ARTICLE

Port Authorities are more than just gateway providers: How certain marine ports are significantly contributing to community economic development

May 10, 2019 – Gregory Bair

(Underthemarkets.com commissioned the research and development of this article; Picture Port of Oslo)

For many communities worldwide, marine port authorities are major contributors to the local and regional economy and positively impact the livelihood and quality- of-life of area residents. Port authorities are governmental organizations legally charged with owning, managing and operating marine and or air installations, related infrastructure and companion industrial and commercial acreage and facilities.   

By improving gateway activity, Port authorities help communities grow. Port traffic creates jobs and vitalizes the local economy.  Many of these organizations understand that their success and sustainability is intricately linked to the economic well-being of the community they serve.  As such, they look beyond the gates of their facilities to see how they can improve the surrounding economic environment by appropriately leveraging their expertise, facilities and resources.

In addition to making the movement of goods possible and providing other logistic services, port authorities implement community development initiatives such as improving infrastructure for local businesses and community residents, refurbishing urban areas surrounding the port, and more.

Because we often overlook the ancillary activities of these entities this article explores five examples of how port authorities and/or port terminal operators, small and large, and in various regions of the world, contribute to community development and area economy. 

 Example #1: Bellingham, WA (population estimate- 89,045)

Background

The Port of Bellingham is a municipal corporation, independent from local or state government, administered by an elected Port Commission.  Its facilities extend over an area of 1,500 acres.  More than 200 companies involved with marinas, industrial manufacturing, seafood processing and many other industries operate on or proximate to this acreage. The port property encompasses a waterfront, a commercial airport, and commercial and industrial uses.[1]

Problem

For years, many of Bellingham’s waterfront properties were idle and abandoned, with no public access. Georgia-Pacific’s pulp and paper mill closed in 2001, with a loss of 420 high-paying jobs and the associated economic contribution to the local economy. 

These unused properties represented a significant economic loss to Bellingham including loss of employment, government revenue and spending.[2]  Equally problematic, the then vacant plant facilities separated downtown Bellingham from its waterfront.[3]

Initiative: Revitalize Waterfront

In 2005, the Port of Bellingham spearheaded an economic revitalization and environmental restoration effort to repurpose the community’s idle waterfront properties.[4]

The Port acquired 137 acres from Georgia Pacific and undertook the cleanup of contaminated upland and sediment sites as well as implemented a comprehensive program of maritime improvements. The redevelopment plan focused on revitalizing the waterfront to include a new marina, a regional sustainable development center, improved public access, mixed-use buildings, and the restoration and protection of natural habitats. The first projects to be completed included roads, trails and residential buildings. The goal was to connect the community to the port and make the unused waterfront space available to the general public.[5]   As use of the waterfront district grows the plan envisions introducing commercial activity that complements public enjoyment of the area.[6]

The federal inter-agency Portfields Initiative, spearheaded by the US Environmental Protection Agency and the National Oceanic Atmospheric Administration, is the driving force behind redevelopment of brownfields in and around ports, harbors and marine transportation hubs in the U.S. The Bellingham waterfront restoration project is one of several such projects. 

Results

• Enhanced environment/aesthetic appearance of the surrounding community.
• Job creation.
• Improved public access – restored connection between community and port.
• Creation of commercial and recreational opportunities.

As of August 2018, the Port of Bellingham has signed 12 new leases and helped five other businesses expand. For the first time in its history, the port’s occupancy rate has risen to almost 98 percent.[7] 

The waterfront project is bringing a lot of focus to the area, according to Don Goldberg, director of economic development for the Port of Bellingham.[8]

 Example #2: Mossel Bay, South Africa (population estimate-130,000)

Background

Transnet National Ports Authority (TNPA) is mandated by South African legislation to plan, provide, maintain and improve port infrastructure, provide or arrange for marine related services, provide navigational aids and control and manage all eight commercial ports on the South African coastline.  

