American Association of Port Authority

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Freight Connections to America’s Seaports
Crucial to Economic Resurgence

 

GUEST COLUMN

Kurt Nagle
President/CEO, American Association of Port Authorities

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Since the birth of the United States more than two centuries ago, its seaports and navigation channels have served as a vital economic lifeline by bringing goods and services to people around the world and by delivering prosperity to the nation.  Seaports facilitate trade and commerce, create jobs, help secure the nation’s borders and serve as stewards of valuable coastal environmental resources.

Although America’s ports are dynamic, vibrant centers of trade and commerce, they rely on federal and private partnerships. U.S. seaports and their private-sector business partners are investing more than $9 billion annually to maintain and improve their freight- and passenger-handling infrastructure.

Unfortunately, the federal government isn’t adequately matching this with concomitant investments in connecting land- and water-side infrastructure to effectively handle increasing cargo volumes.

This lack of federal foresight causes inefficiencies in moving cargo to and from ports, resulting in time delays, reduced international competitiveness for U.S. exports and increased prices and product shortages for consumers.

Despite there being a federal Harbor Maintenance Tax (HMT) on seaport cargo that raises 100 percent of the revenue needed for maintaining America’s harbors and channels at their federally-authorized dimensions, less than two-thirds of that money is being appropriated for its intended purpose, resulting in serious dredging needs being neglected.  At the same time, federal funding for constructing deeper navigation channels is sparse at best, although project sponsors – usually ports – pay between 35 percent and 60 percent of the cost, depending on the project depth.

Landside connections with ports also continue to be a low federal priority, with little of the highway funds going to freight transportation projects. In its 2013 report, “Falling Apart and Falling Behind,”
Building America’s Future Education Fund explains how international economic competitors are sprinting ahead of the U.S., citing a series of sobering statistics, such as U.S. infrastructure has dropped from first place in the World Economic Forum’s 2005 economic competitiveness ranking to No. 15 today, that China now boasts six of the world’s top 10 ports while none are located in the U.S. and the U.S. is one of the only leading nations without a national plan for public-private partnerships for infrastructure projects or a national infrastructure bank to finance large-scale projects and leverage private capital.

In its 2013 “Report Card for America’s Infrastructure,” the American Society of Civil Engineers (ASCE) gave the nation’s seaport infrastructure a relatively generous “C” grade, but later informing AAPA that the grade included both the high-quality infrastructure developed within port authority jurisdictions and the oftentimes inadequate connecting transportation infrastructure to ports that is outside of ports’ control.  That report went on to say, “While port authorities and their private sector partners have planned over $46 billion in capital improvements from now until 2016, federal funding has declined for navigable waterways and landside freight connections needed to move goods to and from the ports.”

There are bright spots however.  The latest round of federal Transportation Investments Generating Economic Recovery (TIGER) grants, of which about 22 percent went to port-related projects, and Congress’ passage of the MAP-21 surface transportation reauthorization bill – which includes language supporting maintenance of federal navigation channels and creating a national freight plan – were signs that lawmakers are paying greater heed to the needs of ports.  Additionally, in January, Congress included more funding than anticipated for port-related programs in its fiscal 2014 appropriations bill, and at this writing, was close to passing a new water resources bill to authorize funding for future navigation improvement projects and provide more equity for “donors” whose cargo owners pay more in HMT than comes back in federal dollars.

However, these glimmers of hope are overshadowed by an otherwise troubling picture of the federal government paying scant attention to the needs of freight, freight mobility and the connections freight needs to access our seaports.

As we recover from the economic downturn, we must make investments today to address the trade realities of the future.  Ship sizes continue to get larger, requiring on-going modernization of ports and federal navigation channels, even for ports that don’t require 50 feet of depth.  Panama has recognized the need to modernize and has underway a $5.25 billion expansion of its canal. Canada (which recently signed the Canada-Europe Trade Agreement that greatly expands access to overseas markets) and Mexico (which anticipates investing $4.7 billion in its port infrastructure by 2018) are two other Western Hemisphere nations that are focusing on freight movement and international trade.

As the administration seeks to double the volume of U.S. exports shipped through its ports and over its land borders, it needs to be focused on how to do it.  In the meantime, countries like Brazil and Chile, which compete against the U.S. in terms of agricultural exports, are making huge transportation infrastructure investments that could make their exports even more competitive.

What’s more, the U.S. population is forecast to grow by about 100 million – a 30 percent increase – before the middle of this century, causing a huge increase in demand for goods that must flow through its seaports.

While ports are planning for the future, lawmakers in Washington haven’t kept pace with the industry or our international competitors. The federal government has a unique constitutional responsibility to maintain and improve the infrastructure that enables the flow of commerce, but many of roads, rails, bridges, tunnels and navigation channels connecting to seaports have been neglected for too long.

Many of our land and water connections are insufficient and outdated, affecting the ports’ ability to move cargo efficiently.  This hurts U.S. business, U.S. workers and our national economy.

With growing international trade volumes now accounting for more than a quarter of U.S. Gross Domestic Product, America’s ports are the nation’s economic lifeline, handling more than 99 percent of the country’s non-NAFTA imports and exports.  These seaports support 13.3 million U.S. jobs, which account for $649 billion in annual personal income.  Consequently, federal investments in seaports have proven to be an essential and effective utilization of limited resources, paying dividends through increased trade and commerce, long-term job creation, secure borders, environmental stewardship and more than $200 billion in federal, state and local tax revenue.

Given the history of federal underinvestment in freight movement infrastructure, what must the nation do to ready its ports for the future?

First, the federal government must make funding for dredging maintenance and improvements a higher priority.  Congress must pass legislation that results in more funding for port, freight and landside infrastructure, including maintaining the TIGER infrastructure grants program.  Finally, Congress must reauthorize and provide adequate funding for the Port Security Grant Program and environmental programs such as the Diesel Emissions Reduction Act that provides grants that ports use to lower emissions from trucks, trains, ships and other “transient” sources.

On another front, new trade agreements with Korea, Panama and Colombia were recently approved, while other trade agreements are being negotiated.  Trade agreements such as these should be encouraged because they result in more U.S.-made products being sold overseas, more goods moving across port docks to fuel our economy, and more jobs being created to handle all those goods.

As our nation recovers from its economic troubles, cargo volumes will continue to grow. As our nation invests in transportation infrastructure, we must ensure that our ports and their needs to efficiently move freight are high on the list.

Today, we face enormous challenges and ports are making the necessary investments to build and maintain a world-class maritime transportation system, which supports U.S. jobs, our global competitiveness, and our economy. We need our federal partner to make that commitment, too.

Because seaports deliver prosperity, we urge you to serve as advocates for port infrastructure so that America’s ports can meet the challenges for today and tomorrow.