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Protecting Maritime Trade

March 31, 2014
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Bob Foster, mayor of Long Beach, points out one in eight jobs in Long Beach is linked to world trade, putting to rest the question of whether ports are economic engines.

Keeping the engine tuned and running efficiently, therefore, becomes a top priority for port authorities as they deal with environmental impact and simultaneously try to grow and improve their ports.

Adding that the Port of Long Beach needs to run more efficiently, Foster told industry leaders gathered at the annual TPM conference in his city, “We are firmly fixed on that goal.”

Fred Smith, CEO of FedEx, gave a nod to the “incredible environmental progress” at the port before threading his way carefully and forcefully to a theme he believes threatens the growth of world trade and, by extension, the economic engine Mayor Bob Foster had already shown is running smoothly.

NAFTA, Smith offered as an example, quadrupled trade among the three signatory nations, reaching $1 trillion. But trade growth has slowed to a trickle and, “we believe even modest growth is not a foregone conclusion,” Smith continued.

Smith’s concern is that protectionism is on the rise. “It’s frustrating to see nations throttle the very thing that created their prosperity,” said Smith, continuing the discussion of open trade.

The top 20 trade economies have seen protectionist regulations at a level 23 percent higher than 2009, Smith pointed out. Multilateral trade agreements including the TransPacific Partnership (TPP) and its counterpart agreement between the U.S. and European nations could drive world GDP growth of 5 percent, Smith continued.

“It will only get better if we make it better,” Smith concluded.

The maritime industry is clearly betting on world trade getting better. Carriers are investing in larger container ships and U.S. ports continue their efforts to prepare for those larger ships.

The move to larger ships is not entirely predicated on growth of world trade. The rate at which the industry is scrapping older, smaller, less efficient ships comes into play. Ships have a long operating life, but they are being scrapped earlier. This leads the industry ever closer to regaining balance while improving the efficiency of the fleet that remains. This means a better cost overhead for the carriers, helping them approach better fiscal and operational efficiency.

The bigger issue still remains to be addressed – protectionism. Ships can shift to the active trades to keep the carriers’ economic engines running. Ports will need to work with their communities to demonstrate their value, as Mayor Foster’s comments on the economic impact of the Port of Long Beach does. That message needs to be expanded and carried beyond the community

 Mayor Foster has provided an example that can help demonstrate the role of world trade in economic growth. It’s an approach that can be adopted by ports and by the ocean carriers and other logistics services that operate at and beyond the ports. And, it can be carried through to communities well beyond the coastline. For the U.S. to avoid any protectionist attitudes of its own, every congressional constituency should carry a message similar to Mayor Foster’s to its representatives. 

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