AAPA Seaports
Coastal, Great Lakes, and inland ports are critical to the U.S. economy. Aside from moving freight, ports across the country may have a variety of non-freight activities – like cruise ships, commercial fishing, and recreation.
The Government Accountability Office (GAO) published two recent reports on these matters that can help enhance such operations. In 2021, GAO looked into a range of non-freight port activities and their critical contributions to the U.S. economy. In 2023, GAO looked into the use of inland facilities to increase supply chain mobility especially in light of congestion of cargo containers at U.S. maritime ports during the COVID-19 pandemic. To help reduce future delays, this 2023 report called on the Department of Transportation to create a plan to update a long out-of-date handbook on best practices for inland facilities where ports transfer cargo containers between trains and trucks.
Many seaports pursue an extensive range of non-freight activities related to tourism, transportation, real estate, and more, according to 80 ports surveyed by the GAO in 2021. Some port authorities consider themselves drivers of economic development in their communities. For example, one study estimated that commercial fishing at the Port of Seattle accounted for 11,300 jobs and $1.4 billion in business output in 2017. Even so, ports still look to state and federal funding to meet their needs to develop expensive infrastructure.
Several federal grant programs are available to ports, and the vast majority of funding in these programs goes toward freight-related activities, even though about half of the ports GAO surveyed said the majority of their revenue stream stems from non-freight activities. GAO found that 8% of grant funding in the programs it reviewed between fiscal year 2010 and fiscal year 2020 went to non-freight projects.
While port stakeholders identified several challenges with federal grant programs, such as competition and minimum award size, port respondents provided mixed perspectives about the need for additional funding. For example, some stakeholders supported increasing federal non-freight funding to support small ports and spur economic development, but others said the need for additional freight funding was more pressing.
Maritime ports face congestion and other challenges, but some ports move goods to inland facilities to address certain constraints. For example, GAO reported that some port authorities, railroads, and state and local agencies use inland facilities to reduce the buildup of containers at their maritime ports. These inland facilities, which can be publicly or privately owned, can be as simple as an intermodal terminal with rail-to-truck transfer capabilities. But some facilities are more complex. For example, logistics hubs and inland ports can host manufacturing activity, conduct secondary customs inspections, or consolidate export shipments.
Developing these inland facilities generally requires the alignment of multiple factors, like sufficient infrastructure and market access. GAO analyzed six studies and found several factors that were widely considered, such as sufficient access to class I rail, interstate highways, and key markets to support enough freight volume to provide revenue. Since development is costly, the studies considered public-private partnerships to leverage state and federal funding.
The Department of Transportation has developed resources to help stakeholders who want to develop inland facilities, such as the Federal Highway Administration’s 2012 Freight and Land Use Handbook. The Handbook outlines factors to consider when developing land for freight use, such as a favorable cost environment, an available workforce, and market access. However, GAO found that many stakeholders were unaware of this resource. The handbook was also outdated and did not consider the increased impact of emerging market trends like e-commerce. GAO recommended that the Department of Transportation develop a plan to update its handbook to ensure it includes current information and a communication strategy so that the Handbook reaches freight developers.
These two reports highlight the complex role of ports beyond their traditional operations. Since every port is unique, federal resources such as grants and guidance are constantly evolving. The critical economic role of myriad port activities illustrates the importance of communicating practices about these less conventional activities.
