Marine Transportation System

Posts Tagged ‘USDOT’

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.)

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

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

So Spake the Freight Stakeholders

In Congress, Federal Government, Intermodal, Surface Transportation Policy on June 4, 2012 at 11:49 am

The Freight Stakeholders Coalition–a group of 18 or more organizations–spoke  freight to power.  But in today’s Washington, where the policy makers often wear policy blinders, will the Deciders (to use Dubya-speak) listen to the goods movement call for change?

Back in 2005, when SAFETEA-LU came out of the House-Senate conference cooker, the Stakeholders were dumbfounded to realize that the negotiators cut from the bill a key freight provision on which there had seemed to be agreement.   It was a 2 percent set-aside funding requirement for freight related projects.

It didn’t take long for the Stakeholders to regroup, this time in sync with the 50+ State DOT leaders (AASHTO), and produce a 10-point paper making a collective case for goods movement policy.    Still feeling the SAFETEA-LU sting years later the Stakeholders sent a letter to House and Senate conferees–the people tasked with coming up with a surface transportation bill to send to the President.  The letter contains the 10-point paper and concludes:

Now more than ever, the needs of our goods movement network must be addressed as system use continues to grow in lockstep with America’s recovering economy. The inclusion of a national freight plan with supporting policies, strategy and funding will help ensure America’s international competitiveness, create jobs and bolster the U.S. economic recovery.

But will the conferees–who largely take their cue from a small number of party and committee leaders–get it done?  As we learned from the sad SAFETEA-LU experience just because there are fairly substantial freight provisions in the MAP-21 Senate bill (S. 1813) doesn’t mean the final product will take goods movement seriously.   Besides, the House-passed version (H.R. 4348) was a Plan B vehicle to get to conference with the Senate.  It doesn’t have freight provisions.  For that matter, the version that was reported from the Transportation & Infrastructure Committee, but which failed to get to a House vote, H.R. 7, contains little in the way of substantive freight provisions.

Will the conferees get it done?  Larry Ehl rightly has cause to ask a more basic question: Are Transportation Bill Negotiations on the Rocks?  Ben Goldman also see bad news clues.  Pessimists, which may include most who work around Washington these days, would observe that this particular Congress seems to want to get not much done.  Some legislators–tea partiers especially–would proudly label that an achievement.

I still think it can get a bill done, however, despite a significant push by the private sector for strong freight provisions, one wonders what the House conferees will agree to.  Moving on…

Days after sending their letter to the conferees the Stakeholders gave cheers for a senator’s letter to Secretary of Transportation Ray LaHood.

In her letter of May 31, Maria Cantwell (D-WA) told Secretary LaHood to “tear down bureaucratic barriers and inefficiencies” in the modally stove-piped department by creating a freight-focused operation in the Office of the Secretary.  The senator pointed to ways that her home state has realized benefits of “freight coordination, prioritization, and collaboration” between the public and private sectors.

Over the years Congress has been importuned to create a freight office, establish an assistant secretary post for goods movement, etc.  But silly arguments about expanding government and creating new bureaucracy usually keeps those ideas from being given a serious hearing.  The implementing agency of national transportation policy remains structured as if the modes rarely if ever meet.

But as we know, in the real world they are meeting with ever increasing frequency as the market seeks ever more efficient ways to getting the job done.  On dock rail.  Intermodal yards.  Trains to airports.  Boxes shuttled from trucks to ships to barges to trucks to rail to….

The senator’s letter speaks to the need for a  “high-level and coordinated multimodal freight initiative.” *  She reminded the Secretary he doesn’t have to wait for Congress to create a formal structure.

… I strongly encourage you to establish a high-level and coordinated multimodal freight initiative at the U.S. Department of Transportation using your existing administrative authority.  If established, this initiative office should report directly to you, include a special assistant designated with specific responsibility for freight movement, and endeavor to improve federal freight policy, planning, and investment across all modes.

Or as one might say in Obama-speak: Yes, he can.

Secretary LaHood is leaving the Obama Administration later this year.  Let this be his gift to his successor.  He can set up a freight office down the hall from his own.  He can start the process of directing the DOT stovepipes, which in truth do talk to each other about some freight objectives and the occasional project, to be even more intentional about it.  He can ask his modal administrators and freight staff for their input on how best to get it done.  But most of all he can make a serious effort–as serious as his pretty effective distracted driving campaign–to bring his department and government policy to where the mostly private sector freight innovators have been for a good long while.   Pbea

* Kudos to the Coalition for America’s Gateways and Trade Corridors for its diligent efforts in advancing the freight message on Capitol Hill.

