MARAD Chief David Matsuda, in his July 14 2010 testimony to the House Armed Services Committee Subcommittee on Seapower and Expeditionary Forces, outlines what is next for domestic maritime affairs. In a laundry list of as many as ten items on the plate of DOT’s maritime modal arm, shortsea shipping ranks all but dead last in terms of MARAD’s priority list.
- Heavy Load – Defined Priorities
Lurking just behind the latest in a seemingly endless stream of DOT news flashes that triumphantly announce that the 39th (or was it the 38th?) U.S. State had just signed into law yet another ban on “texting and driving,” MARAD and its all-but-forgotten workforce soldier on in pursuit of a more efficient domestic waterfront. Nevertheless, the recent news that that MARAD intends to issue a Notice of Funding Availability for eligible Marine Highway Projects has given some shortsea shipping advocates reason to smile. How that news was packaged and the paucity of real support behind it provides little hope that we have moved beyond the status quo in the ongoing effort to remove trucks and related pollution/congestion problems from the crumbling Interstate highways. As always, the devil is in the details.
The good news is supposed to be laid out in a separate Federal Register notice to be published in July of 2010. In the meantime, Matsuda’s report to Congress, spread out over 4,500 words that encompass the full breadth of MARAD’s work, outlined more than ten initiatives underway is his domain. These include the Maritime Security Program, the Ready Reserve fleet(s), various disaster responses – as well as logistical support to the ongoing Deepwater Horizon spill – the U.S. Merchant Marine Academies, six state maritime academies, Title XI funding, assistance given to small domestic shipyards and MARAD’s efforts to improve the environment. Almost dead last on this list – curiously just a bit higher than the environment – was the ongoing effort to revive a domestic shortsea shipping program that is all but ‘dead on arrival.’ That his shortsea message encompassed all of 300 words, or less than 8 percent of his talk, was not lost on MaritimeProfessional.com.
Matsuda’s message of last week sounded just fine. He told the subcommittee, “For too long, America has overlooked the economic and environmental benefits of moving domestic goods on the water – but, we are changing all that with our America’s Marine Highway Program initiative. As reported in May by Secretary LaHood, we are currently in the process of identifying marine highway corridors and project designations. Congress has provided strong support for this initiative in the Energy Independence and Security Act of 2007, the National Defense Authorization Act for Fiscal Year 2010, and the Consolidated Appropriations Act of 2010.”
Getting more specific, he went on to claim, “MARAD has completed several major steps in implementing the America’s Marine Highway Program in FY 2010. On April 9, MARAD published the Final Rule for the program, superseding the previous Interim Final Rule published in October 2008. On April 15, 2010, MARAD issued a formal call for Marine Highway Project applications by public agencies. MARAD will issue a Notice of Funding Availability for eligible Marine Highway Project’s in a separate Federal Register notice to be published in July 2010. This latter notice will implement a new initiative, “America's Marine Highway Grants” as authorized under the National Defense Authorization Act for Fiscal Year 2010. The initial $7 million funding for the grants is provided in the Consolidated Appropriations Act of 2010.”
And finally, he also announced, “On February 17, 2010, the anniversary of the ARRA, DOT announced $1.5 billion in Transportation Investment Generating Economic Recovery (TIGER) Discretionary grants for fiscal year 2010. Of this amount, $120.4 million has been designated for seven seaport and maritime-related projects, most of which will be supplemented by State and local funds. MARAD will administer these seaport-related grants under the oversight of the Office of the Secretary. These grants will support new marine highway services, add capacity to ports, and improve shoreside linkages to inland markets.”
- Benchmarking the Effort So Far
Beyond the paltry $7 million in funding first announced in April, another $120 million has apparently been buttonholed for shortsea shipping via the newest round of “TIGER” Discretionary grants. That’s the good news; that this number represents just 8 percent of the total grant figure is not. And, while marine highway supporters will cheer the money that far exceeds anything they’ve received before, it still only equates to a very small percentage – less than 1 percent really – of the total ARRA funds disbursed to date. DOT continues to pour concrete and asphalt so that heavy trucks can continue to roll on the highways, to the ultimate detriment of American seaports.
