    [House Hearing, 116 Congress]
    [From the U.S. Government Publishing Office]

           SHORT SEA SHIPPING: REBUILDING AMERICA'S MARITIME INDUSTRY

    =======================================================================

                                    (116-23)

                                    HEARING

                                   BEFORE THE

                                SUBCOMMITTEE ON
                    COAST GUARD AND MARITIME TRANSPORTATION

                                     OF THE

                                  COMMITTEE ON
                       TRANSPORTATION AND INFRASTRUCTURE
                            HOUSE OF REPRESENTATIVES

                         ONE HUNDRED SIXTEENTH CONGRESS

                                 FIRST SESSION

                                   __________

                                 JUNE 19, 2019

                                   __________

                           Printed for the use of the
                 Committee on Transportation and Infrastructure

     [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

         Available online at: https://www.govinfo.gov/committee/house-
         transportation?path=/browsecommittee/chamber/house/committee/
                                 transportation

                                   ______

                  U.S. GOVERNMENT PUBLISHING OFFICE
     39-742 PDF            WASHINGTON : 2020

                 COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE

                        PETER A. DeFAZIO, Oregon, Chair
    ELEANOR HOLMES NORTON,               SAM GRAVES, Missouri
      District of Columbia               DON YOUNG, Alaska
    EDDIE BERNICE JOHNSON, Texas         ERIC A. ``RICK'' CRAWFORD,
    ELIJAH E. CUMMINGS, Maryland             Arkansas
    RICK LARSEN, Washington              BOB GIBBS, Ohio
    GRACE F. NAPOLITANO, California      DANIEL WEBSTER, Florida
    DANIEL LIPINSKI, Illinois            THOMAS MASSIE, Kentucky
    STEVE COHEN, Tennessee               MARK MEADOWS, North Carolina
    ALBIO SIRES, New Jersey              SCOTT PERRY, Pennsylvania
    JOHN GARAMENDI, California           RODNEY DAVIS, Illinois
    HENRY C. ``HANK'' JOHNSON, Jr.,      ROB WOODALL, Georgia
        Georgia                          JOHN KATKO, New York
    ANDRE CARSON, Indiana                BRIAN BABIN, Texas
    DINA TITUS, Nevada                   GARRET GRAVES, Louisiana
    SEAN PATRICK MALONEY, New York       DAVID ROUZER, North Carolina
    JARED HUFFMAN, California            MIKE BOST, Illinois
    JULIA BROWNLEY, California           RANDY K. WEBER, Sr., Texas
    FREDERICA S. WILSON, Florida         DOUG LaMALFA, California
    DONALD M. PAYNE, Jr., New Jersey     BRUCE WESTERMAN, Arkansas
    ALAN S. LOWENTHAL, California        LLOYD SMUCKER, Pennsylvania
    MARK DeSAULNIER, California          PAUL MITCHELL, Michigan
    STACEY E. PLASKETT, Virgin Islands   BRIAN J. MAST, Florida
    STEPHEN F. LYNCH, Massachusetts      MIKE GALLAGHER, Wisconsin
    SALUD O. CARBAJAL, California, Vice  GARY J. PALMER, Alabama
        Chair                            BRIAN K. FITZPATRICK, Pennsylvania
    ANTHONY G. BROWN, Maryland           JENNIFFER GONZALEZ-COLON,
    ADRIANO ESPAILLAT, New York            Puerto Rico
    TOM MALINOWSKI, New Jersey           TROY BALDERSON, Ohio
    GREG STANTON, Arizona                ROSS SPANO, Florida
    DEBBIE MUCARSEL-POWELL, Florida      PETE STAUBER, Minnesota
    LIZZIE FLETCHER, Texas               CAROL D. MILLER, West Virginia
    COLIN Z. ALLRED, Texas               GREG PENCE, Indiana
    SHARICE DAVIDS, Kansas
    ABBY FINKENAUER, Iowa
    JESUS G. ``CHUY'' GARCIA, Illinois
    ANTONIO DELGADO, New York
    CHRIS PAPPAS, New Hampshire
    ANGIE CRAIG, Minnesota
    HARLEY ROUDA, California
                                    ------

            Subcommittee on Coast Guard and Maritime Transportation

                     SEAN PATRICK MALONEY, New York, Chair
    ELIJAH E. CUMMINGS, Maryland         BOB GIBBS, Ohio
    RICK LARSEN, Washington              DON YOUNG, Alaska
    STACEY E. PLASKETT, Virgin Islands   RANDY K. WEBER, Sr., Texas
    JOHN GARAMENDI, California           BRIAN J. MAST, Florida
    ALAN S. LOWENTHAL, California        MIKE GALLAGHER, Wisconsin
    ANTHONY G. BROWN, Maryland           CAROL D. MILLER, West Virginia
    CHRIS PAPPAS, New Hampshire, Vice    SAM GRAVES, Missouri (Ex Officio)
        Chair
    PETER A. DeFAZIO, Oregon (Ex
        Officio)
                                    CONTENTS

                                                                       Page

    Summary of Subject Matter........................................     v

                       STATEMENTS OF MEMBERS OF CONGRESS

    Hon. Sean Patrick Maloney, a Representative in Congress from the
      State of New York, and Chair, Subcommittee on Coast Guard and
      Maritime Transportation:

        Opening statement............................................     1
        Prepared statement...........................................     2
    Hon. Bob Gibbs, a Representative in Congress from the State of
      Ohio, and Ranking Member, Subcommittee on Coast Guard and
      Maritime Transportation:

        Opening statement............................................     3
        Prepared statement...........................................     3
    Hon. Peter A. DeFazio, a Representative in Congress from the
      State of Oregon, and Chair, Committee on Transportation and
      Infrastructure, prepared statement.............................    37
    Hon. Sam Graves, a Representative in Congress from the State of
      Missouri, and Ranking Member, Committee on Transportation and
      Infrastructure, prepared statement.............................    38

                                   WITNESSES
                                    Panel 1

    Rear Admiral Mark H. Buzby, U.S. Navy (Ret.), Administrator,
      Maritime Administration:

        Oral statement...............................................     4
        Prepared statement...........................................     5

                                    Panel 2

    Jonathan Nass, Chief Executive Officer, Maine Port Authority:

        Oral statement...............................................    17
        Prepared statement...........................................    19
    James Weakley, President, Lake Carriers' Association:

        Oral statement...............................................    20
        Prepared statement...........................................    21
    Larry I. Willis, President, Transportation Trades Department,
      AFL-CIO:

        Oral statement...............................................    25
        Prepared statement...........................................    27

                           SUBMISSIONS FOR THE RECORD

    Letter of June 19, 2019, from Percy R. Pyne, Chairman and CEO,
      Green Shipping Line, Submitted for the Record by Hon. Maloney..    32
    Statement of Kurt Nagle, President and CEO, American Association
      of Port Authorities, Submitted for the Record by Hon. Maloney..    38
    ``America's Marine Highways,'' Fact Sheet, Maritime
      Administration, Submitted for the Record by Hon. Maloney.......    40
    ``America's Marine Highway Program,'' Brochure, Maritime
      Administration, Submitted for the Record by Hon. Maloney.......    42

                                    APPENDIX

    Questions from Hon. Alan S. Lowenthal for Rear Admiral Mark H.
      Buzby, U.S. Navy (Ret.), Administrator, Maritime Administration    45
    Questions from Hon. Alan S. Lowenthal for Jonathan Nass, Chief
      Executive Officer, Maine Port Authority........................    46
    Questions from Hon. Bob Gibbs for James Weakley, President, Lake
      Carriers' Association..........................................    46

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                                 June 17, 2019

        SUMMARY OF SUBJECT MATTER

        TO:       Members, Subcommittee on Coast Guard and Maritime
    Transportation
        FROM:   Staff, Subcommittee on Coast Guard and Maritime
    Transportation
        RE:       Subcommittee Hearing on ``Short Sea Shipping:
    Rebuilding America's Maritime Industry''

                                    PURPOSE

        The Subcommittee on Coast Guard and Maritime Transportation
    will meet on Wednesday, June 19, 2019, at 2:00 p.m. in 2167
    Rayburn House Office Building to examine the state of short sea
    shipping in the United States. The Subcommittee will hear from
    the United States Maritime Administration, Maine Port
    Authority, Lake Carriers' Association, and Transportation
    Trades Department, AFL-CIO.

                                   BACKGROUND

        Short sea shipping (SSS) refers to the waterborne
    transportation of commercial freight between domestic ports
    (from one port in the Unites States to another port in the
    United States) through the use of inland and coastal waterways.
    Since vessels operating in SSS are required by the Jones Act to
    be built, owned, and crewed by United States citizens, an
    increased domestic trade would result in significant
    development for the U.S. maritime industry.
        The Department of Transportation's (DoT) Maritime
    Administration (MARAD) has determined that increased SSS would
    result in a number of ``public benefits'' \1\ including:
    ---------------------------------------------------------------------------
        \1\ See https://www.maritime.dot.gov/grants/marine-highways/marine-
    highway
    ---------------------------------------------------------------------------
          Creating and sustaining jobs on U.S. vessels and
    in U.S. ports and shipyards;
          Increasing the state of good repair of the U.S.
    transportation system by reducing maintenance costs from wear
    and tear on roads and bridges; \2\
    ---------------------------------------------------------------------------
        \2\ Francesca Medda & Lourdes Trujillo (2010) Short-sea shipping:
    an analysis of its determinants, Maritime Policy & Management, 37:3,
    285-303, DOI: 10.1080/03088831003700678
    ---------------------------------------------------------------------------
          Increasing the environmental sustainability of
    the U.S. transportation system by using less energy and
    reducing air emissions per ton-mile of freight moved; and
          Increasing national security by adding to the
    nation's strategic sealift resources.\3\
    ---------------------------------------------------------------------------
        \3\ Development of Short Sea Shipping: Hearing before the
    Subcommittee on Coast Guard and Maritime Transportation of the House
    Committee on Transportation and Infrastructure, 116th Congress. 2
    (2007) (Testimony of Sean Connaughton.
    ---------------------------------------------------------------------------
        An opportunity may exist to develop a new SSS policy that
    will promote the continued development of this method of
    transportation. While MARAD established the ``America's Marine
    Highway Program'' and a number of limited SSS services exist
    that take advantage of that resource, the system remains
    underutilized. For example, in Europe, shipping accounts for 37
    percent of intra-EU trade.\4\ Conversely, in the U.S., there
    are more than 25,000 miles of coastal, inland, and intracoastal
    waterways that move more than 1.4 billion tons of freight
    annually which represents approximately only 2 percent of the
    domestic freight.\5\ Despite their inherent efficiencies,
    domestic coastal and Great Lakes shipping carry barely half as
    much cargo today as they did in 1960.\6\
    ---------------------------------------------------------------------------
        \4\ See European Community Shipowners' Associations. Short Sea
    Shipping. https://www.ecsa.eu/sites/default/files/publications/
    ECSA_SSS_Download%201_0.pdf
        \5\ https://www.researchgate.net/publication/248989077_Short-
    sea_shipping_
    An_analysis_of_its_determinants
        \6\ See CRS R44831 Revitalizing Coastal Shipping for Domestic
    Commerce. May 2, 2017. https://crsreports.congress.gov/product/pdf/R/
    R44831
    ---------------------------------------------------------------------------
        The majority of water freight shipping systems in the U.S.
    operate on the Mississippi River, the Great Lakes, and the St.
    Lawrence Seaway, and typically transport bulk cargoes. Bulk
    cargo typically consists of commodities that are transported in
    large unpackaged quantities. SSS is one of the most cost-
    effective ways to move heavy, lower value, and non-time-
    sensitive freight (as SSS is a slower mode of transportation
    than truck, rail, or air). The types of vessels that could be
    utilized in new SSS trades include towing, small and medium
    cargo, and roll-on/roll-off vessels.

    POTENTIAL BENEFITS OF SSS

        Some of the potential benefits of SSS include:
          Improved Freight Mobility: The volume of freight
    transported in the U.S. is expected to continue increasing in
    the coming years. Also expected to increase is congestion on
    both our roadways (where trucks carry more than 70 percent of
    freight by weight) and our rail networks. Increased SSS
    capacity could offer freight shippers an additional
    transportation option and help alleviate increased surface
    congestion with less federal investment.
          Reduced Environmental Impact: Transportation on
    SSS vessels can have significant energy efficiencies over land-
    based modes of transportation. On average, trucks can carry one
    ton of freight approximately 145 miles on a gallon of diesel
    fuel and rail achieves 477 ton-miles per gallon. Meanwhile, a
    tug and barge operation can get as much as 647 ton-miles of
    freight to a gallon of fuel and self-propelled vessels may
    achieve an even greater rate of energy efficiency.\7\ Shifting
    freight traffic to waterborne commerce can reduce associated
    vehicle emissions and improve air quality.\8\
    ---------------------------------------------------------------------------
        \7\ Texas Transportation Institute, Center for Ports and Waterways,
    A Modal Comparison of Domestic Freight Transportation Effects on the
    General Public: 2001-2014, prepared for the National Waterways
    Foundation, January 2017, p. 7.
        \8\ Mulligan, Robert F. and Lombardo, Gary A., Short Sea Shipping:
    Alleviating the Environmental Impact of Economic Growth. World Maritime
    University Journal of Maritime Affairs, Vol. 5, No. 2, pp. 55-70, 2006.
    Available at SSRN: https://ssrn.com/abstract=1028845
    ---------------------------------------------------------------------------
          Increasing Mariner Jobs: As the U.S.-flagged
    international fleet has declined, MARAD has identified a
    shortage of 1,800 mariners. That shortage has a direct negative
    effect on the Department of Defense's (DoD) readiness.
    Increasing the number of small and mid-sized vessels operating
    in the domestic trades would provide additional platforms on
    which American mariners can work. Additional opportunities for
    maritime employment would grow the pool of mariners available
    for military sealift.
          Increased Shipbuilding Capacity: Under current
    law, vessels carrying cargo between U.S. ports are required to
    be owned, crewed, and built by United States citizens. SSS
    vessel construction and repair in U.S. shipyards would help to
    assure the DoD's access to skilled shipbuilding workers and
    facilities and promote job creation in the commercial
    shipbuilding sector.

    POTENTIAL IMPEDIMENTS TO SSS

        Factors that could limit the development of SSS include:
          Duplicated Harbor Maintenance Tax: As reported by
    the Congressional Research Service (CRS) the Harbor Maintenance
    Tax (HMT) is a levy placed on the value of cargo that is
    imported to a port within the United States or that is
    transported between two U.S. ports. The levy is assessed at a
    rate of 0.125 percent of the value of the cargo. The tax is
    assessed only once on cargo that is transported between one
    U.S. port to another; however, cargo that is carried from a
    foreign port may be taxed twice--once upon arrival at the
    initial U.S. port, and again if transported aboard a different
    vessel to another U.S. port. CRS concluded that the tax
    discourages domestic water shipment of import and export
    containers.\9\ CRS also noted the tax could be particularly
    cumbersome for domestic vessel operators carrying containers of
    mixed cargo assembled by consolidators, because these typically
    hold shipments from multiple customers.
    ---------------------------------------------------------------------------
        \9\ See CRS R41590, Can Marine Highways Deliver?, January 14 2011.
    ---------------------------------------------------------------------------
          Shipper Reluctance: There exists a general
    reluctance among freight shippers to try new, relatively
    unproven, modes of transportation. Many shippers rely on trucks
    or trains because they are known modes, and consequently, they
    may be reluctant to utilize SSS even if it is marginally more
    cost effective.
          Ship Financing: It is difficult for potential
    shipbuilders to secure financing for new ship construction if
    they do not have freight contracts in place. Freight and
    logistics companies are often unwilling to enter into those
    contracts for a service that has not proven itself and at a
    cost that cannot be specified before the ship is delivered from
    a shipyard and placed into service. To help overcome ship
    financing barriers, SSS proponents have advocated allowing the
    Capital Construction Fund (CCF) program to be used for SSS. The
    CCF is a tax-deferred program that allows ship owners to defer
    Federal income taxes on their deposits as long as the
    withdrawals are used to build ships in a U.S. shipyard (similar
    to an IRA for ship owners). Others have recommended increased
    use and funding of MARAD's Title XI loan guarantee program
    under which the Federal Government will guarantee the mortgage
    of a ship owner for up to 30 years.
          Insufficient Port Facilities: Currently, major
    container ports are built to service large, ocean-going
    vessels. It is likely any additional cargo that would enter the
    Marine Highway System would enter at these ports which are
    equipped with large cranes to service large container ships. An
    expansion of SSS may require the construction of right-sized
    infrastructure that can service SSS vessels, many of which may
    utilize Roll-on/Roll-off technology (meaning that cargo can be
    driven or pushed on and off the vessel) rather than crane
    technology. Additional infrastructure investments may be
    necessary in smaller ports to ensure their ability to receive
    SSS cargoes.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

     Figure 1--America's Marine Highway Program, Maritime Administration.
     Designation of these Marine Highway Routes is the first step towards
    reducing landside congestion by focusing public and private efforts on
        increasing the amount of cargoes and passengers transported on
      commercially navigable waterways. See https://www.maritime.dot.gov/
                     grants/marine-highways/marine-highway.

    FEDERAL INVOLVEMENT

        Congress established America's Marine Highway Program
    (AMHP) at MARAD in 2007 in order to reduce landside congestion
    through the designation of Marine Highway Routes. In 2012,
    Congress expanded the scope of the program to provide support
    for projects that generate public benefits by utilizing Marine
    Highway Routes. Though the AMHP has existed for over a decade
    and a number of projects have been designated as SSS routes,
    the system remains underutilized. The Consolidated
    Appropriations Act of 2019, signed by the President on February
    15, 2019, provided $7,000,000 for the AMHP to be used for
    Marine Highway Grants for the development and expansion of
    documented vessels, and port and landside infrastructure.
        The AMHP currently includes 25 all-water Marine Highway
    Routes that serve as extensions to the surface transportation
    system.\10\ Routes are designated by the Secretary of
    Transportation because they can offer relief to traffic
    congestion on landside corridors, address excessive air
    emissions, or other environmental concerns and challenges, or
    provide new transportation options.
    ---------------------------------------------------------------------------
        \10\ See https://www.maritime.dot.gov/grants/marine-highways/
    marine-highway
    ---------------------------------------------------------------------------
        MARAD identifies specific SSS opportunities through the
    Office of Marine Highways. Every 6 months, MARAD reviews
    applications and designates new Marine Highway Projects. SSS
    operators can receive designation through the Office of Marine
    Highways if their proposal has the potential to offer public
    benefits and long-term sustainability without long-term Federal
    support. Once a project has been received designation as a
    Marine Highway Project, it receives preferential treatment for
    Marine Highway Grants or any future federal assistance from the
    DoT and MARAD.
        MARAD released its last report on the AMHP in April 2011,
    where it summarized the motivations behind the Program and
    federal support required to capture environmental, economic,
    and security benefits of the Program in addition to steps for
    implementation.\11\ The program can work in conjunction with
    other MARAD grants to improve port and terminal intermodal
    infrastructure, as well as in collaboration with the
    Environmental Protection Agency's SmartWay and Clean Ports
    initiatives.
    ---------------------------------------------------------------------------
        \11\ See https://www.maritime.dot.gov/sites/marad.dot.gov/files/
    docs/intermodal-systems/marine-highways/3051/
    maradamhreporttocongress.pdf. The report also includes recommendations
    for leveraging the program through paired grants.
    ---------------------------------------------------------------------------
        While MARAD issued grants totaling $7 million in 2010, the
    AMHP has not provided the investment, incentives, or assistance
    needed to jumpstart a robust SSS industry. In 2016 and 2017 the
    Program received $5 million from Congress and another $7
    million in 2018.

