FMC Report: U.S. Container Ports Seek Infrastructure Funding Solutions

---

Researched by Industrial Info Resources (Sugar Land, Texas)--U.S. container ports are looking at several ways to improve their infrastructure to handle the growing container traffic load, according to a new report by the Federal Maritime Commission (FMC). Potential solutions range from greater reliance on public-private partnerships to more cooperation between ports on key infrastructure improvements, according to the report "U.S. Container Port Congestion & Related International Supply Chain Issues: Causes, Consequences and Challenges." The report, which was released on the commission's website last week, comes after the FMC held a series of stakeholder hearings last year.

From 2012 through 2016, U.S. ports and private sector partners were expected to spend $45.97 billion on capital improvements, according to an American Association of Port Authorities' survey, but even that amount may not be enough to adequately reduce bottlenecks and alleviate container traffic congestion, the FMC report suggests.

Industrial Info is tracking 127 active U.S. port cargo handling projects worth $11 billion. With a total investment value of $1.5 billion, the G-R Craney Island Marine Terminal in Portsmouth, Virginia, is set for construction kickoff in third-quarter 2020, with completion in fourth-quarter 2024. The Virginia Port Authority was working with Moffatt & Nichol Engineers (Long Beach, California) and the U.S. Army Corps of Engineers on justification for the grassroot project. It would have an 8,400-foot-long berth, 15 container cranes, non-terminal rail access to Norfolk Southern Corporation (NYSE:NSC) (Norfolk, Virginia) and CSX Corporation (NYSE:CSX) (Jacksonville, Florida) rail lines, and a capacity of 5 million twenty-foot equivalent units (TEUs).

The FMC report notes the importance of international trade in supporting the U.S. economy: "While international trade through U.S. ports now accounts for around 32% of the nation's economic output (GDP), this figure is expected to reach 60% by 2030."

But the nation's container freight moves through a comparatively small number of ports, which are bearing more strain as congestion issues rise. All U.S. ports combined loaded 31.6 million TEUs in 2014. The Port of Los Angeles led the way with nearly 5.9 million TEUs, followed by the Port of Long Beach at 4.9 billion TEUs, and the Port of New York and New Jersey at nearly 4.3 million TEUs. On the Gulf Coast, the Port of Houston loaded 1.6 billion TEUs last year.

The nation's top 11 container ports accounted for more than 85% of the nation's containerized international trade, the report said: "On the one hand, this concentration could help America focus resources on expanding the capacity of its most important container ports, but on the other it also makes the freight system more vulnerable to the sort of disruption and delays the industry experienced in the past year or so."

For related information, see July 15, 2015, article - U.S. Port Congestion Growing Cause for Concern.

Container traffic is likely to grow 5% to 7% per year, the report said. "In light of the recent congestion problems at several key U.S. port gateways, it is a daunting prospect that at 5% to 7% annual rates of growth, twice as much port capacity may be needed in just 10 to 15 years to accommodate anticipated growth."

While the situation requires attention, "the unfortunate reality is current investment resources are limited because of fiscal constraints in the public sector and the relatively poor financial health of shipping and shipping-related sectors."

Takeaway suggestions from last year's FMC hearings included:

• Using public-private partnerships to finance port capital projects. Government and private sector parties would "have to be flexible to see across the lines of their traditional roles and that some regulatory restructuring at the state level may be necessary to secure private-sector capital using this tool." However, the U.S. House Committee on Transportation and Infrastructure has cautioned there are a number of roadblocks to this approach, including the fact that the U.S. already has a municipal bond market to provide infrastructure funding.
• Taking advantage of a new national freight strategic plan. Several of the stakeholders said ports and their business partners should participate in developing statewide freight plans as part of the U.S. Moving Ahead for Progress in the 21st Century Act, which was signed into law by President Barack Obama in 2012. An estimated $78 billion of the Obama Administration's six-year, $478 billion surface transportation reauthorization bill is slated for infrastructure related to ports and the U.S. freight network.
• Reinforce the connector links between ports and the national highway system. Many of the hearing participants said more needs to be done to enhance the intermodal industry's connectivity to the highway system. The "first and last mile" connections between ports and highways are arguably the weakest link in the freight network, according to the report.
• Ports should engage more in joint planning, investments and marketing. It was suggested ports could take advantage of their limited antitrust immunity to perform joint activities. As an example, it was noted the ports of Seattle and Tacoma in Washington were engaging in formal collaborations designed to improve the competitiveness of the Puget Sound gateway. The FMC approved the Alliance on Tuesday.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.