Seaports are the backbone of a thriving 21st century global economy. Yet, a nation’s freight transportation system is only as good as its underlying infrastructure. In the American Association of Port Authorities’ (AAPA) 2015 Surface Transportation Infrastructure Survey – The State of Freight, results indicate that the nation’s unsurpassed goods movement network needs immediate and significant investment in the arteries that carry freight to and from its seaports. Without that investment, the American economy, the jobs it produces and the international competitiveness it offers will erode and suffer, creating predictable and oftentimes severe hardships to the individuals who live and businesses that operate within its borders.
In 2013 alone, some 1.3 billion metric tons of imported and exported cargo, worth nearly $1.75 trillion, moved through America’s seaports, while an estimated 900 million metric tons of domestic cargo with a market value of over $400 billion was also handled through these international gateways.
Port-related infrastructure connects American farmers, manufacturers and consumers to the world marketplace and is facilitating the increase of American exports that are essential to the nation’s sustained economic growth. In 2007, Martin Associates, of Lancaster, PA, reported that U.S. port activity was responsible for about 13.3 million American jobs and $212.4 billion in federal, state and local tax revenue. Martin Associates’ 2015 nationwide port economic impacts update study shows the benefits of America’s seaports having risen sharply over the intervening years, now responsible for 23.1 million U.S. jobs and $321.1 billion in federal, state and local tax revenue. According to the study, marine cargo activity at U.S. deep-water ports also generated $4.6 trillion in total economic activity, or roughly 26 percent of the nation’s economy in 2014, compared to $3.2 trillion in combined economic activity associated with U.S. deep-water ports in 2007, or roughly 20 percent of the nation’s GDP at the time.
Despite the importance to the economy, freight investments are disadvantaged in the current transportation planning and funding process. Freight projects face competition from non-freight projects for public funds and community support. Although passenger and freight movements must coexist on America’s transportation network, these are two distinctly different stakeholder constituencies.
Because there’s no clear definition of what constitutes “freight projects” in the federal government lexicon, there’s been a lack of coordination among federal and state government entities and private sector stakeholders. This has resulted in a shortage of public funds to plan and invest in the nation’s freight network and address the key freight chokepoints that impact both passenger and freight constituencies.
Due to their significant role in driving commerce, public seaports have the experience to help grow the economy, create jobs and promote an efficient, safe and environmentally sustainable freight network. As in any other successful operation, every port has a business plan for its long-term success to identify markets, leverage assets and prioritize and sustain its capital investments. Similarly, if America wants its transportation system to achieve long-lasting and sustainable success, it must implement a national freight plan to develop, sustain and grow its advantages for moving goods.
The results of AAPA’s infrastructure survey reinforce one of the industry’s key messages, “Seaports Deliver Prosperity.” The survey also illustrates the significant steps public ports are making and have made in working with the planning community in developing and investing in freight projects. This has been particularly evident since passage of the 2012 Moving Ahead for Progress in the 21st Century Act (MAP-21), which laid out a clear and aggressive vision on how America plans and coordinates a national freight plan through collaboration with the individual states.
Additionally, this survey helps define the role ports are continuing to play in developing innovative Public Private Partnerships (P3s) with the nation’s business sector, and facilitating additional resources into the process.
This survey focuses on seaports – critical gateways in the U.S. freight network through which more than 99 percent of America’s overseas trade must pass. While there are other components of the freight network that must be addressed, the impact of vital seaport “first and last mile” connectors on the country’s regional and national transportation infrastructure cannot be overstated. Ports are national models of effective intermodalism and are the very definition of critical infrastructure.
Survey Purpose and Participation
The purpose of AAPA’s 2015 Port Surface Freight Infrastructure Survey is to quantify the baseline need for investment in port infrastructure connecting the United States’ deep-draft seaports to the rest of the nation’s freight transportation system. The survey results reflect responses to questions asked of AAPA’s 83 U.S. member public ports in the six months leading up to the publication of this report. With a 95 percent response rate, the survey represents nearly all of the top U.S. seaports on the Atlantic, Pacific and Gulf coasts, and along the Great Lakes.
The survey seeks to illustrate the critical nature of connection points between seaports and the national surface transportation system, including highway connectors and on-dock rail. It’s at these critical connection and transfer points that the efficiency of moving freight through seaports and to and from the interior of the country can be maximized. These connection and transfer points for goods are the foundation of America’s freight network.
The freight network is vast and evolving. It’s a living grid that infuses an economic lifeline throughout the country; from small towns to major metropolitan regions, and farming districts to technology centers like Silicon Valley. At its heart are America’s seaports, which handle an overwhelming majority of the nearly $6 billion worth of products that move to and from overseas markets every day. For the network to work properly, it must seamlessly connect to commerce centers in every community, state and territory, as well as to an ever-growing and vibrant inland waterway system that is unparalleled worldwide.
Analysis of Surface Transportation Connectors with Ports
It’s been two decades since the United States addressed its surface transportation connectors. In 1995, the National Highway System (NHS) Designation Act, directed the Secretary of the U.S. Department of Transportation (USDOT) to develop a list of NHS intermodal connectors. With the input of state departments of transportation, the list was completed in 1998. In 2000, USDOT reported to Congress on the state of NHS Intermodal Freight Connectors. USDOT identified significant deficiencies in U.S. freight connectors and estimated the cost of them to be $2.6 billion.
