U.S. exporters count on low transportation costs to offset higher wage levels and higher production costs in this country. If these transportation costs are to be kept low, it is vital that the nation’s airports, seaports, river ports, and inland waterways be properly maintained and receive adequate levels of investment to meet technological and other changes.
According to the report Failure to Act: The Economic Impact of Current Investment Trends in Airports, Inland Waterways, and Marine Ports Infrastructure
, if current trends for investment and maintenance spending on U.S. airports, inland waterways, and marine ports continue, the nation’s global competitiveness will erode. That will mean declines in export levels, business sales, disposable personal income, and gross domestic product (GDP), and more than 1 million jobs could be lost by 2020.
“We know that these [marine ports, inland waterways, and airports] systems are critical for international commerce,” said ASCE’s president, Andrew W. Herrmann, P.E., SECB, F.SEI, F.ASCE, at a press conference in Washington, D.C., on September 13 coinciding with the release of the report. “Congestion and delays lead to goods waiting on docks and in warehouses for shipment. Now, [ASCE] has quantified the cost of these delays and of maintaining the status quo with our investment in these infrastructure systems. This report answers the question of what happens if we just keep investing at the same level that we have in the past—how it affects businesses, how it affects our families and our GDP.”
Commissioned and prepared for ASCE by the Boston firm Economic Development Research Group, Inc., the report estimates that keeping the nation’s seaports, river ports, and waterways open by widening and deepening harbors for larger ships and constructing wider and more efficient locks to provide faster and more reliable service will cost approximately $30.2 billion by 2020, revealing an investment gap of $15.8 billion in projected funding. The report concludes that investing the additional $15.8 billion would protect $270 billion in U.S. exports, $697 billion in GDP, and 738,000 jobs and would save $770 a year per household in personal income.
“The U.S. inland system has more than twelve thousand miles of inland intracoastal waterways with two hundred forty lock chambers. More than five hundred sixty-six million tons move through the inland transportation system annually,” noted Herrmann. “The greatest threats to the inland waterway system are delays, both scheduled and unscheduled, and those are caused by insufficient funding for operation and maintenance needs for locks. A total of ninety percent of locks and dams in the system experienced some type of schedule delay in 2009, and those delays totaled more than nineteen thousand hours.”
Herrmann added that the key challenge for marine ports in the United States, particularly on the East Coast, will be handling the larger (“post-Panamax”) ships made possible by the widening of the Panama Canal. These ships are expected in late 2014, and their entrance into U.S. ports will require the dredging and expansion of many channels. It may also be necessary to increase the height of certain bridges.
“Why is all of this important?” asked Herrmann. “Because our nation’s marine ports and inland waterways are critical links that make international commerce possible. The nation’s marine ports and waterways cover more than seventy percent of U.S. imports by tonnage and just over half of our imports by [dollar] value.”
With airport congestion on the rise, the report estimates that in view of a 54 percent projected increase in freight shipping by 2020, a total of $114 billion will be needed to develop the next generation of systems for guiding and tracking aircraft. Factoring in the projected investment of $95.1 billion, the report concludes that there will be an $18.9-billion investment gap. That additional investment of $18.9 billion would protect $54 billion in exports, $313 billion in GDP, and 350,000 jobs and would save $320 a year per household in personal income.
The report suggests that without significant investment in airports, goods will be moved within the country to a greater extent via surface transportation. This shift, the report concludes, will result in higher costs for commodities that are normally shipped by air and will be hard on industries that require same-day freight delivery. The cost of air transportation is projected by the report to be 6 percent higher in 2020 and 9 percent higher in 2040 than would be case if the entire $114-billion investment were made.
“Today there is a significant gap between planned investment and needs,” said Herrmann. “The aging infrastructure for our seaports, inland waterways, and airports makes shipping more expensive, increasing the cost of goods. The Failure to Act report finds that these costs reverberate throughout the economy.”
Herrmann noted that the report provided a few “high-level solutions that show promise.” These include developing a national freight plan that prioritizes improvements in road and rail connections and coordinates the activities of various federal and state agencies; passing the Water Resources Development Act now under consideration to authorize these projects; using monies already collected in the Harbor Maintenance Trust Fund to pay for marine port maintenance; rehabilitating locks and dams using monies in the Inland Waterways Trust Fund; and streamlining the project approval and delivery process at the federal level.
“I want to thank the American Society of Civil Engineers for creating this objective analysis of the economic implications,” said Jerry A. Bridges, the executive director of the Virginia Port Authority, at the press conference. “This Failure to Act report does a great job of addressing the implications of what to expect if America fails to make the necessary investment.
“Over the next five years America’s seaports and their marine terminal partners have told us they will make a combined investment of over forty-six billion dollars to maintain and improve their infrastructure. The federal government, however, has not committed to matching this level of investment to improve the connections to our ports. For example, the dredging of federal channels has slowed and decreased, especially for new construction. Further maintenance dredging is sorely underfunded, despite nearly seven billion dollars in the Harbor Maintenance Trust Fund.”
Bridges explained that when cargo is delayed because of deficiencies in roads and rail lines serving ports, supply chains and business operations are affected throughout the country, threatening the price competitiveness of goods that businesses are seeking to export.
“You walk around Target or Walmart and you see a lot of stuff,” Bridges added. “And the consumer never thinks about how it got there, so there is not a lot of thought [from the public] about keeping the ports sustainable.”
“That is what we do—we move stuff,” said Richard R. Calhoun, the president of Cargo Carriers, Inc., a subsidiary of Cargill, Inc., the latter headquartered in Columbia, Illinois. Calhoun is also a former chairman of the Waterways Council, Inc. As he noted, “Last year our barge company moved over one hundred five different commodities. ASCE has the right answer and paints a grim picture [in the Failure to Act report] of our transportation system if we fail to act quickly. Keeping these [inland waterway] channels open is critical to our business. Failing to meet the nearly sixteen-billion-dollar [marine port and inland waterways] gap by 2020 will impact our economy in multiple ways. Cargill and other U.S. companies shipping goods to market will experience congestion and delays, leading to higher transportation costs, causing the price of goods to rise.”
Calhoun appeared before the Senate Committee on Environment and Public Works on September 20, and in his testimony he supported passage of the Water Resources Development Act. In his remarks at the press conference on the investment gap revealed in the latest Failure to Act report, he pointed out that “we cannot expect the Army Corps of Engineers, who are responsible for the maintenance and operation of all the locks throughout the U.S., to do it effectively when over half of that infrastructure is past its intended useful life. So what we need to do as a nation is create the will to invest in infrastructure so that we can serve the ports and inland waterways and we can compete in the world market.”
This is the fourth Failure to Act report released in the past 15 months. The titles of the other three are Failure to Act: The Economic Impact of Current Investment Trends in Surface Transportation Infrastructure; Failure to Act: The Economic Impact of Current Investment Trends in Water and Wastewater Treatment Infrastructure; and Failure to Act: The Economic Impact of Current Investment Trends in Electricity Infrastructure
. Later this year a final report will be released that will summarize the potential consequences of failing to invest in these critical infrastructure areas. To read the latest report, click here
. To read any of the previous Failure to Act reports, click here