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San Diego Port’s Maritime Accounting Questioned

Above: The Tenth Ave Marine Terminal is situated along the San Diego-Coronado Bay Bridge and is in the center of commercial shipping activity.

Audio

Aired 7/14/09

The Port of San Diego’s cargo business has lost tens of millions dollars since 1993. And the marine division has sustained larger losses than the port has admitted to the public. Critics say the port’s Tenth Avenue Marine Terminal is partly to blame for the shortfalls.

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Video unavailable. Read transcript below.

Above: Reporter Amita Sharma talks to host Gloria Penner about how the Port of San Diego is tracking its revenue and expenses and posting its profits.

An aerial view of the 96-acre Tenth Avenue Marine Terminal.

Above: An aerial view of the 96-acre Tenth Avenue Marine Terminal.

The Port manages the working waterfront in San Diego Bay, where long-shore workers offload cargo for the region at the Tenth Avenue Marine Terminal.
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Above: The Port manages the working waterfront in San Diego Bay, where long-shore workers offload cargo for the region at the Tenth Avenue Marine Terminal.

— The Port of San Diego’s cargo business has lost tens of millions dollars since 1993. And the marine division has sustained larger losses than the port has admitted to the public. Critics say the port’s Tenth Avenue Marine Terminal is partly to blame for the shortfalls.

The Tenth Avenue Marine Terminal began bringing in goods from all over the world in 1963. But it never actually turned a profit until 2006. Part of what kept the terminal afloat was bananas.

“Our bananas are holding firm, so that’s worked out great for us,” says Ron Popham, head of marine operations for the Port of San Diego.

But as Popham points out, there’s a lot more that comes through Tenth Avenue than fruit.

“Break bulk, forest products, lumber, steel coils from China, transformers, generators -- don’t forget too we’re a strategic port…one of 15 in the U.S. We load military cargo here,” he says.

So with all of this cargo why did it take the Tenth Avenue Marine Terminal so long to make a profit of $104,000?

“We didn’t have the cargo…volumes that we have now,” he says.

Port Chief Financial Officer Jeff McEntee says what matters is the terminal is making money now. But some say the operation only appears to be making a profit. In 2004, the port started transferring millions of dollars in revenue from real estate leases on certain waterfront property into maritime operations.

Former Port Commissioner Peter Q. Davis says that practice started right around the time people began raising the prospect of using Tenth Avenue for other purposes.

“The port felt that if it was losing money there, it was more susceptible to a successful takeover of its assets,” he says. “So it appears that it moved revenue generating uses into the books of maritime so that it could show a profit. That’s self-serving. It’s not what they’re there for.”

Without the transfers, marine operations would have lost $106 million over the last 15 years. Even with the transfers, the loss was $80 million. But in the last 10 years, those losses haven’t been documented for the public. (Story continues below)

“It looks very much like Enron. It looks like they’re doing their budgets in an effort to convince us of something rather than to explain to us what in fact they’re doing and that’s just simply wrong,” says Davis.

Davis says the port isn’t applying economic rationale to maritime operations.

“If you’re not running a profit, uses are discontinued. Los Angeles and Long Beach have great maritime. They grow their terminals in a year more than we’ve grown in our history,” he says.

But the port’s Chief Financial Officer McEntee says projections show that once the ports of Los Angeles and Long Beach reach capacity, they will have to turn cargo away, and the natural destination for those goods is San Diego.

“Where’s that cargo going to go?" asks McEntee. How’s it going to get into the United States if it doesn’t come into the West Coast?”

But LA and Long Beach are primarily container cargo ports. San Diegobdoesn’t have a crane big enough to handle container cargo. And the port’s own documents show there is not enough storage space once container cargo is delivered.

But even if Tenth Avenue doesn’t grow, port Maritime Director Popham says marine operations still make money for San Diego.

“In 2005 or 2006, the port contributed $10.5 billion in economic impacts to the region. Almost 70 to 75 percent of the jobs produced most of that impact.”

Popham also points to the ‘family wage jobs” at the terminal. There are about 200 people who work at the terminal full-time and unionized longshoremen make as much as $200,000 a year.

But Davis calls the port’s claims economic puffery. And he says the port is tossing out financial logic in favor of protecting a couple hundred union jobs.

“They’re not guaranteed a job at the terminal. This is for the benefit of the people, not the occupiers of the Tenth Avenue Marine Terminal.”

He says it’s time for the agency to consider other options for Tenth Avenue. But that might be difficult. In 2004, port commissioners passed a resolution banning discussion of any other uses for the terminal.

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