Louisiana should send ‘clear message’ to shipping industry that it can accommodate growth

Prospects for growing container volumes through the Port of New Orleans remain on a solid footing as new trade route opportunities emerge in the coming years, according to a new study.

“Strategic Advisory Report: Napoleon Avenue Container Terminal Development Utilizing Public-Private Partnerships,” a 72-page report prepared by Parsons Brinckerhoff (PB), a global transportation consulting firm, highlights the Port’s ability to grow and expand container capacity to meet increased demand.

“This study produces a clear picture of today’s economic climate and how best to prepare for the future,” said Port President and CEO Gary LaGrange. “It details the Port’s strengths of connectivity and current assets, while also providing a strategic plan for long-term success in capturing new cargoes.”

The Port of New Orleans has eight direct container liner services that make regular calls to the Napoleon Avenue Container Terminal. Four container lines, Hapag-Lloyd, Maersk, Mediterranean Shipping Company and Seaboard Marine run those services and provide access to ports worldwide through New Orleans.

The Napoleon Avenue Container Terminal was opened in 2004 with the capacity to handle 366,000 containers (TEUs) per year. PB confirmed that initial capacity estimate, but noted that additional container handling resources that have been added since the opening have increased the terminal’s maximum annual capacity to 594,000 TEUs.

The most likely scenario for garnering significant new cargo is attracting direct container services with Northeast Asia, which would transit an expanded Panama Canal – set for completion in 2014. Currently, only indirect services allow container trade between Northeast Asia and New Orleans.

The study recommends ways that the Port can increase capacity to meet growth of its current base cargo levels and to accommodate two additional containerized shipping liner services. It also recommends that the Port focus on its competitive advantage of being able to bundle inland transportation services, such as rail, truck and barge transportation to markets in the Mississippi Valley and beyond.

While some shipping lines may be interested in investing in a terminal that they control, PB reports that it is not likely that the entire cost of a new terminal and related infrastructure will be financed solely by the private sector. Therefore, the report recommends that the Port and the State identify sources of funds that can be put toward a partnership with the private sector. Funding commitments from both public and private sources should be identified to communicate “a clear message to the shipping industry that (the Port) can accommodate growth for both existing businesses and new shipping services,” the report states.

The report deems the Port’s top priority should be to proceed with planning for the expansion of the Napoleon Avenue Terminal and the creation of a new adjacent dedicated terminal. The Port’s current plan calls for four additional 1,000-foot berths and 70 acres of additional storage yard space through the redevelopment of wharves adjacent to the current facility and the relocation of the Port’s intermodal rail facility to provide increased efficiencies. The Port has already undertaken portions of the plan by purchasing two additional gantry cranes at a cost of more than $25 million, which are scheduled to be installed in July 2010.

With an investment of nearly $500 million needed to fully expand the Napoleon Avenue terminal and develop the adjacent facility, the study emphasizes these projects as “the most cost-effective and expedient way the State can realize Louisiana’s containerized cargo growth opportunities…as opposed to a greenfield site.”

One key element of the report focuses on the latest national demand forecasts as they relate to the global economic slowdown. The study predicts the growth of U.S. container trade from 2009 to 2028 will be significantly lower (+3.5%)