Marine Transportation System

Archive for the ‘Ports’ Category

Port Performance Under the Microscope

In Congress, Labor, Legislation, Ports on September 1, 2015 at 5:07 pm

I last wrote of how Washington policy makers and agencies grew more interested in the port sector and how ports, small and large, benefited by that attention. So let’s consider some recent and largely unwelcome attention.

The messy, prolonged West Coast contract talks and negotiating tactics that resulted in a dysfunctioning supply chain at the waterfront elicited a strong and prolonged backlash from the importers, exporters and others whose own operations depend on reasonably well-functioning ports. (“After all, shippers crave certainty, and they crave reliability,” the recently released Pacific Maritime Association annual report acknowledges.) Not that the shippers were taken by surprise. With the 2002, ten-day shutdown of the ports fresh in mind, they expected the worse and were diverting some cargo to gateways of other coasts (or countries) months into the talks.

You are familiar with the recent history. The talks between the PMA and International Longshore and Warehouse Union started in May 2014. A year later the ILWU rank and file gave the new contract its final approval. In between is where it got interesting and “port congestion” came to be reported in main stream media. Management pointed to the intentional shorting of the workforce by union leadership. The union countered saying the terminals brought the problem on themselves by not being prepared for big ships with more cargo. In any event, port congestion was amplified at the largest Pacific gateways.

Export apples were not making it overseas markets in time. Retailers decried the slow flow of their freight from ship to gate and finally to shelves. But first the ship had to get to berth. By February, when the tentative agreement was reached, there were over 30 ships waiting at anchor off Los Angeles and Long Beach. POLA executive director Gene Seroka told the Wall Street Journal that he expected “it will be about three months before we return to a sense of normalcy.”

Over the nine months that the negotiations were underway the cargo interests were active and vocal. A coalition of companies and trade associations formed and periodically met with and issued joint letters to policy makers. They asked for intervention or at least for official Washington to pressure negotiators to make it quick. Their major complaint over time was that President Obama was just, in the White House’s word, “monitoring,” not acting. Members of Congress eventually expressed their concern about the effect of the prolonged talks.

Meanwhile the Port of Portland had its own particular low productivity problem where a continuing multi-year dispute, if anything, wasn’t helped by the prolonged contract talks. By February, a frustrated Hanjin Shipping announced it would end service there, leaving Portland and its ICTSI terminal operator in search of a willing container line.

Leading up to and long after the conclusion of the contract talks the shipper community lobbied for “a tool that will help provide certainty to future negotiations.” Letters seeking legislation to provide that tool typically would carry over one hundred organizations’ names. Some bills eventually were introduced. But from the perspective of most ports, the bill represents more problems than potential solutions.

Congressional advocates for the cargo interests have taken two approaches in their legislation. The first to emerge was the “Port Performance Act” (S.1298) by Senator John Thune (R-SD). He chairs the Commerce, Science & Transportation Committee that eventually approved the measure. Noting that the port sector had yet to be plumbed for the sort of “condition and performance” data that Congress and transportation planners say are needed to better evaluate the national freight system, Thune’s bill prescribes the annual collection of monthly terminal operations data. It’s the sort of data that terminal operators keep for themselves to improve terminal functions and that port authorities are reluctant to have out there to be used by the competition. In the version that ultimately was approved as a provision in the Senate’s surface transportation bill is the requirement for data on vessel, train and truck time in port, lifts per hour, and cargo dwell time. Those and other metrics are required to be used for the annual reports to USDOT.

What is not in the Senate-passed bill is a provision, original to S.1298, that would require monthly reports of port performance data to USDOT and Congress during collective bargaining periods when contracts have expired. Organized labor and ports don’t like the bill and the unions lobbied especially hard to have that particular provision excised.

The other type of bill that was introduced—first in the Senate and more recently in the House—would amend labor law. Whereas Thune’s Port Performance Act is premised in part on the idea that data would be useful in documenting when port cargo operations and cargo interests suffer during contract negotiations, the other legislation is to provide a means to engage the government and the courts in bringing closure to prolonged negotiations i.e., a market for that data.

Freshman Senator Cory Gardner (R-CO) introduced his “Protecting Orderly and Responsible Transit of Shipments (PORTS) Act” (S.1519) to amend the Taft-Hartley Act to make slowdowns an unfair labor practice and empower governors to initiate boards of inquiry and seek court injunctions. (The House version was introduced in July by Dave Reichert (R-WA) and others.)

Senator James Risch (R-ID) takes a somewhat similar approach to the Gardner bill, with added inspiration from the Portland terminal operator who wants parties responsible for slowdowns to be penalized. Risch’s “Preventing Labor Union Slowdowns (PLUS) Act” (S.1360) makes slowdowns an unfair labor practice, defines slowdowns, declares US policy as one to “eliminate the causes and mitigate the effects” of port disruptions, and prescribes penalties for violators including decertification of labor organizations.

So what are the prospects for these bills in this Republican-led Congress? Amendments to labor law are sought by Republicans and opposed by Democrats. While the former has solid majorities in both chambers, the latter is in a position to slow and stop bills in the Senate where 60 votes routinely are needed to assure passage of just about any bill of substance. We may see hearings on the PORTS and PLUS Act legislation, and we definitely will see GAO reports—already requested—on the economic consequences of the West Coast talks. But between the Senate rules and the Democrat in the White House (see Secretary Perez comments), those bills will have trouble becoming law, perhaps even getting floor time in Congress.

Thune’s Port Performance Act is quite another matter. The diluted version of the bill passed the Senate, tucked away in the 1024-page, appropriately labeled DRIVE Act (H.R.22). It is the Senate’s version of a must-pass highway and transit bill. Key House legislators have yet to weigh in on the issue of port performance metrics and data collection, much less produce their own 6-year transportation infrastructure bill. Some action on the larger bill is inevitable, perhaps to the point of becoming law.

When the House side takes up the question, cargo interests will again point to the West Coast experience and seek restoration of frequent data reporting during contract talks. Port interests will explain why the Thune language is generally impractical and unwelcome. Labor will ask the House transportation leaders to flatly oppose the entire Port Performance section that is in the Senate passed bill.

More to come on this matter of the performance and condition of ports, and how and whether to measure it.   Pbea

Ports Then, Ports Now

In Congress, Federal Government, Infrastructure, Ports, Surface Transportation Policy on May 4, 2015 at 10:08 pm

Not all that long ago U.S. ports—principally through the public port authorities—were minor and largely absent players in the Federal transportation policy discussion. Port authorities and marine terminals engaged attorneys who tended to the infrequent channel project and to regulatory matters before Federal commissions. Seaports were (and still are) creatures of states and municipal level government. There was no Federal funding to speak of. Ports were assisted in the form of navigation channels constructed and maintained by the U.S. Army Corps of Engineers through the Civil Works program—a program in the control of legislators, who reserved the authority to approve projects, and engineers, who were told to implement the projects. Even in the case of port channels the appropriated sums did not go to port authorities but were cycled within the Federal government and to its contractors.

