PERFORMANCE INDICATORS FOR INLAND PORT INVESTMENT: HUNTINGTON & PITTSBURGH

Transcription

1 PERFORMANCE INDICATORS FOR INLAND PORT INVESTMENT: HUNTINGTON & PITTSBURGH May 10, 2011 Prepared for LCDR Charles Bright, LCDR Ellis Moose, and Dr. Marc Thibault of the US Coast Guard.

2 Prepared by George Mason University s Transportation Policy, Operations and Logistics 2011 Practicum Participants Class Roster Catalina Betancur Joel Bolton Bryan Budds Chris Coakley Megan Cull Magid Elabyad Adam Fisk Janet Ford Hassan Kamouni Matt Kelly Marc Knox Je-Jeung Lee Matt Morgan Timothy Quackenbush Thomas White Under the guidance of Dr. Laurie A. Schintler, Associate Professor, George Mason University School of Public Policy Acknowledgments The preparers of this report would like to thank the following individuals for their participation and guidance in completing this analysis: Helen Brohl, Director, US Committee on the Marine Transportation System Russell Byington, Chief Economist, United States Maritime Administration Bruce Lambert, Institute for Trade and Transportation Studies Doug McDonald, US Army Corps of Engineers, Institute of Water Resources Patricia Mutschler, US Army Corps of Engineers, Headquarters Disclaimer This document was developed to meet a degree requirement for the Transportation, Policy, Operations, and Logistics Master s Degree Program at George Mason University. The opinions and recommendations in this report are the responsibility of the members of the study team and do not represent the positions of any federal, state, or local government agency, the Ports of Pittsburgh, the Port of Huntington, or George Mason University. First Page Sources Inland Waterways Map, Port of Pittsburgh Commission, accessed May 3, 2011, Braddock (Locks and Dam 2), Port of Pittsburgh Commission, accessed May 3, 2011, Emsworth Locks and Dams, Port of Pittsburgh Commission, accessed May 9, 2011, Lock and Dam 9 - Allegheny River, Port of Pittsburgh Commission, accessed May 9, 2011, Point Marion Lock and Dam, Port of Pittsburgh Commission, accessed May 9, 2011, Grays Landing Lock and Dam, Port of Pittsburgh Commission, accessed May 9, 2011, Charleroi Locks and Dam, Port of Pittsburgh Commission, accessed May 9, 2011, 2_.jpg i

3 TABLE OF CONTENTS LIST OF FIGURES... iii LIST OF TABLES... iii EXECUTIVE SUMMARY... iv I. Introduction... 1 Identification of Situation... 1 Key Stakeholders... 3 Objectives of the Study... 6 II. Literature Review... 9 National Maritime Strategy... 9 Federal Guidance...13 State Guidance...17 Port Funding Comparison to other Modes...20 PIANC Report No : Performance Indicators for Inland Waterways Transport...26 Current Port Funding Decision-Making Process...27 III. Performance Indicators for Inland Waterways...34 Port of Pittsburgh...34 Port of Huntington...36 Capacity...37 Safety...44 Security...46 Economic Development and Finance...50 Environment...58 Resilience and Reliability...70 IV. Conclusion...76 BIBLIOGRAPHY... I NOTES... V ii

4 LIST OF FIGURES FIGURE 1. Map of the Port of Pittsburgh FIGURE 2. Map of the Port of Huntington-TriState FIGURE 3. Maximum number of Vessels by type served per month; Port of Pittsburgh FIGURE 4. Maximum Tons/TEUs by commodity loaded/unloaded per month; Port of Pittsburgh FIGURE 5. Maximum number of passengers loaded/unloaded per month; Port of Pittsburgh FIGURE 6. Maximum number of Vessels by type served per month; Port of Huntington FIGURE 7. Maximum Tons/TEUs by commodity loaded/unloaded per month; Port of Huntington FIGURE 8. Maximum number of passengers loaded/unloaded per month; Port of Huntington LIST OF TABLES TABLE 1. Estimated Fuel Consumption TABLE 2. Fuel Consumption by Pittsburgh Tugboat Fleet TABLE 3. Port of St. Louis Cruise Hours TABLE 4. St. Louis Average Cruise Speeds TABLE 5. Hours of Operation for Downbound Calling Vessels at Pittsburgh TABLE 6. Hours of Operation for Downbound Passing Vessels at Pittsburgh TABLE 7. Hours of Operation for Upbound Calling Vessels at Pittsburgh TABLE 8. Fuel Consumption (yearly per vessel category) TABLE 9. Emissions Pittsburgh Commercial Marine Vessels TABLE 10. Data on endangered species located near the Ports of Pittsburgh and Huntington iii

5 EXECUTIVE SUMMARY Inland and coastal ports like every country, play a crucial role in the Nation s economy and are considered a key component of our national infrastructure. Government involvement in developing and improving transportation infrastructure not only opens doors to new businesses, but boosts the quality of transportation industry which contributes to a more competitive and robust economy. Currently, the US Federal Government has limited funds for transportation infrastructure development and ports are an expensive capital investment with a large portion of sunk costs, which means that once the investment is made it involves a long-term commitment. i It is important that all parties involved in the funding of transport infrastructure such as federal agencies, state governments, and other local entities reach some agreement in terms of priorities and cost sharing. The problem is not that the agreement between parties is difficult but also that it is challenging for ports to use the existing infrastructure efficiently, thus agencies are hesitant to commit to funding new infrastructure or raising the transportation spending when the available resources are not well allocated. Also each port needs to quantify its need for new infrastructure, and determine how these needs can be financed and how these financing costs might be distributed across users and all parties involved, Establishing measurements of effectiveness and efficiency of a port is necessary for the development of port economic activity. Performance indicators play a key role in the evaluation of effectiveness and efficiency because they can define not only the current state of processes but also project the future of ports and reflect its needs.ii A set of standard port indicators is needed that can be applied to every port. In their development, these standards should reflect how the port is operating in terms of capacity, safety and security, environmental aspects, resilience and reliability, finance and economics. Standard port indicators can enable the process of setting national priorities, and will provide a system of evaluation which is less challenging and arbitrary for all parties involved in port activity and port funding. Major Stakeholders While other modes of transportation have singular governing bodies within the federal government system, the marine transportation system (MTS) is governed by over 25 federal agencies. Such disjointed and varied governing body s makes it difficult to define a cohesive national maritime strategy and thus funding and developing the MTS is extremely convoluted and problematic. Major Stakeholders included: US Coast Guard. Within the federal system, the US Coast Guard (USCG) is a major player in the development and governing of maritime policy. US Army Corps of Engineers. The US Army Corps of Engineers (USACE) is responsible for a majority of dredging projects nationwide to ensure that the waterways are maintained at a suitable depth. Additionally, they are responsible for the locks and dams along the inland waterways to both facilitate commerce and recreation but to prevent flooding. National Oceanic and Atmospheric Administration. The National Oceanic and Atmospheric Administration (NOAA), under the Department of Commerce, play an important role in coastal and oceanic maritime services. NOAA is responsible for surveying and charting coastal areas including seaboard, ports, and major tributaries. iv

6 The Marine Administration. The Department of Transportation s Maritime Administration (MARAD) is involved in the intermodal networks that service the MTS. Other Agencies include the Federal Emergency Management Administration (FEMA), the Saint Lawrence Seaway Development Corporation, the Federal Maritime Commission and the National Transportation Safety Board (NTSB), The Committee on the Marine Transportation System (CMTS) is the cohesive body that attempts to bring all federal government departments and agencies involved in the maritime realm together. CMTS is an Executive Branch level inter-departmental committee created to improve federal MTS coordination, strategic planning, and budgetary and regulatory activities and policy. The CMTS is made up of the Secretary of Transportation as chair with participation by the Secretary of Commerce, Secretary of Defense, Secretary of Homeland Security, Secretary of Treasury, Secretary of State, Secretary of the Interior, Secretary of Agriculture, Attorney General, Secretary of Labor, Secretary of Energy, Chairman of the Joint Chiefs of Staff, Administrator of the Environmental Protection Agency, and Chairman of the Federal Maritime Commission. Reporting to the committee and conducting day-to-day management and policy development are the members of the Coordinating Board which is made up of all agencies and departmental offices with an interest in the MTS, with the chairperson rotating yearly between NOAA, USCG, USACE and MARAD.iii The National Maritime Strategy developed by the CMTS is the major frame work in the prioritization of the port operation measures of effectiveness identified in this report. The local stakeholders pertinent to this project include the West Virginia Public Port Authority (WVPPA), the Port of Huntington Port Authority, and the Port of Pittsburgh Commission. The importance of the local stakeholders within the maritime transportation sector is that they generally are the ones promoting development and infrastructure enhancements which, in turn, promote the national MTS as a whole. Objectives of the Study This study aims to identify metrics pertaining to the evaluation of port efficiency and uses the performance indicators for inland waterway transportation identified by PIANC in their publication, "Performance Indicators for Inland Waterways Transport: User Guideline", hereby referred to as the PIANC report. PIANC, also known as The World Association for Waterborne Transport Infrastructure, has much experience in pooling global academic and professional expertise for the purpose of studying common issues of concern within the field. In the case of Report No. 111, the PIANC Technical Commission overseeing inland waterways and ports (InCom) convened an international working group to produce guidance regarding the adoption of more transparent and internationally standardized performance indicators. A major focus of this project revolves around providing an analysis of the various benefits and potential drawbacks associated with utilizing the framework set out by PIANC in this report. Ultimately, an assessment should be reached as to what extent PIANC methodologies could feasibly be utilized to aid transportation policy planners across multiple federal, state and local agencies in setting funding priorities to most effectively meet the needs of our waterborne transportation infrastructure within the United States. Despite efforts to bring universal comparison of performance, the PIANC performance indicators miss some critical criteria. For example, cyber security is missing, which is critical for US port security. Performance indicators which may only applicable to US ports and waterways are not available. Similarly, some indicators may not be applicable to US ports for our purposes. As a result, additional metrics pertaining to US-specific applications have been added and some indicators which were determined were not applicable to US ports are not included here. v