                                  WITNESS LIST

    PANEL I

          Rear Admiral Mark H. Buzby, USN, Ret.,
    Administrator, Maritime Administration

    PANEL II

          Mr. Jon Nass, Chief Executive Officer, Maine Port
    Authority
          Mr. James Weakley, President, Lake Carriers'
    Association
          Mr. Larry Willis, President, Transportation
    Trades Department, AFL-CIO

           SHORT SEA SHIPPING: REBUILDING AMERICA'S MARITIME INDUSTRY

                                  ----------

                            WEDNESDAY, JUNE 19, 2019

                      House of Representatives,
              Subcommittee on Coast Guard and Maritime
                                        Transportation,
                Committee on Transportation and Infrastructure,
                                                        Washington, DC.
        The subcommittee met, pursuant to call, at 3:18 p.m., in
    room 2167, Rayburn House Office Building, Hon. Sean Patrick
    Maloney (Chairman of the subcommittee) presiding.
        Mr. Maloney. The subcommittee will come to order. I ask
    unanimous consent that the Chair be authorized to declare a
    recess during today's hearing. Without objection, so ordered.
        Good afternoon. Welcome to today's hearing on short sea
    shipping. I do apologize to our witnesses, the Members have
    been detained by votes on the House floor, which just concluded
    moments ago, so we apologize for keeping you all waiting. It
    was unavoidable, unfortunately.
        So on March 6, the subcommittee examined the state of the
    maritime industry. In that hearing, the Maritime Administrator
    and industry representatives repeated a common message: When it
    comes to growing the American maritime industry, cargo is king.
        Now, if you have driven on I-95 recently, you know full
    well that there is an excess of cargo and, therefore, traffic,
    on our roads. By 2045, truck freight volume is expected to grow
    by 43 percent, which without major infrastructure improvements,
    will further clog our roads and highways. This increased
    traffic would be significantly alleviated if we shifted cargo
    to our waterways through short sea shipping.
        Short sea shipping is the waterborne transportation of
    commercial freight between domestic ports through inland and
    coastal waterways. While our friends in Europe have placed
    short sea shipping at the center of their transportation
    policies, moving over 40 percent of all European freight on
    oceans and inland rivers, we have failed to leverage our
    existing programs to provide additional support for our
    domestic shipping industry. An invigorated short sea shipping
    industry would not only increase the state of good repair of
    the U.S. roads and bridges by reducing maintenance costs from
    wear and tear and improve air quality and emissions, but it
    would also help to address the critical shortage in our
    merchant mariner workforce.
        Administrator Buzby and other Government officials have
    repeatedly stated that we have 1,800 fewer mariners than what
    is needed to address America's sealift needs. That gap would
    quickly begin to close if we fully utilized America's marine
    highway and began shipping cargo on coastwise ships.
        In order to rigorously promote short sea shipping, we must
    develop a national multimodal transportation and infrastructure
    plan that prominently features maritime transportation. The
    Maritime Administration claims to be working to maintain the
    health of the merchant marine, yet in the 5 years since
    Congress tasked MARAD with the development of a comprehensive
    maritime strategy, we have seen little movement to create a
    comprehensive plan to promote short sea shipping.
        So I look forward to hearing from Admiral Buzby on the
    status of that strategy, particularly as it pertains to short
    sea shipping. I also look forward to hearing from our civilian
    panel on the benefits of short sea shipping, the status of
    projects that currently exist, and what Congress and the
    administration can be doing to advance the use of marine
    highways.
        Now I would call on the ranking member, Mr. Gibbs, for his
    opening remarks.
        [Mr. Maloney's prepared statement follows:]

     Prepared Statement of Hon. Sean Patrick Maloney, a Representative in
     Congress from the State of New York, and Chair, Subcommittee on Coast
                       Guard and Maritime Transportation
        Good afternoon and welcome to today's hearing on Short Sea
    Shipping. On March 6th, the Subcommittee examined the ``State of the
    Maritime Industry.'' In that hearing, the Maritime Administrator and
    industry representatives repeated a common message--when it comes to
    growing the American maritime industry, ``cargo is king.''
        If you've driven on Interstate 95 recently you know full well that
    there is an excess of cargo, and therefore traffic, on our roads. By
    2045 truck freight volume is expected to grow by 43 percent which,
    without major infrastructure investments, will further clog our roads
    and highways. This increased traffic would be significantly alleviated
    if we shifted cargo to our waterways through Short Sea Shipping.
        Short Sea Shipping is the waterborne transportation of commercial
    freight between domestic ports through inland and coastal waterways.
    While our friends in Europe have placed Short Sea Shipping at the
    center of their transportation policies, moving over 40 percent of all
    European freight on oceans and inland rivers, we have failed to
    leverage our existing programs or provide additional support for our
    domestic shipping industry.
        An invigorated Short Sea Shipping industry would not only increase
    the state of good repair of the U.S. roads and bridges by reducing
    maintenance costs from wear and tear and improve air quality and
    emissions, but would help to address the critical shortage in our
    merchant mariner workforce. Administrator Buzby and other government
    officials have repeatedly stated that we have 1,800 fewer mariners than
    what is needed to address America's sealift needs. That gap would
    quickly begin to close if we fully utilized America's marine highways
    and began shipping cargo on coastwise ships.
        In order to rigorously promote Short Sea Shipping, we must develop
    a national multi-modal transportation and infrastructure plan that
    prominently features maritime transportation. The Maritime
    Administration claims to be working to maintain the health of the
    merchant marine. Yet in the 5 years since Congress tasked MARAD with
    the development of a comprehensive maritime strategy we have seen
    little movement to create a comprehensive plan to promote Short Sea
    Shipping. I look forward to hearing from Admiral Buzby on the status of
    that strategy, particularly as it pertains to Short Sea Shipping. I
    also look forward to hearing from our civilian panel on the benefits of
    Short Sea Shipping, the status of projects that currently exist, and
    what Congress and the Administration can be doing to advance the use of
    marine highways.

        Mr. Gibbs. Thank you, Chairman.
        Increased use of waterborne transportation of commercial
    freight between domestic U.S. ports--short sea shipping--could
    expand the limited and increasingly crowded freight
    transportation capacity of the Nation's rail and road system
    without the need for large additional public investments.
    Historically, freight has been moved by water in the United
    States, and a large portion of bulk shipments still move by
    water. Increased availability of trains and trucks have reduced
    the usage of water transportation for movement of higher value
    freight.
        Water is far and away the most fuel efficient way to move
    freight, but since it is geographically confined by where there
    is water, it is limited in its ability to get goods to the
    ultimate destination, the last-mile problem, and every loading,
    unloading, and reloading of freight adds expense and time
    delays.
        Increased freight volumes, limited dollars to invest in new
    infrastructure, increased road congestion, and increased
    interest in reducing air emissions have also been cited in
    recent years as reasons that short sea shipping should be
    examined as an alternative source of added transportation
    capacity. However, movement of container freight on America's
    waterways has not increased. The reasons given include the
    configuration of large ports to handle large vessels, a
    reluctance of freight shippers to move to new modes of
    transportation, and the difficulty for potential shipbuilders
    to secure financing for new ship construction if they do not
    have freight contracts in place to prove that they can pay off
    the vessels' mortgages.
        In 2007, Congress established a short sea transportation
    program to promote the domestic transportation of freight by
    water. I look forward to hearing from the witnesses today about
    whether that program has worked and what additional public or
    private actions can be taken to promote such transportation.
        Mr. Chairman, I look forward to the hearing today, and I
    yield back.
        [Mr. Gibbs's prepared statement follows:]

    Prepared Statement of Hon. Bob Gibbs, a Representative in Congress from
    the State of Ohio, and Ranking Member, Subcommittee on Coast Guard and
                            Maritime Transportation
        Increased use of waterborne transportation of commercial freight
    between domestic U.S. ports--short sea shipping--could expand the
    limited, and increasingly crowded, freight transportation capacity of
    the Nation's rail and road system without large additional public
    investment.
        Historically, freight moved by water in the United States, while a
    large portion of bulk shipments still move by water. Increased
    availability of trains and trucks have reduced the water movement of
    higher value freight.
        Water is far and away the most fuel efficient way to move freight,
    but since it is geographically confined, it is limited in its ability
    to get goods to their ultimate destination, the last mile problem, and
    every loading, unloading and reloading of the freight adds expense and
    time delays.
        Increased freight volumes, limited dollars to invest in new
    infrastructure, increased road congestion, and increased interest in
    reducing air emissions have all been cited in recent years as reasons
    that short sea shipping should be examined as an alternative source of
    added transportation capacity.
        However, movement of container freight on America's waterways has
    not increased. Reasons given include, configuration of large ports to
    handle large vessels; the reluctance of freight shippers to move to new
    modes transportation; and, the difficulty for potential shipbuilders to
    secure financing for new ship construction if they do not have freight
    contracts in place to prove that they can pay off the vessel's
    mortgages.
        In 2007, Congress established the Short Sea Transportation program
    to promote the domestic transportation of freight by water. I look
    forward to hearing from the witnesses today about whether that program
    has worked, and what additional public or private actions can be taken
    to promote such transportation.

        Mr. Maloney. I thank the gentleman.
        I would like to welcome the witness on our first panel,
    Rear Admiral Mark H. Buzby, Administrator of the Maritime
    Administration.
        Thank you for being here today, sir. I look forward to your
    testimony.
        Without objection, our witness' full statement will be
    included in the record.
        Since your written testimony has been made part of the
    record, sir, the subcommittee requests that you limit your oral
    testimony to 5 minutes. Thank you for being here. You may
    proceed.

      TESTIMONY OF REAR ADMIRAL MARK H. BUZBY, U.S. NAVY (RET.),
                 ADMINISTRATOR, MARITIME ADMINISTRATION

        Admiral Buzby. Right. Thank you.
        Good afternoon, Chairman Maloney, Ranking Member Gibbs,
    members of the subcommittee, I appreciate the opportunity to
    testify this afternoon on the Maritime Administration's efforts
    to foster, promote, and develop short sea shipping through
    America's Maritime Highway Program. The marine highway system
    consists of our Nation's navigable waterways, including rivers,
    bays, channels, the Great Lakes, St. Lawrence Seaway System,
    coastal and open ocean routes.
        As established by Congress, America's Marine Highway
    Program aims to reduce road congestion, emissions, conserve
    energy, improve safety, and reduce landside infrastructure
    costs. Marine transport of goods offers a safe and efficient
    option for shippers. One study estimates that in 2014,
    congestion on our roads, bridges, railways, and in ports cost
    the United States as much as $160 billion; trucks accounting
    for $28 billion of this cost. Overall, the volume of imports
    and exports transported by our freight system is expected to
    more than double over the next 30 years. This will have an
    implication for ports which handle approximately 70 percent of
    America's international trade by volume. Expanding existing or
    establishing new marine highway services on commercially
    navigable waterways is a cost-effective way to meet some of our
    freight transportation needs and relieve landside congestion.
        America's Marine Highway Program designates routes and
    projects and provides grant funding. As of this month, DOT has
    designated 25 marine highway routes compromising a significant
    portion of our navigable waterways. A semiannual call for
    projects helps to identify concepts for new or expansion of
    existing marine highway services that have the potential to
    offer public benefits and long-term sustainability without
    long-term financial support from the Federal Government. To
    date, DOT has awarded $24 million in competitive marine highway
    grants, supporting at least six new and two existing marine
    highway services. America's Marine Highway Program grant-funded
    services moved 35,215 20-foot equivalent units, or TEUs, in
    fiscal year 2016 by water, saving an estimated $1.5 million in
    road maintenance and congestion costs. These savings were from
    the M-64 Express Marine Highway Service, running between
    Hampton Roads and Richmond, Virginia, the only grant-funded
    marine highway service operating in the United States at that
    time.
        In fiscal year 2017, savings calculations were estimated at
    $3.6 million and increased to more than $4.9 million in fiscal
    year 2018; a result of a new Baton Rouge to New Orleans service
    and a New York Cross Harbor service. While the numbers may be
    small relative to the initial grant, the equipment will operate
    for decades, in most cases, and the reductions in
    infrastructure damage, emissions, and fatalities will be felt
    for years. We are considering specific ways the Maritime
    Administration can maximize America's highway benefits,
    particularly using our marine highways to move Federal cargo.
    We are also exploring partnerships with the EPA Smart Way
    program and other such programs to tout the efficiencies of
    utilizing the marine highway system.
        Finally, the Maritime Administration has been proactive in
    engaging with local and regional officials and private
    entrepreneurs in analyzing specific logistical challenges where
    a waterborne solution may offer the best and most sustainable
    approach.
        We are proud of the effect that the America's Maritime
    Highway Program has had in support of the Jones Act, and are
    excited about the momentum it is building in such a short
    period of time, but we are not done. We believe that continued
    expansion of the use of marine highways can greatly benefit the
    marine industry generally, while reducing road traffic and
    emissions and landside infrastructure costs.
        Thank you for the opportunity to testify this afternoon,
    and I look forward to your questions.
        [Admiral Buzby's prepared statement follows:]

      Prepared Statement of Rear Admiral Mark H. Buzby, U.S. Navy (Ret.),
                     Administrator, Maritime Administration
        Good afternoon, Chairman Maloney, Ranking Member Gibbs and members
    of the Subcommittee. I appreciate the opportunity to testify today on
    the Maritime Administration's (MARAD) efforts to foster, promote and
    develop short sea shipping in the United States through the America's
    Marine Highway Program (AMHP).
        The Marine Highway System consists of our Nation's navigable
    waterways including rivers, bays, channels, the Great Lakes, the Saint
    Lawrence Seaway System, coastal, and certain open-ocean routes. These
    navigable waterways touch 38 states plus the District of Columbia and
    Puerto Rico. The purpose of the AMHP is to further incorporate these
    waterways into the overall U.S. transportation system, especially where
    marine transportation services are the most efficient, effective, and
    sustainable transportation option.
        Congress established the AMHP through the Energy Independence and
    Security Act of 2007, P.L. 110-140. Recognizing the potential in the
    program, in following years Congress expanded and modified the program.
    The Coast Guard and Maritime Transportation Act of 2012, P.L. 112-213,
    expanded the program to include efforts to increase the utilization and
    efficiency of domestic freight and passenger transportation on Marine
    Highway Routes between U.S. ports. The National Defense Authorization
    Act of Fiscal Year 2016, P.L. 114-92, broadened the definition of short
    sea shipping to include more kinds of cargo and cargo or freight
    vehicles carried aboard commuter ferry boats.
                purposes of the america's marine highway program
        The AMHP is intended to, among other things, reduce travel delays
    caused by congestion, cut greenhouse gas emissions, conserve energy,
    improve safety, and reduce landside infrastructure costs. Marine
    transport of goods offers a safe and efficient option for shippers as
    reflected in the tables below: \1\
    ---------------------------------------------------------------------------
        \1\ Tables created from data in, A Modal Comparison of Domestic
    Freight Transportation Effects on the General Public, Texas
    Transportation Institute, Center for Ports and Waterways, as amended
    (2017): http://nationalwaterwaysfoundation.org/documents/
    Final%20TTI%20Report
    %202001-2014%20Approved.pdf

    ----------------------------------------------------------------------------------------------------------------
                     Emissions                                 Safety                        Fuel Efficiency
    ----------------------------------------------------------------------------------------------------------------
                                        Tons of
                                          GHG/                            Ratio of
                   Mode                 Million           Mode          Fatalities/          Mode          Ton-Miles/
                                          Ton-                          Million Ton-                         Gallon
                                         Miles                             Miles
    ----------------------------------------------------------------------------------------------------------------
    Barge.............................  15.6     Barge................       1       Barge...............        647
    ----------------------------------------------------------------------------------------------------------------
    Railroads.........................  21.2     Railroads............    21.9       Railroads...........        447
    ----------------------------------------------------------------------------------------------------------------
    Truck.............................  154.1    Truck................    79.3       Truck...............        145
    ----------------------------------------------------------------------------------------------------------------

