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The Honolulu Advertiser
Posted on: Friday, September 9, 2005

Smaller ports picking up slack

By Emery P. Dalesio
Associated Press

A load of raw rubber is unloaded from a ship at the port in Morehead City, N.C. The cargo had been bound for the port in New Orleans before Katrina struck.

CHUCK BECKLEY | Associated Press

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RALEIGH, N.C. — The docks in Morehead City are booming this week as longshoremen unload twice the amount of rubber that normally passes through the port. The same is true at the Port of Pensacola in Florida, where cargo traffic has jumped by about 60 percent in the days since Hurricane Katrina and companies are calling to see how much more steel, lumber and other products it can handle.

"I've been here eight years and I've never seen this level of activity before," Pensacola port director Leon Walker said.

But the boon to Pensacola and other ports could prove a bane to consumers, as businesses look to pass on a host of costs related to Katrina.

Neither Morehead City nor Pensacola rank in the country's top 40 ports. But they are receiving cargo once headed for New Orleans or Pascagoula and Gulfport, Miss., before Hurricane Katrina swept through, damaging ports and forcing shippers to divert to docks elsewhere along the Gulf and East Coast. New Orleans is believed to be just weeks away from reopening, but there's no guess when the two Mississippi ports may again operate.

The extra workload has taxed some ports. Panama City has turned away cargo it's not equipped to handle and for the first time is accommodating small container ships that carry textiles to Mexico and return with finished products, ports executive director Wayne Stubbs said yesterday. The port is also handling many of the forest products previously exported through Pascagoula, he said.

Ports at Houston, and Fort Lauderdale, Miami and Tampa, Fla., also will probably see cargo once destined for storm-ravaged docks, said Aaron Ellis, spokesman for the American Association of Port Authorities.

In Tampa and at the Virginia ports of Newport News, Norfolk and Portsmouth, shipping companies have asked about making deliveries of fresh produce, frozen poultry, rubber, plywood and other products.

"Our phones are very busy," said Tampa Port Authority spokeswoman Lori Musser, adding that it's too soon to report a big jump in traffic.

Fruit companies Chiquita Brands International Inc. and Dole Food Co. used Gulfport for banana shipments into the United States, but have diverted to Freeport, Texas and Port Everglades, near Fort Lauderdale.

Other ports may also see increases in specific types of freight, depending on their capability to unload, store and distribute it at the lowest cost, Ellis said.

The added shipping and logistics costs are just one item on the mounting bill businesses are paying for Katrina. That bill is topped by the jump in the cost of fuel, so large that it will bury the cost of port changes.

"One would think that rerouting your supply lines, there would be additional costs incurred," said Jason Schenker, an economist with Wachovia Corp. "It'll be very difficult to isolate how much of the cost increase is related solely to the diversion of transport."

Eventually, however, companies will look for a way to recoup those costs, by trying to pass them on to their customers, economists say.

North Carolina's state-run ports — Morehead City at the south end of the Outer Banks and Wilmington near the South Carolina border — compete with New Orleans for the rubber, steel and lumber they handle most often, ports authority spokeswoman Karen Fox said.

Morehead City trails only New Orleans in imports of natural rubber used in tire manufacturing. Dockworkers expect to load more than 250 trucks this week — twice as much as usual — for the port's biggest customer, Goodyear Tire & Rubber Co.

The disaster on the Gulf Coast prompted the world's No. 3 tire company to restructure its supply chain so that rubber diverted to North Carolina docks can reach tire plants as far away as Lawton, Okla.; Topeka, Kan.; and Tyler, Texas, spokesman Keith Price said.

"I would expect that the additional shipping that we have to do will increase our cost," Price said, but "we aren't able to forecast or estimate where pricing might be in the future."

Two ships scheduled to leave a portion of their rubber cargo in North Carolina before going on to New Orleans were forced to push off their entire shipments of more than 24,000 tons each at Morehead City. That's a quarter of the port's rubber tonnage for all of last year.