•Thank you for inviting me to speak on the subject of the U.S. seaport industry and its relationship with dredging and short-sea shipping. But before we journey down that watery road, I’d like to tell you a little about my organization.

•As an international trade association, the American Association of Port Authorities, or AAPA, represents 150 of the leading public port authorities in the United States, Canada, Latin America and the Caribbean. Within the U.S., we have 85 port authority members, including all the major international ports and a number of inland ports that are sustaining members.

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

•Hemisphere-wide, AAPA also represents about 335 individuals, businesses and related organizations that support the port industry, ranging from insurance brokers and engineering firms to environmental consultants and security equipment providers.

• In addition to promoting the common interests of the seaport community, and providing leadership on trade, transportation, security and the environment, 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.

•For centuries, seaports have served as a vital economic lifeline for the movement of goods and services to people around the world.

•Seaports provide critical links to the global marketplace, connecting buyers and sellers with the goods they need at competitive prices.

•Modern, navigable seaports are vital to our economic prosperity. To handle all this cargo and cruise business efficiently, and to ensure prosperity, ports are constantly investing in their infrastructure, facilities, equipment and personnel.

•In 2008, Western Hemisphere seaports generated about $8.6 trillion of economic activity, supported the employment of tens of millions of people and handled more than 7.6 billion tons of imports and exports, including food, clothing, medicine, fuel, building materials, electronics and toys. This doesn’t include the millions of tons of domestic cargo moved in and out of these ports.

•In the U.S in 2007, our seaports generated nearly $3.2 trillion of economic activity, supported jobs for over 13 million workers who earned nearly $650 billion in wages and salaries, and moved more than 2 billion tons of domestic and international goods.

•Seaport-related businesses in the U.S. also paid in excess of $212 billion in federal, state and local taxes.

•U.S. ports also enabled more than 9 million Americans to take cruise vacations last year, supporting more than 350,000 cruise-related jobs and generating $38 billion in total economic output.

• The ports of Savannah, Charleston, Port Everglades, Jacksonville, Miami and Wilmington, N.C., are the leading tonnage ports in the U.S. Southeast. As you can see from this chart, the one port that has grown significantly since 2005 is the largest volume port … Savannah.

• However, the Southeast U.S. ports’ tonnage volumes reflect what is happening throughout the rest of the country.

• America's waterborne foreign trade in September continued its rebound from 2009’s abysmal lows. Though down from the preceding month, the September data reported by the U.S. Census Bureau show healthy tonnage increases from a year ago for imports and exports.

• January-September was the strongest tonnage quarter of 2010. Imports posted their seventh consecutive month of year-on-year growth, thanks in part to strong demand for crude petroleum, steel, and containerized merchandise, but remained below 2008 levels for the month, the quarter and the year.

• Steel imports through September amounted to 16.7 million tons, up from 10.7 million tons a year ago, but substantially below the 22.0 million ton average of the corresponding periods of 2005-09.

• Exports posted double-digit gains from a year ago and from September 2008.

• In 2009, according to Cruise Line International Association, the North American cruise lines, their employees and passengers generated $35.1 billion in gross output in the United States. That included 313,998 jobs paying a total of $14.23 billion in wages and salaries, and direct cruise industry spending totaled $17.15 billion, according to the report's findings.

• Fifteen ports accounted for 92% and Florida for 59% of the 8.9 million passengers who embarked on cruise ships in the United States in 2009. Direct spending increases in Massachusetts, Maine, Louisiana, Maryland and Alabama reflected increased cruise activity while Nevada and Arizona benefited thanks to increased numbers of residents taking cruises and increased direct cruise line spending.

• Declines in Hawaii and Alaska resulted from reduced capacity caused by the redeployment of cruise ships to other markets.

• The Panama Canal expansion is expected to be complete by 2014. This could have a huge impact on traffic all along the Atlantic and Gulf coasts.

• As seen in this map, most Asian trade currently enters through the West Coast and sent East. Experts expect some of this cargo to move to the East Coast once the canal widening is complete. There are only three ports on the East Coast that can currently handle that trade – New York, Baltimore and Norfolk.

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• A major development that is expected to impact vessel traffic and freight movements throughout the hemisphere is expansion of the Panama Canal, expected to be complete by 2014. This is causing ports, especially along the Gulf and East coasts, to consider the opportunities available to them for handling larger vessels and to make the case for deepening and widening their access channels to accommodate them.

• In order to streamline the permitting process for dredging, the U.S. needs to put into place a system that allows just one permit for all phases of a dredging project that now requires multiple permits. This would eliminate the time-consuming and inefficient process of getting sequential permits, similar to what has been instituted in the Jacksonville (Florida) District.

• Another needed reform is to expedite stand-alone port permits for dredging to ensure environmental “windows” are met, as well as “windows” for infrastructure improvements, which are often needed for terminal development, dock construction, etc.

