With the current laws and regulations governing infrastructure, there’s no amount of money the U.S. could spend to build an internationally competitive port.
A $14 billion port-modernization plan in Singapore is essentially illegal in the United States.
S ingapore is investing $14 billion in port improvements that will result in the world’s largest automated port by 2040. It will double the capacity of the current port, which is already the top port in the world for trans-shipments.
It’s the kind of project the U.S. could really use right now, but nothing like it could occur under our current laws and regulations.
Here are details on the Singapore project from Bloomberg:
Space presents a significant limitation for ports handling tens of thousands of containers a day, especially when trucking and shipping schedules are disrupted. The need for more room became clear during the pandemic, as docks overflowed with containers, and some ports had to place boxes along roadsides to await transport.
Singapore, a densely populated island slightly smaller than New York City, would seem a difficult place for expansion. But the city state, facing rising competition from rivals such as Shanghai, began allocating funds in 2013 to reclaim land needed to build a new port, Tuas, on the country’s west coast. The port eventually will double its capacity to 65 million twenty-foot equivalent units (TEU) by 2040.
The plan, set in place long before the onset of supply-chain upheaval, now appears prescient. The expansion has provided much-needed space to run operations efficiently and carry the city beyond the current pandemic, said Ley Hoon Quah, chief executive officer at the Maritime and Port Authority.
Land reclamation at U.S. ports is much more expensive than it should be because of the Foreign Dredge Act. Part of the reclamation process includes digging up material from underwater to create new land. That protectionist law effectively prohibits any foreign competition for dredging services, which excludes most of the world’s top dredging companies from U.S. contracts. That means the Army Corps of Engineers, which contracts dredging operations to private companies, is stuck with the same five companies (with only 16 total ships between them) to dredge coastal harbors. And according to a Congressional Research Service report from 2019, 42 percent of the contracts the Corps awarded between 2014 and 2018 received only one bid. While dredging costs have been falling in the rest of the world, they’ve been increasing in the U.S.
Bloomberg explains that in Singapore,
[The project] will help consolidate operations into a more logical structure, allowing for faster handling of containers, which reached a record 37.5 million last year. The new arrangement will reduce the need for trucks to traverse downtown traffic while transporting cargo from one terminal to another.
Shortening the lines of trucks waiting at terminals is crucial for all ports. That’s a major reason for bottlenecks, holding up the movement of goods during Covid lockdowns in Shanghai and causing significant delays in clearing boxes at California ports. The risks tied to trucking were also highlighted earlier this month when striking drivers in South Korea wreaked havoc on supply chains.
Reducing reliance on trucks is a major component to improving the port complex at Los Angeles/Long Beach, where drayage carriers do laps all day, 25 miles in each direction, between the ports and the rail yards near downtown Los Angeles. Since 2005, BNSF has been willing to spend $500 million of its own money to build a rail yard much closer to the Port of Long Beach, but it has been stopped from doing so by California environmental regulators.
More from Bloomberg:
Singapore will operate automated guided vehicles to move more containers between the yards and berths where ships wait. A human driving a truck will use sensors and wireless communications to lead a convoy of driver-less vehicles in and out of the port. Drones will be used for shore-to-ship deliveries, and aid security guards with checks.
The upgraded technology will save on manpower in the global labor crunch. But the Singapore port wants to take a further step by integrating information systems, enabling it to track cargo and communicate surges in demand to all supply-chain players.
American port policy is designed to use more manpower than needed by resisting technological advances at the behest of organized labor. Outdated American labor-relations law has allowed the International Longshore and Warehouse Union to essentially decide the speed at which West Coast ports will modernize. After labor negotiations are complete between employers and dockworkers, the ILWU always ends up with the result it wants: Higher pay and little automation. Port funding in the bipartisan infrastructure law came with this proviso: It must not be used for automation. This set of improvements in Singapore is essentially illegal in America.
Bloomberg:
Singapore is among a growing trend of seaports cutting down on paperwork processes. It is one of seven jurisdictions globally that accepts electronic bills of lading, a key supply-chain document that must be submitted or collected from ship captains before cargoes can offload from vessels.
The shift is a major leap from the decades-old practice of submitting physical papers to verify cargoes.
The U.S. is not one of the seven jurisdictions; they are Bahrain, Belize, Kiribati, Papua New Guinea, Paraguay, Singapore, and Abu Dhabi. In a document enthusiastic about the possibility of electronic bills of lading in 2021, the U.K. Law Commission noted that “one transaction can require between 10 and 20 paper documents, totalling over 100 pages with global container shipping estimated to generate 28.5 billion paper documents a year.” Streamlining that paper trail with digital technology should be a top priority for the U.S., considering its world-leading technology companies. Instead, we’re behind Belize.
Bloomberg is careful to note the major difference between the Port of Singapore and Los Angeles/Long Beach. Singapore is mostly for trans-shipments; Los Angeles/Long Beach is mostly a final seaport destination for ocean cargo, which is then moved to other modes of transportation. That presents a different set of challenges. But the basic tenets of Singapore’s improvement plans — capacity expansion, less reliance on trucks, automated dock operations, and electronic documents — would all be extremely helpful in the U.S. as well.
“The U.S. should appropriate $14 billion to do a similar project here,” you might think. It would be a no-brainer financially: $14 billion to make Los Angeles/Long Beach like the Port of Singapore would pay off exponentially for the economy. But Singapore is starting from a good place. It’s one of the best major ports in the world right now; Los Angeles/Long Beach is one of the worst after decades of bad policy. The U.S. would need more than $14 billion just to catch up to where Singapore is right now.
More fundamentally, American regulations make it far more expensive to even attempt such a project, and portions of it are prohibited by law. Congress just appropriated $1.1 trillion for infrastructure improvements last year, but the most immediate effect of the law was more bureaucracy; large portions of it won’t go toward actual infrastructure at all; much of the portions that do are wasted; and the rest is hamstrung by an army of interest groups demanding special benefits and provisions.
Improving America’s ports is not a question of government spending. It’s a question of legalizing the necessary innovations to make our ports internationally competitive. So long as the current laws and regulations governing infrastructure and ports are in place, there’s no amount of money the U.S. could spend to get a port as efficient as Singapore’s.