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SEPT. 27, 2018

Good afternoon! It’s great to be with you. On behalf of our U.S. secretary of transportation Elaine L. Chao, I want to thank SUNY Maritime, RADM Mike Alfultis and the Maritime Industry Museum and its chairman – and my classmate – John Arntizen for inviting me to offer some remarks as we enjoy lunch together.

I apologize in advance for any indigestion this may cause.

I’ve been spending a lot of time in this part of the harbor over the past several weeks; between Kings Point’s 75th anniversary celebration last weekend, and the all-academy Monomoy Rowing Championships hosted here about 3 weeks ago… (won by Maine!).

Two great weekends of events that just reconfirmed for me what a fabulous group of young men and women we have coming up through the ranks and preparing themselves to jump into this industry to lead and make a difference.  It is just so great to be around them – and that spirit is pervasive no matter which school they attend.

It charges me up every time I’m around them – like today! – and makes me want to redouble my efforts to do what we can to get our industry energized.

So let’s talk about the piece of the industry that we’re all here to discuss today:  our marine highways.

We heard some of the success stories this morning, and I thank the presenters for offering their views.

I think what we heard is that with a solid understanding of the market and a good business case, these projects can get launched and can begin making a difference.

I think it’s a given that the next 30 years will see an increase in population growth in this country, and a corresponding need to move more goods and people both inside and outside our national lifelines.
Its already readily apparent in the passenger side right here in the harbor with the rebirth of the commuter ferry system. There were ferries years ago…then there weren’t any…and now they are back.   And that’s happening in Boston, and DCand other places too.

The added pressure on our national freight system is feeling the effects too. It leaves us no alternative but to find cheaper and more efficient ways of transporting cargo. I think all of us here are in agreement that the answer lies back on the water – where cargo movement all began in this country before we had a road and rail network.

From our perspective, the extensive coastwise and inland waterways system is a key to it all.

As a core – but vastly underutilized component of the nation’s freight transportation network –  our marine highways are really the only remaining “surface mode” of transportation capable of absorbing this excess freight volume.

So what do we see going forward?

We “get it” that it begins with the premise that it’s going to take a significant investment in maintenance, rehabilitation, modernization and capacity improvements to even begin to tap our marine highways’ potential.

I’ve made my own waterfront surveys of a number of our ports on all coasts, and I’ve got to tell you that the condition of much of our pier and ‘wharfage’ capacity is staggeringly poor.  It’s just begging to be demolished and repurposed for more efficient uses.  It just takes money…and permits….and a plan.

You all get that around here; I’ve seen lots of change on your waterfront since I was regularly in the harbor some years back.

At MARAD we’ve spent a lot of time researching, planning and thinking about the best ways to prepare our nation’s ports, coastwise and inland waterway infrastructure for the growing freight volumes headed our way — and then how to channel that flow through the America’s marine highway program.

I’d say that my “main battery” in that effort is our gateway office program –  to help our local stakeholders across the nation transform waterborne routes into seamless extensions of our nation’s surface transportation system.

That’s why captain Jeff Flumignan is kicking around the waterfront in the northeast region.

So now we have ten gateway offices located nationally around the coasts, along the Mississippi River corridor, as well as the Great Lakes.   We just stood up a new office last month in Paducah, KY, with a local yokel and KP grad Chad Dorsey in charge.

Those gateway directors’ purpose is to promote and facilitate maximum port and maritime stakeholder engagement in coastwise shipping and the inland waterways network….and in planning how it integrates into the larger U.S. transportation system.  We’re not building stove pipes here – everything needs to fit and flow.

It’s important that our efforts are in sync nationally, so that each of the regional projects are all working together toward developing our rivers and coastal waterways as complete integrated systems.

Gateway directors are key to that.

You all are quite blessed here:  the Port of New York and New Jersey sits at the intersection of three of the busiest marine highways in America and has the greatest concentration of maritime activity in the U.S.

The M-95 runs along the east coast; M-87 runs up the north river from New York Harbor to Albany, and the M295 marine highway runs through the East River and down the sound.

