American-flag cargo operators, port officials tell Congressional panel in Miami hearing that $20 billion Biden directive is a boost, but ’trillions’ are needed.
“The very unfortunate incident last week in Baltimore Harbor is making the case that our prosperity, which relies to a great extent on maritime trade, is not as secure as it once was,” Heritage Foundation Senior Research Fellow Brent Sadler testified before the House Transportation & Infrastructure Committee’s Coast Guard & Maritime Transportation Subcommittee, and the House Homeland Security Committee’s Transportation & Maritime Security Subcommittee.
The three-hour hearing, which featured Coast Guard officials addressing port cyber security concerns, was the first formal assembly of Congressional lawmakers following the March 26 container ship Dali crash that destroyed Baltimore’s Francis Scott Key Bridge, killing six people, and shut down one of the East Coast’s busiest ports.
The Baltimore Harbor disaster illustrates that “the nation’s maritime sector is not as healthy as it needs to be,” Mr. Sadler said. “The American public has become increasingly aware that assumptions their store shelves or gas stations will be stocked can no longer be taken for granted.”
“It really comes down to infrastructure, not just the bridges that need to be resilient but tunnels that need to be constructed to remove those impediments.
“It also about the infrastructure of our waterways—some of our waterways in the country are not deep enough or wide enough” to accommodate mega-ship cargo containers “and we need funding for that,” said Georgia Ports Authority Chief Operating Officer Ed McCarthy, speaking on behalf of the National Association of Waterfront Employers (NAWE).
The “lessons learned” from the Baltimore Harbor disaster illustrate what NAWE and other maritime commerce advocates have been saying for years, he said, that “what we need to do as far as the cost and the funding goes” is a comprehensive investment “in the trillions of dollars” for the United States to “get moving in the right direction.”
House Homeland Security Committee’s Transportation & Maritime Security Subcommittee Chair Rep. Carlos A. Giménez (R-Fla.), who served 25 years as a Miami firefighter before becoming city manager, and then Miami Dade County mayor, said ports are “gateways to the world” that have been underfunded for years.
“Major disruptions at a port like what we’re witnessing in Baltimore severely harm local economies and hinder a region’s connectivity to the rest of the United States and beyond,” he said, vowing to find ways to expand port improvement funding beyond the $20 billion.
That is about a half-percent of the total $1.2 trillion earmarked for infrastructure funding nationwide in coming years “to ensure … the nation’s ports have what they need to operate safely effectively and securely” and be competitive.
U.S. Maritime Administration (MARAD) Associate Administrator for Ports & Waterways William Paape agreed that the Baltimore Harbor disaster highlights “how important our maritime transportation system is to our economic and national security” and agreed that until Mr. Biden’s $20 billion earmark, port infrastructure had been under-funded.
MARAD orchestrates the Port Development Program (PRD), a discretionary grant program for improvements that in Fiscal Year 2023 (FY23) drew 153 applications for projects across 37 states with the combined funding requests exceeding $2.8 billion but “with only $662 million available, MARAD awarded grants to fund 41 port infrastructure projects.”
“These numbers vividly demonstrate the over-subscription of this grant program and highlights the continued urgent need for measures to help continue strengthening the nation’s supply chains,” he said, noting the president’s executive order dipping into BIL/IRA infrastructure will boost PRD funding.
PRD grants “should continue to be expanded to ensure that we don’t lose momentum in addressing the needed port improvements across the United States,” Crowley Shipping Senior Vice President/General Manager James Fowler said.
Jacksonville, Florida-based Crowley operates more than 170 U.S.-flagged commercial cargo carriers, “mostly in the Jones Act fleet.” with 7,000 employees in ports in 36 nations.
The company has initiated its own $3.2 billion improvement plan, he said.
PRD funding within the $20 billion federal funding boost shows “progress has been made in addressing various challenges facing the maritime industry,” Mr. Fowler said, “but continued vigilance and investment are essential to ensure the safety, security, and resilience of our ports and supply chains.”
But more money is needed, he said.
