Marine Transportation System

Posts Tagged ‘freight’

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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Today, the still unpublished document is nearing the end of the draft process.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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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

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Measuring Port Performance

In Efficiency, Federal Government, Legislation, MTS Policy, Port Performance, Ports, Transportation Policy on January 26, 2016 at 4:35 pm

The issue of measuring port performance was a contentious one over the last half of 2015. Now that there is such as thing in law as the Port Performance Freight Statistics Program the action has shifted to what to do about it. USDOT — really the Bureau of Transportation Statistics — is tasked with implementing the new law that requires the collection of data to express throughput and capacity in ports. BTS is expected to anonymize the competitively sensitive data for public consumption and report annually to Congress.

Implementation will prove no less a contentious matter, at least among the interests who were most active as the bill was being debated and now hope to inform BTS decisions. Nor does it promise to be a simple task for the agency.

Helpful to BTS is that some of the original bill requirements as to specific metrics and stepped up data collection during collective bargaining was left on the legislative cutting room floor. (The Port Performance Act, S.1298, as reported from committee listed eight metrics that must be used — such as average container lifts per hour and average cargo dwell time — and then added another five data types to be reported monthly to Congress around the time of port labor contract negotiations.)

The final version frees BTS to assemble a program that, perhaps, a transportation statistical agency might consider valid for assessing both port condition and performance, both being information that the department wants to have on the total freight system. Port related metrics are a segment of supply chain data that BTS previously said it lacked.

Not so helpful to BTS is that the mandate to build a new program was not accompanied by money to pay for the effort. Indeed, the agency’s authorized annual budget limit for the next five years is $26 million as set by Congress in the FAST Act. That is less than the agency has been given in past year appropriations and less than the $29 million requested by the Administration. (The American Statistical Association provides this perspective: “$26 million is the same level of the BTS budget in FY05, which means BTS will see a 30% decline in purchasing power from FY05 to FY20 due to inflation.”)

The port performance program is not a simple matter to stand up. That was made patently clear recently when BTS held a session on the subject at the TRB Annual Meeting. The agency took advantage of the fact that Washington was temporarily populated with scads of transportation economists, planners, engineers, industry representatives, consultants and other data hounds. At this session labeled “Port Data Users Forum” Rolf Schmitt, Deputy Director of BTS, sat on the dais making notes on his laptop as he heard a variety of comments and issues from persons at the standing mic. Specific questions were posed to get responses from the 70 or so folk in the room.

  1. What are the different port types from which data would need to be drawn?
  2. How could they be ranked (given that the law calls for data from the top 25 ports as measured by TEUs, tonnage and dry bulk cargo but ranking would not be a simple as that might seem)?
  3. What are some widely accepted and used types of port statistics?
  4. What is the best way to measure performance to determine efficiency and productivity?

Dan Smith of The Tioga Group that has studied terminal productivity, Bruce Lambert of the Institute for Trade and Transportation Studies, Anne Aylward of USDOT’s Volpe Center and former Boston port  director, Paul Bingham of the Economic Development Research Group, and Anne Kappel of the World Shipping Council were among the knowledgeable persons who offered suggestions and cautions. The comments collected gave Schmitt plenty to chew on.

The folks at BTS were given some formal help by Congress. The new PPFSP (it being Washington we have to mine initials to mysteriously label programs) includes the formation of a temporary “working group” of Federal agency, stakeholder and other sector representatives to assist BTS in determining what metrics to use in data collection and how to go about getting the data. Those stakeholders and some other likely working group members were among the persons (I among them) who lobbied and competed for preferred legislative language. One might expect those opposing views to surface again in some form during the working group discussions.

In his opening comments Rolf Schmitt noted that while the legislation uses the “working group” phraseology — perhaps an attempt by bill writers to avoid mandating formation of a formal advisory committee under the Federal Advisory Committee Act — it will be a Federal Advisory Committee in every sense of the word. That means a formal process starting with a notice in the Federal Register, the writing of a charter, and a host of other administrative requirements. A rulemaking process also is necessary to complete the task of establishing the data collection program. Schmitt noted that Federal law says that agencies such as his must minimize the burden put on those affected by such rules. Always good to know.

There was no lengthy list of suggested metrics offered that evening by those at the microphone in response to the question that held the most interest. Cargo dwell time and rail turn times were mentioned and indicated as among data that the marine terminal would keep. Since many terminals are privately operated, port authorities are not in possession of that data and, as one person noted, that is especially true in ports where private terminals are not tenants of a port authority.

