Kornegay seeks dredging, Houston rail fixes

The U.S. government should lift restrictions on foreign dredge operators as a way to tackle the backlog of dredging projects in deep seaports, Thomas Kornegay, executive director of the Port of Houston Authority, said Monday. 

He also proposed that the three Class I railroad carriers serving Houston relinquish intra-city service to concentrate on long-haul moves to and from the metropolitan area.

Kornegay delivered the recommendations, and several others regarding freight transportation funding, during a presentation at the Transportation Research Board's annual conference in Washington.

Ports have consistently complained about the red tape involved in approving and funding federal dredging projects, a process that can take 10 to 15 years or more, and maritime industry officials say that hurts U.S. trade competitiveness. Channels routinely have to be dredged to maintain their depth and the need is becoming greater as ocean carriers begin deploying larger container vessels that require depths in excess of 45 to 50 feet. After congressional authorization is secured, projects undergo environmental impact studies, planning and design, and feasibility analysis before going through the annual appropriation process in hopes of getting funded.

Similar problems exist on inland waterways and the Great Lakes.

I believe there is a basic flaw with the way we do navigation projects in the United States, Kornegay said. The Corps (of Engineers) is using the same formula today as they used in the late 1800s when they did the first study of the Houston Ship Channel. As for ongoing maintenance, Congress is only giving about 60 percent of the amount needed to dredge all the channels. The problem is that Army Corps of Engineers doesn't dredge 60 percent of the channels -- it dredges each channel 60 percent of the way, he said.

So they do them all partly, instead of doing the ones that really need to be done, he added. 

Gary LaGrange, port director in New Orleans, backed up Kornegay's assessment.

We have an inner harbor lock (part of the Gulf inland waterway) that was authorized when I was playing Little League baseball. We've yet to begin construction, said the 30-year industry veteran. There's definitely a flaw in the formula. Kornegay, who has headed the Houston port authority since 1992, said Congress could help alleviate the dredging situation by appropriating funds for the Army Corps on a multiyear rather than year-to-year basis, because large navigation projects cannot be completed in a single budget cycle.

He also argued for rejiggering the funding formulas so that states that pay more taxes and fees for maintenance of the nation's harbor system get a greater share of the money.

Texas and the Houston-Galveston areas should get more funding for construction and maintenance of our channels, he said, noting that the region gets back a fraction of the amount it donates to the government.

The ports industry overall is frustrated that successive administrations have kept a tight lid on the Harbor Maintenance Trust Fund, which boasts a $5 billion surplus. It is supported by a 0.125 percent tax on shippers based on the value of cargo imported into the United States and moving between coastal ports. In 2007, the government collected $1.4 billion for the Harbor Maintenance Trust Fund, but spent only $751 million for dredging projects.

The Corps of Engineers said that almost 30 percent of the 95,550 vessels calls at U.S. ports are constrained due to inadequate channel depths.

The most controversial proposal put forth by Kornegay is to open competition to foreign dredgers as a way to get more mileage out of the limited available dollars.

Under the Jones Act, coastal maritime trade is limited to U.S.-flagged, built and crewed vessels

There are five contractors in the United States with large self-contained, self-propelled hopper dredge rigs used for vacuuming material from the sea floor and dumping it in offshore disposal locations through an open bottom. They are:

   • Great Lakes Dredge & Dock Corp. of Oak Brook, Ill.

   • Seattle-based Manson Construction Co.

   • Weeks Marine Inc., Cranford, N.J.

   • B+B Dredging Co., of Portsmouth, Va.

   • Stuyvesant Dredging Co., Metairie, La.

   Stuyvesant is owned by a Dutch parent company, Boskalis Westminster Inc. and is allowed to bid on government work by chartering U.S.-flag dredges.

   Kornegay said this small club of domestic dredgers raises dredging prices because there are not enough providers to meet the high demand. Allowing foreign dredging companies into the market would increase competition and lower prices so that the government could get more dredging for its money, he said.

   Last fall, another maritime industry official lamented the fact that it takes about 17 years to develop a new port in the United States.

   Clint Eisenhauer, vice president of government relations for ocean carrier Maersk Inc., said sister company APM Terminals was able to cut that time down to seven years for its new $500 million private container terminal in Portsmouth, Va., by paying for the Corps' studies itself rather than waiting for congressional earmarks. APM Terminals, however, had more flexibility as the exception to the rule of public ports that lease or operate their own facilities.

   Congress needs to reform the Water Resources Development Act to make it easier for the Corps to approve dredging permits, Eisenhauer said at the Council of Supply Chain Management Professionals conference in Denver.

   The law currently requires at least two beneficiaries for a dredging or waterside construction project to receive federal funding. APM Terminals searched for three years for a qualified beneficiary before opting to foot the bill itself, he said. Ports also need a more predictable funding process than the ad hoc attempts by hometown legislators to slip projects into spending bills. And, he said, legislation is needed to make it easier for private investment in maritime infrastructure.

   Eisenhauer said he was somewhat optimistic Congress could adopt the maritime reforms in the coming years.

   I believe that Maersk could get that permit faster and cheaper than I can, Kornegay said, noting that there are few private companies that can entirely bankroll the huge cost of building a container terminal.

   Meanwhile, the Houston port director offered a unique solution to address Houston's freight rail congestion.

   More than 300 trains per day crisscross the Houston metropolitan area, which is subjected to 30,000 daily vehicle hours of delay at some 750 railroad crossings. The region's infrastructure includes more than 800 miles of mainline tracks and 21 miles of railroad bridges. Nearly half of the trains operating on the regional system are local trains and rail yard engines. Only 5 percent of the traffic involves non-stop through moves. The Texas Department of Transportation estimates the total cost of vehicle and freight rail delays, wasted fuel and accidents during the next 20 years at $2.6 billion.

   Under Kornegay's plan, the three railroads that serve the area -- Union Pacific, Burlington Northern Santa Fe Railway and Kansas City Southern Railway -- would engage a short line rail operator to serve the region and transfer railcars between the metro area and outlying rail yards. The railroads would concentrate on their networks between Houston and other parts of the country. He suggested that the Gulf Coast Freight Rail District, established by the Texas legislature in 2005, could serve as the operator of the short line railroad.

   The Gulf Coast Freight Rail District is a regional planning organization designed to reduce the impact of rail operations on mobility in the region by separating high-volume grade crossings from roads with bridges and making other track improvements to increase rail velocity. It doesn't have taxing authority, but is eligible to receive federal and state funding and contract infrastructure projects. The district, which represents the city of Houston, Harris County, other local governments and TxDOT, will identify rail project priorities and share the cost of upgrades with the railroads.

   Kornegay said the freight railroads have kept an open mind towards the concept during preliminary discussions.

   As for highway infrastructure funding, Kornegay echoed proposals to increase the gas and diesel tax to help fund the beleaguered federal Highway Trust Fund. And he again called for better equity in how funding is dispersed.

   Allocations to metro areas need to better reflect what is collected and the infrastructure needs in those areas, he said.

Source: American Shipper