Here in this harbor, I think the level of coordination between the state, the city, the port authority, and us in Washington is pretty solid. Part of the gateway director’s job is making sure key stakeholders in each region are fully appraised of our federal assistance funds and grant and loan programs — so that we can then work alongside you to meet what can be very complex eligibility requirements.

Among its many responsibilities, our Office of Ports and Waterways Planning back in DC provides a variety of resources to assist ports, shippers, service operators and stakeholders. It helps them, first, to understand and then develop marine highway services as cost competitive and routine options for U.S. shippers.

We’re there to help facilitate your good ideas.  If you are waiting for us to have the bright idea, you’re going to be waiting awhile! And while I may be stating the obvious here; there needs to be a designated marine highway in place in order for a marine highway project to be designated, so that the project can then be eligible to compete for a Marine Highway Grant.  That’s if you want access to the federal money. Of course privately funded projects are on their own.The program currently has 19 designated projects with several more working their way through the approval process. This includes several services operating in the northeast, Virginia, and the Mississippi River, and we’ve talked about some of those already this morning. The afternoon session will offer some other possibilities.

So then we also have an array of federal assistance funds and grant and loan programs available. Our gateway offices can help stakeholders navigate the fine print of USDOT and MARAD funding programs, and then prepare them to submit complete, quality applications.

This works in tandem with MARAD’s Office of Ports & Waterway Planning, for example, which advocates for greater use of container on barge services for all of our regions.

A classic, well-conceived container on barge project meets our mission criteria by enhancing and relieving pressure from the national transportation system.

It does this by reducing traffic congestion, easing highway wear and tear and cutting air pollution while boosting economic growth, opening up new markets and helping existing markets expand.

This ties directly to MARAD’s funding role. This year the U.S. Department of Transportation and MARAD released $4,872,000 in grants to six marine highway projects. That funding will help enhance marine highways now serving ports in Louisiana, Virginia, New York, and Connecticut. It will also support development of new container-on-barge services in Kentucky and Rhode Island.
Our next round of marine highway grants closes on October 5, and we’re hoping to receive quality applications from among our designated marine highway projects.Additionally, the U.S. department of transportation recently released a notice of funding opportunity for the FY 2018 Better Utilizing Investment to Leverage Development, or “BUILD” transportation discretionary grants program.

This is the next iteration of the old Tiger Grant Program, and the $1.5 billion in available “BUILD” funds is three (3) times the historical average. So we’re very hopeful that a greater than normal number of maritime projects will get picked up.

Let me tack over for a minute.  I’m sure some of you are probably wondering about Jon Kaskin’s short sea shipping shipbuilding program that was being discussed a couple years back.

The idea was to build some jones act ships – small ROROs with militarily useful features – that could operate commercially on some coastal routes to relieve some of the road loading by trucks, but be made available during times of national emergency for sealift.

The funding wasn’t there, DOD never really got interested, but most importantly – the business case to make it work just never came to be.

I’m told that until you can get the operating costs below that of current truck road traffic – about $2 per mile – and on a stretch of road where you can make the time/speed/distance work in your favor vs. the driver rest restrictions, you won’t get buy in. I know there are some people out there working this through.

Along those same lines, MARAD has entered into a consortium agreement with the coast guard and the American Bureau of Shipping to develop policies, and oversee the design, development, and eventual operation of increasingly automated and perhaps someday, fully automated vessels for use in coastal and inland waters.  We’re obviously also looking at international implications as well.

The consortium will promote research and development of new technologies across a wide spectrum of maritime and offshore industries.   Rand Pixa, my Deputy Chief Counsel, is lead sled dog for our efforts.

In closing, for the midshipmen here today:  some one here – perhaps several of you – are going to have an idea on how to make short sea shipping work in this country.  It’s going to take an innovative approach, using technology that is emerging now, and applied to an unbiased, unconstrained-by- “old think”- framework.

I challenge you to brainstorm this and find us a solution.  You are better positioned to do so than almost anyone in this room.

Carry on ladies and gentlemen!  Thank you.

Let me stop there and take some questions if anyone has any?

Thanks for your attention, and I look forward to working with many of you in support of building our marine highways.

Updated: Monday, November 19, 2018