Truck turn times were also mentioned but, as another person noted, collecting turn times that include waiting outside the gate will require capital investments in measuring equipment. The Port of Oakland is experimenting with Bluetooth technology. On the previous day Reade Kidd, Home Depot’s Director of International Logistics, offered the opinion of probably most cargo interests that metrics should reflect berth, rail, yard and gate operations.

When the hour was up, Rolf Schmitt left the convention center, no doubt thinking he had more questions and problems to solve on leaving than when he arrived.  Pbea

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A Perspective on Port Dominoes

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

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

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

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

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

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

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

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

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

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

Dire predictions underscored the calls for solutions.

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

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

 

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The Murray-Cantwell Approach to Problem Solving

In Competition, Congress, Infrastructure, Intermodal, Water Resources on September 23, 2013 at 7:05 pm

This past week State of Washington Senators Patty Murray and Maria Cantwell introduced the Maritime Goods Movement Act of 2013 (S. 1905). Their inspiration for legislation came from what I have described as the unintended consequences of the Harbor Maintenance Tax, starting with complaints from the ports of Seattle and Tacoma that the Canadian competition to the north and the shippers, who are obliged to pay the Harbor Maintenance Tax when entering U.S. ports, were taking full advantage of the cost-differential where the HMT does not apply.

It is a complaint that was given some appearance of validity in a Federal Maritime Commission report issued last year and, a bit more convincingly, by data comparisons published by The Journal of Commerce last month.

At the request of the senators the FMC studied the role played by the HMT (0.125% of cargo value) in decisions to use the Vancouver and Prince Rupert gateways. The report, adopted by the FMC commissioners on a party line vote, didn’t make a strong case as to cause and effect. It did suggest that if an equivalent of the tax were applied in Canada “a portion of the U.S. cargo…likely would revert to using U.S. West Coast ports.” The report concluded by suggesting any remedy is in the hands of Congress not the regulatory agency.

The JOC looked at the issue by comparing market share within the PNW and among U.S. West Coast ports, where the HMT is uniformly applied. This is their finding in a nutshell:

Port data collected by The Journal of Commerce shows clearly that while Seattle and Tacoma have lost no market share relative to U.S. West Coast ports, their market share in the Pacific Northwest, a region that includes the Canadian ports of Vancouver and Prince Rupert, has slipped significantly in recent years.

That may not be conclusive of HMT culpability but it is indicative of competitive weakness just south of the 49th Parallel.  The comparative strength in British Columbia could be attributed to the HMT in addition to other factors, among them the efficient intermodal delivery system established as part of Canada’s ongoing Pacific Gateway Transportation Strategy.

Enter the Maritime Goods Movement Act User Fee proposed in the bill. The HMT would be repealed and then, for all practical purposes, recreated as the “MGMA User Fee.” In virtually every respect it would be like the HMT. The principal difference is that it also would be applied to U.S. bound cargo that first enters North America through Canada or Mexico.  Shippers would pay when the cargo crosses the land border.  On this bill rest the hopes of Puget Sound’s largest ports.

But the senators didn’t stop there. They also decided to try to fix the issue that is troubling most U.S. ports—the Harbor Maintenance Trust Fund. The bill would make several changes—including expanded uses of the HMTF such as are found in the Senate-passed WRDA (S. 601)—but let’s here focus on the greatest failing of the law as it now stands. That is the under-spending of HMTF funds.

Unlike the RAMP Act that would rely on a parliamentary mechanism to leverage full funding over the objections of appropriators, and unlike the WRDA bills of the Senate and House that set funding targets at which appropriators might aim, the MGMA bill uses a direct approach. At the bottom of page 10 is this: “[N]o fee may be collected…except to the extent that the expenditure of the fee [for allowable activities] is provided for in advance in an appropriations Act.” It is a rarely used means tying revenue collections to the spending of those revenues. The transaction would occur outside the section 302 allocations that cap appropriations committee spending. In doing so it would remove the incentive for appropriators to limit allocations and would treat the HMTF more like a dedicated trust fund.

This approach is employed in other areas of government where a user fee is collected to support a specific function of government. The only downside is that to meet the requirements of budget rules Congress also would have to identify offsetting revenue to fill the hole that would be created when, as a first step to creating the new MGMA User Fee, the HMT would be repealed, thereby eliminating 10 years of projected revenue.  Yes, it gets murky down deep in the budget process. But the result would be the very easily understood concept of “dollars in, dollars out,” as a Murray aide summarized.

Finding the offset, in the range of billions of dollars, presents a real challenge to the bill sponsors. There is a reason why other attempts at legislative solutions have produced little more than “sense of Congress” statements of principle and funding targets that are…well…just targets. The climb up this legislative Hill is very steep and the obstacles—including leadership objections and the search for offsetting revenue—have been daunting.