7 Federal Guidance United States federal spending on infrastructure construction, operation and maintenance, either direct spending or grant funding, is governed by a suite of legislation and regulations. Many of these rules are less than twenty years old and they direct federal, state and local agencies to produce high quality plans that help manage costs and enhance the return on infrastructure investment and development. Policy makers and transportation professionals in the United State understand that the sustained maintenance and improvement of infrastructure is directly linked to a sustained and improving national economy. Maintaining and improving infrastructure consumes vast sums of public funds and a perennial problem in tracking that money is the systematic management of federal, state and local agencies that are responsible for spending taxpayer money on infrastructure. The diffusion of funding sources makes it all the more important for ports to maintain transparency of both operations and investment returns to attract scare federal funds through direct spending by agencies or through competitive grants. As federal spending on maritime and port infrastructure continues to decline, there must be a directly proportional increase in improved and innovative planning for infrastructure investment, maintenance and project delivery. Federal agencies are required to track and improve investment principles to maximize the impact of taxpayer money, and port stakeholders must do the same. Compared to the other transportation modes receiving federal funding, the US maritime sector has a complex, bureaucratic, and multi-agency structure. Financing for various infrastructure projects are a patchwork of federal trust funds, different agency and departmental budget lines, and congressional appropriations. Each of these various items have created a system of finance for the MTS that is inefficient and ineffective in supporting a major infrastructure network that helps drive the national economy year after year.iv The inland waterways system was the first transportation mode to be supported from the federal level with financing coming from the general treasury, but still to this day lacks a streamlined and efficient framework for financing necessary maintenance and improvements. Performance Indicators for Inland Waterways Port metrics indicators are simply measures of the effectiveness of the port s operation. Performance measures are important to port authorities for two reasons: Data can be used for improving port operations, and data can also provide an appropriate basis for planning future port development. To fulfill this purpose, such indicators need to be easily calculated and simple to understand. Measurements should provide insight to port management into the operation of key areas. Metrics can be used to compare performance with a target and observe the trends in performance levels.v This study utilized the recommendations of the CMTS who established a national-level strategy for the MTS. This strategy was signed and adopted by all 18 federal agencies that serve on the CMTS. The National Strategy for the Marine Transportation System: A Framework for Action is established to serve as a five-year framework to build an implementation plan for the MTS. The document focuses upon all major challenges facing maritime transportation over the next 20 years. It identifies five priority areas for maritime investment needs: capacity, safety and security, economic growth and finance, environment, resilience and reliability and finance and economics. Capacity The capacity of an inland port is characterized by the physical description of the network, its operations and the fleet that is using it. Capacity can be defined by demand related constraints such as vi

8 distribution of the fleet, moved tonnage and maximum tonnage by vessel type, average loading factors, and rates of empty returns. Other characteristics can also be considered such locks capacity and utilization, lock operations, and downtime due to weather, planned or unplanned maintenance and other factors. Areas Examined Include: Average Daily Traffic Multi-modal & Inter-modal Facilities Waterways Utilization Support of Desired Land Development Connectivity/ Access to Global Markets Concentration of Trucks for Goods Movement Support of Passenger Transportation Safety and Security The safety of vessels, personnel, and equipment within a port are of the utmost importance when considering the performance of a port and assessing future infrastructure investment, in particular those investments made to mitigate potential safety shortcomings. To assess port performance with respect to safety, the following metrics were examined: Injury Rate Fatality Rate Material Damages Accident Rates Performance indicators for port security target specific areas in which such variables as thefts, access control, and cyber security measures are evaluated. The overall objective in such indicators relative to inland port security is to evaluate how to reduce loss of value due to water crimes in a given section and time period relative to total transport cargo volumes. The 2010 PIANC report outlines in concurrence with formal literature on behalf of inland port authorities, Department of Homeland Security and TSA, numerical values in which to assess security metrics as they may occur. The PIANC report outlines the following: Access Points Thefts Cyber Security Economic Growth and Finance No authority is more potent for policymakers at federal, state or local levels than the spending of money on infrastructure. Infrastructure requires long-term financial commitment to both the maintenance and management of assets. Implementing sound fiscal management of public assets is an essential element for measuring economic contribution from infrastructure and proving to policymakers the value of continued public investment. Public and private stakeholders need to know how much money a port has in assets and liabilities, how much the port has received from public and private sources, how that money is expended, and what amount is invested through direct spending, grants or reinvested rev Economic Impact of Cargo Transport revenues. Specific areas considered include: vii

9 Job Creation Average Wage Level Income per Net-Registered Tonnage of Shipping Rate of Return of Turnover Development of Cargo Transport Volume on Inland Waterways Cargo Revenue Earned by Inland Waterway Navigation Regional & Local Development Environment Inland waterways can play an important role in mitigating the overall environmental effects of transporting cargo through the supply chain. While inland waterway transportation has some favorable environmental attributes compared to competing modes, it also can have significant localized impacts on the natural environment and human health. Ports are located in coastal areas that tend to contain wetlands or other sensitive areas and ecosystems, some of which may be home to endangered species or significant cultural resources. Port activity can also limit the public s enjoyment of waterfront areas and access to recreational opportunities. Further, as the value of waterfront property is on the rise and land near ports becomes more attractive, conflicts between port commercial needs and desires for other types of land use are increasing. Maintaining and expanding infrastructure under these conditions can be challenging. In addition to their presence in sensitive and valuable lands, port activity can negatively impact water quality through the discharge of oil and other pollutants, the carriage and introduction of invasive species, and the disturbance of contaminants in the dredging process. Port activity can also have significant impacts on air quality, as vessels, cargo handling equipment, and trucks and locomotives serving the port emit pollutants that can harm human health and contribute to climate change. Finally, because emissions directly result from the combustion of fuel, there are also energy security implications. These environmental pressures will become more acute if projections for growth in waterborne freight materialize. It is therefore increasingly important to understand and measure the environmental performance of ports. Doing so can help decision-makers allocate scarce resources to environmental mitigation projects, or even capacity enhancing projects that have concomitant environmental benefits. Areas examined include: Fuel Consumption Air Emissions Endangered Species & Protected Land Water Quality Resilience and Reliability Resilience and Reliability is the port s ability to accommodate in a safe and efficient manner, unexpected or unusual conditions such as emergencies or special events; without failing to provide accessibility. It is the capacity to absorb shocks gracefully vi Because of this, a plan is necessary so the port will be prepared for a wide range of possible situations. Port efficiency is reflected when time, effort and other resources are well implemented in order to accomplish the port s goals without minimum expenditure of resources. viii

10 The following metrics concerning port efficiency are measured: Command & Control Landside Accessibility & Reliability Waterway Accessibility & Reliability Capacity Utilization Maintenance Utilization Conclusion This report applied available data to specific performance indicators as a test case for comparing overall performance between the two inland ports of Huntington, West Virginia and Pittsburgh, Pennsylvania. While Huntington is the largest inland port in the United States by tonnage and ton-miles according to 2009 Army Corps of Engineers data and could be expected to outperform the Port of Pittsburgh, it was difficult to compare Huntington s performance to Pittsburgh s because of the paucity of data on either port.vii It is impossible to determine which of the two inland ports performed better for the years that data are available and that determination limits the ability to hypothesize which port should receive public investment. Even if adequate performance measures were available to complete a comparison of the two ports, the decision of how to fairly allocate public funds to achieve appropriate goals for infrastructure investment is a significant challenge. Although the test case failed to produce sufficient results, the report s analysis of PIANC performance indicators that apply to U.S. inland ports produced a reasonable, basic methodology that could be used to assist public officials in making port infrastructure investment decisions. Every step involved in collecting, synthesizing, publishing, and analyzing the performance indicators listed above is rife with challenges. While PIANC s report was international in focus, it is clear that the U.S. faces almost all of the challenges cited in the report, from a lack of standardized terminology to insufficient transparency of port information. The authors of this report faced the same difficulties that ports would face when collecting data across various sources and comparing it equitably. Despite these challenges facing stakeholders, the rewards for ports and the public are significant. Quite simply, more accurate collection, measurement and publication of standard data reports in key performance areas can inform internal process improvements for managing infrastructure. An improved level of transparency would also allow limited public money to be invested wisely, enhance the return on investments and measure the economic and social benefits of improving infrastructure. If performance of ports is measured and reported systematically, then what formula should policymakers use for distributing funds to improve the overall efficiency of the river system? This question only invites more questions. For instance, should inland ports with lower performance be provided additional funds to boost efficiency or should high-performing ports be rewarded with increased investment? This question is currently being debated in Congress as the Inland Waterways Trust Fund continues to diminish in reverse proportion to the funds necessary to sustain essential inland river infrastructure. Further study could help determine how to balance public and private investment based on a wide range inland waterway uses, including recreational, commercial, hydroelectric, fisheries, and environmental preservation. ix

11 I. Introduction Identification of Situation Funding allocation questions Inland and coastal ports play a crucial role in every nation s economy and therefore they should be considered as one of the most vital aspects of national transport infrastructure. 8 Governments have always participated in developing and improving transportation infrastructure as it is a way of not only opening doors to new businesses, but also boosting transport industries, improving the quality of services, supporting the maintenance of infrastructure in the case of ports, maintaining the channel and berths at optimal level for receiving increasingly large vessels, making it more efficient, productive, and competitive. Currently, the US federal government has limited funds for transportation infrastructure development and ports are an expensive capital investment with a large portion of sunk costs, which means that once the investment is made it involves a long-term commitment. 9 Then, it is important that all parties involved in the funding of transport infrastructure such as federal agencies, state governments, and other local entities reach some agreement in terms of priorities and cost sharing. The problem is not that the agreement between parties is difficult but also that it is challenging for ports to use the existing infrastructure efficiently, thus agencies are hesitant to commit to funding new infrastructure or raising the transportation spending when the available resources are not well allocated. Also each port needs to quantify its need for new infrastructure, and determine how these needs can be financed and how these financing costs might be distributed across users and all parties involved.10 A set of port performance indicators that could be applied to fit all ports when funding decisions are going to be taken, is urgently needed. This could be a better tool to identify each port s priorities and also will determine and evaluate how efficiently and effectively ports are using their infrastructure and utilization of former funds granted to them. So the remaining question would be how to best allocate the limited available resources in a way that the greatest benefit will be reflected? Evaluation of Port Effectiveness and Efficiency The measurement of effectiveness and efficiency of a port is necessary for the development of port economic activity. Performance indicators play a key role in the evaluation of effectiveness and efficiency because they can define not only the current state of processes but also project the future of ports and reflect their needs.11 A set of standard port indicators is needed that can be applied to every port. In their development, these standards should reflect how the port is operating in terms of capacity, safety and security, environmental aspects, resilience and reliability, finance and economics. 12 Standard port indicators will enable the process of setting national priorities, and will provide a system of evaluation which is less challenging and arbitrary for all parties involved in port activity and port funding. 1