        Congestion on our surface transportation system significantly
    impacts our economic prosperity and quality of life. One study
    estimates that in 2014 congestion cost America's urban commuters an
    estimated $160 billion in wasted time and fuel; trucks account for $28
    billion of this cost.\2\ Overall, the volume of imports and exports
    transported by our freight system is expected to more than double over
    the next 30 years. This will have implications for ports, which handle
    approximately 70 percent of America's international trade by volume.\3\
    Most of this additional cargo will ultimately move along our surface
    transportation corridors, many of which are currently at or beyond
    capacity.
    ---------------------------------------------------------------------------
        \2\ 2015 Urban Mobility Scorecard, Texas A&M Transportation
    Institute and INRIX (2015), 2015 Urban Mobility Scorecard [https://
    d2dtl5nnlpfr0r.cloudfront.net/tti.tamu.edu/documents/mobility-
    scorecard-2015.pdf].
        \3\ BTS Freight Facts and Figures 2016, Figure 2-9, BTS Freight
    Facts and Figures 2016 [https://www.bts.gov/bts-publications/freight-
    facts-and-figures/freight-facts-figures-2017-chapter-2-freight-moved].
    ---------------------------------------------------------------------------
        Expanding existing or establishing new marine highway services on
    commercially navigable waterways is a cost-effective way to meet our
    freight transportation needs and relieve landside congestion.
        The AMHP consists of three elements: Route designation, project
    designation, and grants.
                             marine highway routes
        Marine Highway Routes are commercially navigable coastal, inland,
    and intracoastal waters of the United States as designated by the
    Secretary. This includes connections between U.S. ports and Canadian
    ports on the Great Lakes-Saint Lawrence Seaway System, and non-
    contiguous U.S. ports. Marine Highway Routes are a component of the
    Nation's surface transportation system. Public entities may apply to
    MARAD at any time to request that the Secretary of Transportation
    designate (i.e., establish) a Marine Highway Route. To be eligible for
    designation, at a minimum a route must relieve landside congestion
    along coastal corridors or promote short sea transportation, as well as
    meet AMHP objectives described in regulations.\4\ As of this month, DOT
    has designated 25 Marine Highway Routes comprising a significant
    portion of our navigable waterways.\5\ The Marine Highway Routes are
    numbered akin to the interstate highways that they generally parallel.
    The latest route to be designated, the M-H1, are the waters in and
    around Hawaii.
    ---------------------------------------------------------------------------
        \4\ 46 CFR 393.2
        \5\ See attachment 1.
    ---------------------------------------------------------------------------
                            marine highway projects
        Marine Highway Projects are planned or contemplated new services,
    or expansions of existing services, on designated Marine Highway
    Routes, that seek to provide new modal choices to shippers, reduce
    transportation costs, and/or provide public benefits, which include
    reduced air emissions, reduced road maintenance costs, and improved
    safety and resiliency impacts. These projects represent concepts for
    new, or expansion of existing, marine highway services that have the
    potential to offer public benefits and long-term sustainability without
    long-term Federal support. The desired outcome is that designated
    projects will help start new businesses or expand existing ones to move
    more freight or passengers along America's navigable coastal, inland,
    and intra-coastal waters. The AMHP publicizes a semi-annual ``Call for
    Projects.'' In response, applicants propose projects and the Secretary
    of Transportation may designate qualified projects as ``Marine Highway
    Projects.''
                             marine highway grants
        Competitive grants form the third component of the AMHP. Only
    Marine Highway Projects designated by the Secretary are eligible to
    apply for Marine Highway Grants. Grantees may use the funds to develop
    and expand the availability of documented vessels and port and landside
    infrastructure. Only projects the Secretary designates are eligible to
    apply for Marine Highway Grants. Either the grant applicant, or private
    entities with endorsement by the applicant, are eligible to apply for
    grant funding. There are currently 25 designated projects.\6\
    ---------------------------------------------------------------------------
        \6\ See attachment 2.
    ---------------------------------------------------------------------------
        To date, DOT has awarded $24 million in Marine Highway Grants
    supporting six new and two existing marine highway services. In two
    instances, we funded vessel construction. In another case, interest
    from users on the inland waterways spurred Taylor Manufacturing of
    Louisville, MS, to engineer a ``negative drop'' reach-stacker used to
    load containers into river hopper barges; that equipment had previously
    only been available from foreign sources.
        The AMHP is clearly having an impact. Metrics we gather to measure
    that impact include the number of truck road miles that have been
    eliminated. Using Federal Highway Administration formulas, MARAD
    estimates the public benefits of funded projects in dollars. In FY 2016
    AMHP grant-funded services moved 35,215 twenty-foot equivalent units
    (TEUs) by water saving approximately $1.5 million in road maintenance
    and congestion costs. These savings were from the M-64 Express Marine
    Highway Service, running between Hampton Roads and Richmond, Virginia,
    the only grant funded marine highway service operating in the United
    States at that time. That number has continued to increase. In FY 2017
    savings calculations were an estimated $3.6 million and increased to
    more than $4.9 million in FY 2018. This positive momentum is a result
    of additional new services being added: the Baton Rouge to New Orleans
    Service and the New York Cross Harbor Service. While the numbers may be
    small relative to the initial grant, the equipment will operate for
    decades in most cases, and the reductions in infrastructure damage,
    emissions, and fatalities will be felt for years.
     actions that could expand the america's marine highway program's reach
        We manage the AMHP with an eye toward innovation and constant
    improvement. To that end, we are considering specific ways MARAD can
    maximize the program's effects. First, we are exploring opportunities
    with other Federal entities to transport federally-owned or generated
    cargo using a short sea transportation project when practical or
    available. We are also exploring partnerships with the EPA's Ports
    Initiative and Smart Way Programs, and other such programs, to tout the
    efficiencies and environmental benefits of utilizing the Marine Highway
    System. Finally, MARAD has been proactive in engaging with local and
    regional officials, and private entrepreneurs, in analyzing specific
    logistical challenges where a waterborne solution may offer the best
    and most sustainable approach.
                                   conclusion
        We are proud of the effect that the AMHP has had and are excited
    about the momentum it is building in the interest of national security,
    economic success, and the lives of the American people, but we are not
    done. We will continue to support innovation through the AMHP.
        Mr. Chairman, thank you for the opportunity to discuss the AMHP and
    MARAD's efforts to expand short sea shipping opportunities. I
    appreciate the Subcommittee's continuing support for maritime programs
    and I look forward to working with you on advancing maritime
    transportation in the United States. I will be happy to respond to any
    questions you and the members of the Subcommittee may have.
                                  attachment 1

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                                  attachment 2

                   List of Designated Marine Highway Projects
    ------------------------------------------------------------------------
                                                                   Marine
                  Project Name                Date Established     Highway
    ------------------------------------------------------------------------
    New England Marine Highway Expansion                 2010          M-95
     Project................................
    ------------------------------------------------------------------------
    James River Container Expansion Project.             2010          M-64
    ------------------------------------------------------------------------
    Trans-Hudson Freight Connector Project..             2010          M-95
    ------------------------------------------------------------------------
    Tenn-Tom Freight Project................             2010          M-65
    ------------------------------------------------------------------------
    Detroit/Wayne County Ferry Project......             2010          M-75
    ------------------------------------------------------------------------
    Gulf Atlantic Marine Highway Project....             2010        M-95 &
                                                                       M-10
    ------------------------------------------------------------------------
    Cross Gulf Container Expansion Project..             2010          M-10
    ------------------------------------------------------------------------
    Cross Sound Enhancement Project.........             2010          M-95
    ------------------------------------------------------------------------
    M-55/M-35 Container on Barge Project....             2015        M-55 &
                                                                       M-35
    ------------------------------------------------------------------------
    Potomac River Commuter Ferry Project....             2015         M-495
    ------------------------------------------------------------------------
    New York Harbor Container and Trailer-on-            2015          M-95
     Barge Service..........................
    ------------------------------------------------------------------------
    Baton Rouge-New Orleans Shuttle.........             2016          M-55
    ------------------------------------------------------------------------
    Paducah/McCracken County Container on                2016          M-70
     Barge Marine Highway Project...........
    ------------------------------------------------------------------------
    Illinois Intrastate Shuttle.............             2016          M-55
    ------------------------------------------------------------------------
    Lake Erie Shuttle Service on the M-90...             2016          M-90
    ------------------------------------------------------------------------
    Great Lakes Shuttle Service.............             2017          M-90
    ------------------------------------------------------------------------
    Mid-Atlantic Barge Service..............             2017          M-95
    ------------------------------------------------------------------------
    Container on Barge & Heavy-Lift Corridor             2017          M-69
     Service at Freeport TX.................
    ------------------------------------------------------------------------
    Philadelphia-Canaveral Direct Service...             2017          M-95
    ------------------------------------------------------------------------
    Port of Davisville/Brooklyn/Newark                   2018          M-95
     Container on Barge Service.............
    ------------------------------------------------------------------------
    Harbor Harvest Long Island Sound Project             2018          M-95
    ------------------------------------------------------------------------
    Container on Barge Service on the M-70               2018        M-70 &
     and M-35...............................                           M-35
    ------------------------------------------------------------------------
    South Carolina Ports Authority Container             2018          M-95
     on Barge Service.......................
    ------------------------------------------------------------------------
    Port of Everett Container on Barge                   2018          M-84
     Service................................
    ------------------------------------------------------------------------
    Chambers County Container on Barge                   2018          M-69
     Expansion Service......................
    ------------------------------------------------------------------------

        Mr. Maloney. I thank the gentleman.
        I will now proceed to questions. I will be observing a 5-
    minute rule this afternoon. I will begin by recognizing myself
    for 5 minutes.
        Admiral Buzby, please help us understand what the principal
    barriers are to marine highway development, and please also
    comment on when the Congress can expect to see the national
    maritime strategy, since we have been waiting for some time on
    that document and that strategy. And would you also refer to
    the role that short sea shipping would play in such a strategy.
        Admiral Buzby. Yes, sir. Thank you. I will address that
    strategy piece first.
        As you know, Congress has given us now an extension till
    the 13th of February of next year, 2020, and I fully expect
    that we will present the strategy within that timeline, sir. It
    is currently in interagency coordination, and I will be
    standing by to get it and move it forward to you, sir.
        Mr. Maloney. What can you tell us about it, sir? Give us a
    preview of coming attractions. Don't ruin the ending. I don't
    want any spoilers, but surely after 6 years, we have got to
    have some thoughts on what we are doing, right?
        Admiral Buzby. I can tell you this, foundationally it is
    built on the Merchant Marine Act of 1936, the Jones Act, cargo
    preference. It is built on those things that have kept the
    merchant marine alive and breathing, quite frankly, so that is
    the basis of it.
        I think that you will see that short sea shipping and port
    development and port modernization play a key role, recognizing
    that our ports are our economic gateways to this country, the
    majority of our goods flow through those ports and then are
    distributed through rail, through highways and hopefully
    increasingly through maritime highways. So that will be a key
    element of that, making sure we continue to modernize that flow
    and, of course, preparing the workforce for the future.
        That is a very key element of the strategy to make sure
    that we are modernizing and bringing enough people in, which is
    why the National Security Multi-Mission Vessel program is a
    very key element of that. So while you haven't seen it yet, a
    lot of the things that we are doing right now, you will
    recognize in that strategy when you see it. We haven't stopped
    waiting for that to be approved to move forward.
        Mr. Maloney. And short sea shipping?
        Admiral Buzby. Short sea shipping, the barriers, I think,
    that are keeping us from really surging ahead thus far, I would
    say, number one, is probably awareness, education of shippers,
    that there are these ultimate means. And quite frankly, it is
    understanding the business case that exists to move things by
    water.
        It takes a little digging into and understanding,
    especially when you are just used to throwing it on the back of
    a truck or throwing it on a railcar, understanding that there
    are other ways to move it that, you know, there may be
    tradeoffs in time or other certain aspects of it, but in the
    end, it can have significant impacts in terms of the
    environment, in terms of savings due to road wear and
    everything else.
        Mr. Maloney. What are the Europeans doing that we are not?
        Admiral Buzby. Sorry?
        Mr. Maloney. What are the Europeans doing that we are not?
        Admiral Buzby. Well, you know, they have not benefited from
    the road network and the rail network that we have. We have
    been very blessed in this country in that we have such an
    extensive road network that has enabled trucking really to take
    the place of what rivers do in Europe. We kind of got spoiled
    in that respect. You think back, our river system, our coastal
    system, that is how America moved goods in the beginning.
    Before we had roads, before we had railroads, that is how it
    all happened. We moved away from that because we got so darn
    good with our rail system and our road system, both of which
    are becoming overtaxed now.
        So our waterways are our one artery where we still have a
    lot of capacity to grow into, and if we double our cargo, as we
    say we think we are going to do over the next 30 years, we
    won't have any choice; we will have to go into the waterways.
        Mr. Maloney. Mr. Gibbs?
        Mr. Gibbs. Thank you.
        Thank you, Admiral, for being here.
        Some of the options, I know the shipping community has
    suggested that the harbor maintenance fee, Harbor Maintenance
    Trust Fund, the law--any cargo that is imported from Canada or
    between U.S. ports, there is the ad valorem tax for the Harbor
    Maintenance Trust Fund. Do you know how much is raised annually
    as a result between the domestic shipments?
        Admiral Buzby. I don't have the number right at the tip of
    my tongue, but, you know, that is an issue, is when you are
    doing that sort of domestic shipping, you end up paying twice.
        Mr. Gibbs. Do you think it is enough that it is a
    disincentive to increase short sea shipping?
        Admiral Buzby. It certainly is a factor. Like every form of
    transportation has cost factors that have to be factored in,
    this is one that has to be factored in.
        Mr. Gibbs. I just raised this because some in the shipping
    community are raising it--and at least from the Canadian and
    domestic ports to ports.
        Admiral Buzby. Right.
        Mr. Gibbs. You know, we maybe talked about this in the
    questions from the chairman, but is there anything the Federal
    Government could do to really try to jump start the short sea
    shipping?
        You talked a little bit about infrastructure. I guess I am
    just trying to think--this is really a private sector thing and
    there are challenges, there are obstacles for one to do that.
    Some of that is getting financing, building new ships, just
    reluctance from shippers because there is competition between
    other modes of transportation.
        Do you see anything specifically that the Federal
    Government should be doing to maybe help give confidence to the
    shippers to want to increase their assets or capabilities?
        Admiral Buzby. I think this program is a great impetus to
    try and do that because it is not just the fact that we are
    designating projects and providing grants for those designated
    projects, which is an incentive, but I think the education
    piece, as I mentioned before, is really important. It is just
    not well-known, it is just not well-appreciated, I think, by
    most shippers and many carriers, that this alternate means
    exists and it can be beneficial to their business.
        At the end of the day, it comes down to a business case,
    people moving goods around. The business case has to be there
    in order to do that. The reliability has to be there, costwise
    it has to work, schedulewise it has to work. In some areas,
    marine highways work like a champ where we have seven very
    good, strong programs that are out there working where all of
    those pieces fit in, but, you know--so that is discovery.
    People figured that out, so more of that discovery has to
    occur, so----
        Mr. Gibbs. I think most of shipping and short seas maritime
    is really bulk commodities, for lack of a better word, maybe
    not so much the containers.
        Admiral Buzby. Right. And this program is specific. It
    doesn't address bulk, because bulk is moving pretty well. This
    program was developed to address containers and later on break
    bulk----
        Mr. Gibbs. What was that last part?
        Admiral Buzby. Break bulk, palletized goods. Which, you
    know, in some areas--I think if you look at New York, if you
    look at the New York area itself, a lot of the users of goods
    in New York City or the area don't need a 20-foot TEU worth of
    stuff; they need a pallet. So to the extent that you can use
    the harbor to move things around instead of on a truck, in a
    small vessel or something, move a pallet size and then move it
    through the streets, I think there is potential there that
    could be exploited. And I know there are entrepreneurs out
    there that are looking at that kind of a thing. You know, it is
    people thinking beyond the normal, we are stuck with this size,
    this is all we got.
        Mr. Gibbs. I guess if they could think outside the box and
    satisfy what the markets demanding are asking, and I think you
    just gave an example of that.
        Admiral Buzby. Yeah. There are other projects around that,
    I think, have great promise. They just need to kind of be fully
    baked. They are conceptual in many cases. They just have to
    work through that business case and then they will be ready to
    go.
        Mr. Gibbs. Thank you. I yield back.
        Mr. Maloney. I thank the gentleman.
        Mr. Gallagher.
        Mr. Gallagher. Thank you, Mr. Chairman.
        Admiral Buzby, thank you for being here. Thank you for your
    testimony.
        You mentioned the link between short sea shipping--it is
    very hard to say quickly--and the Jones Act. Obviously, the
    Jones Act is always the subject of debate. What do you think
    the biggest misconception out there about the Jones Act is? If
    you could sort of talk to the American people about why the
    Jones Act is important and correct sort of some of the
    misconceptions, what is at the top of that list?
        Admiral Buzby. Well, these days, it is getting to be that
    the Jones Act is the root of all evil, everything that is wrong
    is the fault of the Jones Act, and that everything that costs
    more is a result of the Jones Act, and that is just not borne
    out in the facts. When you look at the detriment that would be
    caused to this Nation by the Jones Act going away, in terms of
    impact of shipbuilding and ship repair, or the 40,000 vessels
    that are Jones Act vessels that all get built and repaired in
    U.S. shipyards, to the number of people that are employed, the
    American mariners that are employed that, oh, by the way, on
    some of the larger Jones Act ships I depend upon to help crew
    up our sealift vessels, they would go away. To just the people
    that are pushing, you know, transiting our waterways, American
    citizens that are a de facto layer of security for our Nation.
    They are out there every day. They know what normal looks like.
    If they see something wrong, they are going to say something is
    wrong. I don't think we can believe that would ever happen with
    a foreigner pushing goods up and down our internal waterways,
    and why would we want to turn our internal commerce over to a
    foreigner to control. It blows my mind. So, I think for all of
    those reasons, it is absolutely critical.
        Mr. Gallagher. I appreciate that. And you mentioned in your
    testimony that we have congestion on our roadways and,
    therefore, we have an advantage when it comes to maximizing our
    maritime shipping lanes. Can you also speak about the
    importance of icebreaking for keeping maritime shipping lanes
    open and our current icebreaking capacity on the Great Lakes?
        Admiral Buzby. Obviously, icebreaking falls into the
    purview of the Coast Guard, and as we heard the Commandant last
    time he and I were here speak, he believes he has a plan, for
    the Great Lakes at least anyway, and he needs obviously some
    help in the high latitudes with our new Polar Security Cutters.
    But clearly, especially on those cold winters, icebreaking
    capacity on the upper reaches of the rivers and the Great Lakes
    toward the end of the seasons is really vital to ensuring that
    flow of goods and that flow of commerce. On those years where
    we have heavy freeze and heavy icing on the upper Mississippi,
    it wreaks havoc, and even up on the upper Hudson, we have heavy
    ice years, it wreaks havoc. So I know the Coast Guard has a lot
    of inland cutters, 140 footers that they task pretty heavily,
    but they all are a vital part of the entire marine highway
    system, absolutely.
        Mr. Gallagher. Thank you. I yield the balance of my time.
        Mr. Maloney. I thank the gentleman.
        Mrs. Miller.
        Mrs. Miller. Thank you, Chairman Maloney. And thank you,
    Admiral, for being here today.
        Short sea shipping, especially along our Nation's rivers,
    is vitally important in my district in West Virginia. The
    Huntington Tri-State Port is one of the largest inland water
    ports. It was the largest till Cincinnati got dredged, if I
    remember correctly, but it ships over 80 million tons of cargo
    every year. That is 80 million tons of natural resources
    reaching domestic and foreign markets creating jobs and driving
    our economy. Our waterways are essential for efficiently
    shipping our products and staying competitive in the global
    market.
        This is a little bit like Congressman Gibbs's question, but
    what steps can Congress take to promote maritime careers for
    hardworking Americans?
        Admiral Buzby. Thank you for the question, and it is a
    great one because it really speaks to the workforce issue,
    which is a big focus of mine. And traditionally, MARAD has
    really focused at the State maritime academies and Kings Point,
    our Federal maritime academy. We are increasingly looking lower
    now. We are looking deeper into our educational system down to
    the high school level. Maritime-focused high schools at
    community colleges, we are getting ready to fire off the
    Centers of Excellence for Domestic Maritime Workforce Training
    and Education. I will be coming out with the advertisement for
    that for comment here very shortly, but we really see that as
    the generator of maritime workforce, especially for the inland
    sector, Jones Act sector, becoming so much more important in
    the future.
        As we see growth on our maritime highways, we need to kind
    of get ahead of that, if you will, I think, through increased
    focus at our high school level, and I have asked all of my
    State maritime academy presidents to reach out in their regions
    to start interfacing with those folks to start getting it known
    that maritime education, maritime careers, both ashore and
    afloat, are really going to be vital to our Nation and they are
    good-paying jobs. You will be able to raise a family on them.
        Mrs. Miller. I am glad to hear you say that because there
    is much more focus on career in technical happening now, and so
    I think that would be wonderful.
        What are the biggest regulatory burdens or unfair taxes
    imposed on maritime shipping industry that keep it from
    competing with trucking and rail?
        Admiral Buzby. Well, we talked about the Harbor Maintenance
    Tax and the fact that that is kind of a double jeopardy thing.
    That has to probably ultimately be addressed at some point. I
    am not sure how that is going to go, but that has been raised
    repeatedly as an issue. We hear it from industry. It has been
    made to work in some places, but depending on the market,
    depending on the commodity, depending on the circumstances, it
    can be more of a challenge to keep those programs moving
    forward. I think that is probably the biggest thing.
        Mrs. Miller. The maritime highway system includes the
    section of the Ohio River that connects my district to the rest
    of the country. How has the program expanded since its
    enactment, and how can Congress continue to help the Maritime
    Administration promote maritime highways?
        Admiral Buzby. We have designated 25 marine highway routes,
    and that really covers most of the navigable waterways. We may
    have a couple yet to go, but I think we have pretty much--I
    think we have one that is under consideration actually right
    now by the Secretary, but we have done a pretty good job, I
    think, of covering the navigable waters. But, you know, there
    may be others, and we will certainly look for nominations of
    those designations, because that is the basis of the program.
        You have to have a highway in order to support the project.
    So once the highway is there, the project can then go forward,
    and that project designation then enables it to be considered
    for grant funding based on the merits of the program and I
    think that will continue to grow. I mean, every year, we see
    more programs being requested for designation, and we are able
    to then consider more for grants and that is, you know, we can
    spread the funding that we get a little bit broader every year
    with the broader grants, with the broader programs.
        Mrs. Miller. OK. Thank you.
        Are the Navy and the Coast Guard continuing to find more
    effective ways to see that their ship drivers are eligible to
    receive merchant mariner credentials after they leave the
    Service?
        Admiral Buzby. Of course, we have the Military to Mariner
    program, which we continue to push forward on. Of course, the
    President passed the Executive order a couple of months back
    that helped that process along. I know I can speak for the
    Navy, my old Service, they have done a lot of effort to try and
    start cataloging the sea time and the actual coursework that is
    done during the course of an officer's career in order to make
    that transition, if they so choose to do it, much easier than
    it was even a couple years ago.
        So to answer your question, yes, we are moving well in that
    direction. We will get some people to transition over.
    Unfortunately, most of the people that leave the Navy do so
    because they don't like the family separation, and coming into
    this line of work, you get a little bit more of that. But we do
    get naval officers and Coast Guard officers and Army officers,
    for that matter, that enjoy coming over in the merchant marine.
        Mrs. Miller. OK. Thank you. I yield back my time.
        Mr. Maloney. I thank the lady.
        Mr. Garamendi.
        Mr. Garamendi. First, let me compliment you, Mr. Chairman
    Maloney, for holding this hearing. It is a very, very important
    step along the way to maintaining and enhancing our maritime
    industry.
        Admiral, I missed your opening statement. I have been
    busily trying to catch up in reading it, but I do want to thank
    you for your attention to the issues of maritime. The work that
    you did with us on the NDAA and the issues there moves it
    forward, and hopefully, we will be able to expand the maritime
    support for our military.
        Investing in our Nation's inland and coastal waterways will
    always reduce roadway congestion and fatalities. Short sea
    shipping can be competitive, but it needs help.
        There are many different pieces to this, Army Corps of
    Engineers dredging programs, or not, docks and the like that
    are not exactly or even closely designed for the kind of
    infrastructure necessary for short sea, which is a whole lot
    different than across the ocean ships and the infrastructure
    needed for that. It is interesting that the dredging issue in
    my district becomes very important, and it is not just for
    freight, but also for moving people.
        The ferry system in the San Francisco Bay area sometimes
    doesn't work because the ferries can't even get to the dock,
    and so that brings us to the Army Corps of Engineers and their
    budget and the allocation of their funds. Also, I noticed the
    exchange between Interstate 80 and 680 in my district,
    Fairfield area, is probably going to be a multibillion-dollar
    interchange when it is finished. I guess I am pleased that we
    provided some $7 million for short sea shipping, which is some
    small, small fraction of the billions that will be spent on one
    interchange, largely because of the truck traffic coming out of
    this San Francisco Bay area.
        In any case, just a couple of questions. How do we make
    better use of the taxes that are presently collected, and is it
    necessary for us to find a way of avoiding the double taxation
    that will occur in short sea shipping?
        Would you go into that in a little detail?
        Admiral Buzby. To the extent I can, yes, sir. As we have
    sort of discussed here earlier, that has long been an issue in
    short sea shipping, and that is the double jeopardy for Harbor
    Maintenance Tax, that it gets tagged twice.
        Mr. Garamendi. This is something that comes to us, and your
    earlier testimony, once again, I apologize for missing, should
    be the foundation for an amendment to our current tax law so
    that we don't double tax so that we eliminate this financial
    disincentive. Also, I am going to bring your attention, which I
    suspect you know, there is a very strong incentive to use the
    Port of Vancouver rather than the ports in Seattle because of
    that very same tax. So when that train arrives in the Midwest
    from Vancouver, maybe that tax ought to apply when it crosses
    the border. I don't think the MCA took that up, but it is an
    issue that harms the industry on the west coast.
        What is it going to take here? Is it going to take direct
    subsidies to the shippers? Does it take better infrastructure?
    Where would you suspect we spend the next $7 million or $20
    million or $21 million?
        Admiral Buzby. In terms of marine highways specifically?
        Mr. Garamendi. Yes.
        Admiral Buzby. Well, I am always siding on the
    entrepreneurial sort of spirit in this country. Just about all
    of these projects, you know, that are up and running now, seven
    that are running and the many, many--25 that are approved and
    probably another 30 that are in the queue, are all somebody's
    brain child. They all looked at a situation and said, that
    makes more sense to move it by water. And now figuring out the
    business case to make that happen, you know, it takes a while
    to do it. It doesn't work in every case, but we have good
    examples where it makes great sense. Some places should not
    probably ship by water. It just doesn't work, but I think
    increasingly as we see the costs mounting and the----
        Mr. Garamendi. Is it possible for the construction of the
    vessels themselves? We have had programs in the past that
    supported the construction of vessels. Is that a good place to
    invest?
        Admiral Buzby. Yeah. You know, building Jones Act vessels
    of the size that we are talking about here, tugs and barges for
    the most part, you know, that is not really an issue. The rest
    of the world doesn't build tugs and barges as well as we do for
    the cost that we do. We are very competitive. Our shipbuilding
    industry is very competitive in tugs and barges, so having to
    provide a lot of--building subsidies, I don't know that that is
    specifically the answer. Certainly, in the international side--
    --
        Mr. Garamendi. Just a couple of--one final point.
    Rebuilding our maritime industry requires specific legislative
    support for the industry. Next week, we will be introducing the
    Energizing American Shipbuilding Act. We appreciate your
    support for that and the Members, many of the folks that are
    here on the dais, for their support, and folks in the audience.
    That will provide at least many of the jobs and much of the
    industrial construction of the ships, so we will be working on
    that and maybe fit into this. Thank you very much for your
    testimony.
        Mr. Chairman, I yield back.
        Mr. Maloney. I thank the gentleman.
        And seeing no further Member questions, I know we have kept
    you longer than anticipated already, Admiral Buzby. We do have
    your written testimony for the record. We appreciate very much
    those submissions as we lay the necessary predicate for some of
    the good work we want to do as a committee in this area. Work
    that, without today's hearing, would not be possible under the
    new House rules, so we appreciate very much your participation.
    It does help us in our work.
        I would like to move to the second panel, if that is
    possible, and thank you very much, Admiral.
        Admiral Buzby. Thank you very much.
        Mr. Maloney. Thank you.
        Mr. Maloney. While our witnesses are taking the table, I
    will go ahead and begin to introduce them.
        We are lucky to be joined today by Mr. Jonathan Nass, chief
    executive officer of the Maine Port Authority; Mr. James
    Weakley, president of the Lake Carriers' Association; and Mr.
    Larry Willis, president of the Transportation Trades
    Department, AFL-CIO.
        Thank you all for being here today. We look forward to your
    testimony.
        Without objection, our witnesses' full statements will be
    included in the record, as the previous panel. Since we have
    your written testimony and it has been made part of the record,
    the subcommittee requests that you limit your oral testimony to
    5 minutes.
        Mr. Nass, you may proceed.

