FEDERAL MARITIME COMMISSION

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 INTERNATIONAL SUPPLY CHAIN EFFICIENCY:

 CHALLENGES FACING GULF COAST PORTS

 PORT OF NEW ORLEANS

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 MONDAY, NOVEMBER 3, 2014

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 The meeting of the Federal Maritime

 Commission convened in New Orleans, Louisiana,

 pursuant to notice at 9:27 a.m., Rebecca F. Dye,

 Commissioner, presiding.

 PARTICIPANTS:

 Welcome:

 REBECCA F. DYE, Commissioner

 Federal Maritime Commission

 Gulf Coast Port Authorities:

 GARY LaGRANGE

 President and Chief Executive Officer

 Port of New Orleans

 ROGER GUENTHER

 Executive Director

 Port of Houston Authority

 PAUL ANDERSON

 President and Chief Executive Officer

 Port Tampa Bay
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 1 PARTICIPANTS (CONT'D):

 2 SMITTY THORNE

 Deputy Director

 3 Alabama State Port Authority

 4 JEFF STRADER

 Chief Financial officer

 5 Port Freeport

 6 Ship Operations:

 7 WALDEMAR POULSEN

 President and Chief Executive Officer

 8 Rickmers-Linie (America), Inc.

 Houston, Texas

 9

 JIM MICHALSKI

 10 Vice President, Inland Operations

 CMA-CGM (America), Inc.

 11 Norfolk, Virginia

 12 DHAVAL PATEL

 Head of Gulf, Pacific Northwest, and Safmarine

 13 Delivery

 USA Country Operations, Maersk

 14 The Woodlands, Texas

 15 STEVEN GARIFALOS

 Regional Director, North America

 16 NYK Bulk & Project Carriers

 Houston, Texas

 17

 THOMAS GRANT

 18 Director, National Accounts

 Crowley Maritime

 19 New Orleans, Louisiana

 20 Trucking Operations:

 21 BRIAN FIELKOW

 President, Jetco Delivery

 22 President of the Local Chapter of Texas

 Trucking Association, Houston, Texas
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 1 PARTICIPANTS (CONT'D):

 2 BRIAN FIELKOW

 President, Jetco Delivery

 3 President of the Local Chapter of Texas

 Trucking Association

 4 Houston, Texas

 5 CATHY GAUTREAUX

 Executive Director

 6 Louisiana Motor Transport Association, Inc.

 Baton Rouge, Louisiana

 7

 PHILLIP WOJCIK

 8 President and Chief Executive Officer

 Consolidated Chassis Management, LLC

 9 Budd Lake, New Jersey

 10 RANDY GUILLOT

 President

 11 Southeastern Motor Freight, Inc.

 Jefferson, Louisiana

 12

 JEFFREY LOUIS

 13 President

 TCI Trucking and Warehousing Services

 14 New Orleans, Louisiana

 15 CURTIC WHALEN

 Executive Director, Intermodel Motor Carrier

 16 Conference of the American Tracking Association

 17 Terminal Operations:

 18 JAMES PARKER

 New Orleans Terminal LLC

 19 New Orleans, Louisiana

 20 KEITH PALMISANO

 Ports America New Orleans

 21 New Orleans, Louisiana

 22
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 1 PARTICIPANTS (CONT'D):

 2 BRIAN HAROLD

 Director

 3 APM Terminals Mobile

 Mobile, Alabama

 4

 DAVE MORGAN

 5 Vice President

 Cooper/T. Smith

 6 Houston, Texas

 7 DON JOHNSON

 Senior Vice President

 8 Shippers Stevedoring Co.

 Houston, Texas

 9

 JOHN CROWLEY

 10 Executive Director

 National Association of Waterfront Employers

 11

 KENNETH CRIER

 12 President

 ILA Local 3000

 13 New Orleans, Louisiana

 14 Cargo Operations:

 15 KRISTI APP

 Vice President, Business Development & Customer

 16 Service

 JW Allen & Company Inc.

 17 Kenner, Louisiana

 18 DONNA LEMM

 Vice President, Sales and Marketing

 19 Mallory Alexander International Logistics

 Memphis, Tennessee

 20

 DALE STREET

 21 Zen-Noh Grain Corporation

 Covington, Louisiana

 22
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 1 PARTICIPANTS (CONT'D):

 2 RICHARD CHRISS

 Executive Director

 3 American Institute for International Steel

 Falls Church, Virginia

 4

 SEAN M. DUFFY

 5 Executive Director

 Big River Coalition

 6 New Orleans, Louisiana

 7 DAVID KEARNEY

 President

 8 The Kearney Companies

 New Orleans, Louisiana

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 1 P R O C E E D I N G S

 2 COMMISSIONER DYE: If the first Panel

 3 will come and be seated. They tell me our mics

 4 are hot all the time. Is that right?

 5 MR. LaGRANGE: You ought to be on the

 6 monthly Board meetings.

 7 COMMISSIONER DYE: I appreciate it.

 8 Good morning. Thank all of you who are here today

 9 to participate in the Federal Maritime

 10 Commission's Gulf Coast Forum of International

 11 Supply Chain Efficiency and Effectiveness. All of

 12 you have distinguished business backgrounds, and

 13 your willingness to participate reflects the

 14 critical importance of supply chain effectiveness

 15 to American competitiveness.

 16 And thanks to the Port of New Orleans

 17 for hosting this forum, especially Executive

 18 Director and CEO Gary LaGrange; Director of

 19 External Affairs, Matt Gresham; and Administration

 20 Assistant Angelo Rivera. You've shown us

 21 graciousness and a very warm welcome.

 22 My favorite business author is Jim
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 1 Collins, who discusses the primary organizational

 2 importance of getting the best people on the bus.

 3 Now today, I brought some of the FMC's best

 4 people. Ed Lee, my Counsel; Karen Gregory, who is

 5 the Secretary of Federal Maritime Commission; Bob

 6 Blair, who is from our office of Economics and

 7 Competition Analysis; and Cathleen -- Megan Moran,

 8 Office of the Secretary. And Catie-Megan handles

 9 our graphics, and she's going to be tweeting

 10 today. I hope that all of you have a chance to

 11 meet them today.

 12 You probably know Bruce Johnson, who is

 13 our FMC Area Representative. Among Federal

 14 agencies, the Federal Maritime Commission has the

 15 greatest expertise and understanding of the

 16 Maritime logistics system. We oversee

 17 international ocean shipping, port and terminal

 18 operations, and shipping intermediary operations.

 19 The challenges facing our ports and supply chain

 20 are not new, neither are they limited to U.S.

 21 ports.

 22 Several weeks ago I attended the Danish
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 1 Maritime Forum in Copenhagen. The Forum brought

 2 together 200 international business and

 3 governmental officials to discuss the most

 4 pressing maritime issues of the day. I had the

 5 opportunity to lead a discussion group on

 6 transportation and infrastructure, and how to

 7 prepare for the increase in world trade by 2030.

 8 Our group discussion quickly focused on current

 9 supply chain congestion, other disruptions, and

 10 how to deal with those effectively.

 11 I can tell you that we found no easy

 12 answers. The divergent commercial interests,

 13 pressures and responsibilities in the

 14 international supply chain makes solutions

 15 difficult to achieve. International supply chain

 16 effectiveness, reliability and resilience depend

 17 upon continual adaptation to the dynamic

 18 requirements of global trade.

 19 I don't support governmental

 20 prescriptions or requirements that would attempt

 21 to respond to current supply chain challenges

 22 facing our ports, truckers and other supply chain
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 1 actors. Most government agencies regulate in

 2 silos, that focus on only one mode of

 3 transportation. In this case, there is a risk

 4 that unintended consequences of government actions

 5 may negatively affect the operations of the supply

 6 chain.

 7 However, I do support the creation of a

 8 dedicated port and supply chain disruption

 9 planning framework that's similar to the Coast

 10 Guard Contingency Port Planning Regime with which

 11 all of you are familiar. This planning process

 12 should involve all international supply chain

 13 commercial stakeholders to address supply chain

 14 challenges on a sustained and continual basis.

 15 Port and supply chain disruptions deserve

 16 permanent, continual collaboration by all

 17 organizations interested in port operations.

 18 The matter is vitally important to

 19 transportation businesses, and to the American

 20 economy, and requires our consistent attention.

 21 But today I'm here to listen to your opinions and

 22 advice, on what's going well in maritime
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 1 logistics, and what can be improved. Our

 2 international shippers and intermediaries get the

 3 last word today.

 4 Our proceedings are being transcribed

 5 and will be made available to the public with your

 6 consent. If there is anything you would like to

 7 discuss with me privately, please catch me this

 8 afternoon and, of course, feel free to give me a

 9 call anytime. Our business cards are at the

 10 registration desk. Thank you again.

 11 Our first distinguished Panel here, of

 12 the Gulf Coast Port Authorities; Mr. Paul

 13 Anderson, President and CEO of Port Tampa Bay;

 14 Gary LaGrange, President and CEO of the Port of

 15 New Orleans; Roger Guenther, Executive Director of

 16 the Port of Houston Authority; Smitty Thorne,

 17 Deputy Director, Alabama State Port Authority, and

 18 Jeff Strader, CFO Port Freeport. And I appreciate

 19 very much your being here. Thank you for coming.

 20 So, today, gentlemen, I don't have any particular

 21 agenda, I would like to hear from you about what

 22 you believe is going to develop among Gulf Coast
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 1 ports. I know that you have an AAPA meeting

 2 planned next week at the Port of Houston. I

 3 notice that you will be discussing public-private

 4 partnerships. I had a chance to review the good

 5 work that the House Transportation and

 6 Infrastructure Committee did on the topic. We at

 7 the Commission encourage efficiency and

 8 innovation, and I think that's a very interesting

 9 topic.

 10 And also of course I'm interested in

 11 your advice on what can improve efficiencies in

 12 Gulf ports. Congestion issues that you have here,

 13 I know it's not to the extent that we are

 14 suffering on the West Coast. So, I'll give you

 15 the floor and, Paul, if you'd like to begin, I

 16 know you might have some travel restrictions, and

 17 I want to make sure that we have enough time.

 18 Thank you all for coming.

 19 MR. ANDERSON: Thank you very much,

 20 Commissioner Dye, for hosting this hearing this

 21 morning. Again, my name is Paul Anderson,

 22 President and CEO of Port Tampa Bay.
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 1 Commissioner, I applaud the Agency for taking time

 2 to survey the industry around the nation in your

 3 four hearings, and I must say that I'm

 4 particularly pleased that we get to be in Gary

 5 LaGrange's home port, and feel what it's like to

 6 sit on the hot seat up here, at this Board

 7 Meeting.

 8 I'll start by saying, it's an extremely

 9 interesting time in our global industry and

 10 particularly, I think, with how the United States

 11 transportation, particularly on the intermodal

 12 side, is attempting to keep up with the rest of

 13 the world. I think that it's really -- you know,

 14 the more that you are in this industry, the more

 15 you realize you need to be very fluid in your

 16 decision-making, as the dynamics are changing

 17 constantly, and particularly, we have unique,

 18 logistic supply chain considerations on the Gulf

 19 side, as my colleagues you'll hear from, I'm sure,

 20 here today.

 21 Now when you are in this industry, you

 22 get used to talking to your colleagues, and we are
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 1 constantly talking about what's going on, not only

 2 with our respective ports, on the port side, your

 3 commercial colleagues on the private sector side,

 4 but how you might work together, if you're doing

 5 business together. And I know one thing I'm going

 6 to touch on is, in particular, is the P-3s that we

 7 will also be discussing at AAPA, as you mentioned.

 8 But from our perspective and in my

 9 opinion, our capacity and supply chain is in good

 10 shape. And in fact I'm very bullish on our

 11 ability to serve our region in the West Central

 12 Florida which is made up of about 8.5 million

 13 citizens of the State of Florida, with 60 million

 14 visitors a year, what we call -- we have a big

 15 election tomorrow, everybody is aware of the I-4

 16 Corridor, and that's the primary market that Port

 17 Tampa Bay serves. And I'm very bullish that we

 18 are going to be able to serve that market with the

 19 capacity of our port complex, about 5,000 acres,

 20 in the total complex for generations to come.

 21 I think that my colleagues here today

 22 will also agree that it's the free market that's
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 1 going to make decisions for how the supply chain

 2 is going to work. They are going to work through

 3 solutions to allow their businesses to serve their

 4 customers on a global basis. And one thing I

 5 don't want to focus on today, because I was

 6 talking to one of the audience members here in

 7 attendance today, about the Panama Canal.

 8 I just got back from Panama a few weeks

 9 ago, and there's so much more going on in the

 10 world with trade and logistics than just the

 11 Panama Canal, although it is a very sexy and

 12 timely topic with the 100th Anniversary of the

 13 Panama Canal, there are so many other cargoes, and

 14 so many other challenges that we are facing, that

 15 I think that we focus on some of the ones right

 16 here on our shores that we can control.

 17 I think the Federal Government in

 18 particular, needs to speed up its approval

 19 processes for projects that ports deliver. That's

 20 been a significant hurdle for all of us sitting at

 21 this table, and I'm sure around the country,

 22 particularly the United States Army Corps of
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 1 Engineers. I think it is paramount that the

 2 United States Congress passed a Water Bill like

 3 the one we just passed after seven years, to pass

 4 a Bill. But I think this passed Bill did go a

 5 long way in updating and revising policies that

 6 were outdated, outmoded, bureaucratic and set up

 7 to delay projects rather than get projects

 8 approved.

 9 And I'm very positive on our industry

 10 being able to react to the supply chain, to the

 11 capacity issues, particularly on the Gulf Coast,

 12 as our ports, generally speaking, have quite a bit

 13 more capacity and real estate available, but one

 14 area that I am very much seeing the industry

 15 working with government and our ports doing very

 16 well, is the P-3 process.

 17 We have three in particular that I want

 18 to highlight, just to give you an idea of the

 19 investment that's being made by the private sector

 20 with our port in our state in this world as a

 21 Federal Government. And one is our Gateway Rail

 22 investment which is a collaborative, innovative
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 1 public-private project that was undertaken by the

 2 port, CSX Corporation, and Kinder Morgan Energy

 3 that takes the Port of Tampa to new levels of

 4 efficiencies and intermodal activities.

 5 This was a very multipurpose terminal

 6 with new track and supports infrastructure that

 7 will handle 96-car unit train deliveries right on

 8 dock, as well as a multi- product unit train

 9 offloading yard, at our Hooker's Point facilities.

 10 And the total cost of this P-3 project was

 11 approximately $16 million, and funding for the

 12 project was a combination of sources from the

 13 State Department of Transportation in Florida, CSX

 14 Corporation, Kinder Morgan and Port Tampa Bay.

 15 So this was a true model of

 16 public-private partnership, it was, again, the

 17 response of our port identifying a need with our

 18 private sector partners, investing with our State

 19 Department of Transportation, and now creating a

 20 new delivery mode for particularly ethanol in this

 21 instance. But complementing the Port Authority's

 22 investment with Kinder Morgan also because of this
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 1 facility, invested a new pipeline to transport the

 2 ethanol from the rail offloading facilities, in

 3 its Tampa Terminal where it would be distributed

 4 to other Tampa terminals for blending and

 5 transported to the Orlando I-4 market that I

 6 mentioned.

 7 This innovative partnership ensures the

 8 financing and also the immediate commercial

 9 viability of the project, and today it's extremely

 10 successful. We also are just completing -- are

 11 finally operational on our petroleum facilities

 12 terminal -- which is a three-berth expansion and

 13 modernization of the port's primary petroleum

 14 terminal facility. This is a $56 million

 15 expansion in a redevelopment that is one of the

 16 port's most significant capital projects in our

 17 history, which includes a common-use petroleum

 18 pipeline and loading system for three different

 19 petroleum companies.

 20 This is a project in the agreement

 21 between its users again, Kinder Morgan, Mosaic,

 22 Amalie Oil, TransMontaigne, Murphy USA, and as a
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 1 benchmark for the Port of Tampa, which is the

 2 energy products gateway for the West in Central

 3 Florida markets. This facility is extremely

 4 important to the people on economic vitality of

 5 the region, as the port is the primary entry point

 6 and conduit for all oil for those -- for almost

 7 8.5 million citizens, and again, 60 million

 8 visitors a year.

 9 That includes rail, buses, the rental

 10 car fleets, airline jet fuel, so this was a key,

 11 again, public-private partnership investment with

 12 the State Department of Transportation, which

 13 invested $28 million, and then a unique agreement

 14 with the port and our three energy partners to

 15 fund the rest of the $28 million.

 16 And the last facility that I want to

 17 highlight, again of the free market working with

 18 our government planning agencies, to meet the new

 19 demands that we are identifying for increasing

 20 capacity, is our C-Max lease and investment on

 21 approximately 24 acres of land for a bulk

 22 aggregate terminal. And the improvements included
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 1 a new 43'- depth berth, road relocation, dredging

 2 and upland improvements.

 3 The cost in capital improvements for

 4 this project is approximately $23 million. This

 5 unique P-3 financing for this project again

 6 included the Tenet, C-Max, furnishing the concrete

 7 for the berth, rather than the cargo yard, with

 8 approximate value of $4 million. The balance of

 9 the funding was a combination of the State

 10 Department of Transportation and Port Tampa Bay

 11 funding. The lease terms allow for the port to

 12 recapture its investment in less than eight years.

 13 So, what are we doing? We are investing

 14 with private partners, we are looking for true

 15 commercial rates of return on investment and in

 16 turn, rate of return on our projects. And it's

 17 doing it in very open P-3 financing mechanisms

 18 that can adapt to different tenets, users and

 19 cargo operations in our port. And I really see

 20 that this is the way the industry, working

 21 together with the government, can move forward to

 22 expand capacity on various modes of, not only
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 1 that, but the transportation through various

 2 cargoes to utilize the full capacity of our ports

 3 here in the Gulf region. Thank you.

 4 COMMISSIONER DYE: Thank you very much.

 5 After you make your presentations, feel free to

 6 ask questions of the others. Gary, you have the

 7 floor.

 8 MR. LaGRANGE: Sure.

 9 COMMISSIONER DYE: As our host. Thank

 10 you.

 11 MR. LaGRANGE: Thank you. First, thank

 12 you, Commissioner Dye, for being here, and the

 13 rest of your staff with the Federal Maritime

 14 Commission, and I state that on behalf of all --

 15 all of us who represent the Gulf Coast, from Tampa

 16 to Brownsville. It's a real delight, and we are

 17 honored to have the Federal Maritime Commission

 18 here, so thank. Thank you for being here.

 19 COMMISSIONR DYE: Thank you very much.

 20 MR. LaGRANGE: A brief history lesson

 21 about New Orleans, and no, I'm not going to talk

 22 about the War of 1812, but although we are
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 1 celebrating the end of the War of 1812 next

 2 spring, what I am going to talk about is its

 3 geographical location and proximity to Mid America

 4 and to the Northeast, via a 14,500-mile

 5 Mississippi River and tributary system, all

 6 navigable by barge. As far as Pittsburg to the

 7 East, it's Catoosa, Oklahoma, to the West; Sioux

 8 City, Minneapolis, and so on and so forth, it's a

 9 market area that represents 62 percent of the

 10 consumer spending of the United States of America.

 11 It's not a local market area, so when we

 12 talk about the Mississippi River, I like to talk

 13 about the deep-draft aspects of the Lower

 14 Mississippi River, that being from Baton Rouge to

 15 the mouth of the Gulf, which is 290 miles. In

 16 that 290 miles, constitutes the largest port

 17 system in the United States, collectively. The

 18 movement of 500 million tons of cargo a year,

 19 12,000 ships coming and going a year, and 500,000

 20 barge movements a year, which we all deemed to be

 21 significant.

 22 Some of the things that we look at, as
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 1 being at the apex or in the center of the entire

 2 complex, if you will, the Lower Mississippi River

 3 complex, or the growth -- is the growth right here

 4 at the Port of New Orleans. Our container

 5 business has doubled in the last three years. We

 6 built a new container terminal in 2004, over the

 7 last three years it's doubled. Projections

 8 indicate that it will continue to grow at a very,

 9 very fast rate, and some of the reasons why they

 10 are hinged around some of the things that happened

 11 post Hurricane Katrina.

 12 At the time that Hurricane Katrina hit,

 13 as many of you know, some of you maybe don't, we

 14 had a second channel here in New Orleans called

 15 the Mississippi River-Gulf Outlet, MRGO, and when

 16 the MRGO was decommissioned by Congress following

 17 Hurricane Katrina, we needed to determine what to

 18 do with 1,500 acres of industrial property, with

 19 deep draft access directly to the Gulf of Mexico,

 20 and to how to relocate all of our customers that

 21 were counting on the MRGO for deep draft access to

 22 the river as quick as we possibly could, and at no
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 1 small cost.

 2 Those nine companies basically as it

 3 came down to, although there are 54 companies

 4 located out there today, but the nine deep-draft

 5 companies constituted the employment of 9,000

 6 individuals, and we didn't want to lose those

 7 jobs. At the end of the day we saved six out of

 8 the nine, and in one instance, that moved out of

 9 state; has returned back to New Orleans since. So

 10 seven out of nine, at the end of the day, we

 11 think, is not bad under the most austere of

 12 conditions.

 13 What we've done over the course of those

 14 years, the ensuing years after Katrina, was to

 15 determine what's the best land use value, how can

 16 we best retrofit you all in (inaudible) in those

 17 1,500 acres at France and Jordan Road, and we came

 18 up with the conclusion that we should develop an

 19 intermodal transportation logistics. And I say

 20 that because we have 92 chemical plants located

 21 between here and Baton Rouge, Louisiana, all along

 22 the river.
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 1 All connected by rail, truck and barge,

 2 and those chemical plants last year were the

 3 recipient in 2013 of $81 billion in foreign,

 4 direct investment, from foreign countries

 5 investing in the chemical plants because of the

 6 low price of natural gas, if you will. And it

 7 appears as though that's going to continue for

 8 some time to come, according to many associations,

 9 including the Louisiana Chemical Association.

 10 This year the projections are somewhere

 11 around 75 billion for investments in those plants.

 12 Now, what that means is that products that come

 13 out of the plants such as resins and pellets, so

 14 on and so forth, are brought into New Orleans now,

 15 before they were destined for other ports out of

 16 state, are brought into New Orleans now, and are

 17 being able to have a value-added concept with

 18 good-paying jobs, with people taking the bulk

 19 cargo and the bulk product and stuffing into one

 20 and two-time super stacks, and then into

 21 containers, and on our public belt railroad taking

 22 it to our container yards at Napoleon and
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 1 Nashville Avenues, and putting it on container

 2 ships for export purposes.

 3 So we really -- we feel pretty robust

 4 about the future, we think it's going to be fairly

 5 significant, as we continue to grow in the future,

 6 and that arena, as far as containers are

 7 concerned, are like anybody else, or many others;

 8 if there's an Achilles heel that we have, it's on

 9 the import side for the balance of trade due to

 10 what do you do, once the containers -- I mean,

 11 where do you find the empties for the export

 12 purposes, and you are not receiving them on the

 13 import side?

 14 So we are doing a lot to work a number

 15 of different angles. We just opened a new office

 16 in Mumbai, India, that has to do with a lot of

 17 steel export coming into the Port of New Orleans,

 18 in addition to our other four foreign offices that

 19 we have as well. We, too, have sought now for

 20 eight years, and have entered into the public-

 21 private partnership abode, looking for

 22 opportunities to bring a partner on board with us
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 1 to invest in our needed $565 million of

 2 infrastructure investment, at the container

 3 terminals, that will be needed over the next 10 to

 4 12 years -- to totally fill out our footprint to

 5 1.8 million TEUs.

 6 So that's an active and ongoing process.

 7 We are constantly looking for the right player

 8 that can bring the right numbers to the port. On

 9 the internal side, I'll get back to that in a few

 10 minutes. Everybody knows that probably our number

 11 one problem that we have now and our two container

 12 terminal operators are working hand-in-glove with

 13 America and New Orleans terminals, to come up with

 14 a similar software package at our main gate, which

 15 will dovetail with each other, which should really

 16 ease some of the restrictions that we have now, in

 17 terms of an easy flow -- and a much easier access

 18 and egress in and out of the container terminal

 19 itself.

 20 In addition to the containers, I must

 21 say that -- and I'll be talking about this in two

 22 days at our Annual State of the Port Speech, but
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 1 we had a really, really bullish year this year, on

 2 the break bulk side. We really saw a huge, huge

 3 exhibit of imported steel coming in like we hadn't

 4 seen since the late '90s and early 2000s, and so

 5 that helped put us in a position to where it

 6 accounted for our fourth record year in a row, in

 7 the history of the Port of New Orleans since the

 8 1990s.

 9 So, '11 was a record year, '12 beat '11;

 10 '13 beat '12 and '14 beat '13. So we are really

 11 running strong right now. We think the future is

 12 going to be really, really good, but that's not

 13 without problems. We need to make room from a

 14 congestion standpoint for the future expansion and

 15 growth of this port. In order to do that, we have

 16 many aspects that need to be addressed, but I'm

 17 going to concentrate on two main aspects today.

 18 One is the dredging of the Mississippi

 19 River to 50 feet, which has been addressed by

 20 Congress favorably, and in order to get to 50

 21 feet, the Corps just funded a study a couple

 22 months ago, I see Mr. Sean Duffy, sitting here
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 1 somewhere, there he is, with the Big River

 2 Coalition, he will address that in much more

 3 detail later this afternoon. But that's one of

 4 the things that we look at. When you are

 5 exporting 60 percent of all of this nation's grain

 6 through here, 25 percent of all of this nation's

 7 coal is exported through here. And 28 percent of

 8 all this nation's petro-chemical products and

 9 petroleum is imported through here, it would bode

 10 really, really well.

 11 About a year ago a study was done by the

 12 Former Chancellor of UNO, and a great Economist,

 13 Dr. Timothy Ryan. And Dr. Ryan's numbers

 14 indicated that the cost benefit ratio of dredging

 15 the river an additional 5 feet, from 45 to 50, is

 16 a whopping 89.4 to 1; 89.4 to 1. The issue was

 17 going to be the landside congestion, at the end of

 18 the day, and that brings us to item number two.

 19 And item number two, when Congresswoman

 20 Janice Hahn from L.A., Long Beach, was here just

 21 recently, late on a Friday afternoon, she sits on

 22 the Maritime Caucus. I was explaining to her the
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 1 issues that we had with the last mile. They are

 2 not all different from L.A. and Long Beach's

 3 problems with the interstate, and the issues that

 4 they've got out there from a vehicular and truck

 5 standpoint.

 6 We have got to address from the

 7 Pontchartrain Expressway, into the gate at

 8 Felicity, sooner rather than later. And for the

 9 record, Madam Commissioner, I have a study that

 10 was done by our engineers, Volker, it's the

 11 freight issues and the last mile conundrum at the

 12 Port of New Orleans, and it was just done this

 13 past week. And it highlights all of the many,

 14 many details; alternates one, alternates two, and

 15 the third alternate, but at the end of the day

 16 this is going to take quite some time.

 17 We are looking at a 600 to $650 million

 18 fix with flyovers getting to it. It can be done

 19 for 600 to $650 million dollars to get to the

 20 Felicity gate and not to cause chaos and

 21 congestion, and mass pandemonium with the regular

 22 commuters coming into the CBD for work and going
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 1 home, on day-in and day-out basis, as they pass

 2 the main gate of our container terminal at

 3 Felicity.

 4 There are some quick fixes, the quick

 5 fixes include small or on-off ramps which come

 6 down onto Tchoupitoulas Street, just outside, and

 7 when you all came in here today, you were on the

 8 last mile, believe it or not. I'm glad you came

 9 at the time when you came and not a little

 10 earlier. But you were on the last mile, and that

 11 last mile can get pretty ugly sometimes, as we

 12 approach the actual bottle gate at Felicity, and

 13 at Religious and Tchoupitoulas.

 14 So, anyway, there are some quick fixes,

 15 other faster than quick fixes, or the redesign of

 16 lane changes possibility, possibility of doing

 17 things, i.e. rededicating HOV lanes to possibly

 18 truck-dedicated lanes, and I did say, possibly.

 19 All those things are being considered. Mechanized

 20 state-of-the-art signalization. Changing of

 21 traffic flow, utilizing -- I looked at it, and I

 22 read it in detail several times now. And I'm
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 1 thinking; boy, boy, boy, you are going to be --

 2 this is going to be like driving up a one-way

 3 street to get people in the habit of going down

 4 these things correctly if ever they implement

 5 them.

 6 But they'll need it in order to make

 7 more and more and more room for the truck traffic

 8 going in and out of that gate at the port, in

 9 order that the truckers who are represented here

 10 today, and they have the next panel, I believe, in

 11 order that they can make more turns on a given

 12 daily basis, and better shoes on the baby's feet

 13 for the people that work for them.

 14 So again, the two congestion issues that

 15 we have are on the river itself, trying to get to

 16 50 feet which will probably mean less ships

 17 because of heavier volumes of cargo, and then the

 18 last mile, the ability. Anything that we do on

 19 the river means nothing if we can't correct that

 20 last mile, and allow for our truckers to have easy

 21 flow in and out to their terminals on the port.

 22 Thank you very much.
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 1 COMMISSIONER DYE: Thank you very much.

 2 And can I accept your study into the record?

 3 MR. LaGRANGE: Okay.

 4 COMMISSIONER DYE: Thank you. Roger

 5 Guenther from the Port of Houston. I was from

 6 Texas for a while when I worked with Congressman

 7 Jack Fields (inaudible), so I appreciate you being

 8 here.