12 Despite the importance of port performance measurement, however, it is surprising to note that there are almost no standard methods that are accepted as applicable to every port for the measurement of its performance (Cullinane, 2002). More surprisingly, it is even harder to find standard terminology to describe port production... Measurement will always have a natural tendency to be terminal-specific (Robinson, 1999). As reported by De Monie (1987), the measurement of port productivity has been greatly impeded by the following factors: The sheer number of parameters involved; The lack of up-to-date, factual, and reliable data collected in an accepted manner and available for dissemination; The absence of generally agreed and acceptable definitions; The profound influence of local factors on the data obtained; The divergent interpretation given by various interests to identical results. Source: Dong-Wook Song, Kevin Cullinane Teng-Fei Wang, The Applicability of Data Envelopment Analysis to Efficiency Measurement of Container Ports, Proceedings of the International Association of Maritime Economists Conference (Panama: ECLAC, November). The World Association for Waterborne Transport Infrastructure (PIANC) has developed a set of performance indicators for inland waterways transport in order to support decision-making processes and reach common understanding of definitions and measurement standards. 13 These indicators will be taken as a base and will be evaluated in order to identify their applicability to the process of port funding in the United States. 2

13 Key Stakeholders While other modes of transportation have singular governing bodies within the federal government system, the marine transportation system (MTS) is governed by over 25 federal agencies. Such disjointed and varied governing bodies makes it difficult to define a cohesive national maritime strategy and thus funding and developing the MTS is extremely convoluted and problematic. The major stakeholders and their roles will be reviewed here including the stakeholders for this particular study including local and regional governing bodies. US Coast Guard Within the federal system, the US Coast Guard (USCG) is a major player in the development and governing of maritime policy. USCG is responsible for maintaining the navigable waterways by placing and servicing aids to navigation (buoys) as well as domestic ice breaking to keep commerce flowing. USCG is also responsible for maritime search and rescue, though frequently partnering with other federal, state, and local agencies. USCG is the regulating arm for enforcing maritime vessel safety inspections and crewing standards within US waters. The USCG has a standing agreement to respond to and investigate all maritime pollution cases while the Environmental Protection Agency is responsible for land-based pollution cases. Lastly, USCG and partnering Department of Homeland Security agencies the Transportation Security Administration and Customs and Border Protection are responsible for port safety and security enforcement. US Army Corps of Engineers The US Army Corps of Engineers (USACE) is another major stakeholder within the federal government. USACE is responsible for a majority of dredging projects nationwide to ensure that the waterways are maintained at a suitable depth. Additionally, they are responsible for the locks and dams along the inland waterways to both facilitate commerce and recreation but to prevent flooding. In tandem with the locks and dams responsibility, USACE is responsible for traffic management on some of the nation s inland waterways. USACE is responsible for clean-up of floating debris and submerged or sunken hazards to navigation to ensure safe navigation of recreational and commercial vessels. Finally, USACE is responsible for updating and maintaining the charts (both paper and electronic) which allow mariners to navigate on the inland waterways. National Oceanic and Atmospheric Administration The National Oceanic and Atmospheric Administration (NOAA), under the Department of Commerce, plays an important role in coastal and oceanic maritime services. NOAA is responsible for surveying and charting coastal areas including seaboard, ports, and major tributaries. Charts and publications produced by NOAA provide mariners with information on changes and notices regarding the nation s waterways and NOAA is also responsible for broadcasting and publishing updates to this vital navigation information. NOAA additionally has the responsibility to manage the federal fisheries and marine sanctuaries that occur along our nation s coasts. The Marine Administration The Department of Transportation s Maritime Administration (MARAD) is involved in the intermodal networks that service the MTS. With regards to regulations, MARAD networks with international bodies such as the International Maritime Organization to ensure consistency. MARAD also assists ports with 3

14 financing, infrastructure development, and redevelopment plans.14 MARAD has oversight of the merchant mariners program and is responsible for maintaining the auxiliary fleet of vessels to be used in times of war and in response to emergencies for surge transportation of equipment. Similarly, the Military Sealift Command is the single agency responsible for the Department of Defense s ocean transportation needs. 15 Federal Emergency Management Administration As a result of the September 11th terrorist attacks and the realization of our port vulnerability, the Federal Emergency Management Administration (FEMA) has also entered the world of port security. In fact, as part of the American Recovery and Reinvestment Act, FEMA awarded grants for port security to create a sustainable, risk-based effort to protect critical port infrastructure from terrorism, particularly attacks using explosives and non-conventional threats that could cause major disruption to commerce. 16 Saint Lawrence Seaway Development Corporation The Saint Lawrence Seaway Development Corporation (SLSDC) is the federal entity that is responsible for maintenance, operation, and construction along the Saint Lawrence Seaway in US waters from Montreal, Quebec to Lake Erie. The SLSDC works with their Canadian equivalent to meet those objectives as well as foster further development and trade along the waterway and in the Great Lakes region.17 Federal Maritime Commission The Federal Maritime Commission (FMC) works to ensure fair practices for the United States by regulating foreign commerce transported into the country via ships. In doing so, the FMC serves as a watchdog to protect against discriminatory or predatory practices by foreign governments and entities towards US vessels aboard or US-bound cargo. National Transportation Safety Board The National Transportation Safety Board (NTSB), along with USCG, is the investigation arm of the federal government in marine accidents and incidents. USCG conducts preliminary investigations and formal investigations a minor marine accident. When the USCG determines that a major marine casualty as occurred, or other thresholds have been met, the NTSB completes investigations involving public and private vessels occurring on navigable waters, inland waters or within the territorial sea of the United States. 18 Committee on the Marine Transportation System The Committee on the Marine Transportation System (CMTS) is the cohesive body that attempts to bring all federal government departments and agencies involved in the maritime realm together. CMTS is therefore an inter-departmental committee created to improve federal MTS coordination, strategic planning, and budgetary and regulatory activities and policy. The CMTS is made up of the Secretary of Transportation as chair with participation by the Secretary of Commerce, Secretary of Defense, Secretary of Homeland Security, Secretary of Treasury, Secretary of State, Secretary of the Interior, Secretary of Agriculture, Attorney General, Secretary of Labor, Secretary of Energy, Chairman of the Joint Chiefs of Staff, Administrator of the Environmental Protection Agency, and Chairman of the Federal Maritime Commission. Reporting to the committee and conducting day-to-day management and policy development are the members of the Coordinating Board which is made up of all agencies and departmental offices with an interest in the MTS, 4

15 with the chairperson rotating yearly between NOAA, USCG, USACE and MARAD.19 A detailed description of the national maritime strategy developed by the CMTS follows in our literature review section. Local Stakeholders The local stakeholders pertinent to this project include the West Virginia Public Port Authority (WVPPA), the Port of Huntington Port Authority, and the Port of Pittsburgh Commission. The importance of the local stakeholders within the maritime transportation sector is that they generally are the ones promoting development and infrastructure enhancements which, in turn, promote the national MTS as a whole. WVPPA was developed to promote intermodalism and development within West Virginia through the development of infrastructure to enhance economic advantages to the state s businesses, industries, and citizens. The Port of Huntington Tri-State Port is the largest inland port in the United States in terms of total tonnage as well as ton-miles of cargo. The port includes 100 miles along the Ohio River as well as 90 miles of the Kanawha River and 9 miles of the Big Sandy River including the cities of Ashland, Kentucky; Ironton, Ohio; and Huntington and Charleston, West Virginia. The district was expanded in 2000 from the previous 14-mile stretch of the Ohio River surrounding Huntington. The Huntington District Waterways Association is made up of representatives of 40 member companies, which include towing companies, facilities, shipyards, coal, oil, chemical, and petroleum companies. The association s objective is promote safe navigation and use of the waterway while fostering river and harbor development and supporting flood control.20 The Port of Pittsburgh has two local entities, the Port of Pittsburgh Commission (PPC) and the Waterways Association of Pittsburgh (WAP), which aim to promote and foster the development of the Port of Pittsburgh. The WAP has a joint panel that meets with USACE and USCG regularly to develop the waterways and address safety and navigation issues. The PPC serves as the more formal body that lobbies state and federal elected officials to promote the development and maintenance of the nearly 200 miles of the Allegheny, Monongahela, and Ohio rivers within the port area. As part of the lobbying function, PPC is an advocate for the nearly 200 commercial waterway users and industries within the area and provides the information and documentation necessary for continued development.21 5

