The Port Authority is a bistate public authority created in 1921 and charged by the two States to promote and protect commerce in the New York-New Jersey metropolitan region, including responsibility to provide the infrastructure necessary to accomplish that goal.
The Hudson-Raritan estuary was one of America's principal ports well before the First Continental Congress met. Before the Dutch settlers of New Amsterdam built roads or schools, they built docks.
Historically the Port of New York and New Jersey has been the gateway for much of the nation's imports and exports. In fact, as late as the 1950s half of all U.S. trade flowed through the Port. As the nation's land and waterside infrastructure improved, especially in the latter half of the 20th century, other ports grew. As production and population growth shifted southward and westward, so did a growing share of the country's maritime trade. By the 1970s the Pacific Rim had begun to supplant the North Atlantic nations as the driving force of global economic growth, resulting in a boom in business at our western ports. That growth was not only good for the country but necessary as the U.S. economy became more integrated with the new world economy.
While the Port of New York and New Jersey's U.S. market share experienced a decline as other port regions and intermodal capabilities grew, the actual volume of trade remains enormous and it continues to increase. Today, New York-New Jersey is handling 2.5 million containers (as measured in twenty-foot equivalent units), a growth of 67 percent in just 4 years. And the cargo volumes at our Port, like the rest of the nation, are projected to continue to grow. Trade growth nationwide is projected at 4 percent in the years ahead; we conservatively project a 3.7 percent growth that would mean a doubling of cargo in our port over this decade. Other major ports anticipate similar growth.
This realization prompted us in 1998 to undertake a major review of the impacts of such growth on our marine infrastructure and determine what new investments would be required in our marine terminal, roadway, railroad and waterway infrastructure to meet this future demand.
The results of that review are contained in an investment options plan with a scope of 40 years that identifies up to $7 billion in local investments to modernize and expand the major components of the Port's infrastructure.
The Port of New York and New Jersey is not alone, obviously, in considering or undertaking major new investments in its maritime infrastructure. Charleston is planning to develop a new terminal on Daniels Island, Los Angeles and Long Beach are investing billions of dollars in marine terminal and intermodal infrastructure, while the Virginia Ports Authority has expansion plans of its own. A 1995 VPA study identified almost $335 million in improvements to accommodate the significant cargo growth projected for that port. Continuing with the Virginia example, the study forecast a possible 250 percent increase in containerized cargo by 2010 of which intermodal volume was expected to increase 300 percent. I would not be surprised if today those five year old projections are revised upward to account for the incredible changes of our economy. All told, the Maritime Administration reports that between 1999 and 2003, ports predicts spending over $9 billion of non-Federal funding on marine terminals, dredging and other infrastructure.
Mr. Chairman, the significance of the Federal and port industry estimates is very clear. In this age of the international economy, multilateral trade relationships and intermodal technologies, import and export cargo flows will grow increasingly and we all will have to invest in channels and facilities in order to stay competitive.
Coupled with projections for strong growth in international trade throughout the U.S. is changing trends in the maritime industry. An impressive example of one of the trends sailed into New York Harbor in the summer of 1998 with the arrival of the Regina Maersk, her first U.S. stop on her inaugural East Coast Tour. She is a 6000 TEU vessel whose operating efficiencies can be realized with channel depths of 47 feet. (The Army Corps of Engineers uses a +2 feet standard to ensure safe bottom clearance in the channels.) An indicator of the challenges the Port of New York and New Jersey faced was the fact that the Regina had to stop first in Canada to discharge cargo before sailing into New York to make certain the vessel could navigate the 40-foot channels available to her. (I should note that underway now is Phase 2 of the 45-foot deepening of channels leading to the Howland Hook, Newark and Elizabeth container terminals.)
While the Regina Maersk may have been the first of these large vessels to call on New York Harbor, she not the only one we will see. As of the first quarter of 2000, there are 101 deep draft or "Post-Panamax" container ships sailing the world's trade lanes. While these vessels represent a little more than 6 percent of the world's commercial fleet, they carry 14 percent of all of the cargo traded in the world. In addition, another 130 orders have been placed by shipping lines that will more than double the number of these giants in service around the world. It is clear that the established trend toward larger vessels in most trade lanes is not an extraordinary occurrence for specialized cargo as was the view during the WRDA debate of 1986; it has, in fact, become the industry standard, much as corresponding channel depths will be the standard. This trend in the maritime industry is no different from technological developments in other transportation modes. It is the ocean equivalent of wide body jets, tandem trucks and double-stack unit trains, all of which are familiar sights throughout the country.
