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Greater Houston Port Bureau
The following is the July, 1999 edition of "The Bulletin". Any questions or comments regarding content should be addressed to Alistair Macnab at 713-678-4300.
 The Editorial
Every time I have the opportunity to attend a maritime function here in Houston, I am struck by the sheer wealth of talent and experience represented by those worthy citizens who have spent so much of their time and energy to bring Houston to its well-earned and pre-eminent position as a world-class seaport.
There are the more obvious leading characters - terminal operators, stevedores, port administrators, ship agents, and all the others who provide direct services to ships calling at our docks - but there's also a whole range of supporting players who provide banking, insurance, and trading and logistics expertise; people who actually make it possible for goods to be bought, sold, and traded with the world through the Port of Houston. As we've said many times before, ships need cargo and traders need ships; so its perfectly logical to remind ourselves that the Port of Houston needs ships AND cargo in order to prosper.
Latest statistics from Booz -Allen & Hamilton tell us that 50% of the Port of Houston's traffic is actually Houston-generated with a further 20% either originating in or destined for other Texas destinations. Wouldn't it be a real indicator of our even greater regional significance if we could grow the remaining 30% to become the port of choice not just for Houston and Texas but also for Northern Mexico, California, the Mid-West and even Central Canada?
Many of the world's great ports are not significantly supported by their own local production and consumption activities but have made it their business to be important gateways to a vast hinterland covered by connecting road, rail and air services to far-away places with the port as the nexus between land and sea.
So; should we look upon Houston's unique position as a seaport with its own built-in local support as a blessing or as a curse? Just suppose one of these entrepot ports decided it needed to add Texas to its range and worked with railroads and truck lines to make it convenient and economical for a steamship line to serve our so-called captive market from somewhere else? Before you'd know it, Houston would revert to secondary status as a seaport and our talented citizens would be looking for jobs somewhere else.
But that won't happen because we know what we need to do to avoid such a calamity. We know that we need to continue to grow the port and its facilities and Dock 33 at the Turning Basin and the Bayport project will take care of that. But we also know that we need to grow our cargo base. Ships and Cargo. Cargo and Ships. Chicken and Egg. Houston's destiny is not just Houston and Texas. Its as the seaport that interconnects the world economy to the growing American heartland. Our nation's economy is no longer bi-coastal and neither should be our ocean shipping services. Let's make sure go-ahead steamship lines won't be able to bypass the Port of Houston and our cargo base!
Alistair Macnab
In what has to be very good news for international steel traders and their customers, the U.S. Senate on June 22nd. rejected HR975 which was the protectionist steel quota bill previously passed in the House. On a procedural vote, the Senate voted 57-42 against cloture, 18 votes short of the 60 needed to cut off debate. This effectively kills the proposed legislation.
"A majority of Senators obviously understood that the domestic steel industry itself relies on imports, that many of its partners are foreign steel companies, and that the steel consuming sector's 8.3 million workers, compared to the domestic steel industry's 170,000, would have suffered from this legislation", stated Horst Buelte, President of the American Institute for International Steel which had been battling a small but noisy group of special interest protectionists pushing for quotas.
For more information on AIIS, look for their website at or call Eric Blomquist on 202-466-6210.
In keeping with the Port Bureau's policy of working within a more open management system, the Annual Directors' Lunch, this year will be held in conjunction with the July meeting of the U.S. Gulf International Commerce Club. The combined meeting will take place in the Plaza Suite of the Fountain View Restaurant which is located on the second floor of the Riviana Building at 2777 Allen Parkway, just to the West of Downtown.
The Port Bureau's Executive Committee meets bi-monthly and a report is presented by the Executive Vice President to the full Board of Directors in each quarter. To mark this year's half-way point, Captain Macnab's report will be presented to the Bureau's Board and the Commerce Club, and will provide an opportunity for both groups to get together.
The Commerce Club, now in its thirteenth year, has established itself as one of the principal maritime-related organizations in the Port of Houston which functions as a regular opportunity for its members to meet socially and to hear from interesting and topical guest speakers. As the Club is now sponsored by the Port Bureau, the combined lunch, which will take place on Thursday July 8th., starting at 1145 Hours, is seen as yet another means by which the Port Bureau's activities and services can be drawn to the attention of a wider constituency.