16 Objectives of the Study This study aims to identify metrics pertaining to the evaluation of port efficiency and uses the performance indicators for inland waterway transportation identified by PIANC in Performance Indicators for Inland Waterways Transport: User Guideline, hereby referred to as the PIANC report, as main metrics22. Why the PIANC report? This study adopts PIANC performance indicators for inland waterway transportation as main performanceevaluation metrics, and provides additional recommendations for useful indicators as applicable to US ports. Published by InCom Working Group 111 in September 2010, performance indicators identified in the PIANC report provide an effective and practically approved method to support decision-making processes by working out the causes and effects that directly and indirectly influence the achievement of goals and corresponding results. The real challenge is to develop applicable performance indicators in the different sectors limited for inland navigation to support correct decision making and improved competitiveness of waterborne transport. In evaluating performance of different transportation modes or facilities, there is a need for a standardized set of performance indicators for the following reasons: Common definitions, standards, and measurements to encourage industry-wide adoption of harmonized performance indicators and best practices are missing; Shipping industry and forwarders suffer from a lack of transparency in documentation; There is no effective utilization of existing transportation potentials and information exchange; Currently only a limited set of data is available for supporting transportation activities and in a crossnational context neither a harmonized structure nor a common way of application is available; Currently performance indicators are only used on an individual or company level for improvement of quality and benchmarking. There is a need for a common understanding of the benefits, goals, and the nature of performance indicators to guarantee active participation of all stakeholders. The development of appropriate service performance indicators for inland waterways will help tie together condition assessment and required levels of service with prioritization of routine maintenance, major rehabilitation, and recapitalization strategies. PIANC performance indicators are based on the following objectives: Make the performance of inland navigation comparable to other modes. Show and educate inland waterway users on implementation of performance indicators. Therefore, all performance indicators are edited in a standardized way to show potential users the steps necessary to develop and describe performance indicators. Stress the importance of a standardized and automatic procedure for basic data collection. It shall not exhibit any contact surface for counterfeit, as the collection of underlying basic data determines the degree of quality of the performance indicators regarding their ability for comparison. Ease application, strengthen acceptance, and push the implementation of performance indicators. Hence, the recommended performance indicators are based on already existing and available basic data. 6

17 Motivate inland waterway users and administrators all over the world to collect data on performance and define performance indicators using the collected data. Enable a common basis of comparable data on performance for inland navigation. Improve transparency in reporting performance and increase the quality and attractiveness on the one hand and the cost savings on the other hand. Enable stakeholders to measure, manage and communicate their performance in a commonly accepted way. Provide measures that enable timely feedback for users and ensure action on time. Eliminate the difficulty of comparing parameters across countries. Induce a long-term continuous improvement process. In summary, the performance indicators provide a standard set of performance evaluations for inland waterway systems. However, we found some limitations in the PIANC report as well. Despite efforts to bring universal comparison of performance, the PIANC performance indicators miss some critical criteria. For example, cyber security is missing, which is critical for US port security. Performance indicators which may only applicable to US ports and waterways are not available. Similarly, some indicators may not be applicable to US ports for our purposes. As a result, additional metrics pertaining to US-specific applications have been added and some indicators which were determined were not applicable to US ports are not included here. The metrics we identified pertaining to US port performance evaluation are organized into the following six categories, discussed in further detail in section III Performance Indicators for Inland Waterways: Capacity Safety Security Economic Development and Finance Environment Resilience and Reliability Definition of Port Efficiency According to the PIANC report, handling capacity, utilization of handling capacity, storage capacity utilization, and waiting time for service are the elements for estimating port efficiency. Intermodality is also an influencing factor for port efficiency. This report aims to analyze the metrics provided in the PIANC report and recommend areas in need of funding allocation through applying those metrics to two ports: Pittsburgh, Pennsylvania and Huntington, West Virginia. 1. Analyze metrics pertaining to port efficiency. Analyses of outcome according to the metrics for performance evaluation are provided in later part of this study so that they can give reasons and insights for the evaluation results. Data for the ports of Pittsburgh and Huntington according to the performance metrics are searched and compiled. The validity and availability of data are reviewed for reliable analysis of the study. Gap analysis between PIANC performance metrics and desirable metrics are made based on applicability and availability of 7

18 port data. Analysis of performance report and documentation including metrics in other transportation mode is also conducted to see how other mode measures the performance. Limitations and shortfalls in our analysis are identified and discussed so that port efficiency evaluation in the future can be modified and improved. 2. Make recommendations of areas in need of funding allocation. Bases of recommendations will be the data on performance metrics of ports and analyses on those results. Recommendations will be made according to comprehensive conclusion on metrics data, interpretation and analysis of results, and other factors as necessary. 8

19 II. Literature Review National Maritime Strategy In accordance with their 2005 Charter the CMTS established a national-level strategy for the MTS. This strategy was signed and adopted by all 18 federal agencies that serve on the CMTS. The National Strategy for the Marine Transportation System: A Framework for Action is to serve as a five-year framework to build an implementation plan for the MTS. The document focuses upon all major challenges facing maritime transportation over the next 20 years. It identifies five priority areas for maritime investment needs: capacity, safety and security, environmental stewardship, resilience and reliability and finance and economics. Capacity Studies show by 2020 total freight volumes will increase by over 50 percent and international container traffic will double its levels from This additional growth will create the need for expanded facilities, staging areas, equipment, and technologies. Although improved technologies and equipment can increase throughput it is clear that investment in expanded infrastructure will be needed. Operational and maintenance costs will increase as locks age, repairs increase, and dredging becomes more expensive. Additional intermodal support (roads and railway) improvements will be necessary to reduce congestion and accommodate added capacity. To ensure sound investment decisions, comprehensive and innovative approaches must be engineered and collaborations need to exist between federal, state, and local governments as well as the private sector. To meet these challenges the CMTS recommended eight specific actions: Work collaboratively to address federal statutory, regulatory, and institutional requirements in order to improve MTS performance. Encourage the expansion of shipping on the Marine Highways, including the establishment of a pilot program to designate Marine Highway Corridors to relieve congestion on roadways; Propose economic incentives for private sector investment in MTS infrastructure and operational technologies to make the MTS more efficient for existing and future needs. Collaborate with state, local, and private entities to ensure environmental and National Environmental Policy Act compliance, and to plan for land use in and near ports. Share best practices and create incentives to encourage private sector interests and local governments to pursue initiatives for increased efficiency and environmental sustainability. Publish valid, reliable, and timely data on the MTS including cargo movements, capacity, and productivity. Facilitate standardized terminologies, interpretations, and flow-through models to foster increased productivity. Develop performance measures to assess the productivity of the MTS and the risk of potential infrastructure failures to the MTS. Safety and Security The increase in capacity and vessel traffic presents additional risk of accidents and increased vulnerability to waterway and port activities and infrastructure. Security mandates such as the Maritime Transportation 9

20 Security act of 2002 and the Safe Port Act of 2006 have addressed this. The Department of Homeland Security s Customs and Border Protection and USCG, NOAA s Office of Coast Survey, and other agencies have passed guidance and directives to enhance security and safety at ports. This national strategy will leverage these initiatives and provide for cooperation among all stakeholders in the areas of safety and security. Specific recommendations include: Coordinate existing federal navigation programs to ensure collaboration, reduce duplication, and standardize terminology and presentation. Deliver timely, relevant, accurate navigation safety information to mariners, including real-time information systems such as the Physical Oceanographic Real Time Systems, e-navigation, under-keel clearance, High Frequency Radar air gap technology, Real Time Current Velocity systems at locks, and systems associated with development of the Integrated Ocean Observing System to improve navigation safety and efficiency and reduce the risk of accidents. Encourage, coordinate, and support navigation technology research and development to enhance navigation safety. Enhance and improve existing frameworks that plan for, operate, maintain, and mitigate risks to vessels and the environment, and respond to accidents and natural disasters. Ensure coordination among maritime transportation and maritime security policy-making bodies and programs. Consider ways in which security measures impacting the movement of trade by water can be streamlined, and where economies and coordination can be realized between safety and security imperatives. Work closely with State and local boating authorities and entities, recreational boating organizations, commercial shipping interests, and ports to reduce accidents resulting from competing uses of navigation channels, and increase and manage safety of the MTS. Economic Development and Finance Collaborative efforts between federal, state, and local governments as well as the private sector are necessary for the success of the MTS. While the federal government examines all facets of the MTS, state and local governments look at how this interacts with regional concerns. In an environment of limited public sector funding, the private sector will take an increasingly prominent role in infrastructure, port, and asset investment. A coordinated, detailed, and consistent approach is imperative to ensure investments are sound. Thorough and systematic analysis of opportunities and assurance that prioritization of investment is solid and needs to be coordinated at all levels and based upon policy. Proper revenue utilization and efficiency should guide decisions for investment. Private investment must also complement public investment. The National Marine Transportation Strategy recommended the following actions: Study alternative approaches to financing construction, rehabilitation, and maintenance of infrastructure projects, as well as environmental impact mitigation. This study should consider fees, taxes, and general revenue contributions for financing infrastructure projects, depending on the characteristics of the projects. The study should involve high-level discussions and collaboration with federal, state, local, and tribal governments, and also with private entities, as appropriate, on funding strategies. Study approaches to prioritizing how federal dollars should be allocated among competing priorities. 10

21 Ensure that cost allocation takes into consideration environmental and human health costs, promotes economic efficiency, and does not create unfair competitive disadvantages. Study how best to coordinate the allocation of federal funds for projects across government agencies. Coordinate a CMTS membership policy recommendation to the President for congestion prices, which should be charged when appropriate. The revenues collected from congestion pricing can offset fixed costs and thereby reduce economic distortions. Environmental Stewardship The MTS operates within our nation s waters and wetlands. Its routes, ports, and waterways cross estuaries, wetlands, river systems, fisheries, and habitats for waterborne and marine animals. Waste and byproducts from these activities put wildlife, fish, and plant life at risk. Discharges of oil and other petroleum products, chemicals, and black and grey water not only effect the natural environment but human drinking water sources as well. Accidents and spills can bring irreparable damage to valuable natural resources and affect the health and welfare of plants, animals, and humans. Management of these concerns requires coordination between scientific agencies, management bodies, and federal, state, and local government. The National Marine Transportation Strategy provides a system-wide approach to the implementation of regulations designed to protect these valuable resources. To support this endeavor the National Marine Transportation Strategy presents eight recommendations: Advocate transportation projects, technologies, and mitigation activities that improve air quality, reduce greenhouse gas emissions, and reduce congestion in port areas and other MTS components. Work collaboratively to foster the collection of data and information that will underpin environmental impact assessments and decision making in MTS planning and development. Support research and develop and implement practical strategies to control and mitigate effects on the marine environment from pollutants, invasive species, and anthropogenic sound, and to reduce negative interactions between ships and marine mammals. Ensure environmentally appropriate dredged material management. Promote coordinated regional and watershed efforts of states, federal agencies, and other partners to manage sediment, dredging and dredged material, point source discharges and storm water runoff, oil or hazardous material spills, harmful anti-fouling systems, and sources of marine debris to restore habitats, reduce pollution, and plan for conservation and mitigation. Support harmonization of state, federal, and international environmental standards, policy, laws, and regulations through work with federal interagency bodies, in the International Maritime Organization and other organizations, and implement international treaties such as those regarding prevention of maritime pollution at sea. Support national and international solutions to environmental problems related to ship decommissioning and dismantling. Encourage use of industrial land banks and formerly polluted industrial areas for MTS and intermodal transportation system facilities, and promote MTS development that avoids disproportionate impacts on minority and low-income communities. Resilience and Reliability Today s supply chain is a streamlined and highly intricate and efficient enterprise. Efficiencies in transportation haves resulted in lower costs for materials and finished products to both industry and 11

