WASHINGTON — America wants to make its maritime sector globally competitive again. But significant obstacles stand in the way of development and expansion, says the chief U.S. ocean shipping regulator.
“The message that I try to reinforce is that [shipping revitalization is] going to last many administrations past this one,’ Federal Maritime Commission Chair Laura DiBella said. “I hope that the support and the resources will follow it with bipartisan support. I mean, bringing an industry back — and putting my economic development hat on, because that’s my past life — reshoring industry takes decades.
“It’s going to take a very long time and a concerted, long-term effort, economic development does not happen quickly. So I try with that in mind to manage expectations and don’t start to be critical.”
DiBella operated her own real estate business, served as Florida’s Secretary of Commerce and led Enterprise Florida, a public-private development office.
As head of the maritime competition regulator, DiBella is chiefly concerned with the strategic implications of the American maritime system. And, there’s work to be done, she said in an interview at the FMC’s headquarters.
“Not throwing the [U.S.] Army Corps [of Engineers] under the bus here, but permitting is always a problem,” DiBella said. “A big problem that slows down everything. You can have as much money on the planet as you want, but sometimes a better incentive is speed to market. Port Everglades has been waiting for a [dredging] permit 10-plus years. People just say, you know, if the Corps could only move quicker…”
[The USACE this month withdrew its state Water Quality Certification permit application for the Port Everglades dredging project amid environmental concerns. The project to deepen and widen channels was authorized in 2016.]“I don’t want to say money is the easy part,” DiBella said. “But there’s plenty of private investment out there that can support or assist with these projects, if they had a better idea of timing.”
Port efficiency and automation
DiBella said that automation needs to be brought into U.S. ports, to improve cargo handling.
“We are grossly inefficient here in the United States, period, end. I’m I’m very sensitive to protecting jobs, it was my [past] job to retain and create jobs. However, I do believe that automation needs to be brought in and can coexist very nicely with current labor arrangements where nobody loses their job. I understand that opening up to that could be perceived as a slippery slope. But, there’s too much technology out there that could make us produce so much more throughput.”
What looks to be a gradual process of force multipliers to make ports more efficient should “alleviate any concerns and embracing the technological environment that this world is,” she said, “you know, everything is connected these days, and our ports need to be connected, as well. We shouldn’t be afraid of having the discussion, it should be exactly that — a bigger discussion and collaboration with everyone that is involved and potentially affected by it.”
There are jobs to be created within the new era of industrialization, said DiBella, who doesn’t believe that jobs are going to be largely eliminated by automation.
Transcontinental rail merger
DiBella said that East Coast ports “are not speaking up enough” about the possible effects on their businesses from the proposed merger of western rail giant Union Pacific (NYSE: UNP) and eastern network Norfolk Southern (NYSE: NSC). She said that the FMC has started to receive feedback on the historic transcontinental tie-up.
If the merger goes through, the “Port of Baltimore stands to lose, [CSX (NASDAQ: CXS)] just invested in doublestack [clearances in the city’s Howard Street Tunnel], which was designed entirely to get [Baltimore container traffic] into Chicago. I was in Mobile, Alabama, two weeks ago, and they had expressed their concern to me about the merger, saying that Gulf Coast ports and the Gulf Coast in general has been largely ignored as far as impacts are concerned. There’s uncertainty around there. Mobile just dredged to 50 feet, to be globally competitive in shipping.”
The commission likely will collaborate with the Surface Transportation Board, she said, as to the impacts to ports.
“We all operate in our own lanes, I say, ‘Not my lane, not my lane,’ but in a way everything kind of bleeds into your lane in this space because we are all impacted by it. The silo approach that has been an existence for forever, that model cannot cannot exist moving forward. We absolutely positively need to be in better conversation with our partners at the STB, which we have great a relationship with.”
The Maritime Focus Problem
The problem, said DiBella, is that the U.S. over the past decades has lost its maritime focus.
“Others will not like this answer, that aren’t the maritime space, but maritime should be the beginning of the discussion and shouldn’t be the afterthought,” DiBella said. “What happens at the waterfront will have every impact on what happens inland so therefore the system needs to be addressed, maritime needs to be at the heart of the system. And we’ve lost that, I think, and that has led to the supply chain challenges that we have. Communities grew around ports.”
DiBella said that the while the U.S. can’t change the current structure of global shipping including mergers involving terminal operators and liners based outside the U.S., it can build up its own flag business. “They serve their purpose, and we need them. We need them as much as they need us. So it’s a copacetic relationship.
“Hindsight being 20-20, should some of the should some of these consolidations been allowed to happen. No, but we are where we are. All we can do is help build the reasoning around the U.S. flag model and create more competition in that space.”
Opportunity — and threat — in the Northern Sea Route
The FMC is conducting a chokepoint study that could help guide future maritime planning and investment. Chinese ships recently raised the tantalizing possibility of time-definite ocean shipments, completing Asia-Europe voyages on the Northern Sea Route through the Arctic in 18 days, compared with 30-40 days on trans-Pacific routes.
That’s important, DiBella said, because the risks and opportunities could position Alaska seaports for funding to build out infrastructure, to support the new route.
“Where are we in this infrastructure game,” she asked, “to capture what is a budding sea lane? What’s the saying — ‘If you’re not at the table, you’re on the menu’? So yeah, I think it should encourage us to definitely be more proactive.”
Worryingly, China and Russia have taken steps to explore the Arctic route.
“In my mind and I think everybody’s mind, that’s pretty dangerous. It definitely speaks to defense and security, and supply chain is all about financial security. So, yes, we need to be on top of that situation.”
This is Part 2 of a two-part interview.
Read more articles by Stuart Chirls here.
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