The Port Project

Despite being the smallest of the commercial ports along the South Africa coast, the Port of Mossel Bay is an important contributor to the economy of the Garden Route and Southern Cape.  The Garden Route is a 300-kilometer stretch of coastal road on the southwest tip of South Africa regarded as the most beautiful region in the country.   The Port of Mossel Bay is also the fishing industry base for the region, with facilities for fleet maintenance and for processing catches.[9] The Municipality, within which it operates, generates 65% of its own revenue.[10]

Problem

Mossel Bay’s harbor caters to the fishing and natural gas industries, and handles little other commercial cargo. It has limited sophisticated infrastructure and what exists is old, the slipway needs to be upgraded, and quays need to be reinforced.[11] Further limitations include the small turning circle for vessels, the lack of cranes to handle containers, and the difficulty of moving cargo in and out of the port.[12]

Research indicates that sardines, the mainstay of its fishing industry, are moving toward the Southern Cape.  The positive from this development is that fishing vessels from the West Coast will increase traffic in Mossel Bay harbor using it as a way-point to the fishing grounds. Upgrades to Mossel Bay’s slipway are imperative to ensure that this expected increase in traffic complies with industry regulations and existing legislation.[13]

Initiatives: Upgrade and Build New Facilities, Develop Skills and Supply Chain

TNPA’s plan is to transform the Port of Mossel Bay, along with other South African ports, into a “People’s Port” where local communities and businesses have access to and participate in port activities. TNPA has introduced several programs to promote radical economic transformation, localization and supplier development.[14]  These programs include training people to join the maritime and engineering fields through learnerships as well as an adopted schools program that fosters the development of math and science in students from historically disadvantaged schools.[15] Supplier development initiatives include encouraging local small business, information protocol transfers, and training scholarships for local South Africans.[16] TNPA has opened up participation in port activities to businesses owned by historically disadvantaged individuals.

TNPA plans for the developmental of the Port of Mossel Bay will promote and support economic growth for the region, such as establishing a mixed-use waterfront with retail, commercial, and industrial facilities. It includes an upgrade to the slipway, which is essential to the local fishing industry and other industries that require the use of this facility.  Finally, it will advance the construction of a dock for cruise line passengers to accommodate thousands of tourists to the South African Garden Route.[17]  Overall, TNPA’s initiatives are projected to create a smart, safe, and secure port system with the infrastructure and capacity to promote economic growth, job creation, economic transformation, and sustainable benefits for the greater port communities.[18]

The reintroduction of the Mossel Bay Dias & Port Festival, held in partnership with the Mossel Bay Municipality, also aims to engage the public, grow awareness of the role ports play in the economy, and promote career and business opportunities amongst local communities.[19]

Greater access to the Mossel Bay harbor through the implementation of a cruise terminal, as well as the transformation of the waterfront, should increase both local and international tourism and attract investment to the area, which is a pivotal driving force for local economic development.[20]

Results

• New business opportunities and catalysts for economic growth.
• Generate economic development through the utilization of South Africa’s abundant maritime resources.
• Create sustainable jobs for the local community.
• Attract investment to the area.
• Ensure local community/businesses have access to and are able to participate in port activities.

TNPA’s programs and leasing policy are designed to support economic transformation and promote opportunity for new businesses and use thereby ensuring ports are able to serve communities more inclusively and sustainably.[21]

 Example #3: Oslo, Norway (population estimate- 634,293)

Background

The Port of Oslo is Norway’s leading cargo and passenger port, with nearly 7 million users yearly and 50 to 70 calls of cargo and passenger ships each week.[22]

The Oslo Port Authority is a municipal enterprise, accountable to the municipality.  An elected board governs the Authority and a Port Director manages facilities and operations. 

Problem

Despite the fjord being one of Oslo’s most prominent features, the City of Oslo was largely cut off from the fjord by highways and industrial properties.[23] The urban area surrounding the Port of Oslo was underdeveloped and not properly utilized by either tourists or by Oslo’s residents. This absence of both commercial and aesthetic development meant that the area was not fulfilling its potential as a major tourism draw and a recreational, cultural, residential and commercial center for Oslo.

Initiatives: Transform Port, Relocate Port Activities and Free Up Land for Urban Use

Plans for Fjordbyen, or “Fjord City”, began in 2000 to renew this long under prioritized area and include enhanced land use including housing, commercial, entertainment and industrial development.  This initiative was a joint effort involving the municipality and the Oslo Port Authority. Coordination and cooperation between both entities was essential if the initiative was to succeed.

The plan called for repurposing and developing acreage previously used for port activities for non-port purposes. In this way, the fjord was “to be brought in as part of the city and made available for the enjoyment of the Oslo’s population.”[24]

Between 2003 and 2005, work began on redeveloping both the Bjorvika and Tjuvholmen sectors of the City.  By 2004, the Port of Oslo’s strategic plan for 2003-2011 was in place and subscribed to the following major elements:[25]

• Maintain the ferry and cruise activity in the heart of the city.
• Relocate port activities that were too close to the city center (particularly one of the container terminals) and concentrate this industrial use in the SouthPort zone.
• Free up some 124 acres of land and earmark these for urban use.
• Reinvest proceeds from the sale of port land in a manner that enhances port operations and related projects.

