Anticipated federal under-investment in port-related infrastructure could dampen job and economic prospects
In its just-released 2016-2020 Port Planned Infrastructure Investment Survey, the American Association of Port Authorities (AAPA) – the unified and recognized voice of seaports in the Americas – asked its U.S. member ports how much they and their private-sector partners plan to spend on port-related freight and passenger infrastructure over the next five years. The answer was a whopping $154.8 billion.
AAPA then contrasted that number with what it believes is the “best-case” scenario for investments by the federal government into U.S. ports, including their land- and water-side connections, through 2020. The answer was just $24.825 billion.
According to AAPA President and CEO Kurt Nagle, the vast difference between the two investment numbers poses tangible concerns, particularly considering the need to increase government investments in America’s federal navigation channels and the “first-and-last mile” connections with ports. It’s vital, he noted, that the federal government uphold its end of the partnership.
“Infrastructure investments in America’s seaports and their intermodal connections – both on the land and in the water – are in our nation’s best interest because they provide opportunities to bolster our economy, create and sustain jobs, enhance our international competitiveness, and pay annual dividends through the generation of more than $321 billion in federal, state and local tax revenue,” said Mr. Nagle. “From a jobs standpoint, goods moved through America’s seaports in 2014 supported employment of more than 23 million U.S. workers … up from 13.3 million in 2007.”
Economist John C. Martin, Ph.D., president of Lancaster, Pa.-based Martin Associates, said U.S. Bureau of Economic Analysis formulas show that investing nearly $155 billion in capital projects at U.S. ports would create about 1.6 million direct, indirect and induced domestic jobs, accounting for approximately 3.3 billion person-hours of work over the period of the investment.
“Those are really significant job numbers,” emphasized Dr. Martin. “In 2014, the U.S. coastal ports also generated $4.6 trillion dollars for the U.S. economy, about 26 percent of the U.S. Gross Domestic Product. From a dollars-and-cents perspective, it’s hard to over-emphasize the value of investing in ports, particularly when you factor in how much these investments contribute to our overall economic prosperity and help lower the cost of imports and make our exports more competitive overseas.”
The combined $155 billion, five-year investment that U.S. ports and their private sector partners are planning represents a more than three-fold increase over the combined $46 billion figure obtained from the same survey five years ago. The biggest project investments will be in ports along the U.S. Gulf Coast, where many new energy processing, production and transfer facilities are being planned.
When reviewing the anticipated five-year federal investment in port-related infrastructure, AAPA found that while there’s been progress, the federal government has historically under-invested in the nation’s goods movement system. America’s road transportation network, for example, was only ranked 16th in The World Economic Forum’s Global Competitiveness Report for 2014-15, while federal navigation channels aren’t being adequately maintained at their originally-constructed depths and widths.
“AAPA applauds enactment of the FAST Act surface transportation bill at the end of 2015 that authorized $11 billion in new funding for land-side freight improvements through 2020. While that was a major positive step, additional investments are needed to effectively handle the nation’s burgeoning freight volumes,” said Mr. Nagle.
According to the American Society of Civil Engineers’ (ASCE) 2012 Failure to Act report, by 2020 there will be a $15.8 billion investment gap between expected annual federal funding on goods movement infrastructure and what’s needed to effectively maintain the system. In that report, ASCE estimated the cost of deficient and deteriorating highways to American businesses will have grown ten-fold between 2010 and 2020, to $276 billion. Similarly by 2020, shallow, narrow navigation channels will result in a $9.3 billion annual trade loss to U.S. businesses from the inability of most ports to accommodate today’s larger ships.
AAPA completed its 2016 infrastructure investment survey at the end of March. The following is a regional breakdown of survey respondents:
“The take-away from this survey,” concluded Mr. Nagle, “is that we must have increased and sustainable funding at and on both sides of our ports. There’s still a lot of work to be done, but the investments that we make today in our ports will pay off for generations to come.”
Founded in 1912, AAPA today represents 130 of the leading seaport authorities in the United States, Canada, Latin America and the Caribbean and more than 200 sustaining and associate members, firms and individuals with an interest in seaports. According to IHS World Trade Service, combined international sea trade moving through Western Hemisphere ports in 2014 totaled 3.48 billion metric tons in volume and US$3.75 trillion in value. Of that total, ports in Central and South America handled 1.68 billion metric tons of cargo valued at US$1.36 trillion, while North American ports handled 1.79 billion metric tons of goods, valued at US$2.39 trillion. To meet the growing demand for trade, the AAPA and its members are committed to keeping seaports navigable, secure and sustainable. For more information, visit www.aapa-ports.org.