Maritime Transport Deserves Some of Obama’s Infrastructure Money

In last night’s speech to a joint session of Congress, President Obama emphasized the importance of additional spending on infrastructure. He made a point of talking about the need to repair roads, bridges and schools. He spoke about the importance of new airports and faster railroads. As the President correctly pointed out, “Building a world-class transportation system is part of what made us an economic superpower.”

Noticeably missing from this vision of an upgraded transportation infrastructure was waterborne transportation. The U.S. maritime industry includes international, coastal and inland waterways transportation. In 2009, water transportation carried 78 percent of U.S. goods exports by tonnage and 36.9 percent of U.S. goods exports by value, via U.S.-flag and foreign-flag carriers. The American maritime industry moves about one-quarter of our domestic commerce for about 3 percent of the domestic freight bill. The inland waterways system consists of 12,000 miles of navigable waterways that serves 41 states and carries almost two million tons of freight annually. Some 40,000 U.S. privately-owned vessels are involved in U.S. foreign and domestic trades, the vast majority in coastal areas and inland waterways. The value of U.S. water transportation activities alone, separate from the value of goods moved by water, was estimated recently at more than $100 billion. Other maritime activities such as support for offshore drilling are worth tens of billions of dollars more each year.

Like its road and rail counterparts, the U.S. waterborne transportation system is in need of repair and upgrade. By some estimates, the U.S. inland waterways system alone requires $50 billion in urgent repairs and upgrades. Expanded foreign trade is placing stresses on major U.S. ports which are in need of billions of dollars of improvements to handle greater volumes of freight.

An essential part of the U.S. maritime industry is shipbuilding and ship repair. This portion of the industry has been battered by low cost subsidized foreign competition. A major support for U.S. shipbuilding is provided by the Jones Act which requires that all vessels engaged in trade between two U.S. ports be U.S.-built and repaired. Because of the Jones Act, not only do American commercial shipyards exist, but many of them have been modernized and turn out high-quality vessels with advanced engineering. Today, hundreds of seagoing vessels from larger container ships and tankers to barges and world-class deep-ocean drilling platforms are built every year in America. These projects keep a dozen shipyards in operation where thousands of skilled workers are employed. These same yards produce new ships for the U.S. Navy and repair and overhaul existing ones.

So, as long as he is handing out bags of money for infrastructure projects, the President should spend some of it to sustain and expand America’s maritime transportation system. For $50 billion, this nation’s inland waterways could be modernized and expanded. This would speed transportation, lower costs and even improve the environment.

The President also should consider using some of the American Jobs Act funding to support the Navy’s shipbuilding program and to ensure full funding of that service’s ship repair accounts. This money will go to American shipyards and workers thereby enhancing both economic and national security. In a similar vein, the administration should provide funding to replace aging Jones Act vessels with more modern, fuel-efficient and safer ships.

There are two additional, relatively low cost, maritime infrastructure initiatives the administration should pursue. First, it should propose continued funding for the Title XI Federal Ship Financing Program which offers loan guarantees on contracts to build or overhaul commercial vessels in U.S. shipyards. Title XI encourages the maintenance of commercial facilities and a skilled workforce that can also be employed in constructing and maintaining Navy vessels. Finally, President Obama should expand implementation of our own Marine Highway Initiative (MHI). The MHI is intended to accelerate development of waterborne shipping services thereby reducing congestion on land as well as saving money through expanded use of maritime transportation. Initiatives under the MHI that involve funding support for the construction of carrier vessels would go to U.S. shipyards. The results would be a double boost to the economy (ship construction and reduced freight costs), the creation of jobs and support for national security.