Politics and the Ports

Southeast Louisiana ports must think globally in an everchanging shipping landscape.

BY DREW HAWKINS

Biz spoke to few local experts and insiders to get some insight into how geopolitics can affect the maritime industry here at home.

UNO’s Bethany Stich, PhD, and Faisal Mallum, PhD candidate, who both specialize in public policy and freight administration, said in a joint email that traditionally, countries around the world manage their international trade transactions through international trade policies. Such policies are designed to either improve or restrict trade. Trade agreements or Free Trade Agreements (FTAs) are trade policies aimed at removing most limitations to trade, allowing for a free movement — or close to free movement — of goods between parties in the FTA.

“A good example of a regional FTA is the U.S.-Mexico-Canada Agreement (USMCA), that supports free trade between the U.S., Mexico, and Canada,” they said.

and Mallum. “Take for example the war in Ukraine that led to a closure of their four major seaports, which in turn impacted the shipment of grains to the global markets, thus, causing major food shortages around the globe.”

Stich and Mallum said that on the other hand, the Port of South Louisiana, as an example, has increased exports of grains to fill the supply deficit that was created by the war in Ukraine. Similarly, sanctions that have been imposed on Russia because of the war have led to the creation of a huge gap in global energy supplies and prices. These are products that move through the ports, for example ports in Louisiana and Texas. Global deficits in energy supplies created by the war creates opportunities for U.S. suppliers to try to plug the energy gap by supplying the countries in Europe which were formerly reliant on Russian supplies.

New Orleans’ port system has been making the news a lot lately.

From Port NOLA’s ongoing efforts to build a container terminal facility that would allow them to receive and handle the supermax container ships that are becoming more and more the mainstay of the international shipping industry, to the Port of South Louisiana’s recent acquisition of the Avondale shipyards in order to further develop the Avondale Global Gateway and expand the site as a thriving economic center in the region, more people have started to pay attention to the state’s ports.

Part of that attention has brought to light the fact that Louisiana has 32 ports, each with their own separate boards and prerogatives.

On the other hand, according to Stich and Mallum, countries may impose higher tariffs on their trade partners, in most cases to reduce trading on certain goods, a move that is mostly associated with protecting the local economy and/or manufacturing from competition that arises from selected nations. They pointed to the recent increase in steel and aluminum tariffs established by former President Trump and continue under President Biden as an example.

The maritime industry is also subject to a wide range of environmental regulations aimed at reducing pollution and protecting marine life. These regulations can impact the industry by increasing operating costs, requiring investments in new technology, and limiting the availability of certain types of vessels. Stricter regulations may lead to capacity restrains in the industry which can significantly push shipping prices higher, thereby affecting local ports productivity.

There’s also political instability, conflicts, and war, which can have significant impacts on the maritime industry.

“These can lead to the closure of ports; significantly increasing insurance costs; and difficulty accessing certain regions/markets,” said Stich

Drew Heaphy, executive director of St. Bernard Port, Harbor and Terminal District said Louisiana ports are always accounting for the changing geopolitical landscape.

“Some strategies local ports can try is to have a diversified cargo base to reduce their dependence on cargos that are affected by policy changes and world politics,” Heaphy said.

Heaphy said the St. Bernard Port averages annually over 10 million tons of cargo through its four marine terminals. With its unique position as a primary bulk handler of everything from metals to the advanced manufacturing of fertilizer for national and state food producers, the port is also the only place on the Lower Mississippi with a deepwater slip.

And while the world outside of Louisiana is always changing, the state’s ports focus on strategies that can help ensure the future of the region as a major player on the international shipping stage.

“We fully recognize the importance of having stable policies and a stable political environment,” said Heaphy, “and any policy change or political change can affect vital resources getting to and from manufactures and/or food producers.”T