Washington, Dec 1, 2006 - The ability to cost-effectively transport goods to domestic markets is vital to Florida’s economy.  Take our citrus industry for example.  In any given year, Florida citrus growers ship hundreds of millions of dollars worth of citrus products to key markets around the country.  

Like most U.S. producers, they rely heavily on land-based shipping operations, such as trucking and rail, to transport their goods.  Consequently, their success hinges upon a transportation infrastructure that enables the timely, cost-effective distribution of those goods to domestic markets.

Until recently, our national highway and rail infrastructure have largely succeeded in meeting the transportation needs of U.S. producers, expanding over the years to absorb shifting population centers and increased cargo traffic.  However, it’s becoming increasingly clear that economic and population growth is far outpacing our ability to maintain and expand our existing transportation infrastructure, posing serious, long-term challenges to our current reliance upon land-based shipping.

In Florida and around the country, roadway congestion and driver shortages are already making it difficult for trucking companies to expand capacity.  Freight shipping by rail is encountering serious capacity problems in some regions, as well.  And, recent estimates indicate that overall freight traffic will continue to increase exponentially in the coming years – up as much as 70 percent by 2020.

In short, our reliance upon land-based shipping and the growing demand for increased capacity has resulted in a catch-22:  Effective cargo transportation is vital to our economy, but our land-based shipping infrastructure will increasingly have difficulty absorbing the growing demand.  

Fortunately, Florida is well positioned to take advantage of another mode of transportation that will lessen highway congestion, save energy, and reduce air pollution. Short sea shipping, or what I call the “Blue Water Highway,” involves shipping cargo by sea between U.S. ports.  By establishing a “highway” along our coast where smaller cargo ships go from port to port along the Eastern Seaboard and Gulf Coast, we can significantly reduce highway congestion in an environmentally friendly and economically sound manner.  Additionally, sea-based shipping would mitigate against wear and tear on our highways, potentially delaying the need for expensive taxpayer-funded improvement projects.

That’s good news all around for Florida’s economy.

Though getting the Blue Water Highway up and running is no small task, I believe that a modest tax policy change could significantly encourage the development of a short sea shipping industry.

According to federal law, shipping companies pay a tax, known as the harbor maintenance tax (HMT), whenever its vessels enter a U.S. port.  As long as this tax is in place for all vessels, it will pose a significant barrier for short sea shipping, making it too expensive to become a viable alternative to land-based shipping operations. Therefore, we must create a level playing field from the outset if a short sea shipping industry is to develop.  

To that end, I have introduced H.R. 3319, the “Short Sea Shipping Tax Exemption Act of 2005.”  Specifically, this measure would amend the Internal Revenue Code to exempt from the harbor maintenance tax cargo shipped between U.S. mainland ports.  This simple tax reform would remove the primary prohibitive cost to short sea shipping, allowing designated cargo vessels to travel from Port Canaveral in Florida, to Baltimore, and then onto New York, making other port calls along the way without having to pay the cargo tax each time it enters a port.   

Because highway and rail corridors in the Northeastern U.S. are already at capacity, my proposal has garnered interest and support from a number of Members of Congress representing Northeastern states. In the next Congress, I will continue working to generate support for amending the harbor maintenance tax and addressing other barriers to the creation of the Blue Water Highway.

Florida officials at all levels of government have a role to play, as well.  Given Florida’s location and its numerous ports of varying sizes, the development of a short sea shipping industry could have a profound impact on the state and its local economies.  Not only will the Blue Water Highway ease current road congestion; increase competition in the shipping industry; and aid our producers, manufacturers, and suppliers in getting their goods to market, industry-related jobs would likely be created, as well.  

Therefore, I encourage Florida municipalities to learn more about the potential benefits of the Blue Water Highway and work with state and federal officials to explore ways to create a climate in which a short sea shipping industry can be nurtured and encouraged. The more support short sea shipping garners from interested parties at the state and local levels, the better chance it has of becoming part of a national strategy to address our long-term commercial transportation needs.  

Your support is especially vital since we may be at the tipping point with respect to interest in short sea shipping at the federal level.  The Department of Transportation recently unveiled a comprehensive Marine Transportation System/Maritime industry initiative known as SEA-21. The initiative’s ultimate goal is to ensure a more competitive and modern maritime transportation system.  Importantly, it includes a serious look at the concept of short sea shipping.  

With your support, I will continue working with the Administration to ensure that short sea shipping becomes a key part of an overall transformation of our maritime transportation system.

Such a transformation will no doubt be years in the making.  In the meantime, I believe it’s important to remove fiscal barriers to help short sea shipping so that it can become a viable, cost-effective, and competitive transportation system.  Amending the harbor maintenance tax is a reasonable policy objective that would go a long way toward moving short sea shipping from the backwater of the shipping industry.