Hawaii Superferry auctions coincide with DOT’s Marine Highway grant announcements. One event perhaps signals the end of Title XI loan guarantees while the other is intended, in part, to stimulate shipbuilding in the U.S. markets. The disparity in dollar amounts between the two is telling.
Separated by just ten days, the U.S. Department of Transportation announced – with only passing mention of its maritime modal arm – a multimillion dollar award to regional port groups in an effort to “jumpstart” marine highway initiatives, and following that, their participation in the auction of the latest Title XI casualties in Norfolk, VA. In the latter case, the U.S. Government has a reasonable shot at recouping its $150 million investment in the Hawaii Superferry vessels. As for the shortsea shipping grants, the paucity of the funds distributed and the disparity of those numbers in comparison to what is at stake in Norfolk, says it all. If you are following along, none of it is good news.
By themselves, the announcements have nothing to do with one another. Careening aimlessly through Marad’s mysterious world, neither will spur a much-needed rebound in domestic Jones Act shipbuilding. Moreover, the lightly publicized fire sale auctions could mean, for all intents and purposes, the end of it.
The Real End of Title XI
A regular reader of this column sent me the DOT NOTICE OF PUBLIC AUCTION links for the sale of the vessels ALAKAI and HUAKAI and then added simply via E-mail, “You can get them for a penny above what is owed.” Before you start rifling through the sofa cushions for spare change, just know that Marad’s David Matsuda is on record as pledging to protect the government’s interests in the matter by matching any bid that does not equal the full amount owed. A Marad PAO confirmed that metric on Monday.
It could well be a sad ending for the Superferries. The viable, domestically well-built and environmentally sound commercial vessels could sent off to be painted gray, or worse; relegated to decay in a Marad reserve fleet until the next round of “ghost ship” crises. But the real fallout from the end to former Navy Secretary John Lehman’s dream to bring affordable, shortsea transportation solutions to the 50th state is the almost certain fact that no administration, within your lifetime or mine, will ever back a project of this magnitude again. Assuming that there are no serious commercial takers for the two hulls on Thursday, then that $150 million has been emphatically flushed down the toilet. And that kind of cash would have come in handy in the battle to bring shortsea shipping to life on America’s three deep sea coastlines. Easy come; easy go.
American Marine Highway Grants: Much ado about nothing
The other excitement brewing at DOT (beyond, of course, the historical milestone of the 42nd state to enact “no texting while driving” laws) is Transportation Secretary Ray LaHood’s September 20th Announcement of $7 million awarded to the Mississippi Department of Transportation, the Virginia Port Authority and the Tennessee-Tombigbee Waterway Development Authority to support the transportation of marine cargo between U.S. ports. Cloaked as a “new” initiative, the effort and the grants are anything but. Instead, the ridiculously low dollar figure afforded the domestic waterfront once again reveals the tepid support that maritime programs enjoy within this version of the Department of Transportation and as a whole, the national intermodal plan (assuming one exists to begin with).
As part of their announcement, DOT said in a prepared statement, “The money will help expand an existing marine highway operation in the Gulf of Mexico between Texas and Florida and one on the East Coast between Richmond and Hampton Roads in Virginia. The money will also help start an entirely new all-water service on the Tennessee-Tombigbee Waterway between Itawamba, Mississippi and the Port of Mobile, Alabama.” As for myself, I’m anxious to see how funds split up six different ways with some awards as small as $250,000 will do anything more than line the pockets of a couple of consultants.
When it comes to shortsea shipping and America’s Marine Highways, DOT and Marad always seem to know just what to say. Secretary Lahood insists, “These projects demonstrate how water transportation can help solve some of our toughest transportation challenges. Transporting goods by water will let us reduce congestion and greenhouse gas emissions.” Okay, Maybe. Maritime Administrator David Matsuda (you may remember him) adds, “This is a key opportunity to demonstrate the benefits and viability of moving freight on the water. These grants will help a long overlooked means of transporting goods finally grow.” Um, actually, no, they won’t.
DOT by the Numbers:
- $38.71 Billion: amount available under ARRA grants to U.S. DOT
- $19.2 Billion: amount paid out to date in ARRA DOT funding according to www.recovery.gov
- $40 Million: DOT Loan guarantees for new barge orders. (8/09)
- $14.7 Million: Grants to Help Small Business Shipyards (4/10)
- $10 Million: Port of Anchorage Next Phase of Development (4/09)
- $9.8 Million: Marad Shipyard Grants (4/08)
- $7 million: DOT Grants to Jumpstart America’s Marine Highway Initiative (9/10)
With less than one-half of one percent of all DOT funding going to the domestic waterfront, it isn’t hard to see why the DOT “Tiger” grants are little more than a paper tiger in disguise. For maritime stakeholders, it is also a little like being the well-behaved teenager who gets a dollar a week in allowance money and then discovers that his friend next door got a Volvo and a laptop computer after being busted for hosting a drunken keg party while his parents were out of town. It just doesn’t add up.
What’s in Your Wallet?
As Secretary Lahood tries to pave himself out of a bankrupt Highway Trust Fund crisis and the crumbling infrastructure precipitated by overuse of the nation’s Interstate highways, U.S. shipyards are thirsting for domestic Jones-Act tonnage orders that are unlikely to come. And without the modern infrastructure to accept those new vessels, a resurgence of replacement tonnage is even less probable.
A paltry $7 million isn’t going to do it. $7 million buys a pretty nice beachfront house in Rehoboth Beach, but if you have to ask how much, you probably can’t afford the taxes. On the other hand, $150 million (assuming someone ponies up for the Superferries) might put one heck of a dent in the dredging (to 60-feet) of the main ship channel for one of our major ports, thereby paving the way for the new generation of 11,000 TEU container ships to deliver cargo into one port so that a fleet of Jones Act-compliant shuttle vessels can then move those boxes more efficiently, and with less environmental impact, up and down the coastline.
There really is no time to lose. After the ongoing widening of the Panama Canal is done – as early as 2014 by some estimates – many of the large vessels could begin to immediately make the canal transit instead of docking at west coast berths. Conversely, there won’t be much point in any of it, especially if U.S. ports aren’t prepared to accept the increased tonnage. Inextricably, the fortunes of U.S. shipbuilders, global environmental compliance, the federal Highway Trust Fund, the nation’s collective transportation infrastructure and yes – the fate of the Obama Administration itself – all ride on our ability to fund projects related to the waterfront. It is well past time to ask: what’s in your wallet? – MR.
* * * * *
Joseph Keefe is the lead commentator of MaritimeProfessional.com. You can also read his work in MarineNews and The Maritime Reporter magazines. He can be reached at jkeefe@maritimeprofessional.com or at Keefe@marinelink.com. MaritimeProfessional.com is the largest business networking site devoted to the marine industry. Each day thousands of industry professionals around the world log on to network, connect, and communicate.