    TESTIMONY OF JONATHAN NASS, CHIEF EXECUTIVE OFFICER, MAINE PORT
          AUTHORITY; JAMES WEAKLEY, PRESIDENT, LAKE CARRIERS'
      ASSOCIATION; AND LARRY I. WILLIS, PRESIDENT, TRANSPORTATION
                       TRADES DEPARTMENT, AFL-CIO

        Mr. Nass. Thank you, Mr. Chairman.
        Mr. Maloney. If I could just recommend to the witnesses,
    you can pull that box as close to you as needed. It does move.
    And if you speak into the microphone, it helps our stenographer
    and the folks watching it on TV. Thanks.
        Mr. Nass. Chairman Maloney, Ranking Member Gibbs, and
    members of the Subcommittee on Coast Guard and Maritime
    Transportation, my name is Jonathan Nass, and I am the chief
    executive officer of the Maine Port Authority. Thank you for
    inviting me to speak today on the exciting topic of short sea
    shipping.
        The Maine Port Authority is a quasi-governmental entity
    tasked with improving Maine's economy by developing and
    promoting infrastructure that moves freight domestically and
    internationally.
        Maine has a long history of living from and by the sea. If
    you drive Route 1 along Maine's coast, you will encounter
    mansions sea captains built over several hundred years in
    virtually every town you cross through. These once grand houses
    are monuments of the prosperity once enjoyed from a thriving
    coastal freight transportation network. Unfortunately, today,
    many are in disrepair and suggest a time past and many lost
    opportunities over the last 50 years.
        The Maine Port Authority and many others are currently
    working to revitalize that maritime shipping heritage. We
    recently developed a brownfield in the City of Portland into
    the international marine terminal, a container terminal that in
    just 5 years has gone from a derelict abandoned eyesore to a
    vibrant international, logistical, multimodal hub connecting
    Maine to the world. We are very proud to note that we have had
    annual growth and volume of over 20 to 30 percent every year.
        I believe that we can build on that success by connecting
    northern New England domestically to ports to our south through
    establishing water service paralleling the congested I-95
    highway system on the east coast.
        For those of us that live in port cities, moving freight by
    water is instinct, but it needs to become intuitive for others
    as well, especially those who set transportation policy. One
    only needs to sit for a few frustrating hours in Boston or
    beltway traffic to appreciate the value of alternative
    transportation of freight. Moving freight from highway to
    seaway will improve commerce, decrease air pollution, and
    reduce fuel consumption and traffic congestion in our largest
    cities.
        I am certainly not the first to suggest that the United
    States has an infrastructure problem. There is no denying it.
    In maritime terms, the Nation's surface transportation
    infrastructure is like a vessel taking on water, fast.
        Fortunately, fixing our transportation network is not a
    political issue. Democrats and Republicans all agree it is
    broken. Rather, it is a policy issue. How will we as a Nation
    fix it? How can we help you as Congress to address it?
        The first step in saving a sinking ship is to plug the
    leaks. The infrastructure policy debate usually centers around
    one question: Where will the funding come from to rebuild
    America's highways?
        But there is more to the transportation equation than
    highways. As with any fixed asset, there is also a matter of
    depreciation and use. If we can reduce the cost of the highway
    system, reduce the rate of appreciation, and reduce the rate of
    growth of trucks on our highways, then we are starting to plug
    the leaks.
        By not making an alternative freight transportation system
    a national priority, especially short sea shipping
    alternatives, I believe that we are misusing our surface
    transportation network. We are missing a win-win opportunity to
    both stop the leaks in the highway infrastructure while
    fostering a revitalized waterway economy nationally.
        What if we can establish a well-utilized marine highway as
    functional as roads and bridges but without the cost of
    pavement and steel, without potholes, without traffic jams? A
    system where at least some long-haul freight bypasses the
    heavily congested urban areas.
        That is exactly what the Maritime Administration's marine
    highway is designed to do, and it should be a top priority when
    fixing the entire system.
        Since the Eisenhower administration, the United States has
    focused on a network of expensive fixed transportation assets.
    The problem is that with constant patching, lost time, money,
    road rage, accidents, but we have ignored a great opportunity.
        In 2010, Secretary Ray LaHood designated the New England
    marine highway system as part of the national marine highway
    system. Part of that project was the designing of an
    articulated barge that is Jones Act-compliant yet is 40 percent
    CapEx and 40 percent OpEx of a comparable marine vessel.
        We have also become a member of the North Atlantic Marine
    Highway Alliance. This effort funded by the Maritime
    Administration and managed by the New York City Economic
    Development Corporation includes parties from the Chesapeake to
    Maine.
        Mr. Chairman, we recently hosted a meeting that brought
    freight owners together with port owners and shippers in Maine,
    and I would be happy to answer questions on that interesting
    discussion. Thank you, sir.
        [Mr. Nass's prepared statement follows:]

      Prepared Statement of Jonathan Nass, Chief Executive Officer, Maine
                                 Port Authority
        Chairman Maloney, Ranking Member Gibbs, and members of the
    Transportation and Infrastructure Subcommittee on Coast Guard and
    Maritime Transportation, my name is Jonathan Nass and I am the Chief
    Executive Officer of the Maine Port Authority.
        Thank you for inviting me to speak today on the exciting topic of
    Short Sea Shipping.
        The Maine Port Authority (the MPA) is a quasi-governmental entity
    tasked with improving Maine's economy by developing and promoting
    infrastructure that moves freight both domestically and
    internationally.
        Maine has a long history of living from and by the sea. If you
    drive Route One along Maine's coast you will encounter the mansions sea
    captains built over several hundred years in virtually every town.
    These once grand houses are monuments of the prosperity once enjoyed
    from thriving coastal freight transportation networks. Unfortunately,
    today, many are in disrepair and suggest a time past and many lost
    opportunities in the last 50 years.
        The MPA and many others are currently working to revitalize that
    maritime shipping heritage. We recently developed a brownfield in the
    City of Portland into the International Marine Terminal, a container
    terminal that in five years has gone from a derelict abandoned eyesore
    to a vibrant international, logistical, multimodal hub connecting Maine
    to the world with annual growth in volume of 20 to 30 percent.
        I believe we can build on that success by connecting Northern New
    England domestically to ports to our south by establishing water
    service paralleling the congested I-95 highway system on the East
    Coast.
        For those of us who live in port cities, moving freight by water is
    instinct, but it needs to be intuitive for others as well--especially
    those who set transportation policy. One needs only to sit for a few
    frustrating hours in Boston or Beltway traffic to appreciate the value
    of alternative transportation. Moving freight from highway to seaway
    will improve commerce, decrease air pollution, and reduce fuel
    consumption, and traffic congestion in our largest cities.
        I am not the first to suggest that the United States has an
    infrastructure problem. There is no denying it. In maritime terms, the
    nation's surface transportation infrastructure is like a vessel taking
    on water. Fast.
        Fortunately, fixing our transportation network is not a political
    issue. Democrats and Republicans all agree--it is broken. Rather, it is
    a policy issue. How will we as a nation will fix it? How can we help
    you, as a Congress to address it?
        The first step to saving a leaking ship is to plug the leaks.
        The infrastructure policy debate usually centers around one
    question--Where will the funding come from to rebuild America's
    highways?
        But there is more to the transportation equation than highways. As
    with any fixed asset, there is also the matter of depreciation and use.
    If we can reduce the cost of the highway system, reduce the rate of
    depreciation, and reduce the rate of growth of trucks on our highways
    then we are starting to plug the leaks.
        By not making alternative freight transportation systems a national
    priority, especially short sea shipping alternatives, I believe that we
    are misusing our surface transportation system. We are missing a win-
    win opportunity to both stop the leaks in the highway infrastructure
    while fostering a revitalized water-way economy nationally.
        What if we can establish a well-utilized marine highway as
    functional as roads and bridges but without the cost of pavement and
    steel? Without potholes and traffic jams? A system where at least some
    long-haul freight by-passes heavily congested urban area?
        That's exactly what the Maritime Administration's Marine Highway
    program is designed to do and it should be a top priority when fixing
    the entire system.
        Since the Eisenhower Administration, the United States has focused
    on a network of expensive fixed transportation assets--superhighways,
    bridges and interchanges, with efforts of constant widening, continuous
    patching, lost time and money, road rage, and accidents.
        What we as a nation have largely ignored is the natural highway
    system that is part of the inherent American geographical make up--our
    nation's waterways and coastal routes.
        In 2010, then USDOT Secretary Lahood designated the New England
    Marine Highway project as part of the National Marine Highway System.
    That project funded the design of an articulated barge, in partnership
    between the MPA and McCallister Tug, to operate a service between
    Northern New England and New York/New Jersey.
        Last year, the MPA became a member of the North Atlantic Marine
    Highway Alliance. This effort is funded by the Maritime Administration
    and managed by the New York City Economic Development Corporation and
    the Port Authority of New York New Jersey. Its members include
    interested parties from the Chesapeake to Maine.
        We recently hosted a meeting in Portland, Maine that brought
    interested parties--ports, shippers, barge service operators, the
    Maritime Administration--to Maine to meet beneficial cargo owners to
    discuss short sea shipping options.
        The Alliance recognizes that freight owners are critical to the
    success of a reinvigorated short sea shipping network. To convince
    beneficial cargo owners to make a modal shift of a portion of their
    supply chain--the new alternative must be cost-competitive and it must
    be consistent and reliable.
        To make this happen, there must be a shift in government policy to
    make short sea shipping a priority. Perhaps not on the scale of the
    creation of the interstate highway system, but that type of vision is
    not a bad place to start. Let's apply the same vision, imagination, and
    policy that brought us the interstate highway system to short sea
    shipping.
        Mr. Chairman, Transportation matters. Transportation policy
    matters. A national policy, like that managed by the Maritime
    Administration, to foster and encourage domestic water-borne freight
    will make domestic businesses more competitive, create jobs on working
    waterfronts, promote cleaner air, less congested and less damaged
    roads, and could rebuild America's maritime industries.
        Thank you for this opportunity to testify. I look forward to your
    questions.

