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Ten Things to Do Now: Advice for Trade Associations on Responding to the Coronavirus

In Crisis, Federal Government, Government, Ports, Washington, DC on March 10, 2020 at 2:48 pm

[Susan Monteverde has many years of experience in Washington, DC – based trade associations, including in the port sector. As an association executive and government relations professional she has represented her member organizations in challenging situations and can help trade groups and businesses that need strategic advice and representation. Below are ten tips worth reading for those in port/maritime and other sectors.]

Trade associations, the life blood of much of Washington, need to take notice of the Coronavirus and make sure they have devoted time to plan.  A crisis often comes up quickly and it is important to get ahead of the curve to protect your industry, show value to your members, and often something not thought of enough, to protect the financial health of the organization.

1. Set up a senior management team to address the crisis if you haven’t already.  While this is the key initial group, later involve your staff as they may have excellent recommendations.  More than most crises, the Coronavirus can impact not only the industry you represent but the workforce of the Association.  Start planning now!

2.  Consider bringing in a crisis communications specialist.  There are different audiences they can help you with, and they are often an important part of your crisis team.  They can help craft clear and well thought out messages for various audiences and can keep their pulse on how the crisis is changing. Associations are normally busy places, especially in the Spring, don’t shy away from extra help.

3.  Determine and serve your key audiences. You may have different messages for your members, the media, and government officials.  Make sure you are in touch with your key government contacts. They are interested in the impact on your industry.  Your members will also want to know what the government response will be.

4. Seek input from your members.  Make sure you listen to your members and set up a mechanism to get input on a regular basis. Consider weekly conference calls to achieve broad two-way communications.  If your members handle different commodities or come from different sectors of the economy, be sure to reach out to those different types of members.  Ask and listen.

5. Show leadership in sharing information.  Sharing information, expertise and best practices are often a key value of association membership.  In a crisis, some are on the front line and have to deal with the crisis first. What can you do to share their experiences, especially during the crisis, not just after?  Larger members who often have crisis management teams in place, with outside experts, can also help both the association and smaller members communicate about the crisis.

6. Be flexible and don’t simply plan on your first impressions.  Be nimble but also have a structure in place to continually get feedback from your members, the media and often most important, federal officials.  People need time to react and you need to be sure to understand the evolving ideas.

7. Determine the impact on your bottom line.  Something like the Coronavirus can have a big impact on an association’s bottom line. Many associations experienced this after September 11 and the 2008 financial crisis.  What lessons did you learn?  How do you make your meetings safe and communicate this to the members to encourage them to come?  Do you have a plan if someone becomes ill with the Coronavirus at your meeting and how they can get care? Be proactive or you could lose both your value/relevance to members in addition to losing money from a decrease in meeting attendees.

8.  Keep a close eye on government reaction.  Washington loves a crisis.  This could be to help industry be safer or spur the economy or it could be to establish new laws and regulations.  Like other national crises, expect the government to take some action.  Keep track of the impact on your association and industry and lookout for opportunities.  Think big.  Determine how your industry can fit into this mix.   Make sure your messages are clear and convincing and then charge your government relations team to spend time lobbying, even if that means changing some priorities.

9. Crises often change your strategic and operational plans.  Be flexible.  The Coronavirus is likely to have a negative financial consequence on your association.  It may be a drop in attendance, less advertising or a decrease in members who can afford dues if they took a financial hit.  Your original advocacy agenda may change as well. Again, be flexible.  See how this crisis can be an advantage, not just a disadvantage. Associations should also look at operational and business continuity plans.

10.  Take action now!  So, bottom line: be both on the offense and the defense and make sure your game plan is flexible to address the many changes.  Be dynamic and don’t forget to put together a plan that is multi-faceted.  A crisis can also bring a lot of visibility about the value of your industry.  Show leadership and value to your members and don’t forget your bottom line.

Susan Monteverde can be reached at MonteverdeAdvisors@gmail.com.

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A Transparent FMC Strategy

In Federal Maritime Commission, Ports, Uncategorized, Vessels on September 21, 2018 at 9:08 am

The Federal Maritime Commission met this week to hear Commissioner Rebecca Dye describe her interim report on the Fact Finding No. 28 (FF28) examination of detention, demurrage and free time practices of ocean carriers and marine terminal operators (MTOs). Dye reported to Acting Chairman (and only other seated commissioner) Michael Khouri. Her report was publicly released on September 5. A final report on the investigation, prompted by petitioning cargo and drayage interests who fault carrier and terminal practices and fees, is scheduled to be delivered on December 2.

The 19-page interim report on the non-adjudicatory investigation is based substantially on information obtained through FMC “served orders comprising questions and document requests on twenty-three ocean carriers and forty-four marine terminal operators and operating ports, and solicited evidence concerning demurrage and detention practices from cargo interests (shippers and consignees).”  The FMC also held two days of hearings in January of this year. The report’s conclusion points to both a stated desire to avoid issuing regulatory prescriptions — that some have argued the FMC would not have authority to do — and an inclination to reprise Commissioner Dye’s prior experience of shepherding industry people to develop a solution that the agency has no power to require.

Based on the volume of valuable information provided by VOCCs, MTOs, shippers, OTIs, drayage providers, and others in the industry, it is apparent the industry’s demurrage and detention practices can be improved with the involvement of industry leaders.

Commissioner Dye sees the experience of the complaining parties as more widespread than episodic.

The resulting record strongly suggests that concerns about demurrage and detention in U.S. trades are not limited primarily to weather-or-labor-related port congestion in 2014-2015, a small subset of large ports, or episodic events unrelated to potentially systemic issues.

