Tuesday, May 29 2018
By Sarah B. Hood
In January, Port of Cleveland President and CEO William Friedman spoke on behalf of the American Association of Port Authorities (AAPA) before the U.S. Senate Committee on Environment and Public Works about the sector’s critical infrastructure issues.
“It’s imperative that related infrastructure be a part of any broad infrastructure investment legislation the committee develops,” he told the Committee. “AAPA has identified $66 billion in potential waterside and landside investments over the next decade that will help assure the benefits from an anticipated $155 billion in port-related capital infrastructure investments.”
AAPA President and CEO Kurt Nagle points out that “seaport cargo activity accounts for 26 percent of U.S. GDP and over 23 million American jobs, and generates over $320 billion annually in federal, state and local tax revenues.”
AAPA estimates that, without sufficient investment from federal sources, the United States risks the loss of $4 trillion in potential GDP loss and $575 billion in cost to American businesses and households by 2025. That’s in addition to the $14 billion in the added cost of traded products due to shallow harbors by 2040.
Ports drive their local economies; for example, the Virginia Port Authority (VPA) accounts for 10 percent of the state’s Gross Domestic Product annually, supporting at least 530,000 jobs and generating combined revenues of $88 billion.
With the help of federal and state governments, this large, mid-Atlantic seaport is currently going through a significant period of expansion, which is already showing an effect on the economic life of the region. In 2017, the VPA was instrumental in the creation of 6,300 new jobs.
“We were at a point of congestion three or four years ago. These projects are helping to create greater capacity,” says VPA CEO and Executive Director John F. Reinhart. “These were necessary investments to start to bring the infrastructure up to a current state.” The benefits of increased shipping through Virginia are felt through a wide territory. “We have a strong intermodal connection here; 36 percent of our freight coming or going out of our port is done by rail. It’s the highest of any port on the East Coast,” he says. “It affects all of the mid-Atlantic.”
In 2016, Virginia was awarded a FASTLANE grant of $165 million toward a $1.4 billion expansion and improvement of area road and rail connections serving the “Atlantic Gateway.” Transurban and CSX Transportation are contributing $565 million, with $710 million coming through state transportation funds.
“That was the biggest project that went through last year,” Reinhart says. “That will help move freight and people up through the Commonwealth and into the Capital.”
Last December, the port authority’s Richmond Marine Terminal (RMT) added a portable, 40-plug central power unit that can be mounted on the Richmond Express barge and a specialized, heavy-lift forklift that will help to make the Port of Virginia a destination for cold cargo. The total project cost was $595,934, of which the federal Marine Highway Projects program covered $446,747, with the port contributing the balance.
Meanwhile, a major two-part upgrade will allow for a 40 percent increase in container traffic through the port, potentially creating 286,000 new jobs across the state, generating $38 billion in spending and $1.1 billion in new state and local taxes.
The VPA’s Norfolk International Terminals (NIT) South Expansion has attracted $350 million in state funding, for a total $375 million project to modernize the port as a semi-automated facility with electric rather than diesel-run, rail-mounted gantry cranes. Scheduled to open in 2020, it would increase capacity by 400,000 containers, or 46 percent.
In June 2017, the port completed its North Gate Expansion: a 26-lane gate complex that will speed the flow of truck-borne cargo and more than double the total gate capacity at NIT. The cost of the project was $42 million, of which the port contributed $27 million. An additional $15 million came from the federal Transportation Investment Generating Economic Recovery (TIGER) grant program.
“On the other side of the river, we’re doubling the capacity of the Virginia International Gateway by spring of 2019, in part with private owners,” says Reinhart. This $320 million project includes expanded rail operation, a longer berth, an expanded container yard and four new ship-to-shore cranes. “We’ll have one million containers of additional capacity when these two projects are complete,” he says.
Last January, NIT received a $2 million grant from the U.S. Environmental Protection Agency under the federal Diesel Emission Reduction Act (DERA) to purchase nine hybrid mobile container handling machines that will save fuel and reduce emissions. (The port is investing $6.1 million.) The port is in the initial stages of a dredging project estimated to cost $324 million, potentially to be split between state and federal governments.