Back then U.S. maritime related policy was tightly focused on promoting U.S. flag shipping, American shipyards and American crews. Ports were in a policy no-man’s-land between the water and land modes. In its early years the U.S. Department of Transportation had maritime jurisdiction through the U.S. Coast Guard. USDOT was all about building the interstate highway system and tending to railroads, aviation and mass transit. It was not until 1981 when the Maritime Administration moved into USDOT after 31 years in the Commerce Department. Even then the agency continued to be concerned with vessels, not ports and harbors.

By 1980 only a handful of ports had need for Washington representation focused on Capitol Hill and transportation programs and policy, beyond that provided by the American Association of Port Authorities (AAPA).

The 1980s were a time of change. Transportation regulation was giving way to forms of deregulation. By the close of 1978 we saw deregulation take hold; railroad, motor carrier and aviation policies were being reshaped. At times ports were very interested stakeholders as Congress ushered in deregulation. If anything, they wanted to be assured of sufficient rail service, preferably the competitive kind. The Shipping Act of 1984 took the maritime sector a few steps toward deregulation, with some implications for harbors, but greater reforms had to wait until the Ocean Shipping Act of 1998.

It was not until the mid-eighties that ports entered the center ring of Washington policy deliberation. Most of the Carter and Reagan years constituted a legislative dry spell for water resource bills. Ready plans for navigation improvements and proposed feasibility studies awaited action. “User fee” had a certain cachet in the Reagan years. The message to Congress was clear: in return for the president’s willingness to sign a projects bill some reforms would be required and Federal project costs would be offset. Local project sponsors would have to share the cost of improving channel projects. Port users would have to cover a substantial portion of Federal channel maintenance costs. Defining who was to pay, and how much, divided ports into two opposing coalitions. It was not a lasting split but it highlighted differences among the harbors, their physical characteristics, their cargo volume, and their cargo kind.

The resulting Water Resources Development Act of 1986 was landmark legislation that reset navigation and other water resources policy. It also triggered an awareness on the part of ports to be present and active in Washington, both through individual representation and associations.

In the 1990s the Department of Transportation developed an interest in the port sector and the condition of water and land access routes to marine terminals. The department’s jurisdiction did not include the system of channels–and the Corps of Engineers jealously guarded that historic jurisdiction–but it rightly saw the importance of efficient access to the port facilities regardless of the mode taken. Moreover, port and other freight interest groups collaborated in calling on policy makers to give their attention to freight mobility.

In 1991 Congress enacted surface transportation legislation–its prior iterations known simply as “the highway bill”–and in doing so finally adopted intermodalism as a desirable direction for policy. The Intermodal Surface Transportation Efficiency Act of 1991 did not create an avenue for Federal aid for port facilities but it did hint at a line that would be crossed years later, when Federal dollars helped make improvements inside the terminal gates. The ISTEA sausage-making experience inspired trade groups to form the Freight Stakeholders Coalition. In the twenty-five 25 years that followed the coalition celebrated some successes and today is still at work looking to strengthen Federal freight infrastructure policy.

One of the first intermodal efforts by USDOT, in conjunction with the National Academy of Sciences’ Transportation Research Board, was to examine the state of access to ports by the land modes. TRB’s 1993 report, Landside Access to U.S. Ports was followed the next year when the ISTEA-created National Commission on Intermodal Transportation published its report, Toward a National Intermodal Transportation System. The case was being made with evidence mounting. In 2000, the results of another congressional mandated study was reported by USDOT on National Highway System Intermodal Connectors. Freight infrastructure as it led to and departed from marine terminal areas was in poor condition. Actually doing something about it had to wait a while longer for SAFETEA-LU (2005) and MAP-21 (2012).

One other marker along the policy path deserves mentioning. In 1997 Transportation Secretary Rodney Slater initiated a look into what he referred to as the “marine transportation system,” which by definition is port-centered and extends beyond the terminal gate to include the access modes and intermodal operations. USDOT convened stakeholder sessions in port cities and then a national conference on the MTS. The resulting 1999 report–An Assessment of the U.S. Marine Transportation Systemincluded recommendations, among them the facilitation of landside access to ports and the formation of an interagency Committee on the Marine Transportation System and a stakeholder Marine Transportation System National Advisory Council. Those and certain other recommendations were implemented and have contributed to improvements in both freight operations and the port policy discussion.

In September 2001 the rationale for port security measures was instantly revised, making it so much more than a matter of smuggling and cargo theft. Securing both the ports and vessels took on an urgency that made for a sharp learning curve for government and private sector alike. A ship entering a port represented a new vulnerability for the U.S. For a start, Congress produced the Maritime Transportation Security Act of 2002. The Coast Guard was given new responsibility, multi-stakeholder port security committees were formed, and facility plans were required. Fences and cameras went up where there had been none. The Transportation Worker Identification Credential (TWIC) was created for the maritime sector. The Port Security Grants Program was created and before long it was funded annually at $400 million, the dollar level being a particular success of the ports’ American Association of Port Authorities.

Then, in 2009, the severe recession prompted the new administration and Congress to formulate an economic stimulus package that included a $1.5 billion dollar competitive grant program for “shovel ready“ construction projects. What came to be called TIGER grants were awarded not just for the usual road and transit systems but also to ports and heavy rail. Freight related projects snared a third of the grants to the surprise of everyone including the folks at USDOT who realized that freight investments could be evaluated in cost/benefit terms more readily than Biden in Charlestonthe usual stretch of highway or transit rail. To date, TIGER grants have gone to 24 port projects in 16 states for a total of over $344 million in Federal funds alone.

Today the Federal government takes great interest in ports. They are seen as vital gateways for U.S. exports and critical modal connectors that when not functioning well can diminish American competitiveness. They are potentially vulnerable to terrorist attacks and are bell-weathers for our economic well-being. And they make impressive backdrops for politicians.

In 1985 I convened a meeting of a few port lobbyists to talk about shared issues. Thirty years later, a considerably larger Washington Port Reps group continues to meet and discuss a much larger issue agenda.  Pbea

(Thank you, Lillian Borrone and Jean Godwin, for your memory-jogging assistance.)

Much Ado About a Budget Resolution

In Congress, Infrastructure, Ports on March 31, 2015 at 12:31 am

At 4:24 am last Friday the Senate called it a night (or morning). Shortly before, the “world’s greatest deliberative body” quit deliberating, bringing its “vote-a-rama” session to a merciful end. “Deliberation” doesn’t apply very well here. When the Senate takes up its annual budget resolution and an around-the-clock offering of amendments it is anything but “long and careful consideration or discussion,” as defined in Oxford.