 9 MR. GUENTHER: Well thanks for having

 10 me, and the Port of Houston, and you are welcome

 11 in Houston anytime. Gary, thanks for hosting

 12 this. It's good to be in New Orleans, so I'm

 13 anxious to hear about all the perspectives that we

 14 have here today, we've got quite a list of

 15 industry folks here that represent the whole

 16 supply chain, so hopefully we all come away with

 17 here, with some takeaways that maybe we didn't

 18 have, all showed up, so I think this is a great

 19 venue.

 20 The Gulf, ports in the U.S. Gulf is a

 21 great story of success, and I'll be speaking from

 22 the Houston perspective this morning, but I'm sure
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 1 -- and I can already tell we share similar

 2 experiences up and down the Coast, but what I can

 3 say for Houston, I believe we are headed for just

 4 an unprecedented growth due to many different

 5 factors over the next several years. The future

 6 is bright. And in terms of cargo, containerized

 7 break bulk, both import and export, so we have to

 8 be ready for that.

 9 And today I also want to say that, you

 10 know, we don't have the impediments in the supply

 11 chain in Houston today that create congestion of

 12 any magnitude. We don't have congestion today.

 13 However, we have to make sure that we don't have

 14 congestion, and we are not going to be able to

 15 achieve that if we maintain the status quo. We

 16 don't have congestion just because we are lucky,

 17 we have worked hard at it.

 18 If you go back through the years just on

 19 the container side, thinking about what

 20 transpired, you know, we don't stick paper up

 21 through tubes anymore, and we don't -- you know,

 22 we exchange good information, so we have to keep
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 1 doing that to make sure that we capture the flow

 2 of cargo coming through our region. There's a lot

 3 of factors pushing what's going to happen in our

 4 region of the Gulf. The renaissance of the energy

 5 sector is driving a lot of what we do.

 6 I can remember back when Hurricane Ike

 7 came through, we took a look at it, the economy

 8 went -- you know, the economic downturn, Hurricane

 9 Ike, and we were looking at ourselves, and 50

 10 percent -- I'll say 33 percent of export

 11 containerized cargo was some form of plastic

 12 resin, and they were talking about manufacturing

 13 resin in the Middle East, and Singapore, and in

 14 Europe. And then all of a sudden we are blessed

 15 with Eagle Ford Shale down in South Texas which

 16 has changed the game, and there is a significant

 17 amount of investment going on in our region.

 18 I know -- I'll speak for Houston, but I

 19 know in the Louisiana region another, you know,

 20 $35 billion over the next couple of years just in

 21 Houston alone where they are now manufacturing

 22 plastic resin, and it's going to be for export,
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 1 and we have to take care of it, and we would have

 2 laughed at that five or six years ago, that we

 3 would be increasing manufacturing in Houston.

 4 So that's something that we have to deal

 5 with on the export side. On the import side, the

 6 population in Houston, and Dallas, and San

 7 Antonio, Metroplex is growing faster than

 8 anywhere in the nation, which is going to

 9 encourage, and already has, the distribution

 10 centers, and imports coming into our region.

 11 I will, like Paul said, not talk about

 12 the Panama Canal, we are all ready for that to get

 13 open so we can quit talking about what's going to

 14 happen when the Panama Canal opens, but we believe

 15 it's going to be a good impact, it's going to be

 16 significant, but we are anxious to see what

 17 happens there as -- The East Asian Cargo, all

 18 water through the canal to Houston is already

 19 about 25 percent of our import trade; so we are

 20 excited to see what happens as well.

 21 So those three things are driving a lot

 22 of what we do, so how do we keep from having
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 1 congestion? I think a lot of what we've done over

 2 the years, it sounds simple, but as a terminal

 3 operator, the port -- every port does things

 4 different. We are a terminal operator. Primarily

 5 we have one tenet that operates a portion of our

 6 terminal, but we've made a lot of progress

 7 recently and through the years, through our

 8 communication, constant communication with our

 9 carriers.

 10 We have to know what our carriers are

 11 going to do, what kind of volumes that -- what our

 12 shippers are going to do on this -- on the cusp of

 13 a huge demand, we have companies saying; hey we

 14 are going to run triple our volume of plastic

 15 resins now. What does that mean? You know, what

 16 kind of volumes can we expect, because with the

 17 capital- intensive nature of the infrastructure,

 18 we all have to provide, you know, it's two or

 19 three years out, and we have to make sure that we

 20 stay ahead of that demand curve.

 21 We have close communication with our

 22 truckers. We have quarterly -- bimonthly meetings
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 1 with the truckers to understand their needs, so

 2 that we can evolve with the industry and make sure

 3 that they can efficiently use our terminals. An

 4 example that recently, we expanded our hours with

 5 the shortage in trucker supply that's leaving to

 6 go to the Eagle Ford Shale to make more money. Or

 7 having to evolve with that. Extend our hours a

 8 little bit so truckers can make more turns in a

 9 day with the amount of drivers that they have.

 10 We work closely with the stevedoring

 11 companies to make sure that we are being

 12 productive and efficient on the (inaudible) -- on

 13 the ships, and the vessel activity, as well as our

 14 labor. You know, we are lucky to have a

 15 continuing, and have for many years worked closely

 16 with our labor and our maritime association to

 17 make sure that we have a skilled workforce to be

 18 productive on our waterfront.

 19 Sharing of information is key, not only

 20 in those types of groups that are users, we have

 21 to not only received information to plan, but also

 22 share that information with others, and we've
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 1 gained that through technology. Someone mentioned

 2 about the systems. We have to continue -- again,

 3 we are not lucky, we spend a couple million

 4 dollars on a new operating system at the container

 5 terminal, so that we can more efficiently

 6 understand our operation, and be more productive

 7 on the docks.

 8 Infrastructure is something that we have

 9 to stay ahead of. Ports are just expected to have

 10 the infrastructure available to handle all this

 11 change, and volume, and talk about funding these

 12 is challenging, to say the least. Talk about

 13 public-private partnerships, we are trying to make

 14 sure that we make the investments to stay ahead of

 15 this demand curve, and we have to have information

 16 from our shippers and commitments to those types

 17 of cargo.

 18 A lot of times we are doing this blind,

 19 because you can't afford to be behind the demand

 20 curve. We've done that, we did it back in the

 21 2000s, mid-2000s when were delayed opening Bayport

 22 Terminal. That's not a situation you want to be
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 1 in, but also you can't build -- it's not

 2 profitable for anyone to build too far ahead of

 3 the demand curve. So we have to have those

 4 conversations and know what's coming through us --

 5 are going to be coming through our terminals.

 6 Just to talk a little bit about what may

 7 be the challenges and where we've been successful.

 8 Waterfront properties are the most expensive

 9 properties in our region in Houston, and I can

 10 assure you probably on any port in the country.

 11 We have to work hard and use those properties

 12 wisely, to be for the movement of cargo and not

 13 for the storage of cargo, so we have to be

 14 rethinking what opportunities there are to keep

 15 the cargo velocity moving.

 16 We focus a tremendous amount of time in

 17 this area, and take pride in the services that we

 18 perform, because we have to be productive on the

 19 vessel, and we have to be productive in and out of

 20 the terminal. I'll let the truckers talk more

 21 later on about what's occurring in their industry,

 22 but we are not ignoring these opportunities for
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 1 congestions that might crop up if we don't get out

 2 in front of those -- the decline in available

 3 truckers leaving to go to the oil patch, we've

 4 continued to -- placing emphasis on our

 5 environments, so they get in and out of terminals

 6 quickly.

 7 We have to make it efficient for them to

 8 have quick trips through our terminal. We do 30,

 9 35-minute turn- times today. We do good

 10 productivity on the vessel. We believe the

 11 trucker has a right to earn a decent living and

 12 get in and out of our terminals. That's at a cost

 13 that sometimes is ignored, but you talk about

 14 congestion, if you clog up the terminal, it starts

 15 costing people a lot of money very quickly.

 16 Also, briefly, I want to talk about the

 17 Federal Government, the customs and border

 18 protection play a key role in the commerce -- in

 19 the flow of commerce through our terminals. We

 20 work closely with them locally, but historically,

 21 they are budgeted to not be able to work a lot of

 22 hours. We've engrained that we are pretty much
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 1 7:00 to 6:00, Monday through Friday, in Houston,

 2 that has to change. We have a tremendous amount

 3 of assets that we are going to be forced to use

 4 those assets, and we want to use those assets

 5 24/7.

 6 If you think about what we did today, we

 7 are going to put another billion dollars over the

 8 next five years. We have a billion dollars in

 9 Bayport already, and those assets are used for the

 10 road, and receiving and delivering containers, 25

 11 percent of the clock hours in a week, we need to

 12 be able to use those -- use off hours, and use the

 13 equipment, that sits idle a lot of the time, more

 14 productively and more cost-efficiently for our

 15 users.

 16 Also, there is a lot of talk around the

 17 nation about chassis, we currently, I believe --

 18 and I'll listen to what the truckers have to say

 19 -- don't have a chassis issue, but we want to make

 20 sure we stay out ahead of that as well. There are

 21 opportunities we've engaged to look at what the

 22 opportunities are, moving forward, to make sure
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 1 that the trucker has a piece of equipment to haul

 2 his container in and out of the terminal when he

 3 needs to.

 4 I'm not going to talk much about

 5 dredging, but we need to make sure that that is

 6 not part of our congestion opportunities. I echo

 7 what Paul said about water and funding and, you

 8 know, we just need to make sure that our channels

 9 can handle these larger ships that are coming in,

 10 first and foremost, and then be able to address it

 11 on the land side as well, to make sure we are not

 12 congested.

 13 But in Houston, we know the big ships

 14 need to come, not necessarily because of the

 15 Panama Canal, it's our existing North Europe and

 16 East Coast of South America business, so we have

 17 to make provisions for dredging to match the

 18 Houston ship channel. And we did this ourselves,

 19 we invested $80 million for the deepening and

 20 widening of the Barbours Cut and Bayport

 21 Terminals, so we can get it done in four years,

 22 versus the normal, maybe, 15 or 20 years than if
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 1 it went through the normal Federal process. Our

 2 region couldn't afford to wait and miss out on

 3 that lost opportunity, so the Port Authority

 4 funded the deepening and widening of the Federal

 5 Channel.

 6 I'll close, we talked about

 7 infrastructure, and I could talk all day about

 8 this, but we have to stay with the demand curve,

 9 but we can't do this in a vacuum either, we've got

 10 a capacity today of 2 million TEUs annually

 11 between our Barbours Cut and Bayport Terminals.

 12 We have the ability to expand the 5 million-plus,

 13 however quickly we need over the next 10 or 20

 14 years. But we also have to remember, we can do

 15 that all day long and be efficient.

 16 The roads coming in and out of our

 17 terminals have to be planned so that we have the

 18 freight mobility to move the cargo into and out of

 19 our region. We are not necessarily a regional

 20 port like we were 20 years ago, we have the

 21 opportunities by road and by rail to reach further

 22 and further inland to the consumer base which, in
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 1 Houston, within 1,000 miles, we can reach 140

 2 million consumers. So, we work closely with our

 3 local and State Departments, and transportation,

 4 we look at the Federal level as well. We have to

 5 make sure that we have the infrastructure to move

 6 cargo so that we don't cause congestion in our

 7 facilities.

 8 Anyway, thanks for letting me have those

 9 comments, and certainly looking forward to any

 10 questions that we have moving forward.

 11 COMMISSIONER DYE: Thank you. Thank you

 12 very much. Mr. Thorne?

 13 MR. THORNE: Hi. Thank you,

 14 Commissioner. I appreciate being included here as

 15 well. Port of Mobile is the 12th largest port in

 16 the United States, and we appreciate the

 17 opportunity to address the matters here. Like the

 18 Port of Houston, we are not experiencing

 19 congestion at the current time either, but we do

 20 have some concerns in mind about the future.

 21 We are building an ICT and that will be

 22 complete and ready to go next year, for intermodal
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 1 container freight transfer. We are concerned

 2 about Class I railroads ability to service these

 3 facilities.

 4 We are seeing more and more service

 5 problems with the Class I railroads. I think

 6 those of you that follow them, the industry

 7 magazines and so forth, realize that Canada had to

 8 force the railroads out there to take care of

 9 their grain last year. We've got a big grain crop

 10 coming this year, and we are concerned about here

 11 in the U.S. Some of the ports are fortunate to

 12 get their grain by barge, but those of us that get

 13 a lot of -- are regular, are going to be watching

 14 that very closely.

 15 The oil is moving now by rail. With

 16 Congress demanding, they have (inaudible)

 17 demanding the double-skin railcars. If you go to

 18 book a new box car being built now, I'm told that

 19 the delivery would be in late-2016. Every one of

 20 the box, the railcar facilities are building

 21 tanker cars, double-skin tanker cars, and cars to

 22 carry the oil sands, we are already seeing a
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 1 shortage of box cars for break bulk cargo. And

 2 cargoes that are stuffed into containers for

 3 containerized shipment, we are already seeing

 4 those shortages, and we've addressed them in our

 5 own manner by leasing cars, our railroad at the

 6 port is leasing cars for our customers to use.

 7 But we see this continuing to grow until

 8 these facilities were free to start addressing

 9 that growing need, so I worry about congestion on

 10 the rail. It's a big concern, we see the oil

 11 being more and more important to the railroads and

 12 we see service falling in other sectors, and we

 13 are very concerned about that.

 14 We've also, like the Port of New

 15 Orleans, we finished our third record year last

 16 month, and we've been very blessed with that.

 17 We've been building facilities for the last 10

 18 years, and now the business is growing to take

 19 advantage of those facilities and we are very

 20 happy about that. We have a public-private

 21 project going right now that will be finished by

 22 the end of the year building a new steel coil
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 1 warehouse. When it's finally phased out they'll

 2 be able to handle 475,000 square feet of coil,

 3 steel, and that's going to take coils that we have

 4 in our break bulk warehouses now, and free up that

 5 space for other cargo.

 6 So we are real happy about that, and the

 7 growth that we've seen has been phenomenal over

 8 just the last few years, and I think we are going

 9 to see that continue. We've worked hard with the

 10 Port of Houston, the Port of Tampa, with our Gulf

 11 Coast Advantage teams that have gone over and

 12 called on container carriers, showing them that

 13 coming into the Gulf is not just a East Coast,

 14 West Coast movement any more. That the Gulf can

 15 offer a lot more distribution capabilities and we

 16 appreciate the cooperation we've had with our

 17 partners on that.

 18 I'm not sure they all have. We do have

 19 concerns on dredging, not only permitting. We are

 20 at 45 feet and don't see a need for that -- more

 21 than that at the present time, but every year all

 22 of our ports sweat out the core of getting the
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 1 proper funding to keep the water we've got, much

 2 less taking care of deeper water. When you go to

 3 50 feet it expense is going to be that much

 4 greater to keep it at 50 feet.

 5 So Congress has got to address this.

 6 We've got to find a solution for the dredging

 7 needs of the entire industry and the nation.

 8 Thank you very much.

 9 COMMISSIONER DYE: Thank you. Thank you

 10 very much. And Mr. Strader.

 11 MR. STRADER: Yes, ma'am. Thank you,

 12 Commissioner. And to Gary for hosting this, as

 13 always, a gracious host. Opportunities like this

 14 have to be created. And I think probably one of

 15 the most crucial things that we can do as an

 16 industry is talk to each other. And we need to

 17 look for those opportunities and take advantage of

 18 it, to the extent that it's legally possible with

 19 all members of our industry.

 20 Without that, I just don't see how we

 21 can ever be individually and collectively all that

 22 we need to be. Everyone in this room has formed
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 1 by unique experiences and circumstances, and I'm

 2 going to share a couple of mine with you. Just to

 3 be a little different. I've had the fortune to

 4 work both in the South Atlantic Port Range, as

 5 well as the Gulf. I've also had the opportunity

 6 to work for both an operating port as well as a

 7 landlord.

 8 And two comments relative to that; one,

 9 the Gulf has got everybody beat hands down. That

 10 this is a great place to be, we do have tremendous

 11 balance and tremendous opportunities. It's not

 12 often you can come to a place where you have

 13 actually more exports than you do imports, and

 14 you're scrambling looking for that equipment, to

 15 fill those exports into it, that's a great

 16 challenge to have.

 17 Relative to being operating versus

 18 landlord, Roger, no disrespect, but I've been both

 19 places, and being in a landlord position has its

 20 -- has some very distinct advantages. First and

 21 foremost, it puts you closer to -- I think at

 22 least from one standpoint to harnessing the unique
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 1 capabilities of each of your partners inside that

 2 port operation. And that gets us back to the sort

 3 of the public-private concept, and the private

 4 investment. I will have to put a plug in for

 5 Freeport, everybody else kind of has too. We do

 6 have one of those public-private partnerships, I

 7 do think that's a term sometimes that gets pounded

 8 into the ground and gets overused, but

 9 nonetheless, with private investment, comes

 10 private partnership. But in our particular case,

 11 it's an export opportunity and it is borne out of

 12 the shale gas revolution. And that is, again,

 13 another big number. That was another thing coming

 14 from the South Atlantic into the Gulf.

 15 I wasn't used to talking in terms of

 16 billions, it was millions, maybe 100 million, but

 17 certainly not billions; but we had a piece of

 18 property that we were not in a position,

 19 necessarily, to develop it, the private sector

 20 was. And this month we'll have the ground

 21 breaking on a $15 billion liquid natural gas

 22 export facility.
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 1 So again, this is one of those examples

 2 of where partnering with the private sector makes

 3 tremendous sense. Some of the issues that I guess

 4 I will talk about, ultimately sort of surround

 5 around, one, of the communication aspects, being

 6 very, very critical. And then, two, obviously

 7 money being a scarce resource that all of us have

 8 to rationalize as we look at having to spend, or

 9 attempt to accomplish stuff that there's no

 10 possible way our bank accounts can, by themselves,

 11 completely address.

 12 On the capital side, I think working

 13 with the U.S. Army Corps of Engineers, certainly

 14 they are, typically, our biggest partner, and

 15 sometimes our biggest foe. But in the case of

 16 Freeport, we were blessed to be included in the

 17 most recent (inaudible) authorization, but

 18 following that comes a tremendous challenge as to

 19 how then are we going to actually accomplish that

 20 authorized project.

 21 We are looking at private investment.

 22 The Corps has made tremendous strides, I think, in
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 1 terms of trying to reduce the study time, and also

 2 looking for ways to be creative to accept local

 3 funding. We have a number of examples of that,

 4 certainly in the Gulf as well as in the South

 5 Atlantic also. But we are looking for those

 6 opportunities, I think another way to look at this

 7 though, is fundamentally to go back to how the

 8 Corps funds these projects in the first place.

 9 Once we are past the authorization

 10 point, you know, projects need to be looked at the

 11 same way that typically they are looked at in the

 12 private sector, as opposed to funding them on an

 13 appropriation-by-appropriation cycle basis there.

 14 We need to figure out a way to fund them

 15 holistically. The Corps expects that of us, as

 16 private -- the local sponsors. In turn, I think

 17 it needs to be looked at, the whole project,

 18 respective of a holistic basis.

 19 From an operating standpoint, I share

 20 Roger's concerns about U.S. Customs. Again, I

 21 think steps have been made in that area with the

 22 contribution program to begin to address that, but
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 1 they do have limited hours that the FTEs can work

 2 on annual basis. And this is where communications

 3 comes back into it, and supplying customs with,

 4 you know, the information that they need,

 5 ultimately, to go back and justify additional

 6 resources on the ground but, you know, we are at

 7 that point where, as an industry, we just don't

 8 have enough financial resource to allocate at

 9 times. And ultimately we rather get creative

 10 about addressing.

 11 And then, I guess the last part of that

 12 is, just again, dealing with those scarce

 13 financial funds. You know, I like to think that

 14 in Freeport we are in a good position to address

 15 the expansion needs that we have for our terminal,

 16 but again, that's only part of it. Ultimately the

 17 inland connections are absolutely essential,

 18 whether they be road or rail, and then on the

 19 navigational side. If you don't have all three

 20 components you've got an incomplete recipe. Thank

 21 you.

 22 COMMISSIONER DYE: Thank you. I will be
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 1 calling my contacts over at Customs to discuss

 2 Customs Resources and Port Operations, We should

 3 have a conversation with them about resources,

 4 because obviously you have to use your

 5 infrastructure as efficiently as possible, and you

 6 can't stay open without support.

 7 MR. STRADER: Well, I'm not -- I don't

 8 want anybody to think that we have a bad

 9 relationship with U.S. Customs.

 10 COMMISSIONER DYE: No. No. I have not

 11 heard --

 12 MR. STRADER: Okay.

 13 COMMISSIONER DYE: -- that you have a

 14 bad relationship. I think that speaks very well

 15 for them.

 16 MR. STRADER: We had a meeting recently

 17 that was enlightening to me, in terms of the

 18 explanation of how they go about justifying the

 19 resources, and the timeline it takes to accomplish

 20 that.

 21 COMMISSIONER DYE: Yes.

 22 MR. STRADER: The result of that we
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 1 began to share our long-range volume forecast with

 2 them in order to enable them to plan for that. I

 3 don't know if other ports do that or not, for us,

 4 that was new.

 5 COMMISSIONER DYE: Roger?

 6 MR. GUENTHER: We have done the same and

 7 certainly, on record, we have a very good

 8 relationship with the Port Director there in our

 9 region, but we just have to make sure that the

 10 message is clear, where these volumes are going

 11 and what kind of resources folks are going to

 12 need, from CBP to continue the flow of commerce.

 13 COMMISSIONER DYE: And it's -- I'm very

 14 pleased that it sounds like -- that you are doing

 15 your best to get out in front of any problems that

 16 exist now, that might be an issue in the future,

 17 and that's very good news.

 18 MR. LaGRANGE: Yes. That's where I

 19 reckon I feel compelled to respond as well. We

 20 have very, very few issues, detrimental issues

 21 with Customs and Border of Patrol. The issues

 22 that we do have when something does crop up, they
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 1 are very responsive, they are very respondent, and

 2 usually the problem, if not in a short period of

 3 time, over some period of time, is resolved. It's

 4 usually over a new issue or a new type of cargo; a

 5 new way of handling things. We resolve this, we

 6 saw a lot of that when we opened our cruise ship

 7 terminals back in the early-2000s, it was a

 8 strange creature to the Port. So, after a period

 9 of time, like anything else, they acclimate it and

 10 are just doing a yeoman's job with it.

 11 COMMISSIONER DYE: That's good.

 12 MR. ANDERSON: Commissioner, I also feel

 13 that we have a fantastic relationship with our CBP

 14 partners. Also, make no mistake that everyone one

 15 of us up here, one of the most important

 16 relationships that we have to have is necessitated

 17 by the way our business moves, is with our

 18 counterparts at CBP. And in general, they are

 19 extremely responsive, but they have the same

 20 issue, though, that other Federal agencies have.

 21 COMMISSIONER DYE: That's true.

 22 MR. LaGRANGE: And its resources and a
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 1 lack of understanding and commitment from Congress

 2 to provide the necessary resources, so we are

 3 growing, and you heard every port up here,

 4 including I did not address, but we've had three

 5 -- two record years, all-time records, along with

 6 all of the other ports and the Gulf Coasts are

 7 saying the same thing. And CBP is being asked to

 8 do more with less.

 9 COMMISSIONER DYE: I'm sure that's true.

 10 Thank you. Is there anything else you'd like to

 11 add, gentlemen; or would like to ask each other?

 12 MR. LaGRANGE: I'd just like to comment,

 13 once again, I think you see an underlying theme

 14 here, on the Gulf Coast. As several of you have

 15 mentioned, it's very bullish, I think it will

 16 continue to be bullish. Some of the things that

 17 Roger alluded to, and I alluded to from an energy

 18 standpoint and an energy side, again, the Achilles

 19 heel is always in beefing up the imports. Making

 20 sure that the adequate number of boxes and

 21 containers are here.

 22 But I think the underlying side also, as
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 1 this growth continues, and all of the

 2 prognosticators indicate that it's going to

 3 continue for a while, we'll best be prepared. And

 4 Roger, again, alluded to that, in making sure that

 5 if you have an expansion program in mind, over the

 6 next five to ten years, you'd better start working

 7 your infrastructure now. And so those are the

 8 issues I think we all need to be concerned. You

 9 can't wait till the last minute.

 10 COMMISSIONER DYE: Of course.

 11 MR. ANDERSON: I'd also like to conclude

 12 by -- you know, there's a couple of things that

 13 came out that, one, was the Gulf Coast advantage

 14 that you heard talked about.

 15 COMMISSIONER DYE: What is that?

 16 MR. ANDERSON: It is a Joint Marketing

 17 Agreement between the Ports of Mobile and Tampa,

 18 and Houston, where we market together. And this

 19 is something that, you know, we are in competition

 20 with all of our ports on the Gulf Coast. But we

 21 all work very well together, and I think it's

 22 really important where you see the destructive
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 1 competition amongst some others around the

 2 country, we all have the same challenges but we

 3 identify that to get the capacity to come into the

 4 Gulf, we needed to work together. And it's

 5 working very well, we've got to market around the

 6 world; Asia, Europe and Latin America and work

 7 together on that.

 8 The other one is the investment that's

 9 being made by all other ports, so we have a

 10 $500-million capital plan over the next five

 11 years. Our largest ever single year, will be this

 12 budget year, 2014; '15 which is 96 million; so

 13 these ports all of us are investing hundreds of

 14 millions of dollars to expand our capacity to meet

 15 the future needs of the growth of our country.

 16 And two other things, Gary mentioned the

 17 connectivity, I think all of us are concerned

 18 about the intermodal connectivity to our nation's

 19 interstate system, and we were very fortunate that

 20 the -- as I was able to do the ribbon-cutting in

 21 December, of a $600-million project that was an

 22 I-4 connector for Tampa with a dedicated truck
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 1 lane into the port. And of our 8- to 10,000

 2 truck-moves a day that's taking almost 60 percent

 3 of those daily truck moves off of local roads, and

 4 putting them right on to the truck.

 5 But again, the number, the $600 million,

 6 you heard that number that Gary mentioned so --

 7 you know, you have to start years ahead of time,

 8 we are very fortunate. And the last thing is that

 9 when you talk about P-3s, when you have private

 10 partners that have skin in the game, in your

 11 projects, the likelihood of that being successful

 12 and getting a good, solid return on investment

 13 goes up exponentially. So I think it's really

 14 important as we look forward to expanding capacity

 15 that we utilize these private partnerships.

 16 COMMISSIONER DYE: I've talked to

 17 several private investors in Copenhagen, when I

 18 was at the Maritime Forum, you will be glad to

 19 hear, that they are interested in investment in

 20 the United States as well as foreign ports. As we

 21 look forward to avoiding any congestion problems,

 22 obviously we have to be prepared for the increase
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 1 in volumes.

 2 MR. LaGRANGE: You know, you are

 3 absolutely right. I'd like to add one thing, I

 4 just happen to hear Rand Paul talk about it on

 5 Face the Nation yesterday. And in addition to

 6 foreign direct investment, we really need to start

 7 looking at the Apples, at the Caterpillars, and at

 8 the companies, the corporate world, and the

 9 corporate structure in the United States. There's

 10 over $1.3 billion available now, in funds for

 11 those companies to reinvest back in the

 12 infrastructure in the United States to help with

 13 the issues that we have, and also to spur the

 14 economy.

 15 So I don't think we should always

 16 restrict this to just a foreign direct investment,

 17 but we need to start looking at home as well. The

 18 money is there. Maybe the Appropriations Bill in

 19 January will help out with that.

 20 COMMISSIONER DYE: Yes. Anything else,

 21 gentlemen? Okay. We are good.

 22 MR. ANDERSON: I'm good.
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 1 COMMISSIONER DYE: Thank you. I can't

 2 tell you how much I appreciate it. It's been

 3 excellent, and I'm planning to make a motion when

 4 I return to the Federal Maritime Commission that

 5 we move our headquarters to the Gulf.

 6 MR. ANDERSON: All right. Here, here.

 7 COMMISSIONER DYE: Or maybe we can just

 8 move around to these wonderful locations to --

 9 MR. ANDERSON: You have a roomful of

 10 (inaudible) in there.

 11 COMMISSIONER DYE: -- to do business.

 12 Thank you. Thank you, again, very much.

 13 MR. ANDERSON: Thank you.

 14 COMMISSIONER DYE: It's excellent.

 15 (Applause)

 16 MR. ANDERSON: Thank you so much.

 17 (Recess)

 18 COMMISSIONER DYE: Ladies and gentleman,

 19 let's begin our second panel on ship operations.

 20 They told me to speak into the microphone, so I

 21 apologize if some of you haven't been able to hear

 22 me during the first panel. We'll fix that right
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 1 now.

 2 I appreciate your being with us this

 3 morning. This morning we have Mr. Waldemar

 4 Poulsen, President and CEO with Rickmers from

 5 Houston, Texas. Mr. Jim Michalski, Vice President

 6 of Inland Operations, CMA-CGM America, from

 7 Norfolk, Virginia. Mr. Dhaval Patel, Head of

 8 Gulf, Pacific Northwest and Safmarine Delivery,

 9 USA from The Woodlands, Texas. Is that right?

 10 Mr. Steven Garifalos, Regional Director,

 11 North America, NYK Bulk and Project Carriers from

 12 Houston, and Mr. Thomas Grant, Director, National

 13 Accounts, Crowley Maritime in New Orleans. Thank

 14 you very much gentleman. I appreciate it. If you

 15 have any particular travel concerns, anyone can go

 16 first. Otherwise, Mr. Poulsen, why don't you

 17 begin?