Functional (Not WTF) Government

In Federal Government, Leadership, Politics, Surface Transportation Policy on August 2, 2011 at 3:51 pm

~ Political Drama in Three Acts ~

Cast:  Persons who come to positions in government to make a point and others who come to govern.  Neither conservatives nor liberals alone are cast as good at governing.

Forward:  Some like wielding power but their interest wanes when it comes to the nuisance of making government function well. Governing can get in the way of principles, pledges and making points. For some, government isn’t complicated; it’s just in the way. It’s the root of all ailments. They reach for the lancet with no less confidence as to the result than did medical men whose all-purpose remedy was to bleed the patient. Governing is not always done well, which makes it easier for the talented among the electeds and civil servants to stand out. 

I.  The urge to rant about the needlessly protracted debt ceiling decision-making is resisted here.  Today Congress finally sent “the deal” to the White House.

There is little evidence of  the art of politics; instead we witness the game of brinkmanship. Think playing chicken on a narrow country road. In the the driver’s seat are persons with an unswerving belief in what government shouldn’t be and a disinterest in the map of governance.  (They also sign a pledge to drive the car without benefit of headlights.)  They would just as soon call people names than to the negotiation table.

Props to the White House writer who came up with this for President Obama: “…for the first time ever, we could lose our country’s AAA credit rating…because we didn’t have a AAA political system to match…”  

That some people did come to town to be Governers may be what eventually pulls our national fanny out of the fire but one fears that the flames will burn hot for a good while longer.

Governers brought about the Simpson-Bowles fiscal reform commission, sweated over the details of its report, and were prepared to act on that report. Governers tried to make the “Biden negotiations” work…and didn’t walk out.  Governers make up the Senate’s bipartisan “Gang of Six.”  Whatever terms of agreement over fiscal policy to emerge from the fire over the next year will be founded in such efforts.

II.   The House panel that held longest to a bipartisan spirit in an era of increasing rancor is the Transportation and Infrastructure Committee.  Road projects know no party as the saying goes.

In July, Chairman John Mica (R-FL) released the highlights of his planned surface transportation bill.  It read much as he said it would.  Reforms, consolidations, and reined-in spending to match reduced Highway Trust Fund revenue. It is based on harsh reality and a tax-averse party caucus.

That interest groups responded with concerns about program eliminations and slashed funding was hardly surprising but the response from Mica’s Democratic counterpart was.  Nick Rahall’s (D-WV) sharp words may not sound unusual in today’s Washington but observers noted the change for a committee where the chair and ranking member stand together on most things and respectfully disagree on the rest.

In the last scene is the Federal Aviation Administration bill.  Mr. Mica takes on both House Democrats and Senate counterparts of both parties over disputed issues in the long unresolved bill that authorizes funding for aviation programs. He put a provocative provision in the House-passed extension and dared the Senate to not approve it. It didn’t. As Congress beats it out of town for the August recess this other Capitol stand-off leaves USDOT holding the bag with 4,000 non-critical FAA staff forced to stay home and contractors around the country ordered to stop work on airport projects.

III.   Not without reason many States are concerned, even alarmed, at the damage that can be done by non-indigenous invasive species.  Great Lakes States have a long history of struggling with what can arrive in vessel ballast water.  But what concerns certain regions of the country also concerns the United States and other nations.

Solutions to an international problem carried in the tanks of global shipping rightly belong to Washington and the International Maritime Organization.  A patchwork of regulation at the State level is opposed by the maritime community that values uniform rules from port to port.

When New York State’s Department of Environmental Conservation (DEC) issued its regulation the response from the industry was predictable and especially vigorous. Why? Besides being imposed at the State level it set an un-enforceable, technologically unachievable standard that initially is 100-times more restrictive and, later, 1000-times tougher than the IMO standard, which the US Coast Guard also is expected to require initially. (A committee background memo provides a summary on the issue.)

