Geoff Dougherty

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Chicago’s port awash in criticism; Longshoremen say district does little to keep or entice shipping companies to Illinois’ waterfront

By Geoff Dougherty | Chicago Tribune staff writer

On a recent afternoon, longshoreman Bill Woods stood on a dilapidated wharf at the Port of Chicago and pointed: “See that hole? That’s where a forklift fell through,” he said.

After the October accident, the damaged wharf section was closed, halving the number of ships that can be unloaded at Ceres Terminals Inc., a major discharge point at the port.

Like its docks, Chicago’s maritime industry appears to be crumbling.

“I haven’t had a ship in Chicago in two years,” says ship agent Henning Christiansen, who used to regularly handle traffic in the Port of Chicago.

In 1998 the Chicago port handled 26 million tons of cargo, according to the U.S. Army Corps of Engineers. By 2002, that number had fallen to 20 million tons.

Much of that business, said Christiansen and others, has migrated 30 miles southeast to the port of Burns Harbor, Ind., which maintains a more efficient labor force and offers a quicker turnaround time for outbound trucks.

That’s what attracted FedNav Limited, the Canadian company that operates half of the ships on the Great Lakes, as well as terminals and stevedoring operations. In 1999, FedNav pulled out of Chicago in favor of Burns Harbor, taking with it up to a million tons of cargo each year.

“People have found they can do stuff better and cheaper elsewhere,” said Nick Faul, a vessel agent with FedMar International, a unit of FedNav.

Some in the shipping business hold the Illinois International Port District responsible for the port’s decay, claiming that the public agency has failed to maintain or market the port. Nearly half of the district’s $6.8 million annual budget is spent on running a golf course built on port land.

“Most of the people on that board wouldn’t know a cargo ship from a yacht, and they don’t particularly care,” said Woods, president of the longshoremen’s union.

Anthony G. Ianello, executive director of the Illinois International Port District, said blaming the agency for the troubles of the entire port is unfair. The district, created in 1952 to promote development of the port, only owns about 10 percent of the available space at the port; the rest belongs to the private sector.

Ianello disputed the notion that Chicago’s port is losing business to other terminals and said dwindling cargo volume is not necessarily a sign of decline. “It’s a very cyclical business.” Case in point: Chicago’s maritime industry depends heavily on shipments of imported steel, which fell when tariffs were imposed in 2002.

In the early 1970s, Woods said, the International Longshoremen’s Association had more than 1,000 members handling nearly 50 million tons of cargo a year at terminals dotting the lakeshore.

But by the end of that decade, shipping into Chicago had begun to dry up. Most cargo traveled aboard container ships too large to navigate the St. Lawrence Seaway, the main passage to the Great Lakes. At the same time, Great Lakes ports began to aggressively market themselves.

“We are always competing with each other,” said Eric Reinelt, acting port director in Milwaukee. “We got a lot of cargo that otherwise would have gone to a lot of other ports. Some of it came out of Chicago.”

Some Illinois manufacturers rely on steel shipped through Milwaukee because the unloading process can be accomplished more quickly than in Chicago and because trucks don’t have to fight city traffic upon leaving the port.

Burns Harbor, the newest port on the Great Lakes, was built in 1970. In the early 1990s it created a manufacturing campus adjacent to its wharves, which helped it snare mini-mill operator Beta Steel Corp. and other businesses.

“They can ship in, process their products and ship them out,” said Jody Peacock, spokesman for the Ports of Indiana. “You can get it all done right here and save transportation costs.”

Chicago business is the lifeblood of Burns Harbor, said director Stephen Mosher, who is wooing several Chicago businesses thinking about moving to Indiana and has already convinced others to do so. “We were able to pick up some heavy hitters that were in Chicago and wanted to relocate.”

One of them was FedNav, whose move to Burns Harbor was seen as a landmark for Indiana commerce. In 1999, the company relocated its stevedore operations, Federal Marine Terminals, to be closer to its biggest customers, the steel-processing centers in northwest Indiana. The parent company’s ships naturally followed.

