Growing Criticism Over Port Security Puzzles Many in Shipping Industry

'We haven't done a good job of explaining how we work'


Feb. 22--Just about any given time, it's possible to find a Greek-owned ship flying a Liberian flag, employing a Filipino crew and carrying cargo from China into a U.S. port terminal managed by a British company that hires American longshoremen.

This is how Wal-Mart, Best Buy, Target and others get their socks and stereos for the U.S. consumer.

So, some in the shipping industry have been taken aback in the past week by growing criticism in Washington and in state capitals to a deal that would transfer control over some operations in several major U.S. ports from a British company to one owned by the government of Dubai.

"To be fair, we're on the edge of the world and we haven't done a good job explaining how we work, so people are confused by it," said Art Wong, a spokesman for the port of Long Beach, near Los Angeles.

Wong lived through a similar controversy about six years ago when China Ocean Shipping (Group) Co., an ocean carrier owned by the Chinese government, was doing such a booming business bringing products to the United States that it sought a bigger landing spot at the Southern California port. Before the company could move to a former Navy base, a groundswell of opposition on Capitol Hill over national security concerns killed the deal.

Critics of the Dubai deal express similar concerns about possible threats from Middle Eastern terrorists. Dubai Ports World, which paid $6.8 billion last week to acquire Peninsular and Oriental Steam Navigation Co., is based in the United Arab Emirates, where one of the Sept. 11, 2001, hijackers lived and others passed through.

In the major U.S. ports where Dubai Ports World would operate terminals - Baltimore, New York, New Jersey, Miami, New Orleans and Philadelphia - many of the shipping lines, the stevedores that load and unload ships and terminal operators have foreign owners.

The top 10 containership fleets are based in Denmark, Switzerland, Taiwan, China, Germany, France, Japan, Hong Kong and Singapore, said Peter S. Shaerf, managing director of AMA Capital Partners LLC, a merchant banking firm that focuses on the maritime and transportation industries. All call on U.S. ports, and some of the shipping lines manage terminals.

Other terminal operators with U.S. operations are based in England, Denmark and Hong Kong.

Panama has the world's largest ship registry, and Liberia is second. Brad Berman, president of the company that runs the Liberian registry, said about 2,300 ships fly that country's flag and that they carry 10 percent of the world's cargo tonnage.

Shaerf described Dubai Ports World as a respected international company.

The Bush administration announced last month that it would nominate David C. Sanborn, director of operations for Europe and Latin America at the Dubai company, to be administrator of the Maritime Administration of the Department of Transportation, which aids marine commerce and ensures that a U.S. fleet is prepared for emergencies.

"The real risk is in a poorly run port. A badly run port is more of a terrorist target than perceived bad ownership," Shaerf said. "This is an international business. If you welcome their commerce, you have to welcome them."

Many U.S. ports, including Baltimore's, have offices and agents overseas to drum up business from foreign companies. Some want shipping lines to visit their terminals, and some want them to run and invest in their operations.

This content continues onto the next page...