EconSouth (Fourth Quarter 2005)

Recovering from Katrina

‘Each Week Has Gotten Better’

An Interview with Gary LaGrange, CEO of the Port of New Orleans

The Port of New Orleans has been a vital cog in America’s economy for more than 200 years. Access to the shipping hub at the mouth of the Mississippi River was a major reason President Thomas Jefferson negotiated the Louisiana Purchase in 1803. Today, 62 percent of Americans consume cargo shipped through the port, including steel, rubber, coffee, and plywood, said Gary LaGrange, the port’s president and chief executive officer. In the aftermath of Hurricane Katrina, however, the Port of New Orleans faces major challenges.

EconSouth: At what capacity is the Port of New Orleans operating?

Gary LaGrange: As of early December, we’re about 45 percent in total activity. In 2004, we had an average of 36 ships a week. We had 18 ships last week. As a general rule, each week has gotten better. Now, we’re still improving each week, but the curve has leveled off. My prediction has always been that this port’s going to be at 80 percent by March 1. I really, firmly believe that.

ES: What are the critical issues facing the port at this time?

LaGrange: We’ve made several good strides. Right now, though, the most critical issue is the lack of truckers and our ability to reach the marketplace. Sixty to 75 percent of all [imported] cargo moves out of our port by truck. We normally see 1,500 trucks a day coming and going. Right now, we’re averaging 450 or so. In an effort to try to lure truckers into New Orleans, I was on a radio show this morning appealing to truckers to contact us.

ES: Why aren’t all the trucks back yet?

LaGrange: There was a shortage of truckers nationwide before the hurricane. In the case of New Orleans, a lot of the truckers lost their rigs in Katrina, and a lot of them lost their homes and moved to other states. So we’re trying to get them back to the point of putting them on cargo ships to live. To complicate things even more, there’s a catch-22: FEMA [the Federal Emergency Management Agency] is paying huge wages to the truckers to haul trash and debris, so a lot of the truckers we need to work at the port are doing other things such as hauling trash, a service the port also needs. It’s a dilemma.

ES: What’s the condition of railroads into and out of the port?

Photo courtesy of the Port of New Orleans

LaGrange: We’re at 90-plus percent capacity. The railroads have bounced back really well. The immediate problem, again, was workers. And the reason for that was a lack of housing. All it takes is one break in the chain, and the whole process breaks down.

ES: How are you dealing with housing needs for the port employees?

LaGrange: I’ve got about 70 percent of our people back to work at this point. And we’re going to develop a site for FEMA housing for port employees. The three things we needed most were housing, electricity, and transportation. For housing, on the night of the storm I was able to get in touch with the interim director of the Maritime Administration in Washington. He contacted U.S. Secretary of Transportation Norman Mineta, and within two or three days we had a green light on having five or six cargo ships, which are either part of the Ready Reserve Fleet or training ships used at Merchant Marine academies, sent to New Orleans. Those ships provided us with heavy lifting power because our cranes were still out at the time. Because those ships serve as power generation plants, they provided electricity. They also gave workers a place to sleep, shower, and have a hot meal. As our people have come back, many of them have lived on those ships.

ES: How are steel imports holding up?

LaGrange: Up through September, this year was not as good as 2000 and 2001, but steel import levels were certainly better than in 2003, when tariffs were imposed for an 18-month period. We’re the number one importer of steel in the United States. I’m sure that Katrina has affected that designation a little bit. The day after the storm, people said the Port of New Orleans won’t see a ship for six months, but eight days after the storm, we moved steel to the Hyundai plant in Alabama.

ES: Are you able to handle the big grain shipments from the Midwest harvest season?

LaGrange: When Katrina hit, it was the middle of the harvest season in the Midwest. Not a lot of people realize that more than 60 percent of all grain exports out of America come through the lower Mississippi River and New Orleans. A lot of the ships that call here at our port bring in steel, then go back up to the grain elevators to pick up grain and take it out. The process really wasn’t disrupted. I can tell you because I saw it with my own eyes. The day after the hurricane, I counted 13 grain ships going up to the grain elevators. The grain never really stopped. Quite honestly, it couldn’t. The country couldn’t afford it. Those shipments were actually out of the Port of South Louisiana, north of New Orleans on the Mississippi River. They have the major grain elevators there. Now there is a shortage of barges. Some sank, and some were lost in the storm. Some grain was on barges that got wet, and those barges were out of commission for awhile.

