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American Association of Port Authorities703.684.5700 • www.aapa-ports.org

Presentation for conference onRebuilding America’s

Infrastructure for Global CompetitivenessMarch 4, 2009

JW Marriott, Washington, D.C.

By Kurt Nagle, President & CEOAmerican Association of Port

Authorities

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AAPA Overview

• AAPA a hemispheric alliance of 160 port authorities

• Members include 300 related organizations

• Association promotes info sharing/education & training

Committed to keeping seaports navigable/secure/sustainable

•As an international trade association, AAPA represents 160 of the leading public port

authorities in the United States, Canada, Latin America and the Caribbean.

•Throughout the hemisphere, AAPA also represents more than 300 individuals, businesses

and related organizations that support the port industry.

• In addition to advocating on issues related to seaport development and port operations,

AAPA also:

• facilitates relationship building and information exchanges between members

and nations;

• provides education and training programs, seminars and workshops;

• and works to inform the public, media, and policymakers about the essential role

ports play within the global transportation system.

•To that end, we’ve initiated an expanded seaport industry Awareness Initiative

with the theme, “Seaports Deliver Prosperity.”

• AAPA is committed to helping its member ports be competitive. navigable, secure and

sustainable.

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Seaports Deliver Prosperity

• Western Hemisphere seaports generate trillions of dollars of business activity and support millions of high-paying jobs

• Seaports and their business partners generate nearly ¼ of U.S. GDP

• Ports spend >$2 billion/year on infrastructure, but investment needed in connections on land-and waterside

For centuries, seaports have served as a vital economic lifeline

•Throughout civilization, seaports have served as a vital economic lifeline for the

movement of goods and services to people around the world.

•For 2008, according to figures we just received from IHS Global Insight, Western

Hemisphere seaports generated about $8.6 trillion in economic activity, and imported and

exported nearly 7.6 billion tons of cargo, including food, clothing, medicine, fuel, building

materials, electronics and toys. In addition, hemisphere-wide seaport activities support

the employment of tens of millions of people.

•Of the $3.15 trillion of total economic output attributed to U.S. maritime activities in

2007, $73.5 billion was revenue from businesses dependent on seaports.

•Port authorities and their business partners are investing more than $2 billion a year in

marine terminal capital improvements that are helping them handle freight and cruise

passengers more efficiently. But much more is needed to ensure efficient freight mobility

on land and water.

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Seaports are a Vital Freight Moving Asset

• Intermodal connectors and rail crossings must not inhibit moving nation’s growing trade volume

• Additional federal funds must be invested to improve freight mobility

• Federal tax credit for rail expansion improvements should be adopted

• States need more expertise in freight mobility and should include seaports in their planning process

Landside access to seaports becoming severely congested

•Ports are finding the weakest link in the logistics chain is often at their back door…beyond

their jurisdiction…where shallow navigation channels, congested roads or inadequate rail

connections are causing delays and increasing costs.

•For example, bottlenecks and obstructions need to be removed for trucks and trains. We

need rail track, switching system and other technology upgrades to increase the efficiency

of moving goods intermodally, and in turn, increase the productivity of our seaports.

•Significant investments are needed throughout our transportation system, but what has

received less focus and is increasingly vital to our economy is the infrastructure that carries

freight, such as consumer goods like food, clothing, electronics and toys to store shelves;

fuel to the pump; as well as building materials and other needs of U.S. businesses. An

efficient system provides consumers and businesses the choices they demand at prices

they can afford, and helps make U.S.-produced goods competitive in the global economy.

•Special attention should be on the “last mile” road connections into and out of our

nation’s seaports and other facilities moving goods. A Federal study showed the condition

of these critical road connections are in worse condition and have received less funding

than the other portions of highway/road system. Another focus should be on

transportation corridors that have national or regional significance.

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Seaports are a Vital Freight Moving Asset

• Larger vessels need deeper, wider channels

• HMT not fully utilized

• HMT a disincentive for short-sea shipping

• More federal investment needed to help keep U.S. competitive globally

Modern, safe, navigable shipping channels crucial to international trade & national economic prosperity

•On the waterside, with ships getting increasingly larger, dredging the deep-draft

navigation channels is more crucial than ever, both to maintain the existing channel depths

and widths, and to expand them.

