Industry Market Trends

Urgent Need to Upgrade U.S. Ports Infrastructure

Sep 25, 2012

While there's been a great deal of public attention on failing bridges and energy brownouts, the nation's sea trade is also being hit hard by a lack of investment in key shipping infrastructure. Unless funding improves for U.S. ports and waterways, their deteriorating conditions are likely to cost jobs and impede economic growth.

United States ports and inland waterways have experienced years of neglect, resulting in a rapidly deteriorating waterborne trade infrastructure that is likely to have a severe impact on economic conditions. Experts estimate that America will need investments totaling around $30 billion to repair these key structures, but currently there's only $14 billion earmarked for that purpose.

According to a recent report from the American Society of Civil Engineers (ASCE), America's marine ports and inland waterways are in need of more than a cosmetic facelift. Over the next eight years, ASCE officials say, "unless America's infrastructure investment gaps are filled, transporting goods will become costlier, prices will rise and the United States will become less competitive in the global market."

When people think of upgrading infrastructure, they tend to think of roads, bridges and airports, the electrical and water grids or public transportation systems. But America's waterways are vital components of the nation's trade, and tend to be neglected when it comes to paying for repairs and upgrades.

"You walk around Target or a Wal-Mart and you see a lot of stuff" that was brought to the country on a ship, Jerry A. Bridges, head of the Virginia Port Authority, told the Washington Post, which calls America's aquatic infrastructure "outdated." But it's not a critical issue in the public mind because, as Bridges noted, consumers don't realize that so many products on retail shelves was brought here on a ship, "so there's not a lot of thought about keeping the ports sustainable."

Politicians calling for renewed investment in roads and bridges that voters use every day tend to win applause, but speeches calling for more taxpayer money to be used on waterways and ports are often met with disinterest.

But the impact of water-borne trade on the American economy is significant. According to the ASCE, $42.2 trillion in goods passed through U.S. ports in 2010 alone. The report estimates that failing to address infrastructure needs could result in "losses of $270 billion by 2020 and a $697 billion drop in gross domestic product," or 738,000 jobs.

Industry journal Supply Chain Digital highlights the need to build new inland ports as well: "There are a number of new locations under development such as the 4,000-acre Florida Inland Port in St. Lucie, Florida and the 580-acre Inland Port Arizona in Casa Grande, Arizona, which will become the first inland port to serve the ports of Los Angeles and Long Beach."

Compounding the need to refurbish our ports and inland waterways is the fact that in 2015 the Panama Canal is scheduled to be expanded, which means "the average size of container ships is likely to increase significantly," according to the ASCE. That means we'll need more harbor and channel dredging as well as "new or rehabilitated lock and dam facilities" for inland waterways.

The ASCE notes that currently only Baltimore and Norfolk have the deepwater port capacities to accommodate the new, huge Asian carrier ships expected to pass through the expanded Panama Canal. New York's ports, as currently configured, are incapable of handling that traffic. The economic impact to New York, as well as other Eastern seaboard cities, of not being able to accept these megaships will mean huge economic losses to those regions. But increasing funding is a difficult sell for taxpayers who feel pinched already.

Inland ports are the subject of major concern. John Carver, head of Jones Lang LaSalle Ports Airports and Global Infrastructure (PAGI) group, told Supply Chain Digital that inland ports are used to move international shipments to and from ports and locations within the U.S. that are usually "connected by dedicated rail lines to one or more seaports."

Supply Chain Digital identifies three key economic issues driving the need for improved aquatic infrastructure spending:

  • Increasing exports. "U.S. agricultural products are in high demand from China," the journal notes, adding that exports to other developing nations are increasing as well.
  • Fuel costs. Moving goods by truck is getting more expensive as gas prices rise. "Inland ports offer cost-effective intermodal access" when moving things to and from ports and harbors, the journal notes.
  • Global containerized shipping. Import containers can be re-used at inland ports when sending material back out overseas.

Standing up and calling for money to be used for upgrading, dredging and building out the maritime infrastructure might not be popular right now. But the consequences of ignoring our nation's ailing ports and waterways could be worse.