Examples are cited as to how current carrier and MTO practices vary in many respects, including even how detention and demurrage are defined. According to the commissioner, the collected data suggest “six areas to be developed” by the FMC as approaches to improve current practices in the market:

  1. Transparent, standardized language for demurrage, detention, and free time practices;
  2. Clarity, simplification, and accessibility regarding demurrage and detention (a) billing practice, and (b) dispute resolution processes;
  3. Explicit guidance regarding types of evidence relevant to resolving demurrage and detention disputes;
  4. Consistent notice to shippers of container availability;
  5. An optional billing model wherein (a) MTOs bill shippers directly for demurrage; and (b) VOCCs bill shippers for detention; and
  6. An FMC Shipper Advisory or Innovation Team.

One can’t help noting in the last item the reference only to “shipper” (cargo interest) in the FMC’s summary version. The somewhat longer version is phrased similarly, suggesting that Dye would give special status — and the agency’s ear — to shippers.

The record supports the need for continual input from U.S. shippers into issues affecting the international freight delivery system, including the potential future formation of a Shipper Advisory Board or Innovation Team after the close of the investigation. The Commission will also consider Advisory Boards or Innovation Teams comprised of Ports and FMC stakeholders as well. [emphasis added]

“Innovation team” is a reference to a tool employed by Commissioner Dye in her follow-up to the FMC’s 2015 report, “U.S. Container Port Congestion & Related International Supply Chain Issues: Causes, Consequences & Challenges.” In that instance, the commissioner invited supply chain stakeholders to participate in closed-door deliberations intended to identify both the central cause of the “congestion” problem and how to solve it. Doubtless, many participants thought it better to be in the room than not.

In her 2017 report, “The Commission’s Supply Chain Innovation Initiative,” she summarized the work of the six “supply chain innovation teams” (three each addressing import and export trades).

[T]he “Value Proposition” for increasing supply chain performance is providing visibility of critical information throughout the commercial supply chain.

~ ~ ~

[Such visibility] across the American freight delivery system was the one operational innovation that would most increase US international supply chain performance. It was not about information technology per se – but an effort to (a) achieve changes in perspective and in behavior to “harmonize” the operation of the freight delivery system and to (b) increase systemic efficiency and performance. Without the right information, supply chain actors are essentially “flying blind.”

A web-based portal for the sharing of cargo status information was the suggested solution by the import teams. The kind that is being tested in the San Pedro ports now.

Note the similarity of the commissioner’s conclusion in the above 2017 report and the direction that her new interim report on terminal and carrier practices is taking. Both look for transparency and standards. Both aim to corral [one or more] stakeholders to have them devise a potentially system-wide solution.

At the FMC meeting this week, Commissioner Dye wrapped up her oral report by asking and answering, “how will the investigation proceed?” She said the commission wants to “determine how to ensure that reasonable notice of cargo availability and reasonable opportunity to pick up cargo can be achieved.” In developing the final report, she said she “will not be repairing to a regulatory ivory tower to reflect in solitude on these issues” but will seek input from the practitioners.

Dye will look for those who have been “most helpful and thorough” during phase one of the investigation. She said she already has heard from “quite a few” carriers and MTOs who want to help, and she firmly indicated she want to hear from people. To emphasize her availability, the commissioner will post her travel schedule to facilitate outreach by persons outside the Washington Beltway.

Acting Chairman Khouri followed Dye’s remarks by encouraging stakeholders to participate. He said that any recommendation for a rulemaking would be “premature,” but he isn’t ready to rule one out.

[That is not] a first choice but…at the end of the day, if there are persistent practices that are found unjust and unreasonable, and stakeholders do not want to listen and proactively adjust business practices for other stakeholders, it will remain on the list.

One hears both commissioners issue more than a cordial invitation to stakeholders to help them bring the FF28 examination of carrier and terminal practices to a satisfactory conclusion. Their message is clear. Fix it — (we’ll gladly facilitate) — or be regulated.

Carriers and terminals consider detention and demurrage fees, and free time practices, to be wholly a matter of the commercial relationship. Nothing the FMC need involve itself in. Regardless of whether they have the necessary statutory authority to regulate this aspect of the commercial relationship, the commissioners have hit upon a non-regulatory way. They are empowered with the expectation that the concerned parties, terminal operators and carriers included, will be willing to address supply chain problems as Rebecca Dye’s report depicts them.   Pbea

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A Thirty-Year Project: Fixing Civil Works

In Congress, Corps of Engineers, Federal Government, Infrastructure, Leadership, Ports, President, Water Resources on March 15, 2018 at 11:35 am

The US Army Corps of Engineers took it on the chin last week.  And the bruise can’t be easily hid when delivered by a certain person in the White House.

One of the things I will be starting off the meeting with is to continue to cut regulations.  We have a tremendous way to go. I think we are probably 40 percent of the way there.  Again, statutory requirements make it where you have to give a 90-day notice and then you have to give a 30-day notice, then you have to give a six-month notice. By the time you give all these notices, time goes by.  But still in 12 months, in fact at the end of the 11th month, we cut far more regulations than any administration in the history of our country, whether it’s four years, eight years or in the one case, 16 years. So nobody’s close. But we’re going to cut a lot more. We really have a lot more to go.

Trump Mattis

And we’re working with General Mattis very much and the Army Corps of Engineers, because they have been…uh, not so fast.  And they are slowing up some jobs, so we’re going to get that taken care of.  We’ve been working on that.  The Army Corps, you know EPA gets it done, and we’re all getting it done, the Army Corps has to follow much quicker. And we have to streamline it because they are in charge of areas of the country that really have nothing to do with the Army Corps so much anymore.  General Mattis is working to streamline that procedure and some jobs are being held up because of the Army Corps of Engineers.  They are fantastic people but we’re going to have to speed that up.

The Commander-in-Chief’s words about the Corps, with Defense Secretary Jim Mattis sitting to his left, nodding affirmatively, were said to assembled reporters and cameras in advance of the March 8th Cabinet meeting. (video)

The folks at Corps Headquarters may be excused for feeling a little unloved. At two House hearings that same week, the Corps’ contribution to slowing projects was voiced by Members of Congress, including the chairman of the House Transportation & Infrastructure Committee.

