Compensatory ocean freight rates are essential in the maritime industry. Today ocean freight rates remain at some of their lowest levels in years. U.S. ports are having a very difficult time trying to balance their budgets and provide for the future needs of the industry.
Ports must meet the ongoing needs of adding or replacing land-side assets while continuing to fund very necessary and also very expensive dredging and harbor development projects. This balance can at times be extremely challenging. However, it is absolutely critical to the long-term health of a port.
We have been witnessing a troubling trend where certain ports are creating incentives where compensatory rates are drawn into question. Without sound decisions, incentives can be extremely reckless for the port engaging in these practices. Ports that are actively creating these problematic incentives will find that they are not sustainable long-term. Moving forward, ports should recognize the responsibility in creating incentives so that these incentives do not undercut the capital funding necessary for future infrastructure.
James J. White, Executive Director, Port of Baltimore