Between 2000 and 2013, the volume of containers shipped through U.S. ports grew by approximately 50%, from 30.4 million to 44.6 million twenty-foot equivalent units (TEUs), adding further strain to port highway and rail connectors. The population in U.S. metropolitan areas also grew by 33 million people (14%) over the same period, which created a related increase in the demand for goods.
In the AAPA survey, respondents were asked what they anticipated the minimum cost would be over the next decade (through 2025) to upgrade the intermodal connections at their port so it could efficiently handle all of their projected inbound and outbound cargo.
Key Survey Results Included:
Nearly 80 of AAPA’s U.S. ports surveyed said they anticipate a minimum $10 million investment being needed in their port’s intermodal connectors through 2025, while 30 percent anticipate at least $100 million will be needed.
- These intermodal connectors, often referred to as the “first and last mile” of the freight transportation network, account for roughly 1,200 of the 57,000 miles in the national highway system. Many of these connectors are in various states of disrepair and face further deterioration, particularly as trade volumes continue to grow. Like links in a chain, these transportation connections with America’s seaports are critical to the overall freight network, and they are particularly vulnerable in large, congested metropolitan communities where commuters and freight share the same system. As the U.S. takes a closer look at planning and investing in its freight grid, intermodal access points must be prioritized.
- One-third of respondents said congestion on their port’s intermodal connectors over the past 10 years has caused port productivity to decline by 25 percent or more.
- MAP-21 made incremental steps in providing resources for improving intermodal connectors. Surface Transportation Program (STP) funds are now eligible for surface transportation infrastructure improvements in port terminals for direct intermodal interchange, transfer and port access. However, the competition for these funds is intense, as states have 27 other eligible funding activities in which to use these federal funds.
- Among AAPA survey respondents, 33 percent said their port has applied for STP funds during the last two years. However, AAPA has also heard from ports that low success rates in securing funding has made it difficult for them to make long-term commitments for infrastructure projects. AAPA repeatedly hears from U.S. member ports that sustainable and reliable funding sources need to be available in order for them to invest and leverage funding into the connecting freight network.
Needed and Planned Investment in the Freight Network
In a 2012 AAPA survey, U.S. public ports and their private sector partners reported plans to invest more than $9 billion each year for the next five years to maintain and improve their infrastructure. However, this investment is not being adequately matched by a federal government commitment to improve the corresponding connecting infrastructure. Many of the land-side connections to seaports are insufficient and outdated, negatively affecting the ports’ ability to move cargo into and out of the U.S., and threatening our international competitiveness.
Key Survey Results Included:
- There is an identified current need of $28.9 billion in 125 port-related freight network projects. These projects range from intermodal connectors, gateway and corridor projects, to marine highways and on-dock rail projects.
- Of these 125 projects, there are 46 intermodal projects totaling $7.5 billion, and 34 Projects of National & Regional Significance totaling $19.5 billion. Additionally, respondents identified 35 TIGER (Transportation Investment Generating Economic Recovery) projects totaling $1.9 billion.
Since 2009 TIGER Funding Has Leveraged $700 Million for the Freight Network:
- Over the past six years, the Maritime Administration (MARAD) has coordinated 39 maritime TIGER projects, worth $500 million in federal funds.
- About $700 million in additional freight rail and federal TIGER projects have been awarded that also move maritime freight.
- TIGER is a multi-modal and multi-jurisdictional competitive grant program.
America’s freight network is vast and evolving. It’s a living grid and economic lifeline for the country; from small towns to major metropolitan areas, from farming regions to technology centers.
At its heart are America’s seaports, which handle approximately $6 billion worth of goods to and from overseas markets every day. These goods come in all shapes and sizes. Apparel and consumer electronics are shipped in standardized steel containers. Cars and trucks are driven on and off ships. Farm harvests are conveyed into the hulls of vessels. Liquids are moved by pipeline. Gaseous products are shipped in pressurized tanks. Project cargoes, like wind turbines and electrical generators, require special handling. These different cargo types require different transport modes to get them from shore to ship, and ship to shore. For the freight network to operate smoothly and efficiently, it must seamlessly connect commerce centers in every community, state and territory.
As indicated in AAPA’s 2015 The State of Freight survey, investment in America’s port connection infrastructure is an urgent national priority. There is a path forward. This survey documents and illustrates the freight planning successes that resulted from the TIGER application process. Survey results show how MAP-21 built upon TIGER’s targeted investments with the various state freight plans and with ongoing input of the individual states’ freight advisory committees.
The survey also, for the first time, documents from the ports’ perspective the requisite capital investments that are needed to maintain and enhance a 21st century freight network. These investments include “first and last mile” connector and gateway projects that, when viewed collectively, represent a strategic investment in the national transportation system, the national economy, as well as all of the individual enterprises and people who make the nation great.
This survey is a strong first step towards identifying the critical infrastructure needs of America’s sea-ports, however more must be done. AAPA will continue to gather input from the industry and work with our partners to ensure that investing in our nation’s freight transportation system is a national priority. A reliable and efficient transportation system will guarantee that seaports continue to deliver prosperity for all Americans.