Senator Patty Murray (D-WA) coached visiting constituents on Wednesday morning that this was great time to see the Senate from the gallery. The senator was right to the extent that one doesn’t often get a chance to see a majority of Members on the floor for an extended period of time. As promised, she and her colleagues were there touting and voting on amendments to the FY 2016 Budget Resolution in a rare display of a constant quorum in search of a budget framework. Probably more than a few of them were also in search of an expeditious deliverance from what at times has the appearance of an exhausting, even pointless, legislative exercise.

Senate Concurrent Resolution 11 is serious business, much like its cousin, H. Con. Res. 27, which on Wednesday the House of Representatives dispatched in far fewer bleary-eyed hours. When/if the process is concluded, the Congress will have a single congressional budget resolution—no White House signature needed, thank you—that sets enforceable limits on appropriations in broad categories, e.g. transportation, for the next fiscal year. It is a budget discipline that Congress created in 1974.

In this case, both chambers and their Republican majorities last week produced resolutions that maintain the increasingly constrictive caps and the across-the-board cuts of sequestration of the infamous Budget Control Act of 2011 (BCA). Both resolutions project balanced budgets in ten years. Both put downward pressure on spending for  non-defense and defense discretionary (non-entitlement) programs. But both, ultimately, also create exceptions so as to boost defense spending above the BCA ceiling that John McCain (R-AZ) called “reckless” and “a disasterin his attempt to end the grip of sequestration on the DOD side of the ledger.

There are differences between the Senate and House resolutions, which may be resolved in conference between the two budget committees.

So, you might ask, what exactly is a “vote-a-rama” in the US Senate?” In large part, it is a chance for a large number of amendments to be taken up in a short amount of time. Everybody, in theory, has the opportunity to shape the broad framework for spending. Well, not really. It might better be described as rapid-fire amendments so one can go on record—or put the other guy on record—for or against something. Standard Senate rules are put aside for purposes of budget resolution consideration. No chance to spend 20 minutes airing an issue or in orderly exchanges with a colleague over some weighty matter. Instead, senators mostly were asked to vote on vaguely worded issue proxies that have little practical effect on spending decisions or the issues themselves.

Serious subjects may be raised but a senator has a minute to state her case, assuming her amendment—one of nearly 800 introduced—is among the few that actually get floor time. Some are approved without objection, others rejected or agreed to by recorded vote. Some are withdrawn—the point already made—or ruled out of order.

Susan Collins (R-ME) said “the process gets misused just to make the other side cast uncomfortable votes,” adding that “the budget should be a serious process…” One didn’t have to look far for a handy example, this one covering two political hot buttons in one amendment. A senator wanted to “establish a spending-neutral reserve fund relating to limiting the ability of Environmental Protection Agency personnel to carry guns.” The italicized phrase is the common form used in the amendments, helping make it pertinent to the budget resolution and within its dollar limits.

Where any subjects of relevance to the port/logistics world proposed in the wearying session last week? Yes.

Two proposed amendments were inspired by the recent West Coast longshore talks and slowdown. One was by Deb Fisher (R-NE) relating to a request that has been (or will be) made for the GAO to investigate “the impact of service disruptions at West Coast ports during 2014 and 2015.” The other was by Cory Gardner (R-CO) with the notion “to prevent labor disputes at seaports in the United States from causing national economic disruptions and crippling businesses across the United States.” Neither would have practical effect beyond perhaps establishing Senate sentiment as to what took place during the longshore negotiations. (No vote)

Deb Fisher, chair of the Surface Transportation and Merchant Marine Infrastructure, Safety and Security Subcommittee, and Barbara Boxer (D-CA), ranking Democrat on the Environment & Public Works Committee, sponsored an amendment to “strengthen waterborne commerce in our ports and harbors, which may include increasing the percentage of the amounts expended from the Harbor Maintenance Trust Fund that are dedicated to port infrastructure and maintenance.” What does that mean? They associated themselves with the notion of increasing O&M spending from the HMTF. Nothing more. (Adopted)

A freight-related amendment by Dean Heller (R-NV) aspires to ensure that the DOT Secretary prioritize “the construction of projects that are of national and regional significance and projects in high priority corridors on the National Highway System…” (Adopted)

In the same vein, Cory Booker (D-NJ) sought to “encourage freight planning and investment that incorporates all modes of transportation, including rail, waterways, ports, and highways to promote national connectivity.” (Adopted)

A Gary Peters (D-MI) amendment related “to supporting trade and travel at ports of entry.” (Adopted)

Patty Murray (D-WA) called for increasing funding for the TIGER grant program. (Adopted)

Sheldon Whitehouse (D-RI) proposed one “to ensure high-income earners pay a fair share in taxes and to use the revenue to invest in repairing our Nation’s bridges, coastal infrastructure, and damage from wildfires.” (Withdrawn)

Majority Leader Mitch McConnell (R-KY) got a vote on his amendment relating to EPA regulation of “greenhouse gas emissions, which may include a prohibition on withholding highway funds from States that refuse to submit State Implementation Plans required under the Clean Power Plan of the Agency.” (Adopted 57-43)

Today EPA’s Gina McCarthy today said, no problem, Senator. “EPA doesn’t have the legal authority” to do that anyway.


What Will This Congress Do?

In Congress, Infrastructure, Marine Highway, Politics, Ports, Security, Surface Transportation Policy, Water Resources on January 9, 2015 at 1:45 pm

Nearly a dime’s worth of days into the New Year, this is no time to rehash what happened in the last Congress. A new Congress—the 114th of our maturing nation—is now underway. And what a new Congress it is.

Republicans now rule Capitol Hill and veteran Senate Democrats are being reminded of how it feels to be called Minority. (Republicans have held the majority in the House and Senate more often than not in the previous 10 congresses, since 1995.) At the other end of the avenue is a president who has confronted more than his share of domestic and international crises. January is the starting gun for his latest test – working with the 114th Congress and its routinely unfriendly and uncooperative Republican membership. In that respect, so far, there is not much new about this Congress.

The leaders in the House and Senate themselves face internal and external challenges as they assume on behalf of their caucuses the collective role of governing. Politico used apt “cliff” and “landmine” metaphors for what faces Speaker Boehner (R-OH) and Majority Leader Mitch McConnell (R-KY) as they advance legislation through their own caucuses. The leaders know that the GOP is well positioned to turn around the “do-nothing Congress” label that the Republicans made possible—even intended—over recent years. (Yes, the dethroned Harry Reid hardly facilitated the legislative process in the Senate but Messrs Boehner and McConnell are faced with colleagues in the rank and file who came to Washington to stand in the way of government. Twelve Republicans found reason to vote against returning Boehner to the Speaker’s chair, as if he is didn’t well serve the cause(s) of conservative Republicans.) This go-round Democrats, with little control over committees, the bills they produce, and the floor schedule, will not be plausible scape goats for a failure to legislate. And in the Senate McConnell may be 6 votes shy of a filibuster proof majority but he has a pool of moderate Dems and an Indie who are potential “ayes,” such as we will see with the upcoming Keystone XL vote.

