from staff
Paul Anderson recently completed six months on the job as CEO of the Jacksonville Port Authority.
A former Federal Maritime Commissioner, Anderson also held other leadership positions during his 30-year career, including with the Transportation and Infrastructure Committee of the U.S. House of Representatives and president of the International Oil Shipping Co., based in Boca Raton.
He also spent 10 years with JM Family Enterprises, headquartered in Deerfield Beach. JM Family Enterprises operates Southeast Toyota at the port’s Talleyrand Marine Terminal.
Anderson grew up in San Clemente, Calif., and is a 1982 graduate of the University of Florida. He completed the Senior Managers in Government program at the Harvard University John F. Kennedy School of Government.
The port consists of three cargo facilities, a cruise terminal and a public river ferry. The port said it generates 65,000 jobs and more than $19 billion in annual economic impact for the North Florida region.
Mayor Alvin Brown considers port development, including deepening the channel to 50 feet and correcting the Mile Point navigational problem where the St. Johns River meets the Intracoastal Waterway, a priority.
Anderson’s is focusing on applying for the latest round of $527 million in Transportation Investment Generating Economic Recovery grants, known as TIGER grants, that are a part the American Recovery and Reinvestment Act of 2009.
Anderson also is working with TraPac, a container terminal operator founded by Mitsui O.S.K Lines Ltd. of Japan, that developed a terminal in Jacksonville.
He also is working with Hanjin Shipping Co. of South Korea, which wants to build a $300 million container terminal in Jacksonville pending the dredging of the St. Johns River channel.
Anderson met last week with the Daily Record editorial staff.
They’ve just announced the public meeting on the Mile Point feasibility study for Aug. 15. Have you had a chance to look that over?
The feasibility study will give us an opportunity for the public to comment on the proposed fix for Mile Point. It’s a necessary step. I’m very hopeful that we will have very strong public support during that hearing. I’m confident that the Army Corps of Engineers has developed a comprehensive fix of the Mile Point hydraulic problem of ships coming through that channel. I’m hopeful that we don’t have any surprises, and I want to encourage those that support building Jacksonville in our region as a trade center to come out in support at the public hearing.
How have the first six months been? Have you had any surprises?
I’ve had some really pleasant surprises, and I’ve had a few awkward surprises. It’s been wonderful coming to Jacksonville. I’ve said this over and over, the people here are great. It was a big part of my and my wife’s decision to bring our family here because of the quality of life, the quality of people, and a good place to raise children. I’ve visited ports all over the world and particularly the United States, and one of the pleasant surprises has been the community support almost unanimously for supporting international trade logistics and port activities, because they realize how important it is to our economy, in our state, in our region.
I can tell you there are some communities around some ports where the port is viewed as a nuisance to their way of life. I just wish one day that people in those communities who are opposing ports would walk into their Costco one day and there be nothing on those shelves stacked 30 feet high. That’s how it all gets there.
I’ve also come into this like I’ve learned in my career — you look forward, you can’t go back and dwell on the past. Be positive, make changes that you have control over. I can’t control anything that happened before I came here.
We have an outstanding team and a great board. One of the strengths that I saw here when I decided I was considering coming here was the board, our government structure of this port, having an appointed board with the mayor appointing four and the governor appointing three.
Former Mayor John Peyton and the Florida governors have appointed good people here, and I believe we have a terrific new mayor. I’m very excited to work with him, and I think they’re going to continue to make good appointments to our board. So, that was a pleasant surprise.
We have a new mayor who campaigned a lot on the port, and a new City Council president who also has the port as one of his big talking points. How do you capitalize on the momentum of the government here?
We work as a team. I’m going to be meeting and working closely with the mayor’s staff and the mayor himself. We’ve talked about doing some joint travel. In fact, I need to remember to talk to him about giving some dates that we’re going to Korea. He’s going to go if it fits his schedule.
We’re going to join the broad relationships that he has with relationships that I have, and with all of our other key stakeholders. We’re going to leverage those to the best of our ability to support JaxPort and this community.
What do free trade agreements with South Korea, Panama and Colombia mean to the local community?
It means a lot to our community and our nation and our state. The numbers are staggering of other countries that are getting those businesses. They want to do business with us, but until we get that free trade agreement, the United States is losing business to other countries that already have trade agreements. It makes absolutely no sense that our United States Congress hasn’t agreed to those, especially when the No. 1 issue in our country, in our state, in our region, is jobs. This will create new jobs.
