Free Port Marketing, Logistics, Performance and Environment Essay Sample
Being a port taking part in the global economy, New Orleans is bound to encounter competition both within and outside the US. The port experiences two types of competition- inter-port and intra-port competition.
This is the competition that exists between or among different ports. The best criterion used to judge whether container ports are competing among themselves is to examine whether the ports serve overlapping or the same hinterland. The world today has been made smaller by the international trade, but the ships that the trade uses are getting bigger and bigger by the day. For commercial ports to avoid losing their market share, they should plan for these big ships. The port of New Orleans competes with many ports in the US including the Plaquemines Port Harbor and Terminal District, and the Millennium Port Authority.
Sometimes partnerships or collaborations are a better way of tackling competition, this is precisely what the port of New Orleans has done. It signed a cooperative venture agreement to start planning jointly how to get more cargo container business. Efforts are being made by the Millennium Port Authority to build a giant container port to take advantage of the expected growth in trade. This has forced the Port of New Orleans, just like its biggest competitor, the Port of Houston, to make appropriate plans to also share in the expected growth with South and Central America. It is planning to do this by creating a port which can handle large loads of containerized cargo. Planning for such a big facility is not an easy task for one facility and that is why the Port of New Orleans ventured into collaboration (De Langen & Pallis 3).
Catching up with a Port like Houston is an uphill task for the Port of New Orleans especially keeping in mind that at one time the Port of Houston had a container traffic that was nearly four times larger than that of New Orleans? The Port of Houston is also engaged in various plans of improvement; it has agreed to build a regional port with the Port of Galveston. This has therefore kept the Port of New Orleans on its toes. It has made a very huge investment at the Napoleon dock in an effort to add container cargo facilities. Also facilities on the industrial Canal will handle cargo that is containerized. All these efforts are facing major challenges, the channel depth hampers the Industrial Canal facilities, and future container cargo can not be accommodated by the Napoleon Avenue site. The Millennium Port Authority has offered to build a mid stream container transfer station, this is near the Mississippi River mouth as an interim measure (De Langen & Pallis 3).
This happens when two or more different terminal operators that work within the same port vie for the same market. Because the Port of New Orleans serves a very large hinterland and also pays homage to many ships that come to the United States, it has many operators that take charge of the day to day activities at the port. Because of this, there is bound to be fierce competition among them. Some of these operators include; Ports America Louisiana, Inc, a stevedoring and terminal operator company at the Gulf South, Transoceanic Shipping Company, Inc. provides personalized global transportation services, Greater New Orleans Barge Fleeting Association engaged in operation of barge in the New Orleans Baton Rouge Corridor, Pacorini, Bisso Marine Company, Inc. Atkins International, LLC., that specializes in steam ship line containers transportation directly to the location of their customers near the port of New Orleans, and many other operators(De Langen & Pallis P 3).
In order for a business organization to achieve its goals, it has to look for ways of promoting its business. There are many ways through which businesses can be promoted marketing being one of them. The port of New Orleans just like any other business organization has been using marketing to promote its business itself in this world of business competition. It has done this mostly through tourism; the many tourism attractions in the Louisiana area attract many port operators at the port of New Orleans who all strive to satisfy the influx of many guests form all over the world. Many cruise travelers who had made New Orleans their popular homeport in America during the Pre-Katrina years have been returning to the port after it was reopened due to the return to normalcy of the port. Norwegian Cruise line has maintained a seasonal presence at the port all the year round, while the Carnival Triumph took up residence at the port to make sure that it does not miss on the many business opportunities. Opening of new port facilities has also been another way of attracting cruise ships and hence the many customers that use the port (Myers 1).
Another marketing strategy that has been employed by the port of New Orleans is the use of Tax credits. These are used to reward investors in port infrastructure and companies involved in the moving of cargo in and out of the port. This is majorly depended on the decisions from the State but it can greatly help in attracting more investors and service providers at the port. This incentive has seen more and more companies calling the port of New Orleans to gain access to supply routes. This is a per-tonnage tax credit which, as one economist at the University of Louisiana said, will bring gains beyond neutrality, containers in Louisiana will increase at higher rates as operators rush to have a share of the incentives given. Other incentives include the Louisiana's six foreign trade zones that makes it possible for one to import components and materials into the US without paying any duty until they enter into the United States market, the Gulf Opportunity Zone federal tax incentive that offers a competitive advantage for the expansion or relocation of large manufacturing facilities in the country, and many others (Myers 1).
