Marine Transportation System

Meeting of Agendas at the Metrics Meeting

In Federal Government, Labor, MTS Policy, Port Performance on July 20, 2016 at 2:11 pm

The Working Group that is to advise the Bureau of Transportation Statistics on port performance statistics metrics had a memorable first meeting. The panel consisting of Federal agency and stakeholder representatives — appointments that nearly comply with congressional direction — includes proponents and opponents of the notion that the Federal government should collect port performance data. They, and others who had stayed clear of the 2015 congressional debate that concluded with the creation of the Port Performance Freight Statistics Program, part of the surface transportation FAST Act, voiced their views, doubts and questions at the inaugural meeting.

Part of the day’s program was designed to get participants on the same page. While some of them may never agree on why or what data should be collected they could at least start working from a certain understanding as to terminology, what a port looks like, and how terminals operate. It was the task of consultants Daniel Hackett (Hackett Associates) and Dan Smith (Tioga Group) to provide tutorials. It was a lot to absorb. Especially for those at the table who spend little, if any, time in the maritime world.

The hour that Dan Smith spoke could have been doubled considering the volume and value of the information he shared on terminal configurations, the diversity of metrics used in ports, and other pertinent details. If anything, the Working Group members could start to appreciate the challenge presented by the congressional mandate that USDOT collect data employing uniform metrics in a sector where even the term “ton” comes in different forms and meanings. A hundred or so commercial ports, and many more marine terminals, operate in the US. Uniformity may be inevitable but it may take a while to get there.

Several people in the room — representatives for the railroads, a port, and organized labor — questioned why collecting port data was even necessary. John Gray of the American Association of Railroads started, matter of factly. “Just because Congress says go collect data doesn’t make it a good idea.” It was a view likely not shared by Senate staff in the room.

The shippers in the room — National Retail Federation, Lowe’s and Home Depot, at the table, and agriculture exporters in audience — represented the interest sector most responsible for the creation of the new port performance program. Advocates for an answer to what happened on the West Coast and for the industry and longshore labor to answer for it. The shippers who won seats at the WorkinHg Group table explained their need for transparency and reliability but seemed not to want to be the oft-heard advocates in the room.

Labor did.  The AFL-CIO, ILWU, and other union reps made clear their opposition to any data collection that oculd reflect on workforce performance.  Inevitably, it would be used by others during contract talks, they explained. (Of course, everyone at the bargaining table — unions and management alike — would already have every potentially useful statistic at their disposal.) Besides, they said, better infrastructure is where the need is, implying that port data are not useful in showing where inadequate infrastructure contributes to port congestion.

They reminded folks who knew the legislative history, and informed those who did not, of the original Senate legislation — the Port Performance Act. Inspired, as it was, by the slowed cargo on the West Coast during the 2014-2015 talks, and by appeals from the cargo interests, the bill’s authors wanted to mandate more frequent reporting of port performance data to Washington around the time of collective bargaining.

Labor representatives did not fail to note that a shippers coalition letter to Transportation Secretary Anthony Foxx, sent after the bill became law, urged the collection of monthly figures on container lifts, a key KPI on workforce productivity. Labor pointed to it as evidence that, even though provisions on specific metrics and collective bargaining did not make it into to law, the shippers were persisting in urging USDOT to secure data that could be used to create legal or political pressure against the workers’ interest.

The unions were aided in discouraging consideration of crane-related metrics when, later in the meeting, POLA’s Gene Seroka and others said crane lift data was of questionable value outside of the terminal itself. As if to put a period on the issue, Lowe’s Rick Gabrielson said he does not care about the reporting of crane hours. Capacity is the issue.

Over the course of the day persons questioned the rationale for nationally collected port data but no one questioned the value of metrics used in addressing port terminal problems at the local level. Former Lowe’s executive Mike Mabry, now chair of MARAD’s Marine Transportation System National Advisory Committee, was one to ask how data would be used. He discouraged BTS collecting data just to have data. “You can drown in input metrics,” he said. What’s important is to know how the data would be used and then tailor a decision on metrics to that.

