Costly SPA Treatments

This revealing Letter to the Editor appeared in Charleston’s Business Journal on Oct. 27, 2008:

“Dear editor,

“It has recently come to the public’s attention that Maersk line is considering leaving the port of Charleston. Maersk line is a highly respected, world class shipping company that has been operating in South Carolina for more than 25 years.

“Unfortunately, container volume has dropped at the Port of Charleston because of the worldwide economic problems coupled with uncompetitive contract rates offered by the S.C. State Ports Authority.

“The SPA has the ability and capability to renegotiate contracts, lower rates and adjust their bottom line to make the port authority more competitive. That’s what the Port of Savannah has done, thus creating thousands of jobs and economic security for many of their citizens and related marine businesses.

“The SPA has taken the opposite approach. Because Maersk Line has not met their container volume quotas, the SPA is penalizing Maersk for unused crane and equipment time. A wise decision by the SPA to become more competitive in this case alone would save more than 100 good, secure, private-sector company and union jobs.

“The SPA is attempting to force Maersk into a SPA managed common-user container gate and yard operation. This is a clear violation of the ILA’s master contract agreement with the world’s major shipping lines and will eliminate many full-time private sector company positions.

“The SPA has an outdated charter created in 1942 that allows them to ‘ride the fence’ by acting like a state agency when needed or a private entity of the state when it suits them best. At times, the SPA receives federal and state grants and issues bonds but does not pay state taxes on their net profits. The SPA pays no rent or land taxes on the waterfront facility and they do not share their profits through the state treasury for general use as our legislators best see fit. How can any private South Carolina company compete with such a monopoly?

“As dire economic news abounds, must we also suffer unnecessary job losses because of a mismanaged ports authority? Sadly, the CEO and board of the SPA have lost sight of its mission. They have become a competing agency, eliminating many private-sector jobs with an unfair advantage while only caring to increase their own unshared bottom line.

“It is very important to remember that the stevedoring companies and the local ILA have together created tens of thousands solid middle class jobs for nearly 60 years, adding billions of dollars to the South Carolina economy and tax base.

“Charleston’s waterfront workers are famous worldwide for professionalism, speed and production, averaging 40.5 container moves per hour, the best in the entire U.S. The local born union labor, stevedore company management and many fine crane and equipment operators are talented, proud South Carolinians willing and anxious to work hard together to provide financial security for their families, contribute to their communities and regain Charleston’s former prestigious ranking in the worldwide port community.

“The time is long overdue for a change of direction of the SPA. If necessary, a complete changing of the guard will help create and protect jobs, not eliminate them. A lot of talk has been made about privatization, this also may be a good solution that would create millions of dollars for South Carolina through rent, state taxes, good jobs and a much needed stimulation of the state’s economy.

“Today it is Maersk threatening to leave, tomorrow it may be Chinese-owned Cosco and later the Taiwanese-based Evergreen. We can’t afford to find out.

“Thousands of middle class jobs are at stake. We humbly seek the guidance and help of our business community, citizens and elected officials, Republican and Democrat, to stand with us and not let worldwide, multi-billion dollar shipping corporations or SPA executives exploit our fine South Carolina work force.

“Sincerely and respectfully,

“Bill Tyler Harwell, James Island

“Member of ILA Local 1771, Clerks and Checkers Union”

Right on the money, Mr. Harwell! We’ve written thousands of pages to Charleston’s port officials, business officials, newspaper columnists, legislators, environmentalists and even educators, but Mr. Harwell has said more in this one letter than we’ve been able to say, and write, in the last ten years.

Mr. Harwell makes it clear that this port authority enjoys a truly unique and unchallenged position because of its outdated charter, first of all, but especially because no one in the community, or in the legislature, quite understands that charter and knows how to regulate the SPA. By being unregulated and unreigned, the agency can “ride the fence”, as Mr. Harwell so aptly puts it, and pretend to be “a state agency when needed or a private entity of the state when it suits them best … The SPA pays no rent or land taxes … and they do not share their profits through the state treasury,” he adds.

That’s unconscionable. Within the last half-dozen years we made numerous offers to retrofit our cost-effective, job-creating and highly efficient patented storage, retrieval and delivery systems at the Port of Charleston, and on one occasion we even visited community and state officials, demonstrated our profitable system, offered to build the structures at our own expense, pay millions of dollars annually in city and state taxes and in leasing fees, and guaranteed the release of several hundred acres of the port’s presently used tracts of land to surrounding communities for other purposes. No one … not even the legislators … knew how to take advantage of our offers because of the mysterious structure and monopolistic nature of the SPA.

For the good of the City of Charleston, and indeed, the State of South Carolina, something has to be done to straighten out matters in that once-prestigious port, and the “changing of the guard” is the most logical starting point. Perpetuating the status quo will cost more than the taxpayers can afford. As an example, the stance being taken by SPA executives in its dealings with Maersk is an utterly stupid one. It’s a David vs. Goliath confrontation, but in this case David doesn’t have a prayer.

In the November 1st issue of the same journal, reporter Molly Parker provides us with a few statistics dealing with the size of Maersk (Goliath). Here’s what the SPA is trying to intimidate:

• Maersk is the world’s largest shipping line and the Port of Charleston’s biggest customer, accounting for nearly 25% of the S.S. State Ports Authority’s business.

• Maersk has been calling on the Port of Charleston since 1953.

• At any one point in time, Maersk Line is transporting cargo worth approximately 3% of the world’s GNP, which in 2005 was $ 36.3 trillion.

• In 2007, Maersk Line made 41,500 port calls – equivalent to approximately five port calls per hour, or one call every 13 minutes.

• If all the Maersk Line containers were stacked on top of each other, they would reach approximately 2,500 kilometers high, the equivalent of stacking 8,550 Eiffel Towers on top of each other.

“The SPA is attempting to force Maersk into a SPA managed common-user container gate and yard operation,” Mr. Harwell explains. “This is a clear violation of the ILA’s master contract agreement with the world’s major shipping lines and will eliminate many full-time private sector company positions,” he states.

The SPA must think this is some kind of a poker game. It isn’t. It’s more like Russian Roulette. It isn’t the elimination of private sector company positions that’s at stake, it’s the elimination of Maersk and its 25% cargo volume.

Any number of competing East Coast ports would just love to extend an invitation to Maersk. As imposing as that giant carrier is, it is facing the same problems that beset other carriers. Profits are down, and because business is business, and stockholders are stockholders, Maersk could up and vacate the Port of Charleston in a heartbeat.

Maersk’s CEO warned last week that operating losses and the credit crunch have adversely affected carriers, and he predicted that, “If we see that picture continuing another six to 12 months, my estimate is that not all carriers will be able to sustain that.”

It should be pointed out to the SPA that if carriers go under, vacancies in competing East Coast ports will bring tempting offers of reduced rates and perks to Maersk. And business is business, y’know.