22 consumers alike. It has brought regional economies onto the global stage. Unfortunately with a lean supply chain comes an increased vulnerability to disruption. Political crises, terrorism, wars, labor disputes, as well as weather and natural disasters can disrupt the supply chain and adversely affect the greater economy. The MTS must not only withstand these vulnerabilities but also support emergency and contingency plans that result from these disruptions. These plans and risks must be identified and proper coordination needs to be developed to ensure investment in the MTS supports this capability. The National Marine Transportation Strategy identified six actions to increase the resilience and reliability of the MTS: Provide coordination, expertise, and resources to ensure continuity of operations, essential public services, and the resumption of commercial marine activities following a disruption. Develop reserve and surge capacity in the MTS and coordinate with industry on response and recovery operations. Develop a coordinated approach to emergency permitting for channel restoration following a largescale sediment deposit in navigation channels from natural disasters such as hurricanes, which may obstruct the channel and disrupt port activities. Work collaboratively to resolve cross-cutting jurisdictional issues surrounding abandoned and wrecked vessels or damaged bridges. Develop and promote national and international strategies for addressing potential climate change impacts on ports, waterways, and other vulnerable elements of the MTS. Provide appropriate consultation and coordination with other policy facilitation structures, such as the Committee on Ocean Policy. The publishing of this strategy marks the first time all 18 stakeholder agencies agreed in a common framework expressing policy. Although this has not been modified since its approval in 2008, and a change in federal government leadership has occurred since its inception, this strategy remains the sole document addressing marine transportation policy. The priority areas established are comprehensive and consistent with other national policy documents (National Maritime Strategy) and thus serve as the best available document to base funding and investment decisions upon. The CMTS has yet to prioritize or to develop performance measures against them; this study will attempt to do so. 12

23 Federal Guidance United States federal spending on infrastructure construction, operation and maintenance, either direct spending or grant funding, is governed by a suite of legislation and regulations. Many of these rules are less than twenty years old and they direct federal, state and local agencies to produce high quality plans that help manage costs and enhance the return on infrastructure investment and development. Executive Order Policy makers and transportation professional in the United State understand that the sustained maintenance and improvement of infrastructure is directly linked to a sustained and improving national economy. Maintaining and improving infrastructure consumes vast sums of public funds and a perennial problem in tracking that money is the systematic management of federal, state and local agencies that are responsible for spending taxpayer money on infrastructure. One of the more instructive regulatory guidance documents directing U.S. federal agency spending requests and decisions is Executive Order (EO) 12893, titled Principles for Federal Infrastructure Investment. This document, signed by President Bill Clinton on January 26, 1994, is used by every federal agency as the policy for justifying federal infrastructure expenditures over $50 million. The principles outlined in the EO present a systematic approach to spending analysis, management and planning in order to enhance the return on investment from federal infrastructure spending that takes place at the national, state and local levels. The federal guidance document EO is brief, but it dictates clear actions and considerations for all federal agencies and departments that have jurisdiction over spending decisions for existing or new infrastructure projects. In sum, the EO provides four principles for infrastructure investment decisions including cost-benefit analysis, management review procedures, facilitation of private sector involvement in funding or administration, and inclusion of state and local funding recipients in the systems planning procedures outlined by the guidance. The first two principles relating to cost-benefit analysis and efficient management deserve detailed explanation here because these two rules require the most specific action by federal agencies (along with prescribing actions for state and local recipients of federal money). In accordance with the EO Section 3, Submission of Plans, agencies must provide written details of their adherence to the infrastructure investment principles as dictated by Office of Management and Budget (OMB) instructions. The agencies written details must incorporate the following items that are the essential components of the first two principles from the EO: Cost-benefit analysis of market and non-market factors affecting infrastructure investment; Complete infrastructure life-cycle cost analysis; Quantification and qualification of investment uncertainties; Comparison of alternative options available to agencies (e.g. infrastructure repairs, rebuilds, technology enhancements, etc.); Consideration of the qualitative value of infrastructure spending; Periodic review of operations and maintenance; Review of improved process management and delivery on investments; and, Application of market-based mechanisms for controlling demand on infrastructure usage. 13

24 The aforementioned components of EO provide the structure to assist federal agencies and recipients of federal funding in improving investment management and performance. The federal agency infrastructure investment guidance from EO is just one of numerous regulations and accompanying laws that governing acquisition, management and performance of infrastructure investments, and these rules have significant impacts on investment in port infrastructure. Coastal and inland ports in the U.S. receive funds to improve maritime infrastructure through several means, including but not limited to the Harbor Maintenance Trust Fund (primarily for dredging and navigation improvements), the Inland Waterways Trust Fund (for lock and dam construction and major rehabilitation), congressional funding (from the Water Resources Development Reauthorization Acts, Energy and Water Appropriations Acts and Coast Guard Reauthorization Acts) and from grant money. In keeping with the fractured government oversight of maritime transportation, the control of maritime infrastructure funds is overseen by multiple agencies and stakeholders, including the Army Corps of Engineers, the Coast Guard, the Environmental Protection Agency, U.S. Department of Transportation, metropolitan planning organizations, state departments of transportation, individual port commissions and private terminal operators. This diffusion of funding sources makes it all the more important for ports to maintain transparency of both operations and investment returns to attract scare federal funds through direct spending by agencies or through competitive grants. As federal spending on maritime and port infrastructure continues to decline, there must be a directly proportional increase in improved and innovative planning for infrastructure investment, maintenance and project delivery. Federal agencies are required to track and improve investment principles to maximize the impact of taxpayer money, and port stakeholders must do the same. TIGER Grants In 2009 and 2010, pursuant to funding appropriated by Congress, the US Department of Transportation (DOT) solicited applications for multi-modal surface transportation infrastructure grants. The grants were awarded on a competitive basis for projects deemed to have a significant impact on the nation, a region, or a metropolitan area. Based on this program s multi-disciplinary, outcomes-based approach, it could serve as a model for a comprehensive port infrastructure investment framework. The program received its initial funding with a $1.5 billion appropriation in the American Recovery and Reinvestment Act of 2009, and became known as the Transportation Investments Generating Economic Recovery, or TIGER discretionary grant program. An additional $600 million was provided for similar purposes in the Consolidated Appropriations Act, This funding was administered as the National Infrastructure Investments program, but was referred to as TIGER II. In a departure from typical federal transportation funding programs, both TIGER and TIGER II funds were not intended for any one particular mode. Rather, a broad array of surface transportation investments were eligible, including highway or bridge projects, public transportation projects, passenger and freight rail projects, and port infrastructure projects. The program was also unique in that funding selections were made competitively based on expected outcomes, rather than by pre-determined formulas or other criteria. 14

25 Evaluation Process Applications were accepted from state and local governments, transit agencies, port authorities, metropolitan planning organizations, and other political subdivisions of state or local governments. 24 The program was administered by the Office of the Secretary of Transportation. However, the application evaluation and selection process involved representatives of DOT modal administrations with expertise in the different project areas, such as roads, rail, and ports. 25 The evaluation teams assessed projects based on two layers of selection criteria. The first layer, or primary selection criteria, was intended to reflect a candidate project s ability to meet the program s statutory purpose of significantly impacting the nation, a region, or a metropolitan area.26 The second layer, or secondary selection criteria, was intended to reflect innovative approaches to improving transportation. 27 The primary criteria were further broken down into a project s anticipated contribution to achieving longterm outcomes and supporting job creation and increases in economic activity. The long-term outcomes sought were: Improving the state of good repair of transportation facilities, with priority on minimizing life-cycle maintenance costs; Improving the economic competitiveness of the United States; Increasing transportation choices and access to transportation services; Improving energy efficiency, reducing emissions, or improving the environment; and Improving the safety of transportation facilities and systems. 28 The secondary criteria granted priority consideration to projects with innovative approaches to achieving the long-term outcomes, such as using advanced technology, and considered the extent to which projects involved collaboration among a broad range of stakeholders. 29 Additionally, TIGER II applicants were expected to perform an analysis of project costs and benefits, and if selected commit to collect information and report on the project performance with respect to the longterm outcomes anticipated to be achieved after its implementation.30 Implications for Port Investment Several port-related projects received funding under both TIGER and TIGER II, and some were multi-modal in nature. For instance, the Tennessee Department of Transportation received a TIGER II grant to build a port and harbor facility on the Mississippi River, as well as improve road access to the site.31 There were additional grants directed at improving access to rail, such as at the Port of Miami, and others focused on ports themselves, such as a grant to replace cranes at the Port of Providence. While TIGER itself is clearly a program of interest, it could also provide a framework for a comprehensive, performance-based port investment program. For example, the myriad federal agencies involved in the MTS, in addition to the modal agencies that oversee complementary transportation modes like highways and railroads, could agree on a limited set of outcomes upon which to evaluate proposed port investments, and select projects based on their anticipated positive contribution toward achievement of those outcomes. Project performance could then be measured to assess the effectiveness of investments and inform future budget decisions. 15

26 This would provide a uniform framework for understanding and evaluating port investment requirements. The multi-disciplinary approach should be crafted to ensure that the various dimensions of port-related funding from locks and dams to multi-modal facilities to security enhancements are handled in a coordinated fashion and responsive to the same goals. The nature of maritime transportation necessarily involves many maritime and non-maritime agencies. TIGER provides a framework whereby those agencies can evaluate funding needs in a comprehensive, performance-based manner. 16