Governor Andrew Cuomo and his environmental commissioner inherited the DEC requirement that the agency regulators have insisted on despite all reasoned arguments and documented findings to the contrary.  Those regulators made individual vessel operators–a thousand?–apply for an extension of the implementation date so they would not have to meet the un-meetable standard.  They were held in suspense until February 2011, beyond the implementation date, when DEC finally sent out letters of extension. Most recently, Steve LaTourette (R-OH) decided that New York was not taking the concerns of others seriously. So he did something to get Albany’s attention.

Perhaps reason will prevail.  Industry and other States from whose waters shipping would be effectively barred if the regulation is enforced in New York waters await a decision by the new administration.  It’s called governing.   Pbea

Make Time for Maritime Policy

In Federal Government, Marine Highway, MTS Policy on July 2, 2011 at 11:37 pm

The piece below appears in the June 2011 edition of the Eno Transportation Foundation newsletter, EnoBrief.  I appreciated the invitation to pen something on a maritime theme and decided to continue on the topic of American maritime policy, which is in need of attention.  Comments are welcome.  Pbea

“Now, what about our national maritime policy?” posed Norman Mineta in 2007, no longer Transportation Secretary, before answering himself. “Frankly, it is comparatively meager and unfocused.”

In his remarks to an industry finance audience he drew comparisons to the other modes that are more completely housed at USDOT, underpinned by substantial programs and funding, and enjoy large, strong and active stakeholder bases.

The former cabinet officer and present day Eno Board member’s prescriptions to address the sector’s ailments included things that might explain his waiting to address this “comparatively meager” sector only after he was out of office.

He said his recommendations can be accomplished “by overcoming the inevitable opposition – not only from without but from within.” He continued, “Within the maritime industry there are many agreements of mutual mediocrity.  People…will not want to see it changed.  The ground is shifting under their feet and they imperil needed financial investment and the innovation and the efficiencies it brings.”

He also mentioned some difficult issues that “need to be addressed within the industry” but “they are not reasons to oppose raising the importance of maritime issues on the national agenda.”

Secretary Mineta thought there was reason to issue an urgent call.  “Compared to the resources and focus that we have devoted to surface transportation and aviation, I believe we must quickly and dramatically increase our attention, our funding, and our national purpose with respect to maritime issues.  To fail is to become a second rate economic power with a decrease in our quality of life here at home and a reduced ability to effect change in international affairs.

“Simply put:  the United States must develop a comprehensive maritime policy and implement it through a thoroughly reorganized federal structure.” He said the public sector “must work with industry stakeholders to educate American citizens and their decision makers regarding U.S. reliance on a strong national maritime system.”

Four years later his concerns about maritime policy still deserve consideration.  And while Secretary Mineta’s remarks did not dwell on the issue of “ships and crews” the vessel aspect of present policy also warrants attention, especially if marine transportation is to play a role in addressing some of our nation’s transportation challenges.

The declining American flag presence in foreign commerce is being examined by the House Transportation & Infrastructure Committee, which prompted USDOT to commence a study, soon to be completed, to quantify the competitive disadvantage of American shipping.  Facing a competitor that flies flags of convenience, builds ships in China and Korea, and hires low wage crews the American operators will always find it tough to capture market share.

So let’s drill down to examine the protected American market. Not surprisingly, much of the Jones Act trade is carried in dry and liquid bulk vessels that lend themselves to commodities like grain and petroleum.  As for container shipping, the Jones Act fleet has only 26 vessels in service with a total carrying capacity of 56,631 TEU.  Most of those are in the Alaska, Hawaii and Puerto Rico trades. Sixty-eight percent of American container vessels (including barges) are at least 26 years old with 41 percent exceeding 30 years. (One can’t resist noting that a major program at the Maritime Administration is managing the disposal of U.S.-flag vessels.)

Meanwhile the capacity of U.S. commercial shipyards to build container and roll-on/roll-off ships is rapidly diminishing.  The Aker Philadelphia Shipyard is surviving for the moment on an emergency injection of State funds to build to ships on spec.  Aker, General Dynamics’s NASSCO Shipyard (CA) and Bay Shipbuilding (WI) announced layoffs last year. All 5,000 jobs at Northrup Grumman’s Avondale facility (LA)—a defense shipyard that could convert to commercial construction—are slated to end in 2011.