“We were losing money to the Port of Indiana because it was closer to the steel centers,” said Ian Hirt, general manager of Federal Marine Terminals’ Burns Harbor site.

The move also saved Federal Marine Terminals thousands of dollars in property taxes, Hirt said. The company was a private operator at the Port of Chicago, owning about 15 acres along the Calumet River. It sold the property when it moved to Indiana, where it leases space.

Aging workforce

Stevedores played a role, too, said Faul of FedMar.

“The labor force is definitely younger and better,” Faul said. “In Chicago, they’re getting very, very old.”

Until last year, Chicago’s docks boasted an 83-year-old forklift operator. Now the oldest employee at Ceres is a 78-year-old stevedore. Still, Federal Marine Terminals’ labor costs in Indiana are about the same as they were in Chicago because wages, according to the union contract, are not based on seniority, Hirt said.

Likewise, the equipment at some Chicago facilities is aging. Woods said one of the forklifts at Ceres has been there since before he started as a stevedore in 1959. And the terminal he works at has inadequate lighting.

In the evenings two light poles illuminate several football fields’ of cargo storage. Stevedores who load trucks at night sometimes pull their cars into the work area and turn on the headlights to see the cargo, Woods said.

“It’s pitiful,” he said. “They’re not fixing up the port. They do absolutely nothing. The port director here shouldn’t exist.”

Despite the loss of some business to Indiana, the Chicago port still handles three times as much cargo as Burns Harbor, which in November set a monthly record with 431,000 tons.

Ianello said the Illinois International Port District spends $125,000 a year on advertising that touts the benefits of shipping through Chicago, and it forwards business leads to shipping firms here. Also, the port has spent $5.5 million on capital improvements in the last 5 years.

The district primarily funds its budget from rent and dockage fees, which have declined because of the slide in shipping. The district receives no tax dollars, port officials said.

Ianello said repairs to the forklift-damaged Ceres wharf will be made before this year’s shipping season begins in April.

The port, Ianello said, has provided generators and light stands when workers needed to load cargo at night. “They haven’t had to pull their cars out there in three years.”

Many of the businesses that have moved to Burns Harbor have done so because they do business primarily in Indiana, Ianello said. The Port of Chicago is pursuing tenants who are likely to remain in Illinois, rather than those who can easily move to Burns Harbor.

“They’ve been marketing in Chicago,” Ianello said of the Indiana port. “But what they’re marketing is not the trade I’m going after.”

Tariffs brought trouble

Business at the Chicago port took a hit in 2002. Offloading ships bearing European steel bound for factories in the Midwest is the port’s principal business. And when the federal government imposed hefty tariffs on imported steel, Woods said, the impact was immediate.

Activity slowed to the point that many longshoremen were pushed out of jobs; some moved to Burns Harbor. Union membership dropped below 300. “It was dreadful,” Woods said.

Chicago’s tonnage bounced back a bit in 2003, rising to 23 million tons from 20 million. Ianello and others said 2004 was a particularly busy year for the port, but official statistics are not yet available.

Even so, Chicago continued to decline in comparison to other ports. In 1998, the city’s port ranked 26th in the country in shipping volume, according to the Corps of Engineers. By 2003, it had slipped to 35th.

Similarly, for every $100 in international cargo that was loaded on the Great Lakes in 1998, Chicago handled $16. By 2003 that number had been cut nearly in half.

Other ports have managed to maintain their foreign trade despite the steel tariffs.

“The last five years have been extraordinary,” said Reinelt, noting that the Milwaukee port has operated at capacity for some time. “A lot of it is new business.”

Shipping is an important economic engine in Chicago. A 2002 study commissioned by the port district found marine activity in the city paid nearly $398 million in salaries to Chicago-area residents.

While cargo volumes are expected to grow by 50 percent between now and 2020, some question whether Chicago is positioned to capture that business.

“We are more or less out in the cold,” Woods said. “There’s no way Chicago will ever compete with Burns Harbor.”

January 23, 2005