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  • OTLT.USA
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  • OTLT.USA
    2.793
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  • OTRI.USA
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  • OTVI.USA
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  • TSTOPVRPM.ATLPHL
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American ShipperIntermodalWarehouse

Industrial expansion boosts New Orleans port, LaGrange says

   The industrial rebirth in the Gulf region, new domestic energy production, and the steady rise in U.S. exports has benefited the Port of New Orleans the past 18 months, and Louisiana state officials are laying the groundwork to grow cargo volumes further, Port Director Gary LaGrange told business leaders last month in his annual state-of-the-port address.
   Shippers are capitalizing more on New Orleans’ location at the tail of the Mississippi River system, and connections to six Class I railroads and interstate highways, LaGrange said, according to a summary of his remarks posted online and presentation materials provided by the port authority. He noted that the rail transit time to and from Memphis, Tenn., is only 12 hours.
   The energy sector’s development of shale oil and gas fields around the country, including Texas and the Dakotas, has resulted in an abundant supply of cheap fuel to power factories and provide feedstock for the chemical industry, which has contributed to a tripling of chemical volumes during the last five years, the port’s chief executive and president said.
   In 2012, the Port of New Orleans handled 2 million tons of chemicals, with exports up 5.4 percent. Meanwhile, exports of chemical resins, driven by low natural gas prices, have surged during the past five years. In 2008, the port handled 171 containers of PVC pipe for export and that number jumped to 14,689 in 2012, LaGrange said. The chemical and plastics industries have publicly announced 97 projects totaling $71.7 billion in potential new plant investments by 2020, according to the American Chemistry Council.
   Total breakbulk volume for fiscal year 2013, ended June 30, was 2.78 million tons, up 1.34 percent from 2012. Within the breakbulk segment, oil-field related equipment increased 500 percent during the first six months of calendar year 2013. In 2012, imported steel grew by 38 percent to 1.9 million tons
   Overall, general cargo tonnage grew 8.6 percent to 7.55 million tons in calendar year 2012. LaGrange said that amount included tonnage for container traffic, which actually slipped from a record 477,363 TEUs in calendar year 2011 to 463,147 TEUs.In 2012, poultry exports by container grew 23 percent.
   “The growth in New Orleans has captured the attention of new container carriers who currently do not call on New Orleans, and the port is working closely to secure additional services,” LaGrange said, citing ZIM Integrated Shipping’s formal announcement in August that New Orleans was added to its weekly Caribbean Gulf Express service.
   During the first half of 2013, imported steel has tracked near 2012 levels, forest products were up 2 percent, imported copper grew 227 percent, natural rubber increased 5 percent, and coffee shot up 35 percent. The Port of New Orleans is the nation’s largest gateway for imported coffee beans, with 14 warehouses and six roasting facilities within a 20-mile radius taking delivery of the commodity.
   LaGrange said Louisiana exports grew a record 3.4 percent in the first half of the year to $29 billion, with the top market being Mexico, followed by China and Singapore. The biggest growth (112 percent) came from exports to Panama.
   Much of the aggregate and commodity data cited by LaGrange is new to the public, even for 2012, because the port held off reporting statistics so it could clear up data discrepancies discovered during an audit of third-party commodity flow data, spokesman Matt Gresham said. 
   Export growth is being aided by a growing number of businesses opening operations in Louisiana, which LaGrange attributed to the port’s transportation domestic and international transport connections. The state’s energy infrastructure and tax policies have also played a role in attracting companies, according to state officials.
   In the past two years, Louisiana attracted $23 billion in new capital investment, primarily in the energy and chemical industries. Major investments by Dow, ExxonMobil, Dupont, Chevron, Benteler Steel, Elio Motors, Nucor (steel mill) and Roy O. Martin (wood products plant) all present new opportunities for ports throughout the state, LaGrange said.
   Companies are also investing in the port’s industrial property. Folgers recently purchased a 13-acre site and leased another 9.5-acre site from the port as part of its $80 million coffee-plant expansion. Gulf Gateway Terminals, which handles liquid bulk transfers from rail to barge, has commenced operations at a 40-acre site at the Elaine Street Wharf, LaGrange said. It will be able to handle 118-car unit trains and transfer liquids at the rate of 10,000 barrels per hour. 
   Legislation signed into law last summer that expands Louisiana’s infrastructure tax credits for private entities investing in ports, and tax credits for shippers that use New Orleans and other ports are expected to provide a further boost to cargo business, LaGrange said. Louisiana Economic Development (LED), a state agency, is working to write the rules for implementing the tax credits by a March 1 deadline.