•Yet, the U.S. government doesn’t fully utilize the federal Harbor Maintenance Tax only for

its intended purpose—to pay for navigation dredging. Since its inception in 1986, the tax

has too often been used for other programs while serious dredging needs have been

neglected.

•To provide incentives for removing cargo from America’s most congested roadways and

putting it on the water, AAPA advocates eliminating the domestic portion of the Harbor

Maintenance Tax. Doing so will make shipping domestic freight by water more affordable,

promoting the more environmentally friendly short-sea shipping option while helping

alleviate highway traffic congestion on some of America’s busiest highways.

•In addition, AAPA believes that improving waterway and landside transportation

infrastructure must be a high priority of the new Administration and Congress. These

investments aren’t only critical from a safety standpoint, but they will create jobs and help

construction and engineering businesses, small and large, immediately.

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Stimulus Funds Can Improve Port Infrastructure

Port infrastructure projects that enhance freight mobility on landside are eligible to compete for stimulus surface transportation funds & discretionary grant program

Examples:• Bridges, roads and tunnelsconnecting port facilities

• Intermodal yards• Freight rail corridors• Grade separations between modes

•The $27.5 billion in surface transportation investment funds identified under Title XII of

the new federal stimulus bill isn’t highway trust fund money. The funds come from the

general treasury. The language in the bill specifically identifies passenger and freight rail

transportation and port infrastructure projects as eligible for assistance.

•I’m calling this to your attention because the transportation projects in the bill are

broadly defined to include those that may not typically be paid for with highway trust fund

money. Examples may include:

•Bridges, roads and tunnels to improve port access in congested urban areas.

•Intermodal yards, both outside and within port terminal gates; and,

•Above- and below-grade rail and highway connectors between marine terminals.

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Stimulus Funds Can Improve Port Infrastructure

On the waterside, stimulus funding provided to

Corps of Engineers to help maintain & improve federal navigation channels

• Creates jobs and economicactivity

• Helps U.S. exports becompetitive in global markets

•Improving freight mobility and enabling America’s seaports to be more efficient,

productive and secure are the best investments this country can make to reinvigorate the

economy and create sustainable infrastructure and environmental programs that put

people back to work immediately and over the long term. Deepening, widening and

maintaining our federal navigation channels is of paramount importance.

•Because of seaports, everyone from farmers to small business owners to large scale

manufacturers can compete and thrive in a global marketplace.

•In these uncertain economic times, exports are more important than ever. More than 1/3

of America’s economic growth in 2007 was derived from exports.

•The following three projects are the kind of transportation infrastructure projects that

will provide long-term, regional and national benefits and will help make the U.S. more

internationally competitive.

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Stimulus Funds Can Improve Port Infrastructure

Example: PANYNJ ExpressRail & Harbor Deepening Projects

• ExpressRail System - $600 million

• Dedicated on-dock rail for port’s major container terminals

• Links with Midwest, Pittsburgh, New England, Canada and beyond---------------------------------------------------------

• $1.4 B Harbor Deepening Projects (to 50 feet) slated for completion in 2014

• 50/50 cost split, PANYNJ/Corps

• $161.5M annual net benefits to nation

•My first example is actually a combined infrastructure program at the Port Authority of

New York and New Jersey.

•The port’s ExpressRail System is a comprehensive $600 million rail program of dedicated

rail facilities, and additional support track and rail yards.

•By expanding its ExpressRail system and enhancing its inland connections, the port

authority is advancing its role as a leading gateway for speeding cargo to destinations in

the Midwest, Pittsburgh, New England, Canada and beyond.

•In terms of its harbor and berth deepening projects, the port authority and U.S. Army

Corps of Engineers began a nine-year project in 2005 to enable ships with drafts as much

as 50 feet to enter its harbor and terminals. According to the Corps, the annual net benefit

to the nation for deepening the New York/New Jersey harbor is $161.5 million.

•Navigation improvements like this will keep the port, and nation, competitive in

attracting modern, deep-draft vessels that will be in even greater abundance once the

Panama Canal expansion is completed in 2014. Harbor and channel dredging also

improves navigation safety and lowers the potential for costly ship groundings.

•The kinds of transportation projects that improve America’s ports and create better

freight mobility are the kinds that create the high-paying jobs and attract business

investment that Americans expect from this stimulus bill. Tax dollars will be paying for the

stimulus legislation for many years, so we should expect those dollars to be well invested.

