In the Pacific Northwest, two U.S. senators hope to streamline the port funding process in an effort to remain competitive with nearby Canadian counterparts.
Sens. Maria Cantwell (D-WA) and Patty Murray (D-WA) have introduced the Harbor Maintenance Trust Fund Reform Act of 2016 in an effort to spur more investment in ports both within their state of Washington and elsewhere in the U.S., according to a press release The legislation would change the way the Harbor Maintenance Tax (HMT) funds are spent each year. This, the senators hope, will help ports create more jobs and bolster trade to compete with other facilities in cities such as Vancouver.
"Ports are core job creators in Washington state, and the Harbor Maintenance Tax has threatened those jobs for 30 years by diverting cargo to Canadian ports. Sens. Murray and Cantwell have courageously introduced meaningful reforms that will help us compete more effectively," Connie Bacon, president of the Port of Tacoma commission, explained in the press release. "Thanks to their efforts, customers of The Northwest Seaport Alliance finally will get something for their money."
In the past, Cantwell and Murray have proposed other methods for increasing investment in U.S. ports – specifically, in their state, Tacoma and Seattle. They, along with Bacon and other supporters of the reform legislation, believe that the way funds are collected through the HMT are spent now does not benefit ports. Instead, they claim that the lack of proper investment leads shippers to divert their cargo north to Canadian terminals.
Shippers find Canadian ports more affordable
The U.S. dollar-to-Canadian dollar comparison is one reason why shippers find it more affordable to move their cargo through ports in Canada, in addition to an apparent lack of proper investment in U.S. counterparts. The Canadian National Railway stated that by moving goods over the border and shipping them out of Canadian terminals, shippers could save between $200 and $250, according to the Journal of Commerce. They would realize these savings through lower fees from marine terminals, ramping changes and rail loading, as well as less expensive container royalties.
The higher costs at U.S. ports are in part because the HMT they pay is not fully reinvested in their facilities, meaning they have to find other ways to collect funds. Cantwell and Murray hope that their proposed legislation will divert money back to ports that pay the tax, to ensure growth and assist in building a more welcoming environment for shippers.
"The Harbor Maintenance Trust Fund (HMTF) was intended to help maintain all of the country's ports," said Robert McEllrath, International President of the International Longshore and Warehouse Union (ILWU), in the press release. "Diverting those funds and not fully utilizing them hurts US ports and maritime jobs, which means less cargo crossing our docks and less work. Ports are critical economic drivers that support good paying, family wage jobs. The ILWU supports Sen. Murray and Sen. Cantwell's efforts to reform the HMTF, create an even playing field for U.S. ports, and protect and create maritime jobs."
Specific changes included in the senators' proposal
Sens. Cantwell and Murray's proposal would make several changes to the HMTF. The press release listed the reforms:
- Create a direct funding mechanism to fully utilize the HMTF with interest.
- Allow ports to provide rebates to shippers.
- Create a set-aside for donor ports to ensure that funds are maximized and distributed equitably.
- Establishing a permanent set-aside for smaller ports to support operation and maintenance.
"Simply put, the existing system is broken and putting Washington state ports at a competitive disadvantage," Sen. Murray stated in the press release. "This bill would be a critical step to support ports of all sizes, keep jobs in Washington and the Pacific Northwest, and fix this broken system. Ports in Tacoma and Seattle are critical to our state's economy, and we need to make sure we are doing what we can to encourage job growth and development in Washington state."
Washington's location in the Northwest corner of the U.S. places it in direct competition with Canadian ports. While right now, harbors to the north of the border offer more affordable services, the goal of the bill is to eventually reduce that cost gap through more efficient investment.