Given the long time that it takes to plan and carry out major infrastructure investments and the certain knowledge of the pressures that trade and technology will bring to our gateways, this country cannot afford to put off project authorization and funding decisions until the private sector is choking the channels of U.S. ports with ships with modern ships that require modern channels.
In recognition of this direction in ocean shipping and the presently inadequate depths of New York Harbor to accommodate these new vessels, our congressional delegation, including Senators Lautenberg and Moynihan, helped authorize a Corps feasibility study. That work, the New York and New Jersey Harbor Navigation Study, was completed this year. It is the subject of a Chief's Report signed earlier this month. In short, the report recommends the deepening to 50 feet of major channels that lead to major container terminal areas in the Port. I have included in my testimony a map that shows the various channels included in the recommendation.
Mr. Chairman, two questions that your Committee may have are what is the value of this project to the nation and why should the nation invest here. The answers lie in two places. First, as this Committee well knows, the purpose of an Army Corps feasibility study is to determine whether or not particular channel improvements derive national economic benefits. The Corps study found that the project would, in fact, realize an annual benefit totaling $238.5 million in national transportation cost savings. These benefits are the transportation cost savings that result from larger vessels being able to call on the Port of New York and New Jersey directly, rather than divert to another port only to have goods bound for the New York-New Jersey region trucked or railed back into the bistate area. Such a scenario has national consequences in terms of wear and tear on the nation's road and rail network, air quality, highway congestion, freight delivery time and overall quality of life. As you may know, a ship the size of the Regina Maersk carries 6000 containers, a volume that would require 6000 trucks or 3000 rail cars. Providing direct, all-water service into the region is both a more economical, as well as environmentally preferred, method of serving this market.
But the national interest in this project goes beyond those numbers, significant as they are. The Port of New York and New Jersey is in the heart of the nation's largest and most affluent consumer market. Eighteen million consumers live and work in the immediate metropolitan region and that number swells to 80 million within one day's truck drive from our docks (or a 260-mile radius around the port). This area covers a ten-state region that stretches from Maine to Maryland, from Cape Cod Bay to the Ohio River. Add to this broad market base the national rail system that emanates from the region and the Port of New York and New Jersey directly serves the southeast, the Midwest and beyond. (No doubt few consumers inland of the coastal states understand how much seaports contribute to their quality of life.) As you can understand, given this broad customer base, the Port of New York and New Jersey is not only a regional port serving its own local market. Indeed, the Port continues to be a major gateway, the largest on the East Coast of North America, for international trade. Given the nation's growing involvement on world trade activities and the significant role that the Port of New York and New Jersey plays in that trade, the nation has a significant interest in maximizing the port's potential to serve this national consumer demand. The same would be true in other major gateways on the four coasts.
We recognize, of course, that ports throughout the nation and certainly along the East Coast compete for cargo. Baltimore competes with Norfolk which competes with New York-New Jersey which competes with Los Angeles and so on. That competition is an inherent characteristic of our nation's ports as we reflect, among other things, America's economic system and principles of federalism. It is to Congress' credit that, after exhaustive analysis by the Corps of Engineers, projects are authorized on the basis of their benefits to regional and national economies and not to make one port or region more competitive than another. The emphasis is on what is good for the country. That is nowhere more evident than in considering that New York-New Jersey, Norfolk, Seattle and Boston, for example, compete with Canadian ports for cargo. Halifax and Vancouver are formidable competitors that, it is useful to note, have naturally deep water among other advantages.
This competition among U.S. ports is healthy and economically beneficial. It ensures that port authorities, marine terminal operators, waterfront labor and others work to improve service, invest in facilities and adopt efficiencies. Those are things our customers expect and the consumers deserve. Channel depth is just one element of the investments that are made. In the case of the Port of New York and New Jersey, we will commit approximately $1 billion for the non-Federal share of the channel project that we are seeking in WRDA 2000. Furthermore, as described earlier, we anticipate on the order of $5 billion to $6 billion in major investments in upland infrastructure.
This combination of investments by Federal and local governments, coupled with significant private sector investment will result in a modernization of the Port of New York and New Jersey that will be better able to serve the nation, its businesses and consumers well into the 215 Century.
Mr. Chairman, I would like to be able to submit additional information for the record. Meanwhile, I would be happy to answer any questions you may have.