•Putting stock in America’s seaport infrastructure is a sound investment and allows our

ports to deliver the kind of prosperity that will put our country back on a sound financial

footing.

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Stimulus Funds Can Improve Port Infrastructure

Example: West Vancouver (WA) Freight Access Project

• $137 million, 10-yearundertaking

• Provides competitive accessto 2nd rail carrier for moving freightmore efficiently and economically

• Creates 1,900 temporary construction jobs and 1,000 permanent freight industry jobs

• Will attract new industrial activitiesand associated jobs

•My second example is the West Vancouver Freight Access Project, in Washington

State.

•This $137 million, Port of Vancouver USA/Burlington Northern Santa Fe-

sponsored, 10-year project will expand the dedicated port rail facilities from 18

miles of track to more than 43 miles. These enhancements will provide significant

unit train improvements and marked capacity improvements to the Pacific

Northwest railroad system that will benefit the region, and nation, for years to

come.

•The Port of Vancouver USA is one of the nation’s leading wheat export gateways

and its imports of wind turbine components are shipped by rail as far as Michigan.

•This project also opens the way for new commercial rail access for shippers within

the port’s expanding marine and industrial facilities. The port expects improved rail

access will be a major business and jobs magnet.

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Stimulus Funds Can Improve Port Infrastructure

Example: Port of Miami tunnel project

• Would provide direct freeway access and additional mainland-port connection

• Would reduce downtown congestion

• Would facilitate current and future Miami-area development plans

•My third example is the Port of Miami tunnel project, which was put on hold last fall after

private-sector investors pulled out due to the poor economy. If funded, the approximately

$1 billion Port of Miami tunnel project would:

•Provide direct access between the seaport, I-395 and I-95;

•Provide additional access between the mainland and the port;

•Ensures the Port of Miami will continue as the community’s second largest

economic generator;

•Relieve congested downtown Miami streets of port passenger and cargo traffic,

improving safety; and

•Facilitate ongoing and future development plans in and around downtown Miami.

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Beyond Stimulus

Continued focus and priority for freight

transportation infrastructure needed

Waterside

• Fully utilize HMT to maintainchannels to authorized depthsand widths

• Fully fund deepening, wideningfederal navigation channels tokeep U.S. globally competitive

•Looking beyond this year’s stimulus package, America needs to continue funding

and improving project delivery efficiency for the U.S. Army Corps of Engineers’ Civil

Works program, including:

•Making full use of the Harbor Maintenance Tax, or HMT, for its purpose of

maintaining federal navigation channels to their authorized width and

depth; and,

•Funding deepening and widening of these channels to keep the U.S.

globally competitive.

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Beyond Stimulus

Continued focus and priority for freight

transportation infrastructure needed

Landside

• Develop national freight policy

• Increase funds for projects andcorridors of national/regionalsignificance, intermodal freightconnectors and marine highways

• Encourage states to invest inpublic-private partnerships, railexpansion, more freight expertise

• Encourage federal support ofmarine highways

•On the landside, America needs to develop a comprehensive national freight

policy.

•We also need to increase funding for projects and corridors of national and

regional significance, intermodal freight connectors and marine highways.

•Furthermore, we need to encourage public-private partnerships, rail expansion

and more freight expertise and funding at the state level.

•Additionally, we should encourage federal support for marine highways, including

elimination of the HMT for U.S. port-to-port cargo moves, to provide a federal

incentive for domestic short-sea shipping. This would help alleviate highway

congestion and improve environmental sustainability.

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Surface Transportation Reauthorization Guiding Principles

National Freight Program should:

• Fund projects & corridors of national/regional significance

• Fund intermodal freight corridors

• Allow ports to apply directly for project funds

• Require state/MPO level expertise on freight

transportation & marine highway alternatives

Turning to the surface transportation reauthorization legislation now being formed in

Congress, AAPA supports the creation of a comprehensive National Freight Program, which

should:

•Include funding for projects and corridors of national and regional economic significance

based on a cost/benefit analysis which considers externalities (including environmental

impacts) and encompasses all modes and existing corridors as well as new ones.

•Follow AASHTO’s recommendation for the State Freight Transportation Program and

National Freight Corridors Investment Fund with the stipulation that port authorities are a

key part in the planning process in both the federal and state programs.