 18 MR. POULSEN: Well, I have a flight this

 19 afternoon so I have lots of time.

 20 COMMISSIONER DYE: Good. I appreciate

 21 that.

 22 MR. POULSEN: But good morning everyone,
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 1 and thank you to Commissioner Dye and the FMC for

 2 arranging this important meeting. I'm Waldemar

 3 Poulsen, President and CEO of Rickmers-Linie.

 4 Rickmers is headquartered in Hamburg, and my

 5 office is in Houston. I'm responsible for

 6 Rickmers in North and South America.

 7 Just for your information, Rickmers

 8 operates east and westbound break bulk around the

 9 world services with 30,000 dead weight ton

 10 multipurpose vessels. We cater to all types of

 11 cargo; break bulk, bulk, oversized, heavy lift,

 12 and all types of project cargos. We are, as

 13 everybody else, very happy to see all the projects

 14 that are going on in the Gulf, in Lake Charles,

 15 and the Bay Port, and so on. That will benefit a

 16 carrier like ours.

 17 Also, Rickmers has about 75 port calls

 18 in a year within the U.S. Gulf. Primarily we go

 19 to Houston and New Orleans, but we also go to

 20 other ports here and there on inducement basis to

 21 Mobile, to Corpus Christie, Brownsville, and so

 22 on. So we go where the cargo demands us to go.
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 1 Certainly, again, the U.S. Gulf is extremely

 2 important to us even though we also go on our

 3 around the world services up the East Coast. So

 4 let's say the East Coast and Gulf together, that's

 5 our field of operation in the U.S.

 6 Container carriers offer door-to-door

 7 service. Contrary to most break bulk carriers

 8 like Rickmers, we offer port-to-port. So that

 9 means that in the overall total supply chain we

 10 are only responsible, if you will, or we only

 11 handle the port-to-port section. So in other

 12 words, a limited part of it. Everything that has

 13 to do with inland issues with the chassis and

 14 truckers and so on. Of course, it effects

 15 somebody in the supply chain, especially the cargo

 16 owners. But we're not, as a carrier, let's say

 17 involved directly in that. Okay? Just so that's

 18 clear.

 19 In general, although things are working

 20 pretty well for us it all has to do with

 21 competitiveness in the marketplace. Our

 22 competitors operate in the same arena as we do,
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 1 and they're up against the same challenges. So as

 2 long as we are on a level playing field we feel we

 3 are okay.

 4 That does not mean that there's no room

 5 for improvement in the supply chain. We have been

 6 listening to the port directors to understand that

 7 there are all kinds of investments going on. In

 8 Houston that's our main port, $1 billion over the

 9 next five years. That sounds impressive. One can

 10 only ask, is it enough? I'm not going to be the

 11 judge, but I think it's a question we all have.

 12 How much can be improved in the infrastructure in

 13 order to have carriers cut costs, if you will,

 14 which is certainly the aim all the time. But not

 15 only for carriers, for anybody in the supply

 16 chain.

 17 I think, if I'm not mistaken,

 18 Commissioner, will we address a little later on

 19 some of the shortfalls or inefficiencies or do you

 20 want that to be comments also now?

 21 COMMISSIONER DYE: Please go ahead.

 22 MR. POULSEN: Okay. So --
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 1 COMMISSIONER DYE: If think if there are

 2 issues that you'd like to raise.

 3 MR. POULSEN: Sure. I would just like

 4 to bring up --

 5 COMMISSIONER DYE: Please proceed.

 6 MR. POULSEN: For example, in -- I can

 7 speak for Houston. I haven't really personally

 8 experienced it in New Orleans, but we are up

 9 against fog at the wrong times when our ships come

 10 in and want to go to a birth in Houston they get

 11 stuck maybe down in Galveston Bay because of the

 12 fog. We have had delays, some up to a week,

 13 where, I don't know how many ships have been lying

 14 down there, you know, basically waiting for the

 15 fog to lift. I do understand it has to do with

 16 radar systems that could be installed that would

 17 allow ships to go in and out even during fog.

 18 In New York, we haven't experienced

 19 those issues. Even though we also have, let's say

 20 snow, that can also be a little difficult to

 21 maneuver through. But fog is definitely something

 22 that extends the transit time and the cost in the
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 1 supply chain. So if we can find a way in Houston

 2 and anywhere else to get the ships in and out

 3 despite fog then, I think, that's certainly one

 4 important issue that should be considered.

 5 A ship can cost, let's say, $15,000 or

 6 maybe $30,000, depending what type of ship you're

 7 talking about, huge container ships are extremely

 8 costly. If you're lying there for seven days

 9 that's a tremendous cost that should be

 10 considered. If there is a way to mitigate that

 11 type of delay I certainly encourage anyone who has

 12 powers to consider it, and do what can possibly be

 13 done to improve.

 14 Then we were talking about drafts and

 15 feet I think is what has been considered, the

 16 maximum draft in certain ports, like also the

 17 Mississippi River. For us, if we -- for our ships

 18 get 40 feet we were pretty happy. So I think

 19 depending on where we go, but it's not just a

 20 general port that should have, in our case 40

 21 feet. It's, of course, the draft along the

 22 terminals also that is extremely important. So
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 1 the drafts should be considered.

 2 Another thing, let's say heavy lift

 3 pieces that boom will carry, and ships will have a

 4 lift key, and they are accepting more and more

 5 weights. That's where, also, the infrastructure

 6 of the ports will be critical so that the weights

 7 can be held by the, or supported if you will, by

 8 the old Maritimes, old piers. So reinforcement

 9 may happen here and there or may be required that

 10 ports will have to look at together with the

 11 carriers, I'm sure.

 12 Also, infrastructure when it comes to

 13 cranes. Take the container lines. They're having

 14 cranes prop all over the place, you know, to

 15 handle their larger reach with the post Panama X

 16 vessels and what have you. Within our field with

 17 break bulk we also would like to see more crane

 18 capacity on shore instead of having to always

 19 basically use our own vessel gear.

 20 So those are the general issues. But,

 21 of course, again, we want to be competitive, but

 22 if we are talking about efficiencies or
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 1 inefficiencies I think these are important points

 2 that we can at least pinpoint. I'm sure there are

 3 others, but it's all different from port to port,

 4 from terminal to terminal. But, in general, those

 5 are the issues we are facing as a break bulk

 6 shipping company. Thank you very much.

 7 COMMISSIONER DYE: Thank you very much.

 8 Mr. Michalski?

 9 MR. MICHALSKI: Morning everyone. Thank

 10 you, Commissioner Dye --

 11 COMMISSIONER DYE: Of course.

 12 MR. MICHALSKI: -- for the opportunity

 13 to address the FMC and the International Supply

 14 Chain Efficiency Port congestion issues and

 15 industry challenges that all stakeholders are

 16 wrestling with in today's logistics supply chain.

 17 I am Jim Michalski. I'm VP of Inland

 18 Operations at CMA America. For those of you that

 19 don't know, CMA we're the third largest

 20 containership company in the world. As far as the

 21 U.S. trade is concerned we call every single port

 22 from Vancouver to Boston, and everywhere in
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 1 between. So the congestion issue is very near and

 2 dear to us.

 3 I've spent my entire career in the

 4 industry, and I've seen my fair share of

 5 operational challenges. After spending nearly 25

 6 years on the ocean carrier side of the

 7 transportation sector nothing has quite prepared

 8 me for the challenges we are facing today.

 9 As everyone here knows, the smallest bit

 10 of congestion at the port has a trickle-down

 11 effect throughout the intermodal chain. Even

 12 brief periods of congestion can lead to days, or

 13 even weeks, of recovery. With the sustained

 14 congestion we have seen this year the supply chain

 15 is seriously at risk of grinding to a halt which

 16 will impact our economy. I think all the

 17 stakeholders here today know that I'm not

 18 exaggerating, or being melodramatic, when I say

 19 that the challenges we are discussing have reached

 20 crisis level.

 21 I have followed the previous port

 22 congestion forums with great interest, and I
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 1 appreciate Commissioner Dye and the other

 2 commissioners providing these opportunities for

 3 public discussion. Unfortunately, it seems to me

 4 that at the previous meetings many stakeholders

 5 have been too anxious about their own points' of

 6 view and not working collaboratively with other

 7 stakeholders.

 8 I recognize that each stakeholder here

 9 today has competing priorities, but at the same

 10 time I hope we can agree that we each need to make

 11 a profit in order to build infrastructure and

 12 reinvest in our individual organizations for

 13 sustainability. With that in mind, I'd like to

 14 highlight a few areas where I think investment is

 15 the key to resolving the current crisis.

 16 On the Port Authority side. Port

 17 authorities must continue to invest in capital

 18 infrastructure to insure competitive capabilities

 19 and to develop jobs in each of their states. The

 20 large capital investments necessary to develop

 21 facilities have been slow to develop, and are

 22 currently behind the industry demands.
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 1 We hear a lot from East Coast Port

 2 Authorities and politicians about the introduction

 3 of big ships after the Panama Canal expansion.

 4 That can't happen without critical infrastructure

 5 development, starting with the ports.

 6 For the terminal operators. Terminal

 7 operators must continue to invest in container

 8 handling equipment to ensure they can grow their

 9 operations to eliminate congestion and empty

 10 container repositioning. They also need to invest

 11 in necessary resources to timely repair chassis

 12 and terminals that are perceived to have more

 13 equipment out of service than in service.

 14 Terminals cannot simply rely on

 15 solutions such as PierPass, which have only pushed

 16 gate congestion at facilities to peak periods.

 17 The equipment investment needs to be considered in

 18 order to ease congestion, and to keep the

 19 terminals fluid.

 20 Motor carriers must continue to invest

 21 in their drivers to ensure there is a future for

 22 drayage and inland trucking. Motor carriers must
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 1 continue to invest in equipment, and take on

 2 responsibility for chassis in line with a model

 3 followed elsewhere in the world.

 4 The owner/operator has been squeezed for

 5 years on rates to a point where the driver living

 6 wage is unsustainable. The driver population

 7 average age has grown from 41 to 55 over the last

 8 decade. This trend is, obviously, unsustainable,

 9 and the entire supply chain needs corrective

 10 action to improve the current situation.

 11 For the shippers, the NVOs, and the

 12 BCOs. They need to invest in the service levels

 13 they demand. Shippers are demanding the best

 14 service while driving rates down. Cargo is

 15 compressed into seasonal windows, straining peak

 16 capacity. Warehousing hours do not meet the

 17 demand of cargo surges, so shippers are holding

 18 equipment and asking for more free time.

 19 Carriers are usually willing to grant

 20 the additional free time to secure the business,

 21 but this just contributes further to the equipment

 22 shortages. The cycle that serves demands and rate
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 1 erosion is not sustainable.

 2 For the Class A railroads. Investment

 3 is needed in equipment and infrastructure and also

 4 look at the operational practices that add to the

 5 congestion and equipment shortages. For example,

 6 the wheel chassis operation required by railroads

 7 to minimize operational costs has a negative

 8 impact on already over utilized chassis capacity.

 9 Also, there is an insufficient railcar

 10 supply in the network causing railcar shortages

 11 and delays throughout the network. While

 12 railroads want to protect their individual

 13 interests, over usage of cars by one company to

 14 protect the interest against competitors has a

 15 negative effect on supply throughout the industry.

 16 For chassis management and leasing

 17 companies. Again, they must continue to invest in

 18 an aging fleet, in new equipment, and the

 19 resources needed to timely repair equipment. As

 20 well as to reposition equipment from surplus

 21 locations. Depots are holding chassis that could

 22 be deployed to mitigate chassis shortages in other
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 1 areas. Again, this simply adds to the problem.

 2 On the labor front, cyclical

 3 availability in the workforce, and stronger

 4 internal leadership in each organization is

 5 required to meet the demands of the industry. I

 6 applaud what has been done by the USMX, an ILA to

 7 increase the workforce in the New Jersey/New York

 8 port. Including the ILA effort this year to limit

 9 vacations in the Northeast to meet the demand of

 10 peak freight.

 11 Labor availability has notably improved

 12 over 2013, but these initiatives need to be

 13 formalized in agreement with PMA and USMX to

 14 ensure the industry is provided with the

 15 consistent, skilled, and efficient labor force for

 16 the long term. Certainty of labor supply plays an

 17 important role in the confidence of shippers and

 18 carriers alike.

 19 Last, but not least, for the ocean

 20 carriers. That's me. We must continue to invest

 21 in larger ships to take advantage of economies of

 22 scale needed to provide superior service at a
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 1 competitive price. At the same time, we need to

 2 exercise restraint in pricing to ensure that

 3 service levels are not eroded by declining rates.

 4 Right now carriers are barely afloat,

 5 losing money as an industry year after year. To

 6 mitigate the bleeding, the carrier industry has

 7 adopted a slow steaming policy. This means that

 8 when vessels are delayed due to port congestion it

 9 is cost prohibitive to spend the money to make up

 10 the time.

 11 Carriers also need to play our role in

 12 equipment investment by ensuring a strong supply

 13 of containers, including specialized containers,

 14 and we need to invest our time and efforts into

 15 finding a solution for container imbalances, so

 16 that the containers are not only available, but

 17 available where we need them.

 18 At the same time, carriers must continue

 19 to push for a move out of the chassis business so

 20 the equipment can be managed more effectively by

 21 other stakeholders who are in a better position to

 22 maximize efficiencies.
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 1 None of these issues are new to the

 2 industry, but they are exacerbated by the volume

 3 growth in the industry. I do not pretend to think

 4 that these comments are all inclusive for each of

 5 the stakeholders, but I do hope that I have

 6 identified some of the competing challenges and

 7 areas where we can reach common ground, and stop

 8 working in different directions.

 9 Until we as an industry identify a

 10 common path and accept that we need to take

 11 responsibility for our financial piece to the

 12 solution, this cyclical nature of congestion will

 13 persist and only get worse. I recommend an

 14 industry-wide CEO level task force encompassing

 15 all stakeholders to address the issues and work

 16 toward a common industry solution.

 17 We all know the challenges and have the

 18 power to influence a solution, but not one of us

 19 can solve it separately. Thank you again for your

 20 time and opportunity to discuss solutions for

 21 change.

 22 COMMISSIONER DYE: Thank you. Thank
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 1 you, Jim. I appreciate that. As you heard, I

 2 agree that we need a sustained high-level,

 3 dedicated group to consider these challenges. I

 4 think at the regional or local level. Thank you.

 5 Mr. Patel.

 6 MR. PATEL: Thank you, Commissioner Dye,

 7 for hosting this. I'll try to get right into it.

 8 Dhaval Patel with Maersk and I've been operations

 9 for, I guess, almost as long as I've been with

 10 Maersk.

 11 So this congestion, and all of these

 12 issues on the automotive side very near and dear

 13 to my heart, and something that I deal with on a

 14 daily basis. And something, kind of, Jim

 15 mentioned, you know, this is not something that's

 16 new. Growth was starting in 2006, 2007, but then

 17 the economy took a downward trend. The issues

 18 that we were about to start facing back then are

 19 just now coming up as the economy has started to

 20 get better.

 21 This year things such as the ice storm

 22 in Newark just made things a lot worse. Then the
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 1 issues that we're facing today on the West Coast

 2 are not helping either. So just as an example,

 3 one day that a terminal is down it's taking ten

 4 days to recover from that downtime.

 5 So when Newark was shut down for 20 plus

 6 days you're looking at the rest of the year for us

 7 to fully recover. Now that the issues on the West

 8 Coast are happening it's going to make things

 9 worse. All we kind of seem to do is move issues

 10 from port to port. This is congested, let's start

 11 sending things to Norfolk. Let's start sending

 12 things to Seattle, to Vancouver. We're kind of

 13 just moving the problem from area to area.

 14 I think we need to kind of work together

 15 to find the root cause. I was kind of saying that

 16 earlier, unluckily it's not just one thing that

 17 needs to be fixed. It's a variety of issues that

 18 need to be fixed in order to get us to where we

 19 need to be. It's not something that's going to be

 20 solved overnight.

 21 You kind of mentioned rates, Jim, and

 22 rates are going in a downward trend. So that's
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 1 pushing the terminal, the rail, the truck

 2 providers, and the ocean carriers to look for the

 3 lowest possible cost. With the rates going down,

 4 the variable costs like wages, benefits,

 5 healthcare, they're all increasing. Again, it's

 6 impacting everyone when that happens. We're not

 7 able to make as much of a profit. Because of that

 8 we look for ways to have the lowest possible cost

 9 like slow steaming and so forth.

 10 So there's a lot of challenges, but

 11 talking about terminals, you know, some of the

 12 Port Authority members earlier they mentioned turn

 13 times at the terminals, and 35, 40 minutes.

 14 That's great when it works. But what we see and

 15 what we hear about from our truckers are the

 16 outliers.

 17 The turn times outside of the terminal,

 18 the hour that they have to wait to get inside the

 19 terminal or the one to two truckers that have to

 20 wait three hours, four hours. Those are the guys

 21 that speak up, and they are the ones that helped

 22 the other drivers. They're the ones that end up
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 1 leaving the industry and not coming back. They go

 2 to the oil companies or shale gas, and so forth.

 3 It's the outliers that we have to worry about.

 4 It's not the averages.

 5 Rail, you mentioned rail early as well,

 6 and a few people have. But with the rail, they're

 7 not expecting new cars or they don't have anything

 8 on new order until 2016. That, to me, is a big

 9 issue because 90 plus percent of all the railcars

 10 that they have are in use today. That's causing a

 11 shortage. That's what's caused a lot of issues on

 12 the West Coast. It's not the only, but it's one

 13 of the major issues that caused issues.

 14 On the trucking side, you have a variety

 15 of issues, but the major one being the driver

 16 shortages, and it's related to the terminal issues

 17 that we mentioned earlier. Where the age of the

 18 drivers are getting larger, but the pay is also

 19 not getting larger. We're not attracting new

 20 drivers. Then the regulations that we have with

 21 CSA, safety with the on-board GPSes that everyone

 22 has to have, the paper logs are gone. These are
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 1 investments that trucking companies have to make

 2 in order to make sure they are complying with all

 3 the rules and regulations. A lot of drivers are

 4 leaving because of this as well.

 5 Chassis is another major issue.

 6 Shipping operators are slowly starting to get out

 7 of the chassis business, but it is still one of

 8 the least utilized assets in the U.S. You're

 9 looking at anywhere from 60 to 70 percent of

 10 chassis sitting idle. I think we have to look for

 11 efficiencies and try to get more usage out of the

 12 chassis business.

 13 Then onto Maersk line. Yes, we do look

 14 for the lowest possible cost because we have to.

 15 That's the only way that we can be profitable

 16 because rates, as I mentioned earlier, are on a

 17 downward trend. So we have to look for

 18 efficiencies in our operations. That is the only

 19 way we can make money. It's to look for

 20 efficiencies. It has to be through operational.

 21 So issues like port congestion, railcar

 22 shortages, not having chassis in the right place
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 1 at the right time is also a big concern for us.

 2 But we do understand that we too also don't help

 3 to solve the problem. Issues like vessel bunching

 4 caused by slow steaming, and not sticking to our

 5 performance are adding to an already bad problem.

 6 I don't want to be doom and gloom and

 7 what's really going wrong, but I do want to end

 8 with saying that volumes are up, so that's always

 9 great. Thank you.

 10 COMMISSIONER DYE: Thank you. Thank you

 11 very much. Mr. Garifalos.

 12 MR. GARIFALOS: Nicely done. Thank you,

 13 Commissioner.

 14 COMMISSIONER DYE: Good.

 15 MR. GARIFALOS: My grandfather would be

 16 proud. I'm Steven Garifalos. I'm Regional

 17 Director for NYK Bulk and Projects. That's the

 18 bulk project heavy lift division with NYK. We

 19 operate 50 multipurpose heavy lifters, and 110

 20 bulk ships around the world, semi-liner basis.

 21 Which basically reflects that we are in a given

 22 region for -- on a regular basis just not fixed
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 1 port piers such as our friends at Rickmers.

 2 The problems, honestly, that I see for

 3 the break bulk side is not a whole lot different

 4 than the container group or the container

 5 carriers. We have issues with infrastructure as

 6 far as when the Port Authorities go to their

 7 stakeholders they reach out mostly for the

 8 container carriers. I'm not asking for some

 9 cheese with my wine, but in effect, break bulk

 10 terminals are the ones that see the least of

 11 CAPEX.

 12 We're a Phoenician trade as far as

 13 history's concerned. As far as practices, it

 14 hasn't changed much in that many years. The cargo

 15 has gotten larger. It's gotten heavier. It's

 16 gotten more sophisticated. It requires a lot more

 17 engineering from the carrier side. But as far as

 18 putting it on the ship, taking it off the ship,

 19 and putting it on the pier that pretty much

 20 remains the same.

 21 The break bulk facilities have decreased

 22 in great number over the past, say 20 years. The
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 1 container facilities may, obviously, make more

 2 money for the ports and understand that part. But

 3 as far as a utility, break bulk are just as

 4 important because the stuff that's being built

 5 nowadays in Asia, in South America, in the Middle

 6 East, in the larger manufacturing facilities are

 7 getting nothing but bigger which means you need a

 8 larger, heavier duty facility to handle it across

 9 the dock, through rail, through truck outward, and

 10 all water services, barge services.

 11 That's all part of our support. If we

 12 don't have that we can't support the large

 13 infrastructure construction projects that

 14 basically are our bread and butter. This is where

 15 our real money is. Moving big bags and bulk

 16 cargos and steels is a regular business, but the

 17 sexier cargos are the ones that make more money

 18 for most of the break bulk carriers in our

 19 business. That will also be the cargo that keeps

 20 us in business.

 21 We also experience the same outages as

 22 Dhaval had mentioned before as far as the weather,
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 1 but mostly it's since there are such limited break

 2 bulk facilities trying to get into a given

 3 facility on the time that you want makes it more

 4 complicated. Because there's not that many of

 5 them, and there's several of us. It's not been,

 6 as most of you now, been a great five years for

 7 the break bulk carriers or heavy lift carriers.

 8 But that's just part of the market and

 9 it's part of the trend. It's improving on the

 10 inbound side, but because of that the facilities

 11 in Houston and New Orleans and Mobile, and all the

 12 other Gulf Coast, East Coast, West Coast ports are

 13 feeling the brunt of large influxes of steel.

 14 Still there's a little bit of wind business, but

 15 mostly steel and commodity cargoes that are coming

 16 in for that.

 17 Also for the project cargoes for Eagle

 18 Ford in South Texas, Fort Bakken in the Dakotas,

 19 and the oil shale in Canada, Marcellus Shale in

 20 Pennsylvania. All those are putting pressures on

 21 the break bulk facilities. That is making it

 22 difficult and slow for us to get in and get out as
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 1 carriers. Then all the, as I said before, all the

 2 infrastructure that's associated with those

 3 regions is impacted. That impacts us.

 4 If we can't deliver it to a port that's

 5 more financially viable for us or friendly to us

 6 we have to go someplace more expensive. So it's

 7 all, what I'm trying to get to, is it's all tied

 8 in together. The rail, the truck, the terminal,

 9 our operation, and then the other end of the

 10 transaction at the site. It all impacts us.

 11 So if we don't pay attention, here's

 12 really my point, if we don't pay attention to the

 13 whole supply chain from the other side, from

 14 foreign origins through to the ultimate

 15 destination then we're going to basically not be

 16 able to compete in the world market. Not as a

 17 carrier, but as a nation with the different

 18 infrastructure businesses, projects that are going

 19 along, the LNG business that's happening.

 20 We'll lose the opportunity. A lot of

 21 that has to be driven from a regulatory side as

 22 far as making sure that there's forward vision on
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 1 roads, rail, labor. Truckers are a perfect

 2 example. Everybody and their brother, what, 15,

 3 20 years ago they went out and bought a truck for

 4 themselves, and they got out of it just because

 5 the market's bad.

 6 But if we don't solve that issue then,

 7 in the end, we've shot ourselves. We can't be

 8 competitive in the world market or, actually, in

 9 -- if you want to look in the regional market.

 10 South America will be farther ahead of us than

 11 they should be just because we aren't paying

 12 attention.

 13 So, in short, paying attention to all

 14 the elements of the supply chain, and not just

 15 building new and fancy ports, but paying attention

 16 to staffing on truckers, staffing on longshore,

 17 brown water. We have to really pay attention.

 18 We're going to get killed in the world market if

 19 we don't start paying attention now, and spending

 20 some money. Not just the Federal Government, but

 21 carriers such as ourselves, terminal operators,

 22 everybody in the supply chain. It's painful, and
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 1 it's expensive, but if we don't it won't be there

 2 in ten years.

 3 COMMISSIONER DYE: Good points. Thank

 4 you very much. Mr. Grant?

 5 MR. GRANT: Thanks for having us here

 6 today.

 7 COMMISSIONER DYE: Of course.

 8 MR. GRANT: My name is Thomas Grant.

 9 I'm Director of National Accounts for Crowley. As

 10 my title suggests, I'm in the sales side of

 11 things, so I'll give you a little bit of a

 12 different perspective of some of the things that,

 13 I guess, the red flags that are raised and dealt

 14 with on a daily basis from a sales' perspective.

 15 They're going to sound very similar to the

 16 previous comments that have been addressed by my

 17 colleagues on the operation side of things.

 18 Although I do feel like I am in

 19 operations because I seem to have a intimate

 20 relationship with my intermodal group and my truck

 21 division. As I talk to them, you know, almost

 22 daily trying to get trucks for my customers.
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 1 But someone mentioned the Panama Canal

 2 and that we weren't going to say too much about

 3 it, but I will say, you know, Crowley is in a lot

 4 of different fields, if you will, that -- you

 5 know, labor and projects that are occurring on the

 6 water. Crowley just recently moved the first of

 7 eight gates for the Pacific side of the Panama

 8 Canal. There's going to be 16 new gates at the

 9 Canal.

 10 Crowley's heavy lift division received a

 11 contract for the movement of the eight gates from

 12 Cristobel to the Panama side. So each side will

 13 get eight gates. We just moved the first of the

 14 eight for the Pacific side, so things are

 15 progressing nicely, and that heavy lift barge is

 16 domiciled in Houston, so has a Gulf presence.

 17 So I spent most of my career on the East

 18 Coast marketing trades such as, you know,

 19 Jacksonville to Puerto Rico, Jacksonville East

 20 Coast to South America. Recently I moved to this

 21 area, which is an area I'm familiar with, I'm from

 22 South Louisiana. It's always a nice homecoming
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 1 for me. I spent the last two and a half years

 2 here, and I've gained a good perspective on the

 3 difference between, you know, operations on the

 4 East Coast vice Gulf.

 5 Specifically, our liner footprint which

 6 is the division that I sell for Crowley. We call

 7 the Gulf Port our partner for our service to

 8 Central America, the Northern Zone of Central

 9 America. The thing that we deal with -- I mean,

 10 from a port perspective I have to say things are

 11 running fairly smoothly. But unfortunately, the

 12 customers don't want a port- to-port bill of

 13 lading.

 14 They want a door, and most cases door-

 15 to-door. In most cases, and I'll be honest with

 16 you, sometimes it's easier for us to perform the

 17 door movement in the Northern Zone of Central

 18 American then it is here. You have to do some

 19 things to protect it better. But the capacity is

 20 there.

 21 One of the things I've noticed and dealt

 22 with is, you know, not only is there a driver
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 1 shortage, there's a driver shortage for dray

 2 power. There seems to be a little bit more over

 3 the road power vice dray power, so as a result,

 4 you know, our company is trying to convert as much

 5 product and as much cargo as we can into the

 6 cross-dock model.

 7 So the ports have got to be, you know,

 8 cross-dock savvy, and, you know, those of us

 9 who've seen different warehouses know the

 10 difference between a storage warehouse and a true

 11 cross-dock facility with doors on either side.

 12 That's what we need moving forward. You have to

 13 be, you know, I heard these previous comments on

 14 rate pressure. There's no question about it.

 15 I also heard that there's more volume,

 16 and there is more volume. But the, you know, the

 17 days of, well, we'll make it up on volume, you

 18 know, that phrase doesn't work anymore. Sometimes

 19 more volume means, you know, a greater loss. So

 20 we have to be, and are working towards a model, of

 21 being a low cost carrier in all the trades that we

 22 service because of that rate pressure.
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 1 So as I mentioned, we are working

 2 towards the cross-dock model to take advantage of

 3 the domestic carrier, trying to reduce empty

 4 miles. Fortunately for Crowley we have an

 5 in-house, third-party logistics company that's

 6 helping us facilitate that. We are getting a lot

 7 of cargo that we thought that would, you know,

 8 never in a million years want a cross-dock stuff

 9 that's floor loaded. You know, 1,600 cartons of

 10 shirts for a retailor. Those are things you

 11 typically would never touch, but now you're able

 12 to talk the customer into that because it will

 13 increase the service.

 14 We're also coming to the point where

 15 there's certain pieces of equipment that a

 16 customer's demanding if it doesn't end up in a

 17 city where we can turn around and use it, and I'm

 18 not saying, you know, say it's going to Dallas and

 19 has to come out of Dallas. But if we can't use it

 20 -- the closest need we have for that after Dallas

 21 is 1,000 miles. Well, we're coming very close to

 22 telling a customer we cannot use that equipment
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 1 anymore. So we need to cross-dock it. We need to

 2 put in equipment that, you know, we don't have to

 3 worry about. It's domestic equipment, domestic

 4 trailers.

