Investing in Seaports Pays Dividends

Investing in Seaports Pays Dividends

April 26, 2013  | Carter Templeton

BY KURT NAGLE
President, American Association of Port Authorities

Every four years since 1988, the American Society of Civil Engineers (ASCE) has released its U.S. infrastructure “Report Card” which gives a letter grade to the performance and condition of America’s infrastructure. The critical infrastructure that ASCE typically grades includes everything from dams and drinking water to rail, roads and transit. In its 2013 Report Card for America’s Infrastructure, released on March 19, the civil engineers’ study included the waterway and highway infrastructure connecting with America’s seaports. This is the first time seaport transportation infrastructure connections were part of the larger study, which was gratifying to the American Association of Port Authorities (AAPA) and its port authority members.

Over the years, ASCE’s reports have been instrumental in showing the need for infrastructure investment and the economic impact of their neglect. Advocating for increased federal investment in seaport related infrastructure—including both the landside and waterside connections—has been a high priority for AAPA for many years. Having a respected third party such as the American Society of Civil Engineers helping to tell this story strengthens the argument for increasing federal investment in port-related infrastructure and builds on reports published previously by groups such as the World Economic Forum, Building America’s Future, and the U.S. Army Corps of Engineers.

The seaport transportation infrastructure grade this year is a ‘C’ – which is an average of the infrastructure contained within port authority gates and the connecting infrastructure outside of them.

While the grade is above that of some other types of infrastructure in ASCE’s 2013 “Report Card,” AAPA expected it to be low. This is primarily due to the generally poor condition of the connections into and out of our seaports, and the knowledge that the nation’s growing trade volumes will exceed the capacity of current port-related infrastructure. The grade supports AAPA’s message that while seaports and their private sector partners plan to invest more than $46 billion over the next five years in their infrastructure, the federal government is not upholding its end of the partnership. The grade also underscores the inadequacies of the infrastructure that seaports rely on to facilitate the movement of cargo and will be a beneficial advocacy tool for ports on Capitol Hill and with the Administration.

At the current pace of investments in infrastructure connecting with ports, America’s growing trade volumes will soon exceed—and in some cases may have already exceeded—the ability of these networks to efficiently and cost-effectively handle this necessary and crucial movement of goods.

In the next decade, America’s trade volume is expected to double, while total U.S. exports are expected to surpass imports for the first time in a generation. Since the 2008 recession, exports have been a major factor in sustaining and growing the U.S. economy and providing jobs for American workers. In 2012 alone, the growth in the value of waterborne exports from the U.S. was 3.8%, which was a much higher growth rate than the rest of the economy (0.2%).

Among the fastest growing trade commodities, in dollar terms, came from automotive products (9.7%), capital goods (6.8%), and agricultural products such as foods, feeds and beverages (5.3%). Without adequate connections with ports, the movement of these and other types of international commerce—both imports and exports—is hampered, raising costs to domestic industries and consumers and making America’s exports less competitive in the global marketplace.

Narrowing the Awareness “Gap”

Ask any port industry professional and they will explain the value of seaports to their local and national economies. They know ports provide the critical linkage between land and water transportation. They know ports serve as the gateway to international trade. They know ports provide solid, family-wage jobs and serve as regional economic engines. They also know that nearly everything consumers buy or use comes through a port and without ports, domestic manufacturers would not have access to the raw materials and components that enable their factories to operate.

For many years, the connecting transportation infrastructure with ports has struggled to climb into the larger “infrastructure” lexicon of policy makers and thought leaders in Washington, DC, and other capitals throughout the hemisphere. Looming large in the eyes of their own coastal communities but often minimized or misunderstood in the minds of land-locked cities and towns, ports have had to remind the media, their government representatives and the population at large of the role they play in trade, goods movement and transportation.

However, through awareness campaigns such as AAPA’s “Seaports Deliver Prosperity” initiative and infrastructure reports such as ASCE’s, the value our seaports provide is beginning to resonate among policy makers and those who influence them.

For example, last year’s MAP-21 surface transportation bill included a maritime provision and several directives related to the larger issue of freight policy, for which AAPA strongly advocated. The bipartisan Congressional PORTS Caucus, launched in 2012 by Reps. Janice Hahn (D-Calif.) and Ted Poe (R-Texas), now boasts more than 80 members of Congress and is organizing successful briefings on Capitol Hill to increase the consideration of port issues by lawmakers. Furthermore, port authority and association executives play a major role in testifying before Congressional committees on topics ranging from port security and dredging, to policy reforms and grants for enhancing the nation’s freight transportation network.

Ports Investing Billions

While AAPA has been working to increase federal policy makers’ awareness about the importance of improving port-related infrastructure, ports and their private-sector partners have been making substantial investments into the infrastructure they control. On land and in water, ports authorities and their partners are putting billions of dollars into projects designed to ease congestion, improve efficiency and facilitate the movement of goods and people. These projects run the gamut – from larger cranes and modern terminals, to road and rail connections, to warehouses and distribution centers. And because these are all business investments, they are expected to pay dividends by better serving customers, reducing bottlenecks, trimming truck and ship idling time, and cutting waste.

The investors in and around America’s seaports are varied – public port agencies, terminal operators, private equity firms, state and federal partners – but they participate with a common purpose in mind: seeing their investments pay off. Reducing truck turn times at ports benefits nearby communities that might otherwise contend with traffic jams and increased diesel emissions. Attracting new business generates jobs and economic growth for the state and region. Accommodating larger ships enables more goods to be moved on and off each vessel at less cost. These investments pay forward into the larger economy, providing cargo owners and logistics managers with more reliable, cost-effective options for moving goods and enabling consumers to take advantage of a freight transportation system running at its optimum.

To better reap the dividends that ports provide, AAPA and its industry advocates are urging Congress and the Administration to fully consider the vital importance of federal funding in and around America’s seaports. We are reminding policy makers, and those who influence them, that nearly one-third of the nation’s GDP is derived from international trade while seaport activities—which handle 99 percent of the nation’s overseas trade—generate more than 13 million high-paying U.S. jobs and over $200 billion a year in federal, state and local tax revenues.

We are also reminding policy makers that seaports are the nexus of critical land and waterside infrastructure that connects America’s farmers and producers with markets overseas, and that ports provide access for imports of raw materials, components and consumer goods which are a key part of U.S. manufacturing and our standard of living.

Our goal is for Capitol Hill and Administration officials to realize that federal investments in seaport-related infrastructure are an essential, effective utilization of limited resources, paying dividends through increased trade, economic growth, long-term job creation, and—importantly in today’s fiscal realities—tax revenues.

So when you think about ports and the value they provide America’s consumers and businesses, do not just think of ships, cranes and stacks of cargo within the ports. Instead think about the highway, rail and waterway connections just outside the ports and how increased federal investments in those connections will enable the investments that ports are making to their facilities to pay the greatest dividends for the nation.

This piece was originally produced for Expansion Solutions Magazine and was reprinted with permission.

Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of The Eno Center for Transportation.

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