Lunch, including a refreshment ticket, costs $20.00 and is payable at the door by cash or check. In order to keep track of expected attendance, however, it is greatly appreciated if bookings are made in advance to Cynthia or Jeannie at the Port Bureau on 713-678-4300.
The July luncheon follows the Commerce Club's most successful June meeting at which executives from the Port of Altamira, Mexico, presented a lively and interesting look at their progressive port and the opportunities that are available to enterprising firms looking to provide international transportation support services at their port.
Captain Macnab's "State of the Bureau" report on July 8th. is expected to highlight the very well attended Y2K Symposium which was recently mounted in conjunction with the U.S. Coast Guard. Other topics will include new educational initiatives, the Bureau's Internet programs, and cooperative schemes now being developed in conjunction with several separate maritime sectors.
Mark your calendars: Commerce Club and Port Bureau Combined Lunch on Thursday, July 8th., at 1145 Hours; The Fountain View Restaurant's Plaza Suite on the second floor at 2777 Allen Parkway; Information from and reservations with Cynthia or Jeannie at the Port Bureau on 713-678-4300.
Copies of the proceedings which runs to over forty pages, are available from the Port Bureau at $20.00 each. This includes postage. Many speakers had good ideas for coping with Y2K which they shared with the symposium audience, and these are recorded in this publication.
"The document will be useful as it contains pertinent information about Y2K and the Marine Industry. " - A quotation from the chair person of the Y2K Taskforce at a Canadian-based international bulk liquids carrier who bought a copy.
Also included are copies of the IMO "Year 2000 Code of Good Practice" and an early draft of the U.S. Coast Guard "Vessel/Barge Movement Y2K Risk Assessment". These two documents will be the basis upon which the Coast Guard will evaluate Y2K readiness for all arriving vessels over the critical dates. No ship agent or cargo broker should be without this information as vessel berthing at the Port of Houston (and other U.S. ports) will be determined by a vessel's and her owner's timely responses to the IMO and USCG questionnaires.
Get your copy of the Y2K Proceedings today. Call Cynthia at the Bureau on 713-678-4300 to reserve your copy. Payment in advance by check payable to: Greater Houston Port Bureau, Inc.
This is an action publication you will want to have beside you as Y2K approaches. What have others been doing to prepare for Y2K and what contingency plans ought I to be making to safeguard my own company's interests? The Proceedings are the best review of the uniquely Houston approach to dealing with Y2K. Get the truth behind all those scare stories and storm-in-a-teacup stories (they're both wrong!).
In the event that you haven't seen the June 20th. article in the Houston Chronicle written by Jena Moreno it would be forgivable if we were not to draw your attention to the disappointing statistics that show that the Port of Houston is not having a good year. But news is news whether good or bad and as a port community, the rising tide may lift all boats but the falling tide takes us all back down.
There's no doubt that 1998 was a spectacularly successful year for the Port of Houston which makes it all the more upsetting when the numbers go south and we're faced with a reality check. But what is "reality"?
Vessel arrivals (Jan/May as this is being written) are still better this year than they were in 1997 and for all the years before that. Vessel arrivals, after all, reflect work for agency, towboat, linesmen, back office and other support activities, so all is not yet doom and gloom. No fewer than 95 agencies have represented vessels from 63 countries this year for an average of 17.6 ship-calls per day.
What's up? Well bulk imports and coastwise receipts and shipments are up. And the overall monthly statistical summary for May does show the port's bulk cargo still ahead of 1998 at 5,029,054 short tons. As we've often said in these columns, thank goodness for the broad range of the public port's cargo base.
And can you believe that Barbours Cut still manages to keep ahead of 1998 in teu terms with a Jan/May throughput of 356,191? Unfortunately this 1% growth won't take us to the magic one-million-teus-a-year we keep anticipating but some world trade recovery is anticipated in the fourth quarter so you never can tell.
