Looking Back

1960 to 1980 … Protecting the Tariff Turf

By 1960, the focus of the Greater Houston Port Bureau – known then as the Houston Port Bureau, Inc. – was in protecting an equitable freight rate position for the port of Houston. While the country navigated through a changing culture, the Port Bureau navigated through complex battles to ensure Houston benefited from a competitive rate schedule.

The Port Bureau added two rate experts to the staff and announced its move from the Cotton Exchange Building to Union Station in March 1961. The Port Bureau would later move to the Houston World Trade Center building upon its completion in 1962. Greg Perry, general manager of the Port Bureau, said “the Bureau has been called upon for an increasing range of activity, including numerous and varied presentations on behalf of its customers before regulatory carrier and rate-making bodies” in the press release published in the Port of Houston Magazine.

Take a look at the Port Bureau activities recorded in its 1960 annual report:

  • Represented the Port of Houston in 11 proceedings before the Interstate Commerce Commission, which included the seeking of equal rales by Tampa, Florida; equal rates on grain by Corpus Christi, Texas: reduction in port free time on rail cars; increase in switching charges at Houston.
  • Represented the Port of Houston in two proceedings before the Federal Maritime Board.
  • Represented the Houston Cotton Exchange on 11 major subjects and issued 500 copies of twenty-eight page rate book. Participated in Senate hearing on decline of intercoastal and coastwise steamship services.
  • Originated 102 proposals for changes in transportation costs, designed to port competition or patron assistance.
  • Reviewed every pending or proposed cost revision and opposed, or caused to be amended, 164 propositions disturbing to our competitive position.
  • Distributed monthly advice of changes in transportation costs to mailing list of 950 and provided 2,505 responses to inquiries on port transportation.

In speaking of the Port Bureau’s work in a November 1963 Port of Houston Magazine article, Wiley R. George, president of the Bloomfield Steamship Company, noted “we must have a vigorous, lean, efficient, alert … Port Bureau if we are to preserve the competitive position of our Port . . . (and it) has been and continues to be a vital factor in the growth of our city and port.”

The Port Bureau improved its monthly Transportation Bulletin that included a compilation of transport rate changes and began making regular updates on protecting tariff turf in “The Houston Port Bureau Reports” articles in the Port of Houston magazines in May 1962. Numerous, regular updates on the struggle to keep freight rates viable were published. Whether large or small, the Port Bureau staff attended hearings on rate-making practices and monitored thousands of rate schedules to ensure Houston’s port received its fair share of the pie.

Of particular note, was the frequent appearances before the Interstate Commerce Commission (ICC). For roughly 108 years, the Interstate Commerce Commission regulated the transportation industry. Established in 1887 to seek to negotiate “reasonable and just” railroad rates, the ICC was comprised of a five-person commission appointed by the president and confirmed by the senate. In 1935, the Motor Carrier Acts gave the ICC the authority to regulate interstate truck and bus companies, known collectively as “motor carriers”. In 1940, Congress passed legislation that gave the ICC jurisdiction over vessels on the nation’s inland waterways. At that point, the ICC regulated all forms of freight transport except for air cargo.

Under the Motor Carriers Act, the ICC could decide which companies could become motor carriers, what services they could offer, and what rates they could charge. The act divided motor carriers into two categories: common carriers and contract carriers. Common carriers provided service to the general public; contract carriers held agreements with one or a limited number of customers.

Applications by new truck or bus companies or applications by existing companies to expand their operations could be granted only if, in the words of the statute, the proposed service was “required by the present or future public convenience and necessity.” The ICC had to decide precisely what this very general requirement meant. The act also stated that rates charged by motor carriers had to be “just and reasonable” and could not discriminate between customers of similar circumstances. The act required motor carriers to file rates thirty days before they were to become effective and allowed existing companies to protest.

A competitive freight rate structure was a requirement to the success of Houston’s maritime community. The Port Bureau was known as a watchdog for the port’s economic health. The staff was dedicated in exercising their rate expertise to advance business. The Port Bureau utilized and maintained a transportation library considered to be a “comprehensive gathering of reference material vital to effective representation of the Port of Houston”.