 5 So just want to share those few

 6 comments, and welcome any questions. Thank you.

 7 COMMISSIONER DYE: Thank you very much.

 8 It's interesting to note that we heard about some

 9 of those problems during the 2010 investigation

 10 that the FMC undertook when, at the end of '09,

 11 demand fell off and then very rapidly escalated at

 12 the beginning of 2010. So some of these problems,

 13 unfortunately, are tough.

 14 What else gentleman? Did anything else

 15 occur to you as you heard those remarks? I'm more

 16 interested, than ever, in pursuing a collaborative

 17 effort among all the commercial stakeholders. I

 18 wouldn't include the government in that group.

 19 But I do believe that the more I hear you the more

 20 I believe that we need to have an organized group

 21 of representative stakeholders across the supply

 22 chain to discuss and pursue, in a dedicated way,
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 1 to pursue solutions or accommodations on these

 2 issues.

 3 Thank you very much. Excellent.

 4 MR. POULSEN: Thank you.

 5 MR. MICHALSKI: Thank you.

 6 COMMISSIONER DYE: Let's take a brief

 7 break and begin about quarter to 12:00. Thank

 8 you.

 9 (Recess)

 10 COMMISSIONER DYE: We're ready now. Our

 11 panel discussion on trucking operations. I very

 12 much appreciate your willingness to participate

 13 here today. Thank you. We have Mr. Brian

 14 Fielkow, President of Jetco Delivery, and

 15 President of the Local Chapter of the Texas

 16 Trucking Association in Houston, Texas; Ms. Cathy

 17 Gautreaux, Executive Director of Louisiana Motor

 18 Transport Association in Baton Rouge. Did I

 19 pronounce your name correct?

 20 MS. GAUTREAUX: Yes, you did.

 21 COMMISSIONER DYE: Oh, my goodness,

 22 that's two in a row. Mr. Philip Wojcik, President
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 1 and CEO of the Consolidated Chassis Management,

 2 Budd Lane, New Jersey; Mr. Randy Guillot,

 3 President, Southeastern Motor Freight in

 4 Jefferson, Louisiana; and Mr. Jeffrey Louis,

 5 President of TCI Trucking and Warehousing Service

 6 in New Orleans. And one more, of course, Mr.

 7 Curtis Whalen has joined us I'm please to say,

 8 thank you very much, from the Intermodal Motor

 9 Carrier Conference. Thank you.

 10 So, Mr. Fielkow, would you like to

 11 begin?

 12 MR. FIELKOW: Thank you, Commissioner

 13 Dye. I really want to thank you for the

 14 opportunity that you've given us to discuss the

 15 issues impacting the port drayage industry. My

 16 name is Brian Fielkow; I'm the President of Jetco

 17 Delivery. We're based in Houston and we've been

 18 in business since 1976. I purchased the company

 19 in 2006. We operate approximately 100 trucks,

 20 about 70 percent company owned and 30 percent

 21 owner operator. In addition to owing Jetco I

 22 guess I don't have a golf game so I speak across
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 1 the country about company culture. When it comes

 2 to high consequence industries I focus on behavior

 3 based safety, really as the best means to prevent

 4 and reduce accidents as opposed to the flood of

 5 regulations that we're seeing. I'm the

 6 Chairperson of the Texas Trucking Association's

 7 Intermodal Committee. In this role I work closely

 8 with the port trucking companies and other key

 9 stakeholders.

 10 So I guess my first point -- and I think

 11 Roger Guenther said this well -- is collaboration.

 12 In Houston the trucking industry and the port are

 13 fortunate to share an excellent relationship. We

 14 speak often. We also hold a quarterly open line

 15 conference call so that any issues can be raised.

 16 And creating open lines of communication in my

 17 opinion is the first and only way to properly

 18 address the issues that are affecting all of us.

 19 We really are all in this together. So I think

 20 we've really got something to be proud of just in

 21 the relationship. And even when we have

 22 differences there's a wonderful forum to address
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 1 those.

 2 So the most important issue affecting

 3 our industry is the driver shortage. I think

 4 attracting drivers to port drayage is particularly

 5 difficult. So what are some of the factors?

 6 First of all I would look at non- compensable

 7 activities. In the port world much more than any

 8 other segment of trucking looking for a suitable

 9 chassis, paperwork delays, gate delays; drayage

 10 drivers spend a lot of time in non-compensable

 11 activities. And what we have to do is work to

 12 chase out the inefficiency and to be sure that

 13 drivers are compensated for everything they do.

 14 It's not realistic in any other business to have

 15 an employee and say well, you know, I'm going to

 16 pay you for this but not that, even though you're

 17 on the clock. And I think it's about time that --

 18 you know I heard a few people talk earlier about

 19 low cost provider and that's all well and good,

 20 but if we're going to solve the driver shortage

 21 we're going to need to talk about the value for

 22 what a driver does. A driver is a true
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 1 professional. It's a noble calling and they need

 2 to be recognized and rewarded and paid as such.

 3 Often local port drayage drivers have

 4 more legal driving hours than the port and

 5 warehouses are open. As Roger reported starting

 6 this month, November 17 in Houston the port gate

 7 hours will be extended by an hour per weekday at

 8 two key container terminals. This is a seemingly

 9 simple change, but if you think about it adds 10

 10 hours a week of production opportunity which ought

 11 to provide drivers with greater earning capacity

 12 and allow us to do a better job serving the

 13 shippers and manufacturers in Houston. And if

 14 this change is successful we believe that it will

 15 pave the way for additional expansion of the

 16 workday and the weekends. But now it's incumbent

 17 that chassis providers, steamship lines, and

 18 shipper and consignees extend their work days to

 19 match the new port hours. So if the port and the

 20 truckers are running but the warehouses are

 21 closed, right, you may not have picked up the

 22 right amount of efficiency.
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 1 What's happened with the driver

 2 shortage, I really think it comes down to

 3 treatment. You know, our industry rightly bears

 4 the burden for attracting truck drivers. But I

 5 would say the truck driver issue is a national

 6 issue and could become a national crisis if it's

 7 not managed. So, you know, everywhere we look

 8 we're hit with difficult challenges, whether it's

 9 paperwork, regulations, roadside inspections,

 10 chassis issues, whatever it is some of this is

 11 unavoidable, but I really believe speaking to you

 12 in your capacity, if there's one thing you could

 13 say back it's that we as our country have to show

 14 appreciation for drivers, help us attract drivers

 15 to this noble calling because again we bear the

 16 responsibility primarily, but we're not going to

 17 do it alone.

 18 As far as immediate new sources of

 19 drivers I suggest we look in the following three

 20 areas because if we don't look at what's immediate

 21 we have a generational issue. And this isn't

 22 going to happen overnight. But there are some
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 1 things we could do that might help speed things

 2 up. First we need to identify and eliminate all

 3 barriers to qualified military personnel driving

 4 after discharge. Some military driving is

 5 recognized, other isn't by insurance industry, et

 6 cetera. So we need to make sure that our heroes

 7 can get jobs in the trucking industry of they're

 8 so qualified quickly. Second, it's time for a

 9 serious discussion about immigration reform. The

 10 community that is being forced to unfairly live in

 11 the shadows of our society could contribute to

 12 solving the shortage if they were granted a

 13 pathway to citizenship and opportunity. Finally,

 14 if an individual in our society commits a crime he

 15 or she is punished appropriately, yet the

 16 punishment continues long after release from

 17 incarceration. We can't hire from the Penal

 18 system in many cases due to insurance concerns, or

 19 due to litigation fears of that person being

 20 involved in an accident.

 21 I want to talk for a minute about the

 22 chassis situation. And it was said in the earlier
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 1 panel we have basically migrated to a truck choice

 2 chassis model. But let me be clear, and I would

 3 encourage this discussion to continue, it's

 4 anything but trucker choice. A lot of times

 5 trucking companies are forced to terminate one

 6 chassis for another. And if we're paying the

 7 bill, if we're footing the bill for the chassis I

 8 should be able to show up with a 40 foot chassis,

 9 unload the box, and reload. There should never be

 10 a situation where I'm required, if I'm paying, to

 11 have to waste my time dropping a chassis and

 12 getting another chassis. So to me trucker choice

 13 is the way to go. It was the right answer several

 14 years ago when the industry moved that way, but

 15 then let trucker choice mean trucker choice.

 16 Let's get out of the way and let us run

 17 efficiently. Let's take all barriers to

 18 inefficiency out immediately.

 19 In that regard I support the development

 20 where practical of gray pools where again -- you

 21 know, you heard on the one hand shortage of

 22 chassis, right, then you heard on the other hand
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 1 there's too many chassis, there's an imbalance.

 2 So a gray pool I think would have a great effect

 3 of leveling the imbalance, just letting us hang on

 4 to the chassis that we're paying for and using it.

 5 Again trucker's choice needs to be trucker's

 6 choice.

 7 We talked about in one of the earlier

 8 panels, infrastructure. And what I'd like to

 9 point out here is that no new taxes is just plain

 10 irresponsible when it comes to a multi- modal

 11 infrastructure. We're growing as a country and

 12 the economy is growing faster. We should be

 13 concerned about waste. But saying that we're not

 14 going to fund the infrastructure doesn't make

 15 sense. I support, as does Texas Trucking

 16 Association, increasing and indexing the fuel tax

 17 is the most equitable means to fund the

 18 infrastructure with some sun-setting and some

 19 checks and balances. But we can't just ignore

 20 this. We can't just let the highway funds run

 21 out, pass an emergency bill, and then wait until

 22 the next time the funds run out. We've got a
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 1 generational, long-term issue and we need to be

 2 thinking that way.

 3 And then finally a point was made about

 4 safety and regulations chasing people out of the

 5 industry. Let me be clear, nothing is more

 6 important in our industry to the majority of our

 7 industry has been safe operations. The safety of

 8 my employees and of the public is more important

 9 than any load, period. But we've got to come to

 10 the realization that a flood of unnecessary

 11 regulations is not going to make us any safer. I

 12 would recommend in that regard that the FMCSA

 13 devote some of its resources to helping trucking

 14 institute behavior based safety programs. If we

 15 put some real money there we can get on the front

 16 of the issue. And I know a lot of the companies

 17 that are already doing a great job, and I know a

 18 lot desire to improve if they were just given the

 19 tools. I also think the new hours of service

 20 rules that came into effect in July of '13 have

 21 adversely impacted production without any

 22 measurable impact on safety. And therefore I
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 1 support proposals to suspend those rules and

 2 replace them with the rules that were previously

 3 in effect until a rational study can be done.

 4 The final issue I want to point out

 5 because this is scattered all over the country is

 6 some jurisdictions allow drayage companies to pull

 7 heavy containers. In other words whether your

 8 gross vehicle weight is over 80,000 pounds.

 9 Others such as mine limit weight to 80,000 GVW,

 10 except 84,000 with a permit, but there's a little

 11 catch -- no interstate travel. So you're pretty

 12 limited with that permit. I see both sides of the

 13 argument and I think heavy containers can address

 14 some of the congestion capacity issue, but when

 15 those issues are considered please consider that

 16 you've got to have the right number of chassis

 17 axles to accommodate the weight. Safety has to be

 18 paramount. You can't just say let's allow higher

 19 weights without a plan. Permits need to be fairly

 20 priced to pay for the wear and tear on the roads.

 21 And driver training; hauling 100,000 pounds is a

 22 world different than hauling 80,000. So the idea
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 1 of having containers being part of the solution is

 2 something that we ought to discuss and we ought to

 3 be open to, but I wouldn't support it

 4 automatically. Not until every safety was

 5 considered.

 6 And with that I thank you very much for

 7 the opportunity to speak and to be heard.

 8 COMMISSIONER DYE: Thank you very much.

 9 MR. FIELKOW: Thank you.

 10 COMMISSIONER DYE: Ms. Gautreaux?

 11 MS. GAUTREAUX: Yes. Cathy Gautreaux;

 12 I'm the Executive Director of Louisiana Motor

 13 Transport Association. I've been in the industry

 14 for about 28 years and I can tell you that I've

 15 seen it evolve from a regulated industry and also

 16 I've seen intermodal transportation grow. Though

 17 as I grew and learned more and more about the

 18 trucking industry I watched intermodal

 19 transportation grow and in significance. Not only

 20 in Louisiana but regionally. And in my role as

 21 the Executive Director I'm the lobbyist for the

 22 trucking industry here in Louisiana. I work very
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 1 closely with my counterparts in the other states

 2 and also on the national level on these types of

 3 issues. And I can tell you one of the things that

 4 I will never forget any time soon is the

 5 importance of trucking that was really brought to

 6 a head post Katrina when our office collaborated

 7 with the port of New Orleans to beg, literally go

 8 out and solicit and beg motor carriers, owner

 9 operators, to come to Louisiana so ships would

 10 call on the port again. And we did that for

 11 months and no offense, Houston, Gulfport, and

 12 Mobile, but we wanted New Orleans to remain a

 13 viable port. And it was critical to getting ships

 14 to call on New Orleans to have those truckers

 15 there to move that freight. And I was a part of

 16 that. And it really brought this issue to home.

 17 In my capacity as the Director I have

 18 found that it's been very advantageous to work

 19 closely with the metropolitan planning

 20 organizations in the state. And those MPOs are

 21 the organizations that actually get the money and

 22 they're recognized by the Federal Highway
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 1 Administration, the U.S. DOT, and I found in my

 2 capacity -- I am a voting member of the Technical

 3 Advisory Committees for New Orleans in Baton

 4 Rouge, Lafayette soon to be Shreveport, and Lake

 5 Charles, all the metropolitan planning

 6 organizations. And what that has afforded us is

 7 an opportunity to educate them. It's not so much

 8 that they don't respect and recognize the

 9 importance of intermodal transportation, I don't

 10 think they really understand it. Not only on the

 11 local level -- and I'll tell everyone when I

 12 testify often in the legislature, especially when

 13 there is turnover, often I start out with this is

 14 a truck, this a tractor, and this is the trailer.

 15 The tractor doesn't have a darn thing to do with

 16 the farming community. And then for the container

 17 operations I actually brought in a small container

 18 model and said this is the power unit, this is the

 19 container, oh, and this is a chassis. And it's

 20 amazing how people embraced it and they wanted to

 21 know more about the industry and explain how that

 22 impacts Louisiana. My role in working with the
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 1 port officials, local government, the other modes

 2 of transportation, we have always promoted

 3 intermodalism. Some of my best friends are either

 4 with rail or ship or the steamship lines or the

 5 river pilots, and whatever. And our message is

 6 you bring the freight to Louisiana we'll move it.

 7 We want to make Louisiana competitive. And in

 8 that role, especially with my role with MPOs,

 9 educating them on some of the issues because often

 10 they think that the port of New Orleans, the only

 11 type of truck, they think containers and that's

 12 it. But it's a lot broader than that. And not

 13 only the container operations, but all these

 14 different truck operations have to work together,

 15 and they're sharing the same roads and we're

 16 talking about the issues. And to the trucking

 17 guys on some of the real operational issues we're

 18 glad -- two weeks ago -- well, last Friday I

 19 testified -- I was appointed to the newly created

 20 Louisiana Multimodal Commerce Commission which is

 21 basically taking from DOTD the responsibility for

 22 promoting the various modes and promoting
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 1 Louisiana and how we can become more efficient.

 2 Where DOTD and nothing -- and now work very, very

 3 closing with them would be focused more on the

 4 practical, the operational build highways, build

 5 efficiency. But we're looking forward to this

 6 Multimodal Commerce Commission and the Committee

 7 with this new department in the state.

 8 I also work or participate on the

 9 freight councils. And these were another

 10 directive from the Federal Highway Administration.

 11 I can tell you one of the frustrations that I find

 12 in that especially on the interstate system and

 13 like in New Orleans, the general public thinks

 14 that the interstate system, especially I-10 and

 15 I-12 is a commuter route and that trucks often

 16 interfere with their ability to go to work, go to

 17 school, or whatever. And they just -- I have to

 18 explain that I-10 is a major intermodal -- is a

 19 major freight route for the entire country. And

 20 so people like me in this position have to really

 21 bring that message home and I do that through the

 22 metropolitan planning organizations. Sometimes we
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 1 forget that all politics is local and the MPOs

 2 need to understand and they're eager to understand

 3 and eager to learn more about the impact of this

 4 particular type of transportation on the local

 5 communities and how it impacts on a regional level

 6 and the local level. And it's just a matter of

 7 taking the time to make sure they understand that.

 8 In working with, you know, as a lobbyist and I

 9 worked very, very closely with Randy Guillot, and

 10 one of the issues -- and I testified -- you know,

 11 the Multimodal Commerce Commission says okay,

 12 what's some of the issues that the trucking

 13 industry is faced with, what's your biggest

 14 challenges and, of course driver shortage, we

 15 can't mention that enough. That was brought up in

 16 the state freight council meeting, the

 17 significance of the truck driver shortage and the

 18 role of the trucking industry in the intermodal

 19 chain. But port operations can impact the ability

 20 for us to retain drivers just about faster than

 21 any single thing, that frustration with

 22 inefficiencies. And you're going to hear me bring
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 1 up in the not too distant future, gate hours.

 2 Yes, we want to compete with Houston and we want

 3 to make sure that the port of New Orleans is

 4 competitive. So I will be working with local

 5 officials and my friends in the labor community to

 6 try and make us a little bit more efficient and

 7 competitive. The safety issues, cargo security,

 8 insurance issue. Liability insurance in Louisiana

 9 is the number one problem we have. There are two

 10 companies writing trucking insurance in Louisiana

 11 and it's primarily because of the tort issue; we

 12 desperately need tort reform. There are some

 13 insurance companies in the country -- and I've

 14 talked to the national President and they say that

 15 they will write insurance possibly if they

 16 consider it if the carriers do not operate in the

 17 Parishes of Orleans, Jefferson, St. Bernard,

 18 Plaquemines, which is basically the New Orleans

 19 area and that puts us at a competitive

 20 disadvantage. Some of my carriers if they operate

 21 and they're headquartered in Louisiana their rate

 22 per truck as compared to Texas, Arkansas,
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 1 Mississippi may be 40 percent higher than a

 2 trucking company located in Louisiana. That's a

 3 great, great impediment to us maintaining our

 4 competitiveness and having a viable, strong

 5 trucking industry that is the link between the

 6 modes. And I can't go without saying that port of

 7 New Orleans -- we're addressing the congestion

 8 issue. The port of New Orleans located downtown

 9 City of New Orleans next to the convention center

 10 having all the freight, the trucks coming in and

 11 out, (inaudible) mixing in with this traffic,

 12 downtown New Orleans and the convention center

 13 about to have a major expansion. That puts these

 14 truck drivers in number, in an unsafe situation,

 15 decreases our efficiency. And one day if we dream

 16 and we work very, very hard we may get Leek Avenue

 17 Extension to give us a route on the other side.

 18 People laugh. Don't -- one day, you know, one day

 19 we may just have that. But those are -- the

 20 efficiency of the port is a primary concern to us

 21 and we're proud to work very closely with our

 22 local, state, and government officials to make
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 1 Louisiana more competitive and make the trucking

 2 industry more efficient.

 3 I appreciate the opportunity to be here.

 4 COMMISSIONER DYE: I do thank you very

 5 much. That was excellent. I appreciate it. Mr.

 6 Wojcik?

 7 MR. WOJCIK: Thank you very much for

 8 offering me this opportunity to speak at the

 9 forum, Commissioner Dye.

 10 COMMISSIONER DYE: Of course, of course.

 11 MR. WOJCIK: My name is Philip Wojcik.

 12 I'm President of Consolidated Chassis Management

 13 or also known as CCM. We operate around 140,000

 14 chassis throughout the U.S. That represents about

 15 13 million gate moves of chassis annually. We do

 16 not cover the northeast or the west coast. Last

 17 week you may have seen that the Federal Maritime

 18 Commission cleared our amendment to our agreement

 19 that will expand our scope. And if there is the

 20 opportunity we can actually establish goals or

 21 manage chassis operations in other areas other

 22 than our current scope, or even provide chassis
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 1 management services for motor carriers or other

 2 smaller fleets. And I think that was a great step

 3 in the industry.

 4 The chassis operations model instituted

 5 in the gulf is the CCM pool chassis management

 6 concept. We have about 25,000 chassis in the gulf

 7 region. We cover New Orleans, Houston, Dallas,

 8 Fort Worth, El Paso, Laredo, Mobile, San Antonio.

 9 CCM manages the chassis stocks and the

 10 availability levels. We also arrange for the

 11 maintenance and repair of the chassis. And in

 12 this model our priorities in our business model is

 13 that safety is number one, service is number two,

 14 and then we have then of course cost, but we do it

 15 on a cost pass through or on a nonprofit basis.

 16 Regarding safety, you know, one thing Brian

 17 pointed out is that with the heavy loads that some

 18 of the states are expanding the gross vehicle

 19 weight of the vehicles, it's very important that

 20 not only a third axle on the chassis be available,

 21 but that would exceed the capacity of most of the

 22 chassis. So it is a real safety concern of what
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 1 the states are doing.

 2 Regarding service, CCM measured service

 3 levels at all our locations. In our entire

 4 network year-to-date we're at a measure of 99.92

 5 percent of the time that we have provided a

 6 chassis where and at the right place and the right

 7 time for the containers. We've only had a minimal

 8 amount of spot shortages. Our utilization

 9 typically exceeds 80 percent of the fleet and I

 10 must say that it's a pleasure to hear from the

 11 Gulf port authorities that there are no issues on

 12 chassis. So at least in the Gulf region. So,

 13 Curtis and Randy, you know, remember that.

 14 (Laughter) Does everybody agree? No issues on

 15 chassis. Okay.

 16 CCM acts as the single port of contact

 17 for all the chassis service and operations. Our

 18 pool model has the pool members themselves as the

 19 ones who contribute the chassis and they offer

 20 their own retail model to motor carriers, ocean

 21 carriers, or other entities. CCM model also

 22 preserves competition through its unique offering
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 1 of customer choice where shippers, motor carriers,

 2 and others may use a gray pool chassis and may

 3 select which chassis provider within our pool it

 4 wishes to do business with. But the Gulf region

 5 is not all served by a single gray chassis pool.

 6 It could be more efficient. A single gray pool

 7 has tremendous advantages, not only from a driver

 8 efficiency level, but also terminal efficiencies,

 9 and particularly at the railroads or the wheeled

 10 operations. It's not currently a major issue at

 11 the ports, but there's also stock efficiencies

 12 that can be gained regarding availability. And as

 13 we see the increase in freight and greater demand

 14 on the chassis fleet, those are the type of steps

 15 that I think in the future we would need to look

 16 at in order to avoid what other areas of the

 17 country have experienced.

 18 A couple of items I think we could still

 19 look at some improvement or there are some

 20 challenges. The terminal physical configuration

 21 of the rail facilities and the ocean terminals are

 22 designed for handling loaded containers. Most
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 1 often there's been little consideration on yard

 2 layout for chassis operations and improving motor

 3 carrier efficiencies. Improving the physical

 4 layout on a terminal can improve the velocity of

 5 repairs and improve driver turn time.

 6 In New Orleans we have two operators

 7 separated by an invisible line. It was

 8 encouraging to hear the port of New Orleans saying

 9 that they may invest in a common computer system,

 10 but today it results in motor carriers not being

 11 able to reuse the same chassis or he gets into

 12 difficulty when he crosses the invisible line and

 13 it becomes very inefficient.

 14 Also throughout the U.S. the terminal

 15 out gate controls or the gate controls are all

 16 container based. The lack of validations on the

 17 chassis leads to unauthorized usage, stolen

 18 chassis, and billing discrepancies. And we all

 19 suffer from that. This lack of necessary controls

 20 directly affects chassis operations, raises costs

 21 and prices, and stymies the progression of the

 22 chassis retail business model. At the port of
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 1 Houston we have approximately 4,000 unauthorized

 2 moves per month on our chassis. And it's

 3 important that the chassis transition that goes on

 4 between the ocean carriers over to other entities

 5 is successful because we do need the reinvestment

 6 in the fleet. There's a reluctance of the chassis

 7 owners to upgrade the chassis into items like

 8 radial tires. It sounds very minor and granular

 9 to talk about tires, but all the motor carriers

 10 will attest the amount of down time, missed

 11 appointments, the lack of resulting profitability,

 12 the lack of drivers, and increased costs all

 13 because today primarily the tires are bias ply

 14 tires. Changing to radial tires, adding new

 15 chassis or upgrading existing chassis must first

 16 be worth the investment. NACPAC or the North

 17 American Chassis Pool Cooperative, DCLI, Track,

 18 and Flexi-Van, all the major chassis suppliers

 19 have all publicly announced the beginning of

 20 chassis upgrade programs. It's going to take a

 21 lot of time. There's a lot of chassis in the

 22 country. And although an old chassis can be
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 1 operable functionally and legally, the need for

 2 refurbishment or new replacement depends on the

 3 chassis owners being able to justify the

 4 investment.

 5 And I believe I am done. Thank you very

 6 much.

 7 (Laughter)

 8 COMMISSIONER DYE: With that, thank you.

 9 Thank you. Mr. Guillot. I did better last time,

 10 right?

 11 (Laughter)

 12 MR. GUILLOT: Guillot.

 13 COMMISSIONER DYE: Guillot. Thank you.

 14 MR. GUILLOT: Thank you, Commissioner

 15 Dye, for the opportunity to speak and participate

 16 --

 17 COMMISSIONER DYE: Thank you.

 18 MR. GUILLOT: -- in this relevant and

 19 important forum. International supply chain

 20 efficiency, challenges facing gulf coast ports.

 21 It's a critical topic not only for the

 22 international shipping community, but also
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 1 worldwide commerce. Projections have widely been

 2 publicized that future growth of the world's

 3 chemical production will focus on the gulf coast

 4 region. The reason is quite simple, economical

 5 and abundant energy. The challenges to succeed

 6 with transporting these products are many and

 7 vast. Labor, environment, political regulation,

 8 infrastructure, just to name a few. This being

 9 the fourth and final forum many comments have been

 10 filed with varied perspectives by industry experts

 11 across the intermodal spectrum. Topics such as

 12 terminal congestion, vessel bunching,

 13 infrastructure, driver shortages, chassis

 14 ownership and management are just a few that are

 15 relevant to my industry, intermodal trucking.

 16 While I could speak for hours on end

 17 about these and other troubling issues we have

 18 been asked to discuss innovative ways to prevent

 19 port congestion, promote global trade, increase

 20 international supply chain efficiency. So some of

 21 my comments may present new ideas, most will

 22 probably not. My forthcoming comments like many
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 1 in preceding forums have been communicated for

 2 many years by industry stakeholders with little or

 3 no advancement. By definition intermodal

 4 transportation involves multiple modes of

 5 transportation of ship, rail, and truck. Even in

 6 its definition truck is last. In my speech I will

 7 take the privilege of putting the truck first.

 8 As background to my thoughts I am a

 9 third generation trucker. My business started in

 10 1945 in New Orleans and today is one of the oldest

 11 trucking companies still owned in Louisiana. We

 12 employ a team of civilian drivers paid by the

 13 hour. We have a second trucking company that

 14 utilizes independent contractors. It could be

 15 described as one of the largest serving the port

 16 of New Orleans. Being in the business all of my

 17 life I am probably biased, but maybe, just maybe

 18 today my suggestions can be viewed as coming from

 19 the wheels.

 20 Please accept these comments in the

 21 spirit intended, open, honest, and with respect to

 22 other involved stakeholders who may receive
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 1 negative attention. While most examples used

 2 today will involve the port of New Orleans, my

 3 home, these examples are also true for the vast

 4 majority of ports across America. Chassis

 5 management and utilization, port congestion, and

 6 infrastructure are the topics I'll discuss today,

 7 problems and solutions offered together.

 8 First, chassis management and

 9 utilization is a topic weighing heavily across all

 10 regions. The United States is trying to evolve

 11 from the steamship owned and controlled system

 12 unique to only the U.S. to one preferred in the

 13 rest of the world where motor carriers provide

 14 chassis. The problem is the steamship industry

 15 won't get out of the way, with all respect. As

 16 they are departing or trying to they are also

 17 dictating the terms of transition. In most

 18 circumstances the ocean lines are negotiating

 19 terms of chassis sales and future leasing

 20 arrangements. While in principle this may seem

 21 appropriate, in reality the terms in my opinion

 22 are criminal. Trucking companies are being forced
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 1 to use chassis providers dictated by the ocean

 2 line and overcharged while doing so. Concessions

 3 are given to the ocean carrier that negotiated the

 4 deal in exchange for the lease revenue it's

 5 generating. Open choice is not an option. Free

 6 market place does not exist. Motor carriers and

 7 the shipping public lose all control of an expense

 8 they incur. The solution is simple, open choice

 9 for all chassis provisions. Motor carriers and

 10 shippers should be able to select and negotiate

 11 the terms between each other and between chassis

 12 providers. In addition I believe all chassis

 13 should have tubeless radial tires, LED lights, and

 14 updated brake systems. All chassis should be

 15 available in road worthy condition upon driver

 16 arrival at the terminals, not requiring them to

 17 position chassis within the terminal to a mechanic

 18 area and then wait on repairs before they can

 19 exit. These two issues are intertwined by the

 20 fact that a better spec chassis will not require

 21 the volume of ongoing maintenance happening today.