Why talk about U.S. container and ro/ro ship capacity?  Secretary Mineta, his successors at USDOT, and others have suggested that marine highway development is not only needed but inevitable for goods movement here.  The reasons include the mode’s inherent efficiency, its intermodal capabilities, public benefits to be derived from shifting part of the growing freight burden from land routes, and the extensive use of short sea and waterway service in other developed nations. Congress acknowledged as much by enacting the “short sea transportation” provisions of the Energy Independence and Security Act of 2007.

But to realize any of the above benefits—not to mention the renewal of a shrinking industry—these are needed: 1) a modern Jones Act fleet capable of meeting tough emissions standards effective in 2012, 2) cost-competitive commercial shipyard capacity to build the fleet, 3) vessel financing, 4) sufficient trained seamen and officers, and, let’s add, 5) a clear signal that Washington does not want America to lose its capacity to move goods on the water.

This telling is absent a call for or against Jones Act strictures. There are arguments for the status quo and for alteration.  But, as Secretary Mineta might say, the existence of the Jones Act in a world where cabotage requirements are commonplace is not reason “to oppose raising the importance of maritime issues on the national agenda” and reversing a decline in the American maritime sector.

“Now, what about our national maritime policy?”  

If you only have hot dog money in your pocket maybe you just buy a hot dog…but which hot dog?

In Efficiency, Infrastructure, Surface Transportation Policy on June 2, 2011 at 9:36 am

My previous post about the surface transportation reauthorization bill—TEA for short—ended with a bit of wait-and-see optimism.  That was then.  Here is a bit of face-facts pessimism to balance it out.  It’s the kind of yin yang see-sawing that this town sets the mind to doing.  Spend more than a few minutes thinking that things will turn out fine and then…

It would be so much easier if the main actors in the TEA deliberations agreed to settle for current revenue projections.

There is real money and then there is wish money.  Real money is in the bank, or will be. Wish money is what we want Congress to produce though new transportation revenue measures.  And what is the chance of that happening when?

We can speculate, as many do, that after the 2012 election office holders will muster what it takes to vote for new revenue. But after watching these first months of the New Washington—where donkeys and elephants can’t even agree which of them has the trunk—the best we may have reason to expect of the House, Senate and White House is that they will come to some basic agreement on the overall Federal budget.  Set your sights low.  A big transportation bill won’t figure into that deal.  And a more conservative Senate after the elections may cause our sights to be five clicks lower.  Meanwhile the TEA can gets kicked farther down the road.

Barring the use of creative accounting—the sort that will not serve us well as the government feels its way to solid fiscal footing—the options for a 6-year TEA bill could be limited to $556 billion (Obama), $339 billion (Boxer) and, maybe, $230 billion (Mica). The last of those assumes only projected Highway Trust Fund receipts. Those are the choices. In which case…

Let’s here assume Congress, at best, will extend the soon to expire excise taxes to avoid a total collapse of current programs.  The choice then that policy makers have is between A) extending current law authorization i.e., SAFETEA-LU and sit tight, and B) approving a new TEA bill that fits the revenue stream.

While hardly our preferred road to travel, the “B” route may not be a bad option.  Yes,  it would shrink transportation funding on which States and locals—already strapped for cash—now rely for road maintenance, transit projects, bike paths, and other uses enabled by over one hundred programs.  But—here’s the yang part–it also could have its benefits along with the pain.

  • Get past SAFETEA-LU by enacting reform policies e.g., performance metrics, that have emerged from the various advisory panels.
  • Give States maximum flexibility to put available Federal funds to their best use.
  • Focus Federal policy on what is in the national interest (building stage coach museums vs. easing interstate chokepoints).
  • Provide added impetus to enact creative leveraging of other sources of infrastructure funding e.g., expansion of TIFIA, new infrastructure bank.
  • Force government at all levels to adjust how investment decisions are made—where the priorities are and whether projects can be delivered more efficiently. (Recent testimony from the Congressional Budget Office—“The Highway Trust Fund and Paying for Highways”—provides a helpful review of options and makes the point that “selecting projects carefully can increase the highway system’s contribution to the performance of the economy.”)
  • Cause States to re-examine their own transportation funding mechanisms and, in States like New Jersey, face up to the under capitalization of transportation trust funds.
  • Give the nation the taste of intentional under-investing in America and the significant economic consequences of that.

