With the growth of the US population expected to grow by 70m people over the next 30 years, the country’s ports are expected to see a huge rise in freight demand and congestion. Without an increase in investment and strategic planning among the government, shippers and port operators this could have impacts on ro-ro and finished vehicle flows.
Speaking at the 2015 Import Export North America conference in Baltimore, Paul Jaenichen, maritime administrator at the US Department of Transportation (DoT) Maritime Administration (pictured), expressed worry about investments in infrastructure.
“We’re concerned about where ports are,” he said. “We know that they are increasingly congested and we know if we don’t do something now, we will be negatively impacted as to how the products we need everyday are shipped.”
Jaenichen pointed to government studies that suggest that freight volume will grow to 29 billion short tons (26.3 billion metric tonnes) by 2040, an increase of 45% from today, while value will increase to $39 trillion, an increase of 125%. To cope with this, multimodal logistics will have to increase. Waterborne freight is expected to grow by around 10%, from 975m tons in 2012, to 1.1 billion tons by 2040. Jaenichen said that this presents a good opportunity for the maritime industry to invest, and also to capture more market share from road, rail or air transport.
Investment in ports is a priority for the Obama administration, and Jaenichen cited a number of funding mechanisms and strategy studies currently underway. One important factor, for example, is the development of a National Maritime Strategy, which has been in the works for more than a year following a symposium with maritime officials and port authorities. After heated discussions, a draft of the strategy has been contracted out, and public comments for the proposed strategy are expected in the third quarter of the year. Jaenichen said, “We will make sure we get it right, and support all industries… but I’ll need your help to get it right.”
While the draft strategy is not limited to ports, and extends across the maritime industry, it includes a framework to ensure the capacity and capability of ports are taken into account. Jaenichen said, “We have to establish dedicated and reliable funding, and make sure we develop next generation solutions.”
The DoT is developing several programmes to help facilitate investment, notably TIGER grants (Transportation Investment Generating Economic Recovery). This grant programme provides funds to invest in rail, transit and port projects.
Some of the funds have gone towards vehicle-handling ports, including a $10m grant to the port of Baltimore in 2013, and $16m to the port of Los Angeles.
“We are making sure that ports adapt to accommodate higher volumes and increase the number of sailings, and handle larger vessels that are coming. We want to move vehicles safely, efficiently, and damage free,” Jaenichen said.
However, the TIGER programme is highly oversubscribed. The current funding round has around $500m in grants across all transport modes, with about 10% typically allocated to maritime projects. Jaenichen noted that the administration has received $9 billion in applications. “We can only give out a nickel for every dollar requested,” he said.
In the current surface transportation bill, which has been passed by the Senate and awaits a vote in the House of Representatives this autumn, TIGER funding is set to expand to $1.2 billion, which could mean maritime funding of $125m. “But we know that this will not be enough, and that we have to work together with port authorities and private companies to meet demand,” he said.
Along with Tiger, the government is developing other programmes and seeking to expand funding from other sources within the Transportation Bill, including through programmes that had previously been dedicated to highway or rail funding. The United States Maritime Association is also working to purchase acres next to ports, allowing them to develop and enhance their own facilities. There are also regional offices around the country that are engaging with port staff, shippers, and municipal planning organisations to take a collaborative approach to building the right infrastructure.
Another concern of developing import and export is the first and last mile. “If you can’t get cargo or cars off the port, it’s useless. We’ve asked Congress, but Americans aren’t waiting on Congress – they will keep driving and buying cars. There will be more on the roads, and we’ll have to steer the course and advance in maritime strategy,” Jaenichen said.
“It’s not final yet, but one thing is clear, we have to have a national maritime strategy,” he added.
Further coverage from Import-Export North America 2015 will posted in the coming days.
