key was two weeks ago when both Senate Majority Leader Bill Frist and House Speaker Dennis Hastert both spoke against it as well. “The bow is under water and all the deck chairs have slid to one side of the boat, and the cry comes out from Captain Hastert, 'Every man for himself!'" says a House Republican aide. "God bless Captain Hastert.”

That was the start of a number of Republicans questioning the the deal. Last week, in a meeting with members, GOP leaders learned what they largely already knew: almost no House Republican was for the deal. By Tuesday, House Majority Leader John Boehner, who had been one of the few Republicans not slamming Bush, said he hoped this issue would “go away.” The next day, with the support of House leaders, a House committee passed a bill 62-2 opposing the deal. That same day, Democrats in the Senate announced they would push a bill to end the deal as well. That led to GOP leaders telling Bush on Thursday morning that the deal was dead, which was soon followed by the Dubai company's apparent decision to follow Congress' advice as well.

What does this mean for port security?
Even if DP World isn’t in charge of a U.S. port, foreign companies still play a huge role in U.S. terminals. According to the Wall Street Journal, 60% of the container terminals at the nation’s 10 biggest ports are least partly managed by foreign operators. And that's unlikely to change, although Congress will oversee the process of awarding such contracts more carefully now.

Will Congress do anything to make sure such a deal doesn’t happen again?

Congress is already looking into ways to revamp the U.S. Committee on Foreign Investment in the United States, a group of Cabinet agencies that reviews deals with foreign companies for national security. Susan Collins, a Republican Senator from Maine, has suggested intelligence agencies, which are currently not formally involved in the process, should have a role. Congress has complained that the committee should have recognized the concerns the Dubai deal brought before they approved it.

What does this mean for President Bush?
Bush defended the Dubai agreement for two weeks, making Republicans, already weary from Hurricane Katrina and the failed nomination of Harriet Miers for a Supreme Court seat, again wonder about his political judgment. With Bush’s approval rating hovering near 40%, it’s likely GOP members of Congress will continue to look for issues on which to separate themselves from the president. That will make it even tougher for Bush to get any of his proposals through Congress. The bottom line is that this has started Bush's lame duck pursuit...so we just don't care anymore.

Will Eller & Company Ever Keep Quiet?

Lets hope so, cause I'm getting tired of that one note dirge. Get over it and move on...

Thats it, I'm done with this sad story...

Mountaineers To The Sweet Sixteen!

Let's Go Mountaineers!

Back to the Georgia Dome for the Sweet 16!

Can lightning strike twice for us in the Georgia Dome this year?

Good luck to the Mountaineers and their fans!

Let's Go Mountaineers!

PC Forum Over-Load!

The forum was awesome, and I'm going to try and come up with a solid post on choice, and the user being in charge in this day-and-age of logsitics and transportation. If I can ever distance myself from the DP World mess! Check in with you later this week!

Heading to the PC Forum in SoCal - March 11th To The 14th

My mind will be aglow with whirling, transient nodes of thought...careening through a cosmic vapor of invention.

Can you name the source of the quote? I'll check in with ya after the event...

Dubai Ports Can't Catch A Break

Dubai Ports World can't seem to catch a break. When Chief Operating Officer Edward "Ted" Bilkey went before Congress and offered a gesture of good will that everyone should be guided by Abraham Lincoln's prescription of "malice toward none, with charity for all," senators pounced on him, saying Dubai showed no good will towards Israel by enforcing an Arab boycott of goods from that country.

On Tuesday, Mohammed Sharaf, DP World's chief executive officer, was criticized by Democratic Sen. Charles Schumer and Republican Rep. Peter King for comments on CNN about how his company operates.

The two lawmakers from New York asked Homeland Security Secretary Michael Chertoff to examine Sharaf's comments that port operators do not have security responsibilities, that he didn't know how much U.S.-bound cargo was inspected by automated imaging machines, and appeared unaware of security procedures in the Port of Jebel Ali in Dubai.

Schumer and King also complained about Sharaf's expressions of confidence that the deal would be approved because DP World is obligated to pay the shareholders of Peninsular and Oriental Steam Navigation Co. DP World completed the $6.8 billion merger on Tuesday, but has made arrangements to keep separate the management of the United States facilities to give the government time to conduct a second review about whether DP World poses a threat to national security.

"Mr. Sharaf's comments and his view that this is simply a run-of-the-mill economic transaction, merit further investigation to ensure that DP World, its leadership and employees share our commitment to security," the legislators wrote Chertoff.

