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Eno Transportation Weekly

Federal Freight Focus Shifts Inland – and Zeroes In on Complex Policy Questions

August 16, 2018

Five years after labor disputes out West caused operations at 29 ports to grind to a halt, federal focus on freight transportation seems to be moving toward intermodal connectors and the infrastructure that moves freight out of the port and across the country.

The nine-month slowdown at West Coast ports from mid-2014 to early 2015 cost the U.S. economy as much as $2.5 billion per day and strangled companies that rely on international shipments, prompting significant interest from Congress. This was led predominantly by Sen. Commerce Committee Chairman John Thune (R-SD) and Subcommittee on Surface Transportation and Merchant Marine Infrastructure, Safety, and Security Chairwoman Deb Fischer (R-NE), who held hearings and introduced legislation (later included in modified form in the FAST Act of 2015) on port performance.

The labor issue wasn’t the only news item drawing attention to ports: the rise of the mega-ships—and the ocean carrier alliances established to take advantage of them—since 2008 meant larger ships than ever before were calling to port, bringing with them a higher concentration of containers than ports were used to seeing at a given time.

Ports scrambled to accommodate these gigantic container ships. Channels had to be deepened, cranes had to be lifted, and bridges had to be raised. On the East Coast, the Port Authority of New York-New Jersey raised the Bayonne Bridge to allow the larger ships to pass under. On the West Coast, the Port of Long Beach is replacing the Gerald Desmond Bridge similarly to raise it, and also to widen the bridge to accommodate the increased flow of truck traffic (more containers arriving at once means more trucks coming to pick up their containers at once, increasing congestion in and around the port).

There are labor implications of this development, as well: more containers showing up at a finite space requires more efficient container movement, which in turn requires longshoremen to be more productive. In the immediate wake of the 2014-2015 labor dispute, that was a touchy request.

All of this still matters, and the federal government surely has not left ports behind. The U.S. Department of Transportation recently awarded an Infrastructure for Rebuilding America (INFRA) grant to the Port of Philadelphia, for example, to deepen the berth at the Packer Avenue Marine Terminal, as well as convert two cranes from diesel to electric and construct a new temperature-controlled warehouse. (PhilaPort was one of only two ports to receive INFRA grant funding; PortMiami received $7 million to replace two cargo terminal gates with expanded and automated truck gates.)

And of course, dredging continues to be a large part of the Army Corps of Engineers’ operations and maintenance work; dredging projects featured prominently in the Corps’ 2018 work plan released in June.

Still, there are signs that the federal government’s focus on freight transportation is moving inland. At a recent hearing on maritime transportation, Federal Maritime Commission Acting Chairman Michael Khouri said “we don’t have any port congestion as we speak… where we’re having trouble now is not at the sea ports, but in the inland legs of container shipping. Dallas, Chicago, Detroit—at the railhead end of shipments, there’s a shortage of truck drivers, there’s a shortage of chassis, that American cargo owners are saying their cargo’s getting stuck in those inland places.”

Perhaps responding to renewed interest in inland freight infrastructure, Sen. Roger Wicker (R-MS) recently introduced the Port Operations, Research, and Technology Act (S. 3273) which was passed out of committee earlier this month. The bill establishes a Port and Intermodal Improvement Program, which allows the Secretary of Transportation to pool funds from other agencies and award competitive grant funding to projects that will improve the safety, efficiency, or reliability of the movement of goods through a port or the intermodal connection to a port. This could include marine terminal equipment, intermodal facilities, highway or rail infrastructure immediately surrounding a port, or digital infrastructure systems.

That program would replace the Port Infrastructure Development Program, which was designed similarly but targeted only ports and intermodal connectors with a maritime component—so, not rail or highway infrastructure outside of the port. Ports are still front and center in the Wicker bill, but there’s a new recognition that what happens outside of the ports needs attention (and money), as well.

It’s a small step, but it may represent a change in how federal policymakers are thinking about freight transportation—as an entire network, and not just about what’s happening inside the ports.

It isn’t the first time the federal government has taken a stab at establishing a funding program for freight projects. The FAST Act established a program now called INFRA to provide funding for nationally significant highway and freight projects. But because the program was financed with Highway Trust Fund contract authority, there was a very low cap on the number of dollars that could go toward non-highway projects ($500 million of the $4 billion total). And in the first year of the program, over half of the money awarded went to highways without freight characteristics.

(Eno released a report following passage of the FAST Act recommending changes to the FASTLANE program including increasing the amount of money available to freight projects to $2 billion a year, making the program truly multimodal, and finding a dedicated funding stream that will grow with demand and not disproportionately affect any one mode.)

A freight-specific, multimodal funding stream would be a coup, but not every freight mode needs the same thing—it isn’t about the money for all of them. This was echoed at a roundtable of port stakeholders hosted by the American Association of Port Authorities earlier this month. The conversation was off the record, but while several stakeholders cited the money ports are investing to improve their infrastructure and accommodate larger ships (to the tune of $155 billion over the next five years), many agreed that the needs go well beyond cash infusions.

So what do they want? Faster permit approvals and other regulatory processes are high on the list. Many freight stakeholders are concerned about environmental and permitting processes that can tie up their infrastructure projects for years, making it more difficult to attract private investment. The Trump Administration’s infrastructure plan calls for a two-year deadline to secure permits, down from a current average of 3.5 years.

They also want more collaboration—not just with federal agencies, but also with metropolitan planning organizations (MPOs), port authorities, and other private entities.

And every stakeholder has their pet issues, as well. The freight rail industry, for example, boasts of not needing public investment and is more concerned with making sure public policy does not favor highway users. The trucking industry is concerned with electronic logging requirements for truckers. Truckers and railroads have opposite interests in proposals to allow for longer and heavier trucks.

And those are just the carriers: there are also MPOs that are concerned with congestion and land use around the ports, state Departments of Transportation that are grappling with budget constraints for investing in aging infrastructure, and port authorities that are increasingly investing in infrastructure resilience and natural disaster response.

Ultimately, if the federal government becomes more interested in freight transportation beyond ports, it will also have to reckon with the aforementioned policy issues.

There is no doubt that ports continue to be a vital part of our freight transportation network as gateways to international trade and drivers of one-quarter of our economy. But there are signs that federal policymakers are moving beyond viewing ports as individual entities and instead recognizing them as part of a larger network, all of which are important but have different funding and policy needs.

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