by Rick Ferrin
The effects of the economic meltdown and near collapse of the financial markets of late 2008 and early 2009 manifested themselves at the Jacksonville Port Authority (Jaxport) in a reduction of cargo volumes beginning in January of 2009.
Nearly two-thirds of the port’s container volume is cargo bound for or coming from Puerto Rico. That country’s economy has been in decline for several years and current Puerto Rican containerized cargo volumes are about 80 percent of what they were just three years ago. It appears that the Puerto Rican economy is anemic and any recovery will be protracted as consumer confidence slowly returns.
I am more optimistic about the economies of our South American trading partners, especially Brazil. While we saw some decline in our cargo traffic with Brazil, Columbia and Venezuela it was not precipitous and now appears to be beginning a recovery. I believe that the South American rebound will be quite robust.
One trade statistic that makes Jaxport a significant industry anomaly is the growth in over-all container volume in 2009. Nearly every port in the nation experienced dramatic declines in container volumes as the American consumer went on a crash diet. Jaxport opened the TraPac Container Terminal at Dames Point and our overall container volume for 2009 grew by 8 percent. In 2005 when the Port Authority entered into a 30-year lease, operating and development agreement with Mitsui O.S.K. Lines, we expected that by late 2009 the terminal would be handling five to six ship calls per week with 1,000 containers from Asia per call. We are seeing half the ship calls and half the cargo volume, but given the prevailing economic conditions and the dropoff in demand for Asian imports, I am delighted at the current level of activity. It has given all concerned with the operation of the new terminal an opportunity to perfect the efficiency of the operation, and as the level of activity increases with economic recovery, I believe the terminal will be a model of operational efficiency.
Jaxport has long been known as a major hub for what we in the industry call RO/RO (roll-on, roll-off) cargo including automobiles, trucks and heavy wheeled and tracked equipment. In fiscal year 2008 the port set a new annual record with 656,000 cars, trucks and pieces of heavy equipment crossing over our docks. During FY 2009 only 414,000 vehicles and pieces of equipment moved through Jaxport, a 38 percent reduction. The Cash for Clunkers program did help bolster imports at the end of the fiscal year and demand for new more fuel efficient models is driving a modest recovery as we conclude the first quarter of FY 2010.
The variety of break-bulk cargoes at JAXPORT is a barometer of several segments of the nation’s economy. Break-bulk cargoes are a category of cargoes that are more efficiently shipped in stacks, bundles, on pallets or in rolls. At Jaxport the break-bulk cargoes include steel and other non-ferrous metals, lumber, paper, wood pulp and perishables like chicken that is deep frozen, boxed and palletized for export. Our break-bulk volumes have dropped by 25 percent, mostly as a result of reduced demand for steel and lumber used in construction of both commercial and residential properties. The demand for high-quality paper imported from Finland has dropped as fewer high end magazines and brochures are printed.
Jaxport’s dry bulk cargoes are predominantly aggregates used in various construction applications and with both residential and commercial construction at record lows there is a corresponding demand reduction for crushed lime rock, granite and construction grade sand. Our tonnage in bulk materials is off by approximately 40 percent. Again, as consumer confidence returns all of these situations will improve.
In September 2008, we began a new cruise service on the Carnival Fascination. The operation has been extraordinarily successful with the vessel sailing at every departure with 2,300 to 2,600 passengers. The ship’s capacity is 2,052 at double occupancy in each cabin. This record is clear evidence that Carnival is weathering the recession very successfully as the provider of great vacation value at a reasonable price.
We are forecasting 2010 as the year in which we stabilize and begin a gradual and protracted recovery. Our revenue projections for 2010 are flat at about $49 million and we have kept a very tight rein on all discretionary expenditures in order to live within our means.
I am guardedly optimistic about 2010 with a great deal dependent upon reemployment and the consumer regaining confidence. We are moving ahead decidedly with our terminal expansion plans and our efforts to sufficiently deepen the federal channel as we must prudently position Jaxport to be ready to become a true global gateway when the economy fully recovers and the Panama Canal’s new locks open in 2014, profoundly changing cargo routes and traffic patterns and opening Jacksonville’s future as a global commerce gateway and center of transportation and logistics in the Southeast.
Rick Ferrin is the CEO of the Jacksonville Port Authority. He joined Jaxport in June 1997 as vice president of the Port Authority’s Marine Division. On Oct. 1, 2001 he began serving as executive director of Jaxport following the Port Authority’s split into separate airport and seaport entities and was named chief executive officer in September, 2009. Ferrin is responsible for all activities of the Jacksonville Port Authority including planning, property acquisition and management, operations, security, marketing, administration, engineering and maintenance.