•Make port authorities eligible to apply directly for project funds through the above-

mentioned federal and state freight programs.

•Include funding for intermodal freight connectors (highway, maritime, rail) which are vital

to port efficiency and cargo mobility.

•Include investments in rail and the development of marine highways.

•Require expertise at the state/MPO level on marine highway alternatives/benefits as well

as dedicated freight offices with coordinators, programs and funds that support what is

devolved down from the federal level.

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Surface Transportation Reauthorization Guiding Principles

Program Reform should:

• Be performance-based

• Include freight transportation program

• Establish multi-modal freight office in U.S. DOT

Project Delivery should:

• Address environmental inefficiencies

• Address NEPA redundancies

• Delegate NEPA responsibilities to state agencies

�AAPA supports a performance-based approach which consolidates the existing 108

surface transportation programs into 10 programs (one of which is freight transportation)

as recommended by the National Surface Transportation Policy and Revenue Study

Commission, and AASHTO.

�AAPA also supports establishment of a multi-modal freight office that reports to the

Office of the Secretary at the US Department of Transportation.

�AAPA supports improving project delivery by addressing environmental review

inefficiencies and NEPA redundancies that cause project delays and cost overruns,

including delegating NEPA responsibilities to appropriate state agencies.

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Surface Transportation Reauthorization Guiding Principles

Freight Rail Investments should:

• Provide railroads tax credit incentives to invest in port

access

• Include grant program with federal/railroad cost-share for

projects with public/private benefit

• Increase expertise in state DOTs and MPOs on rail

issues

AAPA supports investments in freight rail that make the system safer and more efficient,

improve environmental sustainability and encourage competitive rail access to ports. The

federal surface transportation program should:

•Provide tax credit incentives for both main line and short line railroads to invest in port

access;

•Include a grant program with cost-share (federal/railroad) for projects with both public

and private benefit;

•Define freight corridors of national significance that would be eligible for rail investment;

•Increase expertise in state departments of transportation and MPOs on rail access issues.

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Surface Transportation Reauthorization Guiding Principles

AAPA supports developing marine highways that alleviate highway congestion & improve environmental sustainability through:

• HMT exemptions for certain port-to-port cargo

• Federal funding support for short-sea shipping services

• Incentives for shippers (e.g., green tax credit)

• Development of expertise at state/MPO level on marine

highway alternatives/benefits

AAPA supports the development of marine highways that alleviate highway congestion and

improve environmental sustainability through:

•Harbor Maintenance Tax exemptions for certain U.S. port-to-port cargo;

•Federal funding support for short sea shipping services;

•Incentives for shippers, such as green tax credits; and,

•Development of expertise at the state/MPO level on marine highway

alternatives/benefits.

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Surface Transportation Reauthorization Guiding Principles

Funding freight infrastructure investment

• Combination of funding mechanisms likely required

• If freight trust fund created, must be fully spent on freight

mobility

• Shouldn’t disadvantage U.S. exports or U.S. ports’

competitiveness

•AAPA believes that a combination of funding mechanisms will likely be necessary to

address freight mobility needs in the U.S.

•If it becomes necessary to create a trust fund for freight mobility, AAPA believes the

money collected should be fully spent on freight mobility.

•Furthermore, we believe any funding mechanism created under the new surface

transportation reauthorization should not disadvantage U.S. exports or reduce the ability

of U.S. seaports to be competitive.

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Many Ports, Same Vital Role

Seaports deliver prosperity through jobs, trade, security & environmental stewardship

• Ports are our economic lifeline with the rest of the world

• They provide jobs, goods, choices, security and more

• Will aid in our economic recovery and long-term prosperity

American Association of Port Authorities

www.aapa-ports.org ● 703-684-5700

•As a vital economic lifeline and a critical link to access to the global marketplace, taking

concrete steps to invest in seaport and connecting infrastructure will have significant

immediate, mid- and long-term positive effects on each nation’s economic condition.

•Seaports can and do play a major role in an economic recovery and, on an ongoing basis,

deliver prosperity.

•I encourage you to help us advocate for funding port infrastructure projects and I invite

you to check out our website at www.aapa-ports.org so you can learn more about what

AAPA and our member seaports are doing to push our economy forward and deliver long-

term prosperity to all.

•Thank you.