Chairman Bill Shuster (R-PA) led a hearing not on the civil works program but on the president’s infrastructure proposals. The hearing’s sole witness was Transportation Secretary Elaine Chao, who dealt with committee questions about everything from the burden of electronic driver logging (ELD) on cattle transport to the Gateway passenger rail tunnel project on the northeast corridor.

During a discussion on the need to improve the permit process, which involves more agencies than just Chao’s DOT, Shuster added his own thinking.

One of the great places to start with permitting is the Corps of Engineers. I met with the Conference of Mayors and AASHTO and I always like to get a show of hands who has had a project, that they worked on…or want to work on, and that the Corps of Engineers has been a huge problem, huge challenge to the project. And every single person in the room raises their hand.  So that’s why subcommittee chairman Garret Graves and I are working now…on a water resources bill and one of the focuses will be a serious look at the Corps of Engineers and a serious look at why the [civil works missions] need to be at [the Defense Department]. Two hundred years ago it made sense. The Army Corps of Engineers was the only ones who could build a dam or roadway, but today there is no need for civil works to remain at DOD. It needs to move to a different agency. I would propose DOT. Secretary Zinke wants it to go to Interior.

In a bit of an understatement by the capable committee leader who failed have the full House consider his major aviation reform objective — moving air traffic control from the FAA — Shuster added that the taking civil works from the Corps would make for a “healthy debate.” (Watch the Shuster statement here on the hearing video.) He does have a more-than-willing partner in any effort to change the Corps. Garret Graves (R-LA) — a former staffer on the committee, then coastal program chief for Louisiana, now heads the Water Resources & Environment Subcommittee. Graves is openly critical of the Corps, will lead the writing of WRDA 2018, and is ready to make significant changes in the civil works program.

In the same building that same morning, a member of the Government Reform & Oversight Committee convened a hearing “Examining the US Army Corps of Engineers.”  Chairman Blake Farenthold (R-TX) of the panel’s Subcommittee on the Interior, Energy, and Environment said “we will discuss ways… project delivery can be stream lined” and led witnesses to address the hearing aim to “highlight ways for improved communication and interaction between the U.S. Army Corps of Engineers, localities, and the public where it conducts its work and projects.”

The subcommittee members and witnesses were not antagonistic toward the Corps but made clear how bureaucratic slowness extends project timing and costs. James Dalton, the top career civil servant at Corps Headquarters was also at the witness table. He pointed to process improvements made in recent years, but also acknowledged more should be done. Witness Sean Strawbridge, the new executive director at the Port of Corpus Christi, which is in Farenthold’s south Texas district, told a story that other port execs could cite as their own experience.

Starting with the initial congressional approval of a feasibility study, the Corpus Christi deepening project (45′ to 54′ ) has been in the Corps’ study-planning-construction process for 28 years…so far. Strawbridge noted in his statement that the project finally found a place in the Corps construction budget that the White House sent to the Hill last month.

When Garret Graves assumed the chair of his subcommittee, his press release stated he would have an expanded “role in shaping legislation to limit the scope and economic damages of agency regulations, shorten the time it takes for projects to be completed and bring efficiency to how the government works.” His Louisiana experience shaped a determined policymaker.

“Untangling the decades of bureaucracy and the culture of delay within the Corps, EPA and other agencies will take time, but we’re committed to helping lead the transformative change that has to occur to fix what’s broken in government operations. We’re going to work toward making Louisiana’s coast and the state’s need for hurricane and flood protection a case study on how it should be done – instead of another story of government failure.”

“The stupidity of spending billions of dollars after disasters instead of millions on prevention beforehand has to end,” Graves continued. “In the decades it takes the Corps to study projects, homes and businesses flood, vulnerable coastal communities disappear and taxpayers’ dollars are completely wasted. It’s time to partner with the private sector and turn dirt instead of talking and ‘studying.’”

The truth is that even as the Corps of Engineers takes a beating from its Capitol Hill critics, most Members of Congress probably still like having this military-led organization taking their orders for favored public works. But Congress also has had a role in creating and prolonging the problem. Both Congress and White Houses have managed to burden the engineers’ hands, programmatically and budgetarily. The policymakers write laws that the Corps and other agencies are charged with implementing, through guidance and regulation. Members of Congress add to workloads, including by pushing projects into the civil works pipeline, thereby creating a demand for greater dollar resources that the Corps is denied on an annual basis.

Will the Corps of Engineers’s responsibility for civil works be given to another part of government as Shuster suggests? It is very unlikely. But the threat of it could help Garret Graves set the table for some meaningful changes in policy.  Will the president’s pokes result in anything? Possibly. No doubt, his Defense Secretary passed the message down the chain of command to the desk of the new Assistant Secretary of the Army for Civil Works, R.D. James.

In the mid-80s, when the Reagan White House and legislators set their sights on instituting new user fees and project cost-sharing as prerequisites for enactment of what became WRDA 1986, port authorities and other navigation project stakeholders said, okay, but also do something about the Corps process that made improvement projects 25-year undertakings. Over 30 years later — about the time it will take to get the Corpus Christi project completed — we are still talking about it.    Pbea

 

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A Working Relationship (and Work in Progress)

In Federal Government, Ports, Security on October 11, 2017 at 10:22 pm

[This piece by colleague Steve Fisher, Executive Director of the American Great Lakes Ports Association, first appeared in Seaway Review (Summer 2017) under the title, “Learning to Love CBP.” As one might take from the title, a port’s development and commerce mandate and the Federal agency’s primary mission of security and enforcement are not naturally compatible. But on an operations level, it is a necessary partnership, faced with challenges, that the commercial and government sides must make work. And Great Lakes ports have their own particular challenges.]

