Logistics, Warehousing & Distribution

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Port Intermodal Connections Crucial to Supply Chain Logistics Flow

4 Nov, 2014

By: Kurt Nagle

In Baltimore, thousands of cargo-laden trucks annually travel an extra 5.3 million miles over some of the city’s most congested roads and release an extra 175,000 tons of CO2 to move cargo to and from the Maryland Port Administration’s busy Seagirt and Dundalk marine terminals. These extra miles and emissions could be eliminated after construction of a proposed project that would replace the city’s Colgate Creek Bridge and create a new primary transportation link between the port and Interstate 95.This would help prevent these trucks from concentrating on local streets, hindering passenger traffic and emitting diesel fumes while idling at intersections.

Called the Broening Highway Corridor Improvement Project with a price tag estimated at $32 million (of which $10 million has been requested from USDOT grant funds), this is just one of many port-related transportation connections that need to be improved across the U.S. to speed cargo movements, reduce traffic congestion, lower truck emissions and help make the country more internationally competitive.

Today, international trade accounts for more than a quarter of the U.S. GDP. America’s seaports support the employment of 13.3 million U.S. workers and seaport-related jobs account for $649 billion in annual personal income. For every $1 billion in exports shipped though seaports, 15,000 U.S. jobs are created.

To bolster economic and employment recovery, U.S. seaport authorities and their private-sector partners are investing over $9 billion annually in capital improvements to their terminals. Despite these investments, inadequate infrastructure connecting ports to landside transportation networks and waterside shipping lanes often create bottlenecks in and around seaports, resulting in congestion, productivity losses, environmental and safety challenges and a global economic disadvantage for America. 

These issues have the potential to stymie competitiveness. Proposed international trade pacts like the Trans-Pacific Partnership between the U.S. and 11 Asian-Pacific region countries and the Transatlantic Trade and Investment Partnership between the U.S. and the E.U. seek to promote innovation, economic growth and development and create/support jobs. These trade agreements provide wonderful opportunities for increasing America’s exports and improving its economy. However, when transportation costs rise due to inadequate supply chain infrastructure, America’s exports become less competitive.

Freight Must Be Priority

Bolstered by the shale oil boom that has pushed America’s crude oil production to a 28-year high, the largest and most efficient of the nation’s new crude-by-rail terminals opened last December at the Port of Beaumont, in Southeast Texas. With expansion already underway, the terminal will be able to handle multiple 120-car trainloads daily. Because about 50 freight trains and a daily Amtrak passenger train pass within feet of the port’s new oil terminal on the so-called "Sunset Route" used by the BNSF, Union Pacific and Kansas City Southern railroads, there’s undisputed need for a safe and secure receiving area where crude oil unit trains can be pulled off line and stored under secure conditions to await unloading.

To help prevent accidents and environmental damage, the Port of Beaumont has proposed a $20 million freight intermodal project to construct four rail loops and operational track improvements at its crude-by-rail terminal. If the requested $10 million from the federal government is realized, the project would help ensure trains aren’t blocked from entering the terminal and end up on unprotected sidings or railroad yards.

Another port infrastructure project in need of federal funds to bolster supply chain efficiency, improve safety and support jobs is the rehabilitation of the Port of Seattle’s Terminal 46 (T46). Considered a critical node in a trade corridor that extends from Asia to the U.S. Midwest and beyond, estimates suggest a combined $20 million federal/$37 million port investment to repair and expand the dock structure and make stormwater improvements would provide service levels comparable to a $304.5 million rebuild project. The port’s innovative approach will allow the terminal to remain in operation and avoid the environmental implications of removal and replacement and will provide a model for port and Navy terminals around the country experiencing similar maintenance issues.

Allowing T46 to fall further into disrepair would greatly reduce the port’s cargo-handling capacity and jeopardize the 3,200 jobs that depend on the facility. Rehabilitating it would preserve those jobs while enabling this key export gateway to accommodate more and larger ships, increase its capacity and clean stormwater runoff to the highest standard in the nation.

America’s freight tonnages and freight revenues are predicted to rise 23.5 percent and 72 percent respectively between 2013 and 2025. Meanwhile, port-related freight projects continue to be a low federal priority. This needs to change.

Focusing on Supply Chain Efficiency

In its 2013 report, “Falling Apart and Falling Behind,” Building America’s Future Education Fund explains how international economic competitors are sprinting ahead of the U.S., citing a series of sobering statistics, such as U.S. infrastructure has dropped from first place in the World Economic Forum’s 2005 economic competitiveness ranking to No.15 today, that China now boasts six of the world’s top 10 ports while none is located in the U.S. and the U.S. is one of the only leading nations without a strategic national freight investment plan or a National Infrastructure Bank to finance large-scale projects and leverage private capital.

There’ve been some bright spots this year. In September, nearly $600 million in federal Transportation Investments Generating Economic Recovery (TIGER) discretionary infrastructure grants were awarded, of which about 22 percent went to port and freight-related projects. Three months earlier, President Obama signed a new $1.2 billion water resources reform bill, which puts the U.S. on a path to full use of Harbor Maintenance Tax (HMT) collections while providing more equity to “donor” ports whose shippers pay more in federal HMT than comes back to the port for navigation maintenance. In January, Congress passed the $1.1 trillion Consolidated Appropriation Act of 2014 that included funding for several high-priority programs crucial to the safe, efficient and competitive operation of American seaports.

Yet, bright spots like these can easily be overshadowed by the lack of programs dedicated to the needs of freight mobility and the connections to U.S. seaports.

America must make investments today to improve supply chain efficiency. Ship sizes are increasing, requiring ongoing modernization of ports and federal navigation channels, even for harbors that don’t require 50 feet of depth. Panama has recognized the need to modernize and has underway a $5.25 billion expansion of its canal. Canada (which recently signed the Canada-Europe Trade Agreement that greatly expands access to overseas markets) and Mexico (which anticipates investing $4.7 billion in its port infrastructure by 2018) are two other Western Hemisphere nations whose governments are focusing on freight movement and international competitiveness.

What Must Be Done?

To address America’s failing transportation infrastructure, congressional appropriators must agree to hit the funding targets authorized in the new water resources authorization bill passed in June. Congress must also pass new surface transportation legislation that includes a dedicated fund for port-related freight and landside infrastructure and for maintaining the TIGER infrastructure grants program. Furthermore, Congress must pass trade agreements like the two mentioned that could boost U.S. exports by more than $120 billion a year.

America faces enormous challenges and ports are making the necessary investments to build and maintain a world-class maritime transportation system, which supports U.S. jobs, global competitiveness and the national economy. Ports need their federal partner to make that commitment, too.

Conclusion

While the nation’s ports are making the necessary investments to build and maintain a world-class maritime transportation system, which supports U.S. jobs, global competitiveness and the national economy, they need their federal partner to make that commitment, too.

 

About the Author

Kurt Nagle

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