Thursday, March 09, 2006

DP World throws in the towel

They just couldn't stand up to the pressure being heaped on them by Congress.

MAR. 9 3:41 P.M. ET - Bowing to ferocious opposition in Congress, a Dubai-owned company signaled surrender Thursday in its quest to take over operations at U.S. ports.

"DP World will transfer fully the U.S. operations ... to a United States entity," the firm's top executive, H. Edward Bilkey, said in an announcement that capped weeks of controversy.

I give them credit for trying to stick it out, but the way things were going this is probably a smart move for them. Having all the negative press and potentially having legislation enacted against you to prevent you from doing business in the US could have damaged relations with other business partners and nations that DP World works with.

In a perfect world I had hoped our ports would be managed by American firms, but in the age of the global economy, it was an unlikely proposition. So watch out Schumer, Boxer, Clinton, and Kerry... you know who I'd love to see get the deal?


You asked for it.

UPDATE @ 3:41pm: Jason Coleman clues us in to probably the worst side effect of the DP World ports deal falling through. New Orleans get screwed. Again. With the port of New Orleans severely damaged by Katrina, the DP World deal offered a silver lining. A chance to completely rebuild, modernize, and streamline the port.

So here's the kicker. DPW wanted to install automated loading, offloading and handling systems in their port facilities much like what they have installed in other places. By automating many of these processes you gain time, and time is what port security needs most. The reason that only 5% of containers coming into this country are inspected is because the offloading of ships is so inefficient. Every available shortcut is taken by companies to get cargo off ships and onto trucks because port facilities are generally too small and cramped. Containers now in many places come straight off a ship and are dropped onto a truck which passes through an inspection station and then moves out into the city. A majority of cargo coming into the country comes in just this way. It's rarely inspected in our ports other than a quick glance at the manifest, maybe someone walks around the truck with a radiation detector and maybe a dog sniffs the back end of the truck, but that's it, mostly cargo just sails on through.

DPW offered a partial solution in their automated cargo handling systems. By using automated cranes to transfer containers to automated shuttles you gained time. The actual unloading of the ships is dramatically increased and the congestion and chaos of the yard is replaced with the quiet hum of electric motors as automated shuttles ferry containers through a radiation detector, place suspect containers aside for customs inspection and move the bulky cargo away from the docks into holding yards where there is time (and in the case of New Orleans, ROOM) to actually undertake systematic inspections of containers on a grand scale. When you're paying people by the hour to sit in the cab of a truck and wait for inspectors to look at the cargo, money gets wasted and people get sloppy. No one cares about a robotic shuttle sitting still or going in circles back and forth to inspection stations, the computers won't complain about wasted time and not enough mileage. Robots don't argue with customs agents that they need to get on the road so they can get home early for their kids recital.

DPW wanted into the U.S. market in a greater capacity then they already had been. Yes, Dubai already has operations in the U.S., they bring in oil and natural gas to numerous terminals, and have shipping and receiving terminals in many ports across the U.S. The facilities that P&O operated were much sought after leases within the 6 ports in question, but the jewel of the deal, make no bones about it was the Port of New Orleans and the opportunity to create a world class port facility in New Orleans and turn the tragedy of Katrina into a godsend for a city that so desperately needed it.

Now maybe those campaign contributions by longshoremen's unions to Senators Clinton and Schumer, while still small potatoes as far as the amount of money involved, are a little more significant than we thought.