Results

• Underdeveloped areas have become a cultural district.
• City and fjord are now connected.
• Public access and transport has been upgraded.
• Recreational and commercial opportunities now exist in the previously underdeveloped areas.
• A significant increase in both tourism and population growth has occurred.

Redevelopment work is now largely complete for the Bjorvika sector, including its iconic Opera House, which is one of the City’s most celebrated buildings.[26] Since the opening of the Opera House, the surrounding area has seen “unprecedented change” and is now internationally identified as a cultural district.[27]  The developments completed across Tjuvholmen’s 51 hectares in 2014, includes a Museum of Modern Art.[28]  In 2020, an additional museum to house the work of Norway’s most celebrated artist, Edvard Munch, is expected to open next to the Opera House.

The City element of the redevelopment plan calls for further opening of the waterfront area for recreational, cultural, residential and commercial use, with emphasis on public access, public and private transport, and sustainable development.  A brand-new public library is also in the works.[29]

This joint initiative between the City of Oslo and the Port of Oslo is one of the largest waterfront developments in Europe and the biggest urban development project in Norwegian history.[30]

The waterfront has become a tourism magnet, and Oslo is one of the fastest growing capital cities in Europe, growing by about 10,000 people per year.[31]

 Example #4: New York/ New Jersey Metropolitan Area (population estimate 20.3 million)

Background

The Port of New York and New Jersey Authority is a muti-state instrumentality serving the New York-Newark metropolitan area. Its multi modal facilities constitute a gateway for international commerce to the greater New York metropolitan area, which is one of the most concentrated consumer markets in the world.  Through its facilities the Authority offers immediate access to world-class transportation infrastructure including international airports, interstate road ways, rail networks, and seaports.[32] It also manages one of the largest natural harbors in the world and is the third largest port by tonnage in the U.S.[33]

Problem

The State of New Jersey had more than 850 million square feet of warehouse space near the marine port that at the inception of the Portfields Initiative was functionally obsolete.[34] Many of these facilities were too old, too small and unsuitable for the modern IT technology that could allow for high-speed manufacturing and inventory control.  Shippers were in need of larger, more modern warehouses with state-of-the-art IT infrastructure and security systems that would contribute to a more efficient supply chain.

Initiative: Transform Brownfield Sites and Underutilized Properties

In 2007, to address these issues, the Port of New York and New Jersey Authority  (“PNY/NJA”)and the New Jersey Economic Development Authority (NJEDA) launched the Portfields Initiative, a project similar to that discussed, above, for Bellingham, Washington. The goal was to redevelop 1,000 acres of property within the marine port district to establish productive warehouse/distribution centers.[35]

The properties transformed represented roughly $500 million in land costs and $1.5 billion in construction value. The joint venture between PNY/NJA and the NJEDA provided long-term financial, technical and other support to government agencies, developers and municipalities in order to implement the initiative.[36]

Seventeen sites were selected for redevelopment because of their access to the New Jersey Turnpike and other major highways, as well as the Newark Liberty International Airport and Port Elizabeth/Newark. Many of these target sites were brownfields.  Through the Portfields Initiative these facilities were able to take advantage of federal, state and private funding for assessment and environmental remediation.  Commercial development was funded with private or private-public partnership resources.[37]

Results

• Capture more shipping-related warehousing/distribution business.
• Enhance aesthetic appearance of the marine port district.
• Create new jobs.
• Significantly expand the tax base for the State.
• Improve local road infrastructure.
• Ensure a better environmental impact.

The Portfields Initiative implemented by the PNY/NJA brought about new jobs, a significantly expanded tax base and an improved local road infrastructure.  It also ensured the long-term viability of the marine port as one of the nation’s most important import-export hubs.

Cargo movement has grown, the cruise industry in New Jersey has expanded, and the region’s industrial space has increased at an unprecedented rate, with the construction of millions of square feet of industrial and distribution centers.[38]

As of 2016, the port industry in New Jersey now supports:[39]

• 200,350 direct jobs.
• 344,470 total jobs.
• Nearly $21 billion in personal income.
• More than $53.8 billion in business income.
• Nearly $7 billion in federal, state and local tax revenues, with local and state tax revenues of more than $2.2 billion and federal tax revenues of nearly $4.8 billion.