In today’s post 9/11 security environment, every Great Lakes port must work closely with the Department of Homeland Security to ensure that our maritime gateways are not used for nefarious purposes. In this environment, a critical federal agency partner is U.S. Customs and Border Protection (CBP).

CBP is the largest law enforcement agency in the United States with more than 58,000 employees. The agency’s mission is to safeguard the nation’s borders and protect the public from dangerous people and materials while at the same time enabling legitimate trade and travel. The breadth of the agency’s activities is remarkable. Every day the agency handles more than 1 million passengers arriving into the United States, including more than 58,000 arriving by vessel. At the same time, each day the agency processes more than 79,000 shipping containers and $6.3 billion of imported goods.

The agency’s relationship with Great Lakes ports is an evolving one. New business trends are challenging both ports and CBP. This is particularly true of inspection-dependent activities such as processing cruise ship passengers and containerized cargo. Since the Port of Cleveland and Spliethoff launched the Cleveland-Europe Express container service in 2014, a number of other Great Lakes ports have been exploring shipment of containerized cargo. While the Port of Cleveland has put in place the required inspection equipment and facilities, most other ports have not. In response, CBP has put a halt to some projects.

Cruise passenger processing also requires specialized CBP-approved facilities. Most ports do not have these facilities. In recent years through the good work of the Saint Lawrence Seaway Development Corporation (SLSDC), an alternative on-vessel clearance program was designed in partnership with CBP utilizing mobile technology. Unfortunately, CBP now intends to sunset this program creating new challenges.

Beyond paying for proper CBP-compliant facilities and equipment, stakeholders have been slow to embrace the agency’s suggestion that staff time be reimbursed through enrollment in CBP’s Reimbursable Services Program. Some view this as paying for government services that ought to be supported by Congressional appropriations.

As CBP works to accomplish its mission, the agency has needs.  Nationwide, the agency is under staffed and under resourced.  For that reason, accommodating new port activity has been challenging for CBP’s Great Lakes field offices. Testifying before Congress, agency leaders claimed to be short 500 officers to work at maritime facilities. In January President Trump’s call for hiring 5000 new agents. With a current 6 percent workforce attrition rate, the agency would need to hire 2,729 new agents a year to reach the President’s goal within 5 years. The current hiring rate is approximately 500 agents a year and is slowed by a strict vetting process, including polygraph tests.

Clearly, CBP needs to be better funded and staffed.  Ports have met with Congressional committees and urged just that. To help address staffing challenges, Wisconsin Senator Ron Johnson, Chairman of the Senate Homeland Security Committee, has proposed legislation (S. 595) to waive polygraph requirements for applicant officers who previously served in domestic law enforcement or the Armed Forces. The American Great Lakes Ports Association formally endorsed this legislation as a common sense approach to increasing the trusted applicant pool.

Seaports and vessel operators also have needs. To their credit, they are working to launch or grow new business ventures and create jobs. However, like any start-up these ventures are initially modest and cannot support large investments in CBP required buildings, equipment and staffing. The seasonal nature of Great Lakes shipping presents additional challenges.

Herein lies the challenge. How do we help CBP accomplish its mission, while also facilitating the development of new commerce? The solution lies in a flexible approach achieved through dialogue, relationship building, and cooperative problem solving. The development of mobile technology for on-vessel processing of cruise passengers was an example of a flexible approach developed cooperatively. In early August CBP met with Great Lakes cruise stakeholders to begin work on a successor scheme. The workshop was hosted by CBP, the American Great Lakes Ports Association, the Saint Lawrence Seaway Development Corporation, and the Conference of Great Lakes and St. Lawrence Governors and Premiers. Groundwork was laid for developing a limited number of strategically located clearance facilities at select Great Lakes ports. In concept, these facilities will enable cruise itinerary planners to design voyages that satisfy their customers.

We all need to remember that CBP is an agency of police officers working every day to protect us and our families. Working in partnership, we can help each other accomplish our respective missions – to facilitate commerce and provide for homeland security.

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Kindest and Other Trump Cuts

In Congress, Energy/Environ, Federal Government, Infrastructure, Ports, Security, Transportation Policy on March 20, 2017 at 11:44 am

President Donald Trump’s 62-page “skinny” budget proposal — he calls it his budget “blueprint” — is devastatingly consequential for most departments and agencies. (See my prior post.) It tells you, for example, that the State Department will take a 28 percent hit should Congress concur in this first Trump Administration budget request, but it is short on how the programs at State and most other departments will be affected. For that we will have to wait a few more months until the main budget document is to be released — or leaks emerge — and the various budget experts do their analysis.

Will Congress adopt the president’s idea of winners and losers? Maybe not. His proposal is hardly a strictly partisan expression to which all Republicans will faithfully adhere, even if it is in the direction that they want to support. Moreover, as much as he wants to see a big defense build-up, dealer Donald Trump’s budget has to be seen as his opening gambit in an appropriations process that is only just getting started. Meanwhile, the budget document and agency press releases provide some information. Here is what we know.

Corps of Engineers
The USACE civil works program proposed number of $5 billion is $1 billion less than current year funding — a 16.3 percent reduction — but, historically, that’s not so bad. That is actually higher than the Obama FY17 budget. Every White House low-balls the Corps budget. The annual fiscal dance is for the president to bid low because he knows Congress will respond high. There is no more detail to report at this point. If there is a caution here it is that the Corps budget can’t be viewed in isolation from the total Federal budget. This clearly is not a normal year. If the Defense Department and Homeland Security are going to benefit in the substantial way that the White House proposes, the competition will be for your program to lose less than the others. If Congress were to provide the civil works program with more than $5 billion, as it has in recent years, that might come from other parts of the budget that are already proposed for stiff reductions.