Congress told BTS to collect data that would help capture US port “capacity and throughput.” Port of Houston’s Roger Guenther asked rhetorically, and doubtfully, if private marine terminals would want to say what is their capacity. Alternatively, he said that a crucial metric for determining how well a port or terminal is functioning is how adequately it is staffed by Customs officers. Insufficient numbers of CBP inspection personnel contribute to terminal congestion and slowed throughput. Others concurred.

At a July 7, hearing the Port of Baltimore’s David Espie told House subcommittee members of the problems presented by inadequate Federal security support in the form of aging radiation portal monitors in need of replacement, unknown maintenance records, and overworked Customs officers.”CBP is very strapped,” said Espie. Low-level personnel work long hours at the RPMs and are “bored,” suggesting a morale issue.

At the BTS meeting the BCOs reiterated their statement of record, that there is no interest in comparing one port to another but rather a port’s improvement (or not) overtime. The railroads’ John Gray, experienced in working with industry numbers, observed that the intended use of collected data notwithstanding, once data is published it will be used by persons incorrectly if they would find that useful.

If there was something on which all folks at the table could agree it might have been that statistics can be helpful in bringing more investment, including Federal grants, to port-related infrastructure. Noting that in recent years ports have become eligible for Federal grants MARAD’s Lauren Brand said collecting port data would be helpful to convince policy makers that capacity requirements and other infrastructure needs warrant greater Federal investment. BTS’s Rolf Schmitt admitted that his agency knows the capacity of the highway system but has no knowledge of the American port system’s capacity. He could have added that some of the Republican bill’s wording came from the Obama Administration’s proposed Grow America Act to —

…authorize a port performance statistics program within the Bureau of Transportation Statistics to provide nationally consistent statistics on capacity and throughput for all maritime ports to assess performance for freight transportation planning and investment analysis; and require advice from major stakeholders who collect and use port information.

The other unavoidable fact is that BTS is under the gun to implement what Congress wrought in law. Former Massport executive director, Anne Aylward, managed well as meeting moderator. She patiently urged participants to “find areas of commonality” and “work with what is in the law now.” She invited the Working Group members, and those who were not at the table, to send, by August 1, initial ideas as to suitable uniform metrics and how the data could be collected.

The Working Group is to issue a final report to BTS by the December 4, statutory deadline. The respected statistical agency is faced with a challenge and must make its first report to Congress a month later. There’s no time to waste.  Pbea

Holy Grail, PortMan!

In Congress, Efficiency, Federal Government, Infrastructure, Legislation, Ports, Water Resources on May 31, 2016 at 11:20 am

If you polled US port directors as to their major objectives in Washington, DC most would put at or near the top of their lists full funding, every year, from the Harbor Maintenance Trust Fund. They would say, if a dollar is collected through the Harbor Maintenance Tax in a given year, then a dollar should be spent on maintenance dredging in ports large and small. One of the other things many would want to see is predictable, biennial water resource bills (WRDA) — say “wurda” — to advance navigation projects.

Well, this is your day, Mr. and Ms. Port Director!

The House Water Resources Development Act of 2016 (H.R.5303) is the timely followup to the Water Resources Reform and Development Act of 2014 (P.L. 113-121), and a hopeful return to a two-year cycle. It also would make it possible for for ports to realize the long desired full-use of the HMTF and the Corps of Engineers harbor maintenance program to be funded directly — as in do-not-stop-at-the-Appropriations-Committee.

But before you start counting long needed dredging dollars…there’s a catch. (We are talking about the congressional budget process, aren’t we?)  Too good to be true?  No….but there is a caveat to this good news. Let’s give it a name….call it “Delayed Port Director Gratification.”

Here’s the story.

