Commentary: Ports are learning business lessons

   As the founding partner of management consulting firm Summit Strategic Partners and a former port director, Stanley Payne sees interesting similarities between start-up companies he assists and port authorities.
   For one, ports and startups always seem to be looking for money. Then they price their product unrealistically low to gain market penetration.
   But after years of higher and higher sales and volumes, both face the harsh reality of profit expectations, Payne said in mid-December at the Journal of Commerce’s Port Productivity Summit.
   New companies and ports have to figure out how to scale up their businesses so they can maintain effectiveness at higher volumes. 
   Both strive for efficiency, but may not know exactly what they are looking for or ways to control or improve it once they find it. And both embrace metrics, but struggle with them.
   Ports may not be startups in the traditional sense, but they need to transform themselves into more business-style organizations to deal with changing economic, government and industry trends, Payne said.
   State and municipal budgets are strapped, so public funding for capital investments has to come from other sources.
   Personally, I can think of at least two port authorities—Virginia and South Carolina—that have begun to take a harder look at the bottom line rather than continuing to simply operate as quasi-public economic development agencies.
   Payne was once deputy executive director of the Port of Virginia and headed Port Canaveral until early 2013.
   He recommended that ports need better use of communications and metrics to help them deal with congestion these days. Investing in cranes and making process improvements isn’t enough.
   Communication is especially important for landlord ports that can only make changes through influence, persuasion and collaboration with stakeholders.
   “Ports may find it beneficial to begin to talk to each other again, not to set rates, but to establish best operational practices. I would argue that it’s actually in the best interest of ports to support each other. Container lines seldom find it attractive to have only one efficient port in a port range or along a coast,” he added.
   It’s an approach the ports of Seattle and Tacoma have undertaken.
   Ports can no longer take the approach that they can identify progress when they see it because the world moves too fast, Payne said. But operational metrics can get very complicated and sometimes lose their purpose if officials overreact or view the numbers as casting their port in a negative light.
   “First, decide what’s most important and only then measure it,” he said.
   Get those operational metrics up and you can use them as a marketing tool, he told the audience of maritime representatives. 
   And that’s another sign that ports are transforming into businesses, he said.

This commentary was published in the February 2015 issue of American Shipper.