An announcement in the March 1963 Port of Houston magazine stated the transportation library included “cost studies, tables and formulae of rail, motor and water carriers and statistical reportings of the commission, Corps of Engineers, Bureau of Census, ports and port associations … Economic, trade, legislative and commodity data are gleaned from 5 daily and 37 periodical sources. An investigative record of all regulatory proceedings concerning Houston’s development and status as a port is maintained.” The library was available to the Houston business community.

As containerization began to change the face of ports and transportation systems, the battle to keep a competitive freight tariff accelerated. A new challenge emerged, revolving around an intermodal transportation concept that was known as a “minibridge” (or in some cases, depending on route and destination, a landbridge or microbridge).

One such service was the “Euro-Gulf Minibridge” offered by Seatrain International, the first company to pioneer the service in 1972. Through its minibridge service, Seatrain provided shippers in the Houston, Galveston, and Beaumont areas a cargo route to and from Northern Europe an alternative to the all-water route from the three ports. The minibridge handled only containerized cargo, and the freight shipped via Seatrain’s minibridge system traveled by rail between the Texas ports and Charleston, South Carolina through New Orleans. The shipper paid a single tariff and the freight traveled under a single bill of lading, simplifying paperwork.

Because Seatrain’s vessels sailed from Charleston more frequently than did Lykes Brothers from the Gulf ports and because Charleston is closer in sea miles to Northern Europe than the Gulf ports, freight shipped via the minibridge usually arrived at its destination sooner than the all-water route. The cost to the shipper, however, was approximately the same. Shippers were quick to take notice, The Washington Post noted Seatrain’s container service marketshare rose from 68% of the company’s water services revenues in 1973 to 87% in 1978, and Gulf ports were concerned by the circumvent.

They were not alone in the concerns raised by the new freight transport innovation. Port management on both the East and Gulf Coasts were uneasy and various charges were filed with the Federal Maritime Commission (FMC). The debate also made its way through the ICC and U.S. courts as several aspects of the legality of the minibridge transportation system were investigated.

The FMC consolidated proceedings to handle separate complaints filed by the Board of Commissioners of the Port of New Orleans; the Port of Houston Authority and Houston Port Bureau, Inc., the port of Beaumont Navigation District of Jefferson County, Texas, and the Board of Trustees of the Galveston Wharves in 1978 over Seatrain’s minibridge service. In short, these ports requested the FMC to declare the transportation of cargo via a joint rail/water service offered by Seatrain to constitute an unfair cargo division practice proscribed by the Shipping Act in Sections 16, 17, and 18. The FMC notes in their published “Decisions of the Federal Maritime Commission, Volume 21” that the only proof of an alleged “adverse effect on the general economy of the various Gulf ports” was presented by the Houston Port Bureau. While the FMC considered each part of the complaints, including labor and environmental impacts, the FMC did not find enough evidence to support the claims and the complaints were denied.

Even though the rate structure decisions by the federal agencies did not always meet the expectation of petitioners, the Port Bureau was valued for its contributions. In June 1979, the Journal of Commerce, published a commemorative edition celebrating the first 50 years of the work of the Port Bureau. In an article entitled, “Port Bureau’s Rate Vigil Vital to Transport Firms”, the Journal of Commerce noted:

“… the last decade when the Gulf made its biggest switch from bulks and breakbulks to the era of automated cargoes, was when the Port Bureau was able to make its greatest contribution to the economic growth not only of Houston but also the state … the Port Bureau … through its hundreds of submissions challenging the concept [of the minibridge] before the Interstate Commerce Commission and the Federal Maritime Commission, left a lasting mark on the transportation industry … the Port Bureau played a significant role in reversing a trend that threatened to seriously reduced the Gulf’s role in the container era.”

These accolades provide insight into the importance the business community laid on keeping the port of Houston an integral part of the nation’s supply chain. Intermodal transportation was rapidly changing the logistics landscape, and the port of Houston was a natural to reap the inherent benefits. Houston’s port had – and continues to have – all the infrastructure and connectivity required to move the goods efficiently and cost-effectively. In 1979, the Journal of Commerce noted the Port Bureau was always “ready to move in whatever direction would benefit the port”. The Greater Houston Port Bureau is proud to have played a continued, a pivotal role in the success of the port community and looks forward to helping set more milestones in the years to come.

Judith Schultz
GHPB

 

  • Date September 5, 2019
  • Tags 2019 August