Last Modified: Saturday, February 01, 2014 12:36 PM
A drop in federal funding and rising cargo costs are two reasons why the Port of Lake Charles has handled fewer U.S. Department of Agriculture bagged cargo over the last several years, a port official told board members Wednesday.
Todd Henderson, the port’s director of operations, said the USDA’s budget has declined, with just over $2.3 billion allocated in the 2009 fiscal year and $1.66 billion allocated in 2013. Meanwhile, the cost of USDA bagged cargo has increased from $1,714 per ton in 2008 to $3,441 per ton last year.
Henderson said more cargo is being moved by containers, leading to less cargo handled at the port’s City Docks facility. More containers are being used because the USDA is purchasing more prepackaged, ready-to-use food for children.
The port had 568,808 tons of break-bulk to bid on in 2008 and had only 152,592 tons in 2013.
“That’s a decrease of 73 percent in the amount of cargo that the port has a realistic shot of getting,” he said.
Henderson said foreign-flagged vessels prefer using containers to handle cargo. A law was passed in 2012, allowing the USDA to use more foreign-flagged vessels for containers.
“Originally, they were only allowed to use 50 percent of foreign-flagged vessels,” he said. “Now they can use 75 percent.”
City Docks also handles bagged commercial cargo, most of which is milled rice. However, Henderson said USDA purchases of milled rice have dropped from 105,000 tons in 2012 to 44,000 tons last year.
Another problem is the current version of the farm bill circulating in Congress includes language that would eliminate the amount of U.S. cargo sent to other countries.
Henderson said the main competitor for USDA bagged cargo in the Gulf is Jacinto Port in Texas. It has four automated shiploaders, versus two at the Lake Charles port. The Port of Houston can also be used as a large-container port, he said.
“They also use non-union labor, which has allowed them to do the shiploading and the container stuff cheaper,” he said.
Henderson said the port is trying to increase its use of bagged cargo by spending $36.5 million to improve the City Docks facility. He said they have also switched stevedore companies and are now working with Federal Marine Terminals. He said the company is using proper equipment, is offering new techniques to load cargo more efficiently and has a marketing department working with the port.
Mike Mallory, general manager of Federal Marine Terminals, told the board that the company is committed to bringing more cargo to the port.
Another investment includes $70 million for a new grain elevator, Henderson said. He said the USDA can use the facility to carry both bagged and grain cargo.
“It’ll give them better versatility on bidding and give us a better advantage on being able to bid on those cargos,” he said.
Despite some of the setbacks, he said the commercial cargo handled at the port has remained steady from 2008 to 2013. Henderson said the West Gulf Maritime Association Longshoreman total hours for the port have dipped slightly, with 189,906 hours in 2011 and 174,288 hours in 2013.