The “perfect trifecta” noted in the 2014 economic impact report – a growing economy, high population density and expansion of ecommerce combined with extensive multi-modal infrastructure – has made New Jersey a leading location for industrial operations.[40]

 Example #5: San Antonio, Chile (population estimate- 85,651)

Background

The San Antonio port is the main seaport in Chile and is also one of the most important in the South Pacific area. The city of San Antonio’s economic activity centers around the port. It is the main docking seaport for ships arriving from Asia, and it is Chile’s first port by tonnage.[41] A private company, Empresa Portuaria de Chile (EMPORCHI), has the responsibility of administering, operating and maintaining the San Antonio port.  EMPORCHI is not a governmental port authority but a private terminal operator.

Problem

With the growth of Chilean international trade, the importance of San Antonio as a port continues to increase. Port activity is the main driver of the local economy, and its direct and indirect contribution to local GDP is estimated to reach 50%.[42]

Although the city’s economy is centered around the port, the link between the port and the San Antonio community has, traditionally, been weak. The lack of use of the waterfront and the unavailability of waterfront public spaces negatively impacted the city’s relationship with the port. The area surrounding the port was underdeveloped and outdated, and the port itself was not as competitive as it could be due to lack of capacity.

Initiative: Modernize Northern Sector, Increase Port Capacity and Promote Citizen Participation

In May 2014, the city approved a modification of the Municipal Development Plan, which established the sectors necessary for future development of the port and set aside waterfront spaces for the development of the city.

In order to strengthen the link with the community and promote port-city integration, more than 100 meetings were conducted with local residents, local and regional authorities, and other interest groups. This citizen participation allowed for a balanced and coordinated development strategy involving the port and the city.

EMPORCHI also made two commitments that contributed to the integral development of the community and improve the quality of life of area residents:[43]

• The modernization of the northern sector for tourism, culture, and urban recreation activities, including an extension of the Paseo Bellamar coastal walkway and the construction of the new San Antonio office building with a  first floor boardroom open to the community.
• The development of a nature reserve in the Mouth of the River Maipo to allow for tourism, recreational activities and bird watching, among other things, adding value to a space internationally recognized for its importance in the conservation of migratory shore birds.

In an all-out effort to boost its competitiveness, EMPORCHI aims to increase the volume of goods handled at the port’s facilities as well as ensure the development of the human capital needed to staff its expansion plans.

Results

• Strengthened link between port and community.
• Improved quality of life for San Antonio residents.
• Added value to the waterfront space by incorporating recreational activities.
• Boosted tourism.
• Increased port business which has grown local GDP.

The now modernized Paseo Bellamar walkway, managed and financed by EMPORCHI, is the public space most highly valued by the local community. The space is open to the entire community with 52 artisanal stalls, two cafes, and several snack bars. EMPORCHI actively participates in the San Antonio Cultural Centre and works with the San Antonio Unido sports club, as well as participates in educational projects related to port activity in the area.

Growing community participation in port initiatives, and projects have contributed to greater integration between the port and the city, allowing both to create a common view of San Antonio’s development for the future.

In a survey, the city found that more than half of the respondents stated that the port and its activities drive development in the city. Additionally, a significant portion of those surveyed believe that the port’s commitment to the city is positive and said that the redevelopment of Paseo Bellamar was the best change to the city in recent times.[44]

 Example #6: Tema, Ghana (population estimate- 161,612)

Background

Tema Port is the bigger of two seaports in Ghana, West Africa, and handles 80 per cent of the country’s national exports and imports. The harbor is located 18 miles from the capital city Accra and serves as both a loading and unloading port for goods, both for Ghana and the landlocked countries to the north.[45]

Tema services a wide range of industrial and commercial companies, producing, exporting or importing everything from petroleum products, cement and food items, to iron, steel, aluminum products and textiles. Most of the country’s main export, cacao, is also shipped from Tema.[46]

Problem

Tema suffers from shipping inefficiencies caused by the strain of inadequate infrastructure. The port and connecting roads form a critical part of the supply and distribution network for shippers and retailers. These infrastructure deficiencies translate into higher operating cost for Ghana’s retailers and in turn higher product cost to consumers.   

Initiatives: Build New Port, Expand and Upgrade Main Highway

APM Terminals ( a unit of A.P Moller-Maersk), an international container terminal operating company and its partners are investing USD 1.5 billion to build an entirely new, modern, and multi-purpose port in Tema on the currently undeveloped beach adjacent to the existing port.[47] APM Terminals is not a governmental Port Authority but a private terminal operator.