Transportation
The budget blueprint shows a $2.4 billion reduction in spending over current year levels — a cut of 13 percent — and contains enough detail to identify some major programs targeted for elimination. Not surprisingly, the $500 million, multimodal TIGER grant program is prominent in that category. The White House would remove this most reliable source of funding for non-navigation port projects, including inside-the-gate improvements. (About $51 million was awarded to six port-related projects in FY2016.) TIGER, started in 2009, has survived past Republican efforts to eliminate funding but it has had strong support from Democrats and even Republicans. The White House is not alone in suggesting that TIGER is to some extent duplicated by the FASTLANE grants program that was created in the FAST Act and is dedicated to freight projects. (The Trump budget retains FASTLANE.) However, that part of the five-year FASTLANE program that most interests ports is the multimodal portion that is not limited to highway projects. Much of the total $500 million multimodal authorization was allocated in just the first year of the $900 million annually authorized spending for FASTLANE. There is no such modal limitation in TIGER. We will see if appropriators allow TIGER to end.

The DOT budget also would also eliminate funding for long-distance Amtrak operations, start down the path to private sector management of the air traffic control system, end the Essential Air Service program that is a major benefit for rural states, and close out a transit capital grant program.

Secretary Elaine Chao issued a statement on the budget blueprint announcement. It includes an oddly incongruent description of a national budget that the OMB itself acknowledges does not address deficit reduction. It also references an Administration talking point that, while proposing to reduce spending on transportation infrastructure, the budget is consistent with whatever will be the promised trillion dollar infrastructure initiative. The Secretary’s statement explains that the “strategy behind” the DOT capital spending cuts “is to move money out” of existing programs and into “more efficient programs” in the still undefined Trump initiative. We will have to see how that manages to end up being a net plus for transportation projects. From Chao’s statement:

This is a strategic document that looks to the future, and is designed to send a clear message on deficit reduction. For DOT, it addresses the department’s discretionary programs, which make up about one-quarter of the Department’s total resources. These proposed savings are largely geared towards future program investments, so they will not have an immediate direct impact on our DOT colleagues. This is just the beginning of the budget process, not the end. We will see the more complete picture when OMB releases its final FY 2018 budget in May, and as the President’s infrastructure initiative takes shape. In fact, OMB Director Mulvaney noted yesterday that the strategy behind the savings in the DOT budget is to move money out of existing, inefficient programs and hold these funds for more efficient programs that will be included in the infrastructure package under development.

E&E News reported that OMB Director “Mick Mulvaney said the cuts to federal funds for transit and roads would be balanced by an infrastructure package coming to Congress in the fall. The grants proposed for elimination in yesterday’s spending wish list were targeted “in anticipation” of a more fleshed-out White House plan…”

The lead Democrat on the House Transportation & Infrastructure Committee, Peter DeFazio (D-OR), was not complimentary, and not without irony, in commenting on the Trump planned cuts for USDOT.

The skinny budget exposes that as a big, fat lie. These are real investments. They could be putting people to work this summer. It’s infinitely stupid for Republicans who have just taken over everything to give up TIGER grants, which are at the discretion of the Republican Secretary of Transportation, and I’m sure they’ll use them much more politically than the dunces at the Obama administration did. [E&E News]

Homeland Security
DHS is proposed to get 6.8 percent more in the coming year to benefit the construction of a southern border wall and heightened enforcement of US immigration law through technological and human resources. Significant additions of personnel — 500 more in Customs & Border Patrol (CBP)  and 1,000 more for Immigration Control & Enforcement (ICE), plus support staff — also are intended to strengthen border security. Another $1.5 billion is slated for cybersecurity activity to protect Federal networks and critical infrastructure.

The budget proposes to cut State and Local security grants by $667 million. Earlier reports suggested a probable 40 percent reduction in the Port Security Grant Program but analysis by the Democrats of the House Appropriations Committee concludes that the budget means a 25 percent reduction in the program, from $100 million to $75 million.

According to prior releases of information the budget includes a cut in the Coast Guard, but that is not highlighted in the materials released by the White House and DHS yesterday. Instead, the DHS release simply says that the budget “sustains current funding levels [for the Coast Guard]…which allows for the continuation of day-to-day operations and investments in the Acquisition, Construction, & Improvements account.”

The budget document also states that the Transportation Security Administration will experience the elimination and reduction of “unauthorized and underperforming programs.” Details presumably to follow.

Environmental Protection
Of all the Federal agencies, the Environmental Protection Agency is targeted by the Trump Administration for the deepest cut — a 31 percent spending reduction. The budget statement offers an ironic compliment (kindest cut?) in suggesting that the “budget for EPA reflects the success of environmental protection efforts…” as if to say, “job well done.” The EPA section appears to be the only one of the two-page department and agency sections that specifically notes the anticipated reduction in personnel — “3,200 fewer positions.”

The proposed budget provides “robust funding for critical drinking and wastewater infrastructure” that is comparable to current levels. It ends funding for Obama’s “Clean Power Plan, international climate programs, climate change research and partnership programs, and related efforts…” It reduces the Office of Enforcement and Compliance Assurance budget, reduces Categorical Grants funding, and “eliminates more than 50 EPA programs that are “lower priority,” “poorly performing,” and “duplicative.”

The budget document proposal to end funding for multi-state regional efforts such as restoring Chesapeake Bay. The proposal to end funding for the Great Lakes Restoration Initiative  is no partisan matter. Nine senators led by Rob Portman (R-OH) and Debbie Stabenow (D-MI) sent a letter to the White House expressing their concerns, and Wisconsin Gov. Scott Walker (R) joined them in opposing the cuts.  Pbea

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Making a Last, Lasting Maritime Policy Impression

In Congress, Federal Government, Legislation, MTS Policy, Ports, Transportation Policy on September 21, 2016 at 11:37 am

An earlier version of this appeared in the Deep Water Notes newsletter of the Connecticut Maritime Coalition.

Summer is coming to a close. The same might be said of the Obama Administration and the 114th Congress, both timing out at or soon after the end of the year. And, as of this writing, the 2016 presidential campaign ends in under 50 days. All of which means we are entering a familiar, but critical period in governing.