We are losing business opportunities, and so I can’t tell you exactly what the number would be with Korea, or Colombia, but it will definitely increase business opportunities for our region. I think that our congressional members should do everything they can, and I think they are, for the most part, to support the passage of the free trade agreements.
Lad Daniels, as president of the First Coast Manufacturers Association, told us not long ago that he, with the manufacturers, would like to champion perhaps a sales tax to benefit the port. What is the status of that, and do you think that would work? Do you agree with that?
It’s not my job to be an advocate of a community sales tax. I think it would require a referendum, which according to my understanding, is how the Better Jacksonville Plan was done.
But I would advocate that what we need is federal, state and local support to accomplish the goals and achieve the opportunities that are in front of us, for the port and the community.
We need every dollar we can find to build these projects. We have well over $1 billion of requirements to achieve in the next 10 years for what I would call becoming a tier one East Coast Atlantic port.
When you hear businesses and business leaders like Lad Daniels and his association advocating to possibly promote a tax, I think it says volumes about the support for growing Jacksonville’s port because you don’t usually hear business people talk about raising taxes.
From a philosophical standpoint, I’ve never been an advocate for taxing, but taxes are in place for government to provide services, and I look at us as an economic development agency for the region.
Obviously they’re all business people, and so for them to even talk about that, they understand return on investment. It’s not the port’s role to go out and advocate that.
If there are third-party groups or elected officials that are willing to do that, that’s great, because we’re going to need every dollar that we can get, and if there’s a decision made by the voters to approve a tax, we will work very diligently to invest that money wisely to create jobs.
Do you have sources for the $1 billion of needs?
Federal, state and local.
The federal government traditionally provides the lion’s share of dollars related to port projects in the United States. Right now we’re at an impasse with our United States Congress at a budget stalemate.
Port projects are some of the most vetted projects that are done in the United States.
Unfortunately there have been a few very high-profile projects that were earmarks that have tainted the good projects that our country needs.
We’re going to have to go through an appropriations process in Congress. Under our current schedule, a bulk of those needs will happen in 2013, ‘14 and ‘15 for the channel deepening. That’s an eternity in the world of Washington politics. I can’t predict what’s going to happen. If I could, I wouldn’t have to be working at the port.
But we also have a new governor. I worked very closely with the Legislature. Our entire legislative delegation was very supportive, led by Rep. Lake Ray, to pass a budget that contained $117 million for funding for Florida’s ports, which was the most money ever appropriated in the Florida Legislature, in history, for Florida ports. That will go to port projects.
They’ve looked at putting that same amount in the budget for the next four years, so that’s over a half a billion dollars of funding that could not have come at a more critical time, based on what’s going on in Washington.
We’re not going to see, I don’t think, federal dollars in the next year, possibly, for new projects.
Now we did get all of the dollars we were seeking this year, I think it was $850,000 for our channel deepening, and that’s the full amount that the Corps had requested to continue the work that they’re doing on that, so that’s good news.
That’s a critical milestone in the process. There are some ports that had channel-deepening projects that did not get their money in that process.
We also receive, I believe, $50,000, which was all they were asking to complete the study process for the Mile Point project. So there is still money that is going through the Corps of Engineers.
Every year, it’s been less money. I believe the president’s budget for fiscal year ‘12 is 15 percent less. Congress hasn’t appropriated yet, so we don’t know what it’s going to end up being, but it’s less than what they’re asking for, so again, it’s very challenging times.
A local component would be very helpful because we’re going to be required to put up a matching amount to whatever federal dollars are appropriated.
Whether it’s state and local, and what the port generates, or what we can use through bonding, or through net operating income from our business operations, we have to provide a local match.
Another component that is becoming very important right now is public-private partnerships. Ports around our country are starting to look at funding their expansion, and we’re looking at that possibility as well.
We’ve met in the last two months with three firms that do that, but we have TraPac, which is a public-private partnership. We sort of have a unique model where we had the first Asian terminal on the East Coast, so I think that was a significant achievement for this community.
The community is aware of dredging and of Mile Point. The new term is ICTF. Would you explain that?
The Intermodal Container Transfer Facility would be on-dock rail. It will be with the continued growth of containers because more and more goods are shipped in containers. Things that they never thought of shipping in a container 10 years ago are now being shipped in containers, so it’s the dynamic of global trade that containers continue to grow as part of supplying the American consumer.
