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Chairman Cordero Addresses Sixth SeaCargo Americas Conference

November 6, 2013

Chairman Mario Cordero
Federal Maritime Commission
Remarks at the VI SeaCargo Americas International Conference
Miami-Florida
November 6, 2013

Thank you for that kind introduction. I am honored to be here at the sixth SeaCargo Americas Conference. More so, addressing this distinguished audience who have come together to dialogue on the growth of the maritime industry in the Americas. Starting with my service on the Port of Long Beach Harbor Commission, and continuing now at the Federal Maritime Commission, I have maintained a deep, personal interest in two topics: promoting economic cooperation and trade between Latin America and the United States, and encouraging maritime policies that reconcile economic growth with a strong commitment to environmental stewardship. So, I am very appreciative this afternoon to have a chance to touch, in my comments, on the importance of Western Hemisphere trade and its economic, environmental and social impacts.

Over the last decade, whether as a Commissioner on the Port of Long Beach or Commissioner on the Federal Maritime Commission, I have repeatedly noted that the importance of the Western Hemisphere’s North/South trades is too often overshadowed by the emphasis we tend to place on the world’s major East/West trade routes. That emphasis, while fully understandable, can sometimes produce a strategic narrowness of vision that, unfortunately, may lead us to overlook potential opportunities.

Conferences like this one offer a valuable counter-balance -- a chance to review and discuss how international trade and transportation affect national economies in our hemisphere, and what opportunities may exist for greater economic growth. Furthermore, emphasizing maritime policy is linked directly to freight policy. I applaud the conference sponsors for providing a forum for such discussions.

This morning, we heard ocean and air freight leaders lay out the trends they see in international trade, transportation, and logistics – and offer forecasts about what may be unfolding in the near future. Later, we heard executives of seaports and airports talk about evolving management strategies and key infrastructure projects, most notably the widening of the Panama Canal, which may accelerate trade flows in the years ahead.

This afternoon the focus will shift to the serious challenges presented by cargo security compliance requirements.

The Federal Maritime Commission – as the independent regulatory agency responsible for overseeing much of the international ocean transportation that serves US commerce -- has direct and indirect interest in almost all of these topics. Our agency’s stakeholders include importers and exporters, ocean transportation intermediaries, port authorities, terminal operators, passenger vessel operators, and the liner companies serving in U.S. trades.

Consequently, we are conscious of and interested in changes in the technologies, operational organization, and supply chain logistics that drive the industries we regulate. As trade expands, economies of scale and scope become increasingly important – leading to much larger vessels – which in turn create a need for more efficient cargo through-put at ports, expanded carrier operational networks, the upgrading of the land-side infrastructure, mitigation of health impacts, and traffic congestion imposed on local port communities. In short, all of us here today – regulators, airport and seaport authorities, carriers, shippers and intermediaries – are under pressure to work smarter and more cooperatively in ways that are commercially, socially and environmentally sustainable. A concept that today is commonly referred to, and accepted, as – sustainable development.

And that is the subject I would like to focus on for the next few minutes: the need to look at the whole picture when reacting to, or planning for cargo growth and port development – not just freight flows and infrastructure requirements in isolation, but the associated economic, social and environmental impacts taken as a whole.

Before departing for Miami, I took a look at some estimates of container trade growth in the U.S. trades with South America, Central America, Mexico and the Caribbean. Based on mid-year data, it appears that U.S. ocean container imports from Central and South America are on-track for additional growth this year. The same is true for imports from Mexico and a number of Caribbean countries. I find that encouraging, and I am impressed by the continued efforts to deal with higher cargo volumes.

There are challenges ahead, of course - slower growth in China, the U.S. recovery, the recent recession in the euro zone, and cost of oil to mention a few. But, as the World Bank’s Doing Business Report of 2013 noted, Latin America has made substantial progress over the last six years in reducing the average time it takes to move export and import merchandise through its ports. Or, to take an example closer at hand, the combination of steady growth in container volumes from Latin American, and the cargo increases facilitated by expansion of the Panama Canal, should prove that PortMiami’s new Super-Post Panamax cranes were a wise investment.