The success of a legislature is measured by legislative productivity. Can this Congress be productive with the Obama White House, which has vetoed exactly two bills in the past six years?

As previously noted, President Obama also will be tested. How well he will deal with the new Congress, his constitutional partner in making law? No doubt we will see more vetoes in his last two years in office but his legacy will depend more on what is accomplished than what he blocked.

In other words, they need each other. Few points will be awarded if progress is not seen in Washington. So, the question is whether the president can find within him the resolve of Bill Clinton, who famously made lemonade out of the GOP blowout of 1994, and whether the Republicans will function as if they want to be remembered as the “did-something Congress.”

All of that is background to a rundown of just some of the issues and questions that are of interest to the port/maritime industry and the larger freight sector.

The president put his previously stated policy view into surprise policy action with his late December announcement on normalizing diplomatic relations with Castro’s Cuba. Any number of ports, exporters and others were pleased by the news. There is bipartisan support among some in the House and Senate but Congress will either come down hard on the White House initiative or, rhetoric aside and with an eye on what Castro might do in the months ahead, show a willingness to reconsider the long-standing trade embargo that can only be ended by a change in law.

Last year, Congress came close to hitting the “target” of spending $1.2 billion from the Harbor Maintenance Trust Fund. The enacted water resources law (WRRDA 2014) sets ambitious, incrementally higher targets for Congress to meet with funding for channel maintenance and other work authorized to be supported by trust fund monies. Will the Republicans, as the saying goes, “put trust back in the trust fund” or continue to allow the Harbor Maintenance Tax assessment on cargo to be used as general revenue applied against the Federal budget deficit?

Last year the House and Senate produced a “sense of Congress” statement generally in support of the US-flag and Jones Act sectors. It can be interpreted as reaffirming existing maritime policy. Around the same time John McCain (R-AZ) reaffirmed his own maritime policy to undo the Jones Act in a speech to the Heritage Foundation. He and the petroleum industry actively urge changes to current law, which is to say, the end of the Jones Act. Meanwhile the Maritime Administration and the Secretary of Transportation will steer a draft National Maritime Strategy through the policy and political wringers of the White House. What will that document say about Administration policy and what if anything needs to be done to improve the US merchant marine or American ports?

In 2015 Congress will have to tackle surface transportation policy and funding. Will it include real money to renew freight corridors and build new infrastructure to support modern, intermodal commerce? Will Congress bite the bullet and find the money to pay it or, for that matter, to save the failing Highway Trust Fund? Past refusal by Congress to tackle this issue has depressed road and transit funding and been a principal expression of austerity economics—advocated by most Republicans, but abetted by many Democrats who also have avoided new revenue proposals—during a time when the country was climbing its way out of The Great Recession. Should this Congress produce a transportation bill that only perpetuates an inadequate level of funding and papers over the structural deficiencies of Highway Trust Fund financing it will not make for a convincing accomplishment.

The issues that may arise in the new Congress are many. Committees are establishing their work plans for the year ahead. What will the Republican majority serve up in the way of budget cuts and appropriations? Will a uniform ballast water policy finally become law? Will the TWIC reader rule that seems to assume container terminals to be at a lesser risk be implemented without alteration? How will Title XI vessel financing fare and will marine highway policy wither from inattention? Will Congress see a Federal role in helping ports, cities and businesses plan for rising sea levels and assist in improving waterfront infrastructure for the coming decades? Will the Coast Guard prepare helpful guidance and rules on cybersecurity and will the industry actively engage in developing it? Will Federal policy foster clean fuel initiatives for the freight modes and encourage off-shore wind energy development? How will the committees answer shipper complaints about railroads? Will a Republican Congress and a White House Democrat come to terms on tax reform, infrastructure funding, and trade policy?

At bottom, how well do the legislators of the new Congress—both Republicans and Democrats—understand, and how will they respond to, these and other issues of relevance to the port/maritime sector?  Pbea

Europe is Breaking the Egg

In Efficiency, Energy/Environ, Infrastructure, MTS Policy, Ports on October 5, 2014 at 11:16 pm

Before we get to John Graykowski’s “Europe is Breaking the Egg” I would like to pose my own chicken-and-the-egg question as one might ask it here in Wonkington, D.C. Which comes first: the policy or the strategy? One might also ponder how good is a forward looking strategy when the policy is of the past century. The Maritime Administration is preparing a “National Maritime Strategy.” It is a principal objective of Administrator Chip Jaenichen and probably has been encouraged by congressional supporters of the U.S. flag industry who, like most of us, have not liked seeing the merchant fleet decline but who, unlike us, are in a position to redefine U.S. maritime policy. The piece below begs the question whether a new national maritime strategy would benefit by first fixing the national maritime policy that for the most part has been in place while the United States lost its prominent role in world shipping. Certainly it would make it easier on Mr. Jaenichen and the Secretary of Transportation to have an updated national policy framework as a basis for new strategies to get to where we need to be. John Graykowski’s article first appeared in Pacific Maritime Magazine on September 1, 2014. You can find it here. He poses the policy question in the context of a growing American supply of natural gas and the multiple benefits to be realized by fostering a bunker switch to LNG. This is the third in his series for MTS Matters on the subject of developing LNG distribution infrastructure to advance the adoption of LNG as a marine fuel. It also is a recurring theme in these pages.  Pbea

We may soon be able to retire the tiresome “chicken and egg” cliché to describe LNG development, since there has been movement in the last year in Europe and the United States that indicates the circle may be breaking; but it’s too soon to tell whether the movement is temporary or permanent. What is apparent, however, it that Europe has moved forward in a more focused and strategic way, to create LNG infrastructure and markets, which is yielding results. By 2016, permanent LNG bunkering facilities will be in operation in Rotterdam and Antwerp – both among the largest ports in the world – thereby signaling that the supply uncertainties have been resolved. It bears asking, therefore, how Europe has done this, and whether we should consider similar measures here if the goal is to expand LNG as a marine and transportation fuel throughout the United States.

In 2008, Norway effectively made LNG the preferred fuel choice for marine operators through a combination of regulatory mandates relating to Nitrogen Oxide (NOx) and financial incentives covering up to 80 percent of the capital cost of the LNG-related components. Following these actions, the number of Norwegian vessels using LNG as a primary fuel went from 3 to 12 vessels in five years, with more than 50 vessels of various types now under construction along with the supporting LNG infrastructure. Concurrent with this, Norway is addressing the regulatory and operational issues, and is now seen as a leader in marine LNG development.

