Maritime cargo has plummeted at U.S. ports depending on the type of shipment, with a 20 to 25 percent drop projected for containers and canceled-vessel calls hitting port authorities while tourism has “completely evaporated” as a result of COVID-19’s wide-reaching effects.
Chris Connor, president and CEO of the American Association of Port Authorities, told the House Transportation and Infrastructure Subcommittee on Coast Guard and Maritime Transportation at a hearing last week on the state of the maritime supply chain during the pandemic that small ports around the country — more than 800 emerging harbors processing less than a million tons of cargo per year — “have been especially hard hit.” Furloughs and layoffs across the port industry have followed.
“We’re also beginning to see that some ports are looking to forego planning for and investment in capital improvement projects. The implications of deferring or canceling investment or other capital improvement programs will be felt long after this pandemic and won’t bode well for American efficiency in logistics, nor its competitiveness in global markets,” Connor warned. “For ports, as for other industries, the future remains uncertain. At this stage in the pandemic, hopes for a quick V-shaped recovery have been replaced by the realization of a longer battle ahead.”
Economic output at U.S. coastal ports accounts for $5.4 trillion, or 26 percent of GDP, and more than 650,000 Americans are directly employed in jobs generated by maritime shipping.
Chairman Sean Patrick Maloney (D-N.Y.) noted that U.S. ports are projecting “a 20 to 30 percent drop in business,” while “some shipping trades are experiencing a 50 percent drop in cargo for the second quarter of 2020.”
“It is unclear what the U.S. maritime transportation system will face in the coming months and years,” he said. “What is clear is the need to maintain capacity across all maritime sectors. What may seem expensive now pales in comparison to the investment that would be needed to rebuild those industries from scratch.”
Ranking Member Bob Gibbs (R-Ohio) said that “like recent cyber attacks, the coronavirus response will pressure-test the post-9/11 port security and determine whether post-9/11 upgrades were sufficient to respond to the wide array of pressure ports and vessel operators now face, or if the upgrades were too specific a response to potential terrorist threats.”
“In addition to those external threats, there have been significant economic changes post-2008. Those changes are the result of the consolidation of container shipping into increasingly larger vessels owned and operated by ever fewer and more interconnected carriers,” he added. “In addition, the increasing technological sophistication of logistics operations has also led to tighter, more consolidated schedules, and, again, more interconnections within the industry.”
Maritime organizations have established protocols on preventing COVID-19 on ships and preventing its spread should a crew member become infected with the virus. “A cargo ship should never be quarantined. A mariner who is sick with COVID should be removed and given treatment as safely and quickly as possible,” said American Maritime Partnership president Michael Roberts. “The rest of the crew should safely come off the vessel and go to quarantine. The vessel should be thoroughly sanitized, a new crew brought in and then resume providing the essential services to the communities they serve.”
American Waterways Operators CEO Jennifer Carpenter noted that “a tow on the river or an articulated tug barge unit at sea is effectively self quarantined,” and company procedures to keep vessels coronavirus-free “include pre-screening crew members prior to boarding, modifying crew change procedures, minimizing non-essential contact between crew members and non-crew members, and more stringent vessel cleaning and decontamination procedures.”
“Our industry’s experience during COVID-19 has also underscored the importance of uniform federal laws and regulations governing vessels and interstate commerce,” Carpenter testified. “As state and local stay at home orders proliferated this spring, we could have experienced catastrophic disruption in the maritime supply chain. We didn’t. Largely because the federal government acted quickly to codify the status of maritime businesses and workers as essential critical infrastructure that needed to continue unfettered operations.”
National Association of Waterfront Employees president Lauren Brand highlighted four “significant” COVID-19 related challenges current experienced by her members: “taking care of waterfront workers, adjusting safety protocols while continuing terminal operations, rearranging terminal facilities to accommodate new needs, and maintaining liquidity.”
“Taking care of waterfront workers has been our first priority. Commercial supply chains for PPE and cleaning supplies are now in place. The rapid price increases experienced for PPE these past three months, frankly, was crippling,” she said. Ports are increasingly having to store stranded cargo and empty containers increasingly sit idle in yards.
“Certain COVID-related needs do remain unmet,” Brand continued. “The cost to ensuring that equipment and machinery are safe to use exceeds the cost of disinfectant. Added to this are safeguarded costs, such as conducting regular temperature checks for several thousand employees and visitors as they enter each terminal facility daily. No sector of freight is immune to the impact of COVID-19.”
As some cruise lines are planning to set sail again next month, marine terminal operators are “strategically planning to protect employees, waterfront workers, and the guests who will transit through terminals on their way to vacation,” she said.
Eric Ebeling, president and CEO of American Roll-On Roll-Off Carrier Group testifying on behalf of USA Maritime, underscored that COVID-19 “has devastated the cargo segments, thereby undermining the central tenet of the U.S.-flag international fleet.” U.S. flag carriers operating under the Maritime Security Program cannot access $17 billion set aside for defense contractors under the CARES Act.
Transportation and Infrastructure Committee Chairman Peter DeFazio (D-Ore.) said lawmakers are looking to develop with the Maritime Administration legislation with “specific emergency authority to allow it to provide financial relief and assistance to each link in the maritime supply chain that serves both foreign and coastwise in the U.S.”
“We need everything from PPE for port workers, and we’ve heard a good deal about that, to assistance to deal with the marine terminal operators. Business is way down. They can’t pay their rent. The ports can’t afford to not get the rent. I mean, it just works up and down the whole chain,” he said. “You know, harbor pilots, assist tugs, drayage operators, fuel bunkers. We can’t have them all go out of business. Can’t reconstitute this easily or quickly. So, you know, we have to deal with the totality of this industry, not a particular segment.”
Ebeling said Congress should consider an emergency stipend of $109.8 million through at least the end of this fiscal year “aimed at addressing the extraordinary costs for readiness that are being borne by MSP carriers.” Recapitalization of the Ready Reserve Force fleet should also be prioritized, he said, as these ships are an average of 45 years old with sealift readiness rates at only 59 percent.
The American Association of Port Authorities is lobbying for $1.5 billion in economic relief to be included in the next coronavirus emergency bill, to help ensure “seaports and port workers maintain a state of readiness for the eventual economic recovery.”
Carpenter urged lawmakers to support prioritized access to COVID-19 testing for mariners along with the safety measures in the Coast Guard authorization bill.