The bulk of our business is containers. We’ve made significant achievements with bringing TraPac here, and awaiting Hanjin. As we get to full capacity — 900,000 additional containers — we are going to need a way to move that cargo very quickly because we don’t have the land to just stack up containers.
On the other hand, I think that becomes a very strong marketing aspect for carriers to come to our port, to have the on-dock rail.
We’re working as a team to make an application for TIGER grants to make sure that our partner is going to be able to operate it, and the volume is going to be there. It’s a little bit of the chicken-and-the-egg, what do you build first?
In some cases, you have to strike while the iron’s hot.
In this case, there’s a round of TIGER grants that’s very important. Transportation Secretary Ray LaHood was just here, we’ve spoken to several of his key staff, the DOT that will be making the decision, and as he said, this fits their model very nicely. It’s that last mile they’re looking at.
I think more and more, intermodal connectivity is going to be very important to our country’s long-term transportation success, and I think this will fit that role very nicely.
If we don’t build the infrastructure, then another state is. Georgia’s been investing in its ports at about a half a billion dollars a year for several years now, almost a decade.
And 10 years ago, if you look at the container numbers, we were even with Savannah. Now they’re at 2.3 million, because they invested in infrastructure.
It’s not apples and oranges when we look at Georgia, at Charleston, or Norfolk, or Maryland, because those are state port authorities. In their cases, the governor’s the chairman of the board, and the Legislature is the board of directors.
In Florida’s case, we have local boards, elected boards, county boards, and we have 14 ports. Even if we were making a half a billion dollars’ investment every year like Georgia has been, it would be divvied up 14 different ways. But that also in my opinion creates opportunity for our state.
One of your partners would be CSX Corp., which is based here. What is the relationship of the port with CSX?
We have a very good relationship with CSX and a very good relationship as well with our other rail partner in Norfolk Southern and also FEC (Florida East Coast Railway). That is one of the reasons that the Asian carriers, I believe, are coming here.
CSX is the one rail that’s suited to bring the on-dock rail that last mile, so to speak. They have indicated in no uncertain terms that they’re committed to working with JaxPort. We’re excited about the opportunity to work together with them on this project.
From infrastructure to deepening, how much is needed?
It’s a little over $1 billion. We’re using estimates for a lot of the numbers, $500 million or $600 million for channel deepening. It’s probably less because all of the projects are coming in under what they were two or three years ago.
For example, the Mayport deepening to 50 feet that the Department of Defense budgeted at $50 million, I think it came in at $30 million. We’re working with a little bit of a moving target. We’re making estimates. The ICTF, it’s probably somewhere between $50 million and $60 million, and again, we don’t have engineering, we don’t have designs, so we’re working on that.
The other component is spoil sites. Regardless of what we do with channel deepening, we are a river port with 20 miles of river to dredge, and every year we have to dredge. The river brings sediment into our port, and we have to have space to put that in.
Spoil sites are going to be probably well over a $100 million over the next 10-20 years. That may be upland sites, real estate acquisitions, public-private partnerships and enhancing our existing sites.
We’ll look at offshore. That’s very expensive, though, the other sites will probably be more affordable.
The Mile Point estimating is at $40 million, and you start adding all these up.
What response did you receive from the legislators who toured the port while they were in town for the redistricting hearings?
Good response. You could see the awe in the eyes of the legislators of the geographic scope of our port. I worked in Port Everglades for 10 years. You can literally do a 360 standing and see almost the whole port. And they’re great ports. Miami’s the same way, Canaveral’s the same way, and Palm Beach. Two of the biggest ports in the country geographically are Tampa and Jacksonville. Several legislators told me they’d never seen a ship working before.
This is creating a high-level awareness of not just JaxPort, but of all ports and the role that they play. I was honored to have that many legislators willing to jump on a bus and take time and come and visit our port. I think there were just under 20.
As an industry, we have to better educate our legislators and we need to start doing it when they’re freshmen in the state House because those freshmen, if they stay in the house, several of them, in four years, will become chairmen of a key committee, speaker, the majority leader or minority leader, and some of them will run for Congress, some of them will be in the state Senate.
Part of our job is to help educate and make them better aware, so that when a bill comes before them, they can have that ‘aha’ moment, for somebody to say, well, when you walk into Costco or Kmart or Walmart, 85 percent of those goods are coming off ships around the country.