The European Union (EU) is also pursuing a comprehensive effort to increase LNG as a marine fuel with the goal of developing LNG infrastructure in every major seaport by 2020, and every inland terminal by 2025; a total of 139 ports across Europe. This goal coincides with estimates that by 2020, 1,700 dual fuel vessels will be built or converted worldwide, with many of these operating in, or calling on, the EU.

By 2020, the United Arab Shipping Corporation (USAC) dual fuel container vessels will be operating between the Far East and Europe. This activity will spawn additional interest and movement in Europe and among its global trading partners leading to a rapid transition from diesel to LNG as a major transportation fuel.

The EU is employing a “carrot and stick” approach combining financial support for the conversion and construction of vessels and infrastructure with increased regulation. Projects such as the Trans-European Network for Transport (Ten-T) and the Rhine-Main-Danube initiatives have produced significant results. $139 million has already been allocated to 7 Ten-T projects to support vessel conversion and LNG infrastructure development, with more funding promised. Support of up to 50 percent of project costs is available for vessel conversion, construction and infrastructure, and just recently the first inland dual fuel barge was delivered and will shortly begin operations.

The EU adopted an approach that combines: (1) clear and defined goals that LNG will displace traditional marine fuels; (2) increased environmental regulations; (3) financial incentives to spur the initial transition; and (4) coordination among ports, governments; regulatory agencies and stakeholders to create uniform regulatory structures. Given the intrinsic advantages of LNG, there is recognition that the market would likely drive toward greater adoption of LNG without assistance. However, many vessel owners and gas suppliers are reluctant to be the first to make the investments in LNG vessels and infrastructure regardless of the advantages. The EU has determined that these measures are necessary in order to reduce perceived risks, accelerate market decisions, and attain the stated goals for LNG deployment.

In contrast, the United States does not have a national policy to support LNG as a marine and transportation fuel. Instead, our LNG market is developing project-by-project, driven by first-adopters such as Harvey Gulf, Tote, Matson, and Crowley with no federal support or strategy; despite the tremendous benefits LNG offers to the country. While we have seen some movement in disparate locations, there is not so much as a policy statement that commits this country to the development of LNG as a transportation fuel; and there are certainly no programs to support the construction of vessels and infrastructure to make this possible nor to address regulatory uncertainties and enhance public acceptance of LNG.

The challenges and obstacles that exist here are no different from those in Europe, and LNG is new to everyone. It appears, however, that the EU has tackled this question in a more coherent, direct, and proactive way that is rapidly producing results. To be sure, there are major differences between the US and the EU in terms of governmental structures and processes. The EU can promulgate Europe-wide regulations and implement promotional programs, and has a history of doing so. Here, that role would be shared between Congress and the Executive Branch, and that is yet another challenge given the continuing dysfunction between both branches of government.

A policy declaring that LNG as a transportation fuel is in the national interest, and committing to the support, promotion and encouragement of its development would have several immediate effects:

  • It would be a clear signal to all potential stakeholders that LNG is “real” and has the backing of Congress and Administration;
  • It would put federal agencies on notice – and could require them– to collaborate with industry on practical and uniform regulation, reduced delays and greater certainty; and
  • It could include limited and temporary financial incentives such as loan guarantees or tax incentives to accelerate LNG conversion, because early adopters should be encouraged in order to build a sustaining market that benefits the entire country.

Federal resources are constrained, but without a national commitment, LNG may not gain the critical mass and momentum to create a long-term viable market. Regulatory direction is important, and does not involve direct costs, but if combined with properly structured and managed loan guarantees or tax incentives they would have a greater likelihood of jump-starting this industry at low risk and large benefit to the whole nation in emissions reductions, energy independence, economic activity in shipyards and elsewhere. The promise of LNG is so great it deserves this sort of recognition, attention, and effort. Clearly the EU sees it that way, and we should as well and the risk if we don’t address it in this way is diminished potential for LNG to transform this country and the lost opportunity to lead the world in LNG development and utilization.   John Graykowski

A Perspective on Port Dominoes

In Competition, Efficiency, Intermodal, Ports on October 3, 2014 at 12:52 am

A few days ago over 100 people packed a room at high up in Baltimore’s World Trade Center for a day-long forum on “port congestion” convened by the Federal Maritime Commission. It was the second of four planned public meetings–the first was in Los Angeles and the next two will occur in New Orleans and Charleston. The window views from the meeting venues will not be the only differences in what is observed at the four sessions but there are bound to be things in common, too.

The subject of congestion means different things depending on where you are. The severity of the problem also depends on when the post-Panamax ships will arrive in greater numbers to the Gulf and on the East Coast.

The Ports of Los Angeles and Long Beach qualify as Congestion Central if only as a matter of volume and a PierPass system that is working only too well. Some of what they are experiencing could be visited upon the Port of New York/New Jersey in less two years’ time when the Panama Canal gives way to the big ships and if certain problems are not fixed by that time. But that does not mean New York Harbor isn’t experiencing head-throbbing congestion today. Name the problem or snafu and the bistate port has experienced it like punches to the gut. So much so that it did not take much convincing to get terminals, truckers, shippers, labor, carriers and others in the room and agree to hold hands and embark on a waterfront version of a 12-step program.

Norfolk may have 50-feet of water to suit, first, colliers and now big box ships but it also is scrambling to have infrastructure and systems ready in a couple years. Truck and terminal-related problems prompted Norfolk’s own come-to-jesus/how-can-we-fix-this? process. Like other ports the problem is more on land than in the water. The concern isn’t about ships scraping bottom but about terminals getting stuck without a chassis or with too many ships and too little in the way of equipment, labor, trucks or gates. It helps that the Vice President brought a $15 million TIGER grant to Norfolk last week to help pay for improvements to gates and last-mile infrastructure over the next few years.

In the South Atlantic the stories and problems will sound a bit different, as they will in the Gulf. Ports there undoubtedly will paint favorable comparisons to their troubled brethren to the north in a sort of Alfred E. Newman way–“What, me congested?”–and not without reason. But there the trucking and chassis management problems may be only in early stages of development and more of the big ships (and perhaps big-ship-challenges) may be in their future. In fact they are counting on it.

A perspective on the problems facing terminals recently appeared in the Journal of Commerce. The opinion piece by John Crowley, Executive Director of the National Association of Waterfront Employers (NAWE, a client) was cited at the FMC forum by Bill Shea, CEO of Direct ChassisLink (DCLI) in its enumeration of congestion-inducing factors that are in play to one extent or another at U.S. container ports. Crowley pointed to 12 factors including the bunching of ship arrivals, larger ships and cargo discharges, local traffic congestion, terminal capacity and gate hours, truck driver decisions, labor shortages, and even severe weather such as has been seen in the Gulf and more recently from Superstorm Sandy. Most of those were mentioned by speakers at the Baltimore session this week.