        Mr. Maloney. I appreciate that, Mr. Nass. Thank you very
    much.
        Mr. Weakley, you may proceed.
        Mr. Weakley. Thank you.
        I represent 13 American companies operating 46 U.S.-flag
    vessels on the Great Lakes. We carry the raw materials that
    drive the Nation's economy: iron ore and limestone for steel,
    aggregate and cement for construction, coal for power
    generation, and more. Those cargoes generate 103,000 jobs with
    an economic impact of over $20 billion.
        I will discuss the benefits of marine transportation, the
    Great Lakes navigation system, our role, the importance of the
    Jones Act, and maritime infrastructure.
        As this graphic demonstrates, it takes less energy to move
    cargo via water. We move a ton of cargo 607 miles from Duluth
    to Detroit with 1 gallon of fuel. A truck moves that ton 59
    miles per gallon, and rail 202 miles.
        Vessels also emit fewer tons of carbon dioxide per ton-
    mile. Economies of scale help lower energy consumption. One of
    our lakers can move 70,000 tons of cargo, which is the
    equivalent of 700 railcars or 3,000 trucks. If trucks operated
    with vessels' efficiency, they could be powered with a lawn
    mower engine.
        Prior to the development of the Interstate Highway System,
    raw materials, lumber, people, vehicles, and finished goods
    also moved on lakers. The higher value, time-sensitive cargoes
    now move by faster modes, so low-value, heavy cargoes are our
    focus. Self-unloading vessels can unload in hours what once
    took weeks. This technology and larger vessels combine to make
    the lakes the world's most efficient system for shipping dry
    bulk cargo.
        In fresh water, vessels last decades longer. We maintain
    our vessels rather than replace them. Last winter, we invested
    $70 million in maintenance. New construction and conversions
    are also part of our investment plan. Interlake Steamship
    recently announced the construction of a new laker. VanEnkvort
    Tug and Barge announced the construction of a new laker-sized
    barge, and Port City Marine Services completed the conversion
    of a cement barge.
        The Merchant Marine Act of 1920, the Jones Act, requires
    that vessels moving cargo between U.S. ports be American owned,
    American built, and American crewed. This bedrock of maritime
    policy provides the stability necessary to invest in the fleet.
    The national, economic, and homeland security benefits, and the
    regulatory certainty it provides allows long-term contracts.
    The Jones Act encourages Americans to invest huge sums of money
    in assets that will last decades.
        It takes more than vessels. The Corps of Engineers will
    soon begin construction on a new Soo lock to add system
    resiliency. No longer will 11 million Americans be dependent on
    a single point of failure in northern Michigan.
        Maintenance of channel depths is also critical. I applaud
    the Transportation and Infrastructure Committee's efforts to
    fully spend the Harbor Maintenance Trust Fund. Through your
    efforts, we have made great strides.
        We also need adequate and reliable Coast Guard icebreakers
    on the Great Lakes, but we appear to be losing ground on that
    front. Because we carry low-value cargo, we operate on thin
    margins. We are sensitive to the cost of regulations. Even
    high-value cargo is sensitive to additional shipping costs such
    as the Harbor Maintenance Tax being applied a second time to
    containerized imports that move domestically by ship.
        Cargo is king and the transportation industry evolves to
    serve its needs. We exploit the laws of physics that make
    shipping the most efficient, environmentally friendly, and
    socially responsible mode of transportation. We changed the
    size of our vessels and invented self-unloading technology.
        In order to grow the domestic maritime industry, we need:
    regulatory stability--support the Jones Act, and consider the
    cost of regulations; infrastructure--dredging, breakwalls,
    locks, and icebreakers; and we need system resiliency--a new
    lock in Sault Ste. Marie, Michigan.
        Moving low-value, heavy commodities is what we do best. We
    can and want to do more.
        Thank you.
        [Mr. Weakley's prepared statement follows:]

        Prepared Statement of James Weakley, President, Lake Carriers'
                                  Association
        Good morning. Thank you for the opportunity to speak to you today.
    I am Jim Weakley, President of the Lake Carriers' Association (LCA). We
    represent 13 American companies that operate 46 U.S.-flag vessels on
    the Great Lakes and carry the raw materials that drive the nation's
    economy: iron ore and flux stone for the steel industry, aggregate and
    cement for the construction industry, coal for power generation, as
    well as sand and grain. Collectively, our members can transport more
    than 100 million tons of dry-bulk cargo per year and employ more than
    1,600 men and women, all of whom are U.S. citizens or legally admitted
    aliens, and provide annual wages and benefits of approximately $125
    million. In turn, the cargos our members carry generate and sustain
    more than 103,000 jobs in the eight Great Lakes states and have an
    annual economic impact of more than $20 billion.
        I would like to provide a brief overview of the Great Lakes
    Navigation System (GLNS), its different market segments, how we engage
    in short sea shipping and are investing in our fleet. Then, I'll focus
    the majority of my testimony on the economic and environmental benefits
    of marine transportation. I'll touch on the challenges we face, the
    importance of the Jones Act and government's role in maritime
    infrastructure.
                                    the glns
        The Great Lakes Navigation System (GLNS) enables maritime commerce
    on America's Fourth Sea Coast. The five Great Lakes are tied together
    by three connecting channels (the St. Marys River, the Detroit/St.
    Clair River system and Welland Canal) and the so-called ``Achilles Heel
    of North American Manufacturing,'' the USACE navigation locks at Sault
    Ste. Marie, Michigan (Soo). The St. Lawrence Seaway is the umbilical
    cord that connects the GLNS and its 68 U.S. ports and 35 Canadian ports
    to global trade. The Great Lakes are a bi-national system supporting
    both domestic and international trade. For example, in the Detroit/St.
    Clair River portion of the system alone the navigation channel crosses
    the U.S./Canadian border 17 times. If measured as a single region, the
    eight Great Lakes States and two Canadian Provinces represent the
    world's third largest economy.
        Although there is a great desire to move international container
    traffic through the GLNS, the majority of the cargo moved today is
    bulk. The international ocean-going fleet, vessels, sometimes referred
    to as ``salties,'' primarily bring steel into the Great Lakes region
    and take grain out. Approximately 225 salties call annually on both
    sides of the border moving 10 million tons of cargo annually.
        U.S.-flag ``lakers,'' the vessels LCA represents, are ships and
    barges specifically designed for the Great Lakes trade. Most are self-
    unloading dry-cargo vessels, although some lack the self-unloading
    equipment, and others move liquid bulk material. Both the United States
    and Canada reserve their domestic waterborne movements of cargo for
    ``coastwise qualified'' vessels. Our nation's Jones Act vessels are
    American-owned, American-built and American-crewed. In 2018, U.S.-flag
    lakers transported approximately 84 million tons of iron ore, coal,
    limestone, cement, salt, sand, and grain in domestic moves (between two
    U.S. points) under the Jones Act, and they carried 2 million tons of
    cargo between U.S. and Canadian ports. In 2014 (the last year they
    published cargo data) Canadian-flag lakers transported 69 million tons
    of cargo. About half of that total moved domestically (between two
    points in Canada), including Canadian points on the Great Lakes ports,
    the Canadian Arctic or its East Coast, and about half between U.S.
    Great Lakes ports and Canadian ports.
                     glns and soo lock economic importance
        LCA members are the linchpin of what has been called ``one of the
    nation's most economically vital systems, the iron mining--integrated
    steel production--manufacturing supply chain . . . '' \1\ In general,
    iron ore, the primary raw material for steel, is transported by our
    ships from mines in Minnesota and the Upper Peninsula of Michigan to
    steel mills in Indiana, Ohio, Michigan and Pennsylvania. So crucial is
    that waterborne supply chain that the Department of Homeland Security
    (DHS) has warned that an interruption of domestic shipping services
    through the Poe Lock would have ``catastrophic impacts on the regional
    and National economy,'' \2\ including the interruption of steel
    production and the plunging of the North American economy into a
    ``severe recession.'' \3\
    ---------------------------------------------------------------------------
        \1\ ``The Perils of Efficiency: An Analysis of an Unexpected
    Closure of the Poe Lock and its Impact,'' Department of Homeland
    Security, (October, 2015), at 1. While this report is focused on the
    impact of a failure of the Poe Lock, through which vessels that are
    part of this supply chain must pass, the analysis also demonstrates the
    significant impact of shipping on the Great Lakes economy and beyond.
        \2\ Id. at 29.
        \3\ Id. at iii.
    ---------------------------------------------------------------------------
        The DHS study estimated that 11 million Americans would become
    unemployed if shipping through the Poe Lock was interrupted for a 6-
    month period beginning at the start of the shipping season. According
    to DHS, the State of Michigan's unemployment would reach 22%, exceeding
    its peak unemployment rate of 15% during the Great Recession of 2008.
    This is a direct result of interrupting the manufacturing made possible
    by the 60 million tons of key raw materials transiting the Poe Lock on
    an annual basis.
        However, this is a national problem. In fact, the unemployment
    spikes in the event of an interruption in Great Lakes shipping will
    ripple through the United States, a result of the far-reaching impacts
    of the automobile manufacturing and general steel industries. Three
    States, Michigan (944,000), Texas (865,000) and Ohio (826,000) would
    experience job losses in excess of 800,000 people. The DHS study also
    determined that nearly 100% of North American appliance, auto,
    construction equipment, farm equipment, mining equipment, and railcar
    manufacturing would cease. The $1.1 trillion decrease in gross domestic
    product would result in widespread bankruptcies and a likely recession.
    DHS concluded that, ``In terms of an impact to the North American
    economy, it is hard to conceive of a single asset more consequential
    than the Poe Lock.'' \4\ Without our vessels to move the raw materials
    via the GLNS, this North American manufacturing would not be possible.
    ---------------------------------------------------------------------------
        \4\ Id. at 55.
    ---------------------------------------------------------------------------
                                  this hearing
        This hearing examines domestic movements of cargo via marine
    transportation, also known as ``short sea shipping.'' By understanding
    the dynamics and market forces that make the Great Lakes Navigation
    System (GLNS) successful, we may be able to expand it to other markets.
    Recognizing the challenges we face can lead to good investment
    decisions by government and business.
          economic and environmental benefits of marine transportation
    Comparing Energy Consumption and Air Emissions:
        It takes less energy to move cargo via water than it does the other
    modes of transportation. A U.S.-flag laker can move a ton of cargo 607
    miles, the approximate distance from Duluth to Detroit, while consuming
    only one gallon of fuel. A truck can typically move that same ton of
    cargo about 59 miles per gallon and rail can move it 202 miles per
    gallon. Given the lower energy consumption, marine transportation emits
    fewer tons of carbon dioxide. A laker will emit 19 tons to transport
    1,000 tons of cargo 1,000 miles. Trucks making the same cargo movement
    will emit 190 tons. Attachment 1 provides a modal comparison of fuel
    consumption and carbon dioxide emissions.
        Economies of scale also help us achieve lower energy consumption
    rates. One of our lakers can move 70,000 tons of cargo. That is the
    equivalent of 700 rail cars or 3,000 trucks. Another measure of modal
    efficiency is horsepower per ton. Trucks require 12-20 horsepower for
    each ton of cargo moved. For rail it is about 1 to 1 and for vessels,
    it is 0.2-0.3. If trucks could operate with vessel efficiency, they
    could be powered with a lawnmower engine.
    Evolution of the GLNS
        Lakers have always moved raw materials. However, there was a time,
    prior to the development of the interstate highway system, that lumber,
    people, vehicles and other finished goods moved via lakers. Those
    higher value and time sensitive cargoes are less suited to domestic
    maritime movements than they were 100 years ago because other faster
    modes of transportation have evolved to serve those markets. Low value,
    heavy cargoes are now our focus. Our self-unloading vessels use a
    series of conveyor belts running from under the cargo holds to the
    unloading boom. They can place cargo within 250 feet of the vessel on
    the dock at a rate of up to 10,000 tons per hour. We can unload in
    hours what it took days or weeks to do. The combination of self-
    unloading technology and larger vessels have combined to make the GLNS
    the most efficient system in the world for handling dry-bulk cargo.
    Investing In Our Fleet
        Given the fresh water environment of the Great Lakes, our vessels
    can last decades longer than oceangoing vessels. That means we maintain
    our vessels rather than replace them. During the winter Soo Lock
    closure from January 15th until March 25, our owners will do engine
    overhauls, steel replacement, drydock vessels, and upgrade systems.
    Last winter, LCA members invested $70 million to maintain their fleet.
    That is not unusual. In years when a vessel is repowered, that number
    can be significantly higher.
        New construction and conversions are also part of our member's
    investment plans. Interlake Steamship recently announced the
    construction of a new river class laker. VanEnkvort Tug and Barge
    announced the construction of a laker sized barge. Port City Marine
    Services recently completed a 21-month conversion of a bulk cargo barge
    to a cement carrying barge.
    Jones Act Remains Critical
        The Merchant Marine Act of 1920, also known as the Jones Act,
    requires that vessels moving cargo between U.S. ports be American
    owned, American built and American crewed. This bedrock of maritime
    policy provides the stability necessary for LCA's members to invest in
    maintaining and adding to their fleet. The national, economic and
    homeland security implications of the law and the regulatory certainty
    it provides, allows us to enter into long-term contracts. The Jones Act
    encourages Americans to invest huge sums of money in assets that will
    last decades.
    Maritime Infrastructure Investments
        It takes more than vessels to keep the GLNS operating reliability
    and efficiently. I've already mentioned the importance of the Soo
    Locks. We are pleased that the U.S. Army Corps of Engineers will soon
    begin construction on a second Poe-sized lock. More important than the
    efficiency gains it will provide is the system resiliency. No longer
    will we be dependent on a single point of failure. The maintenance of
    channel depths and harbor breakwalls is also critical to the GLNS. I
    applaud the Transportation and Infrastructure Committee's efforts to
    fully spend the Harbor Maintenance Trust Fund. Through your efforts, we
    have made great strides. On the Great Lakes we also need adequate and
    reliable U.S. Coast Guard icebreakers, but we appear to be losing
    ground on that front.
    Maritime Regulation
        Because U.S. lakers carry low-value cargo and our vessel operators
    must make large annual investments just to maintain their current
    fleet, we operate on thin margins. This makes U.S.-flag laker operators
    sensitive to the cost impacts of regulations. While U.S. federal
    agencies typically attempt to ensure that these cost impacts on U.S.
    lakers do not eliminate our economic viability when considering new
    regulations that directly impact us, this is not the case with Canada.
        Transport Canada recently proposed new ballast water regulations
    that would force U.S.-flag laker operators to either spend hundreds of
    millions of dollars to comply or give up our portion of the U.S.-Canada
    maritime trade. The Canadian government knows that their proposed
    regulations would likely force our vessels out of that trade, leaving
    Canadian vessels as the only option for U.S. exporters to ship
    commodities by water to Canada. Although this cargo is a small portion
    of our overall business, its loss would reduce U.S.-flag laker
    operators' revenue and our ability to reinvest in our short sea
    shipping assets.
                                   conclusion
        The Lake Carriers' Association was formed in 1880. Our members were
    and continue to be engaged in short sea shipping. Our business has
    evolved to meet the needs of our customers. As we often say in the
    transportation world, cargo is king and the transportation industry
    evolves to serve its needs. We have changed the size of our vessels and
    invented self-unloading technology. We have exploited the laws of
    physics that make the marine mode of transportation the most efficient,
    environmentally friendly and socially responsible mode of
    transportation. In order to grow the domestic maritime industry, we
    need:

            Regulatory stability--support the Jones Act and carefully
            consider the cost impacts of new regulations
            Infrastructure investment--dredging, breakwalls, locks, and
            icebreakers
            System resiliency--a new Poe-sized lock at Sault Ste. Marie, MI

        Moving low value, heavy, raw material is what we do best. We have
    been doing it for over 100 years and I believe will do it for the next
    100. We can do more and we will. All it takes is sufficient cargo over
    enough time to justify the investment.
        Thank you for your interest and for the opportunity to provide my
    perspective. I will answer any questions you may have about these
    concerns.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Mr. Maloney. Thank you, Mr. Weakley.
        Mr. Willis.
        Mr. Willis. Good afternoon, Chairman Maloney, Ranking
    Member Gibbs. On behalf of the Transportation Trades Department
    of the AFL-CIO and our affiliated unions, I want to thank you
    for inviting us to testify this morning, and appreciate the
    interest of the subcommittee in finding new and innovative ways
    to grow our U.S. maritime industry.
        You know, since the Nation's beginnings, waterborne freight
    transportation has been key to moving goods in this country.
    The mariners, the shipbuilders, the dredgers, the longshore
    workers represented by TTD's unions, we are on the front lines
    of this industry and we are fully supportive of the swift
    deployment of short sea shipping.
        Better utilizing our marine highways, we can reduce
    congestion and delays at our major port, which in turn reduces
    the strain on the entire freight network.
        Short sea shipping is also green shipping. It offers a
    viable freight alternative on vessels that are highly fuel
    efficient with lower emissions, and this impact is further
    magnified by cutting idling times and fuel consumption from
    trucks that service our U.S. seaports.
        And as noted, it is a particularly effective method of
    transporting goods that can be challenging to move via other
    modes of transportation, including oversized and overweight
    cargoes.
        But today's hearing, it asks a bigger and, I think, an
    important question of how best to rebuild this industry. And we
    are here to say that we think utilizing our marine highway is
    part of that puzzle.
        The U.S. maritime sector, this committee knows this, has
    long suffered due to unfair competition from unscrupulous
    foreign-flagged shippers. These companies, they have no
    interest in the fair treatment of workers or safe working
    conditions, let alone employing Americans. But because most
    short sea shipping would take place between U.S. destinations
    on vessels that are U.S. flagged by law, it would guarantee
    thousands of good-paying jobs in this country. Jobs, quite
    frankly, that cannot come quickly enough.
        In times of humanitarian crisis and war, the Department of
    Defense calls into service commercial mariners and their
    vessels. Today, the existing pool is inadequate to meet DoD's
    sealift needs. The jobs created by short sea shipping, they can
    close this gap, creating both economic and national security
    benefits with a single stroke.
        Furthermore, short sea shipping would breathe new life into
    America's shipbuilding industry. Once a point of pride in this
    country, too many American shipyards struggle to compete with
    Chinese and Korea shipyards that are heavily and unfairly state
    subsidized. If we cannot change course on this, we run the real
    risk of losing our ability to build commercial vehicles in this
    country and that should be unacceptable.
        A steady demand for Jones Act ships would put this industry
    and the jobs it is able to support on stable footing. And as
    short sea shipping generates business for ports of all sizes,
    it will create jobs on the longshore side, unloading and
    loading new water-bound cargoes.
        And I would be remiss if I did not point out that the jobs
    created in these industries are good jobs, the kind that people
    can raise families on. Why? Because workers in maritime and
    related sectors enjoy the benefits of strong union contracts.
        The policy and commercial benefits of the marine highway
    system, they are clear to us, and I think you have consensus on
    that from this panel, but despite this, we have failed as a
    Nation to unlock the potential.
        We offer several ideas for Congress to consider, not an
    all-inclusive list, but we should examine existing programs
    like those meant to assist domestic shipbuilding to determine
    if they can be modified or applied to support short sea
    shipping.
        Grants, Federal grants, designed to facilitate marine
    highway services should be significantly increased. The initial
    cost of acquiring equipment and infrastructure improvements
    necessary for short sea shipping can be significant, and
    Federal dollars, we think, are necessary to reduce this market
    barrier to entry.
        But the biggest hindrance to the use of short sea shipping
    is the double tax imposed under the Harbor Maintenance Trust
    Fund. By taxing shippers twice, once when their goods reach a
    port of entry and again when these same exact goods arrive at a
    secondary port, this law arbitrarily deincentivized shippers
    from choosing short sea shipping as a viable method to move
    their products.
        We support legislation that will end this double tax and
    pave the way for the marine highway to become an integral part
    of our freight network. We stand ready to work with this
    committee on this policy and others that strengthen the U.S.
    maritime industry, create new jobs, and promise all the
    economic benefits that short sea shipping we know has to offer.
        Thank you.
        [Mr. Willis's prepared statement follows:]