The Marine Exchange of the West Gulf (Tel: 713-678-7711) maintains a statistical account of the public and private port activities that is available to members by subscription. For more details call Alton Landry or John Wentz.
What do you do when a pilot program greatly exceeds all expectations? That's the conundrum that is facing the Port Bureau after the highly successful "Charter Party Training Seminar" that was held on June 8th. With a self-imposed limit of twelve students, Steve Stapleton, John Britton, and Alistair Macnab took the attendees through a crash course on charter parties, bills of lading, and booking notes that highlighted the correct and ethical way to negotiate agreements, to get what you want in a maritime contract, and to reach a win-win situation.
There's only so much that can be covered in six-and-a-half hours but by all accounts, the day was well spent with all students asking for more opportunities to examine the many intricacies of ocean transportation and logistics management in greater detail.
With the next "introductory" class - essentially a repeat of the June Program - already receiving applications, the Port Bureau will launch a structured training program in September for individuals who are already in the ocean transportation business but who desire to sharpen and update their knowledge and skill sets. The schedule will alternate every six weeks between a general refresher class and a specific in-depth teach-in on one important topic. Bills of Lading, Charter Parties, Service Contracts, Way Bills, Claims Procedures and Recoveries, and General Average will be separately examined in detail in a one-day workshop setting. Guest experts will be on hand to augment the program with real-life examples.
Interested individuals and corporations are invited to call Alistair Macnab on 713-678-4300 for more details of this exciting program. For too long, Houston's maritime community has found it necessary to look elsewhere for opportunities to brush up on the professional skills required by every busy executive to keep up with today's fast-paced transportation developments. With the cooperation of several well-known learning centers, the Greater Houston Port Bureau is pleased to be able to bring executive training to Houston and to make it convenient, accessible, relevant, and cost-effective.
The Bureau's new learning programs are just one of the several progressive initiatives currently being undertaken by Houston's maritime interests to bring world-class professional enhancement opportunities to our port community. High on the list of developments in this direction is the move to bring a Gulf and Intracoastal Waterways navigation simulator center to Houston - a facility of particular interest to the towboat industry but also with much wider possibilities as the plan develops. The Port Bureau has taken a position in support of this development and looks to the day when skilled, in-demand maritime and transportation managers are a Houston export to the four corners of the earth. Now that's an interesting thought!
Scheduled for July 16th.,1999
Houston-based consultants - Traffic Engineers Inc. and their sub-contractors, LKC Consulting Services Inc., - met with the H-GAC Steering Committee on June 22nd. to present an update on their progress towards mounting a stakeholders' morning workshop on July 16th to be held at H-GAC's offices at 3555 Timmons starting at 08.30 Hours.
Susan Alleman for TEI and Jorge Castillo for LKC reported that they had sent out more than 300 background reports and questionnaires to selected target entities that had been determined to have an interest in participating in the study which is being conducted to identify intermodal connectors such as freight corridors, traffic lanes, ramps, and signage that need improvement to carry their existing and projected intermodal traffic.
While regulatory matters are not immediately germane to the project, any physical impediment to smooth and safe traffic flows can be brought to the attention of the Council by a stakeholder through the consultants. Indeed, the workshop will be the opportunity for interested parties to meet with H-GAC, TxDOT and other local government representatives to present their projects as candidates for funding consideration.
Existing intermodal project planning success stories will be described and break out sessions will offer the opportunity for discussions on specific roadway access and congestion problems that might benefit from inclusion in the final report.
A free light lunch will be available at 11.30 Hours during which a panel of experts will discuss intermodal freight challenges as seen from the points of view of seaports, airports, railroads, and truckers. The proceedings are scheduled to be over by 13.00 Hours.
This is certainly an ongoing project that should be of great interest to the readers of The Bulletin as mobility, or its absence, is what intermodal traffic is all about. As a stevedore, container yard operator, trucker, equipment lessor, or an organization such as a shipper, consignee, broker, or agent that hires and relies on smooth intermodal operations, your interest in a well-designed and properly maintained highway system is in your best interests - not just the Interstates, but the connectors that carry your traffic on and off from point of origin to final destination.
