White House-led Roundtable on 21st Century U.S. Ports and U.S. Senate Hearing on the State of the U.S. Maritime Industry

On March 7, 2016, Federal Maritime Commission Chairman Mario Cordero and I attended and participated in the White House-led roundtable highlighting the important role U.S. ports play in the national economy. The roundtable was hosted by Secretary of Commerce Penny Pritzker, Secretary of Labor Thomas Perez, and Secretary of Transportation Anthony Foxx. FMC Chairman Cordero and I gave input on matters related to port congestion. The roundtable took place at Tradepoint Atlantic in Baltimore, Maryland. Tradepoint Atlantic owns the property that once belonged to Bethlehem Steel, the home of the old Sparrows Point shipyard.

I am familiar with Sparrows Point having visited the shipyard several times in the 1990s when it was trying to survive as a repair yard. Back then it looked like an abandoned city, a ghost town of vacant structures and crumbling buildings. Now however, the entire Sparrows Point property is on the mend. There is a significant amount of economic activity taking place on the site. Tradepoint Atlantic recently announced that FedEx Ground is building a 300,000-square-foot warehouse and distribution center. It is already under construction and will be located on approximately 50 acres of property. The distribution center is expected to create 150 direct jobs and should be completed by 2017.

Sparrows Point is a historical place, rich in U.S. maritime history. It started out as Maryland Steel in 1887 and began building ships in 1891. Bethlehem Steel bought the property in 1916. Maryland Steel built the first ship to transit the Panama Canal in 1914, the SS SHAWMUT, later named SS ANCON as in Ancon Hill, which overlooks Panama City, Panama. During WWI the U.S. Shipping Board ordered dozens of ships built at Sparrows Point; and during WWII the Maritime Commission ordered dozens of more ships built. Between the wars and thereafter, the shipyard built hundreds of cargo, passenger and tanker ships.

As an officer is the U.S. Merchant Marine, I served on ships such as the OVERSEAS VIVIAN that were built at Sparrows Point. In fact, the SS TS PATRIOT STATE was built at Sparrows Point. The Patriot State, formerly named the SS SANTA MERCEDES was a cargo/passenger vessel originally built for Grace Lines and traded between the U.S. East Coast and the West Coast of South America. The Patriot State served as the training ship at Massachusetts Maritime Academy while I was a cadet at MMA.

Things have certainly changed and development is on the rise once again at Sparrows Point—albeit under the ownership and new management of Tradepoint Atlantic.

On the day of the port forum, a small bulker ship was at one of the Tradepoint docks loading aggregate. Tradepoint Atlantic is a 3,100-acre multimodal industrial site. It features an impressive combination of deepwater access to the port, 100 miles of short-line rail (including on dock rail), a large turning basin, barge pier capability, a Roll-on Roll-off (RoRo) automobile terminal and plenty of space to build a new container terminal. The property has a modern industrial scale waste water treatment plant and natural gas access for power generation. It is the largest private rail yard on the East Coast and can accommodate six locomotives with 100 rail cars each (expandable to 1,200 cars).

The 21st Century Roundtable on U.S. Ports was attended by shippers including retailers and manufacturers, labor leaders, port authorities, marine terminal operators and congressional and state-level leaders.

Secretary Foxx discussed the Department of Transportation’s $800 million funding program for the nation’s freight network and highlighted the opportunity for investments in 21st-century ports. DOT’s new FASTLANE program expands on the work of the Build America Transportation Investment Center, which has been helping ports around the country access federal financing programs. Through seven rounds of funding, the Transportation Investment Generating Economic Recovery program (known as TIGER Grants) has provided $524 million for 43 port and or marine highway projects in 24 states, helping to increase port efficiency and capacity.

Secretary Pritzker discussed the need to find solutions for the critical problem of port congestion in the face of larger ships coming into our ports—some ships three times the size of the vessels calling on the U.S. just 3 years ago. She said it is important that all stakeholders take the dialogue on port congestion to a new level of cooperation to hone in on and address the problems.

Secretary Perez emphasized that ports support millions of American jobs in port communities and throughout the U.S. supply chain. He said these are solid, middle-class jobs that often come with the opportunity to join a union, an important way that workers can bargain for higher wages and better benefits, and also have a say in how the port operates and innovates.

Chairman Cordero noted that the top three ports in the United States account for 50% of international trade, and if that number is expanded to the top 11, the figure grows to 85%.

“I am pleased that the White House is recognizing the indispensable role ports play in connecting America’s economy to the world and the significant economic engine these gateways represent,” said Chairman Cordero. “International trade begins and ends at our ports and the volume of containerized cargo is only going to grow in the coming years. Even using conservative projections, it is entirely feasible that by 2029 twice as many containers will enter the United States than were landed last year. It is truly in the best interests of everyone that the Nation’s maritime gateways do not become chokepoints.”

I pointed out that there are two major issues that can be addressed right now—and it will take the cooperation of the entire supply chain to get it done. The two biggest issues are truckers and chassis. Truckers don’t like serving many ports today because it takes too long to pick up or drop off containers. To be clear, the longshoremen are doing a good job unloading and loading ships—but it’s the trucker who needs to make multiple trips per day (turn times) to make a living wage. Truckers do not make money when they are sitting in traffic and they certainly cannot make a living when they can only pick-up one container per day. As a result, trucking companies are losing drivers and they are struggling to attract new drivers.

Ports are beginning to do a better job of managing the flow and positioning of containers inside the terminals. But there is always room for improvement. That is why it is critical for the truckers, labor, marine terminal operators and shippers work together expeditiously to refine the flow of cargo in and out to the terminals.

On the equipment front, some ports do not have enough available chassis or the equipment is not in position when a vessel arrives. A chassis is the trailer that a container sits on and is towed behind the cab. Truckers cannot pick up a container unless it has a chassis. Prior to two years ago the ocean carriers were responsible for providing and managing the chassis. When the ocean carriers exited the business of providing chassis there was mass confusion. It’s taken a long time to sort out the problems associated with chassis ownership, positioning and maintenance. Today, chassis pools have been formed and leasing companies are working to alleviate equipment shortages. There are still problems and details yet to be worked out in some ports however. This means labor, management and the equipment providers must collaboratively work together to solve the chassis problems.

On Tuesday, March 8, 2016, the U.S. Senate Commerce, Science, and Transportation Committee, held a hearing on The State of the U.S. Maritime Industry: The Federal Role. FMC Chairman Mario Cordero and Maritime Administrator Chip Jaenichen both discussed the White House-led roundtable. They also explained to the Committee the issues related to truckers and chassis and its impact on port congestion.

All in all it was a good couple of days. The federal government cannot address port-related challenges alone. That is why a roundtable was held with leaders from ports, labor, shippers and retail companies from around the country to discuss how the Federal government can work collaboratively with stakeholders to build 21st century ports – and lay the foundations for sustained long-term growth.

From left to right: Chairman Cordero,  Secretary of Labor Perez, Secretary of Commerce Pritzker, and Commissioner Doyle