Chairman John Mica (R-FL), facing the facts for months now, has vowed to get a 6-year bill done this year using existing revenue. That’s the best he can do given the current House majority and leadership.

Sen. James Inhofe (R-OK) is the top Republican on the Environment & Public Works Committee that will produce the bulk of the TEA bill.  As bullish as he has been on the need to produce a full 6-year bill (with earmarks!) he disagreed this week with his committee counterpart, Chairman Barbara Boxer (D-CA), who said she will put a full bill before her committee. Inhofe acknowledged that Congress may have to make do with current levels of revenue in a 2-year bill.

So here is a tough-love case for moving ahead today: improve the policy but face the fact that Washington, sadly, is not yet ready to go the full measure in addressing the terrible under-investment in our infrastructure.   Pbea

The Mineta Speech as a Starting Point

In Federal Government, MTS Policy, Surface Transportation Policy on March 30, 2011 at 11:34 pm

Former Secretary Norman Mineta provided a service in making his 2007 speech on the maritime sector (excerpts found starting here).  Since he went to the trouble, let’s use his suggestions as a starting point for an overdue discussion on rethinking and recharging US maritime policy.

Secretary Mineta called for moving maritime related functions of other agencies to the  Maritime Administration and renaming the agency according to the “Federal [ ] Administration” template used for the other modes.  There are 18 or so departments and agencies with program interest in marine transportation including USDA, NOAA, EPA and the Navy.  Reason enough to create an interagency Committee on the Marine Transportation System (CMTS).  Perhaps some functions could be consolidated in USDOT.  Others not so easily.  The navigation portion of the USACE civil works program, one that often is mentioned as a prospect, may not transfer well.  Not that the status quo is worth maintaining.  The excruciatingly-slow project evaluation and preparation process has ports pulling out their metaphorical hair.  But it’s not simply a Corps of Engineers process failing but one that Congress abets by being very unreliable in implementing the key stages of project authorization and funding.   The channel program is ripe for change.  But it is not a given that USDOT is the best place for it.  For that matter, program consolidation can cause problems as much as fix others.

The former Secretary suggests that MARAD must shift its focus to the condition of the nation’s ports and away from its long attention to “ships and crews.”  Actually that shift started during the Clinton Administration under Secretary Federico Pena.  He gave attention to port issues (including the dredging process) and MARAD has done all it can to grow its portfolio in this direction.  The agency has functioned as project manager for federally funded port projects in Alaska, Hawaii, Guam and elsewhere. (Mostly with DOD money.)  The 111th Congress authorized MARAD to manage such “port infrastructure projects”as money is made available.

I disagree with Mr. Mineta that there is too much focus on ships.  As long as there is a US flag requirement (see Jones Act), a diminishing shipyard industry and capability, and a US merchant fleet that is a shadow of its former self someone should pay it attention.  Clearly current law and policy isn’t getting the job done.  For that matter, I can’t recall a modern administration of either party that has cared much about cargo moving on US flag vessels.  (No, I won’t go back as far as Roosevelt.)

The suggestion also is made to rename the US Merchant Marine Academy and “give it our time and attention.” Reports issued during the Bush and Obama administrations, including one called “Red Sky in the Morning,” made clear that oversight and investment had been lacking at King’s Point.  So a turnaround effort continues today with Kings Point being .  But let’s face it.  Why bother making it a top notch maritime academy if the effort isn’t being made to grow the anemic maritime sector?  It would be nice if the young men and women who want a career in the merchant marine can actually find good paying jobs there.

Secretary Mineta suggested that if “ports and waterways funding is always being relegated to parts of the surface transportation bill, or the defense bill, they will remain second-class subjects…” He is saying that the sector needs, in effect, a SEA-21 much as there were TEA-21 and AIR-21—the highway and aviation authorization bills of the 1990s.  A dedicated maritime bill to advance maritime policy and related projects.  I think a maritime bill is in order, especially for addressing failings of current policy and the paucity of programs tuned to today.  But as long as Washington continues to think in terms of modal stovepipes the marine stovepipe will remain offshore and remote from the “surface” modes, system development and corridor planning where intermodal policy, transportation solutions, and major projects tend to be reserved for road and rail.

Marine transportation related provisions belong in an intermodal, multimodal surface–wet and dry surface, if you will–transportation  bill.

More on this subject to come.  Comments welcome.   Pbea

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