November 2021 | Commentary | Checking In

Unleash Short Sea?

Tags: Ocean, Legislation, Public Policy, and Regulations

Keith Biondo is the publisher of Inbound Logistics magazine.

The ports around the Great Lakes would love to help offset some of the pain of the horror show called the "shipping crisis." Guess what. They can't by law. Thank the Harbor Maintenance Fee (HMF), a well-intended policy perfect for the 1980s, along with related regulations, for sidelining port capacity around the Great Lakes.

The HMF was created by The Water Resource Act of 1986. The collected cash was to be used, in part, to dredge Great Lakes ports and harbors to make them more navigable. The fees were originally levied on any imports, exports, and cargo and passenger movements between domestic ports. The Supreme Court eventually found that taxes on exports were unconstitutional, but let stand taxes on domestic shipments.

The net result of the HMF on today's supply chain activity: The United States has port infrastructure bandwidth that is sidelined and unable to be utilized.

"There are 1,000 ports in the United States, including 25 fairly decent-sized ones in the Great Lakes, that can't help without some changes in legislative policy," says Dean Haen, port director, Port of Green Bay. "The HMF was a way to facilitate and pay for dredging. We're fully dredged now. But (the policy) needs to be tweaked because it's stopping ways to alleviate congestion and it's stopping commerce."

The outdated policy limits Great Lakes shipping of materials to one port only. If a container is moved from a ship to a barge in one port, then moved to a second port and unloaded there, the HMF is paid twice, significantly increasing transportation costs.

"The way the federal taxation works on these vessels, you get charged on the value of goods at each stop," explains Haen. "So if your goods don't get off until the third stop, you're taxed three times.

"The Great Lakes region is the third-largest economy if we were our own country, so there's a lot of manufacturing and consumption happening around the Great Lakes," he adds. "Yet all those goods that are being produced are moving to a coastal port, and other goods coming in to be consumed are also moving into coastal ports and then moved by truck or rail to the region.

"Think about the cost of building a highway or adding another lane—millions of dollars per mile," says Haen. "This water is already here, there are no infrastructure costs, and the docks are there."

Then there is the environmental impact of all those moves, as well as supporting the economies of the Midwest and other regions around the U.S. waterborne highway.

Altering historic transportation routes is not easy to do. Altering U.S. tax policy is really not easy. Is it time to look at all of our short sea shipping assets with an eye toward unleashing all that capacity?






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