By Eric Wright
Few port executives have graduated from the merchant academy and worked their way up through the officer ranks to become a ship captain. Fewer still have served as President and CEO of a historic shipping concern like Hapag-Lloyd USA, a key supplier of end-to-end container transportation services to US Government agencies and their contractors. But, that’s exactly the path that Canaveral Port Authority’s new CEO, John Murray, navigated. This background gives Murray a unique and insightful understanding of the industry that will help position the Port to continue its stellar growth and expansion.
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EW: What was the attraction to maritime service?
JM: When I was in high school, like most kids, I was wondering what I would do and the merchant academy came up and it sounded like something interesting. It was an opportunity to get an education and to see the world. I enjoyed it and sailed for Lykes, both as a cadet and after graduation. While based in Charleston, I met my wife and got married. Then when my first daughter was born, I began to reconsider being a captain as a profession, as you are away from home for months at a time. Back then there were no cellphones or shipboard Internet, satellite phones were $10 per minute, and you were out of touch for months at a time.
Lykes was looking to expand and asked me to lead their Charleston office. That is how I got started in the cargo business on the ocean carrier side, working with all the local port entities, customs, border protection, port authority, tugs and pilots etc. Then they asked me to move to Norfolk to run the entire east coast region. From there I went to their headquarters in New Orleans, then they moved their operations to Tampa.
The company went through a successful Chapter 11 reorganization, then Canadian Pacific bought the company, along with seven other entities. We were spun off into a separate public company, successfully. Next, they were acquired by Hapag-Lloyd, where my role was been with U.S. flag vessels, American ships, with American crews, carrying strategic materials and supporting our military. There are certain cargos that are mandated to move on U.S. cargo vessels, so there has always been a mandate to maintain a U.S. flag fleet.
EW: What percentage of maritime commerce travels on American ships?
JM: Less than 2 percent. American competitiveness is driven by three factors. First is cost of the crew – these are essentially high tech jobs, most of them, and so they command compensatory pay for shoreside jobs, plus because they are away from their families, there is less desire for people to do it. So, the cost of an American crew is much higher. Secondly, the laws are very protective of American merchant seamen, to the point where the cost to insure are six to seven times higher for ships with U.S. crews. Plus, there are laws that all repairs on U.S. flag ships must be done in an America yard or you pay very high duties on services done at foreign dry docks.
EW: What impact will the opening of an expanded Panama Canal have on American ports, particularly Port Canaveral?
JM: You ask 10 people and you’ll get 10 answers. My opinion is it will be negligible. Most cargo destined for the U.S. is coming from hubs in the Caribbean. Some of these ships will come directly to the U.S., but there is a finite number of goods flowing into the U.S. Unless that increases, things will continue as they are. The Canal is a trade lane that doesn’t change the market demand. It will be evolutionary, not revolutionary.
EW: Keys to the future of Port Canaveral?
JM: We must remain focused on what we are. We’re a great cruise destination; there are four cruise companies that call us their “home port.” Plus, we have several others that make us one of their “ports of call” or destinations; both are because of our proximity to central Florida. Last week we had the Oasis of the Seas, which is the largest cruise class in the world, over 5,800 passengers, make its first voyage from here.
We are in promising discussions with the Air Force about rail access for cargo, but that opportunity is limited in my view, at the present, because of connections as you go north. We are more of a truck market within Florida, near term. When you say cargo, people think containers, but we have significant slag import operations, which is a byproduct from the blast furnace process in making steel, that is used in construction.
Seaport Canaveral is where most of the fuel for east central Florida comes in. When the west Florida ports were shut down due to a hurricane, (the airport in) Orlando was within hours of canceling flights due to a lack of jet fuel. Vitol brings in gasoline, diesel and jet fuel for every international flight out of MCO. Also, Morton Salt has a major import operation – traditionally manufacturing industrial salt, but now they are moving into food grade salt. They are probably our longest-term tenant.
EW: Where are the additional opportunities?
JM: [Looking through the windows] Right out here we have an NYK vessel discharging automobiles; most people in this area don’t realize their car may have come in through Port Canaveral. This is a growth area for us; water is a cheaper mode of transport and produces less damage to the car. These cars are headed for Florida dealerships and they move by truck from here, because we’re closest to the end market.
I don’t think most people are aware of what SpaceX and Blue Horizon can mean to Port Canaveral and that is the kind of growth we are looking for. This is our historic base and now it is starting to come back. Ocean-based landing platforms for their vehicles will be based right here, a relatively short distance from their refurbishment and launch site.
EW: The key to cargo development?
JM: Currently we have a drawbridge that separates the north side of the Port from both cruise passengers and where all our cargo has to go. That is not a workable situation, when you have pleasure boat traffic holding up cargo and cruise traffic. There are a number of common sense things we can do to develop the Port’s assets.