But according to the transcript of Sunday's CNN Late Edition, Sharaf actually said security measures are not only the responsibility of the port operator, but also of the customs authorities and coast guard in each nation.

"Port operators don't control the security of the port," Sharaf said, while indicating in the interview that the company takes steps to implement many security regulations to make sure authorities have confidence in their operations.

Although the lawmakers singled out DP World officials for saying they don't know the container's contents, industry officials say that type of information is not shared by vessel operators or customs authorities with the terminals themselves.

Sharaf said Dubai Customs would have figures on the numbers of inspections conducted on behalf of the United States since it is the agency that works with U.S. Customs and Border Protection, which actually receives the electronic manifest from the ocean carrier 24 hours prior to loading.

As for the deal going through, Sharaf appeared to be referring to suggestions that the entire transaction for terminals around the world be held up, saying that could not be done because of contract obligations.

Just when you thought it couldn't get any uglier...

Patriotism? Profiteering? Or, Just Plain Old Political Positioning?

Eller & Co. makes Buy-American play for P&O

The Eller & Co., the Fort Lauderdale-based stevedoring company that has filed suit and asked Congress to block the sale of P&O Ports North America to a state-owned terminal operator in Dubai, now says it is interested in buying some or all of the port facilities if the deal is thwarted.
DP World's $6.8 billion takeover of Peninsular and Oriental Steam Navigation Corp. and its 30 terminals around the world is scheduled to close today, even as the uproar over the sale continues to embroil Washington and the nation. A majority of Congress and the American public oppose the sale to the sheikdom because they are concerned that some of the Sept. 11, 2001 hijackers received aid in the United Arab Emirates and that terrorists could infiltrate the company to launch an attack through vulnerable U.S. ports.

After Congress threatened to stop the transaction, DP World agreed last week to put P&O's North American operations in a kind of operational escrow that would insulate local executives from corporate headquarters while the Bush administration launches a second, more in-depth, investigation of the company.

But with a letter from the Bush administration approving the deal already in hand, DP World is proceeding to finalize the sale and take ownership of the entire company. It will receive revenues as a hands-off, passive investor in the North American business. Some lawmakers and Eller representatives argue that once DP World owns the U.S. facilities it will be hard to roll back that portion of the sale in court.

Eller subsidiary Continental Stevedoring & Terminals is a joint venture partner with P&O at the Port of Miami Terminal Operating Co. where it handles cargo for P&O. The company has filed suit in Florida and Britain asking judges to block the sale because it is being involuntarily dragged into the deal to work for Dubai Ports World. It also claims it would suffer millions of dollars in lost business if security concerns lead the U.S. government to revoke approval of the deal or the Miami port authority to find fault with P&O's contract and terminate the joint lease.
Joseph Muldoon III, a lawyer who represents Eller & Co., lobbied members of Congress Wednesday to block the sale and force P&O to divest its North American ports subsidiary.
"I'm afraid if Congress doesn't act they may be immune from something from the courts," Muldoon said in an interview.

On Sunday, Eller said in a statement that the U.S. terminals should be placed in the hands of a court-appointed receiver until the administration completes its investigation and sorts out its differences with Congress about the sale. If the sale is disapproved the receiver would control the assets until a buyer could be found.

"I think what is needed here is an American operator in order to quell the furor" over the sale, Muldoon said.

Eller, which played a role bringing the issue to the public's attention, has cast its opposition to the sale on national security grounds, saying DP World can't be trusted to comply with U.S. maritime security rules.

But Muldoon told Shippers' NewsWire last week that he believed there were several U.S. companies willing to manage the P&O terminals if given the chance, and Wednesday he acknowledged that Eller & Co. itself is interested in the buying some or all of the facilities, depending on how the deal is structured.

P&O Ports North American represents about 6 to 10 percent of the value of the entire P&O operation, according to DP World officials. Muldoon said Eller would be willing and able to bid on the U.S. assets, which have an estimated value of $400 million to $600 million based on the current sale price.

Eller would consider many options, including being part of a group of investors, to buy the P&O terminals.

Eller is a relatively small terminal operating company, with stevedoring and agency activities in Florida's Port Everglades, Tampa and Port Canaveral, as well as Miami.

Representatives for the privately held company were unable to provide revenue figures. However, the Associated Press reported that in the company’s court filings in Britain, Eller placed the potential loss of business in Miami at $150 million a year.