It is decision time for all. They ask themselves — What can we get done in the time remaining? What will be the lasting impression and effect of this congress, this presidency, this election?

I won’t try to speculate on the last of those. Besides, nary a whisper has been heard on the stump about the port/maritime sector. (Surprised? Not at all.) Instead, here are some thoughts on two matters pending and percolating in the two branches of government.

National Maritime Transportation Strategy.    From the start, some people scoffed at the idea of preparing such a document. The Maritime Administrator was sincere when he started a public thought-process in January 2014. It was to culminate, a year later, in a document that might give direction to US activity and, in the process, highlight policy areas that could use attention and support from the maritime community and policy makers. Not surprising, there was plenty of skepticism, doubting that higher-ups in the department and in the White House would care when the draft came their way and they picked up their red pencils.

For that matter, some organizations in the maritime sector itself were less than enthusiastic about assembling a national strategy document for reasons that 1) they alone would have to explain, and 2) frustrated the stakeholder discussion and drafting efforts at MARAD.

It doesn’t help if members of your core constituency are afraid of what might result or are so jaded that they don’t want to bother.

Today, the still unpublished document is nearing the end of the draft process. That is a hopeful characterization for a paper that has spent the last ten months in “interagency review” garnering three hundred or so comments, to which MARAD is responding, and then to go through the wringer again for one last review. With around 20 agencies and departments having some interest – whether direct or remote — in ports and maritime transportation, one imagines 20 red pencils worn to the nub.

In gestation for over two years, having gone through wringers, reviews, and collecting dust in offices where US maritime policy is little considered, it is anyone’s guess as to the document’s ultimate value for the port/maritime sector. The most that we, and Administrator Paul “Chip” Jaenichen, can hope for is that the final draft will be released for comment before the Administration loses its license to operate.

Put any skepticism aside. It would be useful to have a “maritime strategy” document circulating among the transition teams and the policy planners and makers of the executive and legislative branches starting in 2017.

If anything it could spark attention to a subject area that has been easily ignored and misunderstood at higher levels of government for far longer than the last eight years. Officials and their staff could benefit by reading about the need for investing in ports, preparing the transportation system for the effects of larger ships, adapting to and adopting new technology, growing the domestic maritime service, preparing the next skilled workforce, and improving the port/maritime environment.

Those are consequential topics. That is what the document is about.

Water Resources Development Act of 2016 (WRDA 2016).   It is possible that Congress will complete action on a WRDA bill. The Senate last week passed its version (S.2848). On the other side of the Hill, Majority Leader Kevin McCarthy (R-CA) said the House version (H.R.5303) will have to wait until after the election when the legislators will reconvene for a lame duck session.

That is a disappointing delay for WRDA advocates but we can take some comfort in hearing both McCarthy and Speaker Paul Ryan (R-WI) mention WRDA 2016 as something to get done this year.  Still, with no more than a week of legislative days left before the election break, and facing an unspecific period for what can be an unpredictable lame duck session, most anything can get in the way of bill completion.

Committee leaders want to demonstrate that they can send a WRDA bill to the White House just two years after the 2014 act, and in the process provide some biennial predictability to authorizing water resource projects like navigation and flood control improvements.

The port/maritime sector has a lot at stake in this bill, which would authorize the Corps of Engineers to undertake Portsmouth, Charleston, Ft. Lauderdale, and Brownsville channel improvement projects. Those ports have been waiting for this key step to be taken by Congress. If the bill dies this year, it could be another two years before the next one.

The House and Senate versions of WRDA 2016 contain a large number of policy provisions that would improve a burdensome Corps’ civil works process, strengthen the leverage of ports in the study and implementation phases of Federal navigation projects, and, eventually, improve channel maintenance funding.

The last and most consequential of those is a provision in the House bill that would lead to full use of the Harbor Maintenance Trust Fund and its user-paid Harbor Maintenance Tax revenues. It would enable something like direct funding of the Corps for maintenance work. For reasons explained by arcane congressional budget rules, the legislation would make that change effective eleven years hence.

Would it be worth the wait?

Put it this way: Ports have waited since 1986, when the HMT and HMTF were created, for maintenance of navigation infrastructure to be funded at needed levels, and for the trust fund to be taken “off-budget” and protected from being used to balance against deficit spending in the larger Federal budget.

Yes, it would be worth the wait.   Pbea

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Competing Agencies, Maybe. Not Ideas

In Competition, Data, Efficiency, Port Performance, Ports on August 31, 2016 at 10:53 am

The information revolution has dramatically altered the way companies manage their supply chains, and has spawned a variety of new inter-organizational logistics management approaches. … This inter-organizational form is a consequence of the fact that many partners who are adjacent on the supply chain can both gain from sharing information that was previously accessible to only one of them. [Introduction to “Sharing Logistics Information Across Organizations: Technology, Competition and Contracting“]

When the Commerce Department’s Advisory Committee on Supply Chain Competitiveness (ACSCC) next meets it will take up recommendations developed “in response to [Secretary Penny Pritzker’s] request for information on the maritime container cargo data elements that US shippers, supply chains, and other seaport users and stakeholders need to be able to have and to share in advance of vessel arrival in the US…”

The meeting announcement explained that the data is necessary to improve coordination and information-sharing among supply chain and port stakeholders with the idea of ensuring that the operational elements of the port-related supply chain function well i.e., with each other. The point being to make cargo move smartly and better, especially in major ports where any number of challenges have arisen in recent years. Such challenges include insufficient chassis supply and equipment management; large ships discharging ever more boxes on a single call; not enough equipment to handle the load; gate congestion; too many trucks at one time; too few drivers working off-peak; too few longshoremen when they are needed; too many boxes collecting free time at the terminal; too few Customs inspectors; technology failures…you name it.