   The new tax credits provide more flexibility to achieve their intended goal, Gresham explained. Previously, companies that invested in public port facilities by building warehouses and other activities could receive up to 5 percent off their tax liability each year for 20 years, essentially enabling them to recoup their investment. But a provision, prompted by tight budget considerations, that any spending increases be revenue-neutral meant that if analysts determined the benefit to the state was less than the total tax credit, the application would be denied. The credit has a $50-million cap per project. Under the new rules, if the direct and indirect tax returns from economic activity generated by the investment is determined to be $46 million, for example, then the credit would be adjusted to 4.6 percent, allowing the credit application to proceed at less than the full investment amount. The updated legislation also expands the infrastructure tax credit to oil/gas and shipbuilding facilities  
   Several applications are already being processed by LED, Gresham said.   
   Similar modifications were made to the import-export cargo credit, which now provides up to $5 worth of tax credits for every ton a Louisiana company ships above its baseline cargo volume of the prior year through a Louisiana port. State economists are studying a broad range of breakbulk and containerized commodities to determine the economic benefit of each. Before, shippers couldn’t claim the credit if the economic benefits were less than the total tax credits. Now, companies can receive less than $5 worth of credits for each ton to match the cost-benefit calculation.
   The credits are scheduled to sunset in 2020.
   LaGrange also highlighted the importance of infrastructure investment to enable the port to meet future cargo demand. The port plans to break ground early next year on a $26 million project to reconfigure and modernize its intermodal rail facility at the Napoleon Avenue Container Terminal, he said. The project is aided by a $16.7 million TIGER grant the U.S. Department of Transportation granted in 2011. The project will realign and extend some 4,000 feet of track and move a container marshaling yard closer to the wharf to allow for more efficient intermodal transfers.
   “We must find the political will to support vital investments in port infrastructure in Louisiana. The port has $66 million in Capital Outlay requests this year alone,” including $49.3 million for the Napoleon Avenue Wharf B reconstruction, part of the terminal’s second phase expansion,” LaGrange said in his speech. At full build out, the Napoleon Avenue Terminal will have more than 1.5 million TEU of capacity. Current capacity is 640,000 TEU, and the reconstructed intermodal terminal will boost capacity to 840,000 TEU, according to the port authority.
   LaGrange also called on Congress to fully fund the deepening of the lower Mississippi River from 45 feet to 50 feet to accommodate the newest class of large container vessels. The Water Resources Development Act (WRDA) of 1986 actually authorized deepening the river to 55 feet. 
   Dredge material can used to build 775 acres of wetlands each year, he added.
   In the meantime, state officials are hoping legislative language that would push the local cost-share for maintenance dredging above 50 feet instead of the current 45-foot limit is included in the final WRDA reauthorization bill currently being negotiated for a final vote by both houses of Congress. Escaping responsibility for maintenance costs would act as an incentive for the state to perhaps fund all, or a portion, of the deepening project, although the preferred option, as spelled out in a proposal earlier this year by Rep. Cedric Richmond, D-La., is for the federal government to pick up the entire tab. State officials have also lowered their sights to a 50-foot draft because it equals the depth of the new Panama Canal locks that will be able to handle much larger vessels starting in mid-2015.
   LaGrange pointed to an August report by economist Tim Ryan of the University of New Orleans that showed the extra draft would enable a potential increase of cargo worth more than $16 billion dollars, $11.5 billion in U.S. production and 17,000 new jobs.
   “The study found for every $1 spent on the project, it would generate $89.40 in benefits,” LaGrange said. “That’s a no-brainer. But we have to remember to promote our own issues and tout our own accomplishments because no one will deliver for our maritime industry if we don’t promote ourselves and ask.”
   To that end, the Port of New Orleans this year launched an advertising campaign, in partnership with Ports Association of Louisiana and some tenants, to educate the general public about the port’s role as a job-creation engine in the state as part of its strategy of sustaining legislative support for its operations.
   The ads ran on the 45-station New Orleans Saints radio network that extends into several nearby states.
   The Port of New Orleans has also hired environmental manager Amerlia Pelligrin, who is in the process of establishing the port’s Environmental Department and new programs, LaGrange said. The port was moving to meet environmental certifications a decade ago, but the recovery from Hurricane Katrina in 2005 derailed those plans until now, according to Gresham.
   LaGrange said the port’s sustainability initiatives include exploring the use of alternative fuels for maintenance vehicles as well as facilitating the development of alternative fuels infrastructure for use by port tenants and operators. The port is also entering into an agreement with the University of New Orleans’ Maritime Environmental Resources and Information Center that is aimed at promoting sustainability and green business practices by bench marking energy efficiency, water quality and land use remediation along with other key indicators.

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