    Prepared Statement of Larry I. Willis, President, Transportation Trades
                              Department, AFL-CIO
        On behalf of the Transportation Trades Department of the AFL-CIO
    and our affiliated unions, I want to first thank Chairman Maloney and
    Ranking Member Gibbs for inviting me to testify before you today.\1\ We
    deeply appreciate the Subcommittee's interest in taking a fresh look at
    ways to promote the domestic maritime industry.
    ---------------------------------------------------------------------------
        \1\ Attached is a complete list of TTD's 33 affiliate unions.
    ---------------------------------------------------------------------------
        It is time to have serious conversations in this country about our
    national freight network and the ever-increasing demand put on it. In
    2015, across all modes of transportation, the U.S. moved 18.1 billion
    tons of goods worth about $19.2 trillion. By 2045, the Department of
    Transportation estimates that we will move 25 billion tons of freight
    annually. Our existing network is strained as is, and the costs
    associated with delays and congestion associated with adding even more
    freight are substantial. It is imperative that we consider how our
    transportation network can develop and adapt to the needs of our
    economy. We cannot let economic growth, good jobs and prosperity pass
    us by because we lack the capability and capacity to take advantage.
        Since the nation's beginnings, waterborne freight transportation
    has been an integral component of how we move goods domestically. As we
    continue to address our needs, maritime shipping must be a linchpin of
    any national freight strategy. The maritime industry and the workers we
    represent look forward to continuing to rise to the challenge.
        For this reason, we are pleased the Subcommittee is focused on
    unlocking the benefits of short sea shipping. A fully developed short
    sea shipping sector would provide shippers an additional and viable
    option as they determine how to best direct cargo to its final
    destination. In most instances, goods arrive at large hub ports like
    L.A./Long Beach and New York/New Jersey aboard massive Panamax and
    Post-Panamax vessels and are then transferred to surface transportation
    shipping options. A short sea shipping model would allow these goods
    travel down the coasts or through inland waterways to their ultimate
    destinations or to less congested smaller ports and harbors.
        As Congress, the GAO and the Maritime Administration have noted on
    many occasions, the potential benefits of this model are significant.
    As cargo volumes at major ports continue to rise, congestion at these
    facilities presents an increasingly difficult and costly problem. A
    recent Wall Street Joumal story described a trucking company who, due
    to bottlenecks at the Port of Virginia, can move half as much goods per
    day as it could last year. We've also heard from our members of two,
    four, and even ten hour tum times at crowed ports. Moving cargo along
    the coast or inland waterways to smaller facilities can significantly
    reduce congestion at larger ports, decreasing the amount of time cargo
    spends sitting on the dock or in warehouses, and cutting delays for
    existing freight services.
        Short sea shipping is also green shipping. When transporting
    substantial volumes, utilizing these vessels is highly fuel efficient
    per cargo ton-mile, and can result in substantially reduced emissions.
    The environmental benefits of short sea shipping also go well beyond
    the fuel efficiency of any particular vessel. Delays at ports and on
    the surface freight network more broadly can result in unnecessary
    truck idling and wasted fuel. The utilization of short sea shipping can
    have a multiplier effect, functioning as a green option individually
    while simultaneously increasing efficiency in other freight modes.
        It also makes sense from a commercial perspective. There are
    innumerable uses of a short sea shipping network, but moving certain
    cargoes such as heavy, oversized, lower-value, and non-time-sensitive
    goods can be extremely cost effective. These cargoes can present
    challenges when shipped over surface modes, but are easily moved on
    short sea container vessels or barges. Hazardous materials shippers
    could also take advantage of the network when surface permitting
    requirements prove too costly.
        Today's hearing asks the bigger question of how to best rebuild our
    maritime industry. We are here because we think short sea shipping is
    part of that puzzle. The U.S. maritime sector has long suffered due to
    unfair competition with unscrupulous foreign-flagged shippers. These
    companies evade responsibility by registering in countries with no
    labor or environmental protections, pay their mariners poorly, and are
    known to simply abandon injured or sick mariners in foreign ports with
    no way back home. We have watched as huge swaths of the industry have
    abandoned the U.S. to operate under foreign flags. However, as most
    short sea shipping would take place between U.S. destinations on
    vessels that are U.S. flagged by law, it would guarantee thousands of
    good paying mariner jobs in this country, an excellent step in the
    right direction.
        These jobs cannot come quickly enough. Due to partnerships like the
    Maritime Security Program, many domestic U.S. mariners wear two hats.
    They work aboard commercial vessels in the course of their normal
    duties, but they can be called upon to provide sea-lift capacity to the
    U.S. military in times of war or humanitarian crisis. This additional
    capacity is of critical importance to national defense, and is
    something the country simply cannot do without.
        As Admiral Buzby highlighted earlier this year, we are 1,800
    civilian mariners short of the Department of Defense's needs. As we
    like to say in the maritime industry, cargo is king. If there is cargo,
    we will train the mariners and build the vessels needed to carry it. By
    increasing the availability of cargo moved through a strong short sea
    shipping network, we have the opportunity to create thousands of good
    seafaring jobs and address pressing national security needs with a
    single stroke. For these reasons alone, we should take every action to
    promote short sea services.
        Short sea shipping also holds promise for the American shipbuilding
    industry. Increases in shipping between domestic ports means increased
    demand for U.S.-built Jones Act-compliant ships. American shipbuilding
    companies do not manufacture the types of small to medium-sized
    container vessels that would be most valuable in coastal short sea
    shipping. Why? Because the domestic demand for these vessels does not
    currently exist--a demand that short sea shipping creates. Increased
    demands could also result in orders for new barges to replace many of
    the 28,000 aging Jones Act barges currently in service.
        These orders could alleviate difficult circumstances for the
    shipbuilding industry, which employs over 100,000 workers across the
    country. Many shipyards are struggling to find the reliable orders
    necessary to keep the lights on, in no small part due to the
    impossibility of trying to compete with foreign shipyards in China and
    Korea that are deeply state-subsidized. The further decline of U.S.
    shipbuilding would be deeply damaging to the the U.S. economy and our
    U.S.-flagged commercial fleet.
        If the shipbuilding industry is allowed to erode further, this
    decline will be difficult to reverse. Skilled tradesmen will move to
    other sectors, and expensive facilities will be permanently shuttered
    or repurposed. We will be faced with a scenario in which we cannot
    produce vessels in either the short or the long term for the first time
    in our history. This is unacceptable. Creating a steady demand for U.S.
    built vessels engaged in trade along our coasts will provide a badly
    needed boost to the industry.
        Increased maritime traffic from short sea shipping would also
    create new longshore jobs. Jobs would be created at hub ports where
    longshoremen move goods to smaller vessels and also at the smaller
    ports and harbors which currently receive less traffic. These
    facilities would be obligated to hire more workers to handle the
    increase in cargo volumes that short sea shipping would bring.
        The benefits of short sea shipping are clear but existing services
    are minimal. It is incumbent on us to bridge this divide First, all
    stakeholders must increase the visibility and explain the viability of
    short sea shipping. Shippers' familiarity with the service and
    understanding of its merits is a large hurdle to overcome. Companies
    simply will not order what they do not know is on the menu of freight
    options.
        Additionally, MARAD must devote its resources towards both
    promoting short sea shipping and determining what administrative,
    regulatory, or statutory changes are necessary to achieve the level of
    service MARAD has previously called for. We also recommend that
    Congress specifically examine how existing shipbuilding programs like
    the Federal Ship Financing Program (Title XI), Capital Construction
    Fund and Construction Reserve Fund could be deployed in the effort to
    encourage the growth of short sea shipping, and if changes to those
    programs or new programs entirely may be effectual.
        Finally, and perhaps most importantly, Congress must take immediate
    action to end the Harbor Maintenance Trust Fund's ``double tax''.
    Currently, the statute imposes a tax on vessel bound imports when those
    goods reach their first destination. If those goods are then moved by
    rail or truck, this is the full extent to which shippers pay into the
    HMTF. However, if goods are moved onto smaller ships or barges, the tax
    will be imposed again on arrival at a secondary port or harbor. By
    applying the tax multiple times, current law arbitrarily
    disincentivizes short sea shipping, as shippers have no interest in
    being taxed twice on the same goods.
        TTD has previously supported legislation that would enact this
    overdue fix. We look forward to supporting future legislative efforts
    in this regard, which will be required if any progress is to be made to
    make short sea shipping a reality.
        We stand ready to work with this committee on policies that
    strengthen the U.S maritime industry, create new jobs and promote short
    sea shipping. Thank you for the opportunity to testify.

                               TTD MEMBER UNIONS

      Air Line Pilots Association (ALPA)
      Amalgamated Transit Union (ATU)
      American Federation of Government Employees (AFGE)
      American Federation of State, County and Municipal Employees
    (AFSCME)
      American Federation of Teachers (AFT)
      Association of Flight Attendants-CWA (AFA-CWA)
      American Train Dispatchers Association (ATDA)
      Brotherhood of Railroad Signalmen (BRS)
      Communications Workers of America (CWA)
      International Association of Fire Fighters (IAFF)
      International Association of Machinists and Aerospace Workers
    (IAM)
      International Brotherhood of Boilermakers, Iron Ship
    Builders, Blacksmiths, Forgers and Helpers (IBB)
      International Brotherhood of Electrical Workers (IBEW)
      International Longshoremen's Association (ILA)
      International Organization of Masters, Mates & Pilots, ILA
    (MM&P)
      International Union of Operating Engineers (IUOE)
      Laborers' International Union of North America (LIUNA)
      Marine Engineers' Beneficial Association (MEBA)
      National Air Traffic Controllers Association (NATCA)
      National Association of Letter Carriers (NALC)
      National Conference of Firemen and Oilers, SEIU (NCFO, SEIU)
      National Federation of Public and Private Employees (NFOPAPE)
      Office and Professional Employees International Union (OPEIU)
      Professional Aviation Safety Specialists (PASS)
      Sailors' Union of the Pacific (SUP)
      Sheet Metal, Air, Rail and Transportation Workers (SMART)
      SMART-Transportation Division
      Transportation Communications Union/IAM (TCU)
      Transport Workers Union of America (TWU)
      UNITE HERE!
      United Automobile, Aerospace and Agricultural Implement
    Workers of America (UAW)
      United Mine Workers of America (UMWA)
      United Steel, Paper and Forestry, Rubber, Manufacturing,
    Energy, Allied Industrial and Service Workers International Union (USW)

     These 33 labor organizations are members of and represented by the TTD

        Mr. Maloney. Thank you, sir. And I am very interested in
    the point you ended on, and I would like to get the perspective
    of other witnesses as well, about the Harbor Maintenance Tax.
    For the people who don't understand, I think you laid it out
    pretty well.
        You know, there is a double tax applied to any cargo
    transshipped to another U.S. port, whether it is domestic or
    international in its original origin. How burdensome is the
    second application of that Harbor Maintenance Tax to develop
    short sea shipping? Mr. Nass, Mr. Weakley, Mr. Willis, if you
    want to expand on that. It is a big issue for many of us on the
    committee.
        Mr. Nass. So when we met a couple weeks ago with some
    beneficial cargo owners and port owners and shippers up and
    down the east coast, the biggest part of the discussion was you
    have to be competitive. A business is not going to move to a
    mode of transportation that is more expensive than less
    expensive. It is that simple.
        So I believe any way that you can make waterborne
    transportation more cost effective, more competitive, is going
    to help get this program going. And I think, really, what we
    need to do as a Nation is recognize the benefits of moving
    heavy cargo off the road.
        The numbers I have heard, 44 cents, 46 cents, damage to a
    roadway from a heavy box. I see a win-win here, you know. Let's
    spend 10 cents on getting that box onto the water. And
    certainly, the Harbor Maintenance Tax, the notion of even--it
    sounds like a small amount for your average person, right, .125
    in an industry, though, where margins are razor thin and any
    cost that you add to any of it just makes it that much less
    competitive.
        Mr. Maloney. Appreciate that.
        Mr. Weakley, I don't know if we can get your slide back up.
    I thought it was actually pretty compelling, and it doesn't
    even include the point Mr. Nass just made about the external
    cost of maintaining those roadways, right? That is not included
    in your number?
        Mr. Weakley. Correct, sir, that does not include that
    external cost of the Harbor Maintenance Trust Fund. I concur
    with everything Mr. Nass said, as well as Mr. Willis. If I may
    pick up on a point Congressman Garamendi mentioned, it is not
    only a disincentive to get around the west coast ports, it is a
    disincentive for containers to come into the Great Lakes. They
    are offloaded in Montreal and Quebec, they are put on a rail,
    and they are railed into Detroit, Chicago. I see them crossing
    the bridges all the time.
        In the Port of Cleveland, they have come up with an
    innovative approach to subsidize direct containerships on a
    more liner basis to Europe. I think they have since stopped
    subsidizing that. It still survives. However, the exact problem
    we are talking about prevents Cleveland from being a feeder
    port, a hub and spoke to Europe because of that second domestic
    move. So it is a challenge for us on the lakes too, sir.
        Mr. Maloney. Thank you.
        With that, I will yield to the gentleman from Ohio, Mr.
    Gibbs.
        Mr. Gibbs. Thank you, Chairman.
        I do want to welcome Mr. Weakley, because he is a
    constituent. It is always nice to have a constituent here.
        Mr. Weakley, you talk about the Soo locks project in your
    testimony, and I have always been a strong advocate since my
    tenure here that that should be of national significant
    importance. I think during World War II we had a brigade up
    there guarding it; they were so worried about it.
        Can you tell us where we are in the process of getting that
    redone?
        Mr. Weakley. So, Congressman, again, I appreciate all your
    support over the years, particularly your support through this
    subcommittee.
        Great news on the Soo locks. They have developed a positive
    benefit to cost ratio. The Army Corps, to its credit, and to
    OMB to its credit, recognized that this lock is of critical
    significance well beyond the benefit to cost ratio.
        As you mentioned, there were 10,000 troops up there. In
    fiscal year 2019, we got $32.3 million out of the work plan.
    The President's budget proposed $75.3 million. I think it
    should be--I think it just passed. Was that one of the things
    you were just voting on on the omnibus? So we are hoping that
    will go forward. The project is well underway, and the State of
    Michigan kicked in $52 million towards that project.
        So I am not an optimist by nature, sir, but I am convinced
    this project is going to go forward.
        Mr. Gibbs. Well, I think I'll just reminiscence here a
    little bit. When I was chairman of the Water Resources and
    Environment Subcommittee, Secretary Darcy at the time, we were
    talking about the cost-benefit analysis. And I said to her, I
    think we can do this here in 15 minutes. Me and you can get it
    done. So I am glad to see it is finally moving, because it
    seemed like to me it was a no-brainer.
        Mr. Weakley. Thank you, sir. I should also thank this
    committee for reauthorizing it in the WRDA 2018. So thank you
    for that, sir.
        Mr. Gibbs. Go back to the Harbor Maintenance Trust Fund
    fee, the .125 percent. It doesn't sound like a lot of money,
    but I want to--you know, it is interesting. All three of you in
    the testimony now, because if you have $1 million worth of
    cargo, that is 1,250 bucks. You get charged once. You get
    charged twice. So, you know, 2,500 bucks. It doesn't sound like
    a whole lot of money for a big ship if it is $1 million of
    cargo, but your competition doesn't have that, is what you are
    saying.
        And then you also got the challenge you are limited to
    where you can move because of where the water is, and I am glad
    to hear you say about how much improvement has been made in the
    infrastructure and unloading and loading, because when that
    vessel is sitting there, that is time. That is money, right?
        And I know when I was over at the Shanghai port in China, I
    unbelievably heard of when they told us how fast they were
    turning those ships around. It was sometimes in less than 24
    hours, or 36 hours, I guess, depending on the tide. So that is
    amazing, all those containers. And I know in Cleveland we have
    had the discussion that you are trying to do that with the
    containers.
        So I guess the point I am just trying to make, emphasize,
    it doesn't sound like a lot of money, but when you have got the
    competition with rail and truck and their ability to move that
    cargo from point A to point B, the faster route, to the end
    customer, that is what really factors in and makes it a
    negative for you. Is that correct, right?
        Mr. Weakley. Yes, sir. I would agree. Also, time value of
    money, our ships are moving slower through the water than they
    are over the road. So we have to make that up by handling point
    and by economies of scales.
        I will defer to Mr. Nass.
        Mr. Nass. Absolutely. Efficiency at the dock is the name of
    the game. That ship is only making money when it is moving.
        Mr. Gibbs. The thought that came to my head here, going
    back 10 years or so, how much change in efficiency at the docks
    would you estimate we have picked up?
        Mr. Nass. Well, sir, in our instance, we didn't exist 10
    years ago.
        Mr. Gibbs. Oh, OK.
        Mr. Nass. So, my timeframe is 5 years.
        Mr. Gibbs. OK.
        Mr. Nass. And we were the recipient of a FASTLANE grant
    that brought in some new machinery. And we really struggled at
    about 10 moves an hour when we first started 5 years ago. With
    a new vessel, with a new crane, with a great labor force that
    is getting better and better every day, we are up to 23 moves
    an hour. That makes a big difference. It means the ship is
    leaving in a day and not----
        Mr. Gibbs. It doubles efficiency. That is good.
        Mr. Nass. Yes, sir.
        Mr. Gibbs. Mr. Weakley, just quickly, you talked about the
    ice cutters on the Great Lakes. Do you want to just point about
    the important--I am meeting with the Commandant tomorrow night.
    I thought maybe it might be good to get some more information
    on that.
        Mr. Weakley. Well, sir, with the chairman's permission, I
    will provide some more detailed information for the record. But
    I can tell you, in the winter of 2013-2014, we left 6.8 million
    tons on the dock because of inadequate ice-breaking. That cost
    the U.S. economy 3,800 jobs and $705 million in lost economic
    activity because of inadequate ice-breaking. The winter of
    2014-2015, similar numbers, 3.2 million tons, 2,000 jobs, $355
    million in lost economic activity.
        The reliability is abysmal. This year, four of their nine
    icebreakers were out of commission. Last winter, five of their
    nine icebreakers simultaneously inoperable.
        Mr. Gibbs. OK. That is good to know.
        Thank you. I yield back.
        Mr. Maloney. I thank the gentleman.
        One bit of housekeeping. Without objection, I would ask
    unanimous consent to also include a statement by Mr. Percy Pyne
    of Green Shipping Line into the record.
        [The information follows:]

     Letter of June 19, 2019, from Percy R. Pyne, Chairman and CEO, Green
            Shipping Line, Submitted for the Record by Hon. Maloney
                                                         June 19, 2019.
    United States House Transportation and Infrastructure Committee, Coast
            Guard and Maritime Transportation Subcommittee

    Hearing on ``Short Sea Shipping: Rebuilding America's Maritime
    Industry''

        Honored Members:
        Thank you for this opportunity to offer my thoughts to your
    Committee.
        I am the Chairman and CEO of Green Shipping Line. Our goal is to
    invigorate the nation's most underutilized mode of transportation and
    help rebuild America's maritime industry. We intend to build modern,
    fuel-efficient Jones Act compliant feeder ships for short sea shipping
    on the American Marine Highways and for the installation and
    maintenance of wind farms along the coast.
        While all other modes of transportation are at or exceeding their
    capacity, short sea shipping offers a solution to help ease our
    congested highways, ports, airports and railways. When implemented,
    short sea shipping will add reliable waterborne options for shippers
    seeking resiliency and redundancy to their supply chain management.
        The United States is a nation that was built on its water systems
    which dictated its patterns of development. Using our waterways was the
    preferred choice for transportation and trade until the mid-1960s.
    Historically, we were the number one ship building nation in the world
    until the mid-1980s and we produced more than 5,000 marine assets of
    all kinds in 3 years during WWII.
        Today, our nation faces a significant and growing infrastructure
    and distribution crisis. That being the reality, we at Green Shipping
    Line have looked to our past to find 21st century solutions for our
    21st century problem. Our strong belief is that short sea shipping is
    the answer and Jones Act commercial shipbuilding is critical to our
    national security and economic survival.
        In order to understand how commercial ship building is performed in
    other countries today, we travelled the world to view how other ship
    building nations including Korea, Germany and the Netherlands have
    adopted, integrated and co-opted our systems.
        Having discovered many new techniques, we have formed joint
    initiatives with German, Dutch and Norwegian companies to bring their
    knowledge to re-invigorate our small vessel commercial shipbuilding
    industry. Further, we have sought out and began a long running dialogue
    with our U.S. shipbuilding and maritime unions and the ILA to engage
    them in our initiative from the beginning. The Unions are critical to
    our effort as their members will ultimately build, man, and service our
    ships. We are working with states such as Maryland to create training
    programs and exclusively with ABS to ensure that our designs meet both
    IMO and USCG standards.
        One regional yard, Moran Iron Works, has been with us every step of
    the way on the journey so far. However, the journey is just beginning
    and we expect more will follow in the future.
        What could our government do to help?
        (1)  MARAD must promote the America's Marine Highway program (AMH)
    as defined in the 2007 National Security Law Section C to educate our
    citizens on the importance of: the unlimited capacity of the AMH that
    costs nothing to build and little to maintain, our significant existing
    port networks, green economical water transportation, and
    containerization.
        (2)  Offer Government support in the form of ``Completion
    Guarantees'' or ``Refund Guarantee'' schemes that helped the German KGs
    and Korean shipbuilders.
        In the rest of the world, rail, trucking and water transport all
    work together to move and distribute goods. (The proportions are
    roughly equal between the three.) Adding water to our transportation
    mix will not take away or diminish the need for rail or trucking, but
    rather compliments it.
        In conclusion, we believe that a vibrant short sea shipping
    network, that every other industrialized economy in the world relies on
    for transport and distribution of goods, is the only answer that will
    save our landside transportation networks and allow our economy and
    population to grow unabated. It's ironic that the United States, the
    country with the longest coastlines and most developed ports network in
    the world, is the only developed country without a short sea network.
        Thank you again for this opportunity to express our views.
            Yours sincerely,
                                               Percy R. Pyne IV
                                  Chairman and CEO, Green Shipping Line

    cc: Tom Moran, Moran Iron Works Founder and CEO
    Peter Franchot, State of Maryland Comptroller
    Tom Trotter, AFL-CIO Legislative Representative Government Affairs
    Dennis Daggett, ILA Executive Vice President
    Scott Cowan, ILA Vice President
    Rich Krueger, ILA Vice President
    Don Marcus, MM&P President
    Thorsten Schutt, Kongstein Chairman of the Board
    Peter Tamm, Tamm Media CEO
    Suresh Pisini, ABS Structures Group
    Lauren Brand, MARAD Associate Administrator for Intermodal System
    Development
    Brian Davis, White Star International President
    Colleen Robertson, Green Shipping Line Managing Director