The agenda for the September 7th meeting at Commerce — actually a conference call — will have the forty-some panelists reviewing, probably adopting, draft recommendations that will go to the Secretary. What Secretary Penny Pritzker will do with it remains to be seen.

Timely cargo data-sharing among the principal logistics stakeholders is referred to by some as improved transparency. It is what port stakeholder groups in New York/New Jersey, Los Angeles/Long Beach, Norfolk, Charleston, and maybe other ports have had as central to their collaboration objectives.

Information management plays a role in the intermodal transportation system and the shipping industry. Today, the compelling need to effectively manage supply chains has made the need for real-time information a key component of port logistics. [NY/NJ Port Performance Task Force report].

It may sound simple, but implementation of that notion is not. One year ago, as a follow-up to the bistate port’s stakeholder task force report, the Port Authority of New York & New Jersey launched the Terminal Information Portal System (TIPS). It was an important first step, giving real-time information on export booking and import container availability to BCOs, truckers and others. TIPS will eventually increase in its interactive functionality.

Getting there took a while. Years, really. Ports like the East Coast’s largest gateway have multiple, independently owned and operated container terminals and a supply chain with enough moving parts, self-interest and opinions to make finding common cause among stakeholders a discouraging quest. But progress is possible. Slow, but possible.

The Commerce Department’s advisory panel put “improving stakeholder communication and data sharing” at the top of its list of objectives and recommendations to the Secretary.

Ocean carriers…should provide data to gray chassis pool operators on a scheduled basis to allow the pool operators to plan capacity and usage… [Later in the document:] Port complexes and terminal operators should implement integrated scheduling programs and appointment systems at major terminals, in order to improve information and data sharing, forecasting, and cargo flow. [Recommendations to the Secretary]

It is fair to say that the principal driver of the ACSCC recommendations in January was the shipper community. The principal lobbying force seeking “transparency” in port performance data, and who ultimately succeeded with the enactment of the Port Performance Freight Statistics Program (see MTS Matters post), were the shippers. The influence of cargo interests has been seen in on Capitol Hill, at Commerce, and at the Federal Maritime Commission, where shipper and trucker concerns about port congestion led to a few years of regional port listening sessions, staff reports and, now, stakeholder collaborations such as those taking place in the ports, but at a national level.

One might explain — as I have on occasion, for good reason — that official Washington’s receptivity to the demand for data as a response to stalled exports and slowed imports during the 2014-2015 West Coast contract talks. But just as we could not miss noticing dozens of ships sitting at anchor off the Southern California coast, waiting for berth space, we cannot ignore the other fact that information-sharing and data usage are evermore common elements in how our economy, the logistics industry, and other aspects of society operate today.

Information-sharing and transparency are not just a matter of interest to the Commerce Department and its advisory panel. It also is what the Federal Maritime Commission is nurturing in its “Innovation Teams” effort, which is managed by Commissioner Rebecca Dye. The FMC invited volunteer panelists — many with an interest in the San Pedro Bay ports — to participate in three parallel teams. Looking for “actionable process innovation,” Dye asked them what would be most useful in addressing port-related supply chain congestion. Interestingly enough, all three, meeting separately, chose information-sharing as their focus.

At our May Supply Chain Innovation Teams launch, our teams quickly identified supply chain “visibility” as one of the most effective ways to increase supply chain reliability and effectiveness….  Most supply chain obstacles are created from poor information transmission, inaccurate information, or information unavailable at the right time…. To increase supply chain visibility and effectiveness, all three of our Innovation Teams agreed to pursue the development of a national supply chain information portal that could be adapted for use by any port in the country. [Commissioner Rebecca Dye]

The three FMC advisory teams continue to operate, albeit in private sessions. Those meetings started in early May and perhaps are nearing the time when they will report to the commissioners. Meanwhile, the Commerce Department advisors will meet on September 7, to review their draft recommendations on information-sharing. Two government entities awaiting recommendations from the subject experts. I am not the only person to think there is a bit of interagency competition going on.

Will we see very different approaches to information-sharing among port supply chain stakeholders? Probably not. One product will be a list of recommendations; the other, a somewhat developed model for web-based data sharing. Both groups of advisors include representation of cargo interests, ports and modal operators who have been giving thought to the issues for quite some time.

Even if Commerce and the FMC are in a sort of competition to highlight solutions, their panels of experts are not. In fact, there is commonality among the participants.

We can’t compare names of all involved. The FMC initiative has been annoyingly out of public sight but we do know that the innovation teams include marine terminal, trucking, cargo interests, and other stakeholders who are involved in the same kind of discussions at the local port level. Maybe all we also need to know is that the three FMC teams are being moderated by executives of the three most symptomatic American ports. And those same execs — New York/New Jersey’s Beth Rooney, Long Beach’s Jon Slangerup, and Los Angeles’ Eugene Seroka — also serve on the panel over at Commerce. Bases covered.   Pbea

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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

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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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Rx: Port Decongestant

In Competition, Government, Port Performance, Ports on April 14, 2016 at 1:14 am

The Secretary of Commerce received recommendations from her department’s Advisory Committee on Supply Chain Competitiveness (ACSCC). The paper: Recommendations to the Secretary of Commerce Regarding US Seaport and Connecting Infrastructure Congestion “for addressing and resolving” the “urgent national topic” of port congestion.

(From the humble perspective of a long time ports advocate in Washington, DC, home of the ten-ring circus, it is gratifying and reassuring that ports can sometimes make it to the spotlight and, even more, qualify as an urgent national topic…whether to the Commerce Secretary or to anyone. Not a bad career choice after all.)

Federal leadership is needed to advance a set of best port congestion reduction practices that the private and public owners and stakeholders of each port can individually adopt as appropriate. Our report contains a number of congestion reduction practices for this purpose. By advancing these practices, the Nation can achieve a comprehensive, holistic reduction in port congestion that improves national competitiveness and economic growth.