Besides opening the port to today’s larger cargo ships, the dredging would make the Port of Virginia “the deepest, widest and safest harbor on the East Coast,” Reinhart says. Later, a planned Craney Island Extension project would save costs by utilizing fill from the dredging to create space for a container terminal that could handle three million containers a year.
“We’ve tried to be surgical and strategic and make product investments that will create a hub here in the mid-Atlantic,” says Reinhart. “Getting support at appropriate levels is critical because of the infrastructure demand; 95 percent of the freight coming into this county comes in through the maritime ports.”
Across the country, Courtney Gregoire, who serves as the Port of Seattle Commission’s president and as managing member of the Northwest Seaport Alliance (NWSA), says, “America’s seaports are economic engines. Not only do they create thousands of jobs for the communities in which they’re located, they’re also essential to the economic health of our country.”
She adds, “We can’t have a competitive economy without an effective national transportation system. The Northwest Seaport Alliance is an important gateway for U.S. exports, and 64 percent of our imports clear customs outside the Pacific Northwest. The NWSA is just one of many examples of how a port provides benefits for workers, businesses and consumers nationwide.”
Among the projects that AAPA has identified as potential losses, should federal investment in port infrastructure fail to meet the sector’s current needs, is the Port Authority of New York & New Jersey’s Cross-Harbor Rail Tunnel. The proposed project, now moving into the second stage of its environmental impact study, would see a freight rail tunnel under Upper New York Bay connecting with northeastern New Jersey, Long Island and New York City. Without federal support, “whether that be in terms of federal investment or the assistance of federal grants, these projects just get delayed. All of the companies involved in importing and exporting, and all of these jobs would be in jeopardy,” says Bethann Rooney, assistant director for strategy & innovation at the Port Authority of New York & New Jersey.
“Just as the AAPA talks about the impact of the port community on our national economy, what’s at stake in the Port Authority of New York & New Jersey, as the third-largest gateway in the country, is pretty significant, in terms of 400,000 in jobs, $90 billion in personal and business income and over $8.5 billion in tax revenue,” she says.
Likewise, in Georgia, where the Savannah Harbor Expansion Project (SHEP) began in September 2015, “timely federal funding for the Savannah harbor deepening is critically important to the global competitiveness of American shippers and the people they employ,” says Griff Lynch, executive director of the Georgia Ports Authority.
“A deeper river will allow vessels capable of carrying 14,000 twenty-foot equivalent (TEU) container units to call on the Port of Savannah with greater scheduling flexibility. When complete, the deepening will lower costs and create jobs throughout the country.”
The Savannah project is estimated to have a 7.3 to one return on investment, meaning for every dollar spent on the project, more than $7 of benefits are returned to the nation. With prescribed federal funding, it will be finished by the end of 2021.
Also at the Savannah port, the Mason Mega Rail Terminal will combine the Chatham and Mason rail yards, served by CSX and Norfolk Southern railroads, to allow 10,000-foot trains to be loaded at the terminal with containers double-stacked.
Funding will expand the GPA rail capacity at the Port of Savannah’s Garden City Terminal by 100 percent and improve the way containers move through the port to and from major population centers across the nation. These trains will double the capacity from 500,000 container lifts per year to one million, enhancing economic competitiveness and opportunities for global trade.
Net public benefits for the rail expansion are estimated at nearly $322 million, or over $3 for every dollar of the $128 million total project cost.
In projects such as these, there are further gains beyond dollar values. For instance, at the Port of Boston, the U.S. Army Corps of Engineers estimates that a $350 million harbor dredging project now underway will reduce the number of truck miles by 20 million annually, with an attendant reduction in emissions. The Massachusetts Port Authority (Massport) and the Commonwealth of Massachusetts will contribute $130 million of the cost.
The Boston port has also received a $42 million FASTLANE grant to help modernize its existing container terminal.
“In addition, we have a plan to build a brand-new, 50-foot berth and three new ship-to-shore cranes. We’re seeking an INFRA (Infrastructure For Rebuilding America) grant to help fund the construction of the berth,” says Massport Port Director Lisa Wieland. “To date, we’ve been very fortunate that we’ve received significant federal support. It’s critical to keep freight moving and to get products into the hands of consumers in the most efficient, cost-effective and environmentally-friendly way,” she says. “Ports support the many businesses that are involved in the movement of goods and provide well-paying jobs that can support families. They help companies grow the economy and help families help themselves.”