While we are noting the degree of incline ahead, let’s add to this particular bill the likelihood of complaints to the State Department from Mexico and Canada, who are major U.S. trading partners, and opposition from shippers and the railroads that carry their cargo into the U.S.

But that doesn’t mean it is the wrong solution to an HMTF problem that has existed since the early 1990s. It is the right one because it would be a more effective and lasting way to link the revenue to the reason for the revenue, which is to keep American harbor channels maintained and our ports competitive.  Pbea

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Bottom Line Thoughts on the MTS

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

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

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

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

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

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

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

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

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

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

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The Late Senator Frank Lautenberg

In Congress, Environment, Federal Government, Leadership, MTS Policy, New York Harbor, Politics, Ports, Security, Surface Transportation Policy, Water Resources on June 9, 2013 at 11:53 pm
Frank_Lautenberg,_official_portrait

Senator Frank Lautenberg
1924 – 2013

Last Friday was a somber day of steady rain as New Jersey Senator Frank Lautenberg was buried at Arlington National Cemetery. News reports this past week cited how his passing was notable because he was the last sitting senator of the “greatest generation,” that chamber’s last veteran of World War II. His death came just months after Hawaii’s Senator Daniel Inouye, a wounded veteran of that war, took his resting place among the nation’s noted military and civilian leaders at Arlington.

(They also had a common  interest in the MTS—the marine transportation system. Inouye was a reliable and principal advocate for American shipping; Lautenberg for the landside elements—the ports and intermodal connections. Both were friends of labor.)

It need be said that Senator Lautenberg’s death on June 3, also is notable because it marked the passing of a champion of Federal policy to making communities healthier, the environment cleaner, and industry and travel safer and better. It was a personal agenda well suited to his home State of New Jersey but carried out with no less than the nation in mind.

In his 28 years as a senator he served on virtually every committee and subcommittee that touched on authorizing and funding transportation, civil works and environmental policy. For a period he chaired the Transportation Subcommittee on Appropriations while as a senior member of the Environment & Public Works Committee (EPW).  For a few years after the attack of September 2001 he also was on the Homeland Security & Governmental Affairs Committee. In recent years he chaired the Surface Transportation and Merchant Marine, Infrastructure, Safety and Security Subcommittee of the Senate Commerce, Science & Transportation Committee (CST). In recent years he served on EPW, CST and Appropriations, including the Corps funding subcommittee, concurrently.

As was evident in his committee work his approach to legislating was to cover all the bases, or at least as many as he could. He championed improving airports and the aviation system, expanding the use of transit and passenger rail, modernizing freight transportation, bringing American port infrastructure to world standards, and securing them all from the those who would do us harm.

He was appointed to the President’s Commission on Aviation Security and Terrorism after the tragic downing of Pan Am Flight 103 over Lockerbie, Scotland, and returned to the Senate, after a two-year hiatus, to help write and oversee anti-terrorism law after the downing of the World Trade Center towers. In those towers he had served on the Board of Commissioners of the Port Authority of New York & New Jersey before being elected senator in 1982. His time with the Port Authority–and his building the Automatic Data Processing Corporation (ADP) from scratch–were credits on his resume in which he took great pride and enjoyed telling people about if the occasion would allow.

Frank Lautenberg put much effort into environmental issues. He gave his attention to the recovery of old industrial wastelands through brownfields initiatives and Superfund legislation and to making the Toxic Substances Control Act more effective. He was protecting the coastline whether the recreation beaches or the nurturing marshlands. In his last year he walked the Jersey Shore in the wake of Superstorm Sandy, secured bi-partisan support for his toxic substances legislation and, from his wheel chair, cast his final vote in support of tighter gun legislation.

He was a tough fellow and could be an relentless advocate.  Just ask the trucking industry that couldn’t budge him from the centerline where he stood in the way of increasing truck size and weight limits year after year after year. Ask the FAA whose employees’ merit increases were at risk while their work was incomplete on the redesign of East Coast airspace in the Newark/LaGuardia/JFK market. Ask Norfolk Southern and CSX who found the Senator immovable on key issues pertaining to assuring competitive rail service for his home port when Conrail’s assets were on the block. Was he always the advocate that some of us wanted him to be? No, but then you rarely find a senator who is that agreeable.

From start-to-finish Senator Frank Lautenberg was an advocate for his New Jersey and his United States, which he strove to make  better by improving the quality of people’s lives and the means of commerce.    Pbea

(A version of this ran on The Ferguson Group blog.)

 
 

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Now They’ve Gone and Done It!

