Dubai Firm Would Be 3rd-Largest Ports Operator

Daily News Article   —   Posted on February 22, 2006

(by Tom Ramstack and Audrey Hudson, – The proposed acquisition of British company Peninsular and Oriental Steam Navigation Co. by Dubai Ports World would turn the Middle Eastern company into the world’s third-largest ports operator.
    The $6.8 billion deal, which is scheduled to close March 2, would allow the Dubai-government-owned company to add six major U.S. ports to the 22 marine terminals it already operates in 15 countries, including China, India, Venezuela and Australia.
    Dubai Ports World (DPW) — which also has trucking operations, freight transportation logistics and airport operations — is owned by a member of the United Arab Emirates, whose oil-rich nations have been using their wealth to expand other business enterprises.
    Unless lawmakers citing security concerns can scuttle the Bush administration’s port deal, DPW will join a growing list of foreign-owned entities that are heavily involved in port operations across the U.S.
    At least 90 terminals at major U.S. ports are operated by foreign governments and businesses, which also have participated in efforts to establish new cargo security standards, according to a shipping-industry source.
    The governments of China and Singapore own companies that hold terminal leases along the West Coast. Japanese businesses control dozens of terminals nationwide, and a Danish company runs nearly a dozen major ports on the East Coast.
    Homeland Security officials yesterday scurried to compile a list of all terminal operators in 361 U.S. ports, which was not available by press time. The Washington Times has determined that at least 90 terminals are operated by seven foreign companies.
    “Every shipping company wants to operate their own terminals; it’s a sweet deal to give their shippers the best deal possible,” the source said.
    “I don’t think anyone wants to get rid of foreign businesses, but giving terminals to foreign governments is different.”
    U.S. companies continue to operate the majority of terminals, but no U.S. company made a bid on the purchase of Peninsular and Oriental Steam Navigation Co.
    Britain’s Peninsular and Oriental Steam Navigation Co., also known as P&O, provides stevedoring, freight-loading and -unloading, and terminal-operating services at ports in 18 countries where it operates. The company also operates some ferry services.
    In addition to the U.S. contracts, the P&O ports acquisition would cover ports in Vancouver, British Columbia; Buenos Aires; and locations in Britain, France and several Asian countries.
    P&O hires the terminal work force and ensures that cargo is delivered or shipped at ports.
    Port operators “just make sure every ship and every truck is unloaded,” said Mike Bowden, president of International Longshoremen’s Association Local 1459 in Mobile, Ala.
    Some of the work involves scheduling trains or trucks to pick up and deliver shipments. The operator also allocates storage space for cargo at the ports.
    Operators typically tell shippers, ” ‘This is your warehouse; you put your cargo here,’ ” Mr. Bowden said.
    Work at the ports would continue to be done by unionized longshoremen, and the U.S. Coast Guard, and Customs and Border Protection still would provide security at ports.
    But that has not satisfied Capitol Hill lawmakers from offering several bills to block the sale of terminal port operations in Baltimore, Miami, New Orleans, New York, Philadelphia and Newark, N.J. President Bush yesterday said he would veto any such legislation.
    Lawmakers from both parties have ramped up attacks against the deal approved by the Treasury Department-led Committee on Foreign Investment in the United States last month.
    “It’s a larger problem that puts the president in the untenable position and, unfortunately, it’s not the first time. The system is rigged to get exactly this outcome — it’s a done deal that nobody in the political system gets wind of until it’s too late,” said Frank Gaffney Jr., president of the Center for Security Policy.
    “It is frequently the case that the national-security arguments do not get properly vetted at the right levels, and you have these sort of perennial rubber stamps whereby they go through the motions of proclaiming they’ve done due diligence, but it doesn’t amount to much,” Mr. Gaffney said.
    A Federal Election Commission investigation has turned up no evidence of campaign contributions by DPW or its employees in the U.S.
    But it has several potential ties to the Bush administration, which approved the acquisition.
    Treasury Secretary John W. Snow was chairman of CSX Corp. before being appointed by President Bush to the Treasury Department.
    In addition, Mr. Bush late last month appointed David Sanborn, who runs DPW’s European and Latin American operations to head the U.S. Maritime Administration.
    The shipping source said what is more disconcerting than the port deal is that foreign businesses and governments are sitting down with Homeland Security officials to create cargo security regulations,
    “As the government puts these security regulations together, also at the table are unregistered foreign agents of the government of China and Singapore making recommendations to us on cargo security,” the source said.
    The advisory committee considering new cargo security rules was established jointly by the Homeland Security and Treasury departments. The Departmental Advisory Committee on the Commercial Operations of Customs and Border Protection and Related Functions (COAC) includes port-authority officials, customs vendors and a representative for nearly 30 foreign flag carriers, many of which also operate port terminals.

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