The February 4, 2016 transmittal letter to Secretary Penny Pritzker also noted that there is a limit to the role that Washington can play in addressing the issue but wanted to make the most of that role.

However, where Federal Government involvement can directly resolve port congestion issues, or reduce their impacts, Federal action should be swift and decisive.

The nine-page paper was drafted, discussed, and edited by the panel — a formal Federal Advisory Committee — over a good part of the previous year and then was approved at its January meeting. The folks who led the initiative are knowledgeable in freight logistics. And if certain others of the 30 to 40 persons usually present for the meetings had little personal knowledge of what happens in the life of an ocean shipping container it was explained to them.

(This is a good time to note that one sector that did not have a seat at that table is one that could have contributed greatly to the panel’s understanding of port terminal operations — the marine terminal industry. Further note: the newly selected class of ACSCC appointees to the 44 member advisory committee continues the seeming exclusion of representatives of the terminal industry.)

Port congestion, as it has come to be called, is a problem only in a few of the larger US ports but as those international gateways — New York/New Jersey, Los Angeles, Long Beach, Oakland, Virginia — handle a substantial share of the nation’s cargo, especially imports, slowed cargo throughput is a problem and can be costly to cargo interests and others involved in the port-centered supply chain. It is not that the other ports will never see port congestion. Others likely will, eventually. But even as this “urgent national” port topic has become an issue in Washington, and attracting the attention of multiple Federal agencies, most ports have seen none of the symptoms and few of the causes, of which there are many.

Simplistically, it might be compared to growing pains. Changes are happening to the port, terminal and other elements of the port-centered supply chain. Some of their moving parts are not moving as well as they had been. Cargo volumes are shifting. Shippers are diversifying ports of entry. Larger vessels mean more cargo to load or unload during one vessel call. Terminals were configured for the business of ten years ago. Ocean carriers relinquished ownership of chassis but not full control. A chassis or container depot is not convenient to the terminal. The truck driver makes multiple trips for one load. Drivers are told to to pick up the container when there might be better times to do it. Trucks spend hours in lines, sometimes needlessly. Discouraged drivers exit the business, causing shortages. Roads to the terminal are inadequate for the truck volume. Rail capacity is insufficient. Berths may work around the clock but gates do not because the container is destined for a warehouse not open until eight in the morning.

Throw in some sort of labor dispute (slowdown, etc) or a failure of the computerized terminal operating system and a combination of these factors can make for a quite a mess. The 2014-2015 West Coast experience during protracted labor contract negotiations — with two dozen and more ships at anchor offshore as evidence of the problem onshore — remains vivid in the minds of many whose cargo was slow to get to market and, in the case of farm exports, spoiled. The experience also is a vivid memory for  the people who worked to clear the ships and terminals of containers.

So, yes, there is a problem that some ports have been working to address. Indeed in those named ports multidisciplinary groups were organized to identify and tackle those problems. The first of those was the NY/NJ Port Performance Task Force, which for the implementation phase was succeeded by the Council on Port Performance.

The 2016 recommendations to Secretary Pritzker do not stand alone. In 2014, the Federal Maritime Commission heard stakeholders during four regional listening sessions, and later issued staff reports. The FMC is about to launch what may be its last initiative — Supply Chain Innovation Teams to “develop commercial solutions to supply chain challenges and related port congestion concerns” at the San Pedro Bay ports. In March of this year, the cabinet secretaries of Commerce, Labor and Transportation hosted an invitation-only, “21st century seaports roundtable” that was organized by the White House’s National Economic Council. Bills were introduced on Capitol Hill in 2015 and one — the Port Performance Act — eventually became law. The Department of Transportation’s Bureau of Transportation Statistics is now working on implementing the resulting Port Performance Freight Statistics Program. All of which can reasonably be attributed to the lobbying of cargo interests, with the help of trucking, who smarted from the West Coast port mess and wanted to see improvements that included, but not were limited to, workforce issues.

Committee members noted, during the discussion of this Report, that these measures can be used by the ACSCC to help the U.S. Department of Transportation to develop the set of port performance metrics required by the Fixing America’s Surface Transportation Act. The Committee also encourages the U.S. Congress to consider additional investment in last-mile infrastructure, new technologies and intelligent systems, and on-dock and near-dock facilities towards reducing U.S. port congestion.

The recommendations of “best practices” delivered to Secretary Pritzker, the details of which you can read here, apply to ocean carriers; terminal operations; port authorities; Federal, State and local government; chassis equipment management; motor carriers; and transportation planners. It is interesting to note that the recommendations apply to just about everyone in the port-related supply chain except the importers and exporters who, as happens, were the principal writers and proponents of the document.

One might wonder if others in the supply chain would have “best practices” to suggest to that shipper community. I think they would.

The Port Performance Task Force report engaged representatives of stakeholders from most aspects of the supply chain and came up with twenty-three recommendations to try to implement. Some of those recommendations, perhaps many, are true challenges, asking competing parties to cooperate in establishing shared solutions such as a truck management system (a.k.a. “appointments”) and chassis pools. Most of the recommendations have little to do with Federal or State government and much to do with improving commercial relationships, embracing new technology, sharing information, adjusting operations, improving communications, and respecting a negotiated labor contract. A few of those are in the recommendations to the Secretary.

The interest of Federal agencies in the port congestion issue is not a bad thing but it is misleading to label it “port congestion.” It is a supply chain problem. Why did the advisory committee recommendations go to the Secretary of Commerce? I suppose the reason is — like the banks to Willie Sutton — because she is there, and the panel exists to advise the Secretary. But as the transmittal letter admits, there is not much that the government can do. Outside of facilitating meetings and providing some assistance in funding infrastructure projects, the lion’s share of the work to be done is there in the supply chain, by the parties that make up the supply chain…and not just at the marine terminal.   Pbea