In Congress, Infrastructure, Surface Transportation Policy on July 3, 2012 at 9:54 am

Washington, which is to say Congress, got it done.  Really.

The “it” is the surface transportation authorization legislation that sets the programs for highway, transit and related infrastructure–hereafter referred to as MAP-21 (“Moving Ahead for Progress in the 21st Century” for those of you who feel a need to know.)  The bill, H.R. 4348, won bipartisan approval of both chambers by large margins.

The roughly $52 billion per year measure’s importance can be gauged by the fact that the soon-to-be law determines how much the States and transportation agencies will receive for system maintenance and improvements. It also sets national policy for everything from truck size and weight to reducing transportation emissions to traffic safety.

MAP-21 is the successor to the 2005 SAFETEA-LU (no, I won’t spell that one out for you). Arguably, MAP-21 is a significant successor. It includes some reforms recommended by national commissions that were formed–and informed–by the earmark-excessive SAFETEA-LU.  It also contains provisions on two areas of interest that are, in their own way, groundbreaking: freight and channel maintenance.

Back in 2005 once the dust had cleared following the House and Senate negotiations that produced SAFETEA-LU the freight interest groups were surprised to see the main freight infrastructure funding provision laying there in the dust.  It had been cut out.  It took the Freight Stakeholders Coalition–ports, railroads, shippers, truckers, you name it–no time to regroup and work to get–seven years later–freight policy provisions in the next bill.

Today there is reason for celebration. While a $2 billion National Freight Program didn’t survive the conference some freight provisions were adopted in the final version that is going to the White House for signature.

  • A National Freight Policy is established with goals to improve the “condition and performance of the national freight network.”
  • A National Freight Network consisting of critical freight routes and other routes on the interstate system and in rural areas, is to be designated by the Transportation Secretary.
  • USDOT is to prepare a National Freight Strategic Plan in consultation with States and public and private stakeholders. The plan is to identify freight gateways and corridors (and their bottlenecks), future freight volumes, and needed improvements.
  • USDOT is to report on the condition of the freight network and improve data and planning tools to support outcome-oriented infrastructure investments.
  • States are encouraged to develop freight plans and organize freight advisory committees to give stakeholders input into freight project planning.
  • In lieu of a separate allocation of funds for freight projects the bill offers an incentive for freight project funding by allowing the Secretary to reduce the non-Federal share of a project’s cost if it meets criteria for improving freight mobility.
  • The bill also increases to $1 billion (over a five-fold increase) the popular TIFIA credit assistance program and authorizes $500 million for Projects of National and Regional Significance (PNRS).  Both of those have been particularly helpful in financing large freight related projects.

The other noteworthy provision in MAP-21 isn’t nearly as significant in dollar and program terms but deserves a mention.  In this so-called “highway bill” is a provision bringing attention to the underfunding of port channels and the continuing Harbor Maintenance Trust Fund problem.  The best that the House and Senate sponsors of the RAMP Act legislation could achieve was to get “sense of Congress” language that reminds the White House and Congress that the full measure of HMTF resources should be spent each year to keep U.S. port channels at their most efficient.

It was much less than the RAMP Act supporters (I among them) wanted but there is a legitimately positive way to spin it.  For the first time Congress–in the surface transportation bill, no less–acknowledges the need to make full use of the user-paid revenues to maintain the underwater highways for shipping. It is a stepping stone to greater funding as I suggested a few months back after the House Appropriations Committee approved a record $1 billion to be spent from the HMTF.

Let’s be clear. MAP-21 is not all that it should have been. For starters, it is only a 2-year bill compared to its 4- and 5-year antecedents. Why? Because the House, Senate and Administration conspired to avoid the crucial issue of new revenue as if it were a tick infested bed of poison ivy. Yes, that is a kicked can that you see down the road (to double down on metaphors). The corollary to that is the inability of the legislation to afford the demonstrable need for greater funding for infrastructure  improvements and maintenance.   The funding in the bill is half of what it should be.

The surface transportation bill also is not as multimodal as it should be. It is time for rail and domestic marine freight transportation to be folded into the nominally intermodal surface transportation policy. Commuter rail is. Passenger ferries are. The adage “freight doesn’t vote” continues to apply.

With the exception of rail freight project eligibility for TIFIA and PNRS financing the program remains a predominantly highway one. It’s time we move to a different policy paradigm that addresses transportation infrastructure needs in modally neutral terms.

But let’s not spend too much time lamenting what should be but isn’t. The legislators returned to their home offices over the Independence Day recess able to say they got something worthwhile done on a bipartisan basis.  Imagine that.   Pbea

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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.