I actually laughed after reading that Sen. Lindsay Graham, R-S.C., viewed the recent release of an Army Corps of Engineers report on mega-ship preparedness at U.S. ports as “a significant step toward a national vision that has been lacking.”
I agree, and I am sure many others in the industry do as well, that a national vision is lacking. But to say the report, combined with the Obama administration’s decision last month to expedite the review process for expansion at five East Coast ports, is a step toward a “national vision” is, frankly, preposterous.
The U.S. is actually headed in the opposite direction, where the traditional process by which channel deepening is driven by the states based on their own self-interests is only intensifying. Exhibit A is the delirious rush by eastern states to position themselves favorably for the expansion of the Panama Canal in 2015.
It used to be, for example, that states would wait for Washington to fund the federal government’s share of deepening projects. Given the moratorium on federal earmarks, they’re no longer waiting; witness Florida’s advancing the anticipated (but not guaranteed) federal funds for Miami’s 50-foot “Deep Dredge” project last year, and South Carolina’s committing $300 million of state funds for construction of a “post-45-foot” project at the Port of Charleston.
The South Carolina allocation “could cover the entire estimated cost to deepen the harbor to 50 feet or greater,” including the federal share, the South Carolina Ports Authority said in a July 19 press release.
States taking the step to fund channel-deepening projects without guarantees of the traditional 40 percent federal share isn’t unprecedented — in the past, states or port authorities have advanced the federal and non-federal shares to speed up projects or reduce delays. But the Florida and South Carolina examples are on a much larger scale, said Paul H. Bea Jr., a port consultant and principal of PHB Public Affairs in Washington.
“It is very much a gamble, because Congress doesn’t like the idea of there being an understanding or agreement for reimbursement” when there are so many other claims on federal funds, he said.
All the Army Corps did with its report and the Obama administration did in fast-tracking approvals for deepening in the Southeast was acknowledge what the industry has known for years: Big ships are coming, and U.S. East and Gulf Coast ports by and large are unprepared. Coming to terms with that reality is hardly a “national vision” but rather a belated wakeup call that unless major U.S. ports can handle much larger ships than they do today, the cost of moving U.S. imports and exports will increase and, in the process, make the nation less competitive.
In fact, the federal government is late to the party, considering that preparation and skirmishing on the state or regional level have been under way for years. The Port Authority of New York and New Jersey, on its own (but under pressure from its own port community), put up $1 billion to fund the raising of the Bayonne Bridge to eliminate air draft restrictions. Elements within the South Carolina government are trying to block the 47-foot deepening of the Savannah River in an increasingly acrimonious dispute, a result that would curtail future growth at Savannah, the nation’s fastest-growing container port.
If there were a true national vision emerging, why is there no guidance from Washington on questions such as these: Does the U.S. really need to spend some $1 billion to deepen two virtually adjacent ports, Savannah and Charleston, that serve essentially the same region?
A point made frequently is that while bigger ships may be coming to the East Coast, the amount of total cargo aboard those ships may not grow or will grow slowly at best; many East Coast ports, meanwhile, are half empty, with years of available capacity before they will need to expand. Does Miami’s aspiration to be a Southeast regional gateway really justify the $150 million or more needed to achieve 50 feet at that port?
What about the West Coast, excluded from Obama’s fast-tracking? As the Federal Maritime Commission said in a report about diversion of containers to Canada, the Harbor Maintenance Tax puts Seattle and Tacoma at a disadvantage (while diverting funds generated by their shippers to maintain channel depth at East and Gulf Coast ports). Where is the national vision there?
The point is that the states increasingly are leading port development in the U.S., now with the federal government’s blessing. Any “national vision” is really just throwing more money at port-deepening initiatives advanced by the states.
And, because states don’t naturally think in terms of how their actions have benefits beyond their borders, the federal government is now a party in perpetuating all of the inefficiencies, excessive and wasted spending that occurs in the name of state economic development.
The big ships will come, but at what cost?
Peter Tirschwell is senior vice president of strategy at UBM Global Trade. Contact him at email@example.com, and follow him at twitter.com/PeterTirschwell.