This looks like a boondoggle to me...Eller doesn't have the cash, executive management, or industry scope to deal with this issue...or to purchase the terminal operations (even if they would be part of a consortium). This smacks of plain old positioning or politics, and has nothing to do with safety concerns or increased exposure to terrorism our ports may have under DP World. We need to move on and concentrate on things we can control within DHS, Customs, the Coast Guard, and the State Port Authorities.

DP World Deal Creates Deep Disinformation

I am not above taking a few ideas from the "blogasphere" to heart, and using them in this space. My friend Ken Lyon's opinions posted on his GlobalTradeSecurity@yahoogroups.co.uk forum are spot on...forgive me for just a few edits:

I've been in the US over the past couple of weeks and although it has had limited press coverage outside of the US, the proposed acquisition of the P & O Ports business by Dubai Ports World has created a storm... A HUGE STORM!

The US media are having a field day, along with Members of Congress, who are described in the FT thus... "When they gang together, Washington politicians can make almost anyone look sensible. They have outdone themselves in the P&O saga. Who would have thought that of all the parties involved in the sale of the UK shipping group, Dubai Ports World might emerge with some credit?"

Much of the nonsense being presented in the media on the subject of security concerns is just that, nonsense! The security concerns will change not one jot, irrespective of who is operating the terminals as security has been and will remain in the hands of the Coastguard, DHS and to a degree US Customs...

Some facts!

DPW are acquiring the management contracts for 'some' terminals in each of the ports! For the uninitiated, large ports nowadays are comprised of a series of terminals (aka 'berths') that are connected to a specific shipping line or trade. This is true across the globe... Indeed one of the larger competitors to P & O is Hutchinson Whampoa, owned by one of China's richest men Li Ka Shing (with very close ties to their government!)... This international ownership has been going on for years, in the US and elsewhere... Security has never been raised as an issue...(quick note, China "leans" toward Communism)

As far as I can check, in the past 15 years no US company has ever expressed a desire to get involved in the Port terminal management business anywhere in the world. Less so, have the capability to do it as they are mindful of the powerful longshore Unions that would be nervous at matching the efficiencies found in advanced port operations in Asia and Europe. Meanwhile, the Brits, the Chinese, the Danes and many others have been buying these operations around the world. Indeed, airport terminals have also been undergoing the same kinds of transformation, with UK and other companies building global businesses on the back of exploiting under utilized retail opportunities in these places... Why have these activities never been highlighted as 'A Serious Threat to National Security'??? (Maybe, cause they don't have political implications in the mid-term elections?)

DPW are controlled by the government of Dubai and could allow terrorists to gain knowledge of port operations... I suspect it's a bit easier to discover the operational procedures of any terminal by just having a friendly face get a job in one, read articles about how terminal A is more efficient than Terminal B in an effort to gain new customers (as they try and run them as a business to attract more shipping lines!) or, perhaps just pose as an owner of a small shipping line that wants to use the terminal and in the midst of the negotiation, request a briefing on their security procedures??? But what do I know? And anyway, security is not their job in the wider sense... Are we to understand that Customs and Border protection (who are responsible and independant) are not up to scratch here???

By the way, the Sheiks that control (own?) Dubai are quite keen on our way of life, they get to meet Her Majesty at the races given their shared passion for horse racing (a very big deal in the Gulf) and have been very strong in their support for the US (and not so gentle behind the scenes when dealing with questionable terrorist suspects)... They also employ either British, American or other western managers to run these companies, as they buy them for investment and profit, not murder and mayhem...

A good friend from the US reminded me that it's coming up to election time in the US and so any issue like this will be exploited for its political value, even if truth and fact are discarded along the way... However, this fuss creates the wrong image and justifies the fears many share about engaging seriously with US to defeat terrorism...

As we have discussed in this forum, co-operation and information sharing in advance of ships and cargo arriving on the doorstep is the key to addressing the challenges faced by governments... ill informed hysteria and alienation of innocent parties does nothing to move the the real debate forward...

Have I offended anyone with this??? (Ken probably doesn't really care if he did...he is being polite)

Just a thought; If I were someone up to no good, I probably wouldn't want to bring attention to myself by making an aquisition in a sensitive area using my own name or nationality... Someone might suspect something and want to examine my operations in more detail (which is precisely what is going on now with DP's self imposed review of the deal, along with their own cooling-off period).

Or have I missed the point? (No, you have not Ken...right on...lets see if our politicos catch on any time soon)