The Houston-Galveston Area Council has commissioned this project for the sole purpose of looking into these connectors. Your own personal knowledge of a traffic choke point or a badly signed cutoff (as examples) is the sort of information being sought but unless you speak up, the perceived problem may never be noted or remedied.
As an interested stakeholder in intermodal traffic mobility within the Houston-Galveston area, you should plan to attend the workshop. For more information, call Jorge Castillo on 713-522-2554 or Jim Dickinson at H-GAC on 713-993-4597.
Overseas freight forwarders or non-vessel operating common carriers (NVOCC's), now known as Ocean Transportation Intermediaries, are claiming that the Ocean Shipping Reform Act, which became law on May 1 of this year, gives vessel operating carriers too big an advantage over OTI's.
The International Federation of Freight Forwarder Associations (FIATA) claims that the provision, which harms them most, is the section prohibiting OTI's from entering into confidential service contracts with shippers. This they believe gives carriers a commercial advantage, will limit competition and has already cost intermediaries business. Another complaint is the costs of the bond foreign intermediaries are required to post in order to operate in the U.S. Prior to implementation of the new shipping act, the bond was only $50,000 but has now been raised to $75,000 for domestic operators and $100,000 for foreigners. Although they may pay the lower rate by establishing a U.S. office, there are other costs involved, which makes the difference negligible.
Manufactures who routinely export materials from the United States are worried about plans by the U.S. Census Bureau and the Bureau of Export Administration to issue proposals in July regarding who is the exporter responsible for filling out shipper export declarations (SED's).
Manufacturers are worried about these new rules, which are designed to improve export statistics and tighten national security restrictions on shipments to unfriendly nations.
Manufacturers believe they could be unfairly subjected to investigations if they sell materials, which inadvertently end up in a country or to a company to which exports are banned. However, Government officials state the rule will not lead to prosecutions of people who haven't broken the law. Unfortunately, manufacturers are still concerned especially with respect to "exworks" (EXW) sales, in which a manufacturer gives up ownership of goods at the loading dock, and transfers the goods to a freight forwarder working for a foreign agent.
The new rules being proposed, would define "exporter of record" as the U.S. party who benefits most, financially or otherwise, from an export. That person or company would be required to be shown on the shippers export declaration as the "exporter of record". Usually in "exworks" sales the exporter would be defined as the manufacturer, even if some other party controls where the merchandise moves. Under the proposed new rules, the manufacturer could be deemed responsible if the goods end up in a country to which exports are restricted, resulting in large costs for subsequent investigations even if no prosecution results.
However, Census officials state the proposed rule explicitly assure manufacturers authorities will fairly investigate all parties to the transaction if the goods wind up in the wrong place. Census claims the new rules will clarify who is responsible for each separate portion of the transaction, and will shift responsibility from the manufacturer if they are not the "exporter".
Foreign freight forwarders seem to be satisfied with the proposed rules stating they add clarity and proper definition as to who exactly is responsible for each part of the shippers export declaration.
Importers and customs brokers are claiming a victory over a proposal by U.S. Customs and the Clinton Administration to impose a user fee on import data processing and an increase in the merchandise-processing fee. The shippers group and the brokers have apparently convinced key Congressional committees on Customs automation that no new fees be used to pay for Customs' proposed new Automated Commercial Environment (ACE) program. . Customs wants to use the ACE program as a replacement for the current Automated Commercial System, which is approaching capacity and is increasingly subject to breakdowns. In addition to the ACS system being close to capacity, the main problem is that ACS technology is obsolete and that vendors can no longer support it.
This is the main reason Customs wants to proceed with the ACE program, and in fact Customs has already put into operation a module called the National Customs Automation Prototype at the U.S. border with Mexico and Canada. That module is apparently working very well and according to users such as General Motors, which processes some 2000 shipments a week using the new program at the Canadian border is extremely simple and accurate in documentation. However additional development is stalled, due to lack of funding.
