JOC Uncharted: US ports step up calls for short-term stimulus

JOC Uncharted: US ports step up calls for short-term stimulus

The American Association of Port Authorities (AAPA) is asking Congress for $1.5 billion to cover additional costs associated with the COVID-19 pandemic. Photo credit: Shutterstock.com.

Executives at US seaports are stepping up calls for more direct federal aid, saying the prolonged downturn in demand caused by the COVID-19 pandemic threatens their financial viability.

“It’s not just on the container side; it’s passenger ships, bulk, coal, forest products, aggregates, liquids, and tankers,” said William Doyle, the executive director of the Port of Baltimore and a former Federal Maritime Commissioner. “You name it, it’s been hit.”

Doyle's comments, made on the July 22 episode of JOC Uncharted, came just before the American Association of Port Authorities (AAPA) sent a letter signed by 69 of its members asking Congress for $1.5 billion to cover “business-critical expenses that ports have incurred due to COVID-19.”

Bills that would allow for emergency grants to the maritime industry and that would step up port funding are being introduced in Congress. But port leaders say the aid needs to come in the most current round of COVID-19 relief being considered in Congress, lest ports make further personnel and operational cuts.

The immediate need for personal protective equipment (PPE), extra cleaning supplies, and other safety measures is already putting a hole in port budgets. Daily temperature checks for longshore workers at the Port of New York and New Jersey, for example, cost up to $60,000 weekly.

Those new safety-related costs are butting up against ongoing capital spending needs and debt service costs at ports and revenues that have fallen along with cargo volumes. Through the first half of 2020, US import volumes have tumbled 7.3 percent year over year, according to data from PIERS, a sister product of JOC.com within IHS Markit.

The AAPA said furloughs and layoffs are already happening throughout the maritime industry, positing a worse-case scenario of up to 130,000 US seaport jobs lost due to COVID-19.

“America’s seaports are experiencing significant financial challenges as commercial cargo has plummeted and passenger travel has nearly ceased,” AAPA chief executive Christopher Connor said in a statement. The stimulus is needed to keep ports in a “state of readiness to significantly aid in the nation’s eventual economic recovery.”

Doyle said he hopes the money will be included in the next COVID-19 relief bill, which is currently being debated in Congress.

No time to waste

This latest round of stimulus remains stalled on whether it will extend the extra unemployment benefits that were introduced in the original $3 trillion aid package. But Doyle said it should be easy to find broad political support for helping ports, given how many direct and indirect jobs they support.

“All port directors, states, and governors can get behind” providing stimulus, Doyle said. “Not much was in the first round of stimulus for seaports.”

It’s also particularly important to make sure port operations are fluid now that many states are starting reopening plans and companies are slowly ramping up operations, he added.

“Some ports have had to cut back their hours,” Doyle said. “It’s not the ocean carriers that dictate and determine where cargo goes, but it’s the shippers and beneficial cargo owners all working at the same time” as the ports.

Challenged by drops in revenue across multiple business lines, including airports and road and bridge tolls, some port authorities have already made their own calls for help during the COVID-19 downturn.

The Port of Oakland, for example, in April asked for state aid as it anticipates “steep financial losses” over the next two years. The Port Authority of New York and New Jersey asked for $3 billion in direct federal aid to cover an expected revenue shortfall and applied to the Federal Reserve’s municipal bond buying program to help stabilize prices for its publicly traded debt.

In May, two members of the FMC sent a letter to Congress asking for direct aid to marine terminals, whose rents and throughput fees make up the bulk of seaport revenue.

“Marine terminal operators are getting hit hard,” Doyle said. “They are laying out a lot of money to keep people employed and keeping things clean.”

Relief packages have already been put forth in Congress. Rep. Peter Fazio, D-Oregon, chair of the House committee on transportation and infrastructure, and Rep. Sean Maloney, D-New York, who heads a subcommittee on the US Coast Guard and marine transportation, introduced a bill in early July that would give the Maritime Administration the ability to provide emergency funding to maritime supply chain businesses, such as shipyards, tug operators, and stevedores.

A draft funding bill in the House also seeks to add $1 billion to the Department of Transportation’s Port Infrastructure Development Program, on top of $300 million already targeted for the program, for fiscal 2021.

While Doyle welcomed those other efforts, “both bills are going to take some months to move forward,” adding urgency to the COVID-19 relief bill currently under debate.

“We’ve been hit hard, and it’s time we get some stimulus,” Doyle said.

Contact Michael Angell at bizwritermike@gmail.com.