“An important part of maintaining resiliency in our supply chains is ensuring that our nation’s port infrastructure receives the investment necessary to accommodate the movement of trade, both now and in the future,” Mr. Fowler said, adding the PRD grants, “have been critical to expanding electrification efforts in ports like Jacksonville” and should be expanded.
Years of Under-Funding
Port of Miami Deputy Port Director Frederick Wong Jr., speaking on behalf of the 80-member American Association of Port Authorities (AAPA), said American ports “need robust federal funding and streamlined construction to expand capacity and reduce emissions at every point in our operations.
“We simply cannot do this without your full federal support.”
And even with the $20 billion boost, more investment is needed, he said.
“The ports are concerned because the annual appropriations in the president’s budget requests for the port infrastructure development programs have all decreased” before this year, Mr. Wong said, noting funding for port infrastructure, “was lowered by $150 million and the appropriations for PRD was lowered from $212 million in FY23 to only $50 million in FY24” for competitive grants.
“Although ports mainly operate independently, they are part of a larger system.
“A crisis at one port, such as Baltimore, means that all the other ports must absorb all the other cargo flow,” he said, noting ports are good investments, citing “estimates that for every dollar spent on our maritime supply chain returns $3 of economic activity.
“We ask Congress to fund port infrastructure projects at the level on par with other modes of transportation … to significantly improve project delivery at all ports,” Mr. Wong said.
Among deficiencies is a bloated permitting process and regulatory environment, he said, noting the U.S. Customs & Border Protection (CBP) agency’s workload staffing model reveals a shortfall of 1,750 officers and inspectors, and 250 agriculture specialists, a “deficit that significantly impacts processing time at our seaports.”
There is funding to address these specific needs in the proposed “CBP SPACE Act’ co-sponsored by Reps Laurel Lee (R-Fla.) and Marie Gluesenkamp Perez (D-Wash.) that “will allow CBP to access existing user fees to fund federal facilities at seaports and set guidelines on what ports are expected to provide at all of our seaports.”
The China Threat
“The point is not that our ports don’t meet today’s need in general, but a sustained lack of competitiveness has not generated the vibrancy to modernize, nor to attract and recruit new mariners and shipyard workers as needed,” Mr. Sadler said.
No U.S. port ranks among the world’s top 25 in cargo-handling and none can accommodate the two largest classifications of container cargo ships that can be nearly five football fields long, he said.
“China holds eight of those [top 25] spots. Asia has the most new commercial shipping [investments] led, again, by China,” Mr. Sadler said.
“In short, a national maritime initiative is needed to rectify our over-reliance on non-friendly nations to sustain our economy and ensure safe maritime operations,” he continued.
”Such an act would first provide adequate American-flag commercial shipping; second, expand shipbuilding, repairing and salvage capacities and associated workforce; and third, harden maritime infrastructure and shipping to cyber attack and material damages.”
The first necessary step in “incentivizing” investment in U.S.-flagged shipping is to simplify, not complicate, which federal agencies tend to do, Mr. Sadler said, calling on regulators to take a “maritime Hippocratic oath to do no harm to the legacy Jones Act domestic maritime industrial sector,” citing the century-old federal law that restricts maritime shipping between domestic U.S. ports to U.S.-flagged ships.
“Delivering on the second [objective], a stronger and global competitive maritime sector that serves as a deterrent to Chinese economic coercion and military adventures” is needed, he said.
“This can be done by fostering a revolution and shipping through a new multimodal” investment plan so “American trade can proceed with greater confidence and resiliency and better sustain our military,” Mr. Sadler said.
“Lastly, and perhaps most relevant due to recent events, the legal and regulatory frameworks of the post 9/11 era should be reviewed with an eye to adjusting to the new Cold War that we find ourselves in with China,” he said.
That would mean updating the Maritime Security Act of 2002, container security initiative, and proliferation security initiatives “with China in mind,” Mr. Sadler said.
“Safeguarding the nation’s ports economy and defense requires a national maritime initiative,” he said.
“This is not easy nor cheap, but failing to address the nation’s sea blindness will further place our nation’s economic and national security in the hands of non-friendly parties.”