• With the deployment of larger vessels via the Panama Canal after 2014, as well as the deployment of larger vessels via the Suez Canal, the ability of Atlantic and Gulf Coast ports to handle the larger vessels is critical. The larger vessels that will be deployed via the expanded Panama Canal and the Suez Canal will require a 48-50 foot channel depth when fully laden. This presents a serious constraint at many Atlantic and Gulf coast ports, as the majority of these ports that will compete for the new services consisting of larger container vessels do not have channel depths in this range. Currently, the ports of Baltimore, Norfolk and Miami are the only ones that have 50-foot channels. The Port of Miami has been authorized to deepen to 50 feet, while feasibility studies by the U.S. Army Corps of Engineers are currently underway at several Atlantic and Gulf Coast ports.

• The ability to handle the larger container vessels is critical to attract all-water services at the Atlantic and Gulf Coast ports. However, the U.S. Army Corps of Engineers is responsible for the selection of the ports at which channel deepening will occur. The current economic situation has severely limited the ability to fund the deepening projects, and the benefit-cost criteria by which the U.S. Army Corps of Engineers uses to rank the deepening projects has been criticized for its lack of consistency in its definition of benefits and costs. As a result, Atlantic and Gulf Coast ports at which channel deepening feasibility studies are now underway may not be able to receive the federal funding necessary to attract the larger ships deployed on the all-water services. This will result in a loss of potential economic impact to those regions in which these ports are located, due to the lack of federal funding for the deepening projects.

• America must rebuild and reinvent its transportation system. We have a 19th century rail network, a 20th century highway system, and we’re facing a 21st century transportation gridlock. Today, congestion costs this country $200 billion a year in lost productivity and fuel costs, while the emissions from those 2.9 billion gallons of wasted fuel add to our growing greenhouse gases inventory.

•Among the options to deal with this transportation dilemma is to utilize America’s system of ports to handle more domestic shipments. For example, to reduce traffic congestion in a corridor like I-95, some cargo coming into Port A—such as Jacksonville or Charleston—could be reloaded onto feeder vessels for shipment to Port B—such as Boston—and then be delivered to its final destination by truck or train.

•The now underused marine highway network of coastal, intracoastal and inland waterways could provide resilience and improve the environmental performance of the nation’s transportation system. Coastal shipping, which currently carries only 2% of America’s domestic goods, could complement, not compete with, trucking and rail. This is especially critical given current pressures on the trucking industry, such as rising fuel and equipment costs, and environmental restrictions in some ports.

•The Federal Highway Administration estimates that freight tonnage will be 70% higher in 2020 than its 1998 level. Increased landside congestion slows the pace of economic productivity and recovery.

•Rails and roads along most of America’s coastlines are at or beyond capacity. Making them better will be hugely expensive. The Society of Civil Engineers estimates that improving the nation’s surface transportation infrastructure would require $155.5 billion annually. The total price tag to shore up this failing system will cost trillions of dollars. As Congressman Weldon of Florida noted in April 2007, “we cannot pave our way out of this challenge.”

•On the Atlantic coast, Roll-on Roll-off (RoRo) ships, special vessels carrying truck trailers, seem particularly suited to the salt-water highway. Cargo would be driven aboard at the origin and driven ashore at the destination. Trucks would then engage in more profitable short-haul rather than long distance runs.

•On the Pacific coast, small container ships seem more appropriate to leapfrog crowded highways.

•For U.S. ports, the federal Harbor Maintenance Tax has long been an impediment to greater utilization of our nation’s waterways for domestic cargo movements. That’s because the 0.125% tax, which is assessed on cargo value, must be paid by importers and by domestic waterborne cargo shippers, although not by those who use landside transportation systems.

•The tax unfairly burdens coastal shipping because shallow draft coastal vessels don’t require port dredging.

•Furthermore, the domestic movement of containers accounts for only 0.2% of the total HMT collected, and the Harbor Maintenance Trust fund is running a $4 billion surplus that is expected to reach $8 billion by 2011.

•To provide a narrow exemption to the HMT for the movement of domestic containerized cargo and ferry traffic, Rep. Elijah Cummings (D-MD) in Spring 2007 introduced HR 1499, the Short-Sea Shipping Act.

•Since then, a host of similar bills have been introduced, such as HR 638, the Short-Sea Shipping Promotion Act of 2009, and HR 528, the Short-Sea Shipping Act of 2009.

•If enacted, they would eliminate the HMT on certain port-to-port cargo and clear the way for new coastwise and Great Lakes short-sea shipping services to be offered.

In addition to eliminating the HMT on port-to-port cargo to improve short-sea shipping opportunities, we need additional incentives to entice the shipping community to establish new services. Options include:

•Establishing a new program similar to the ferry boat discretionary program and encouraging more utilization of current federal programs - such as Congestion Mitigation and the Air Quality (CMAQ) Improvement Program—to fund projects for short sea shipping services.

•Establishing and providing federal incentives for using marine highway corridors.

•Developing expertise at the state/MPO level on marine highway alternatives/benefits.

•Reassessing federal shipbuilding programs to explore how they could support marine highway development.

•Providing tax credits for terminals and vessel operators, including “green” credits, to encourage development of new short-sea shipping infrastructure.

•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, including our marine highways, 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 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.