 22 This policy will also help terminal congestion by
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 1 not having such a large inventory of unusable

 2 chassis taking up space waiting on mechanics to

 3 repair. It also allows for the maintenance

 4 expense of a chassis to follow through to the

 5 owner of a chassis. All maintenance and repair

 6 should be built in a daily use price similar to

 7 which everyone uses at a rent-a-car system across

 8 the country at airports. Competition, choice,

 9 quality of product, safety oriented chassis would

 10 be the standard not the exception as it is today.

 11 Port congestion is problematic across

 12 all regions, all ports, all facilities. Some of

 13 the port directors here today made comments that

 14 maybe they don't have as much congestion as in

 15 other areas. Some may define the congestion by

 16 time, some of them by the number of turns in a day

 17 with a truck, some may be measured by lost

 18 revenue. By any description it's not good and

 19 it's not getting better. Here are a few best

 20 practices that should be employed universally.

 21 One, multiuse chassis pool should be the standard

 22 even if multiple equipment owners supply that
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 1 pool. As example, New Orleans has one container

 2 facility within the perimeter. Two terminal

 3 operators are tenants. Each operator has its own

 4 chassis pool which is operated by the same chassis

 5 management company, CCM. Trucks servicing both

 6 facilities in the same day have to exit and

 7 reenter the same gate, drop and swap chassis,

 8 traverse a port dedicated road, and information

 9 entered by the trucking companies into two

 10 separate systems, all of which is

 11 counterproductive, costly, creates a safety

 12 exposure, and it's environmentally irresponsible.

 13 Second, extended work hours are a must.

 14 Many shippers and motor carriers work 24 hours a

 15 day, 7 days a week. Most port facilities are

 16 located in areas of urban congestion; they're

 17 inherently difficult to access during daytime

 18 hours. Where the terminal operators can adjust

 19 existing staffing to extend hours for minimal

 20 additional expense, or adding man hours for longer

 21 and better performance, this best practice is a

 22 must going forward. Ways to finance cost can vary
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 1 from shippers to ports to steamship lines, to

 2 truckers, or even governmental agencies.

 3 Another suggestion to improve port

 4 congestion involves a very sensitive topic, labor.

 5 Not many people want to talk about labor. Ports

 6 across the nation are burdened with

 7 underproductive employees carrying high payrolls.

 8 Truck drivers are often treated poorly, delayed

 9 extensively by willful misconduct, and overall not

 10 being treated with respect as a valuable asset in

 11 the intermodal chain.

 12 Lastly, infrastructure in the context of

 13 today's discussion can be inside a terminal,

 14 within city limits, or on the nation's most

 15 travelled highways. This issue is not cheap and

 16 the answers are not glaringly obvious. Problems

 17 can be seen everywhere. Most critics in the

 18 trucking industry are quick to say put it on a

 19 train, barge it. Being a realist today that's not

 20 going to happen. Trucks travel the first mile and

 21 they travel the last mile in today's and

 22 tomorrow's intermodal world. So let's acknowledge
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 1 this problem and let's deal with it.

 2 I'll revert back to a previous statement

 3 made earlier to offer a partial solution.

 4 Extended work hours. The ability to use the same

 5 infrastructure over a longer period of time daily

 6 and weekly, open capacity without incurring huge

 7 road and facility infrastructure construction

 8 costs. Putting truck traffic on highways when

 9 four wheelers are less likely to be abundant makes

 10 our existing roads safer and more productive.

 11 Congestion within our ports can be eased allowing

 12 a safer workplace for dock workers and truck

 13 drivers alike. Multiple truck routes to ports,

 14 adequate lanes, turning radiuses, and

 15 signalization are all issues that should be

 16 recognized, addressed and resolved. Using New

 17 Orleans as an example once more, it's hard to

 18 believe in today's economy the port of New Orleans

 19 only has one entrance for this container facility

 20 which forces all of its truck traffic through the

 21 City's downtown most congested area in rush hour,

 22 morning, and afternoon traffic. My entire career
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 1 on behalf of the trucking community I have asked

 2 for additional ingress, egress routes to no avail.

 3 If international commerce is as important to the

 4 city, state, and nation as stated, make the

 5 commitment to support the infrastructure we so

 6 desperately need.

 7 Thank you.

 8 COMMISSIONER DYE: Thank you very much.

 9 I appreciate it. Mr. Louis?

 10 MR. LOUIS: As my other panelists have

 11 mentioned I would also like to thank Commissioner

 12 Dye for giving us the opportunity to speak here at

 13 this forum.

 14 COMMISSIONER DYE: Thank you. Of

 15 course.

 16 MR. LOUIS: My name is Jeff Louis. I

 17 work for TCI Trucking and Warehousing, a 31 year

 18 old container, drayage, and warehousing company

 19 with terminals in New Orleans, Mobile, and

 20 Baltimore. We also operate a PVC resin packaging

 21 facility where we package close to 60 million

 22 pounds of PVC a month. In addition we have a
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 1 company called Tritan Stone which we import

 2 granite from Brazil, Italy, and India into the

 3 port of New Orleans. So we're a big player in the

 4 port of New Orleans and we definitely have strong

 5 relationships with the port and the stakeholders

 6 in the industry which allows us to, you know, to

 7 transact our business.

 8 As some of my co-panelists have

 9 mentioned we -- you know, as Brian mentioned on

 10 driver shortage, Cathy mentioned on insurance, and

 11 as Randy mentioned on port congestion -- we face

 12 the same battles as these guys do. You know, day

 13 in and day out, specifically with driver

 14 shortages. I would venture to say a lot of these

 15 people in this room are salaried employees. Our

 16 drivers are paid by the pull. So when these guys

 17 are held up in the port and they're only able to

 18 get two turns a day, you know, that guy is not

 19 making much money at all. And a lot of the people

 20 -- you know, the port employees and even us that

 21 are in the office, you know, we're salaried

 22 employees so I think a lot of people take for
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 1 granted what these drivers have to face day in and

 2 day out to turn a container in, to pull a

 3 container out. You know, that gets lost in the

 4 shuffle of, you know, on what that guy is doing.

 5 And, you know, this guy's got a mortgage to pay,

 6 he's got mouths to feed like we all do. And

 7 that's definitely one of the things that affect us

 8 to be able to recruit competent, qualified truck

 9 drivers in our business. It's not a sexy

 10 profession. It's long hours, low pay, and, you

 11 know, the treatment of these guys is something

 12 else that comes into effect as, you know, these

 13 guys are -- they're just trying to pull a

 14 container out, turn a container in. You know,

 15 those guys don't want to be in the port any longer

 16 than they have to. So to ease some of that port

 17 congestion, and Randy had some very good

 18 suggestions, would definitely facilitate helping

 19 to attract qualified truck drivers to our

 20 industry. And everybody throws numbers around.

 21 You know, 30,000 truck drivers short today. That

 22 number is projected to go up to 220,000 by the
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 1 year 2022 of shortage of qualified truck drivers.

 2 And, you know, it's in our face, it's not going

 3 anywhere. You know, these numbers are real. And,

 4 you know, we definitely have to address the issue.

 5 The next biggest deterrent in our

 6 business as Cathy mentioned specific to New

 7 Orleans is insurance. You know, every year we go

 8 out to market with our insurance, and we go out to

 9 12 markets. Ten of them come back with a big

 10 black X over New Orleans. If you operate in New

 11 Orleans we're not writing insurance. And we've

 12 had several instances in the past 10 years where

 13 as you're driving down I-10 in bumper to bumper

 14 traffic a truck taps the car in front of him and

 15 that's a $300,000 back surgery. And it's the

 16 nature of the beast in New Orleans. We have to

 17 deal with it. But that makes the cost of doing

 18 business in New Orleans a lot higher because, you

 19 know, those costs have to get -- and unfortunately

 20 it's generally the trucking companies that bear

 21 the brunt of it, those increases in costs. You

 22 know, your customers don't want to hear that your
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 1 insurance went up; that's not their problem. And

 2 that's an issue we have to face day in and day out

 3 operating in New Orleans. And it's getting higher

 4 and higher every year as claims continue to

 5 escalate in value.

 6 Another is the space issue at the port.

 7 Now given the constraints of the port, space is an

 8 issue and we definitely have to get creative on

 9 how we address that issue, and it's not moving,

 10 it's not adding more land anywhere. So as Randy

 11 mentioned extended gate hours, weekend, and that

 12 comes with labor. You know, we have to increase

 13 the manpower to get trucks in and out of the port.

 14 One of the things I did was we have about 90

 15 drivers in New Orleans, 50 percent company, 50

 16 percent owner operator. As I gave every one of my

 17 drivers, you know, a sheet of paper and said give

 18 me five things you can -- if you had -- can

 19 improve anything at the port let me know what they

 20 are. Well, I won't read some of them because

 21 they're kind of vulgar, but (laughter) the

 22 majority of them were well thought out,
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 1 constructive ideas that we can definitely bring to

 2 the table. And I won't bore everybody with the

 3 details but, you know, as another commission or

 4 group meets from this meeting we can definitely

 5 provide some ideas to help ease some of the

 6 congestion within the port. And it --

 7 COMMISSIONER DYE: Make sure you send

 8 those to me.

 9 MR. LOUIS: You can't read them out loud

 10 though.

 11 (Laughter)

 12 SPEAKER: Filter them, filter them.

 13 COMMISSIONER DYE: I'll self censor.

 14 MR. LOUIS: I'll have to white some of

 15 the names out. No, but the last thing I'll

 16 address is damaged equipment at the port. New

 17 Orleans is a port as everybody knows, where we

 18 have heavy exports and our imports are far less

 19 than our exports. For companies with high volume,

 20 you know, we definitely run into equipment

 21 shortages on -- in addition to chassis, but more

 22 so on containers and container availability. And,
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 1 you know, as you arrive down the port there's 1000

 2 damaged containers that are just waiting to get

 3 repaired, but that's a labor issue that we have to

 4 address -- a lot of the times it's cheaper to

 5 bring a vessel in of empty containers than fix the

 6 damaged containers on the terminal. So that's

 7 another issue we face -- allocating labor to fix

 8 these damaged containers that will ease the burden

 9 on equipment availability.

 10 That's all I have. And, Commissioner, I

 11 do once again thank you for the time and for the

 12 opportunity to speak here.

 13 COMMISSIONER DYE: Thank you very much.

 14 I appreciate it. Mr. Whalen, I appreciate your

 15 joining us on the panel. And of course it was

 16 your appearance before the Federal Maritime

 17 Commission that has allowed us to get involved in

 18 this issue and we appreciate it. And I'm glad you

 19 would agree to appear on the panel. Thank you.

 20 MR. WHALEN: Well, thank you and not

 21 only for this event but for the combined four

 22 events in six weeks. So when we originally
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 1 discussed this back in June my wildest dream would

 2 not have seen the schedule that developed quite so

 3 effectively and efficiently.

 4 One of the things that is certainly

 5 happening and the discussions were obviously

 6 ongoing around the country because of the nature

 7 of congestion and the impacts, but I think these

 8 events have very much helped focus the attention.

 9 There's obviously additional coverage from the

 10 media and such that goes on, but I think even in

 11 the short period of time we've seen a coalescing

 12 around both what the issues are in the port

 13 environment and not necessarily all the solutions,

 14 but they're certainly discussions now where as the

 15 various groups continue to meet locally and

 16 regionally. The list is pretty much now defined

 17 as to what needs to be addressed, what needs to be

 18 discussed. The fact that the Commission is

 19 engaged in this I also think is adding a potential

 20 new stroke to this. One of the things I've

 21 noticed, the difference in these four events now.

 22 The first two, if you talked about infrastructure
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 1 and the first two were west coast, southern

 2 California primarily and the northeast, because of

 3 the nature of the congestion their infrastructure

 4 needs were by and large defined inside the gate.

 5 Almost no discussion about the infrastructure

 6 which is everywhere else in America and I think

 7 that's an important distinction that really needs

 8 to be kept in mind. And I think there's a role

 9 perhaps for the FMC as you move through when all

 10 the agencies go through their annual trek through

 11 Congress explaining what they do in programs to

 12 make that connect because the rest of Congress and

 13 the Department of Transportation certainly does

 14 not talk about the role of infrastructure in the

 15 global trade. And it's huge as we all know, but

 16 it just hasn't gotten that kind of coverage that

 17 it demands. So I think that would be particularly

 18 useful.

 19 Also I think the role of the motor

 20 carrier driver in the overall container trades and

 21 freight trades through the ports. It's always

 22 been there but it really hasn't gotten, at least
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 1 from my point of view, sort of the identification

 2 of the critical and at this stage fairly well

 3 threatened entity that moves through the chain and

 4 how things are done within the port and how

 5 traffic moves. Every meeting that I go to lately

 6 the aspect of trucking, the aspect of drivers, the

 7 shortage of drivers, all of those things and how

 8 they impact the rest of the port stakeholders is

 9 now a given. We don't have to argue that we're

 10 under siege, I think everyone fully appreciates

 11 that we are and I continually hear across the

 12 stakeholder spectrum the fact that we, all of us,

 13 need to figure out a way to get our hands on that

 14 and better assure that we have drivers both now

 15 and in the future because that is not assured

 16 based on how we're going. I've got members around

 17 the country and these are traditionally a group

 18 like American Trucking, the people that joined

 19 ATA, and our groups are usually the best of the

 20 best within the industry. They're the ones who

 21 have been in it multigenerational, and when I hear

 22 my members how are that category talking about
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 1 losing 20 percent of their drivers it's a stunning

 2 fact. The other part of it is that historically

 3 while trucking is always driver short, and I'm

 4 talking about all types of trucking, port trucking

 5 really has not been that way because these drivers

 6 are generally what we would call short haul, and

 7 it used to be daily drivers. They do get home at

 8 night. And that was an aspect of the job that

 9 they actually liked and it's why we didn't have

 10 high turnovers. But given the fact that we're in

 11 these congested modes in some of America's ports,

 12 I just saw a poll or a survey that was done on the

 13 west coast recently and pay was not actually -- at

 14 least when they took this poll -- the top concern

 15 for the drivers, it was basically self worth, what

 16 did I do today. And the answer "I sat on my butt

 17 for eight hours" and in fact you don't make any

 18 money on top of that was a bigger concern than

 19 just net out revenue. So the moral of the driver

 20 core is extremely low. Because of the shortages

 21 elsewhere if I'm a port driver who's got a --

 22 obviously you have a valid CDL and a good driving
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 1 record I can take that and go somewhere else which

 2 they are doing in the energy sector or in other

 3 parts of regular trucking. And it may not be

 4 quite the daily drive or close to home, it could

 5 be but it may not be, but that is something that

 6 they can readily do right now. There are bonuses

 7 being paid to drivers that go to other sectors

 8 within the greater trucking environment. And once

 9 they leave there is no guarantee that they will

 10 come back. So the situation is getting worse not

 11 better. But I do think again these kind of events

 12 and the whole total picture that we're seeing now

 13 is one that the importance of the driver in this

 14 whole sector of the economy is now I think very

 15 much accepted and understood and the concerns are

 16 real.

 17 Chassis is the other area that certainly

 18 has moved up in the spectrum of issues. If you

 19 had a meeting on chassis three, four, five years

 20 ago no one would come, and I mean literally. Now

 21 I go to meetings where there might be 1000 people

 22 in the room talking about the chassis model, where
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 1 we're getting our chassis and what's to be done.

 2 I think an important role that these FMC events

 3 are having, and certainly as I understand the

 4 process you'll do a report that brings all of the

 5 various information together, I certainly hope --

 6 and I will use it to the extent that I can to put

 7 additional pressure on the Department of

 8 Transportation and the Federal Motor Safety

 9 Administration who is supposed to be enforcing the

 10 chassis law that passed in 2005. Most of our

 11 discussions in the logistic sense are do we have

 12 enough chassis and are they deployed in the right

 13 places. What is not generally discussed although

 14 you've heard it mentioned here, by law that

 15 chassis is supposed to be roadable before it's

 16 offered to the trucker. And while in times past

 17 that was important, in present times where you're

 18 already waiting in line for hours to get into the

 19 gate, if you can't find a roadable chassis

 20 obviously nothing can get done thereafter. And

 21 the ports are looking at the normal solutions of

 22 let's have appointment schedules, let's do a
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 1 variety of things. Well, the appointment schedule

 2 which is one of the favorites in the terminal

 3 community, if you don't have a chassis when you

 4 get there I don't care what the appointment system

 5 is, it won't work. So I'm going to chassis

 6 meetings now that the terminals are running and

 7 going hey, we've got to get this chassis issue

 8 fixed initially so we can go on and try to do

 9 other things that will alleviate congestion. But

 10 that's one that's very, very critical and I think

 11 the highlighting of the nature of the chassis to

 12 the overall movement of international trade

 13 through the ports is one that I'm certainly going

 14 to continue to force the FMCSA types to read this

 15 and actually get out and start making sure that

 16 these chassis are indeed roadable. It's not their

 17 responsibility to ensure that there's enough of

 18 them, but it is their responsibility to ensure

 19 that what is out there is in a roadable safe

 20 condition so it can be used by the trucker.

 21 But these kind of events I think again

 22 and the materials that we're developing that will
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 1 be in these reports and such are very useful in

 2 the bigger picture of what actually goes on and

 3 how global trade comes in and out of the port, but

 4 it's part of the whole infrastructure set up and

 5 not just the port issue.

 6 Lastly I would say -- oh, let me -- one

 7 other thing. In terms of the trucking industry

 8 we're working with groups in both the southern

 9 California area which will then quickly move to

 10 the east coast to potentially file waivers to the

 11 hours of service regulations that are currently in

 12 place to specifically reflect the fact that we are

 13 in a congestion crisis in some of the ports in the

 14 U.S., and as a result the drivers do not have

 15 enough hours. And these are not driving hours,

 16 although once we're on duty and my clock is

 17 running for hours of service, but we need to try

 18 to figure out for the short-term as we try to

 19 address congestion how to get over this hump. And

 20 one of the things is the ability to potentially

 21 have more hours that could be used. And also

 22 importantly we are encumbered with something
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 1 called a 34 hour restart provision where our time

 2 spent in a full rest mode have to structured when

 3 you decide to turn your clock on or off. And what

 4 that gets into is when the ports in their heavy

 5 congestion modes say okay, let's all get together

 6 and work Thursday evening extended hours, or have

 7 a Saturday gate, the truckers cannot readjust

 8 their hours of service clock. And in New York and

 9 the port of Virginia several times this year when

 10 they tried to do these things there were no

 11 truckers there. So they call up and say where the

 12 hell are all the trucks, and the answer is we're

 13 out of legal hours. So we're going to try to get

 14 some flexibility built in short-term as we look at

 15 the end of this season and the beginning of next,

 16 but that's another area that I think the emphasis

 17 from FMC on how the trucks and everything else fit

 18 into the greater movement of freight through

 19 America's ports could certainly be helpful. I

 20 would think another government agency, not

 21 necessarily -- there's no mandate involved,

 22 there's no law involved, but raising the issue in
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 1 terms of visibility I think will perhaps help

 2 FMCSA decide to be part of the solution and not

 3 part of the problem.

 4 Lastly I think the comments in terms of

 5 potentially having a high level group assembled I

 6 would certainly think is a good one. I would like

 7 to see it under some sort of the purview of the

 8 FMC. There are occasions where I think our

 9 industry in its broadest sense needs adults in the

 10 room. In some of these issues, all of these

 11 issues, now there is a degree of pain that has to

 12 be shared and that's generally financial pain. So

 13 there may be a time to slip back and the

 14 traditional way the industry did it was to point

 15 fingers at each other. But I do again in these --

 16 three of the four events that I've attended there

 17 has been a recognition by all of the stakeholders

 18 that it's time to get beyond and actually share

 19 the pain so we can move forward on this.

 20 So again thank you for being part of

 21 this. I think this has been an extremely useful

 22 effort. And I see a longer-term need not for
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 1 regulations or activity, but certainly the

 2 involvement of a voice that understands the full

 3 nature of what port traffic and world trade is,

 4 unlike some of the other agencies, would be very

 5 helpful.

 6 Thank you.

 7 COMMISSIONER DYE: Thank you. Thank you

 8 very much. And I agree. I think the discussion

 9 today has been of a very high quality, very useful

 10 for us. Our first two panels were also wonderful.

 11 I appreciate it more than I can say. Thank you.

 12 MR. WHALEN: Thank you.

 13 COMMISSIONER DYE: Thank you very much.

 14 And if the panel participants will meet me

 15 upstairs I'd appreciate it.

 16 We will reconvene for our final two

 17 panels at 2:15 p.m. Thank you.

 18 (Recess)

 19 COMMISSIONER DYE: We have two more

 20 panels this afternoon, and I'm sure that these

 21 panels are going to be just as informative as the

 22 others. I appreciate it, so let's get started.
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 1 We have Mr. James Parker, New Orleans Terminal,

 2 New Orleans, Louisiana; Mr. Keith Palmisano,

 3 Ports America, New Orleans; Mr. Brian Harold,

 4 Director of APM Terminals, Mobile; Mr. Dave

 5 Morgan, Vice President, Cooper/T. Smith, Houston;

 6 Mr. Don Johnson, Senior Vice President, Shippers

 7 Stevedoring Company, Houston; Mr. John Crowley,

 8 Executive Director, National Association of

 9 Waterfront Employers, Mr. Kenneth Crier,

 10 President, ILA Local 3000, New Orleans. Thank you

 11 very much all of you. I appreciate it. So, let's

 12 get started. Mr. Parker?

 13 MR. PARKER: Thank you. Madam

 14 Chairwoman, I'd like to thank you for giving me

 15 the opportunity to speak on this panel.

 16 COMMISSIONER DYE: Thank you.

 17 MR. PARKER: Welcome to New Orleans.

 18 COMMISSIONER DYE: Thank you.

 19 MR. PARKER: Good afternoon, ladies and

 20 gentlemen. Now it's time for the working group to

 21 go to work, I guess, so we're at the bottom of the

 22 list for a reason. This has been a very
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 1 informative yet kind of open discussion, and then

 2 that's good, and I think as a community in New

 3 Orleans everybody realizes that at this point and

 4 stage we do have to work together as a group. I

 5 think there's been a lot of shotgun stowage in the

 6 past, so to speak -- old stevedore term -- but

 7 everybody tends to go one way and not focus on the

 8 main core, and I think we used to have a lot of

 9 meetings and we've gotten away from that. I'd

 10 kind of like to see us as a group here, and you're

 11 certainly welcome any time when you move your

 12 offices here --

 13 COMMISSIONER DYE: Right. That's right.

 14 MR. PARKER: -- as you so stated, you

 15 could join us.

 16 COMMISSIONER DYE: Thank you very much.

 17 MR. PARKER: But the issues as far as

 18 the congestion, and I guess that's the main theme

 19 here is port congestion, there are a lot of

 20 reasons. I've heard a lot of open discussions and

 21 opinions as to what they are is the main thing. I

 22 will say that there are a lot of variances and
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 1 that the variances were all touched on, but as far

 2 as like the hours and different things, these are

 3 something that we all need to sit down to because

 4 that has been done here before. We have opened

 5 the terminal for extended hours. I started in

 6 Savanah 30 years ago, 32 years ago. They've done

 7 it there. They went to a 24-hour gate, seven days

 8 a week. Their night gates and weekend gates was

 9 at 20 percent participation.

 10 You can't as a terminal -- we don't want

 11 to cost you as trucker. We don't want to cost the

 12 customer. We don't want to cost anybody any

 13 money, but we also have to look at ourself in the

 14 mirror and can't cost ourself money for undo

 15 reasons. We're willing to work with anybody and

 16 everybody here to try to expedite your business.

 17 We are in talks with Sports America now.

 18 We are looking at an enhanced gate

 19 system that we feel will make a world of

 20 difference. It's going to come with some changes,

 21 changes perceived by some as good. It will be

 22 perceived by some as bad, and sometimes you take
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 1 the good with the bad.

 2 Hopefully within the next week or two we

 3 will be calling a meeting for the trucking

 4 community at the port and we're going to sit down.

 5 We'll sit down and discuss this at length, but we

 6 are basically investing a lot of money in the Port

 7 of New Orleans, New Orleans terminals with the

 8 onset (inaudible) we've raised $11 million in this

 9 business in the last six months or in the process

 10 of it, so we are trying to accommodate all. It's

 11 difficult at times, especially when you have

 12 different groups with different philosophies and

 13 different ways on anything they ask on how things

 14 should be run, so it's been trying the last couple

 15 of weeks, and I appreciate everybody's patience

 16 getting this thing kicked off the ground. It is

 17 big boost for the economy in New Orleans, and we

 18 will work to make it as painless as possible.

 19 The congestion side of it, like, I

 20 think, Gary, I went through kind of mentally the

 21 different groups, the port. One of the big issues

 22 we have here in New Orleans is the space. We're
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 1 in dire need of space. Monetary appropriations

 2 are not there. I think sometimes as a whole the

 3 country forgets about what really got them there,

 4 and that's the root group at the ports.

 5 I've been doing it 32 years and I've

 6 seen it here. I've seen it Charleston,

 7 Jacksonville, Miami, Canaveral, and it's amazing

 8 to me how so little effort is thrown the port's

 9 way. I mean basically this is the cornerstone

 10 that started everything in this country. If it

 11 didn't come through the port, it didn't get here,

 12 and it's basically the same thing today, so I

 13 think they're just in asking for a little bit

 14 quicker response time to government funding when

 15 it's there. And we understand that a lot of times

 16 it's not, but sometimes it is, and it's been a

 17 painstakingly slow process.

 18 The road here that Gary alluded to, the

 19 flyovers that we've been -- everybody's been

 20 trying to get for numbers of years is one of the

 21 biggest, if not the biggest, problem that we face

 22 now as a community, a maritime community. Randy
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 1 will tell you -- David -- you come out here

 2 sometimes at 1:30 in the afternoon when you come

 3 off on the interstate and they're backed up on the

 4 interstate which is probably a two-mile run, and

 5 it stays that way for basically hours on end. So,

 6 the relief on that side would be more than

 7 welcome.

 8 Trust me, we don't want anybody on the

 9 road any longer than you want to be on the road.

 10 Time-wise, we try to staff efficiently. We add

 11 people when we think we can, and it's devil's

 12 advocate. One day you staff 100 percent up, and

 13 you get nothing. The next day you go back down

 14 and you get flooded, so it's a guessing game, and

 15 we try to guess the best we can. We really do.

 16 I know that sometimes the truck drivers

 17 don't think we do, but actually -- and they are in

 18 a lot of ways the beaten path. Sometimes I

 19 sympathize with the guys. We were talking about

 20 making three and four turns. One of the issues

 21 here in New Orleans is we've done studies ourself.

 22 It's probably 70 percent or better the cargo in
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 1 this area comes out of Baton Rouge or outside the

 2 2-hour realm, and I asked one of the truckers when

 3 we were at lunch and I said, "Can you give me five

 4 drivers that are in the city now that can make

 5 three turns between here and Baton Rouge in a

 6 day," and he said no.

 7 So, there's a lot of different things

 8 that go into the bowl. Hopefully we can all mix

 9 them all together and come up with one cake, so to

 10 speak, that will make everybody happy when they

 11 get a slice of it. I just want everybody to

 12 understand that the terminal operators are not

 13 here as your enemy. We're here as your friends,

 14 but also we all have to look at this in a

 15 financial manner as well.

 16 Randy alluded to and the chassis people

 17 were talking about being able to come in with one

 18 chassis and keep that chassis. Well, we've had

 19 meetings on it. Randy will tell you we talked.

 20 We had solutions, or we thought we had solutions.

 21 They fell by the wayside. The problem was there

 22 was not an inventory process for the chassis, for
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 1 the pools to keep up with. Now you've got one

 2 chassis coming in one place and going out another.

 3 There's no real way they can keep up with what

 4 kind of pool they have intact, so -- and that was

 5 looked at, and of course, the bottom line was,

 6 "Well, when you come up with an inventory program,

 7 you know, who's going to share the cost?" Well,

 8 the terminal has to bear the cost.

 9 So, there's a lot of issues that I think

 10 locally -- and I've talked with Gary LaGrange, and

 11 I think we all need to sit down again and start

 12 sitting down again because there are things that

 13 can be done. It's just a matter of doing them the

 14 right way.

 15 But to me, in New Orleans here -- the

 16 people -- like I say, I've come from a lot of

 17 different places. The people here have a very

 18 good work ethic. They try and strive to do the

 19 best they can do. Sometimes a lot of things we do

 20 are beyond our control, but the area here, New

 21 Orleans has pretty much kind of, as far as Keith

 22 will tell you, as far as the terminal goes on the
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 1 container side of it, we're pretty much maxed out.

 2 We're starting a new motor rail

 3 facility. We're losing 10 acres. That started

 4 Friday, so we're going to lose half of that, and

 5 then four months later we're going to lose another

 6 half. We're putting in 450 reefer plugs that are

 7 going to be a rack system, which we feel like will

 8 help get the containers out faster, so that way we

 9 can instead of digging with top loaders we can dig

 10 -- we've got two RGGs that will be here in

 11 January. So, infrastructurally, equipment-wise,

 12 we're putting a lot of money into it. We're

 13 trying to make it work. It's not going to be,

 14 like I said, a swift process, but it is a process.

 15 And I welcome any of you all to come.

 16 You're welcome. Anybody's always welcome to come

 17 to our office. You want to sit down and talk,

 18 we'll be glad to talk with you. I don't think

 19 we've ever turned anybody away unless you owe us

 20 money, and then we send you straight to the bank.