The port has also come up with a joint attack I order to attract cruise lines and also to increase the awareness of the public about the successful cruise product from the port of New Orleans. The first strategy is a campaign that is aimed at educating the cruise executives on the availability of facilities to handle cruise ships in the port. These includes terminal, location, wharf space, parking facilities and the potential of marketing the port of New Orleans as the port of call and as a home port to its passenger base. This has been under the theme "Two Vacations in One", a method that has proved to be very effective. Another way that marketing has been done is through educating the travelers about the New Orleans cruise products. A survey done in 2008 showed that more than tow times the average of the industry's cruise passengers enjoyed either a pre- or post-cruise stay in New Orleans. This saw about $150 spend per day on products and services related to tourism in the city. All these were basically done through advertising in magazines, during seminars such as the sea trade convention, the American Association of Port Authorities cruise workshop and many others (Myers 1).
The port of New Orleans was adversely affected by Hurricane Katrina and therefore many efforts have been ongoing to bring it back to its full fledged functioning. First, to make sure that such events do not get them unawares again, the port's management has set up a satellite office that will enable them to detect any other storm that may come. This part of the disaster plan that will make sure that it is easier to restart the port if another big storm like the Katrina comes. This has been set up at the Port of Shreveport-Bossier (Pastor 1).
The Port has also embarked on expansion work, starting with the Panama Canal that is scheduled to be completed in 2014. This will open up the Gulf of Mexico ports to new sources of trade mostly with Asia and the South American west coast not forgetting the large markets found in Chile and Peru. The ports expansive infrastructure offers a thriving industry of ship building and ship repair. This has been receiving large amounts of money especially in defense funds and private contractor orders. Almost 15% of the total US production comes form Louisiana. The port is currently looking forward to improving efficiency in production especially with the new Avondale or UNO Maritime Technology Center of Excellence that is involved with researching for new innovative technologies. The port's strategic position and its interstate access gives it an excellent truck and distribution access to and from ports along the Mississippi River to the population centers that are found in the Gulf Coast and in the River Valley of the Mississippi. Being the only deep water port in the US, the Port of New Orleans is served by six class one rail roads. This avails direct and very economical rail service to and from any part of the country. These are: Canadian national, Burlington Northern/Santa Fe, Kansas City Southern, CSX, Union Pacific, and the Norfolk Southern (Price &Chris 2).
Because transportation infrastructure is vital to any trade more so for international trade, the port of New Orleans has invested in well-maintained, un-congested roads together with on-site port and rail access. This is practically favored by the growing containerization of port facilities. It has also embarked on distribution of center locations by locating them to rural areas; this is also aimed at reducing costs of land and building constructions. It has invested in warehouses, trucks equipment and also IT infrastructure. Moved by a very strong market for imported steel activity has increased at the port where by in 2006 it was up four percent as compared to the other years. The port has also embarked on expanding on container-on-barge services. This currently constitutes about 30 percent of the business at the port. It also is negotiating with other ports to expand the container-on-barge services on the whole inland river system. This is an advantage at their disposal because other ports can't access the services of the river. The port has also planed to create a new refrigeration facility which will have access to the Mississippi River. This will be constructed on the Governors Nicholls Street Wharf and also on the Esplanade Street Wharf. This is a project that includes the demolition of two existing sheds, replacing them with a new 150,000 square foot refrigerated area that has blast freezing capability, a truck parking area and a new marshaling yard, with side improvements (Price &Chris 2).
Scope of performance
In gauging its performance, the port has employed the triple bottom line approach to its performance. This is the measuring of performance basing on the social, environmental as well the financial aspects. For instance the many express ways connecting the port to other parts of the country had many benefits when they were constructed. They eased congestion and made transportation easier and faster. They brought in a lot of money to the economy. But these ways are said to have brought in more harm to the surrounding neighborhoods. The construction of the Claiborne corridor led to the redirecting of the local traffic to the express way leading to the commercial decline of a corridor that was once very vibrant. This also saw the destruction of the largely neutral ground that was liked for picnics, community gatherings and parades. It also lead to extended travel sheds beyond the boundaries of the city and the transit system service area. This led to disinvestment in the urban business and urban transit and also to more household migration to the suburban areas something that would not have happened at all. There are many pedestrian accidents on the express ways something that is impacting negatively to the economy of the country (Partridge 20).