        Mr. Maloney. Mr. Garamendi.
        Mr. Garamendi. Somebody mentioned icebreakers? I just wrote
    down the two numbers here, $705 million and $365 million. Is
    that correct?
        Mr. Weakley. $705 million and $355 million, sir.
        Mr. Garamendi. A super heavy icebreaker runs about $700
    million a copy, and that is not for the Great Lakes, that is
    for the Arctic. Just keep in mind the relative costs and the
    benefits associated with icebreakers. Thank you for mentioning
    it. This committee has been super on that issue.
        We have talked about the double taxation here, which seems
    to be maybe not the only issue but a significant issue. We need
    to get down to the numbers on the potential revenue that is
    lost currently and the economic activity that could be gained
    were there no double taxation. So if you gentlemen could help
    us with that analysis, it would be very useful.
        My sense of it is that there is not much tax loss now,
    should we eliminate the double taxation. But we are going to
    have to score that. And if there is a tax bill ever, then we
    would want to have this in it. So we would want to have that
    kind of detailed information, if you could develop that.
        Also, there is another way of going about it, and you
    mentioned Cleveland and that Cleveland essentially rebated that
    tax. Once again, numbers would be useful here. We have the
    annual appropriation of $7 million, $10 million, whatever, for
    the marine highway system, and just thinking of different ways
    we can get this job done. On the tax side, you can rebate. We
    could appropriate the money and then it gets rebated or we can
    eliminate the tax. So, once again, numbers would be very useful
    for that.
        Also, the efficiency of loading and unloading, which is
    said to be a problem. Appreciate your testimony on the
    efficiency that you have achieved in Maine. But this may be an
    infrastructure problem on the ports and the docks themselves.
    So I would like to get some detail on that. What are we talking
    about? There is one example in the written testimony here of a
    method that did that.
        So if you could just discuss those things, if you have the
    numbers, if you have what it takes to make the dock efficient
    for this purpose. Whichever one of you wants to jump in.
        Mr. Nass. Maybe I can touch on the infrastructure end of
    it. We have invested about $64 million into our relatively
    small terminal. Much of that revolves around being more
    efficient.
        For instance, our maintenance facility was on the pier when
    we started. The wrecking balls are coming today. We built a new
    maintenance facility out of the way, and the entire notion is
    to create that ship-to-shore space that just makes it more
    efficient to unload a vessel. Similarly, we have expanded our
    pier space and put new equipment on there, and it pays off.
        The ROI on this, you know, is a matter of years when the
    infrastructure lasts an awful long time. Our oldest crane is
    over 20 years old, and she is still working great. We think it
    is worth the investment.
        Mr. Garamendi. Is there a specialty issue here also, the
    kind of equipment that you need to take from, perhaps not in
    Maine, but any of the major docks and ports, east coast, west
    coast, coming off a big ship, putting it on a small vessel or a
    tug or--excuse me--a barge? Are we talking about different
    kinds of infrastructure that would be needed?
        Mr. Nass. I think the equipment we have at the
    International Marine Terminal in Portland is the same type of
    equipment you would use for barge operations, mobile harbor
    cranes, reach stackers, those types of items.
        Mr. Garamendi. Very good.
        One of the things we did a couple of years ago was to allow
    the Harbor Maintenance Fund to be used for on-the-dock
    improvements, which has really not been used very much.
        My final point would be a question for us to try to get
    into, and that is--and I did not ask this of Admiral Buzby.
    What are the specific projects that are lined up? What we have
    now created is what I call administrative earmarks. I want to
    know what his earmarks are. So if we can dig that out and see
    how they fit into the testimony and the priorities that you
    have mentioned.
        With that, I yield back.
        Mr. Maloney. I thank the gentleman.
        Mr. Gallagher.
        Mr. Gallagher. Thank you, Mr. Chairman.
        And I appreciate what I sense to be the bipartisan love of
    icebreakers on this committee. I would like to probe the depths
    of that a little bit more. And I want to thank all of our
    witnesses for being here, for being patient with our schedule.
        And thank you, Mr. Weakley, for your eloquent testimony to
    the importance of the Great Lakes. And I represent Green Bay,
    Wisconsin, and that is obviously critical to our economic
    success. The Port of Green Bay in particular is an essential
    part of maritime trade. We have over 166 vessel arrivals that
    generate $147 million in economic impact in the region. As you
    mention, we move everything from iron ore to Wisconsin soy.
    But, ultimately, that trade is dependent on shipping lanes on
    the Great Lakes being open, and in the wintertime, that means
    icebreakers. It gets cold in my neck of the woods, in case
    anyone was wondering.
        So the Coast Guard right now operates 12 icebreakers that
    are in high demand for one-quarter of the year, but only one of
    these, the Mackinaw, is of medium size and was intended to work
    in a pair, meaning that it must cut backwards on each shipping
    lane without a second Mackinaw.
        So last month, I questioned, and we had a great dialogue on
    this committee. I questioned Admiral Schultz from the Coast
    Guard on the need for a new icebreaker for the Great Lakes, and
    I know you have already talked about the economic impact, but
    in your testimony, you mentioned that we are losing ground. You
    sort of briefly mentioned that we are losing ground with
    respect to U.S. Coast Guard Great Lakes ice-breaking. And I
    just wanted to give you a chance to kind of explain and expound
    upon that comment.
        Mr. Weakley. So I will focus on two areas, the 140s and the
    need for the new Mac. So the 140s are going through their
    Service Life Extension Program, or their SLEP. The biggest
    problem with that SLEP program is they are not replacing the
    engines. Those engines are 30 to 40 years old. They are very
    expensive to maintain. They are very finicky. They could have
    put a brandnew tier 4 state-of-the-art, lower energy, lower
    pollution, more reliable engine with a reliable inventory of
    spare parts in the commercial industry; that would have
    streamlined it. In fact, the Morro Bay, one of the ships that
    was out for a month, was out of commission for a month, and it
    is a post-SLEP.
        A Biscayne Bay, 16 months out of commission because of an
    engine casualty. It took them 8 months to build the ship. It
    took them 16 months to fix an engine repair. As a former Coast
    Guard officer and a former engineer in the Coast Guard, I find
    that somewhat frustrating.
        The Mackinaw, as you mentioned, it is basically a single
    point of failure. If the Mighty Mac goes down, we are not going
    to open Sturgeon Bay. We are not going to open our shipyards to
    get them out of layup. We are not going to get them through
    Lake Superior. The original plan was to build two Mackinaws.
    They cut that. I think there is some suggestion of combining it
    with the polar program. The problem I see with that, sir, is
    that it would waste a $100 million, you know, to build a Polar-
    class icebreaker for the Great Lakes. We need a second Mac
    size. We don't need a Polar. The ice conditions are different.
    They are different styles of ice, and it is a different
    operation. We need more maneuverability than they need in the
    Arctic.
        The old Mac was heavier, wider, did a better job to handle
    our thousand footers. The new Mac is more maneuverable, but it
    needed the second. The original plan, had they stuck with it,
    would have worked. Unfortunately, cost cutting has a cost to us
    and the economy.
        Mr. Gallagher. You mentioned the Mac as a single point of
    failure and that we would have to shut down Sturgeon Bay, et
    cetera. Is it even possible to quantify the economic impact in
    such a scenario?
        Mr. Weakley. Well, the best I could do is the 2014-2015
    numbers I would give you, but really, it would be catastrophic.
    There is no way to measure the cost of shutting down a steel
    mill. I think they estimated it would be $100 million, because
    if you do a cold shutdown that is not planned, you have to
    realign the steel mill. It would be catastrophic to the steel
    mills of Indiana.
        Mr. Gallagher. I appreciate that.
        Mr. Chairman, I yield back. And we have got to break the
    ice.
        Mr. Maloney. I thank the gentleman for that bipartisan note
    of consensus.
        I don't see any further questions of the committee. I know
    we have kept you gentlemen well past the time you probably
    expected. So in the interest of respecting everyone's schedule,
    I would like to thank all of you for your testimony. Your
    contribution to today's discussion has been very informative
    and helpful.
        I would ask unanimous consent that the record stays here
    and remain open until such time as our witnesses have provided
    the answers to any questions that may have been submitted to
    them in writing. I further ask unanimous consent that the
    record remain open for 15 days for any additional comments and
    information submitted by Members or witnesses to be included in
    the record of today's hearing. Without objection, so ordered.
        If no other Members have anything to add, with the thanks
    to our panelists, the committee stands adjourned.
        [Whereupon, at 4:29 p.m., the subcommittee was adjourned.]

                           Submissions for the Record

                                  ----------

       Prepared Statement of Hon. Peter A. DeFazio, a Representative in
          Congress from the State of Oregon, and Chair, Committee on
                       Transportation and Infrastructure
        Thank you, Mr. Chairman. Earlier this year, the subcommittee held a
    hearing to assess the condition of the U.S. maritime industry and to
    begin an overdue discussion of what we can do in Congress to stimulate
    greater job creation and economic opportunity in this vital mode of
    transportation.
        This afternoon's hearing to examine short sea shipping, or, as the
    Obama administration tagged it, ``Marine Highways,'' is an excellent
    follow on topic.
        As noted by the Committee on the Marine Transportation System,
    waterborne cargo and associated activities contribute more than $649
    billion annually in personal wage and salary income and local
    consumption expenditures. Waterborne commerce also sustains an
    estimated 13.3 million direct and indirect port-related jobs, and
    contributes over $212 billion in annual port sector federal, state, and
    local taxes.
        Those are impressive numbers. If projections by the U.S. Department
    of Transportation's Bureau of Transportation Statistics hold, it is a
    safe bet that the total volume and value of marine commerce will
    continue to rise in the coming decade.
        Of course, ill-advised trade wars may alter those projections, but
    I prefer to remain optimistic.
        The bottom line is that we are going to have to move substantially
    more freight around the country. Short sea shipping--currently under-
    utilized--offers the potential to move greater volumes of freight via
    the most efficient and cost-effective manner available, bar none.
        Moreover, short sea shipping offers other collateral benefits, such
    as increased transportation options for shippers and reduced congestion
    on crowded highways. In addition, lower vehicle emissions and better
    air quality in densely populated metropolitan areas, and increased
    employment in the longshore and domestic maritime industries, are both
    desirable outcomes that are good for our economy and our communities.
        Considering these attributes and the projections of rising freight
    volumes, it remains a puzzle as to why short sea shipping has not risen
    in prominence as a competitive transportation option.
        I expect this hearing to identify factors that have thus far
    stunted greater market interest in short sea shipping.
        Yet, I think it is also worth mentioning that we absolutely need to
    finalize a comprehensive, integrated national freight strategy.
        Progress in this endeavor was initiated after Congress passed the
    Moving Ahead for Progress in the 21st Century Act, or MAP-21, and was
    further advanced when Congress passed the Fixing America's Surface
    Transportation (FAST) Act, that directed the Department of
    Transportation to produce a National Freight Strategic Plan by 2017.
        Well, it is now 2019, and we only have a draft plan. We need to do
    better.
        In closing, until we think holistically and long-term about how we
    plan to move freight around the country, the U.S. freight
    transportation network will continue to be challenged by congestion,
    inefficiency, and yes, crumbling infrastructure. And until we accept
    that no one mode of transportation is the ultimate solution,
    alternatives such as short sea shipping will continue to be overlooked
    and under-utilized.
        Consequently, the only thing we may succeed in doing is to erode
    the global competitiveness of our own freight transportation network.
    We would all be best advised to avoid such an outcome. Thank you.

      Prepared Statement of Hon. Sam Graves, a Representative in Congress
         from the State of Missouri, and Ranking Member, Committee on
                       Transportation and Infrastructure
        Thank you, Chairman Maloney.
        As a farmer and Member whose district is bounded by both the
    Missouri and Mississippi Rivers, I understand the importance of
    shipping commodities by water in the United States.
        I look forward to learning more today about ways we can increase
    the use of America's waterways to ship more of our higher value
    cargoes.
        Moving cargo via Short Sea Shipping can alleviate congestion in
    other modes.
        Unfortunately, Short Sea Shipping requires the additional loading
    and unloading of vessels which creates expense and delays, as our
    waterways do not extend to everyone's final destination.
        In addition, shippers don't want to enter into contracts to move
    cargo on ships that aren't built yet, and bankers don't want to fund
    ship construction unless contracts are in place to move cargo on those
    vessels.
        Therefore, to encourage more Short Sea Shipping, Congress
    established a program in 2007, and I am particularly interested in
    hearing what actions the Maritime Administration has taken to implement
    it.
        I yield back the balance of my time.

      Statement of Kurt Nagle, President and CEO, American Association of
           Port Authorities, Submitted for the Record by Hon. Maloney
        Chairman Maloney and Ranking Member Gibbs, thank you for allowing
    the American Association of Port Authorities (AAPA) to submit testimony
    following this timely hearing. AAPA looks forward to working with you
    both throughout the 116th Congress.
        AAPA strongly supports the Maritime Administration's (MARAD) Marine
    Highway Program and the potential it has in providing and incentivizing
    additional opportunities for shippers and ports. Specifically, a more
    robust and integrated marine highway system will provide more options
    to maritime customers, improve the environmental space connecting ports
    and communities by reducing truck traffic and emissions as well as
    managing the congestion around ports by providing sustainable waterway
    options to move freight. A strong Marine Highway Program is a much-
    needed tool for ports, shippers and communities.
        Today's hearing is long overdue. The last time there was a hearing
    in this Committee on short sea shipping was 2007. Much has changed in
    the port and shipping industry these past twelve years--and much has
    changed with the advent of the FAST Act and the creation of dedicated
    freight programs at the U.S. Department of Transportation.
        The FAST Act provided a baseline for freight programs and the
    coming reauthorization of the FAST Act provides an opportunity for a
    program such as the Marine Highway Program to become more integrated
    into our supply chain by incentivizing its use. Additionally, 38 of the
    50 states and Washington, D.C., are connected by navigable waterways
    and marine highway routes. As the Marine Highway Program grows and
    becomes a viable option for communities, shippers and port authorities,
    AAPA believes that encouraging more of an emphasis on marine highways
    in the next generation of state freight plans will be key to further
    integrating the program as a tool in our country's transportation
    supply chain.
        AAPA has recommended updating the America's Marine Highway Program
    authorization and including it in the Maritime Freight Supply Chain
    title, as part of its FAST Act Reauthorization Platform. In the
    meantime, AAPA has three immediate recommendations to energize the
    program:
        1)  Step one--Wave the Harbor Maintenance Tax (HMT) tax when it is
    applied a second time in an instance of transshipped cargo. AAPA
    supports this exemption for certain U.S. port-to-port cargo. This is
    the issue that is most often raised as the biggest disincentive for
    shippers to utilize the marine highways.
        2)  Step two--Provide shippers with federal incentives or tax
    credits to utilize marine highways. Some states have put incentives in
    place, but a federal tax credit would send the message that marine
    highways are a national priority and that it is a long-term sustainable
    tool.
        3)  Step three--Build off the FAST Act Congestion Mitigation and
    Air Quality (CMAQ) language and direct and codify more CMAQ funding for
    marine highways with a focus on marine highway projects that have the
    long-term potential to reduce emissions and congestion; two key goals
    of the CMAQ program.
        Other long-standing AAPA recommendations include:
          Federal funding to support the return of transshipment
    cargo service to U.S. mainland ports,
          Federal funding support (operating and capital) for
    short-sea shipping services,
          Development of expertise at the state/MPO level on marine
    highway alternatives/benefits, and
          Reassessment of federal shipbuilding programs, exploring
    how they could support marine highway development.
        AAPA looks forward to working with you throughout the 116th
    Congress on these important maritime issues.

      ``America's Marine Highways,'' Fact Sheet, Maritime Administration,
                    Submitted for the Record by Hon. Maloney

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

           ``America's Marine Highway Program,'' Brochure, Maritime
            Administration, Submitted for the Record by Hon. Maloney

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                                    Appendix

                                  ----------

     Questions from Hon. Alan S. Lowenthal for Rear Admiral Mark H. Buzby,
            U.S. Navy (Ret.), Administrator, Maritime Administration

        Question 1. As you've mentioned in your testimony, coastwise
    shipping holds tremendous promise to alleviate congestion on our
    highways and reduce harmful carbon emissions. In my region of Southern
    California, moving containers on barges can help us grapple with our
    world-famous traffic and allow our ports to handle more cargo without
    adding additional truck trips to our highways.
        As Vice Chair of the Sustainable Energy and Environment Coalition,
    I included investments in marine highways as part of our infrastructure
    proposal, because these investments drive substantial reduction in
    diesel emissions.
        I'm interested to know about some of the barriers to coastwise
    shipping in my region.
        I represent large container ports that have berths and terminals
    for ships that hold over 10,000 TEUs.
        Do container ports now have the infrastructure to allow for smaller
    container-on-barge operations?
        Answer. Adequate infrastructure that can best accommodate smaller
    container-on-barge operations at a container port should include a
    number of features including a dedicated barge berth adjacent to the
    large container berth, which is necessary to facilitate transloading of
    containers from the mother ship to a barge service. A dedicated berth
    allows for the barge service to maintain a service schedule, ensuring
    export loads do not miss the mother ship's scheduled departure.
    Appropriately sized cargo handling equipment will allow loading/
    unloading of the barge which may include a negative drop top pick or
    mobile harbor crane vs. a large ship-to-shore crane.
        A separate terminal area near the barge berth will allow for
    aggregation of containers dedicated for the coastwise service. These
    containers may already be cleared by U.S. Customs and Border
    Protection, or may be domestic outbound moves, therefore a means to
    separate them from the general import stack is desired. Non-intrusive
    scanning of 100% of import containers is mandated. Most ports have such
    scanners located at the exit gates of the port facility. When moving
    containers between the mother ship and barge, a method of scanning
    containers without driving them out of the port gate is needed.
        For inland facilities, such as intermodal rail yards, enabling the
    transfer of heavy freight onto trains to keep trucks away from
    congested urban port areas is useful. To achieve this, high and wide
    clearance is necessary for intermodal corridors from ports to inland
    areas.
        MARAD does not systematically collect information from ports about
    the types of infrastructure they have or do not have to support smaller
    container-on-barge operations; however, it is ourexperience that few
    container ports have such facilities. To our knowledge, PNCT at Port
    Newark, Mobile and the Port of Virginia each have a dedicated barge
    berth adjacent to facilities that accommodate larger container vessels.
    Houston is exploring the viability of implementing a barge berth near
    their container facilities. Through work performed by the Marine
    Highway Program, new projects to develop such facilities may assist the
    following ports in the coming five years: New Orleans, other terminals
    in New York, Savannah, Oakland and ports in South Florida and Southern
    California.