A group called the Coalition for Customs Automation Funding, a private sector group, claims that even though Congress has appropriated some $150 million in funding for Customs automation over the next two years, additional funding is needed. The group estimates that nearly $1.2 billion will be needed to fully fund and develop the new ACE program. Even though the current merchandise-processing fee generates nearly $800 million per year, little of that money is given to fund Customs automation. The Coalition urges importers and brokers to lobby Congress through the various key Committees such as the House and Senate Budget Committees to appropriate enough funds to complete ACE.
The U.S. Customs department claims that it is actually ahead of the court mandated schedule for refunds of the Harbor Maintenance Tax.
Although there were complaints at the start that Customs was moving too slowly on the refunds as mandated by the U.S. Court of International Trade, Customs claims that as of mid-May 1999, it had processed over 3000 refunds well over the 2,500 mandated by the Court and that nearly 1,200 exporters have received refunds.
However, there are several other issues in court cases still pending which could result in additional refunds. These cases involve issues such as whether the government should be required to pay interest on their back payments, how to apply a two-year statute of limitations to refund claims and whether importers also should get refunds. The government is fighting these issues and wants to make the least amount of refund it possibly can to the affected shippers.
Several senior Democratic Congressmen have urged Transportation Secretary Rodney Slater to remove the Clinton Administration plan for a new harbor maintenance tax from a report to Congress on maritime infrastructure.
U.S. Representative James Oberstar, D-Minn. and Representative Peter DeFazio, D-ORE, both senior Democratic members of the House Transportation Committee stated that endorsement of the harbor tax plan would not reflect the views of an industry-government panel that investigated the harbor tax issue earlier this year.
The general consensus among industry members of the panel is that the money for dredging and other harbor maintenance should come out of the general treasury and not from a separate tax. Representatives Oberstar and DeFazio said in a letter sent to DOT Secretary Slater that the report should address the issue in a balanced way and not prejudge the issue as to whether the administration's proposal is or is not constitutional. Private sector members of the panel do not agree with the administration on the constitutionality of the proposal.
The government has created a new Interagency Commission on Crime and Security in U.S. Seaports. This new commission is co-chaired by the Commissioner of Customs, the Assistant Attorney General , Criminal Division and the Administrator , Maritime Administration. The Commission is made up of senior officials from the Departments of State, Treasury, Justice, Agriculture and several other federal agencies.
The Commission will coordinate a study between the various federal agencies to look for solutions to growing cargo security risks, potential port terrorism and a trend toward fraudulent documentation. The study will address all serious crime, which may be going on at various seaports throughout the United States. The study is expected to address all serious crime occurring in the maritime context, including but not limited to drug trafficking, cargo theft and the smuggling of contraband and aliens. The Commission will also look at possible threats posed by terrorists and others to the people and critical infrastructures of seaport cities.
The Commission is seeking comment from the private sector through August 16, 1999 on cargo risks, proposals and methods for better reporting and collecting of data. Further details as regards commenting on these issues are available via the commission's web site,
The Maritime Division of the Organization for Economic Cooperation and Development (OECD) has issued a draft report urging member countries to limit anti-trust immunity used by ocean carriers to meet among themselves and collectively set rates and limit capacity.
Although shipper organizations in Europe and the United States have urged an end to carriers' anti-trust immunity, the recently passed Ocean Shipping Reform Act passed in the United States retained that immunity.
Other OECD committees will assess the draft report, and comments are being requested from individual nations in the organization's maritime transport committee.
The report stated that while liner and bulk shipping are less regulated than many other service industries they believe additional deregulation is possible, especially in the area of antitrust competition policy regulations, which affect liner shipping.
The report states that a complete end to antitrust immunity would be counterproductive and could cause commercial turmoil and lead to reduction in the number of shipping lines. Therefore the report recommends allowing carriers to continue to cooperate in areas of service which might reduce costs, without retention of the right to set rates.
This approach would preserve stability for shippers while improving the shipping sector's ability to respond competitively to changing market circumstances.
In the United States, the National Industrial Transportation League, the large shipper organization, expects to provide shipper input to the U.S. response to the OECD report.
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