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Despite the effects mentioned above, the port of New Orleans has brought great economic impacts to the US. For instance a 2004 survey showed that maritime activity within the port of New Orleans accounts for over 160,500 jobs, bringing in earnings to the tune of $8 billion, on top of these it also sees $17 billion in spending and statewide tax revenue of about $800 million. It is America's most intermodal port that has in addition to the effective rail system, fifty ocean carriers, seventy five truck lines, and sixteen barge lines. In addition to availing jobs to the citizens and stimulating growth in the local economy, it has also spurred growth in distribution centers and warehouses in the region. Companies in the port need distribution centers for their products that are close to their plants. The port also benefits a lot from the factories because the many manufacturers use the port to in their goods. Major firms have been lured into the Port of New Orleans such as Wal-Mart, Folgers Coffee, and Winn Dixie which have located their distribution operations in the area (Partridge 20).
Strengths, Weakness, Opportunities and Threats of the port
No other deep water port enjoys the advantage of being served by six class 1 rail roads like the port of New Orleans. The rail roads cover a net work of 132,000 miles that tie the port community and the many local industries directly to all major market in North America. This means that a customer's shipment or carload is always direct, only on one major rail line. This avoids time wastage and delays and also it's a cheap alternative when compared to multi-rail line routes. The port of New Orleans boasts of 6.5% industrial vacancy and a lease rate of $3.50 that is highly competitive. It has the largest wharf in the whole world at 2.1 miles that can simultaneously accommodate up to 15 vessels. It is the US number one port for imported rubber (Albright 1).
The greatest weakness to the port of New Orleans is that it is located in one of the most environmentally dangerous positions than any other major port in the United States. It is located ten feet below the sea level and worse still on the silt mound of the Mississippi River that is known to be very violent. The barrier islands that used to protect it have been disappearing with time and efforts to rebuild barriers are usually thwarted by the frequent hurricane seasons (Albright 1).
Currently the port is waiting the government legislation on the tax credits which if passed, will see increased container capacity at the port of about six to seven percent every year although this tied to the canal expansion. That is seen as a major opportunity to attract as many port operators as possible to the port of New Orleans. With the expected relocation of the headquarters of Transport Consultants Inc. to the port of New Orleans and the establishment of a $13.5 million warehouse facility, there will be increased capacity to handle the increase shipping lines that call the port. There will be the creation of jobs that is estimated at eighty. This will also help in keeping the shipping activity in New Orleans that has been going to other ports especially Houston. The facility will also package plastic pellets that are used in many manufacturing processes a business that had been lost by the port. This will also create more jobs not just at the port of New Orleans but elsewhere (Albright 1).
The main threat to port of New Orleans has always been the frequent seasonal hurricane that hit the port destroying its infrastructure and vessels. For instance, the 2005 hurricane Katrina that completely destroyed the port and the city of New Orleans forcing it to start from scratch was a big blow. The port and the state authorities should plan to build stronger flood walls that will be able to hold water and also withstand the strength of the Hurricanes when they hit them. The port's management has also planed to set up a satellite station that will be used to monitor the movements in whether so that it can be able to warn people during times of impending threats of hurricanes. There are also very old bridges that were built many years ago. These bridges can't withstand the storm's surge, and are usually lowered during storms because they were not built to handle very strong winds. These bridges should be demolished and new ones build to protect the population from the impending death (Grissett 1).
The current terrorist threats also face the port of New Orleans more so because it handles many foreign vessels entering and leaving the US. The ports also owns and controls long miles of wharfs and terminals that are spread along the Mississippi River with many high priced facilities which, if destroyed, can cause a big financial impact to the economy of the United States. There ports Harbor police are looked upon to provide the necessary security. Another threat has been the channel depths of the many canals making them unable to handle large ships. Efforts should be made to increase the channel depths especially in such times when the port is expecting more activity in containerized ports. The port should also increase port expansions like the one that is ongoing at the Napoleon Avenue. The port of New Orleans should partner with other ports to beef up security on their water ways to eliminate the security threats this should be an addition to surveillance system that should be placed in all crucial points at the port (Guillet 1).
Being strategically located the port of New Orleans stand to benefit from the many cargo ships that call it. The many rail roads accessing the port also serve as an advantage that the port should maximize on. There is no doubt that the port is an economic base which should be guarded to ensure economic stability in the US.