27 State Guidance The use of performance measures for funding allocation has begun to permeate individual state transportation departments. However, application of performance measures with regard to infrastructure investment has not been adopted by all state DOTs. Currently, most states employ a performance-based system as a means of evaluating the department s operation relative to its statutory mandate, rather than an actual assessment of their transportation network. But, some forward-thinking DOTs have begun to transition from a simple analysis of the department s inner workings to a robust assessment of the overall transportation network in a given state. A brief assessment of state implementation of performance measures to guide infrastructure investment follows. Connecticut Beginning in 2007, the Connecticut Department of Transportation (CTDOT), in concert with the Connecticut Transportation Strategy Board, implemented a performance-based system to ensure optimization of the statewide transportation system. This system is comprised of 30 performance measures across five core areas and encompasses each mode of transportation. Connecticut s five core areas are Safety and Security, Preservation, Efficiency and Effectiveness, Quality of Life, and Accountability and Transparency.32,33 In the Safety and Security areas, CTDOT seeks to reduce the number of fatalities, injuries, and risk through optimization, prevention, regulation, construction, and maintenance programs. To accomplish this goal, the department collects and analyzes injury and fatality rates, seat belt usage, and effectiveness of education programs to guide the department s further investment in the statewide transportation system. In the Preservation areas, CTDOT seeks to preserve and maintain Connecticut s physical transportation infrastructure by employing prevention, inspection, construction, and maintenance programs. Through effective monitoring of individual infrastructure status, CTDOT is able to accurately assess the overall infrastructure condition and precisely guide funding towards the most deficient areas. In the Efficiency and Effectiveness areas, CTDOT seeks to maximize the utilization of the state s existing transportation system. Here, the state examines metrics including enplanements and ridership, on-time service rates, and many others. Using a model of resource identification, process improvement, technological advancement, and financial analysis, CTDOT continues to identify innovative ways to strengthen the efficiency and effectiveness of the Connecticut transportation system. In the area of improving the overall Quality of Life, CTDOT focuses on ways to use the transportation network to increase the citizenry s mobility and promote compatible land uses. To achieve this, CTDOT examines noise levels, recyclability of resources, traffic congestion, and others. To improve quality of life, the department analyzes quantitative data, indicating either negative or positive change, and attempts to mitigate situations that degrade the quality of life. In areas of Accountability and Transparency, CTDOT also uses performance data to gauge overall optimization. Through public outreach and communication, CTDOT can analyze public perceptions and adjust the department to ensure the highest levels of accountability and transparency. 17

28 Following the establishment of the performance-based assessment system, Connecticut took the necessary steps to ensure that this information would be used to inform the infrastructure investment decision process and to ensure that decisions were made according to clear and concise economic considerations and sound, verifiable data. Connecticut s performance-based appraisal system remains in its infancy. However, CTDOT seeks to bolster the system and remains committed to widening the program in excess of the current 30 performance metrics across six modal bureaus. Michigan The Michigan DOT has implemented a system of performance measures to provide information on the condition and performance of Michigan s overall transportation system. As with many other states, Michigan s system intends to provide transparency to the performance of the system to industry stakeholders and the public alike. However, Michigan has strengthened its metrics beyond general performance statistics to more detailed information that is used by department staff to inform their investment decision-making processes. Michigan modeled its system of performance measure around the four goal areas outlined in the department s Long Range Transportation Plan: Stewardship, Safety and Security, System Improvement, and Efficient and Effective Operation. Stewardship focuses on preserving transportation system investments, protecting the environment, and utilizing public resources in a responsible manner. Within the stewardship section, the condition of state-owned roadways, bridges, runways, and carpool lots are examined. Safety and Security examines the department s efforts to improve transportation safety and ensure the security of the transportation system. As part of the Safety and Security area of the performance measurement system, crash reduction, safety engineering advancements, and reduction of risk are analyzed. System Improvement seeks to modernize and enhance the transportation system to improve overall mobility and accessibility. As part of this area, Michigan examines modernization of existing facilities in accordance with national, state, and local needs, access to airports, access to paratransit, and access to public transportation. Efficient and Effective Operation assesses options available to improve the efficiency and effectiveness of the transportation system and transportation services, and to expand the department s coordination and collaboration with partners. Here, the state examines the degradation of performance related to transportation system closures, including highway construction, airport refurbishment, and others. In comparison to other state DOT performance measurement, Michigan appears to be at the forefront of effective implementation. The department seeks not only to provide transparent access to the efforts of the department generally, but also to provide clear, concise, and easily measurable data related to the actual performance of the state transportation system.34,35,36 18

29 Maryland The State of Maryland Department of Transportation (MDOT) has also implemented a system of performance-based measurement to guide development of their transportation system and infrastructure. As part of Maryland s Annual Attainment Report, the transportation network is examined and progress toward the state s transportation planning goals is indicated. Five overall areas are examined, including quality of service, safety and security, environmental stewardship, system preservation and performance, and connectivity for daily life. As part of quality of service, MDOT examines the ramifications of negative service quality on the overall transportation system. Specifically, MDOT analyzes performance of maintenance on roadways, customers visits to registration offices, customer satisfaction on transit systems, and many others. Using this information, recommendations for improvement can be made and progress toward attainment of that goal can be monitored. Safety and security areas of the report focus on the provision of transportation systems that maximize personal safety and security. Here, MDOT examines fatality rates, injuries rates, customer surveys, and compliance with federal security standards to gauge progress towards goal attainment. In the area of environmental stewardship, MDOT attempts to develop transportation policies that protect the state s natural, community, and historic areas through sustainable growth. To address these goals, the state examines data regarding gasoline consumption, vehicle inspection program results, and revitalization of natural areas. System preservation and performance analysis seeks to protect the state s investment in its transportation system through preservation of existing assets and maximizing the efficient and sustainable growth of MDOT s resources and infrastructure. This is accomplished by referencing traffic monitoring, traveler information, incident mitigation, ridership, roadway condition, and many other systems. Connectivity for daily life seeks to promote the balancing of overall economic growth with the need for an ever-expanding state multi-modal transportation system. As part of this area, congestion, transit effectiveness, and added destinations are examined. 37 These few examples are representative of the movement of individual states toward an increasing reliance on results-driven, performance-based infrastructure investment. While not all states have fully implemented a network-oriented system of performance assessment, a vast majority has begun to examine at least their internal operations from a quantitative standpoint. With short-term projections of state revenue appearing increasingly dire, states have begun to realize that a strategic approach must be taken to guide infrastructure investment decisions. The experience of state DOTs can undoubtedly be seen as a call to action for federal policymakers to begin implementing similar performance-based systems with regard to federal expenditure on transportation infrastructure. 19

30 Port Funding Comparison to other Modes Aviation The National Plan of Integrated Airport Systems (NPIAS) identifies nearly 3,400 existing and proposed airports that are significant to national air transportation and thus eligible to receive federal grants under the Airport Improvement Program (AIP). The NPIAS also features estimates of the amount of AIP money needed to fund infrastructure development projects that will bring these airports up to current design standards and add capacity to congested airports. The Federal Aviation Administration (FAA) is required to provide Congress with a five-year estimate of AIP-eligible development every two years.38 This report covers commercial, reliever, and general aviation airports. Airport Categories The following airport categories are used for comparative measures for ports, as defined by the FAA.39 Commercial Service airports are publicly owned airports that have at least 2,500 passenger boardings each calendar year and receive scheduled passenger service. Passenger boardings refer to revenue passenger boardings on an aircraft in service in air commerce whether or not in scheduled service. The definition also includes passengers who continue on an aircraft in international flight that stops at an airport in any of the 50 states for a non-traffic purpose, such as refueling or aircraft maintenance rather than passenger activity. Passenger boardings at airports that receive scheduled passenger service are also referred to as enplanements. Nonprimary Commercial Service Airports are commercial service airports that have at least 2,500 and no more than 10,000 passenger boardings each year. Primary Airports are commercial service airports that have more than 10,000 passenger boardings each year. Hub categories for primary airports are defined as a percentage of total passenger boardings within the United States in the most current calendar year ending before the start of the current fiscal year. For example, calendar year 2001 data are used for fiscal year 2003 since the fiscal year began 9 months after the end of that calendar year. Cargo Service Airports are airports that, in addition to any other air transportation services that may be available, are served by aircraft providing air transportation of only cargo with a total annual landed weight of more than 100 million pounds. "Landed weight" means the weight of aircraft transporting only cargo in intrastate, interstate, and foreign air transportation. An airport may be both a commercial service and a cargo service airport. Reliever Airports are airports designated by the FAA to relieve congestion at commercial Service airports and to provide improved general aviation access to the overall community. These may be publicly or privately-owned. The remaining airports, while not specifically defined in Title 49 USC, are commonly described as General Aviation Airports. This airport type is the largest single group of airports in the US system. The category also includes privately owned, public-use airports that enplane 2,500 or more passengers annually and receive scheduled airline service. The airport privatization pilot program authorized under Title 49 U.S.C., Section 47134, may affect individual general aviation airports. Under this program, some private rather than public ownership provisions are allowed, and questions on it should be directed to the Airport Compliance Division.40 20