"Investment" seems to be an ongoing challenge in port development circles. Like real estate’s famous three most important factors – location, location and location -- when it comes to seaports and airports, the most important priorities are often: investment, investment, and investment. Investment in physical infrastructure, investment in expanded intermodal, and investment in information technologies to improve documentation, support efficient supply chains, and facilitate coordination with customers and key public agencies.

But there is another type of investment that I believe we need to address as well: investment in early consultations with all affected parties in the planning and design process – including the local communities directly impacted by airport and seaport expansion. Not only does such an investment in early consultation help reduce future controversies and costly mitigation and restoration measures, it can also improve planning by offering a wider range of options to consider. Substantive dialogue, consensus building and partnerships – locally, regionally and internationally – can result in more efficient and effective planning, better project designs and a smoother implementation process in the long-run.

The challenges for ports – seaports and airports both – are not simply restricted to a transportation network or facilitators of export and import movements. They are the economic engine of their regions, providing jobs and often increase local employment and enhancing economic development. But ports are also important elements of their coastal eco-systems and powerful participants in the communities in which they are situated. Hence, today a ports portfolio must include corporate social responsibility.

My personal experience mainly has been with seaports – indeed a seaport located at one of the world’s great urban centers, Los Angeles, California. But airports, too, face many of the same sorts of constraints, opportunities and challenges that seaports do. And, as we know, ports – air and sea – are large, expensive and technically and organizationally complex organizations. Building them, operating them, expanding and modernizing them, and integrating them into the communities and natural environment where they are located can be a huge challenge.

One of the most important lessons I took away from my years on the Harbor Board of the Port of Long Beach is that early consultation, sharing information, and exchanging experience and expertise – what I refer to as a "culture of dialogue" – is an essential factor in successfully developing, operating and modernizing a port.

In my experience, both in developing port policies at Long Beach and now trying to revise and improve regulatory requirements in Washington, a culture of dialogue is indispensible. And that means active involvement – indeed, pro-active involvement – with all the parties that your port operations and infrastructure projects may affect. In other words, a culture of dialogue with impacted stakeholders is a necessary investment.

At a typical seaport, some affected parties enjoy a high profile – the investors, government agencies, and construction firms that fund, authorize and build the new facilities needed for port modernization. They do not get lost in the shuffle, and they insist on a voice in planning and design efforts. As they should.

But other less obvious and often less well-organized parties, who may turn out to be important potential partners in the long-run, can easily be overlooked. The communities and community organizations outside the port’s gates, for example, may benefit from port-related employment, but must also live with any additional traffic congestion, air and other environmental pollution, and unforeseen consequences to land values or residential quality-of-life that modernization efforts may produce.

There also is the coastal environment itself, and the perhaps less visible populations that depend on water-quality for their livelihood or recreation – fishermen and shore-side residents for example. And there are the health service providers and educational institutions that serve port communities; and in the case of schools, provide the educated workforce that ports, like other modern, technologically advanced businesses, will continue to need.

To put it simply, as we avail ourselves of the wonderful opportunities this conference and trade show offers us to share forecasts, expectations, expertise and visions; as we evaluate emerging opportunities and worry about financial investments and on-going cargo or facility security concerns; I urge you to consider, too, the importance of taking a holistic view of how we deal with cargo growth. I urge you to encourage a culture of dialogue in your organizations that is inclusive even of the less visible, but no less important, parties that trade flows and infrastructure projects may affect.

Our ports – sea and air both – can promote environmental sustainability, as well as economic advancement, as they facilitate increased international trade growth. As with financial investment, social and environmental investment – in the form of consultation and consensus building – will pay off in the long-run.

Let me close now, with a brief word of thanks to the conference’s steering committee and sponsors. This annual conference places a much needed spot-light on trade and transportation opportunities within the Americas. Your efforts are much appreciated.

Thank you.