Peter DeFazio (D-OR), the ranking Democrat on the Transportation & Infrastructure Committee, made it a priority to include in the new WRDA bill a provision that would shift the spending of HMTF resources from being in the discretionary category and subject to appropriations to being mandatory. It would mean less constrained budgeting by the Office of Management & Budget and more funding for channel and anchorage maintenance. Overtime, the underwater infrastructure would be more fully maintained to design dimensions. Around five years ago the Corps of Engineers estimated that sustained annual funding of $1,500,000,000 would keep American harbors adequately maintained.

Today even those Federal channels in major ports are not kept at their originally constructed depths and widths. Small harbors often get the short end of the spending stick and the resulting deferred maintenance means a decreasing ability to accommodate commercial and sometimes even recreation vessels. A few years ago the Corps of Engineers reported that almost 30 percent of commercial vessel calls at US ports are constrained due to inadequate channel depths. (Note: Peter DeFazio also included a provision for the small, “emerging” harbors.)

Congress has come to understand that while Harbor Maintenance Trust Fund monies are authorized for spending only for certain port navigation and administrative purposes, the low level of appropriations has resulted in an accumulating, unobligated balance approaching $9,000,000,000. The HMTF has been a convenient pot used by budgeteers to make the Federal deficit look smaller, not to make port channels more efficient. To their credit, House and Senate appropriators have gradually increased O&M funding to the point where the FY 2017 funding bills include $1,300,000,000. Still hundreds of millions of dollars short of meeting the navigation needs in US ports and full use of HMT revenue.

Such mandatory or “direct” spending as the DeFazio provision would make possible could put the trust back in the trust fund…eventually.

When “eventually?”

Eleven years from now….and for good reason.

The Budget Enforcement Act of 1990 requires that if Federal revenue is reduced, or spending is increased, it must be offset by a savings elsewhere or by new revenue. This was given the Monopoly game sounding name of PAYGO. A budget “score” indicates a proposal’s projected cost and that analysis has a ten-year horizon. If Congress were inclined to provide an immediate change in the HMTF statute to dedicate the full collection of the Harbor Maintenance Tax each year to be spent fully on navigation dredging projects each year the House and Senate would have to come up with ten years of replacement revenue for the Treasury.

However, if a change in revenue, such as the fencing of HMT receipts so they no longer would be blended with other Federal tax revenue, would become effective eleven years from now, that proposed change in the law would not require an offset under PAYGO. The House WRDA 2016 bill says it sweetly and simply:

Section 108(a). … [T]here shall be available to the Secretary [of the Army, who heads the Corps of Engineers], out of the Harbor Maintenance Trust Fund, without further appropriation, for fiscal year 2027 and each fiscal year thereafter, such sums as may be necessary…”

The need for an offset is what has discouraged committee action to fix the HMTF in the past. Bill sponsors have largely left unspecified how to cover that multi-billion dollar cost…as a detail to be addressed at another time.

Washington Senators Patty Murray and Maria Cantwell, both Democrats, introduced the Harbor Maintenance Trust Fund Reform Act (S.2729) last March. Their bill takes the immediate gratification route, both to address the “full use” issue and to address complaints among some of the large ports that have benefited little by current law.

The senators’ Seattle and Tacoma ports require little harbor maintenance funding and much the same is true in the San Pedro Bay ports of Long Beach and Los Angeles. S.2729 would redirect some trust fund resources to certain needs in those ports.

I will go into the Murray-Cantwell bill in greater detail in another post. Suffice it to say that by not waiting patiently for eleven years to roll around the bill likely would require an offset of 10 x $1,600,000,000, to use current year revenue as an example. The odds against finding consensus in Congress on how to raise/save $16,000,000,000 is enough to eventually discourage most any optimistic lawmaker.

