It was the reason for New Orleans’ founding and remains to this day a linchpin of the area economy, but the local port is undervalued and underfunded, its director says. With aggressive rivals nearby, the port can’t afford to sit still.

Pointing out that the local maritime industry scrambled to make a quick comeback after Hurricane Katrina, port President and CEO Gary LaGrange says it’s time for the city and state to get behind these businesses in a much bigger way than they have in the past.

BIZ: Keeping THE PORT COMPETITIVE“The people who control the funding have their priorities pretty messed up,” he says. “We operate the port like a private business – that’s the reason we were back in operation 12 days after Katrina. But because people see the port as strong and independent, they tend to think we don’t need any help. Nothing could be further from the truth.”

Complacency about maritime commerce was hardly a problem in the port’s early days. When settlers decided to sink stakes at the bend in the Mississippi River now known as the Vieux Carré, there was little question about its viability as a commercial center. The location – providing access to both inland resources and the world at large via the Gulf of Mexico – spoke for itself.

The port’s location has served New Orleans well for almost three centuries, providing access to global cargo routes and, during the last few decades, serving as a point of embarkation for millions of cruise ship passengers.

However, global trade patterns have changed drastically and the port is under greater pressure than ever to adapt and upgrade. At the same time, it must maintain the vigorous pace of its recovery from Hurricane Katrina.

Despite the damages and disruption Katrina wrought in August 2005, general cargo tonnage through the port last year totaled 90 percent of the volume handled in 2004. The port logged almost 1,700 ships calls in 2006 and maintained its position as a U.S. leader in handling imported steel, rubber, coffee, wood products and poultry. Last fall, the passenger cruise industry also returned to New Orleans. The major cruise lines are moving cautiously to fully restore or expand local capacity and say they’re keeping a close eye on the pace of tourism growth.

The short-range comeback of business to the port, however, can’t mask looming challenges. One of the biggest is how to better tap into the proliferation of “containerized cargo” – goods transported in 20-foot or 40-foot steel containers. The containers, which are easily offloaded from ships by crane and moved to their final destinations by rail or truck, not only speed the movement of goods to buyers but also save money for shippers who previously used more traditional methods.

Both East and West coast ports of the U.S. long ago began responding to the demand for container transportation and today many of them boast vast container complexes. As rising demand tested their capacity, Gulf Coast ports got into the act as well – but New Orleans has lagged in the race.

LaGrange has one word for what the port needs now: financing. “It’s a huge issue. We’re probably $500 million behind the eight ball in terms of things we need to do,” he says. “The state and Washington, D.C. have really not been contributing what we had hoped, particularly after we had $160 million in damages from Katrina.”

In addition, LaGrange notes it’s likely that the federal government will force the closure of the Mississippi River-Gulf Outlet, a shortcut from the Gulf that some shippers have used for decades to get to major cargo terminals along the Industrial Canal. “They’ll leave some of our biggest tenants stranded on the canal,” he says, adding that it will cost $175 million to relocate the businesses to riverside wharves.

The port’s commissioners intend to take their case to the Legislature soon, perhaps in conjunction with other ports around the state that are also hoping for state assistance. LaGrange says there’s no time to waste.

“There are those who might say that demand for New Orleans to again become a gateway [for commerce] is gone, but if anything it’s escalating because of port congestion on the West Coast and the growing economies of China and India,” he says.

Meanwhile, neighboring ports have a head start. Houston already has built a $500 million state-of-the-art container complex and Mobile is investing as much as $300 million to upgrade its container capacity.

If the port is successful in getting state support, Lagrange says both maritime customers and local residents will enjoy the benefits.

“Ten years from now you’re going to see a new and modern container terminal facility reaching from the Napoleon and Nashville wharves down to at least Jackson Avenue,” he says. “Next, you’ll see a riverfront development similar to Woldenberg Park running from Jackson to Poland Avenue, and at Poland you’ll see a new cruise ship terminal.”

LaGrange also foresees substantial maritime-related development on the West Bank, an area historically underused by the port. He says the Jefferson Parish riverfront is an excellent area for facilities that can handle “breakbulk” cargo such as steel, plywood and perhaps fresh fruit.

Redevelopment of the terminals along the Industrial Canal and MR-GO – paired with new floodwalls and a new lock allowing larger ships to use the canal – could enable the handling of textiles and shipments of heavy equipment known as project cargo.

LaGrange also wants the port, with its six major railroad lines and connections to interstate highways, to become a hub for inland distribution. “The time has come for major distribution facilities to be located here, probably off I-10 in the Michoud [industrial district] – that’s a magnet for ships.”

In his view, it’s hard to imagine how state or federal officials can fail to see the importance of investing in the port. As a direct and indirect employer of at least 175,000 people, “The Port of New Orleans is the greatest economic engine in the state.”