- Properly Prioritized / Fatally Flawed
Both DOT Secretary Lahood and Maritime Administrator Matsuda both know that domestic shortsea shipping isn’t going anywhere, any time soon, certainly not without an overhaul of the Harbor Maintenance Tax for the shortsea shipping leg and a rethinking of where to best spend those stimulus dollars. America’s Marine Highway remains as an abstract concept that can be touted as a good, but unreachable idea. Frankly, I’d rather see the money spent on asphalt than have it scattered to the wind for a dozen, miscellaneous, seaport related grants.
In April, U.S. Transportation Secretary Ray LaHood unveiled a supposedly new initiative to move more cargo on the water rather than on crowded U.S. highways. Under the “America’s Marine Highway” program, the Department’s Maritime Administration (MARAD) would be tapped to identify rivers and coastal routes that could carry cargo efficiently, bypassing congested roads around busy ports and reducing greenhouse gases. Then acting Administrator David Matsuda added, “There are many places in our country where expanded use of marine transportation just makes sense. It has so much potential to help our nation in many ways: reduced gridlock and greenhouse gases and more jobs for skilled mariners and shipbuilders.” All of that, of course, is the easy part. Actually making it happen is more problematic.
The new 2007 law requiring the Secretary of Transportation to “establish a short sea transportation program and designate short sea transportation projects to mitigate surface congestion” was certainly a good starting place. That’s not enough.
Marad’s final rule (click: http://www.marad.dot.gov/documents/MARAD-2010-0035.pdf ) makes for good reading. In fact, the comments received from industry and the general public identified or recommended solutions to impediments to increased use of the Marine Highway had several areas of focus. According to the document, “…the greatest number of comments (13) focused on the degree to which collection of Harbor Maintenance Tax (HMT) acts as an impediment to the development of the Marine Highway Program and all proposed waiving the tax for domestic waterborne freight and passenger movements. This ad valorem tax is charged on cargoes imported to the U.S. and pays for channel dredging that allows access for deep draft ships to U.S. ports. However, in its current form, the same cargo is subjected to the tax a second time if it moves from the port of arrival to another U.S. destination by water. The tax is not charged if this second movement of the cargo is by landside modes.” Indeed.
- The Way Forward: a Simple, But Unlikely Scenario
From my perspective, the latest gobs of money – $120 million in total – represent a mere drop in the bucket of what is actually needed. The way forward includes a simple plan to dredge just two ports on each of America’s three main coastlines to 60 feet in depth, thus paving the way for a new generation of 13,000+ TEU, mega-containerships to efficiently deliver cargo that can then be distributed locally by a newer, more modern fleet of American-flag shuttle vessels. And, anyone who has paused long enough to note the latest round of layoffs at domestic shipyards on both the U.S. West and Gulf Coasts doesn’t need to have dots connected for them on that score.
By all means, we need shortsea shipping. Before that can happen, the idea needs to move from ninth to about second or third position on MARAD’s priority list, with a similar increase in funding commitment and political intestinal fortitude from its DOT parent. That said, only when shortsea HMT goes away will any of that be remotely possible.
This is not Rocket Science. As it stands right now, domestic marine highways just are not commercially viable. We’ve already laid out the reason for that metric. If we dither much longer before doing something meaningful about that, our commercial shipbuilding model and related waterfront industries will quickly follow suit. In fact, the anti-Jones Act factions are already taking this to the bank. What about you? – MarPro.
Joseph Keefe is the lead commentator of MaritimeProfessional.com. He can be reached at jkeefe@maritimeprofessional.com. MaritimeProfessional is the largest business networking site devoted to the marine industry. Each day thousands of industry professionals around the world log on to network, connect, and communicate.