        Question 2. What kind of investments will these ports need to make
    to establish smaller barge services to serve coastwise markets?
        Answer. The types of investments will vary by port, but in general
    the types of investments include expansions, including dedicated barge
    berth capacity, dedicated uplands storage facility separate from the
    general import stacks, and dedicated cargo handling equipment. Some
    ports may need to invest in training simulators for waterfront labor,
    such as to help with loading containers on a barge vs. loading large
    container vessels. Investments may also be needed on dock or near-dock
    rail access for ease of loading and discharging overweight cargo.
    Dredging new berths or rehabilitating berths to ensure access for both
    vessels and barges has also been a priority for large container ports.

        Questions from Hon. Alan S. Lowenthal for Jonathan Nass, Chief
                    Executive Officer, Maine Port Authority

        Question 1. As you've mentioned in your testimony, coastwise
    shipping holds tremendous promise to alleviate congestion on our
    highways and reduce harmful carbon emissions. In my region of Southern
    California, moving containers on barges can help us grapple with our
    world-famous traffic and allow our ports to handle more cargo without
    adding additional truck trips to our highways.
        As Vice Chair of the Sustainable Energy and Environment Coalition,
    I included investments in marine highways as part of our infrastructure
    proposal, because these investments drive substantial reduction in
    diesel emissions.
        I'm interested to know about some of the barriers to coastwise
    shipping in my region.
        I represent large container ports that have berths and terminals
    for ships that hold over 10,000 TEUs.
        Do container ports now have the infrastructure to allow for smaller
    container-on-barge operations?
        Answer. It depends. Large existing container ports have large
    berths where the larger container ships get priority. The availability
    of berth space for smaller barges would be based on schedule. This
    means that smaller feeder barges would have to fit their operations in
    edgewise to be serviced. More often than not we have found that the
    restricting factor is the cost-effective availability of labor to work
    the smaller barges.
        If a larger port is at 80% utilization of its existing terminal
    infrastructure then new additional port infrastructure should be
    considered. The amount of which should be based on the target amount of
    trucks we are seeking to move off the road and onto barges. This could
    be calculated.

        Question 2. What kind of investments will these ports need to make
    to establish smaller barge services to serve coastwise markets?
        Answer. If new port infrastructure is required the types of
    investments necessary to support smaller barge services would include:
    additional pier and terminal infrastructure in larger ports, rebuilt
    terminal infrastructure in smaller feeder ports, new mobile harbor
    cranes or gantry cranes, new reach stackers or straddle carriers to
    move containers around, new chassis (the wheels for the containers
    turning them into trucks), yard trucks, and potentially new barges/
    tugs/or similar vessels. The majority of the above list should be
    considered as qualifying for public investment to incentivize modal
    shift in America. Port Infrastructure and all related equipment should
    be considered equivalent to the asphalt of roads and bridges.
    Financially it is a nominal amount of investment required for port
    equipment and infrastructure to carry the same amount as trucks or
    rail.
        All investment should be tied to market participation, private
    sector shippers (beneficial cargo owners AKA BCOs) committing freight
    for a lower freight rate and the benefit of lower emissions and lower
    social cost. This will not happen naturally under the present structure
    where the federal and state governments are subsidizing trucking
    through huge infrastructure investment without charging that back to
    the truckers or American shippers.

       Questions from Hon. Bob Gibbs for James Weakley, President, Lake
                             Carriers' Association

        Question 1. At the hearing, you were asked to provide information
    on the importance of ice cutters on the Great Lakes. You elaborated
    with the economic costs and jobs lost because of inadequate ice
    breaking but also stated you would provide more details for the record.
    Please provide that information.
        Answer. The U.S.-flag vessel delays caused by the inadequate
    icebreaking during the 2019 ice season resulted in the loss of 5,421
    jobs that were dependent upon the U.S.-flagged fleet's ability to
    deliver cargo throughout the Great Lakes Region. Businesses that depend
    upon the Great Lakes maritime industry lost over $1 billion in revenue.
    The Federal government lost over $125 million in taxes and state and
    local governments lost $46 million. Impacts of delays on Canadian-flag
    lakers and oceangoing vessels flagged in countries other than the U.S.
    and Canada calling on the Great Lakes ports (salties) were not
    calculated.
        Although economic losses were not calculated for the 2016-2018 ice
    seasons, I have attached to this response the economic impacts for ice
    seasons 2014, 2015 and 2019. All impacts were calculated using the
    economic model developed by Martin & Associates for Great Lakes
    shipping. The model was updated in July of 2018. The main reasons for
    the increased impacts in 2019 are inflation and the use of the updated
    economic model.
        The U.S. Coast Guard (USCG) will report that they met their goal of
    keeping ``major'' waterways open 95% of the time during the 2019 ice
    season. LCA believes this measurement is not an accurate determination
    of success in regard to their mandate to keep waterways open to
    navigation by means of icebreaking operations.
        First, the USCG is only reporting on the status of four waterways
    in the Great Lakes which happen to be connecting waterways to the Great
    Lakes System (St. Marys River, the Straits of Mackinac, the Detroit/St
    Clair Rivers and Pelee Passage in Lake Erie). They call these waterways
    Tier 1 waterways and prioritize icebreaking operations with Tier 1
    highest priority to Tier 4 lowest. They do not report on the Lakes
    themselves or the harbors that ships must load out of and deliver goods
    into. For instance, a ship may not be able to transit out of Duluth,
    MN, transit Southern Lake Huron or enter Cleveland, OH due to ice, but
    that is not reported by the USCG. The USCG considers a Tier 1 waterway
    ``open'' even if it is unpassable, if no vessel is actively trying to
    pass through it. In addition, the Canadian Coast Guard (CCG) is not
    bound to a tiered prioritizing metric, therefore they are often
    assisting Canadian vessels into and out of their Canadian ports and not
    in the USCG's defined Tier 1 waterways. We only recall one day in the
    spring 2019 ice season when a CCG icebreaker was deployed to a Tier 1
    waterway. The vessel deployed to the Straits of Mackinaw was quickly
    dispatched to the Canadian Port of Thunder Bay, when another CCG
    icebreaker there experienced an engine casualty.
        It is also important to note that the 95% that is reported to
    Congress is not Great Lakes specific, it is the Great Lakes and Eastern
    Seaboard aggregated. Therefore, a seldom difficult ice season in the
    Northeast is ultimately diluting the percentage of closures on the
    Great Lakes and further pushing the percentage of waterways open up. It
    is also noteworthy that the tiered waterway approach is a relatively
    new system and is not consistent with the ``reasonable demands of
    commerce'' standard stated in the Executive Order that created the
    USCG's icebreaking mission. LCA also questions the consistency of its
    application on the East Coast and the Great Lakes.
        Second, the USCG also does not take transit time into account when
    reporting their performance. A normal round trip from Duluth to
    Cleveland may take 96 hours. With difficult ice conditions on just one
    Lake or connecting waterway, delays can stretch the trip to over a
    week. With a defined shipping season from mid-March to mid-January,
    every shipment is critical and delays shorten the season even further.
    One U.S.-flag operator, based on the ice conditions and the USCG's
    decision not to keep an icebreaker on Lake Superior after the Soo Locks
    closed, delayed sailing its entire fleet. This delayed sailing is not
    captured by the USCG metric. In fact, given the way the USCG calculates
    waterway availability, delayed sailings contribute to their claimed
    success. If all of the vessels delayed sailing until May, given the
    USCG's metrics, they could claim ``100% availability of major
    waterways'' without logging any icebreaking effort.
        Third, the USCG waterway availability statistic does not measure
    whether commercial vessels can safely transit the waterway without an
    icebreaker escort. It measures whether they tried to make the transit,
    misjudged the ice conditions and got stuck. The USCG waterway
    availability statistic has little correlation with the availability of
    its Great Lakes icebreaker fleet because of commercial vessel
    operators' knowledge of that availability (or unavailability). Low
    availability of USCG icebreakers, however, definitely drives commercial
    vessel operators' winter voyage planning, which drives how much cargo
    will be shipped or left ashore during the winter season. Commercial
    vessels don't get underway if their operators know they are going to
    get struck for an extended period of time. They may not only delay
    sailing for the season, they will often wait at the dock until USCG
    assistance is available.
        LCA's economic impact analysis, given in the first paragraph, is
    based on how much cargo was not shipped because:
        1)  Commercial vessels either could not risk a voyage due to the
    unavailability of an icebreaker.
        2)  Commercial vessels proceeded with a transit through the ice
    without adequate icebreaker escort, but made no or slower progress than
    they would have if an icebreaker had been available to properly escort
    them.
        U.S.-flag lakers lost a total of 1,796.5 hours due to inadequate
    icebreaking during the 2019 ice season, which delayed or prevented a
    total of 4.9 million tons of cargo. LCA believes its economic analysis
    is a better measurement of the impact of USCG icebreaker availability
    than the USCG's major waterway availability statistic because
    commercial vessel operators have an economic incentive to attempt to
    ship cargo, but not get stuck in the ice (which consumes operating
    costs and risks expensive damage to the vessel). The greater the
    availability of USCG icebreakers, the less likely cargo shipments will
    be delayed or foregone. The USCG waterway availability statistic does
    not capture this dynamic. Nor does it capture the status of ports or
    waterways other than the connecting channels. The USCG often cites the
    number of vessels and tons assisted during the ice season. That is a
    measure of industry's efforts, not the USCG's. If a vessel is stuck for
    two days or two weeks in port, it is not captured in the USCG's
    metrics. In one instance last winter, the USCG ordered a U.S.-flag
    laker to slow down so one of the largest U.S.-flag lakers could serve
    as the icebreaker for the Canadian-flag tug barge unit that was too
    under powered to be the Tier 1 waterway (Straits of Mackinaw).
        Industry needs a predictable Federal icebreaking response in order
    to make logical business decisions. The current state of the USCG
    icebreakers is bleak. The USCG Service Life Extension Program (SLEP)
    for the 140-foot Bay Class icebreakers did not address the heart of the
    vessel, two main diesel engines. These engines are failing at a rapid
    pace and the 40-year-old icebreakers are not reliable. Last year the
    USCG Great Lakes icebreakers lost 246 operating days during the ice
    season, primarily because of icebreaker engine failures. One of the
    post-SLEP 140's missed the entire spring icebreaking season this year
    due to an engine casualty. The USCG has no plans to replace the most
    critical pieces of machinery. The engines could easily be replaced by
    commercial shipyards on the Great Lakes. This could be accomplished
    independent of the SLEP program.
         attachment a--economic impacts resulting from 2014 ice delays
        To estimate the economic impact of the unusually long ice season on
    the Great Lakes during the 2013-2014 winter season, year over year
    tonnage comparisons were made between December 2012-May 2013 and
    December 2013-May 2014. The data, showing tons by commodity, carried by
    the U.S.-flagged Great Lakes fleet, was supplied by the Lakes Carriers'
    Association. Using the 2010 Economic Impact study of the Great Lakes
    and St. Lawrence Seaway--U.S. Flagged Fleet, jobs per ton and revenue
    per ton ratios were developed for iron ore, coal, limestone/aggregates
    and other dry bulks. These ratios were then applied to the net decrease
    in tonnages from the 2013 winter shipping season to the 2014 winter
    shipping season. This methodology assumes that demand for these cargoes
    did not change from 2013 to 2014. From December 2013 through May 2014,
    cargo moved by the U.S.-flagged fleet decreased by 6.8 million tons
    from the previous year due to lost transit days caused by heavy ice.
    The economic impacts of these delays are presented in terms of jobs and
    business revenue in Table 1.

           Table 1--Economic Impact of Lost Tonnages due to Heavy Ice
    ------------------------------------------------------------------------
                                                             2014 Ice-Delay
                                                                Impacts
    ------------------------------------------------------------------------
    JOBS
      Direct Jobs........................................              1,311
      Induced............................................              1,298
      Indirect...........................................              1,221
                                                          ------------------
        Total............................................              3,830
    ------------------------------------------------------------------------
    BUSINESS REVENUE (1,000).............................           $705,145
    ------------------------------------------------------------------------

        The vessel delays caused by the 2014 ice season resulted in the
    loss of 1,311 jobs that are directly dependent upon the U.S.-flagged
    fleet's ability to deliver cargo throughout the Great Lakes Region.
    This results in the additional loss of 1,298 induced jobs that had been
    supported by direct job holders as they re-spent their wages/salaries
    within the regional economy. Businesses that depend upon the region's
    maritime industry lost over $705 million in revenues because of the ice
    delays. As businesses use their revenue to purchase goods and services,
    they support indirect jobs. The decrease in revenue and corresponding
    decline in purchases of goods and services resulted in the loss of
    1,221 indirect jobs. In total, 3,830 dependent jobs were lost due to
    the 2014 ice delays.
    attachment b--economic impacts resulting from decreased tonnage during
                              the 2015 ice season
        To estimate the economic impact of the 2015 winter ice season on
    the Great Lakes, tonnage comparisons were made between the January
    2015-April 2015 period and the average tonnage carried during those
    months from 2010-2013. Because the winter of 2014 was exceptionally
    severe, it was excluded from long-term average calculations so as not
    to skew the data. Tonnages carried by the U.S.-flagged Great Lakes
    fleet were provided for separate commodity groups by the Lakes
    Carriers' Association. Using the 2010 Economic Impact study of the
    Great Lakes and St. Lawrence Seaway--U.S. Flagged Fleet, jobs per ton
    and revenue per ton ratios were developed for iron ore, coal,
    limestone/aggregates and salt. These ratios were then applied to the
    net decrease in tonnages of each commodity, again comparing the 2015
    winter shipping season against the average tons carried during the
    2010-2013 winter shipping seasons. This methodology assumes that demand
    for these cargoes has remained constant and that the lost tonnages
    correlate to lower production levels by the end users. From January
    2015 through April 2015, cargo moved by the U.S.-flagged fleet
    decreased by 3.2 million tons from the 2010-2013 average due to lost
    transit days caused by heavy ice. The economic impacts of these delays
    are presented in terms of jobs and business revenue in Table 1.

           Table 1--Economic Impact of Lost Tonnages due to Heavy Ice
    ------------------------------------------------------------------------
                                                             2015 Ice-Delay
                                                                Impacts
    ------------------------------------------------------------------------
    JOBS
      Direct Jobs........................................                674
      Induced............................................                667
      Indirect...........................................                628
                                                          ------------------
        Total............................................              1,970
    ------------------------------------------------------------------------
    BUSINESS REVENUE (1,000).............................           $355,578
    ------------------------------------------------------------------------

        The vessel delays caused by the 2015 ice season resulted in the
    loss of 674 jobs that are directly dependent upon the U.S.-flagged
    fleet's ability to deliver cargo throughout the Great Lakes Region.
    This results in the additional loss of 667 induced jobs that had been
    supported by direct job holders as they re-spent their wages/salaries
    within the regional economy. Businesses that depend upon the region's
    maritime industry lost over $355 million in revenues because of the ice
    delays. As businesses use their revenue to purchase goods and services,
    they support indirect jobs. The decrease in revenue and corresponding
    decline in purchases of goods and services resulted in the loss of an
    estimated 628 indirect jobs. In total, 1,970 dependent jobs were lost
    due to the 2015 ice delays.
          attachment--economic impacts resulting from 2019 ice delays
        To estimate the economic impact of the typical ice season on the
    Great Lakes during the 2018-2019 winter season, we asked U.S.-flag
    carriers to report their delays in hours and the number of tons carried
    during their delays. The types of delays included being beset in the
    ice, at anchor awaiting an icebreaker, having to slow down due to
    inadequate icebreaking, waiting for Coast Guard permission to proceed,
    and waiting for a convoy to form. In addition we recorded hours lost
    due to repairing ice damage to vessels and the hours lost by vessels
    that delayed their initial sailing times due to inadequate icebreaking.
    We aggregated the fleet's lost hours and tons delayed and determined
    that a total of 409,729 tons of coal were delayed for 206 hours. We
    also calculated that 2,186,361 tons of iron ore were delayed for a
    total of 1,586.5 hours. Since the vessels operating were a combination
    of ``footers'' and smaller vessels, we used an average of 42,000 tons
    per trip. We also assumed that a typical round trip for a U.S.-flag
    laker takes 96 hours. Using those baseline assumptions, we determined
    that we could have carried 879,210 additional tons of coal and
    4,032,000 tons of iron ore had the fleet not lost time. In other words,
    we lost 21 trips of coal and 860 trips of iron ore among the 31 vessels
    reporting delays.
        The data, showing tons by commodity, lost by the U.S.-flagged Great
    Lakes fleet, was supplied by the Lakes Carriers' Association to Martin
    Associates. The July, 2018 updated Economic Impact study of the Great
    Lakes and St. Lawrence Seaway--U.S. Flagged Fleet, developed jobs per
    ton and economic impact per ton ratios for iron ore, coal, limestone/
    aggregates and other dry bulks. These ratios were then applied to the
    estimated loss of 4,000,000 tons of iron ore and 900,000 tons of coal
    for the relatively average winter of 2018/2019. The economic impacts of
    these delays are presented in terms of jobs and business revenue in
    table below.

      Economic Impact of Lost Tonnages due to Inadequate Icebreaking in the
                           Average Winter of 2018/2019
     4,000,000 ton loss of iron ore and 900,0000 ton loss of coal due to ice
                                     delays
    ------------------------------------------------------------------------

    ------------------------------------------------------------------------
    JOBS
      Direct Jobs........................................              1,925
      Induced............................................              1,666
      Indirect...........................................              1,829
                                                          ------------------
        Total............................................              5,421
    ------------------------------------------------------------------------
    PERSONAL INCOME (1,000)
      Direct.............................................           $106,912
      Re-Spending/Local Purchases........................           $203,098
      Indirect...........................................            $80,454
                                                          ------------------
        Total............................................           $390,464
    ------------------------------------------------------------------------
    BUSINESS REVENUE (1,000).............................         $1,044,044
    ------------------------------------------------------------------------
    LOCAL PURCHASES (1,000)..............................           $187,193
    ------------------------------------------------------------------------
    STATE AND LOCAL TAXES (1,000)........................            $46,429
    ------------------------------------------------------------------------
    FEDERAL TAXES (1,000)................................           $125,518
    ------------------------------------------------------------------------

                           Source: Martin Associates

        The vessel delays caused by the 2018/2019 ice season resulted in
    the loss of 5,421 jobs that are dependent upon the U.S.-flagged fleet's
    ability to deliver cargo throughout the Great Lakes Region. Businesses
    that depend upon the region's maritime industry lost over $1 billion in
    revenues because of the ice delays. Due to the lost business revenue,
    the federal government lost over $125 million in taxes in addition to
    the $46 million lost by state and local governments.