An additional investment of USD 200 to 300 million will be made to expand and upgrade the country’s main highway, the Accra-Tema Motorway. The 19-km highway is the country’s most important commercial corridor linking the port with the capital Accra, the primary destination and origin for cargo coming through the port.[48]

Results

• Revitalized supply chain and distribution network, reducing time for moving cargo.
• Lower operating cost and improved profitability for local businesses, leading to business growth.
• Improvement in port productivity.
• Jobs creation, increased business and employee earnings and additional tax revenues.
• Increase in trade – improve Ghana’s competitiveness, leading to boosted export and imports

The projected positive socioeconomic impact of APM Terminals’ initiative is significant.

QBIS Consulting conducted a socioeconomic impact study of the project and found that the new Tema port will impact Ghana both through the labor, goods, and services required for its construction and operation, as well as through the enhanced cargo handling services that will improve the import and export of goods, thereby improving Ghana’s regional and global competitiveness.[49]

The new infrastructure will be invaluable to Ghana, as more capacity, modern equipment, and deep-water access for larger ships will help attract trade and lower the overall costs of trade and transport. It will also relieve congestion at regional ports. 

QBIS estimates that the increase in trade will increase revenues of Ghana’s import and export companies as much as a USD 1.1 billion and create as many as 450,000 new jobs in the greater Ghanaian economy.[50]

 Conclusion

Key Takeaways

Port Authorities and related operations can significantly impact community and regional development.

Some of the primary benefits of developing joint initiatives between Port Authorities and the government jurisdictions within which they operate include jobs creation, improved trade, growth and expansion of local businesses, and a strengthened link between port activities and the municipalities and countries which the ports’ serve. 

These benefits result from upgrading port facilities and increasing shipping capacity, improving infrastructure for both the port and region, refurbishing and modernizing urban areas, improving public access to waterfront properties, encouraging citizen participation in port related activities and much more.

—————————————————————

[1] (Ache, Baker, Holst, Neely, & Walker)

[2] (Bellingham: Economy)

[3] (Cohen, 2016)

[4] (Ache, Baker, Holst, Neely, & Walker)

[5] (Cohen, 2016)

[6] (Gallagher, What is going on with waterfront redevelopment? Here are some answers, 2017)

[7] (Gallagher, A year after creating incentives for marine trade, port property is a hot commodity, 2018)

[8] (Hamann, 2018)

[9] (Global Africa Network, 2017)

[10] (Sandpiper News, 2014)

[11] (Mossel Bay Municipality, 2017)

[12] (Roux, 2017)

[13] (Roux, 2017)

[14] (Whitehouse, 2018)

[15] (Whitehouse, 2018)

[16] (Whitehouse, 2018)

[17] (Chetty, 2018)

[18] (Whitehouse, 2018)

[19] (Whitehouse, 2018)

[20] (Chetty, 2018)

[21] (Whitehouse, 2018)

[22] (Oslo Havn)

[23] (Nikel)

[24] (Oslo Council)

[25] (Davoult, Oslo, a new step for the city – port relationship, 2016)

[26] (Kingsland, 2018)

[27] (Nikel) (Davoult, Oslo, a new step for the city – port relationship, 2016)

[28] (Davoult, Oslo, a new step for the city – port relationship, 2016)

[29] (Nikel)

[30] (Nikel)

[31] (Nikel)

[32] (Crawford, 2007)

[33] (Port of New York and New Jersey)

[34] (Crawford, 2007)

[35] (Crawford, 2007)

[36] (Crawford, 2007)

[37] (Crawford, 2007)

[38] (Strauss-Wieder, 2017)

[39] (Strauss-Wieder, 2017)

[40] (Strauss-Wieder, 2017)

[41] (iContainers)

[42] (AIVP, 2016)

[43] (Davoult, San Antonio Port: Incentivising Port-City Integration through Citizen Participation, 2017)

[44] (AIVP, 2016)

[45] (Portside, 2015)

[46] (Portside, 2015)

[47] (Maersk, 2018)

[48] (Maersk, 2018)

[49] (Maersk, 2018)

[50] (Maersk, 2018)

 

______________________________

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Son, T. (2018, April 14). Haiphong to step up infrastructure. Retrieved from Vietnam Investment Review: https://www.vir.com.vn/haiphong-to-step-up-infrastructure-58333.html

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