31 Capital Improvements Plan Influence on AIP Eligible airport owners seeking Federal assistance can inquire about requests for aid through the FAA Airport Capital Improvement Program (ACIP). The ACIP is an internal program that serves as the FAA's primary planning tool for systematically identifying, prioritizing and assigning funds to critical airport development and associated capital needs. The FAA relies on the ACIP to serve as the basis for the distribution of limited grant funds under the Airport Improvement Program. A sponsor's Capital Improvement Program (CIP) represents their five-year program for planning and development at their airport. Sponsors identify individual projects by submitting a CIP Data. If the airports are unable to meet with the 39 assurances, then federal funds are withheld and other actions can be taken. 41 Many airports, typically larger hubs serving major cities and top-tier airlines, utilize passenger service fees (PFC s) to fund many investment projects which may not be otherwise be covered by AIP. Aircraft landing fees, concession charges, parking lot charges, and even wireless internet access can all net profits for airports to facilitate h things as renovations, terminal additions, or runway expansions, some of which may be covered by the AIP, but not in full. Funding and Port Comparison Larger hubs get more funding in aviation since major carriers who dominate the market seek growth, thus they tend to get more from capital grants. Commercial service airports most closely resemble small inland ports. Cargo may be handled at both airports and inland ports which support warehousing, production and processing facilities, and storage lots. Inland ports and general aviation ports may also share similarities in their connections to other modes to move cargo received from shipments, such as local trucking services or rail shuttle. Focus Comparisons: Pittsburgh & Huntington As classified by the FAA, cargo service airports are served by aircraft providing air transportation of only cargo with a total annual landed weight of more than 100 million pounds. Pittsburgh processes 82 million pounds of cargo and Huntington processes million pounds of cargo compared to 3.9 billion pounds of cargo.42 Airport cargo traffic measured by weight oftentimes exceeds inland port figures, and under many investment and capital improvement initiatives, receives funding for cargo facility expansion at airports in greater quantities than allocated to some inland facilities, even larger ports like Huntington and Pittsburgh. Highways Highways in the United States are mainly funded by user fees and depend much less on appropriations compared to the inland waterway systems and ports. These user fees include gas taxes, tolls, and vehicle registration fees. According to the US Federal Highway Administration s 2007 statistics, 51 percent of funding for highways ($193 billion) comes from user fees. 43 However, the percentage of user fees as a funding source for highways has been in decline for the past few decades. The vast majority of these user fees are generated from the fuel taxes (93.5 percent of the federal share and 60 percent of the states).44 The rest of the funding comes from general fund receipts, bonds and other measures. 21

32 In 2006, the federal government accounted for 22.6 percent of all highway expenditures with the rest of the funding coming from states, local governments, general funds, and other sources. 45 It is important to note that while the federal government provides a significant amount of funding for the interstate highways, the highway portions of the interstate are owned and managed by the corresponding states. The main source of this federal funding is the Highway Trust Fund which was created by the Federal-Aid Highway Act of The fund is very similar to the Inland Waterways Trust Fund used to fund inland waterways. The funds are mainly collected through an 18.4 cent per gallon gas tax and a 24.4 cent per gallon diesel tax.46 However, a small portion of these tax revenues is made available for other sources of transportation which consist mainly of mass transit projects. The fund has also been used in the past to allocate money to reduce budget deficits at times when there were budget surpluses. These funds are divided among the states based on formulas and allocations after Congress develops and enacts surface transportation authorizing legislation.47 It is of note that the federal funding does not pay for 100 percent of Federal Aid Highways as most projects will require an 80 percent federal share with the rest usually coming from state or local governments. Additionally, the program is not a cash disbursement to the states but works on a reimbursement mechanism as the states are reimbursed for their costs on their approved highway projects. This method of financing the nation s highways has been very successful in the past, as it has provided a dedicated source of funds for the system. Despite the past success of this system and its ability to fund and maintain the interstate highways system over the decades, highways are now facing a major challenge to land appropriate levels of funding. According to the National Surface Transportation Infrastructure Financing Commission report, revenues generated from 2008 to 2035 under current policies provide enough resources to meet only 44 percent of the requirements to maintain the current system. In fact, the Highway Trust Fund has required several disbursements from the general fund to remain solvent in the past few years. The lack of revenue forecasted is due to many reasons, including the lack of political will at the federal and state levels to raise fuel taxes, declining tax revenues due to the economic slowdown, and the increasing fuel efficiency of vehicles among others. To combat this funding gap, experts have proposed many viable alternatives to remedy the situation. One of the solutions would be to increase the fuel tax to match inflation or make it a percentage of the price to keep up with inflation. Such a measure was presented in the American Association of State Highway Transportation Officials (AASHTO) 2011 report on Funding and Financing Solutions for Surface Transportation in the Coming Decade and would go a long way to solve the short-term funding gap.48 One of the main benefits of the fuel tax is the low cost mechanism of collecting the revenues as opposed to other measures and the ease of increasing it to meet future needs. One measure being encouraged would be a vehicle miles traveled tax where users pay a fee based on miles traveled in their vehicle. This option while in principal is the fairest solution, however, would take some time to implement due to the technologies needed. AASHTO recently suggested it could be realistically implemented within 10 years. Another option that is being increasingly considered and applied is the tolling of roads either through the state directly or through private concessions to meet expansion and maintenance needs. With the current lack of federal and state funds, private sources of financing are being increasingly studied, especially with successful implementation of privately funded roads in other countries, especially in Europe. Additionally, taxes on freight, such as a national container tax, are also being considered as viable options. 22

33 Despite the funding problems facing the US highway interstate system, it is still in a good position when compared to other modes due to the Highway Trust Fund and its user fee collection system that has sustained the world s largest highway network. Minor adjustments can be made to make sure that funding is sustainable. Some of the solutions being considered to fix the system, such as increasing or modifying fuel taxes to keep up with inflation, freight taxes, and attracting private investment, can be applied and considered for other modes, especially inland waterways, to make it less dependent on congressional appropriations and with a more dedicated source of funding. Rail Capital investment in freight railroad infrastructure in the United States is largely undertaken by the private sector, which owns most of the nation s rail network. The large Class I freight railroad companies, for example, own 67 percent of the nation s freight rail mileage, and are spending $12 billion in capital expenditures in their infrastructure in There are a few federal financial assistance programs, however, that supplement this investment, or that are designed to fund freight rail projects that offer public benefits but that do not meet a private railroad s business case. The aforementioned TIGER program, for example, can be used for freight rail improvements with public benefits. Several TIGER grants in the first two rounds were used for that purpose, including some for projects aimed at improving connections between railroads and port facilities. Freight rail grants are also provided under the Rail Line Relocation and Improvement program. This program can be used for grants from the Federal Railroad Administration (FRA) to state and local governments for capital projects that improve the route or structure of a rail line. Projects receiving funds must improve safety, motor vehicle traffic flow, community quality of life, or economic development. In selecting applications, FRA judges projects on the following criteria: The ability of an applicant to fund a project without grant assistance; The effects of the line, relocated and under the proposed improvement, on traffic, safety, community quality of life, and commerce; The effects of the line on freight and passenger rail operations; Geographic equity; and Cost-effectiveness.50 In addition to grants, federal financial assistance for freight railroad infrastructure can also take the form of credit assistance under the Railroad Rehabilitation and Improvement Financing Program (RRIF). RRIF allows FRA to issue loans or loan guarantees for rail infrastructure improvements, including intermodal facilities. FRA performs a cost-benefit analysis for each loan application, and favors projects that project a high level of benefits relative to the loan amount requested. FRA gives priority to project applications that: Enhance public safety; Enhance the environment; Promote economic development; Enable U.S. companies to be more competitive in international markets; 23

34 Are endorsed in statewide transportation improvement plans; Preserve or improve rail or intermodal service to small communities or rural areas; Enhance service or capacity in the national rail system; and Alleviate rail capacity problems that degrade service to shippers. Additionally, FRA must find that the loan being applied for can reasonably be repaid.51 Another credit assistance program available for investment in freight rail improvements is the Transportation Infrastructure Finance and Innovation Act program. This program provides loans, loan guarantees, and lines of credit for surface transportation projects of national and regional significance, including railroad, intermodal freight, and port access projects.52 The Secretary of Transportation with the advice of the DOT Credit Council administers the program.53 Projects must be at least $50 million, capable of generating their own stream of revenue or supported by a dedicated funding source, and included on a statewide transportation improvement program.54,55,56 Additionally, applicants must provide an investment grade rating opinion on their debt obligation, which DOT uses to assess an application s creditworthiness.57 Applications are selected based on the following weighted criteria: Significance in terms of generating economic benefits, supporting international commerce, or enhancing the national transportation system (20 percent); Whether assistance will attract private investment (20 percent); Ability to maintain or protect the environment (20 percent); Whether assistance will allow a project to proceed at an earlier date (12.5 percent); Creditworthiness (12.5 percent); Use of new technology (5 percent); Amount of budget authority consumed (15 percent) and; Whether assistance will reduce grant assistance for the project (5 percent).58 FRA also administers grants to both the National Railroad Passenger Corporation (Amtrak) and states for the primary benefit of passenger services. Funding levels for Amtrak are recommended both in the President s annual budget submission to Congress and in Amtrak s own grant request. The funding levels are not necessarily identical. Congress then appropriates an amount for both capital improvements to the Amtrak system as well as operating subsidies necessary to cover the difference between the company s revenues and operating costs. Amtrak must submit a detailed business plan detailing how federal funding will be used, and the Secretary of Transportation must approve this plan before funding is disbursed.59 Amtrak develops its prioritized list of capital projects through use of decision-making software that calculates priority scores for projects based on their ability to meet corporate goals outlined in strategic guidance documents.60 The High Speed Intercity Passenger Rail program (HSIPR) makes grants available primarily to states for capital improvements necessary to build new high-speed rail corridors, upgrade existing intercity passenger rail services, and prepare for future high-speed rail services.61 Although these grants are at times invested in infrastructure owned by freight railroads that host passenger trains, their purpose is to improve passenger service. A relatively new program, HSIPR was initiated in 2009 and to date FRA has solicited three rounds of competitive grant applications. Applications are selected based on their ability to support a series of strategic transportation goals: building a foundation for economic competitiveness, ensuring safe and efficient transportation choices, promoting energy efficiency and environmental quality, and supporting 24

35 interconnected livable communities. Before grant funding can be committed to a particular project, agreements on measureable service outcomes must be in place with the grantee, infrastructure owner, service operator, and the federal government.62 25