Crowley’s piece speaks to the fact that the symptoms of what is being called port congestion are seen throughout much of the intermodal supply chain, which is to say, not just right there at the marine terminal. “The intermodal freight system…consists of market-based industry segments. There are pressures aimed at making each segment more operationally efficient and increasingly productive. It’s a system of nonstop competition, hypersensitive economics and narrow margins. We see it in the increasing size of container ships, the investments made in marine terminal technology and capacity,” etc. “The market determines demands on price and service levels from the modal carriers which, in turn is felt throughout the supply chain and by all modal carriers. Situated in the midst of those demands are marine terminals that strive for each modal operation – marine, rail and truck – to be roughly in sync.”

John Crowley “encourages all industry sectors to collaborate, as much as practicable and permissible under law, to arrive at solutions that will serve their mutual interests… Our operators rely on each mode to similarly commit. Solutions may not come as easily and swiftly as we all would like, but they will have to come about through adaptation in the marketplace by the principal actors in the intermodal freight system…” He calls for government policies that foster market solutions where possible. “We welcome positive and appropriate federal involvement that contributes to solutions but will resist unproductive, regulatory intrusions into terminal operations and where even well-intended government involvement will only frustrate the development of market solutions.” Find the full piece here.

Those views were also heard by the folks in the crowded 21st floor meeting room in Baltimore.  The Port Authority of New York & New Jersey’s Rick Larrabee described one of the guiding principals in the formation of the Port Performance Task Force 10 months ago. The port’s stakeholders had to be willing to “look inside” for answers as much to look to others in the port to fix the problems. Few of those problems stand alone. A line of dominoes is not the perfect metaphor but it will do. The trucker’s dilemma, for example, is one that is felt and affected by other actors in the supply chain. The companies and drivers have something to contribute but without changes in other sectors the drayage problems will become more severe; the congestion will worsen.

Dire predictions underscored the calls for solutions.

Collective efforts formed to tackle problems in the ports of San Pedro Bay, New York Harbor and Hampton Roads and as a result there is reason for optimism. But as several people told the FMC commissioners this week, we will have a rough year or two, starting this winter, until those solutions are implemented by the principal actors in the port marketplace.

Meanwhile, the FMC will hold its forums. The commissioners and staff are taking notes and those will emerge in some form of a report. It is good for the government to be alert to what is going on at the nation’s gateways and the problems of the freight logistics system. That agency may even decide to take some action to the extent its limited jurisdiction allows. But it is up to the chassis, terminal, truck, ship, rail and distribution center operators and the beneficial cargo owners ultimately to figure out how to make things work better.   Pbea


Congress Got It Done

In Congress, Government, Infrastructure, Legislation, Ports, Water Resources on May 23, 2014 at 1:13 pm

While strolling through the park one day
In the merry merry month of May
I was taken by surprise…

Two recent May events are fresh in mind. Maybe not of the surprising sort but perhaps, eventually, capable of the unexpected. On May 6th the Maritime Administration convened its second symposium aimed in the direction of a National Maritime Strategy. And just this week, Congress gave final approval to the first water resources development act legislation enacted in seven years. Both have significance to the maritime sector but, for the time being, we may be able to gauge the significance of just the one.

So, let’s talk WRDA…rather, WRRDA.

You don’t have to have inside-the-beltway know-how to know what “werda” is.  For nearly 50 years, and for more than a century earlier under different names, WRDA has been the path that harbor deepening and inland waterway projects—not to mention flood protection and shore and environmental restoration projects—have taken to Federal approval.

Project ideas graduate from feasibility studies to be authorized for funding by Congress. WRDA is how the Harbor Maintenance Tax and Trust Fund became law in 1986. It is how the near-completed 50-foot deepening in the Port of New York/New Jersey was authorized in 2000. And it is how the Corps of Engineers will be given the go-ahead to deepen and otherwise modify channels in the ports of Boston, Savannah, Jacksonville, Canaveral, Palm Beach, Freeport, and Corpus Christi.

Those ports, and various States and counties, will be relieved when the Water Resources Reform and Development Act of 2014, HR 3080, is signed by President Obama.

Passage of WRRDA 2014 was cheered in the halls of Congress. To be sure, some of the voices heard where those of lobbyists, but more prominent were the self-congratulatory speeches and tweets (#WRRDA) let loose by the legislators, especially those with projects at stake. Even Tea Partiers, who two years ago questioned why Congress should even have a role in public works, voted for the conferenced measure and made floor speeches hailing its importance to their town or to the national economic interest.

No small amount of pride was declared in proving to themselves and to the nation that Congress is capable of agreeing on major infrastructure legislation despite the fractious partisanship and anti-spending sentiment that has come to characterize this town. The bill’s reforms and deauthorization provision, which will dump $18 billion in previously authorized projects, provide the calculated and rhetorical coverage they consider essential to allow them to vote for a bill with an estimated, eventual cost in the neighborhood of $12 billion.

Yes, public works can be costly. Of course, not building such infrastructure also can be costly.

If there is an indicator that the conservatives have been hungry to vote in the affirmative on an [insert favorite jobs creation modifier] infrastructure bill and to show that Congress can do something, it is that only four House members opposed final passage despite it being a Heritage Action “key vote.” Only seven senators—also Republicans—opposed the final bill this week.

It helps that some planned projects—including unsexy port channels for goodness sake!—have in recent years been regularly reported across the country as important to US competitiveness in global commerce. The House Transportation & Infrastructure Committee leadership used it early on to educate colleagues and the public alike. Who hasn’t heard that the Panama Canal is being expanded to accommodate big ships? They must not have been listening to the President, the Vice President, the news media, etc.  Those are the same ships that the aforementioned ports in Massachusetts, Georgia, Florida, New York and New Jersey, among others, hope will come their way.

WRRDA lacks the earmarking that turned some in Congress sour on public works legislation. Instead it prescribes a more detailed process by which the legislature will receive and act on project recommendations. It is a rational process, devised on the House side and intended to be something other than earmarking while reserving the prerogative for Congress to authorize projects i.e., not leave it to the Executive to make the decisions.

The added “R” in the bill is more than for show. Reforms to current law and practice are many. Some are intended to speed the famously bureaucratic civil works process. Others introduce new process and calculus to how Harbor Maintenance Trust Fund monies are budgeted and appropriated. (I may devote some words to that in a future post and so will limit my comment here to wishing “good luck and great wisdom” to the folks at Corps headquarters whose task it will be to interpret and implement the intent of Congress.)

It will have to be seen how well the reforms will enable the Corps of Engineers to meet, and will hold them to achieve, a 3-year study mandate, for example. One test of that will be the extent to which project sponsors are willing to leave the fate of their projects in the hands of Federal planners and analysts. That is because the bill gives more flexibility to project sponsors, such as port authorities, to study, construct and finance their projects. As we have seen in Florida and South Carolina, financial commitments are being made in State capitals in order to get projects constructed and completed well ahead of whenever Federal process and funding get done.

