The Impact of Hurricane Katrina on Mississippi’s Commercial Public Ports and Opportunities for Expansion of the Ports
Executive Summary
Introduction
In response to a legislative request, the PEER Committee reviewed the impact of Hurricane Katrina on Mississippi’s commercial public ports and attempted to identify the strategy the state should take in rebuilding the ports and directing future efforts for their possible expansion.
Background
Mississippi has fifteen commercial public ports. The ports of Gulfport and Yellow Creek are state ports, while the remaining thirteen commercial public ports are local ports1. Three of Mississippi’s commercial public ports operate along the Gulf Coast, six operate on the Mississippi River or its tributaries, and six operate on the Tennessee-Tombigbee Waterway.
Mississippi’s Commercial Public Ports Before and After Hurricane Katrina
On August 29, 2005, Hurricane Katrina made landfall, bringing unprecedented destruction to the U. S. Gulf Coast region. Widely acknowledged as the single most expensive natural disaster in the nation’s history, with over $34 billion in initial damage estimates to all economic sectors, the storm brought with it tremendous challenges that will affect economic recovery, rebuilding, and mitigation efforts for years to come. Not the least of these challenges will be the rebuilding and revitalization of the ports and shipping industry in Mississippi.
The Ports’ Commercial Activity Before Hurricane Katrina
Prior to Hurricane Katrina, Mississippi’s proportion of total U. S. waterborne tonnage was approximately 2%. At the state level, Mississippi’s commercial public ports had a significant impact on the state’s economy prior to Hurricane Katrina.
According to the American Association of Port Authorities, approximately 6% of total goods transported by the U. S. freight transportation system in calendar year 2002 came through commercial ports in the United States. These goods were carried only on domestic waterways.
At the state level, Mississippi’s commercial public ports had a significant impact on the state’s economy prior to Hurricane Katrina. Many of Mississippi’s key industry sectors can attribute their economic viability in part to port services.
By 2003 tonnage, the majority of the state’s waterborne tonnage was handled by the Gulf ports (76%), followed by the Mississippi River ports (19%), with the Tennessee-Tombigbee Waterway ports handling 5% of the total. The Gulf ports handled 54% of the state’s domestic waterborne cargo tonnage and 100% of the state’s international waterborne cargo tonnage that was directly shipped to or received at Mississippi ports.
Status of the Ports After Hurricane Katrina
Hurricane Katrina’s primary impact was on the state’s Gulf ports. The estimated loss of assessed value at these three ports totals approximately $99.9 million.
As could be expected, the hurricane’s primary impact was on the Gulf ports. Hurricane Katrina heavily damaged Mississippi’s commercial public ports of Bienville, Gulfport, and moderately damaged the Port of Pascagoula.
Damage to infrastructure (e.g., berths, docks, storage areas) and superstructure (e.g., cranes, terminals, office buildings) of the Gulf ports included warehouses, berths, docks, offices, access roads, and rail lines. The ports also lost equipment and, in the case of the Port Bienville, all business records, including those stored on computers. As of May 2006, the ports of Gulfport and Bienville were still operating their business offices out of new locations because their previous business offices were destroyed. The Port of Pascagoula moved back into its repaired office space in April 2006.
Customers lost cargo stored at the ports. Also, the hurricane dumped debris and sand into the ports’ shipping channels, which had to be cleared by dredging.
The estimated loss of assessed value at the three ports totals approximately $99.9 million. The ports plan to restore damaged infrastructure through insurance proceeds, Federal Emergency Management Agency assistance, and bank loans.
The heavy damage to the ports is reflected in a decline in their commercial activity in the months following the hurricane. At the end of 2005, the ports were handling only approximately 31% of their pre-Katrina levels of tonnage.
Possible Expansion of Mississippi’s Commercial Public Ports: The Roles of Government and the Individual Ports, Impediments, and Opportunities
In analyzing the issue of expansion of Mississippi’s commercial public ports, the PEER Committee considered the following:
The federal government promotes trade through trade agreements with foreign countries, through laws such as those authorizing the creation of foreign trade zones, and through trade assistance to individual states. These have an impact on how and with what countries the ports may do business. At the state level, Mississippi law has assigned primary responsibility for developing the commercial public ports to the Mississippi Development Authority and the Department of Transportation. Also, the Legislature has enacted several programs designed to promote the development of the ports. Whatever actions are taken to expand Mississippi’s commercial public ports must be subject to the framework provided by the applicable federal trade agreements and laws and state laws and regulations. Also, several of the individual ports have developed their own expansion plans to increase business and serve existing customers more effectively.
In addition to the impact of Hurricane Katrina, factors limiting the expansion of Mississippi’s commercial public ports include major competition from ports in surrounding states, a comparatively poor funding base, and problems with railways and other intermodal connectors. Opportunities for growth of the ports should result from projected growth in domestic and international waterborne tonnage, particularly Latin American trade opportunities; undeveloped land area and facilities available for development; and opportunities with non-cargo markets, such as gaming and cruise lines.
Strategy for the Future
PEER recommends that the Legislature create a Mississippi Commission on Public Ports within the Mississippi Development Authority to provide ongoing policy direction and oversight to a statewide port development program. The purpose of the commission would be to monitor the needs of the ports of the state and to devise a coordinated strategy for their commercial expansion.
PEER recommends that the Mississippi Commission on Public Ports be comprised of the following seven members: a public port director from each of the state’s three major waterways (the Gulf of Mexico, the Mississippi River and its tributaries, and the Tennessee-Tombigbee Waterway) appointed by the Governor; a state port director appointed by the Governor; a business person appointed from the state at large by the Governor; and the executive directors of the Mississippi Department of Transportation and the Mississippi Development Authority, or their designees.
By December 31 of the year of its creation, the commission should recommend to the Legislature a set of future duties and responsibilities for the commission for the purpose of supporting the strategic development of the state’s public ports. These duties should include the provision of active marketing assistance to the state’s public ports, the creation of a strategic plan for commercial expansion of the ports as a statewide system, and a capital improvement program supported through state bonding authority. Also, the commission should identify sources of federal or other funding for its ongoing operation.
Further, the Legislature should amend MISS. CODE ANN. Section 65-1-705 (1972) to provide that the Mississippi Commission on Public Ports perform the functions of the Port Multi-Modal Fund Committee.
Recommendation
The Legislature should consider creating a Mississippi Commission on Public Ports within the Mississippi Development Authority which shall consist of the following seven members: a local public port director from each of the state’s three major waterways (i.e., the Gulf of Mexico, the Mississippi River and its tributaries, and the Tennessee-Tombigbee Waterway) appointed by the Governor; a state port director appointed by the Governor; a business person with import/export experience appointed from the state at large by the Governor; and the executive directors of the Mississippi Development Authority and the Mississippi Department of Transportation, or their designees.
By December 31 of the year of its creation, the commission shall recommend to the Legislature a set of future duties and responsibilities for the commission for the purpose of supporting the strategic development of the state’s public ports. These duties should include the creation of a strategic plan for commercial expansion of the ports as a statewide system, the provision of active marketing assistance to the state’s public ports, and a capital improvement program supported through state bonding authority. Also, the commission should identify sources of federal or other funding for its ongoing operation.
Further, the Legislature should consider amending MISS. CODE ANN. §65-1-705 (1972) to provide that the Mississippi Commission on Public Ports shall perform the functions of the Port Multi-Modal Fund Committee.
1 This review does not include Mississippi’s three public ports that are primarily recreational--i.e., the ports of Biloxi, Long Beach, and Iberville.