The provision in the recently adopted WRDA 2016 bill is credited to Peter DeFazio, who has the support and cooperation of Committee Chairman Bill Shuster (R-PA), but a little history is worth noting. The objective of direct or mandatory spending from the HMTF and other infrastructure trust funds was an objective of this committee back when Bill Shuster’s late father, Bud Shuster (R-PA), was chairman of the committee and introduced the Truth in Budgeting Act.

What are the chances of the provision staying in the bill and becoming law? It’s hard to say. Even the delayed gratification strategy will run up against opposition in Congress and the Executive Branch. I expect it will hear objections from the Appropriations and Budget Committees. The former would likely would lose jurisdiction and the latter just doesn’t like mandatory spending even if it is secured by a dedicated tax or user fee. The White House Office of Management & Budget thinks similarly. Long considered the fiscal and policy nemesis of the civil works program, OMB will have a hard time dealing with the idea of the Corps getting its hands on more money. (Legislative Trivia: the House Budget Committee that in a separate report made its arguments against Bud Shuster’s Truth in Budgeting bill was chaired by John Kasich (R-OH)).

To be clear, there are legitimate arguments to be made against making spending from the HMTF mandatory, but if one is looking for a solution to the long-standing problem of under investment in the maintenance of the nation’s navigation system one finds no other practical options.

Okay, so the DeFazio provision will encounter opposition, perhaps debilitating opposition, in the next months. For the moment let’s focus on who will like the policy change represented by the DeFazio provision. Those are the port directors. Also port authority commissioners, maybe some elected municipal officials, governors, and of course, the industries and other stakeholders who depend on reliable harbor maintenance. They will have to make themselves heard on the issue if it has a chance of staying in the bill.

And if it succeeds in becoming law, they will just have to wait until 2027, knowing that the wait will be worth it.  Pbea

DPW Redux?

In Congress, Politics, Ports, Transportation Policy on May 12, 2016 at 10:50 pm

The trade press is reporting that a majority of shares of Ports America may be acquired by a corporation in Turkey, Yilport Holding Inc. The Istanbul-based corporation is part of a multi-industry holding company, its owner also a major investor in the French CMA CGM container shipping line, acknowledged the talks are occurring. Taking control of a major US terminal organization with around 40 operations around the country, would be a big move as compared to the UAE-based Gulftainer’s purchase of a small container terminal at Port Canaveral a few years back.

A better, if not perfect, analogy of a Mideast-based business making a move on a US MTO/stevedore would be the ill-fated move by DP World in 2006 to take over P&O Ports. At a time when American port security in a post-2001 world was still a very active subject in Washington the credible Dubai Ports World ran afoul of Chuck Schumer (D-NY) and others of both parties in Congress, including then-Senator Hillary Clinton (D-NY). Claims were made that it was a potential foot-in-the-door by a state-owned organization from a region that sponsored terrorism. The rhetoric was hot. The subject was raw meat for never-too-tired-to-talk radio.

P&O Ports had approved the acquisition and the transaction involving port leases required Federal government review and clearance by Treasury’s Committee on Foreign Investment in the United States (CFIUS). Despite those approvals, and the strong support of the George W. Bush White House, the issue became such a political firestorm — involving an industry little understood in Congress, it should be noted — that in the end DP World withdrew, selling P&O Ports’ American operations to AIG. (As it happens, those terminals eventually came under the Ports America name.)

A second, unfortunate casualty of the blowup was the Bush administration’s candidate to be Maritime Administrator. The respected David Sanborn had the doubly bad luck of 1) having his nomination considered in the Senate in this same time frame and 2) being an operations executive of — yes, that’s right — DP World.

So is this another potential “DP World” should Yilport and Ports America do a deal? Maybe not. Turkey is a member of NATO and a US ally, if not the best kind of ally, and more time has passed since that anxiety-filled first decade. But the situation does invite a recollection of a particularly crazy time here when the marine terminal industry and the international nature of the maritime sector were under the glaring, if not illuminating, lights of official US.

What is not especially evident is whether all that attention then led to a greater understanding of the industry today.

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