So there is a lot in WRRDA to cheer, not the least of which is the fact that it is done. And should the congressional committees actually live up to the sense of Congress, in Section 1052, to wit, “Congress should consider a water resources development bill not less than once every [two-year] Congress,” there will be even more to cheer in the years ahead.   Pbea

2013: The Year Before the Year of LNG?

In Efficiency, Energy/Environ, Green Transportation, Infrastructure, Ports on December 29, 2013 at 4:51 pm

A year in which U.S. shipyards announced contracts for over twenty new ocean going vessels (with options for several more) is noteworthy, especially given the recent difficult times experienced by the shipbuilding industry.  What makes this fact even more significant is that LNG as a propulsion fuel is a central feature in each of these vessels, either as the intended fuel source upon delivery or at some point in the future.

So does this mean that the U.S. maritime industry in America has reached the LNG tipping point, where a tidal wave of even more marine projects will be announced in the coming year?  My short answer would be a heavily qualified, but nonetheless definite: “maybe.”

A distinction has developed between ships that will be “LNG-ready” as opposed to those that are “LNG-capable,” the difference being those vessels that will use LNG upon delivery and those that can be converted to operate on LNG at some later date.  While certain design modifications are incorporated into these ordered vessels, such as foundations for LNG fuel tanks and dual fuel main engines, they will operate on conventional diesel fuels when they are delivered.

The reasons for taking a half step to LNG rather than making the plunge are several, among them the additional cost of the entire fuel gas system, including the fuel tanks.  However I suspect the greatest reason is uncertainty related to LNG supplies in the ports where these vessels will call.  This is particularly the case with the product tankers that have been ordered that, unlike the LNG-powered container vessels do not operate in a classic point-to-point liner service.  Their deployment is largely dictated by cargo availabilities throughout the United States and thus, until LNG is more widely available, the owners will likely hold back on a full commitment to LNG.

If one is looking for positive signs on the infrastructure front, they are there.  The Port Fourchon terminal project on the Gulf of Mexico in Southern Louisiana is being developed by Harvey Gulf Marine to serve its fleet of LNG-powered offshore service vessels.  It will be the first operational LNG bunkering facility in the United States and is expected to be operational next year.  Clean Energy has announced its intent to construct facilities dedicated to the marine industry in Jacksonville.  Tote, Inc. issued a request for proposal (RFP) to potential LNG suppliers to provide LNG for their vessel operations based in Tacoma, Washington and Jacksonville, Florida.  Each announcement of new LNG-powered ships results in a deluge of phone calls from potential LNG suppliers seeking meetings and making proposals to vessel owners.  So again, there is clear movement, growing interest and some tangible progress; but it is slow and these projects still face regulatory challenges and uncertainty that may result in delays and higher costs.

Given the delivery schedules of the Tote, Inc. ships, in late 2015 and early 2016, and the Crowley vessels in 2017,  it seems that the window for putting bunker infrastructure in place—completing land acquisition, clearing Federal and local permit requirements, and facility construction—is growing very tight.  This raises the possibility of ships being delivered and no LNG being available, which will greatly increase operating costs due to the requirements to use ultra-low sulfur diesel (ULSD) to meet Emission Control Area (ECA) regulations.

So, to offer a slightly more elaborate answer to the tipping point question, the U.S. is closer today than a year ago but one cannot conclude that the LNG revolution has begun.  Of the limited number of Jones Act liner operators, three have already announced projects–Matson being the third–and another has announced intentions to convert existing vessels to LNG. The product tanker market has been effectively replaced over the last ten years so there are limits to the expansion there.  I think the greatest opportunities for achieving critical mass in a marine fuel transformation can be found when and if several large harbor services or tug and barge companies either convert existing tugs to LNG or CNG or acquire new tonnage or the top-tier international liner companies announce new construction programs with LNG-fuelled vessels.  Either – and certainly both – of these developments would be a critical next step to accelerate widespread LNG deployment.

Marine vessels represent the potential for a large concentrated market for LNG/CNG, and a port that has both ocean going and harbor vessels that need LNG for fuel would surely provide sufficient basis for investments in LNG marine terminal infrastructure for bunkering.

While there is still a way to go until we all agree that the breakthrough has occurred we are seeing some decisions and investments that are the necessary predicate to making LNG a common transportation fuel throughout the country.  John E. Graykowski

LNG: Ports as a Catalyst?

In Energy/Environ, Green Transportation, MTS Policy, Ports on October 10, 2013 at 8:47 am

MTS Matters welcomes a well-known and regarded figure in D.C. transportation circles. John Graykowski, a Principal of Maritime Industry Consultants, served as Deputy Administrator of the Maritime Administration, and for two years as Acting Administrator, during the Clinton Administration. He is an attorney with experience in both private and public sectors. The subject of LNG-fueled transportation and how it might develop in the context of maritime policy and port communities has been a focus of his attention in recent years. This is the first of his contributions to this blog’s musings on port/maritime policy—present and future.

Over the past year, LNG as a marine fuel has gone from novel concept to an accepted alternative fuel here in the United States. Some LNG-capable vessels are operating and more will be under construction as appreciation is growing for the environmental, economic and energy security benefits offered by LNG. This transformation of a marine cargo commodity to emerging marine fuel in here and elsewhere might lead one to conclude that the broad deployment of LNG throughout the U.S. is underway and faces no challenges or constraints—but this is not the case. Lagging behind LNG-fueled vessel development here are the necessary market and regulatory structures that promote its widespread development.

The most common platitude in any discussion of LNG is the “chicken and egg” problem. Ship owners are loathe to make the large capital investment in LNG technologies absent certainty of supply.  Meanwhile gas suppliers are averse to spending $150 million or more on bunkering infrastructure without firm, long term purchase contracts by ship owners. This reflects the lack of historic relationships between the gas supply industry and marine operators, who purchase bunker fuel in virtually every port on a spot basis and never needed long term contracts.

Compounding that is a lack of understanding and knowledge about each other’s industries. Marine operators are not familiar with gas production, transportation and market dynamics and gas suppliers have little direct knowledge about the marine industry practices, requirements, and the like. Emblematic of the divide between the two industries is the simple fact that marine operators purchase fuel on the basis of metric tons or barrels of oil, while the gas industry sells LNG on the basis of million BTUs. Potentially complicating this market disconnect, are increasingly stringent accounting rules that likely require a long term LNG contract to be carried as a contingent liability, thus impairing a balance sheet and constraining future capital expenditures for a marine company.

Beyond these market issues are significant regulatory challenges related to both operational procedures for bunkering vessels and, more importantly, the siting, permitting and operation of small and medium sized LNG marine terminals. It may come as a surprise to some, but there are no existing uniform federal regulatory structures that apply specifically to LNG marine fueling terminals.