Part of the business is travel. Do you have any tips for handling a lot of air travel?
It’s important for what we’re doing here. For the first six months, I’ve felt that it was very important for me to really push the pedal to the metal and get out and see people. That means a lot to go see your customers. I knew that you could get ahead of that curve, and eventually, there’s a balance that has to be made. There’s a lot to do here locally as well.
But, the tips are always have fresh clothes, be ready to go. It’s hard to travel. For people that don’t travel much, it may appear to be exciting, but it’s very difficult. You don’t sleep in your own bed, and you’re away from your family. It’s a sacrifice to travel. It really is.
There’s no substitute for that personal interaction, and I’m committed to doing that if it helps us achieve our goals.
Any update on the cruise ship terminal?
No new news on cruise.
You can expect some good news very shortly on a major new existing customer that will be increasing cargo through the port significantly, and that’s where were focused. Cruise is a very good part of our business. We have to be very careful how we invest the limited dollars that we have. We’re never going to be Miami or Port Everglades or Port Canaveral as a cruise port, but it’s going to be a nice piece of business in diversification of the port.
But right now, frankly, investing $40 million or $50 million in a cruise terminal is going to be hard to justify unless we’re adding a long-term commitment with another ship with a long-term contract. And we don’t have that.
We are doing a competitive market analysis for the cruise industry to see what there is for opportunity, because right now, I think only the cruise line knows what that is. So we’re continuing to look at it. We have so many priorities. I’ll be honest, it’s not a top priority for us.
What is the contract with Carnival right now?
We’re working on a formal extension of our previous contract, and in the midst of negotiating a new contract to stay where they are now, because of the expanded timeline for Hanjin. What the time term of the next contract will be, we don’t know. That’s what we’re negotiating and that’s one of the challenges.
Right now, you can go with the shorter-term contract because we haven’t invested a large amount of money, but the last thing that we would ever want to do is invest a large amount of money, which Houston did, and Mobile did, in a cruise terminal.
Houston’s never had one customer there and they invested a lot of money. Mobile just had their cruise partner leave, and they’re stuck paying a monthly mortgage on a facility that they built for the terminal.
We’re going to make smart, good business decisions: invest the public’s money as wisely as we can, and that’s very important because we have limited dollars to work with, and a huge menu of projects to get accomplished. So we have to prioritize those.
We’re putting together a comprehensive strategic master plan to assist us in making good business decisions.
So the Mayport question right now is not a question?
It’s not a question right now, until we get more information and get further along, and we also have some time. We don’t want to make a decision just for the sake of making a decision. We bought some time. Let’s take advantage of it. Let’s get better information.
We’re not patronizing any one community. We’re here for a broad community, to do what’s best for them. When I was serving at the Federal Maritime Commission, I went around the country speaking to various ports and conferences. I was always talking to port directors and port board members and port audiences: buy as much property as you can. They’re not making any new waterfront property in the United States. And getting new waterfront property is almost impossible, because of the permitting process.
Having some options banked is wise. In a perfect world, if we had a lot of money, we’d look at every possible land-banking opportunity we could because we know we’re going to need it in 20 years. We have to make long-term decisions, not short-term. We’re making generational decisions when we decide to buy land and build a terminal.
How often to you speak with Gov. Rick Scott?
I’ve talked to the governor once a month.
Is he going to be with you on any of these trips you’re planning?
I’m going to invite him, absolutely. The governor needs to be doing it as the chairman of the board of all our ports, even though we don’t have a state port authority, and I think he views it that way.
I see him as a combination chairman of the board and chief marketing officer for Florida, and I think he views himself in that role.
What tier do you see the port being able to reach?
Our channel-deepening is critical. If we are able to achieve our long-term goals, we’ll be a top-tier port in the United States. We’re never going to be Singapore, or Shanghai, because those are just huge in volume, but when we look at cargo projections, in six or seven years, we’ll be where Norfolk and Savannah are in containers. We’ll be a top-tier port if we can get our channel deepened. I should say when we get our channel deepened.
A lot of times when we talk with manufacturers, they say they bring their goods in through Savannah and Charleston. How do you respond to that?
I’d respond that they are doing what you have to do every day — they’re making business decisions, and part of the reason that they’re doing that is Mile Point, because they can’t get into our channel. I’ve been in the business industry.
I don’t like it. We’re going to fix it, and we’re going to give them a better business decision