Since the Chicago office regulates Ohio ports, cargo can go in and out of Cleveland and Toledo that can't come in or out of Michigan's 40 ports, which means a substantial loss of jobs and revenue here.
"The study was the product of a partnership between the Port of Monroe and The Ford School in which we provide a platform for masters students to study real world public policy challenges," said Paul LaMarre, director of the Port of Monroe. "We have an understanding that the Port can only provide facts and that we have no influence on the outcome whatsoever. The Port does not provide any type of compensation to the university nor students. Our goal is to promote educational opportunities in hopes that young professionals become familiar with our field."
Early in 2016, Ford Motor Co. entered into a partnership with the Port of Monroe for a pilot program looking at a new way to ship Mustangs to Germany. Other partners were the New York-based Green Shipping Line; Paramount, Calif.-based CFR Rinkens, an international shipping company; and Warwick, England-based Trans-Rak International Ltd.
Instead of transporting new cars by train or truck to east coast ports to be loaded on ships, the plan was to ship 100 new cars in 25 large steel shipping containers directly from Monroe that June. The goals of the program were to limit how often cars were touched in transit and to reduce emissions from rail or truck transit.
According to the UM report, about a month before the proposed shipping date, the Detroit CBP office told Ford and port director Paul LaMarre that CBP officers would need to inspect the cargo. But since the Port of Monroe is 12 miles outside the official boundaries for what is considered the Port of Detroit, inspection by CBP would be done as a courtesy and CBP officers "could only service the port if they have the manpower available," according to the report.
Not being able to plan on having enough CBP officers to work a shipment of 100 cars, Ford scaled the pilot back to two containers and eight cars.
A week before the intended shipping date, CBP told Ford it might not be able make it to Monroe for the inspection because it was a significant amount of staff time for the size of the shipment. At that point, Ford decided to ship the cars by rail to Baltimore, where they were loaded on a ship to Bremen.
Ford and the Port of Monroe decided to try for a second pilot for the fall with a shipment of 30 containers and 120 Mustangs to Germany. Because of problems with the first pilot, Ford's director of logistics and planning, Matthias Schulz, sent a letter on Sept. 12 to U.S. Sen. Gary Peters requesting "assistance in obtaining U.S. Customs to clear international cargoes and containers at the Port of Monroe."
On October 5, CBP and Ford met to discuss the pilot. Again, CBP said any of its service to the Port of Monroe would be as a courtesy, not a mandated assignment, but in any event, bringing that many containers into the port to be loaded would not be possible and suggest Ford use the Port of Cleveland instead. Ford canceled the pilot.
According to the UM study, at that point, because of lack of radiation scanning and X-ray equipment, the Detroit office of CBP "then proclaimed that there would be no imported containers anywhere in the State of Michigan."
According to the study, "the proposed fall Ford Mustang pilot represented a large economic opportunity. The Port of Monroe estimated that 150-200 workers would be employed during each shipment from rolling the car off the assembly line to finally shipping out of the Port of Monroe. Each container of four Ford Mustangs has an estimated value of $132,611, for a grand total of over $1.1 million in exports from the port in one consolidated shipment of 30 containers of cars in the fall pilot.
"The goal of this project was a regular service ... Conservatively estimated at one container liner arrival per month for the shipping season of nine months, the service would export a total of over $10 million annually. This was still far below the total number of Mustangs being ordered during this time. In 2015, the car's first European model went for sale for the first time with remarkable interest. The first 500 Mustangs put up for sale sold out in 30 seconds. In the year 2016, Europeans purchased over 15,200 Ford Mustangs."
The second example of how Detroit CBP policies affect Michigan ports involved a huge construction project in Grayling.
In 2015, Ft. Mill, S.C.-based Arauco North America Inc. reached a deal with the state to build the largest particleboard mill in North America, a $400 million project supported by property-tax incentives of $11.8 million. The Department of Natural Resources sold Arauco 600 acres for the plant at $1,400 an acre.
Arauco broke ground on the project in April 2017, and the plan was to have 14 ships from Europe loaded with construction material travel through the St. Lawrence Seaway to the Port of Monroe, then have the cargo loaded onto trucks to be transported up I-75.
Houston-based Spliethoff USA used the CBP's web-based tool, Automated Commercial Environment (ACE) in mid-May, to get approval for the cargo, and a ship left Antwerp in early June. The plan was to unload steel containers in Cleveland and then proceed to the Port of Monroe, where crated cargo would be unloaded for the project and trucked to Grayling.
The expected arrival in Monroe was June 24, but as the ship was crossing Lake Ontario on June 18, the Detroit office of CBP sent a letter to Spliethoff, notifying it that the cargo could not be unloaded in Monroe after all. When Spliethoff asked for an explanation, it was told that the Detroit office was now considering any crated cargo as containerized. Previously, cargo in wooden crates had less stringent examination rules than those for steel shipping containers.
The Detroit office, according to the UM report, said that "a container is not limited to traditional shipping containers, but rather is any cargo enclosed in wood, steel or otherwise."
That ship's cargo and future shipments were offloaded in Cleveland and Toronto, causing Arauco to incur increased trucking costs.
"The cargo from these ships was allowed to enter at Cleveland because the Port of Cleveland is not in the CBP Detroit Field Office jurisdiction, but rather that of CBP's Chicago Office," according to the UM report. "The cargo was not opened, devanned, or scanned by CBP in Cleveland before being cleared and released by CBP. Offloading fees, wages and taxes were lost to port workers, the city of Monroe and the state of Michigan."
The UM report said that the changes required by the Detroit office of CBP cost various partners in the project between $1.9 million and $3.1 million in added costs. In addition, the Port of Monroe and its dock operator lost out on about $15.4 million in revenue that was shifted to Ohio and Toronto.
Spliethoff told the UM students it had to cancel plans for two to four other sailings per month, with between 100 and 150 containers each, for the 2018 shipping season, and a contract between General Motors and Spliethoff to use the Port of Monroe was cancelled.
Spliethoff estimated it lost out on $12.5 million in revenue in the 2018 shipping season solely based on the inability to use the port.
A spokesperson for the BNSF Railway Co., the largest freight railroad network in North America, told UM researchers that, in the report's words, "that he had never seen anything like this throughout his 35-year logistics career. Given the issues the company and their client Arauco experienced when trying to use the Port of Monroe, he said that he urges industry associates he encounters at trade shows and his clients, many of which are multinational corporations like Arauco, not to use the Port of Monroe, warning of potential costs brought on by their customs issues. The Arauco-CBP debacle, he said, sends the signal that Michigan is not open for business."
""We are in the midst of doing a second study with the same team which will be a comparative analysis of the State of Michigan's investment in commercial port infrastructure projects as compared to the other Great Lakes states and coastal ports," he told Crain's.
With a Crain’s Detroit Membership you get exclusive access, insights and experiences to help you succeed in business.
Audience Adept Response System Wholesaler Quotes & PriceList
Voting Machine, Electronic Shelf Label, Smart ID Card, Response System - Soonlink,https://www.mysoonlink.com/