By John Stapleford
The governing board of the Diamond State Port Corp has approved a proposed partnership between international port operator Guiftainer and the state to privatize the Port of Wilmington and develop a new container port at Edgemoor. Supposedly, the $580 million deal could add 5,000 port-related jobs.
Gulftainer views Wilmington and the Delaware River as the future and a major gateway import and export to the east coast of the United States.
What does the data say?
As with most industries, marine cargo handling took a hit during the 2007-08 recession. Nevertheless, employment in marine cargo handling across the nation in 2016 was 10 percent above the 2007 level, exceeding 50,000 jobs.
The Northeast was another story. By 2016, total marine cargo handling jobs in Maryland, New Jersey, New York and Pennsylvania were still 5 percent below the total jobs in 2007.
The numbers in total tonnage are discouraging as well. From 2009 through 2015, total tonnage through the ports of New York/New Jersey, Philadelphia, and Baltimore dropped by 15 percent. This included -22 percent for NY/NJ and -28 percent for Philadelphia. Tonnage through Baltimore, boosted by agricultural goods from the Midwest, rose 29 percent.
Overall, Gulftainer does not face a growth market in port activity, whether it is capturing new markets or cannibalizing regional markets.
Why is it happening?
There are two explanations for the lagging performance of ports in the Northeast.The first is energy. The largest ports by tonnage are concentrated in Louisianna and Texas, plus Mobile, Alabama.
The second is the vitality and scale of the economy in the catch basin of the ports. Long Beach and Los Angeles in California ran 7th and 9th in total annual port tonnage. By region, the Northeast has been losing economic ground to the South and West. From 2010-2017, as total employment in the Northeast rose 6 percent, total employment in the South jumped 20 percent and in the West 15 percent.
The implications for business?
When looking at the data on port demand, the Gulftainer project brings back memories of Fisker Motors and Bloom Energy. The basic demand does not seem to warrant the optimistic scenario.
The important thing for the business community is that none of the risk falls on taxpayers. Gulftainer should be free to invest millions of dollars in the port of Wilmington as long as state government isn’t the funder of last resort.
John E. Stapleford is the President of ECON First which provides web-based marketing strategies based upon economic analysis and web presence research.