Politicians on both sides of the aisle have agreed on the importance of infrastructure improvement projects for the better part of a decade, but agreeing on how to fund such projects has been another story altogether.
To say that in some parts of America, the infrastructure that helps goods flow in and out of the country’s airports and seaports is in disrepair would be an understatement. Roads are crumbling, bridges are deteriorating, tunnels need to be replaced, seaports require renovation and airports need expansions.
The need for such projects was something that politicians on both sides of the aisle have agreed existed for the better part of a decade, but agreeing on how to fund such projects has been another story altogether.
Although President Barack Obama called for new federal infrastructure projects at different points during his presidency, his administration was unsuccessful in reaching a political consensus regarding a major national infrastructure repair and advancement plan.
However, new hope for getting a bill through Congress came with the election of President Donald J. Trump, who in the months leading up to and in the initial weeks after his election to the highest office in politics, pounded the drum for reinvestment in America’s infrastructure, even going so far as to place a $1 trillion price tag on it. In his proposed 2018 budget, however, it was revealed that the $1 trillion total was the funding projected for both public and private infrastructure investment. This is a crucial distinction. If the plan is approved as is, the federal government would only pick up the tab for about $200 billion of the cost over 10 years, with private industry incentivized to pay for the remaining 80 percent in exchange for tax breaks and revenue sharing. State and local governments would also contribute to specific projects, but those funds aren’t included in the $1 trillion calculation.
Private investors might be willing to participate, but it’s likely going to be a tough sell, as infrastructure assets don’t tend to generate a particularly high return on investment.
be willing to participate,
but it’s likely going to be
a tough sell, as infrastructure
assets don’t tend to generate a
particularly high return
Coast To Coast. Across the country there are maritime-related projects that could receive a helping hand due to the Trump administration’s promise to boost infrastructure spending.
Among those that have signaled a willingness to work with the administration is the Oregon Shipping Group, an organization that says it advocates for the “revitalization and development of road, rail and marine shipping systems and capabilities” in the state.
The organization’s president, Kevin Mannix, is a former member of the state Legislative Assembly and ex-chair of the Oregon Republican Party. He told American Shipper the group’s agenda includes repair, improvement and connection of various rail lines; expanding deep-water port capabilities in the Coos Bay and Astoria areas; establishing a new intermodal and transload facility in the central-west portion of the state; and exploring prospects for port enhancements along the Columbia River.
“As the Trump administration talks about infrastructure—in terms of moving freight—we’re trying to set up Oregon as a state where the private sector, coupled with the state public sector, are prepared to cooperate with the federal government in helping build up the nation’s infrastructure with Oregon as our focal point,” Mannix said in a recent interview.
Also willing to work with the Trump administration is Armando Bustillo, president and CEO of Atlantic Coastal Shipping (ACS), a Miami-based freight transport company that says it intends to launch a regular weekly fixed-day Atlantic cabotage service by the end of November.
Bustillo has said that the coastwise service will relieve I-95 highway corridor infrastructure and reduce growing traffic congestion, as well as fossil fuel consumption, contamination and cargo theft.
In a statement, ACS said that it’s counting on funds from Trump’s proposal.
“When Congress allocates the funds for the president’s National Infrastructure Renewal Program, our cabotage service will be the only efficient, secure, cheap logistic intermodal transportation option for U.S. government and private cargoes for an I-95 under construction,” the company said.
Changing Criteria. About 1,000 miles up the coast in Maryland, the state is trying to obtain federal funding to help pay for the $425 million raising and reconstruction of a 120-year-old tunnel that’s currently not tall enough to allow double-stacked intermodal trains to and from the Port of Baltimore to pass underneath.
Although the state has committed to contributing $145 million toward the cost, and Jacksonville, Fla.-based Class I railroad CSX Corp., which also owns the tunnel, has promised to chip in $125 million, that still leaves $155 million to be accounted for.
The state had previously been rejected for two infrastructure grants when it applied while the Obama administration was still in place. But since then, the feds’ FASTLANE (Fostering Achievements in Shipping and Transportation for Long-Term Achievement of National Efficiencies) grant program has been replaced by the current INFRA (Infrastructure for Rebuilding America) program, under which goals and recipient selection criteria have substantially changed.
The new program, according to the U.S. Department of Transportation, is designed to reward projects that “make each federal dollar go further and encourage more parties to put skin in the game through higher leverage.” Recipients should also be willing to “implement innovative approaches to permitting and project delivery,” according to the DOT. The submission process for consideration under the $1.2 billion grant program opened in June and doesn’t close until early November.
for Rebuilding America (INFRA)
grant program is designed
to reward projects that
“make each federal dollar go
further and encourage more
parties to put skin in the game
through higher leverage.”
U.S. Department of Transportation
Other significant current maritime-related transportation infrastructure projects around the country that could collaborate with the Trump administration include the Port of Anchorage Intermodal Expansion Project and the Hawaii Harbors Modernization Plan.
The Port of Anchorage Intermodal Expansion, despite its name, is more an infrastructure reconstruction project under which the port has been seeking to, among other things, update its facilities in order to accommodate larger, deeper-draft vessels.
Launched in 2002 and originally expected to take just six years, the project has been plagued by snafus. It was originally overseen by the U.S. Maritime Administration (MarAd), but after lengthy delays and cost overruns, the U.S. Army Corps of Engineers took control in May 2012. The expansion was initially estimated to cost $360 million and was supposed to be finished by 2011, but there’s still no end in sight.
MarAd was originally commissioned by the City of Anchorage to lead the project as a way to direct federal funding to the city’s port, but the agency had no prior experience in the lead role of a major construction project. After MarAd was removed, the city eventually sued it for mismanagement.
A trial date is still pending, but with a new administration in office, one led by a business-friendly president who won Alaska by 15 points in the 2016 general election, it remains to be seen if the lawsuit will continue to go forward, or if some type of settlement can be reached.
The Hawaii Harbors Modernization Plan, which has been supported by the state legislature since 2008, would expand harbor system capacity, update its containerized cargo handling capabilities and alleviate congestion issues, among other things.
In mid-December, the Hawaii Department of Transportation’s harbors division kicked off the initial phase of the modernization plan, which includes construction of a new berthing and container handling facility on the site of the former Kapalama Military Reservation. The state DOT says the new terminal will have berthing capacity for two containerships.
As of now, the $568 million modernization program is being funded by the state, partially through revenue bonds. An additional $250 million in revenue bonds is expected in early 2018, according to the state’s harbor division.
Patience Is A Virtue. Whether the federal government becomes involved in any new or ongoing maritime-related infrastructure improvement projects remains to be seen, but even if it does, real progress might take a while.
In July, Trump issued an executive order establishing a Presidential Advisory Council on Infrastructure of up to 15 members that will have 18 months to study the scope and effectiveness of federal government funding of infrastructure in ports and waterways, aviation and other areas, and make recommendations to the president based on their findings.
Among the matters the council is tasked to advise the president on are ways to increase public-private partnerships for infrastructure projects, accelerating pre-construction approval processes, and promoting “advanced manufacturing and infrastructure-related technological innovation.” The infrastructure council has until the end of 2018 to submit a report before it is disbanded, according to the executive order.
So while the election of a new business-oriented Commander in Chief last fall brought hope that the climate toward business by the federal government might improve substantially, the fact remains that the wheels are still turning slowly when it comes to the prospect of opening up promised federal public—and private—funding to help repair and develop America’s aging infrastructure.