 21 It's just -- it's things that need to be

 22 focused on. I think the Gulf Coast has a big
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 1 upside. I'm one of the one's everybody's Panama

 2 Canal. I'm not a -- I guess a true believer that

 3 it's going to make that much of an overwhelming

 4 difference. I think you're going to see a lot of

 5 feeder ships. New Orleans will benefit to some

 6 extent. You're going to see less ships with more

 7 cargo. Instead of having five vessels a week it

 8 may go down to two, three, whereas 4500 TEU vessel

 9 versus an eight and a half thousand, and that's

 10 the direction I see it going anyway.

 11 We can get a 9,000 TEU ship here. We've

 12 done it. We actually did a comparison for a

 13 10,000 TEU ship, and it will make it under the

 14 bridge, so there is an upside here, and I think

 15 the cargo will continue to come to the Gulf Coast.

 16 As somebody alluded to earlier, one of

 17 the advantages we have is the intermodal

 18 disbursement here. We have on dock rail. We can

 19 have boxes 24 hours, Memphis; 48 hours, Chicago;

 20 72 hours, Montreal. I think it's a very

 21 underutilized system that we have. And we where

 22 the public (inaudible) the port, C&N railroad, a
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 1 couple of railroad companies, we're diligently

 2 trying to get that changed. If I could tell you

 3 in talking with some of the railroad people how

 4 much cargo comes out of Dallas and bypasses Gulf

 5 Coast ports to go to Savannah, you would be

 6 completely amazed. I mean I'm talking tens of

 7 thousands of boxes.

 8 So, we're here to try to change that

 9 trend. Hopefully we can. I just want to -- maybe

 10 we could all sit down here in the future, Randy,

 11 David. Everybody get back to our meetings that we

 12 had. Anybody in the community's welcome to join

 13 us, but we do need to change the congestion. We

 14 do need to change a lot of things, and I think we

 15 can all do it together, not as one -- or not as

 16 separate.

 17 COMMISSIONER DYE: Thank you. Now, your

 18 upcoming changes, are these part of this study

 19 that Gary was discussing?

 20 MR. PARKER: I don't have the list,

 21 ma'am. It should be. The last mile is the

 22 flyovers and that's the biggest issue we're having
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 1 now is the truck drivers getting into the port

 2 (inaudible).

 3 COMMISSIONER DYE: Thank you. Thank you

 4 very much.

 5 MR. PARKER: You're quite welcome.

 6 COMMISSIONER DYE: Mr. Palmisano?

 7 MR. PALMISANO: Good afternoon --

 8 COMMISSIONER DYE: Good afternoon.

 9 MR. PALMISANO: -- Commissioner Dye.

 10 And Gary LaGrange, I know you're still here,

 11 right?

 12 Anyhow, as far as efficiencies, I

 13 oversee the break bulk operations for Ports

 14 America in New Orleans, somewhat indirectly

 15 involved with the container operations and I think

 16 (inaudible) brought up how we measure our

 17 efficiencies, and yes, it is turn times. It's the

 18 best way to see how the trucks are coming in and

 19 out. Forty-five minute turn time, I don't know

 20 how that compares to other ports in the Gulf but

 21 the turn times up in the northeast, 4 hours. Of

 22 course we want to do better as far as turn times.
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 1 We'd like to see 30 minutes, but until you fix the

 2 connection between the interstates and the --

 3 direct to the port, it's still going to have those

 4 challenges.

 5 Of course we can be better on the

 6 terminal side. Some of the points that James

 7 made; yes, we subscribe to do better. As far as

 8 improving technology like some of the rollups that

 9 are coming out between Ports America and New

 10 Orleans terminals, it's going to be, of course,

 11 another change and sometimes change is difficult

 12 to take at first, but we're working those as we go

 13 through changes.

 14 But again, go back to infrastructure to

 15 and from the Port. It's very important, and James

 16 said if you go into Baton Rouge, you know, if you

 17 drive in your vehicle, that's an hour and half

 18 drive. On a busy day coming off the interstate

 19 having (inaudible) but I can guarantee you in my

 20 own personal vehicle it takes me 20 minutes to get

 21 from (inaudible) to (inaudible) gate, so right

 22 there you're looking at probably, you know, in and
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 1 out maybe 45 minutes plus another 40 minutes or

 2 so. That's a good part of a truck driver's day

 3 just getting in and out of there, so if you can

 4 cut out 40 minutes or so of that time to and from

 5 the Port, it's very important.

 6 Again, I'm really on the break bulk

 7 side. I knew that the strains that the terminals

 8 are having, and James also said just the lay of

 9 the land between New Orleans terminals and Ports

 10 America. The Port unfortunately is a very long

 11 and narrow facility. It may not be that ideal for

 12 a container terminal, but within the course of the

 13 day James has two ships in. He had two ships in

 14 just on the container side. You're dealing with

 15 vessel traffic. You're dealing with terminal

 16 traffic along with break bulk, rail operations,

 17 barge operations, the warehouses being very close

 18 to the waterside, so there's a lot of congestion.

 19 And when you think about 45-minute turn time, I'll

 20 say I don't think it's quite that bad.

 21 I know there's challenges with

 22 equipment, damaged equipment, whether it's chassis
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 1 and containers, and maybe that's where the focus

 2 should be and improving those efficiencies where

 3 the truck drivers aren't getting spun with

 4 different issues. But I think it's been said

 5 before, I think we need to go back to being more

 6 involved with the trucking community to work these

 7 things out and (inaudible) guilty of not going

 8 forward with that and maybe through this forum

 9 today that we can further move forward with that

 10 and have better communication. As far as labor,

 11 it was mentioned earlier about not having enough

 12 labor, efficient labor. I'd have to disagree. I

 13 think we have a very good rapport with the local

 14 union here that does supply us with labor. We

 15 need to talk about the man-hours that the Port of

 16 New Orleans and the ILA has. In the course of the

 17 day we're working shifts 24 hours a day, 7 days a

 18 week. The amount of men that -- the employees

 19 that we're putting together in the course of the

 20 day I think they are doing a pretty good job as

 21 far as the relationships and that goes along with

 22 the communication with the Port. Communication,
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 1 communication, communication, (inaudible)

 2 different panels today, and I think that's really

 3 where we've got to start. Go back to those roots

 4 of communication and basically talking about what

 5 we can do to improve.

 6 Again, the ships are coming in. As far

 7 as break bulk and containerized vessels, they're

 8 coming in. We are at growth mode, and with the

 9 growth mode, yes, you are going to have some

 10 inefficiencies as well, so we're probably behind

 11 the curve as far as getting together and being

 12 prepared for the growth, so moving forward I think

 13 we'll do so.

 14 COMMISSIONER DYE: Thank you. Thank you

 15 very much. We have a controversy with those turn

 16 times is when do they start? Inside, outside --

 17 MR. PALMISANO: They're measured

 18 different ways. They can be measured inside and

 19 outside. We have transponders on the road that

 20 basically start from the time they come in until

 21 they come out. We measure our turn times

 22 basically inside from once they get inside the
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 1 gate.

 2 SPEAKER: That's the 45 minutes. It is

 3 inside the terminal.

 4 COMMISSIONER DYE: Mr. Harold?

 5 MR. HAROLD: Thank you Commissioner Dye

 6 for the opportunity. Well, the first thing I say

 7 speaking for the (inaudible) on Mobile at APM

 8 Terminals I'm not going to lie to you and say that

 9 there are absolutely no congestion issues

 10 whatsoever. That would definitely be a lie, but

 11 that being said, I think that we're in a pretty

 12 good spot in terms of timing.

 13 Unlike New Orleans or other places,

 14 we've had the luxury of just opening five years

 15 ago, so we were able to build a terminal to spec

 16 based on a number of lessons that we learned over

 17 the years from the gate system we put in,

 18 technology, et cetera. And by and large, the

 19 project, the business case, the execution, was

 20 done very, very well.

 21 Our terminal sits right next to I-10, so

 22 there is literally no congestion in or around the
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 1 port area. There's not a single stoplight from

 2 the time you get off I-10 to the quarter of a mile

 3 that you have to travel to get onto our facility.

 4 There's really nothing impeding traffic in that

 5 regard.

 6 We've got a very sophisticated terminal

 7 operating system with NAVIS. We're going to be

 8 upgrading to N-4 pretty soon which we expect to

 9 run very smoothly, and we will make sure that

 10 happens.

 11 In my opinion, the first and maybe the

 12 easiest key to addressing the issues of congestion

 13 at the port are your date process just like you

 14 said. When does the turn time start coming off

 15 the street or when you get through the gate? I've

 16 had to, I guess you'd call it the luxury of

 17 working in the Port of New York, New Jersey, for a

 18 number of years before coming to Mobile and seeing

 19 some of the challenges up there, but appointment

 20 systems can be very effective.

 21 We have an appointment system in Mobile.

 22 One hundred percent of the transactions make
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 1 appointments, and that's not always the most

 2 popular thing among the trucking community, but I

 3 think that's more associated to if you really silo

 4 the windows from which a trucker can come in. We

 5 don't say that a trucker can only come in between

 6 the hours of noon and 2:00, and if you don't make

 7 it you can't come in. You just have to come in

 8 that day, and what that allows us to do is have a

 9 lot of the information up front before the trucker

 10 arrives. It really saves a lot of time, and it

 11 allows our clerical staff to do the job more

 12 efficiently.

 13 Also, we have a very good system in our

 14 yard that provides seamless communication between

 15 our gate and our container and the equipment,

 16 which is real-time information. Computer screens

 17 in all of our machines so that when a truck comes

 18 through the gate our operators are starting to

 19 react to it immediately. It doesn't always work

 20 perfectly, but that's the way that it was trialed

 21 and for the most part it works pretty well.

 22 I think that then coming with that is
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 1 training and really having a strong partnership

 2 with your union workforce. The ILA Mobile has

 3 done an excellent job. The clerical staff does

 4 more than I could ever have imagined coming down

 5 from the north a few years ago. They really

 6 manage that system well and seamlessly with very

 7 little supervision.

 8 Talking about the turn times again, I

 9 wanted to echo Mr. Patel's comments that he said

 10 earlier about the focus on the outliers, and

 11 that's something that we've really changed our

 12 philosophy when it comes to service of the

 13 trucking community. Turn times of 45 minutes --

 14 well, when's the last time any of us got a

 15 customer complaint because your average for the

 16 day went from 45 minutes to 50 minutes? I don't

 17 think that's so much the issue as it is what

 18 happens if the trucking community can't plan for.

 19 If it takes a trucker 5 or 10 minutes additional

 20 for one day to get in and out, probably not the

 21 end of the world, but it's that one trucker that

 22 was there for four hours and what happened there?
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 1 And probably in the last year we've

 2 started to change our focus -- really North

 3 America -- around what is a good service to the

 4 trucking community? So our focus now is you still

 5 want to look at turn time. I think that's

 6 important, but more importantly in my opinion is

 7 what are the percentage of your transactions that

 8 are going over a certain period of time? That's

 9 really the challenge, and we've seen about a 50

 10 percent reduction in that regard since we started

 11 focusing on it, so it's been good.

 12 And the other thing I'd say is vessel

 13 productivity is actually very important to

 14 congestion, and maybe most of us would agree that

 15 on a day where you're working a vessel while your

 16 gate is open, your yard is more heavily congested

 17 than when you're not working a vessel. If we can

 18 get the ships in and out quicker, great. That

 19 gives us more time to start moving trucks more

 20 efficiently. But then that also comes back to

 21 good communication with the trucking community

 22 which we -- I think we do a pretty good job in
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 1 Mobile, but we could definitely do a better job of

 2 that just making sure that -- just the communities

 3 aware that if you're working a ship on a Tuesday

 4 and they can avoid the port on a Tuesday, great.

 5 But the more that you can increase your traffic on

 6 non-ship days and reduce during ship days the

 7 better off you're going to be.

 8 Just a couple other things I wanted to

 9 mention here. The Panama Canal and there's still

 10 a lot of -- everybody's been making a comment on

 11 that, so I guess I will too. My opinion is that

 12 there are such good slot cost advantages by using

 13 bigger ships. I think you can -- that's easily

 14 seen, and we have vessels coming through the canal

 15 today into the Gulf. Not many but we have them.

 16 I think that it's really just a New

 17 Orleans-brainer that when the canal widens that

 18 they're going to start using these bigger ships.

 19 I don't know how big the impact is going to be,

 20 but I think that there will be additional capacity

 21 to be filled coming into the Gulf, and while a lot

 22 of it is being service goods to us, canal use
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 1 still have quite a bit of time sensitive cargo

 2 both inbound and outbound. They're still going to

 3 want to use the Panama Canal, so I think that that

 4 additional capacity on some of those services will

 5 really help, not to mention vessel cascading that

 6 is really going to start I think pushing more of

 7 the 8500 TE ships down to a point where they are

 8 going to be looking for homes for these and maybe

 9 some of those at least may be on Transpacific

 10 coming through the canal and into the Gulf, so

 11 we'll see how that goes.

 12 COMMISSIONER DYE: Thank you very much.

 13 Mr. Morgan?

 14 MR. MORGAN: Thank you, Commissioner

 15 Dye.

 16 COMMISSIONER DYE: Of course.

 17 MR. MORGAN: Thank you for coming to New

 18 Orleans.

 19 COMMISSIONER DYE: Thank you.

 20 MR. MORGAN: I was here a long time and

 21 I -- hopefully Gary will invite you to have

 22 monthly meetings here. It's always good to come
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 1 back home.

 2 COMMISSIONER DYE: I would like that

 3 very --

 4 MR. MORGAN: Consider this home, and

 5 I'll start off with safety. I know a lot of

 6 people talked about safety this morning. Then, of

 7 course, that's a keystone to any terminal

 8 operator's operations or trucking lines, shipping

 9 lines. Safety-based systems are just wonderful

 10 and good for not only the moral aspect of keeping

 11 people safe but it's a better operation through

 12 and through, and I have a safety request for you

 13 to take back with you since you said you were so

 14 good with your custom's friends. Is it our

 15 custom's friends do not like to wear their PPE at

 16 the terminals. They're afraid to wear safety

 17 vests and hard hats, and it's a very big concern

 18 for us. We don't want anyone out there hurt,

 19 either our employees or contractors or anybody,

 20 period.

 21 COMMISSIONER DYE: Of course.

 22 MR. MORGAN: For that matter, whether
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 1 they're under our jurisdiction or not, so if you

 2 could take that home for us. We've been trying

 3 and there are places that they do do it, but all

 4 in all around the country, that's a very touchy

 5 subject --

 6 COMMISSIONER DYE: Thank you.

 7 MR. MORGAN: -- so take that back for us

 8 please. I'm on a more of the break bulk side of

 9 life now, and our port director today, Roger from

 10 Houston, said that they've been working on a lot

 11 of things and he tiered a lot of this stuff

 12 towards the container side of life, and he quoted

 13 a saying, "Don't put paper in tube anymore," to

 14 get their trucks in and out, and unfortunately on

 15 the break bulk side, we're not at the level of

 16 putting the paper in the tube yet. (Laughter)

 17 We're still working on what good that could be. I

 18 think unfortunately that's a big hindrance in our

 19 business and the break bulk side of life is steel

 20 and the heavy lifts and the project cargo is it

 21 dawns in the same (inaudible). We all have kind

 22 of homegrown computer systems, but they're nowhere
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 1 near what terminal operating systems are for the

 2 container side of life, and it's just -- it's an

 3 issue that we have to take care of ourselves, but

 4 also with the whole logistics chain. We have --

 5 our technology communication between our

 6 customers, the shipping lines, between us and the

 7 truckers, us and the brokers, us and the carriers

 8 and the truckers; all of it is way behind times,

 9 and I think if nothing else that that has to be

 10 improved and worked upon and somehow, maybe it's

 11 collectively done. I don't know.

 12 I know some port authorities do it where

 13 they'll offer up their systems to the community

 14 and to the stevedores and terminal operators, but

 15 I think that's a huge point for us to move forward

 16 on increasing our productivity and efficiencies

 17 and sharing of this information within the

 18 community. It all gets exasperated when -- he

 19 said this morning there wasn't much congestion,

 20 but there are at times always congestion at the

 21 ports. And there was a timeframe in July at

 22 Houston City docks where we had seven days and
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 1 there was 200,000 tons of steel that was coming

 2 off in seven days, so if you don't have a

 3 communications system and a planning system, it's

 4 all going to go to -- down very fast. So it just

 5 exasperates when it gets to those busy times, and

 6 fortunately there has been more busy times than

 7 not within the last year since 2008.

 8 Houston City docks is a direct storage

 9 port so the logistics and the communications are

 10 key. Stuff has to come off the ship and go more

 11 or less direct to truck to get it out the gate, so

 12 we can't talk enough about communications and

 13 other people have talked about the communications,

 14 so this kind of forum -- and I think we've all

 15 done it in the past here and in other ports that

 16 I've been in, but we kind of get lax on them after

 17 so many months of meeting and so many times and it

 18 kind of goes by the wayside, but I think it is

 19 extremely important that we have group forums like

 20 this within the community, you know, port by port

 21 to take the issues and move forward and not bicker

 22 back and forth; just do what's best for that
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 1 community, and I think we're all open for that on

 2 our side.

 3 Some of the people this morning also

 4 said some infrastructure improvements, yes, kind

 5 of like the paper and the tube. The break bulk

 6 facilities around the country and not just Houston

 7 or, you know, 1960s, maybe new some places 1940s

 8 maybe new, so there's a lot of areas that just

 9 purity terminal infrastructure could be improved

 10 greatly. It is kind of on the bottom of the totem

 11 pole on a lot of port authority's master planning,

 12 but it is a big movement in the United States.

 13 There still in general guard rail. There still is

 14 plenty of steel. There still is project cargo,

 15 and that has to get off and get to the (inaudible)

 16 and vice versa, so our infrastructure definitely

 17 needs to be improved.

 18 And I know the President of (inaudible)

 19 this morning was saying that some of the equipment

 20 for the break bulk handling facilities are -- need

 21 also to be improved and he's correct. Our shore

 22 (inaudible) fleet seems to be well behind, and he
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 1 mentioned that in his comments, and again going

 2 back to our Cooper/T. Smith's baby shore crane in

 3 Houston is about 1980-something, so we haven't

 4 greatly improved in that for us, but we definitely

 5 have to improve on that because the cargo is

 6 bigger. The cargo is heavier, and we have to

 7 adapt to that, and we're behind times on that.

 8 On the labor side we have a great

 9 relationship with the ILA Labor. Again on the

 10 break bulk side of life we're kind of the -- and

 11 that's mostly, definitely in the Gulf, but we kind

 12 of the training ground so they can move up to the

 13 "big money container life," so it's up to us or

 14 incumbent to us to work with the ILA as terminal

 15 operators and stevedorings to make sure we have a

 16 very good training program for the new labor

 17 coming off the street so to speak. That's

 18 paramount. We understand there's a price

 19 differential in the wages and that's done for a

 20 reason: To compete, especially in the Gulf area,

 21 and ILA knows that. We know that. That's a good

 22 thing that keeps us competing with some of the
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 1 other groups in the Gulf area, but we do have to

 2 pay attention to the training aspects and not

 3 leave that behind whatsoever.

 4 The last thing is the working at night.

 5 I heard different numbers and we do tend to try to

 6 work at night and have an extra shift on the

 7 general cargo side, but it gets to a point and I

 8 think Mr. Parker was saying it was 20 percent

 9 utilization of Houston City docks if we work past

 10 -- the truckers will not come past 10:00 p.m. to

 11 catch the cargo, as they say. It's very rare that

 12 they will, and there are shipping lines, our

 13 customers, that want to work around the clock to

 14 get the cargo out and their vessels on and

 15 alleviate congestion, so a group to get together

 16 to talk about working through those logistics, and

 17 if it's possible to do that, maybe at least on a

 18 case-by-case basis, and not just a general blanket

 19 that all ships are going to work 24 hours. That's

 20 not really a model for the general cargo world,

 21 but there are cases on the larger ships and larger

 22 shipping lines that are very conscious about their
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 1 port time and they want to get out, so we need

 2 that trucking side because if it's not, then we

 3 really get into issues whether that cargo,

 4 especially in Houston, hits the docks.

 5 It doesn't have the facilities to do

 6 that, number one, and if there is room to do that,

 7 then it costs the receiver to lift that cargo up

 8 and put it on trucks to get the final destination

 9 which is a completely added cost. It's not in

 10 anybody's supply chain when it left its origin, so

 11 some group meetings could assist on that.

 12 COMMISSIONER DYE: Thank you very much.

 13 Mr. Johnson?

 14 MR. JOHNSON: Thank you, Madam Chairman.

 15 Thank you for hosting this forum. Before I start

 16 some comments I would like to make a salute to

 17 Admiral Crowley to my left for his many decades of

 18 service to our country and to all of the men and

 19 women that ably serve our country and heartfelt

 20 goes out to them for what they do for us and

 21 certainly wish that when they're ready to come

 22 back into the private sector that we will open up
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 1 -- as employees we'll open up jobs and

 2 opportunities for them and welcome them back in.

 3 In Houston we have several stakeholder

 4 groups who engage in collaborative discussions

 5 with both private and public entities in

 6 addressing the challenges head-on. In our case

 7 we're very fortunate to be directly involved with

 8 the Port of Houston under the leadership of Roger

 9 Gunther who very well understands the challenges

 10 they have and that it takes communications and

 11 stakeholders working together to identify the most

 12 important areas of concern and then road- mapping

 13 a plan to get these challenges implemented and

 14 achieved. I think in Houston we do a very good

 15 job of that.

 16 Upgrading the port experience through

 17 infrastructure enhancements and substantial

 18 reinvestments is certainly welcome, but it's the

 19 communication and open- dialogue piece that allows

 20 us to get results done.

 21 We also echo that currently in Houston

 22 we truly do not have congestion at our container
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 1 terminals. I know I've heard some chuckling on

 2 that out there, but it's really true. To date our

 3 turn times of single moves are less than 30

 4 minutes and a double move is less than 60 minutes,

 5 so we must be doing something well.

 6 One of the companies that Shippers

 7 Stevedoring owns in part is a joint venture

 8 company called Integrated Marine Services. I have

 9 the honor of being the co-managing executive

 10 officer of this company with two of these other

 11 panelists that are up here at this table, and we

 12 have a partnership or we have an agreement through

 13 the Port of Houston that provides empty depot

 14 services for empty containers and bare chassis for

 15 the Barbours Cut container terminal facility.

 16 Ninety-five percent of all of the empty

 17 containers and bare chassis out of Barbours Cut

 18 are off terminal. They're close by but they're

 19 off terminal. This aids, obviously, in the turn

 20 times and the overall trucker experience. By

 21 having these empty containers and bare chassis off

 22 the (inaudible) terminal it creates a larger
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 1 footprint for the port to expand its handling and

 2 terminal operations of import and export loaded

 3 units.

 4 Another benefit of this IMS area is

 5 outside of the Coast Guard's CBP restrictive areas

 6 allowing for greater flexibility, late gates,

 7 evenings, holidays. If a carrier or a trucker

 8 needs a late gate, we're open for business. They

 9 know they can call us and we don't have any CBP

 10 restrictions.

 11 And just a quick note on that, you know

 12 those comments earlier about issues with CBP and

 13 how it affects the terminal operations in Houston,

 14 and Madam Commissioner, it's very true that -- and

 15 I can give you an instance where our terminal

 16 operations requested on behalf of one of our

 17 customers we needed a two-hour late gate and we

 18 were willing to pay for it; New Orleans issues

 19 with that. And the Port Authority went to CBP and

 20 CBP says, "Ha, ha, two hours. We'll give you 30

 21 minutes tonight. Be lucky we're giving you 30

 22 minutes," so there are serious issues with CBP
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 1 that need to be addressed. There are some really

 2 quality people there, but what they always fall

 3 back on is the budget. It's the budget. There's

 4 nothing in there for overtime. We can't expand

 5 hours. We like to work with you. Well, as

 6 terminal operators, when you're up against certain

 7 deadlines and you've got to pull containers out so

 8 they don't go on the (inaudible) so you don't

 9 start paying storage; it really impacts us not

 10 having flexibility that we need within the Port

 11 Authority system.

 12 One last note is INS. The Port

 13 Authority came to us and they said, "We're

 14 expanding our hours to 12 hours a day, 7:00 a.m.

 15 To 7:00 p.m." We immediately said without

 16 hesitation, "We're onboard and the empty

 17 containers and chassis will be available for that

 18 same amount of gate hours." There's no secret

 19 that our industry is a capital-intense required-

 20 investment industry that we would certainly

 21 welcome both state and federal authorities to

 22 continue grants and programs that would make new
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 1 cargo, container handling equipment technology,

 2 make the acquisitions possible, affordable, and

 3 reasonable. We certainly hope that both the state

 4 and the federal government will continue with

 5 certain grant programs that allow us as terminal

 6 operators to modernize our terminals and our

 7 equipment fleets.

 8 In Houston we actually have a terminal

 9 operation program in place such as the U.S.

 10 (inaudible) Carrier CCC Subsidy Program that

 11 encourages carriers to load containers heavy and

 12 have cargoes of all types handled on the pier.

 13 Devanning and consolidation of cargoes on the pier

 14 allows for the containers and chassis to be freed

 15 up in the shortest amount of time while offering

 16 freight transportation opportunities outside of

 17 the container itself. It's a very valuable

 18 program that the carriers utilize in Houston.

 19 We also have a joint terminal operations

 20 group made up with the Houston terminal operators

 21 and the Port of Houston Authority that is actually

 22 approved by the FMC that discusses terrorist
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 1 issues. We get together once or twice a year.

 2 We'll discuss the issues that are mutually

 3 beneficial to the entire industry, and of course

 4 our minutes are filed with the FMC accordingly.

 5 While technology enhancements are

 6 certainly great, I still think as employers that

 7 education and training of our workers must improve

 8 both on the front end and back end, whether it be

 9 documentation or handling of the cargo skills

 10 itself. As employers we owe it to the supply

 11 chain to do a better job. We can eliminate

 12 delays, process errors, miss deliveries with

 13 better education, better training, ongoing, and

 14 that's going to be one of our focal points moving

 15 forward.

 16 I guess in closing and kind of just

 17 recapping all of this, I think we can head off any

 18 disruption of services by being aggressively

 19 proactive. Let's continue to roll up our sleeves

 20 and identify the challenges prior to them becoming

 21 obstacles. Let's stay ahead of the curve through

 22 collaborative, meaningful discussions, and we will
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 1 all benefit and prosper. Thank you.

 2 COMMISSIONER DYE: Thank you very much.

 3 Aggressively proactive sounds good. Thank you.

 4 Mr. Crier?

 5 MR. CRIER: Thank you, Madam Chairman,

 6 again. Thanks for having this meeting.

 7 COMMISSIONER DYE: Thank you.

 8 MR. CRIER: We should get together more

 9 often like this. I'm sorry, just not because

 10 you're doing it but that way we can find out the

 11 problems going on within the industry ourself. As

 12 you heard, they were saying nice things about me

 13 earlier. Some of them are true. I was trained by

 14 Mr. Morgan and then by Mr. Parker and Keith

 15 Palmisano.

 16 Here in New Orleans, yes, we do get

 17 along very well. First starting out it was a

 18 little bit hard trying to adjust and understand

 19 the way, you know, we had to move to keep the work

 20 coming here in the Port of New Orleans. Since

 21 then we've been working together constantly trying

 22 to figure out what we have to do to attract more
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 1 ships here, more work here. The guy talked this

 2 morning, Mr. Anderson, dedicated truck lane. That

 3 sounds nice, but we've got to figure out where can

 4 we get that here in the Port of New Orleans. It

 5 would help out tremendously. Also increasing gate

 6 hours. Mr. Parker, Mr. Palmisano, whenever you

 7 need to, let me know. We're ready. We want the

 8 work no matter what it takes. Mr. Morgan taught

 9 me that a long time ago. He still calls me by my

 10 nickname out there, and we're going to leave that

 11 alone. He can call me whatever he wants. He gave

 12 me my first shot out here.

 13 But there's a couple other things that's

 14 going on. Railcars; I'm a commissioner with

 15 Public Belt Railroad also. Jim said something

 16 earlier that shocked me. We're not going to have

 17 any new rail cars until 2016. That's kind of

 18 shocking. Who do we have to talk to to see what

 19 we can do to change that? I mean if it's going to

 20 help us, it's going to help us all, so let's come

 21 together, find out who we have to get to and talk

 22 to about that. I don't know if you can take care
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 1 of that, Commissioner Dye. Set that meeting up

 2 and let us know where we have to be, I mean

 3 because that affects everyone in here.

 4 COMMISSIONER DYE: Yes, it does.

 5 MR. CRIER: Chassis problem; they were

 6 talking about that. We had a meeting just last

 7 week about the chassis here in the port of New

 8 Orleans. We're trying to find new ways of getting

 9 them repaired here. We met with most of the

 10 correctional facility people. We're trying to

 11 find something off terminal. If you are having

 12 problem with chassis, let me know. I'll get the

 13 other local president here, the maintenance guy,

 14 our district president who's out of Houston, and

 15 we'll figure out what we have to do to make that

 16 happen. I mean anything that's slowing down the

 17 progress for the port here in New Orleans, we want

 18 to make sure we take care of it. Not just New

 19 Orleans, anywhere. Let us know and if the ILA can

 20 help in any way, I'm going to see who I have to

 21 talk to, who I have to get with to make it happen.

