U.S. ports have revised their initial outlook in March forecasting a quick “V-shaped” recovery in freight volumes and instead do not anticipate a turnaround this year.
That was the message relayed to lawmakers on Capitol Hill via the first-ever public teleconference hearing held by the House Transportation & Infrastructure Committee on Friday.
“At this stage in the pandemic, the hope for a quick recovery has been replaced by the realization of a longer battle ahead,” testified Association of American Port Authorities (AAPA) CEO Chris Connor. “Over time the reality and complexities of this pandemic have had a reality check for all of us, and we now project that this [volume downturn] is going to be with us at least through the end of 2020.”
Connor brought plenty of evidence to support his prognosis. Containerized cargo at U.S. ports declined 18% year-on-year for March, “with significant blank sailings resulting in revenue losses for port authorities,” he said. While not yet tallied, initial indications point to declines of 20%-25% year-on-year for April and May.
Connor also reported major declines in roll-on roll-off (ro/ro) cargos due to auto plant shutdowns. “One West Coast port has experienced a 90% reduction in ro/ro cargos, with only one or two ship calls expected this month compared to a typical average of four ship calls per week,” he asserted.
“Some ports are looking to forgo planning for and investment in capital improvement projects. The implications of deferring or canceling investment will be felt long after this pandemic, and won’t bode well for American efficiency and logistics, nor its competitiveness in global markets.”
Lauren Brand, who represents U.S. marine terminal operators and stevedores as president of the National Association of Waterfront Employers, testified on the effect the pandemic is having on exports. “A reduction in vessel calls to ports has resulted in higher-value cargos that pay the vessel operator more being loaded first, delaying the export of lower valued items.” She said storage of abandoned cargoes at West Coast port facilities, while currently only at 1.5%, is expected to grow.
“Envision 40,000 chocolate bunnies within just one container that should have been delivered for the Easter holiday,” Brand said. “Storage of stranded cargoes is increasing, requiring regular monitoring of units to ensure they’re handled correctly.” Examples of other stranded cargoes include parts for manufacturing facilities, summer fashions and automobiles, she said.
Earlier this month, AAPA announced it would seek $1.5 billion in maritime-specific relief to be included in any subsequent COVID-19 relief package and used the hearing as an opportunity to push its case.
“This request is not about recovering lost revenue, but ensuring that ports can make bond and other debt payments, keep pace with the accelerating cost of protecting workers, and ultimately ensuring that ports and port workers maintain a state of readiness for the eventual economic recovery,” Connor said.
Brand requested an additional $400 million in relief specifically to help ports and terminal operators pay for personal protective equipment. “Cleaning supplies and incidental changes made to facilities — separating people, social distancing — the things recommended by the CDC,” she said.
Transportation & Infrastructure Committee Chairman Peter DeFazio, D-Oregon, said he would be making the case with the House Appropriations Committee on the need for a COVID funding set-aside for ports and the maritime sector.
“We have to take action,” DeFazio warned during the hearing. “This is a critical part of America’s supply chain — it’s the most important component. Harbor pilots, assist tugs, drayage operators, fuel bunkers — it hurts up and down the whole chain. We can’t have them all go out of business.”