ES: What are the main things the Port of New Orleans needs as far as aid and assistance?

LaGrange: We’ve done three surveys with three different engineering survey firms, so I know our numbers are about as good as they’re going to get. Damage at the Port of New Orleans, public and private, is a little over a billion dollars. That’s what it would take to rebuild and relocate. Of that sum, the public portion that will not be covered by insurance or FEMA is roughly $275 million. On the private investors’ side, I’m in Washington, D.C., to speak on their behalf. They’re going to need tax incentives. They’re going to need Liberty Bonds similar to those issued after 9/11. They’re going to need longer-term amortization schedules on bonds. We’re not asking for handouts; we’re just asking for some incentives.

ES: What sort of response are you getting in Washington?

LaGrange: I just got here today, but I think the general consensus from Congress is that we’re running out of time. Congress is also rushing to judgment on the early, inflated [federal aid] numbers. Congress just seems to be groping for numbers that it could possibly live with. I’ve got my numbers dissected more than a bullfrog in biology class, and I can tell you they’re not going to question these numbers. And they’re not unrealistic. They’ve got to realize this is a national port. It’s not a New Orleans port or a regional port.

Photo courtesy of the Port of New Orleans Katrina’s Effects Ripple Through Region’s Ports Though Hurricane Katrina dealt the New Orleans Customs District a powerful blow in August 2005, the region’s other customs districts were either untouched or are rebounding from Hurricane Katrina and the other storms. New Orleans Customs District The value of U.S. trade passing through this custom district’s ports—which include the Port of New Orleans and 15 ports along the lower Mississippi River—reached $117 billion in 2005, up 12 percent from 2004, with New Orleans accounting for nearly half of that total. The Port of South Louisiana, located on a 52-mile stretch from New Orleans to Baton Rouge, is the nation’s largest port by tonnage. In September, export values out of New Orleans plummeted by $1.1 billion, or 45 percent, and imports fell $500 million, a 21 percent drop from September 2004 levels. Much of the trade that had passed through the Port of New Orleans has shifted to other ports, including Jacksonville and Mobile, reportedly with the higher costs that accompany rerouting cargo. Mobile Customs District Comprising the ports of Mobile, Gulfport, and Pascagoula, the Mobile Customs District handled about $17 billion of trade in 2005, or approximately 6 percent of all the trade handled by regional ports, an increase of 5 percent over 2004 levels. Currently, Mobile has resumed handling key commercial cargo such as containers for auto assembly plants and coal for utilities. The port at Gulfport, Miss., was virtually flattened by the storm. In September 2005, the port’s value of shipments dropped drastically to less than $33 million from $316 million a year ago. Gulfport is a major entry port for banana imports from Central America and the Caribbean and is also an important shipping point for regional poultry exports. This cargo has shifted to Jacksonville and other Gulf ports. Storms also seriously affected the port of Pascagoula, Miss. That port handles cargo as diverse as chemicals, rubber, machinery, and forest products. September port values dropped dramatically to $75 million from $240 million in September 2004. Savannah Customs District Container shipments and autos have contributed to the rapid growth of Georgia’s Savannah and Brunswick ports. Unaffected by Katrina, these ports handled $70 billion in total shipments in 2005, up 23 percent from 2004. Although port officials did not report significant traffic from disrupted Gulf Coast ports, they noted that Savannah ports received some traffic diverted from congested West Coast ports. Miami Customs District About two-thirds of the $66 billion traded by the Miami Customs District’s seaports and airports is with Latin America. Miami port officials did not report major changes in trade resulting from storms affecting the Gulf Coast region; only Port Everglades reported receiving some diverted traffic. Tampa Customs District This district, comprising the ports of Tampa and Jacksonville, handled $26 billion in cargo in 2005. Jacksonville reported a strong uptick in cargo after Katrina. In September 2005, both ports nearly doubled year-ago export values to a record $841 million, an increase attributable to Hurricane Katrina. The ports handled a record $942 million in imported goods in September 2005, up 18 percent from year-ago levels. Jacksonville’s port also is the region’s largest for auto imports.