 22 We're all for progress. I mean we're in business
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 1 to keep each other in business. If we're not

 2 here, you're not here, so let us know what we have

 3 to do to keep everything going together.

 4 Customs with PPE, Mr. Morgan. Sorry.

 5 You don't make stuff up about Customs like that.

 6 They're going to stop you the next time you go

 7 through the gate, so watch what you say about

 8 them. (Laughter).

 9 Turnaround time, Mr. Johnson, you're

 10 going to have to help us out. How can we get a

 11 30-minute turnaround time? Kind of shocking when

 12 I heard that. I know our average time is 45

 13 minutes to an hour, and you can do it in 30

 14 minutes? I'm willing to come anywhere to learn

 15 anything to make it better, so -- and that goes

 16 for any other problem area we have here. Give me

 17 a call, let me know what we have to do.

 18 Break bulk, like Mr. Palmisano said,

 19 well, we're trying to get more and more each day.

 20 It's a competition here in New Orleans here for

 21 break bulk, so I'm willing to work with him.

 22 Whatever we have to do to attract more here, we're
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 1 going to do it. The ILA is not going to be your

 2 enemy. We're here to work together, and we're

 3 going to do whatever it takes for us to work

 4 together. As you can hear right now, we're

 5 willing to do whatever it takes to get the work

 6 here. Like I said, a chassis problem, lower

 7 rates, you know, that's going to be one of the

 8 problems here. You don't want to go to anybody

 9 talking about a pay cut right now, but if it comes

 10 to it and we have to do it, I talked to a

 11 gentleman about the grain. ILA is ready to get

 12 back into the grain business. Whatever -- like I

 13 say, for the Port of New Orleans we're going to

 14 make sure it happens. We're going to do what it

 15 takes to make sure all of this is happening.

 16 The strategic task force; he wants to

 17 start, let me know. I want to be part of that. I

 18 want to help out to find out what we have to do to

 19 make your job a little bit easier and the work to

 20 be more attractive for you for the Port of New

 21 Orleans.

 22 I don't have much more to say because
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 1 like I say, I work with a bunch of great people,

 2 so we're getting along fine right now. I hear

 3 some ports are not getting along with the ILA. If

 4 I have to come and help with that, I'll try and

 5 come help with that also. (Laughter) Just let me

 6 know where you want me to be.

 7 COMMISSIONER DYE: Thank you. Thank

 8 you, Mr. Crier. We appreciate that. Thanks a

 9 lot. And Mr. John Crowley?

 10 MR. CROWLEY: Thank you, Commissioner

 11 Dye, and everyone else on the panel. Some really

 12 good information today on this panel here. I'm

 13 John Crowley and the Executive Director of the

 14 National Association of Waterfront Employers

 15 representing the interests of the marine terminal

 16 operator industry and stevedores. I represent

 17 them primarily in Washington, but have found

 18 particularly with this very important issue such

 19 as congestion, to get around a little bit further

 20 as I very much enjoy to do.

 21 We've all probably heard the saying, "If

 22 you've seen one port, you've seen one port," which
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 1 suggests that there is nothing that we can learn

 2 from each other, and I think that's the falsity of

 3 that phrase because while the character of our

 4 ports may be different, the turn times may be

 5 distinguished. The mechanics are very similar,

 6 and we can learn together, from each other, do

 7 things increasingly different.

 8 Mr. Harold commented about continuing to

 9 learn across North America and his organization

 10 and that's the type of thing to look at. You

 11 know, when I was in my former role in service I

 12 pulled into a number of ports globally, worldwide,

 13 and at that point in time I saw a crane and I

 14 said, "I understand this. Lifting boxes on and

 15 off a ship. Seems pretty simple to me," and I

 16 think that's the perception that has held so

 17 frequently, and it's so far from the case, and

 18 it's so much that I've learned over the last seven

 19 years of working with this industry with joy that

 20 there is so much that goes beyond that; lifting

 21 the box on and off.

 22 As maybe you are aware, I prepared an
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 1 article for the Journal of Commerce a couple of

 2 months ago on this subject of port congestion, and

 3 the thrust of that article was on market-based

 4 factors, and I'd like to expand on that a little

 5 bit this afternoon.

 6 The punch line to kind of get to the end

 7 is that I think with innovation and particularly

 8 innovation through transparency we can continue to

 9 improve. And I say this with confidence because

 10 let's face it, this industry can enjoy a

 11 reputation of innovation. It wasn't that long ago

 12 there was no such thing as a containerized

 13 movement. There was no such thing as the size of

 14 cranes that we see today reaching across and

 15 computerized with simulators behind them teaching

 16 people how to use them. We've come a long way as

 17 an industry with innovation, and we innovate on a

 18 lot of different levels.

 19 Well, maybe we need to innovate on some

 20 other levels, and that's what I would like to

 21 explore a little bit, but first let's take a look

 22 at the reach of the market- based forces that a
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 1 terminal operator faces. The life blood of a

 2 terminal operator is the terminal services

 3 agreement. The terminal services agreement is

 4 whereby the wages are paid and the capital

 5 equipment is purchased. The fees are paid to the

 6 Port Authority and the taxes to the government;

 7 the life blood.

 8 What goes into the terminal services

 9 agreement? Well, they start with the turn times

 10 of the vessel, and is that so peculiar, so

 11 unusual? The turn times of the vessel is a huge

 12 number. I've got to believe someone else in one

 13 of the other panels would know better, but they

 14 affect every single piece of cargo that came off

 15 of that vessel, every single customer, beneficial

 16 cargo owner, not just one. Not just one box will

 17 be conveyed by a rail car or by a chassis out

 18 their gates. They affect everyone, so this is a

 19 huge issue.

 20 It sets everything in motion, and the

 21 offloads are critical, and in today's world they

 22 continue to be driven by the increased size of the
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 1 vessels that have been continued to be mentioned

 2 here today. Well, you have 50-year

 3 life-expectancy cranes that, in order to get that

 4 new vessel in, are going to be sent to the farm

 5 yard at 45 years left of service in turn for a new

 6 crane that can reach a couple more across breast

 7 of the new container ship, and maybe lift more

 8 containers. Maybe computerize better, and

 9 immediately the cost of that in order to get that

 10 business in the first place is driven up

 11 significantly. But it's not enough to just look

 12 at the cranes as I suggested.

 13 The next phase after you get done with

 14 the turn time and really tied intricately to the

 15 turn time is the container yard or the cargo yard

 16 for our general cargo friends. And as we all know

 17 properties got more expensive, so to use that

 18 property either in continuous use or for storage

 19 becomes more expensive, but more than that it is

 20 the use of that property at the first instance in

 21 a smart and wise and in a new-process way so that

 22 you can operate five cranes on a large ship
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 1 instead of just one or two or three and not have

 2 drayage trucks running into each other at the same

 3 time. That's a degree of difficulty that's a

 4 whole lot higher and required a whole lot of

 5 innovation on the part of all these men and their

 6 women colleagues back on the piers including most

 7 especially labor. And those are things that had

 8 to happen in order to make that contract, that TSA

 9 work.

 10 But that price of that property is

 11 significant and so part of the TSA is to merge

 12 after free time, and we've talked about the merge

 13 a little bit here today but in other sessions, but

 14 the merge comes in different flavors. It can come

 15 free. It can come as charged by the shipping line

 16 or it can come as charged by the excess beyond the

 17 TSA that the terminal operator may be charging.

 18 Now, there may be different ways in innovation

 19 would say, "Let's do that electronically so that

 20 the cargo goes right to the beneficial cargo

 21 owner." They're going to charge representative

 22 therein.
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 1 They may do it an older way where we end

 2 up with a check or cash payment so to speak at the

 3 gate, but then you may find the terminal operator

 4 collecting for the terminal for the shipping line

 5 and all the way through the sequence. So, what is

 6 simple on its face, again, is not very simple.

 7 It's not just a crane. There's a whole process

 8 behind the scenes.

 9 But there's a lot of work being done in

 10 automation and a lot of capital expense going into

 11 automation, into new operating systems to remodel

 12 a terminal that may cost hundreds of millions of

 13 dollars to reorganize it so that it can better

 14 both move cargo around to facilitate the vessel

 15 turn time as well as the stacks as well as the out

 16 gate, but that can then increase, for example,

 17 charges with our CBP friends in order to move a

 18 piece of equipment. The costs are extensive.

 19 We get to the gate as the third main

 20 phase to the process; the turn time, the container

 21 yard, the gate. A lot of work has gone into

 22 managing that but you go back again to the TSA
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 1 that may categorize cargo as the first 100 boxes

 2 with this beneficial cargo owner, it goes on the

 3 first rail out of town. That's going to cost

 4 something that's built into the contract.

 5 Consequently the other boxes are going to take

 6 second fiddle to that. That's part of the

 7 contract. It's important to know that, what goes

 8 on behind the curtain, and it's not just the

 9 crane, right?

 10 You may have a big box store and this

 11 makes it easy potentially to put big box stores'

 12 commodities over in a corner and be able to come

 13 and go. You don't have to worry about a

 14 particular box as long as it's the correct

 15 beneficial cargo owner. That makes things easy.

 16 That certain terminal operator's been able to use.

 17 On the other hand others have gone to appointment

 18 systems to help manage the information flow, if

 19 not the arrival at a gate specifically, and the

 20 information flow being so important in charges and

 21 in Custom's output and clearance issues that that

 22 can be a critical item in the path.
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 1 So, we've got a significant path, a lot

 2 of activity behind that crane that goes on the

 3 facilities that these men and women operate, and

 4 that's kind of what I wanted to draw out as an

 5 example. That's a private-sector example.

 6 The government example's similar and

 7 that is the -- we'll continue to pick on Customs

 8 here today, I suppose. In terms of the scanning

 9 equipment, after 9/11 the U.S. declared as a

 10 government function not to be performed by the

 11 private sector the scanning of boxes. Equipment

 12 was purchased, staffing was provided, and that

 13 equipment, unlike the terminals on which they have

 14 operated, have not received any innovation or

 15 improvements. Instead as the budget runs out --

 16 yeah, the budget runs out, but there's been no

 17 innovation to find a way to do it better, cheaper,

 18 faster, as the men and women have continued to

 19 have to do under less cost operations, conducting

 20 more cargo operations under greater stresses from

 21 regulation. And so, we've got to call upon our

 22 government sector partners to pull through in the
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 1 same way that our great work forces are doing

 2 today. And by the way, where are their PPE? I'll

 3 bring that note on your behalf, Mr. Morgan. It

 4 was great.

 5 But so, I, at the beginning said my

 6 punch line was transparency and innovation. Today

 7 that TSA, and rightfully so, this competition,

 8 rates are incredibly important. They're

 9 incredibly sensitive between terminal operators in

 10 the major markets. They're even sensitive between

 11 ports, and within the Gulf, the South Atlantic,

 12 all the different regions, they're incredibly

 13 sensitive. And so, transparency's a hard concept

 14 to get our hands around, but without the

 15 transparency of knowing what kinds of charges that

 16 the terminal has agreed to receive its pay for,

 17 it's hard to have the next level of discussions

 18 horizontally after that vertical contract has been

 19 signed, but horizontally with both its

 20 co-competitors, any port or cross ports, but we

 21 have the virtue of having FMC-authorized shipping

 22 agreements that give us immunity to have the right
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 1 kind of competition discussions, but what is out

 2 in the open is the peer-to-peer discussions such

 3 as between terminal operators and the trucking

 4 community which are both self-contractors, and the

 5 contracts vertically are going to be sensitive

 6 price-wise. They're going to be driven. You

 7 drive up service one place, you're going to drive

 8 up costs someplace else. They inextricably linked

 9 in the significant contracts, so what a degree of

 10 transparency vertically and horizontally can drive

 11 further innovation in the way that we market our

 12 skills and our products and will help. And I

 13 think some of the best examples have been shown

 14 here in other ports, in other regions, driven by

 15 the Port Authorities that have albeit after some

 16 congestion has arisen and to Houston's credit has

 17 driven ahead of the game a little bit I think.

 18 But the Port Authority's been able to bring people

 19 together, and particularly I'm going to say though

 20 that the Port Authorities, without skin in the

 21 game, those that aren't operators, they are

 22 particularly privileged in being able to arm twist
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 1 all members of the larger community to the table

 2 whether they be from beneficial cargo owner to

 3 shipping line to terminal operator to trucker.

 4 They come to the table and work out issues on the

 5 "You've seen the one port, you've seen one port"

 6 theory, and I give a lot of credit to those of our

 7 colleagues that are able to do that.

 8 I guess one final comment on this theme

 9 of transparency and innovation; a couple of our

 10 colleagues earlier today mentioned P-3s, and I've

 11 got a little bit of experience with P-3s. I've

 12 got some views, but suffice it to say that if we

 13 look at P-3s as a new kind of government contract,

 14 Madam Commissioner, they won't work. P-3s can

 15 work. There's investment dollars out there, but

 16 the investment dollars are not a quid pro quo for

 17 a service. They're investment dollars to take a

 18 risk to do something different in return for some

 19 maybe asymmetric benefit, and both the government

 20 circles and the private sector circles have to be

 21 flexible enough to see across the lines of what

 22 their traditional gains and losses are to
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 1 appreciate that there's a risk and there's going

 2 to be a cost to that risk, and it's not going to

 3 be a simple quid pro quo. So, I think that P-3s

 4 are a great tool, but the people on both sides of

 5 the equation and both sides of the negotiating

 6 table have to be flexible and agile as they look

 7 at what the benefit of the bargain really is, and

 8 that is a very hard leap to make.

 9 So, in conclusion, all of this centers

 10 around money, and anything that has to do with

 11 money is very hard, and we've all got fiduciary

 12 duties within our respective organizations;

 13 Trustees for accounts. There's no one here that

 14 doesn't. We've got new investors in our business

 15 that aren't family investors, that are

 16 particularly attuned to fiduciary-duty

 17 responsibilities and how their investment is being

 18 returned.

 19 Life has only gotten more difficult.

 20 It's not gotten easier. That doesn't mean that we

 21 give up. It means that we continue to find new

 22 ways of innovating, not only through equipment and
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 1 technology but also through the methodologies,

 2 modalities in which we determine how we get our

 3 job done. I have confidence that we can do it as

 4 an industry. We've got the reputation of being

 5 innovators and being can-do and making the job get

 6 done, and with that my piece has been said. Thank

 7 you.

 8 COMMISSIONER DYE: Thank you. Thank you

 9 very much, Mr. Crowley. My economist will be

 10 giving you a call. I appreciate it very much and

 11 Mr. Parker, Mr. Palmisano, I look forward to

 12 learning more about what you described and what

 13 you're going to be doing here. It sounds really

 14 good, and I hope you'll be in touch. I look

 15 forward to it. Thank you.

 16 MR. CROWLEY: Thank you.

 17 COMMISSIONER DYE: Anything else,

 18 gentlemen? Mr. Crier, is there anything else?

 19 MR. CRIER: No, that's it.

 20 COMMISSIONER DYE: Good job. Thank you

 21 very much. I do appreciate it.

 22 I am going to, the shipper and OTI panel
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 1 will come forward. Ladies and gentlemen, as I

 2 said this morning, our shippers and intermediaries

 3 get the last word today. So I'd like to welcome

 4 Kristi App, Vice President, Business Development

 5 and Customer Service, JW Allen & Company, from

 6 Kenner Louisiana; Donna Lemm, Vice President,

 7 Sales and Marketing, Mallory Alexander, from

 8 Memphis, Tennessee; Mr. Dale Street, Zen-Noh Grain

 9 Corporation in Covington, Louisiana; Mr. Richard

 10 Chriss, who's Executive Director at the American

 11 Institute for International Steel in Falls Church,

 12 Virginia; Mr. Sean Duffy, Executive Director of

 13 Big River Coalition in New Orleans; and Mr. David

 14 Kearney, President of The Kearney Companies, New

 15 Orleans.

 16 Thank you very much, I appreciate it.

 17 And Kirsti, you can begin. Thank you, go ahead.

 18 MS. APP: Thank you, Commissioner.

 19 Thanks again for coming. I was very excited when

 20 I saw you in D.C. and they had announced the

 21 forum. I think it provides a great opportunity

 22 for all the stakeholders in New Orleans and all
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 1 the ports along the Gulf Coast to get together and

 2 try to think outside the box and look for

 3 solutions to a lot of these problems that we have.

 4 And in saying that, it was funny because

 5 when Donna and I started talking about it, you

 6 were like, well, what issues do we have? What

 7 problems? And we both came to the conclusion that

 8 there are issues, but we really need to look at

 9 what opportunities are out there and to position

 10 ourselves to be the best, and to be able to move

 11 efficiently and not only for all of us as

 12 stakeholder, but especially for the shippers and

 13 the importer/exporters that sometimes - are at

 14 both ends of the supply chain.

 15 I'm sitting here with a few hats. I'm

 16 also the President of the Freight Forwarder and

 17 Brokers Association of New Orleans, and so when we

 18 were talking at our meetings, I had been asked to

 19 just discuss certain points that affect us here

 20 not only in New Orleans, but because New Orleans

 21 is a very intermodal port, a lot of our cargo

 22 still goes east- west and to talk about
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 1 congestion, which is obviously a huge problem on

 2 the West Coast right now. With having you here, I

 3 just wanted to impress upon you how big of a

 4 burden this is for our shippers.

 5 The congestion has led to not only

 6 congestion, but you have your cargo stuck in it,

 7 but you have the detention, the demurrage, and all

 8 of that that it builds up and that has been a real

 9 burden on us and our customers. I realize it's

 10 like if you had asked somebody prior to Katrina,

 11 tell me what you're going to do when a hurricane

 12 hits? Like, I know it's not going to happen, and

 13 I think it's sort of the same thing now with the

 14 congestion problems, they're so epic. They really

 15 are. I think Donna mentioned earlier, it's sort

 16 of an implosion.

 17 I'd like to request that not only the

 18 carriers, but the ports and the terminal operators

 19 work from here on out, like they did post-Katrina

 20 and post-Sandy and be able to publish and share

 21 with the industry contingency plans, when

 22 congestion issues arise. I'd also like to ask for
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 1 more clarification for a lot of times from the

 2 carriers for what we've seen when they announce

 3 congestion surcharges.

 4 I think sometimes there's a lot

 5 confusion on the industry, speaking more from the

 6 shipper side, clarification of what they are,

 7 which ports they apply to, and how best to really

 8 keep our customers informed of what's at risk when

 9 there is congestion and the surcharges that can

 10 arise because they are quite significant.

 11 That being said, I'd like to dig down

 12 into New Orleans. This is where my office is. I

 13 work for JW Allen & Company. We're a Freeport

 14 customs broker, global logistics provider, and

 15 we've been in New Orleans since 1932. Based on

 16 that we have the great privilege of representing a

 17 varied amount of customers and industry. We

 18 handle everything from frozen poultry to chemicals

 19 to hot sauce, alligator skins, live baby turtles,

 20 so we see it all. And with that the good thing is

 21 we get a very good snapshot of problems that occur

 22 along the whole supply chain.
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 1 And with New Orleans in general, I was

 2 so glad to hear -- especially Mr. Crier and James

 3 Parker and Keith -- everybody mentioned getting

 4 together and working together. I think it's key.

 5 I think one of the reasons I was so excited for

 6 this forum because I think it gave the push to all

 7 of the stakeholders. We all really needed to get

 8 together and talk and try to figure out how to

 9 tackle New Orleans' issues. You know, I'd love to

 10 see a working group with CBP, labor, the terminal

 11 operators, FMC, truckers -- all the intermediaries

 12 -- because I think we've got a lot of great people

 13 in this community, with a lot of experience that

 14 can think outside the box and look at solutions to

 15 our problems.

 16 Earlier today Gary spoke about the

 17 Volkert Study that was done, I'm anxious to hear

 18 more information about that, but at the same time,

 19 flyovers cost a lot of money. Here in New Orleans

 20 we need to look at other ways to alleviate

 21 congestion. We don't have terminal congestion,

 22 but we have infrastructure congestion, all the
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 1 roadways leading into and out of the port.

 2 For certain shippers, when I have

 3 exports leaving a plant down in Belle Chasse the

 4 gate closes at 4:00 or 5:00, whichever the time

 5 may be. But if, due to traffic and just

 6 congestion getting in and off the interstate to

 7 try to get into the terminal, if they're not on

 8 the road or if they haven't hit it by 2:00 or

 9 2:15, they just go back to the depot, drop it, and

 10 do a next-day delivery.

 11 And for us that's a cost. That's an

 12 extra leg, you get a next-day delivery charge.

 13 But that being said, what are things we can look

 14 at? What are things we can do? Is it something

 15 like in South Carolina where they did an inland

 16 port? We have all these plants up in Baton Rouge,

 17 having something up there? But it's just things

 18 to look at, you know, I'm not going to volunteer

 19 on the port's property -- even though I know Gary

 20 likes me, he doesn't like me that much -- but

 21 anything down off of France Road, is there a way

 22 to rail things into the port as opposed to trying
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 1 to get all the truck traffic up/down, the lower

 2 Garden District area?

 3 I think this here, and I think

 4 everything we've spoken about -- and I'm almost

 5 glad we're at the end because it's been really

 6 great to hear everyone talk and all these ideas

 7 come to a head, and I look forward, as well, to

 8 working with everybody involved to try to come to

 9 a solution that works best for everyone involved.

 10 COMMISSIONER DYE: Thank you very much.

 11 Donna?

 12 MS. LEMM: Thank you, Commissioner.

 13 It's a pleasure to be here and just to take a few

 14 minutes to share with you all some of the

 15 challenges that we see here in New Orleans, some

 16 of the challenges we see in the Gulf, and if we

 17 can take just a few minutes to talk about what we

 18 also see on a national scale.

 19 My name's Donna Lemm. I'm the vice

 20 president of sales for Mallory Alexander. We're a

 21 third-party logistics company. We do have a large

 22 constituency of shippers on the agriculture side
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 1 and on the forest product side and so a lot of our

 2 focus, often, when speaking deals with our

 3 exporters.

 4 This morning early we heard from all of

 5 the folks at the port authorities throughout the

 6 Gulf and it was interesting because the theme from

 7 all of them were that things were running fairly

 8 smoothly. Now, as Kristi mentions, we do have

 9 problems, I think Gary mentioned last-mile

 10 problems with trucking; we do. But for the most

 11 part, the truth of the matter is our movements and

 12 our shipments, our export shipments through the

 13 Gulf ports are going fairly well. That's the good

 14 news.

 15 We are reading every day about the

 16 problems we are experiencing, especially in L.A.

 17 And in Long Beach. They're very, very real.

 18 About two weeks ago, we held a forum in Memphis,

 19 it was Memphis Transportation Club. We had one of

 20 the major furniture shippers in the United States

 21 talking about how they're crippled. As an NVOCC,

 22 Mallory has customers that are crippled. They're
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 1 actually trying to get freight out of L.A./Long

 2 Beach sometimes for 2 weeks, as long as 22 days,

 3 just to get from berth onto a chassis. Generally

 4 that container is buried, get that unburied

 5 container, and moving it on to the rail, 21 days

 6 is a tremendous amount of time.

 7 So when you hear and you read that

 8 things are critical, I agree with the two carriers

 9 this morning that were ocean container carriers

 10 talking about the critical situation that we're

 11 experiencing today. It's real. This major

 12 importer in Memphis talked about losing jobs.

 13 There are folks that are going to go down and,

 14 unfortunately, at least for the immediate future,

 15 we don't see a lot of relief in sight. But what I

 16 did hear today, and it's something that in taking

 17 the port tour a couple of weeks ago here in New

 18 Orleans, what I heard today was a Gulf port

 19 coastal fluidity situation.

 20 We heard you talk about, we invite the

 21 business. There's an appetite for business. And

 22 I can tell you, as a native New Orleanian, I want
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 1 to see New Orleans succeed, our Gulf ports thrive.

 2 And so often we're sitting there in Memphis,

 3 Tennessee -- you heard the gentleman talk about

 4 Dallas, moving east-west gateways every day. I

 5 promise you, in Memphis we're moving east-west

 6 gateways every day. We need to start thinking

 7 southbound.

 8 Now, as Gary said this morning, the

 9 biggest problem that we face is import containers.

 10 Ocean carriers are in the business to balance

 11 trade, to balance equipment, we need that

 12 equipment. I can tell you, on the export side, we

 13 move a lot of cotton, we move grain, soybeans, we

 14 move a lot of forest products. We have moved our

 15 paradigm; it's moved backwards, back to the early

 16 '90s when we used to railcar everything. We're

 17 back in railcars and we're transporting on our

 18 coast as often as we can.

 19 So I guess, in summary, because you've

 20 heard a lot today -- a lot that we agree with:

 21 The problems and the challenges on chassis,

 22 trucking shortages, mega-ships, all of that,
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 1 absolutely real.

 2 Here in the Gulf, you heard that we

 3 don't have as many mega-ships to deal with. We

 4 may have M&R issues on chassis, but at least we

 5 have them. So I'm a little bit encouraged by what

 6 I heard today. I think certainly for me, as one

 7 forwarder, we can do our part. I'm all about any

 8 forum that will take stakeholder, that we can

 9 share and brainstorm. We've seen some successes

 10 in the past in doing that and, again, I just

 11 appreciate the opportunity to share with you guys

 12 a few words about what we're experiencing every

 13 day. Thank you.

 14 COMMISSIONER DYE: Thank you very much.

 15 Mr. Street?

 16 MR. STREET: First off, let me say thank

 17 you for letting me be a part of this.

 18 COMMISSIONER DYE: Of course.

 19 MR. STREET: And I am actually in the

 20 bulk grain business, so a lot of these problems

 21 talked about today don't apply to us. Most of our

 22 grain comes down by barges, but we do have issues
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 1 with rail deliveries this year, more so than we

 2 have had in the past years. And I think it's the

 3 oil industry again taking up the equipment and the

 4 power. But it's very interesting listening to all

 5 of this today, but I really don't have a lot to

 6 contribute.

 7 COMMISSIONER DYE: So you're happy with

 8 your business?

 9 MR. STREET: Yes.

 10 COMMISSIONER DYE: Good. Well, we're

 11 glad to hear that.

 12 MR. STREET: Yeah, I'm in the right

 13 business.

 14 (Laughter)

 15 COMMISSIONER DYE: I should say. Thank

 16 you. Mr. Chriss?

 17 MR. CHRISS: Thank you, Commissioner

 18 Dye. I'd like to thank the Federal Maritime

 19 Commission and yourself for this important public

 20 forum, and I'd like to ask that my comments be

 21 submitted for the record.

 22 I very much appreciate this invitation
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 1 to this discussion. And especially I was really

 2 happy to be encouraged to engage in a broad

 3 discussion of ideas, so that's what I hope to do.

 4 And with that, just to give a brief idea of my

 5 background, how I approach these issues, I'm a

 6 trade attorney by training and perspective. Also

 7 a trade negotiator. I spent six years with the

 8 Office of the United States Trade Representative

 9 as an assistant general counsel and a trade

 10 negotiator and was privileged to represent the

 11 United States in trade negotiations around the

 12 world. So that's generally my overall

 13 perspective. So I'd like to take that perspective

 14 and then apply it to some of these practical

 15 issues that we're talking about.

 16 First, a word about my organization, the

 17 American Institute for International Steel. The

 18 AIIS is a unique organization due to its diverse

 19 and comprehensive character. Our 100 members

 20 comprise virtually every aspect of the steel

 21 supply chain: Shippers, traders, stevedores,

 22 suppliers, exporters, major port authorities,
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 1 including several of the great port authorities

 2 represented here today, including, of course, New

 3 Orleans; producers, service centers, railroads,

 4 trucking companies, custom experts, you name it.

 5 Every day of the year, the men and women

 6 who are part of the AIIS family load steel on and

 7 off ships. We handle it and store it on our

 8 docks. We transport it across oceans and

 9 waterways in trucks, railcars, and much, much

 10 more.

 11 The subject of today's forum, Improving

 12 the Efficiency and Effectiveness of Our Global

 13 Supply Chains, is exceptionally important. In

 14 many ways, it is the most critical and relevant

 15 trade related issue of our time. The 160 member

 16 nations of the World Trade Organization recognize

 17 the compelling linkages between competitiveness,

 18 trade facilitation, and global supply chains when

 19 last December they, by a consensus, agreed to a

 20 new multilateral trade facilitation agreement,

 21 which was the first successfully concluded

 22 agreement in the WTO's 19-year history.
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 1 Most unfortunately, implementation of

 2 this historic agreement is being held up by one

 3 country, India, over an unrelated matter relating

 4 to food security, even though India favored the

 5 agreement in the first place. Recent significant

 6 comprehensive studies by the World Bank, the World

 7 Economic Forum, the Organization for Economic

 8 Cooperation and Development in Paris, and others

 9 affirm the tangible economic benefits of efforts

 10 to facilitate trade, to make trade simpler,

 11 easier, faster, and less expensive.

 12 Improving the efficiency of our global

 13 supply chains goes hand-in-hand with the global

 14 effort to facilitate trade. I believe that this

 15 session serves the essential goal of broadening

 16 and deepening our understanding, of what our

 17 concerns and efforts should address, and how these

 18 efforts should be organized on both a policy and a

 19 practical level.

 20 So let me just turn quickly to the

 21 policy framework. With regard to the policy

 22 framework, recent research has shown that the
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 1 central factor for the ability of a country to

 2 participate in supply chains is the competence of

 3 local trade facilitation and logistic services.

 4 In competitiveness terms, research shows that the

 5 lack of efficiency in local trade facilitation and

 6 logistics proficiency is equivalent to an

 7 additional tax.