The United States Coast Guard (USCG) and Pipeline and Hazardous Materials Administration (PHMSA) each have regulations that apply to LNG fueling terminals. These regulations, however, were developed with large scale export and import facilities in mind and thus are largely inapplicable to a small marine fuel terminal and the fueling of other than LNG carriers. In many cases these regulations may conflict, which creates a large area of potential regulatory confusion and will most likely result in ad hoc development of LNG regulations. Adding to this uncertainty is the probable requirement that these facilities will be subject to local permitting actions, which can provide opponents of LNG the opportunity to intervene and delay the project.

Where do ports fit in this puzzle of a marketplace?

Ports can and should be a catalyst to spur LNG development throughout the transportation industries since they are at the center of marine activities in the United States. They provide a ready-made, multi-modal market for LNG expansion beyond large oceangoing vessels, which includes ferries and harbor craft, trucking, and rail operations. Port agencies may have some degree of jurisdiction, and even control, over property where LNG operations will occur. Depending on the port, it may have a role in the siting, permitting, financing, development, or even operations of an LNG fueling terminal. As a responsible economic development agency, a port can also play a critical role in the public education and promotion of LNG and the mitigation of local opposition to such projects.

Public port agencies generally understand this is a constructive role they are in a position to play. We are seeing that in isolated initiatives, notably on the West Coast, as well on an international scale with Antwerp leading a working group that includes the Ports of Los Angeles and Long Beach.

The expansion of LNG and compressed natural gas (CNG) as a replacement fuel in port related operations, already showing benefits, is also a powerful tool that ports can use to achieve significant emissions reductions and thus reduce the cost and impact of increasingly more stringent environmental regulations or measures to meet local community demands. If LNG is used to fuel vessels’ auxiliary generators while in port there may be no need to install costly shore power systems for cold ironing since equivalent emissions results could be obtained with LNG.

Collectively, ports can be in the forefront of a “Green” initiative, leading to the expansion of LNG as a transportation fuel throughout the nation. Individually, ports that facilitate LNG bunkering operations could find them to be a competitive factor in attracting and retaining liner business as those companies bring LNG-capable vessels on line to meet IMO global standards by 2020.

Much has been written of the significant impact that domestically produced natural gas and its liquefied form will have on our on our nation. Ports are where all surface modes of commercial transportation intersect and where LNG distribution will naturally occur. They are in a position to be influential in the development of national policies that promote and accommodate the broad deployment of LNG as a transportation fuel.
John E. Graykowski


Bottom Line Thoughts on the MTS

In Congress, Federal Government, Infrastructure, Marine Highway, MTS Policy, Ports on September 17, 2013 at 11:30 pm

AASHTO, the association of State DOT chiefs, issued this summer the last of its “bottom line” modal reports. This one–Waterborne Freight Transportation–is a useful addition to the studies and papers that indicate a marine transportation system in great need of policy attention. It is not that the MTS is in failing condition–certainly not that part engaged in international commerce–but “the very success of the MTS has masked serious underlying structural problems” that, if left unaddressed, “pose critical threats to the long-term health of the MTS and the nation as a whole.”

The report notes that unlike the American interstate highway system the MTS “has evolved without larger scale coordinated policy and planning.” Indeed the ports and related infrastructure and services that developed without a “master plan” make the MTS a “collection of competitors.”  Persons who follow action in the ports of Charleston and Savannah, both overseen by State port authorities and championed by their respective State legislatures, can be fascinated watching that competition in real time.

The AASHTO report, the focus of which lands principally on the MTS infrastructure, identifies areas requiring attention. Waterway maintenance needs are not being met, navigation projects often take far too long to accomplish, funding for MTS expansion needs is uncertain, national investments are not being effectively targeted to meet national needs, and responsibility for the MTS in official Washington is widely diffused.  That last item can be easily understood by looking at the “comprehensive matrix” spreadsheet on the CMTS website.

In a statement that could apply to maritime elements of the private sector as much as it most definitely does to government policy, the AASHTO report offers this bottom line thought: “Embracing business as usual will inevitably lead to significant further declines in MTS condition and performance, and to lost opportunities for our transportation system and economy.” Today, former Pennsylvania Governor Ed Rendell, the nation’s inconvenient truth teller on matters infrastructure, and National Association of Manufacturers CEO Jay Timmons used the Philadelphia port as a backdrop for a similar message that is bolstered by a survey of manufacturers. “Improving our ports, highways, and bridges is essentially an economic driver. Modernized ports and transportation systems enable American manufacturers and businesses to export their goods to countries around the world, which strengthens our economy here at home,” said Rendell.

Much of that message in Philly and the AASHTO report is centered on international commerce, understandably. Ports and their modal connectors enable U.S. exports to make it to other markets in competitive fashion. They also speed imported goods to Costco shelves and components to American assembly plants.

One had to look for it, but the AASHTO “bottom line” document also makes the suggestion, however briefly, that the MTS can play an increasingly important role stateside. With reference to the potential for Marine Highway freight transport the document notes that “with growing highway congestion, waterborne transportation becomes an even more attractive transportation alternative.” It concludes with the statement that “[w]aterborne trade and transportation will be cornerstones of the 21st century economy.”

Among the actions called for in the report is the establishment of an office of multimodal freight at USDOT, an oft-made recommendation by various stakeholders and in the reports of appointed and self-appointed commissions. Among the tasks of the office would be to create a “system map and classification of MTS facilities, analogous to the National Highway System and the National Freight Network.” Congress specified in MAP-21 that the designated NFN be highway only, a decision that reflects more the congressional committee jurisdictions and the “highway bill” tradition than it does the multimodal operating freight sector. (A recently introduced House bill, H.R. 2875, grandly named the “Waterfront of Tomorrow Act,” would amend MAP-21 to “ensure that ports and harbors are incorporated into the national freight network.”)

The recommended freight office would also be used to prepare a “long-range vision plan for the national MTS development and investment to meet national transportation and economic development objectives.” The report also calls for full utilization of Harbor Maintenance Trust Fund monies for navigation infrastructure maintenance as well as an exemption from the Harbor Maintenance Tax for “domestic Marine Highway services.”

These recommendations are pointed in a constructive direction. But there is a missing element in the report. More significantly, it also is missing from the national transportation policy discussion on Capitol Hill, in those many departments and agencies tagged on the CMTS spreadsheet, and in the White House, then and now.  What is missing is visible interest in what the national maritime policy need be. The weakest element of the multifaceted American marine transportation system, oddly enough, is marine transportation. The long, sloping trend line representing flagging support for U.S.-flag merchant shipping, an aging Jones Act coastal fleet that frustrates Marine Highway development, and a shrinking ship building sector needs to be reversed.  It’s far from being the cornerstone of the economy that it once was and perhaps still can be.  Pbea


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