 8 For several years the World Bank has

 9 developed and published a Logistics Performance

 10 Index, the LPI, of 6 criteria for about 150

 11 countries. These criteria serve as an

 12 international scorecard to rank a country's

 13 logistic performance. And that scorecard is based

 14 on six key dimensions that shows comparative

 15 performance in logistics.

 16 Let me just quickly tell you what they

 17 are. Number one is efficiency of the clearance

 18 process. It's speed, it's simplicity,

 19 predictability, and so forth, of border control

 20 agencies including customs. Second is quality of

 21 trade in transport related infrastructure. We've

 22 been talking about this all day: Our ports, our
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 1 railroads, roads, information technology. Third

 2 is ease of arranging competitively priced

 3 shipments. Fourth is competence and quality of

 4 logistic services, that is how the transport

 5 operators and the customs brokers do their jobs.

 6 Fifth is the ability to track and trace

 7 consignments. And number six is the timeliness of

 8 shipments of reaching destination within the

 9 scheduled or expected delivery time. We've also

 10 talked about that quite a bit.

 11 So let's take a look at how the United

 12 States, broadly speaking, has faired in this

 13 analysis. Overall, the United States ranked 14th

 14 in logistics performance behind countries like

 15 Denmark, Belgium, United Kingdom, Japan, Germany,

 16 Canada, and Ireland. In ease of customs

 17 clearance, the United States ranked 19th, in ease

 18 of shipment 20th, in logistic services we ranked

 19 14th. In timeliness of shipments we ranked 18th

 20 and in domestic logistics cost we ranked an

 21 abysmal 144th out of 150 countries.

 22 As a former trade negotiator and U.S.
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 1 Trade official I know that the United States does

 2 a lot of things very well, in terms of

 3 successfully advancing open markets and creating

 4 jobs through trade. But more and more of the

 5 world's goods and services moving in international

 6 commerce, with more and more of our services and

 7 goods moving in international commerce we clearly

 8 have our work is cut out for us, if we want to be

 9 in top competitive form in an increasingly

 10 competitive world.

 11 How do we begin to do this and where

 12 does this work start? I might suggest, Madam

 13 Commissioner, and colleagues that we start with

 14 this forum, but recognize that this is only a

 15 start and we should take the insights and guidance

 16 developed here and use them as a baseline. That

 17 is, we should broaden and deepen the conversation

 18 started here and carry it forward throughout this

 19 coming year and the years ahead, and especially in

 20 light of the major trade policy developments on

 21 the horizon, such as the prospect for a

 22 successfully completed Transpacific Partnership
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 1 Regional Trade Agreement.

 2 As we know, a successfully concluded TPP

 3 agreement may at some point become more than a

 4 regional trade arrangement for the current 12

 5 nations participating in the talks. The TPP may,

 6 in fact, become a platform for a broader and

 7 hopefully more comprehensive regional economic

 8 cooperation regime. By itself, a successfully

 9 concluded TPP agreement will likely present new

 10 challenges and opportunities for the United States

 11 and for the Gulf region, given the enormous

 12 significance of the Gulf region's ports to our

 13 export and import dependent economy.

 14 The new trade relationships and the new

 15 trade patterns that would flow from a broader

 16 TPP-based trade platform would likely have even

 17 more significant consequences for the economy of

 18 the Gulf region, and we should start thinking now

 19 about this and how to prepare for these

 20 developments by taking a clear, hard look at the

 21 Gulf region's trade related infrastructure, our

 22 customs procedures, our supply chain logistics,
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 1 our services and performance, the availability and

 2 quality of transport services, and the other

 3 factors that we've talked about today and the

 4 other factors that were addressed in those six

 5 criteria that I mentioned earlier.

 6 One of the reasons I would suggest the

 7 World Bank's analytic framework, that I just

 8 mentioned, is so useful is because it does

 9 something that was suggested in a 2012 World

 10 Economic Forum analysis of the logistics and

 11 supply chain industry. It unpacks the sources of

 12 potential supply chain costs. It allows us to

 13 target them as areas that will yield immediate

 14 improvement.

 15 Here I would like to focus on a couple

 16 of practical issues and I'm just going to skim

 17 over these just really quickly because we've been

 18 talking about these all day. And, of course, the

 19 major one is the lack of sufficient truck

 20 availability to either catch cargo in direct

 21 discharge or to catch cargo for movement to a

 22 temporary storage facility within a port.
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 1 The availability and quality of inland

 2 transport of cargo is such an enormous factor

 3 affecting trade growth through our ports and it's

 4 not just a Gulf problem, it's a national problem.

 5 And again, earlier today we heard the numbers

 6 about the tens of thousands of fewer truck drivers

 7 than we really need. This insufficiency imposes

 8 costs and the costs associated with insufficient

 9 truck capacity cascade throughout the steel supply

 10 chain. There are increases in port charges, there

 11 are cost associated in the delay of delivering the

 12 cargo to the final customer, such as interest

 13 costs due to invoicing and payment delays. And,

 14 of course, there's the really unquantifiable, but

 15 very real cost of disgruntled customers and their

 16 cost for delayed production.

 17 It is practical issues such as this that

 18 help explain how the United States ends up with an

 19 overall logistics performance index score of 14,

 20 an ease of shipment score of 20, and an even worse

 21 logistics ranking of 144 out of 150 for domestic

 22 logistics costs.
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 1 The good news is that this and related

 2 issues are not intractable. We know that things

 3 like improved transportation capability, human

 4 capital improvements like upgrading manpower

 5 skills, and innovations like new information and

 6 communication technology all facilitate the

 7 movement of trade through our ports. And, of

 8 course, we have the unquantifiable, but very real,

 9 and outstanding attitude of Mr. Crier when he

 10 mentioned, we'll do whatever it takes whenever we

 11 can, to make it happen.

 12 We look forward to addressing these and

 13 related concerns with the Commission in the future

 14 and to being part of the solution. So, on behalf

 15 of the AIIS and our extraordinary member

 16 companies, our organizations, our individuals, and

 17 our partners, thank you again for the honor to

 18 contribute to this public forum.

 19 COMMISSIONER DYE: Thank you very much,

 20 Mr. Chriss. Mr. Duffy?

 21 MR. DUFFY: Thank you, Commissioner Dye.

 22 I really appreciate you including me here,
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 1 especially after telling you I would have to call

 2 you right back because I was on the other line. I

 3 really appreciate that.

 4 COMMISSIONER DYE: Now, see, I had

 5 forgotten all about that.

 6 MR. DUFFY: I'll never forget it and I

 7 wrote down your name and I was looking at it like,

 8 oh, my god, did I really just do that?

 9 (Laughter)

 10 COMMISSIONER DYE: It never happened.

 11 MR. DUFFY: If you understood my life,

 12 I'd hate to admit that it may happen again, but I

 13 apologize on the front end.

 14 As you can tell, I like to interject a

 15 little humor when I speak. It's been a long day

 16 and this was along week for me. I was in Chicago

 17 talking to shippers and grain interests and the

 18 Farm Bureau and energy -- and truckers, and all

 19 looking at the record grain harvest, all concerned

 20 about the lower river. And it was an honor to be

 21 able to tell them that we're ready to move cargo.

 22 The channel's in great shape, we just need to get
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 1 the cargo down the river system.

 2 But as I was leaving Chicago, Nik

 3 Wallenda was preparing to walk the tightrope

 4 across the river and I remember thinking, first of

 5 all, that Chicago is the Windy City and I was in a

 6 lot of very strong winds and cold weather. I'm a

 7 Southern boy and it was pretty cold. But what I

 8 was thinking about was, when I landed in New

 9 Orleans and our plane made it to the jetway and we

 10 were delayed for an hour because there was a

 11 six-inch gap from the plane to the jetway and we

 12 could not traverse across it. They would not

 13 allow us.

 14 I volunteered. My son and I could

 15 probably lift everybody across it, and they

 16 wouldn't have anything to do with it, so we were

 17 delayed for an hour to move down. And this

 18 morning when I woke up, Nik Wallenda was

 19 successfully crossing the channel, so anyway,

 20 that's my story and I'm sticking to it.

 21 (Laughter) You know, I started

 22 working on the
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 1 Mississippi River and I want no trouble

 2 with ILA, Mr.-Crier, but I started driving a

 3 forklift when I was 12 years old at Perry Street

 4 Wharf, and helping the watermen and helping the

 5 gearmen, and the waters from the Mississippi River

 6 run through my veins and it makes me kind of

 7 unpredictable and cloudy and hard to figure out

 8 and hard to read at times, but as I sit here today

 9 I really appreciate this.

 10 I'd like to talk about the Mississippi

 11 River system, the five deep draft ports on the

 12 Mississippi River, and this is where a little

 13 local knowledge is sometimes important and

 14 dangerous. We have, starting up river, the Port

 15 of Baton Rouge, the Port of South Louisiana: The

 16 number one tonnage port in the Western Hemisphere,

 17 number one energy port, based on the new WRDA

 18 criteria, the Port of New Orleans and the Port of

 19 St. Bernard and the Port of Plaquemines. When you

 20 add the tonnages for those ports, we approach 500

 21 million tons.

 22 That makes us number six in the world.
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 1 Because we're often broken down into those five

 2 ports, and I know the ports work very closely

 3 together, there's a partnership where they meet

 4 monthly and they work on it, but when the tonnage

 5 figures are listed, they're listed by each port

 6 and we need to think about the importance of

 7 commerce that moves through this river system.

 8 Clearly, we've talked a lot about the

 9 Panama Canal and I'm going to have to do a little

 10 more of it, but the Big River Coalition represents

 11 members in 31 states, depend on navigation on the

 12 Mississippi River. We focus on issues like

 13 dredging, the Harbor Maintenance Trust Fund,

 14 funding. Deepening the Mississippi River to 30

 15 feet really started with the Big River Coalition

 16 and its Board and as I speak of my Board -- Mr.

 17 Street is one of my Board members and I was very

 18 happy to hear that he was happy. That's great

 19 news. I made a note.

 20 COMMISSIONER DYE: Yes, it is.

 21 MR. DUFFY: So as we also look at

 22 coastal restoration, if you live in Louisiana and
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 1 you follow coastal restoration, you don't see it

 2 in the press anywhere, but this year alone,

 3 through navigation and work with the Corps, we're

 4 creating 1,500 acres in the Mississippi River

 5 delta. The state master plan has so far not

 6 created any. So it's important to know that we're

 7 playing a part and trying to protect the river

 8 channel, trying to protect our infrastructure, and

 9 doing that through the beneficial use of dredge

 10 material. The last 5 years we've done up to 3,500

 11 acres, so at about an average of 700 acres a year

 12 in the last 5 years through a project that we

 13 started.

 14 I'll talk about WRDA 1986 because it's

 15 important for three reasons to me that I can

 16 always remember off the top of my head. The first

 17 is it created the Harbor Maintenance Tax, which is

 18 very important to maintaining our channels. A

 19 tax, an abhorrent tax -- the rate changed in 1990,

 20 it went from.04 to.125. The sell in Washington

 21 was that we were going to go from paying 40

 22 percent of core operations and maintenance to
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 1 paying 100 percent. It sounded good at the time,

 2 I don't think anybody knew what was getting ready

 3 to happen, but let's just say I'll talk more about

 4 that.

 5 It also authorized the river channel to

 6 be deepened to 55 feet, so as we sit here today,

 7 we don't need authorization to be deepened. We're

 8 at 45 feet; I'll come back to that. The other

 9 thing that was in WRDA '86 was in the fine print,

 10 there was a threshold established of 45 feet and

 11 that any channel deeper than 45 feet required a

 12 50/50 cost share with the federal government and a

 13 non-federal sponsor. In Louisiana, that's the

 14 Louisiana Department of Transportation.

 15 That threshold was just changed in WRDA

 16 2014, much to Senator Vitter's efforts, other

 17 members of our delegation, and our work, so now

 18 the threshold for full federal maintenance is 50

 19 feet. Based on that study, the river was deepened

 20 from 40 feet to 45 feet. It stopped at 45 feet

 21 because of that threshold, now that threshold's no

 22 longer there and because of that we're working on
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 1 a deepening effort. Because we have 1981

 2 economics, the economics of the river being

 3 deepened to 50 feet -- not 55, but 50 feet -- has

 4 to be redone, a new study done. The Corps, as Mr.

 5 LaGrange referenced -- another one of my happy

 6 Board members -- earlier, he discussed that the

 7 Corps now has that project. There's an actual

 8 project for that feasibility study. We've worked,

 9 we're working on it -- we need $1.5 million from

 10 the state, $1.5 million from the Corps. We're

 11 working, we have $750,000 from the state right

 12 now, we're working on the second portion and we'll

 13 be working on the federal funding as we move

 14 forward, too.

 15 I think everybody knows that the

 16 economics for this river system is going to be

 17 there. That additional five feet of cargo is

 18 going to show a huge return. As Mr. LaGrange

 19 referenced earlier, we had a study done by Dr.

 20 Tim Ryan -- Commissioner, I went home and got you

 21 a copy of that.

 22 COMMISSIONER DYE: Thank you very much.
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 1 MR. DUFFY: The study that Dr. Ryan

 2 referenced did show an 89 to 1 benefit cost ratio,

 3 getting down that additional 5 feet from 45 to 50

 4 feet. The Corps of Engineers in New Orleans uses

 5 an average on most projects of 20 to 1 for the

 6 lower Mississippi River, so it's safe to assume

 7 it's going to be somewhere there. The economics

 8 are going to show -- I especially remember, a 1981

 9 chief's report showed economics that justified

 10 deepening to 55 feet, 20 to 25 years before

 11 anybody thought the Panama Canal would ever be

 12 deepened to 50 feet. So now, as we lit the match,

 13 we're sure that will be forthcoming.

 14 The things that I want to talk about

 15 also are on our investment in the country. I'm

 16 going to end with a quote that really highlights

 17 that, but the Corps of Engineers budget -- going

 18 back to 1956 -- about $70 a person was being

 19 invested in our infrastructure. And then to the

 20 early '70s it was $56 a person. That was the

 21 capacity building of our infrastructure, our locks

 22 and dams, our waterways, the future that we lived
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 1 on for decades. But it's time to reinvest in

 2 that.

 3 Right now we invest $18 a person and I

 4 can't say it any other way, I used to be a coach.

 5 I don't want to be out of the top ten, but that

 6 puts us at number 143 in the world. We're just in

 7 front of Greece. If we can't see why that's a

 8 problem, then we've got a really big issue here.

 9 I mean, 143, $18 a person? Come on. Look at the

 10 shape of our country and our locks and dams and

 11 our waterways.

 12 In 2012, President Obama's We Can't Wait

 13 Initiative streamlined deepening on five East

 14 Coast ports, based on a report done by the Corps

 15 Institute of Water Resources, the post-Panamax

 16 preparedness for the country and it talked a great

 17 deal about containers and containers are great

 18 cargo. We move a lot of bulk cargo out of the

 19 Mississippi River. A lot of both, a lot break

 20 bulk cargo. It's whatever we can move, we want to

 21 move it, we don't want to focus on one, but bulk

 22 cargo is very important to the river, the grain
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 1 cargos, the energy cargos, the coal, the iron ore

 2 cargos that we move on the system.

 3 From that report, We Can't Wait

 4 Initiative looked at deepening on five East Coast

 5 ports. There was no plans to deepen anything on

 6 the Gulf. We went and met with the Corps

 7 Institute of Water Resources and spoke to them and

 8 they agreed that they should have looked at the

 9 Mississippi River. They should have looked at the

 10 importance of bulk cargos, especially when we hit

 11 them with some economics.

 12 Informa Economics did a study that

 13 showed that being able to move post-Panamax

 14 vessels at 50 feet out of the Mississippi River

 15 would reduce soybean transportation cost by about

 16 35 cents per bushel. I was meeting with Chinese

 17 investors last week, one of them ships over 500

 18 million tons of soybeans and when I said 35 cents

 19 a bushel, he did not need an interpreter to

 20 understand me. He understood me very well.

 21 As we sit here today we're looking at

 22 deepening projects and if I can get them right off
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 1 the top of my head, from New York, New Jersey,

 2 Boston, Baltimore, Virginia, Hampton Roads,

 3 Charleston, Savannah, Jacksonville, and Miami. We

 4 have to be looking at the Gulf coast. A figure I

 5 came on a couple of weeks ago that always stuck me

 6 was, in 2009 the GDP contributed from the 5 Gulf

 7 states was $2.46 trillion, 17 percent.

 8 We're often looked at because we don't

 9 have the huge population that other areas have,

 10 but our contribution to the GDP needs to be taken

 11 seriously. It's time we look at the importance of

 12 the river system. When I go up the river system,

 13 people understand the importance. We have to

 14 begin to look at investing.

 15 Commissioner Dye, I'm going to leave you

 16 with one other thing and recently in WRDA we

 17 talked about the success of WRDA and one of the

 18 things it did was establish a threshold target for

 19 the Harbor Maintenance Tax to be funded, to be

 20 allocated out at 67 percent. The allocation for

 21 this year, as we sit here today, the House

 22 Appropriations passed that target level with an
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 1 amendment. The Senate is still $110 million

 2 short.

 3 As we sit here today, the surplus from

 4 that Harbor Maintenance Trust Fund -- remember, in

 5 1990 it went up to fund 100 percent -- $9 million

 6 is that surplus. Nine million dollars. There's a

 7 lot of nice ways to say it, unallocated,

 8 unaccounted for, stolen could be thrown around,

 9 but $9 million is not there that should have gone

 10 to maintaining our navigation infrastructure. So

 11 the WRDA bill looks to establish these target

 12 levels, 67 percent; it goes up 2, 3, 4 percent, so

 13 in 2025 we get the full allocations.

 14 We were just part of a letter writing

 15 campaign with the U.S. Chamber and the American

 16 Association of Port Authorities that helped send a

 17 letter with 400 signatures to it. I'd like to

 18 leave you with a copy of that, Commissioner.

 19 COMMISSIONER DYE: Thank you, Sean.

 20 MR. DUFFY: And I think of that 400

 21 signatures, we were probably able to add about 100

 22 of them. So we're very much working with our
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 1 partners there. It's a simple thing. Hit the

 2 target. The WRDA bill, as you know, passed 503 to

 3 11. I used to be a coach, 503 to 11 -- the polite

 4 way of putting it is, that's a butt kicking, okay,

 5 503 to 11. So we sure should be honoring what's

 6 in there. We need the money to go where it's

 7 supposed to go; 67 percent means 33 percent is

 8 still going somewhere else. We need to get this

 9 trust fund, it was set up to maintain and dredge

 10 our channels.

 11 With that I'm going to finish by reading

 12 a quote -- I'm going to tell a quick story and

 13 read a quick quote.

 14 Recently, we had members of the Corps,

 15 the USGS, NOAA, National Weather Service, as we

 16 talk about government groups that we depend on

 17 that are underfunded. We really need these

 18 groups, they're very important to us. They came

 19 down to ride ships with us recently. It started

 20 off as an invite to General DeLuca before he was

 21 leaving command at Mississippi Valley Division.

 22 And when they took me up on the offer, I remember
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 1 getting a call that said, Sean, how many people do

 2 you think you can take on a ship with General

 3 DeLuca?

 4 Well, let's just say it took seven ships

 5 to take the amount of people that they wanted to

 6 take down Southwest Pass, but we did it. And

 7 after we did it we were copied on an MLU from

 8 those agencies showing that they want to start

 9 cooperating, to look at weather patterns,

 10 long-range forecasting for hurricane damage, for

 11 river stage levels, for impact of climate change.

 12 So we were part of that and I can only tell you

 13 that some of these folks are scientists that I've

 14 been working with for a long time. And when I

 15 talk to them about that trip, their eyes get huge.

 16 They look like my son does when he comes off a

 17 ship. They were really excited. They got to see

 18 it. And the one thing I remember was the lead

 19 scientist from the Corps coming to me a couple of

 20 weeks later and saying, I never saw beneficial use

 21 of dredge material being used to protect the

 22 channel the way you did. I see it now.
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 1 So that trip and all the headaches that

 2 went with it were very important to us. And I'm

 3 sorry I've gone over my time, but I will read this

 4 quote from the Mississippi River Commission that I

 5 really think explains a lot of what we're talking

 6 about, our infrastructure and under funding.

 7 "By the mid- to late 20th century, our

 8 nation's long-term investment efforts delivered an

 9 inland transportation system that was the envy of

 10 the world. The abundant natural waterways of the

 11 American interior remain the envy of the world,

 12 but that same can no longer be said for our

 13 infrastructure. Our nation's infrastructure, its

 14 ports and navigation locks, levies, and dams,

 15 highways and bridges, railroads and tunnels all

 16 suffer from prolonged underinvestment, deferred

 17 maintenance, and a failure to upgrade and

 18 modernize capacity to keep pace with global

 19 trends. Having built out the greatest

 20 transportation infrastructure in the world and

 21 then benefiting from its consequences for decades,

 22 we became accustomed to its enormous benefits and
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 1 allowed ourselves to be lulled into assuming this

 2 advantage would always endure. So while the rest

 3 of the world has forged ahead in building modern

 4 marvels of infrastructure capable of efficiently

 5 moving vast quantities of waterborne cargo in

 6 recent years, the United States has fallen

 7 increasingly behind due to its failure to continue

 8 its pattern of investment."

 9 I call that the hurricane within. The

 10 hurricane is waiting in a lock and dam on the

 11 Mississippi River system. We can prepare, and

 12 this navigation system on the river we're used to

 13 coming back. We're used to restoring things after

 14 they go down, but if one of those critical locks

 15 and dams fails, there's not a whole lot we can do.

 16 It's going to take months and it's going shut down

 17 the economy, so we have to start working on that

 18 infrastructure, and investment back into it.

 19 Thank you.

 20 COMMISSIONER DYE: Thank you very much,

 21 Sean. I appreciate it. Mr. Kearney?

 22 MR. KEARNEY: Good afternoon. Thanks
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 1 very much for having me here, I appreciate it.

 2 COMMISSIONER DYE: Of course. Thank

 3 you.

 4 MR. KEARNEY: I ask next time you put me

 5 before Mr. Duffy. (Laughter)

 6 COMMISSIONER DYE: I'll keep that in

 7 mind.

 8 MR. KEARNEY: I spend many hours with

 9 Mr. Duffy and applaud him on his tremendous

 10 effort, especially at the federal level, because,

 11 without you, honestly, paying attention at the

 12 detail level you are at, a lot of this wouldn't be

 13 on the front burner, whether it's our U.S.

 14 Delegation or now all the delegations on the

 15 Mississippi River and it's tributaries, it's a

 16 front-page item. So thank you.

 17 MR. DUFFY: Thank you, sir.

 18 MR. KEARNEY: But I still want to go

 19 before you next time. My focus, really, kind of

 20 like Donna and Kristi, is more on the

 21 containerized cargo side, although I see the

 22 impacts in supply chain efficiency of an
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 1 inefficient container supply chain lending to

 2 cargo opportunities in break bulk and bulk. And

 3 the example is the cereal box, they call it, but a

 4 lot of shippers are moving grains over the Pacific

 5 Northwest and, in some cases, the Gulf and the

 6 East Coast in containers.

 7 If the container terminal operations are

 8 not efficient, that cargo will ship back to bulk

 9 and break bulk, assuming those are efficient. And

 10 so I think Sean summed it up. It is so infinitely

 11 complicated how we invest as a nation. A lot of

 12 those investments are by private companies,

 13 frankly. It's not government driven. Those

 14 companies have to see returns on investments to

 15 lead them.

 16 Mr. Crier, you were asking about the

 17 boxcars, and there's six companies to call and

 18 it's the six class one railroads, so they as

 19 private companies, they'll make those investments

 20 if they see the ROI. It's no government agency or

 21 steel company, really. It's them making that

 22 decisions, and the shippers that use them. So, at
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 1 the end of the day, my main focus is always two

 2 things, the lowest cost per ton -- that's what

 3 drives a shipper worldwide to make decisions about

 4 their supply chain, and I think we always have to

 5 go back to that reference point. You can build

 6 the nicest, most automated terminal in the world,

 7 but if it's not a lower cost per ton, you won't

 8 get the business.

 9 The second one is the cycle time, or

 10 speed to market factor. On cycle time you can't

 11 measure it just in terminal turn times, like

 12 we've been talking today. Cycle time is the

 13 entire supply chain from start to finish. So,

 14 free trade agreements, like TPP, those sound kind

 15 of far out there and you say, well, how's that

 16 going to affect cycle time? Well, it improves the

 17 speed of which information flows, documentation is

 18 streamlined so that cargo can export timely from

 19 China and clear Customs timely in the United

 20 States.

 21 Those free trade agreements actually do

 22 matter when it comes to that type of arrangement,
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 1 just like CAFTA for bananas moving between Central

 2 America and here. It defines some of the cycle

 3 time items.

 4 In that regard, on cycle time, whether

 5 it's containerized or break bulk, I think what

 6 we're seeing right now is that you have the

 7 overseas activities, clearly there's not much we

 8 can do about that other than supporting free trade

 9 agreements. The vessel to berth aspect of cycle

 10 time, that's the delays like at Long Beach right

 11 now. Vessels -- I saw it last week, I was in L.A.

 12 -- you will not believe how many vessels are

 13 parked, container ships that can't get to a berth.

 14 So that's part of it.

 15 That's really the labor unions and the

 16 ports working together to build for the volume of

 17 traffic and deal with these large ships.

 18 Everybody talks about the large ships, we've been

 19 planning for the large ships for so long. I can

 20 think back 15 years and we were talking about

 21 large ships, well, they're here. And guess what?

 22 We're not handling them very well, especially in
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 1 L.A./Long Beach where they've had the dollars to

 2 invest in this and take care of this problem and

 3 they seemingly haven't pulled it off.

 4 So that piece is a big one. We can

 5 prepare for that here in the Gulf, now. We don't

 6 have that issue, you don't have a pile-up of ships

 7 at Southwest Pass waiting for a pilot, but we need

 8 to be ready as a port community to address that,

 9 should the need arise.

 10 The turn times in the terminal, that's

 11 obviously a part of cycle time issue that we can

 12 all work on. But then you have the highway

 13 infrastructure piece that is also part of the

 14 cycle time and that's DOT, so that's like a local

 15 DOT issue, maybe with some matching funds from

 16 federal level. But you start to look at this and

 17 you say, okay, vessel could be dredging. So

 18 that's federal and state. And then there's

 19 terminal turn time, that's probably more of a

 20 local issue that the port and the state have to

 21 deal with. And then you go back to highway and

 22 rail infrastructure. If all of that isn't
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 1 synchronized, the investment dollars, the planning

 2 -- again, you can make the nicest flyover in the

 3 world, but if the ship can't get to the berth,

 4 that's pretty much what L.A. has.

 5 They have great highway infrastructure,

 6 but you can't get the ship to the dock. So, yeah,

 7 it's a common effort. We have to communicate and

 8 work together, but I also think that there's got

 9 to be a formula that someone's figured out on how

 10 to make the dollars get to where the real issues

 11 are and having set up an operation in Savannah

 12 over the last two years, and getting a little

 13 closer -- really three years -- to that port and

 14 watching what they're doing.

 15 I encourage all of you to, if you're

 16 near that area, take the time to go see it. The

 17 way they set up their date system, building of new

 18 highways into that port, and synchronizing that

 19 with federal dollars for dredging where their

 20 state went on the line and, basically, put forward

 21 the money before they had the federal part of it.

 22 That to me is -- what they're focused on, again,
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 1 is lowest cost per ton and total cycle time. And

 2 the amount of freight that's going to be driven to

 3 that region is because of those two reasons. So,

 4 thank you.

 5 COMMISSIONER DYE: Thank you. Thank you

 6 very much. I'm still going to be calling you,

 7 David.

 8 MR. KEARNEY: Just call Duffy first.

 9 MR. DUFFY: I thought you wanted to go

 10 first.

 11 COMMISSIONER DYE: This was a wonderful

 12 last word. Thank you very much. I appreciate it.

 13 We're still going to get you out of here on time.

 14 We've done some very good collaborative work, so I

 15 look forward to working with all of you again.

 16 Thank all of you for your participation. It's

 17 been an excellent day on my behalf and I

 18 appreciate all of your hard work to make it so.

 19 Gary LaGrange, what can I say? It's

 20 been wonderful. You outdid yourself and we

 21 appreciate it very much. And everybody at the

 22 Federal Maritime Commission appreciates it very
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 1 deeply.

 2 So thank you again. Good day. I hope

 3 to see you all soon.

 4 (Whereupon, at 4:11 p.m., the

 5 PROCEEDINGS were adjourned.)

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 1 CERTIFICATE OF NOTARY PUBLIC

 2 COMMONWEALTH OF VIRGINIA

 3 I, Carleton J. Anderson, III do hereby

 4 certify that the forgoing electronic file when

 5 originally transmitted was reduced to text at my

 6 direction; that said transcript is a true record of

 7 the proceedings therein referenced; that I am

 8 neither counsel for, related to, nor employed by

 9 any of the parties to the action in which these

 10 proceedings were taken; and, furthermore, that I am

 11 neither a relative or employee of any attorney or

 12 counsel employed by the parties hereto, nor

 13 financially or otherwise interested in the outcome

 14 of this action.

 15

 16 (Signature and Seal on File)

 17 Notary Public, in and for the Commonwealth of

 18 Virginia

 19 My Commission Expires: November 30, 2016

 20 Notary Public Number 351998

 21

 22