36 PIANC Report No : Performance Indicators for Inland Waterways Transport A major focus of this practicum project revolves around providing an analysis of the various benefits and potential drawbacks associated with utilizing the framework set out by PIANC in this report. Ultimately, an assessment should be reached as to what extent PIANC methodologies could feasibly be utilized to aid transportation policy planners across multiple federal, state and local agencies in setting funding priorities to most effectively meet the needs of our waterborne transportation infrastructure within the United States. As a long established international association dating back to 1885, PIANC, also known as The World Association for Waterborne Transport Infrastructure, has much experience in pooling global academic and professional expertise for the purpose of studying common issues of concern within the field. In the case of Report No. 111, the PIANC Technical Commission overseeing inland waterways and ports (InCom) convened an international working group to produce guidance regarding the adoption of more transparent and internationally standardized performance indicators. Completed for publication in 2010, the overarching goal of the report was to establish best practices, or benchmarks, which could be put into place in waterway networks around the world, thus allowing for easier direct comparisons to be made regarding the effective utilization of waterborne transportation infrastructure in various countries. With these comprehensive indicators put in place, it is hoped that waterborne transportation will be able to demonstrate greater efficiencies and cost-advantage benefits as compared to other forms of overland transportation such as rail and trucking. An increase in the proportion of goods carried over navigable natural or artificial waterways clearly provides increased revenues and visibility for the sector, and arguably brings additional spillover benefits to the wider economy in removing traffic from congested roads or railways. By providing a more rigorous quantitative and qualitative assessment of waterborne infrastructure assets, where no commonly accepted industry data has existed before, this PIANC study seeks to create a spur towards clearly definable goals and results driven management improvements for inland waterways and ports. In the context of drawing up national strategies and setting priorities to ensure an optimal usage of waterborne transportation, the PIANC schematic is designed to provide an abundance of specific metrics addressing the issues surrounding all aspects of moving cargo through an inland waterways network. Given that the monetary level and direction of public or private investment decisions should ideally be aided by an abundance of credible and proven data collection resources, this is what the PIANC working group attempts to provide here. In emphasizing the importance of clear performance indicators that can be made applicable on a system wide basis, the PIANC methodology could foster a framework for pinpointing reoccurring weaknesses and areas of relatively strong performance across national and international waterway systems. 26

37 Current Port Funding Decision-Making Process United States Compared to the other transportation modes receiving federal funding, the US maritime sector has a complex, bureaucratic, and multi-agency structure. Financing for various infrastructure projects are a patchwork of federal trust funds, different agency and departmental budget lines, and congressional appropriations. Each of these various items have created a system of finance for the MTS that is inefficient and ineffective in supporting a major infrastructure network that helps drive the national economy year after year.63 The inland waterways system was the first transportation mode to be supported from the federal level with financing coming from the general treasury, but still to this day lacks a streamlined and efficient framework for financing necessary maintenance and improvements. Trust Funds One funding method found at the federal level includes the trust fund. These funds are established to help raise money usually by levying a tax or fee on users of a specific transportation mode. One well-known example is the Highway Trust Fund, which adds a federal tax on every gallon of gasoline purchased. These funds are then used to fund highway construction projects. Federal law prescribes these trust funds and the money collected is earmarked usually for use on infrastructure projects. Similar to the highway trust fund, there are two maritime transportation related funds: the Inland Waterways Trust Fund and the Harbor Maintenance Trust Fund. Inland Waterways Trust Fund The Inland Waterways Trust Fund (IWTF) was created in 1978 and provides financing for just for half of all new construction and major rehabilitation of the inland waterway system. Nationally, there are about 11,000 miles designated in the network and all commercial waterway operators must pay a 20-cent excise tax on every gallon of diesel fuel.64 These new construction and major rehabilitation projects go toward dam and lock replacement and renovation. The goal is to tax the users of inland waterways and reinvest their tax contributions back into the users system.65 Since its inception, commercial waterway users have transferred approximately $2 billion in the trust fund, but comparatively seen little investment back into the trust fund. The program of raising money and then spending it on necessary projects was fairly successful until the 1986 Water Resources Development Act was passed. This act established a cost-sharing formula between federal and non-federal stakeholders. It required these non-federal actors to guarantee the other 50 percent of any particular project before the federal government, through various agencies, particularly USACE, could authorize feasibility studies or construction planning. Additionally, the 1986 act authorized hundreds of water projects. After this act, project approval and authorization began to slow down considerably. A surplus began to grow in the trust from $192 million in 1992 to $412 million in The trust fund sat unused with only a few projects finished and resulting in costs rising for those lock and dam investments already approved. For instance, Olmsted Lock and Dam authorized for construction in 1988 at a cost of $775 million has seen its construction schedule slip 10 to 15 years. Its costs have escalated to nearly $2 billion. 66 This lapse in efficiency can often be found throughout the maritime funding and planning system. 27

38 Currently, the IWTF received about $74 million this year, with more than 90 percent coming from the barge and towing industry. The remaining amount is interest earnings. The fund dispersed about $73 million towards various projects leaving a $58 million balance $20 million of that amount went toward previous funding commitments and the remaining $38 million went towards new construction. This is a considerable drop from years past. Fiscal year 2009 was the first year the IWTF did not have enough funds for what was approved and authorized projects and the trust fund will be limited for the foreseeable future.67 Harbor Maintenance Trust Fund The Harbor Maintenance Trust Fund (HMTF) was another attempt to raise money for the maintenance and operation of ports and harbors. The fund was set up when Congress passed the Harbor Development and Navigation Improvement Act of 1986, which was passed in conjunction with the 1986 Water Resources Development Act.68 The HMTF is funded by the harbor maintenance tax (HMT) that was charged on shippers for the value of the goods being shipped through ports.69 From its beginning in 1986, the tax was collected on the value of both imports and exports. The funds raised would be used primarily by USACE to pay for the cost of only maintaining ports and channels and only at 40 percent.70 Funding for improvements relied on a cost-share formula in which the federal government pays their share out of the general budget with local port sponsors paying the other part.71 Parts of the HMT that were levied on the value of exports were declared unconstitutional after Congress increased the ad valorem tax to cover 100 percent of the dredging maintenance costs for ports and channels in With the increase, surpluses in the HMTF began growing and out-pacing expenditures. The industry fought back by going to court and in March 1998 the US Supreme Court ruled that the HMT export was unconstitutional because it was an actual tax and not a user fee, which are forbidden by the US Constitution. The court ruled that the ad valorem tax was not an efficient and realistic measure of services, facilities or benefits furnished to the exporter. 72 According to USACE, the HMTF currently stands at $5.5 billion for fiscal year 2010, which is a 10.5 percent equity increase from fiscal year The total tax collected was approximately $1.36 billion with about $108 million coming from domestic commercial activity and $910 million from imports. Approximately $827 million was utilized with $783 million going to USACE. 73 Departments /Agencies Processes The transportation infrastructure financing and decision-making process at the federal level is divided into each of the various modes. For the air transportation system we have one central organization, the Federal Aviation Administration. The Federal Highways Administration oversees the highway network and the rail transportation system is regulated and funded by the Federal Rail Administration, all of which can be found under the Department of Transportation. Interestingly, the marine transportation system is not a centrally controlled network, but a multi-agency framework that consist of over 20 federal agencies.74 All these agencies use their own budgets to provide funding to inland ports and waterways. Each of their funding is specific to their specialized focus and what law has allowed. Some of the federal agencies financing a part of the marine transportation system include the U.S. Coast Guard, U.S. Army Corps of Engineers, Customs and Board Patrol, Transportation Security Administration, Environmental Protection Agency, and U.S. Navy. There are several more which all played varying roles in the marine system.75 28

39 States contributed a majority of all non-federal portions to the smaller and larger public ports for USACE navigational projects. Most of the states that provided financing contributed 100 percent of all non-federal portions. According to a GAO report, the states that did provide the needed share for maintenance and improvement projects used various financing options including legislative appropriations, grant programs, and bonds. 76 Local providers at times used property taxes and municipal bonds.77 Congressional Process Interestingly, Congress also plays a role as a whole in deciding funding for specific port improvements. Every few years, bills are passed that authorize numerous USACE construction and redevelopments. Recently, the House of Representatives Transportation and Infrastructure Committee approved H.R. 5892, the Water Resources Development Act of 2010 (WRDA), which approved 300 waterway projects for financing from the Inland Waterways Trust Fund. It also provides a framework for allowing increase publicprivate partnerships for future projects. The act also changed specific provisions governing the HMTF by requiring that at minimum that an equal amount of funds is dispersed as was contributed to in any particular year. By requiring that the full yearly contribution amounts be appropriated, it begins to address the growing surplus, which will within the next year exceed $6.2 billion.78 International Port Funding Decision-Making Process Seafaring ports and ports on inland waterways are essential to nearly every developed nation s economy. Ports provide an essential cog in the wheel to public and private logistic chains. Ports are important gateways that allow countries and private firms to export and import goods. The collection of tariffs, user fees, and operating agreements provide a great deal of revenue to many governments. In order to provide efficient services at these ports, countries must maintain their infrastructure. Port maintenance can come at a steep cost and as a result governments are forced to prioritize infrastructure projects. As national budgets tighten worldwide, governments are forced to find creative ways to help fund infrastructure projects. Gone are the days in which countries could rely on taxation and international loans as primary funding tools. Today governments throughout the world are looking for partners from the private sector to help maintain port infrastructure. Late 20th Early 21st Century Historically most infrastructure projects have been funded by public funds. Governments have financed port improvements through duties, leases of commercial operations to private firms, and license fees. As countries worldwide, face budget constraints, there has been a conscious effort to make ports financially autonomous. Legislation in many European countries have eased government s involvement with port oversight in order to attract private firms to operate the commercial activities as well as manage infrastructure.79 The theory being that as port authorities gain autonomy it will result in greater competition across national borders. However, it is important to note that even with liberalized public funding policies, some sort of a public entity regulates most ports. As the United States explores using performance metrics to identify how best to distribute funds for port infrastructure projects, it is important to review how some European countries fund their infrastructure projects. The next portion of this paper will review the port infrastructure improvement policies of Italy, Greece, Slovenia, Cyprus, Japan, and India. 29

40 Italy Port authorities have a legal status as a public entity in Italy. The port authorities have administrative, budgetary, and financial autonomy from the central government of Italy. The authorities are tasked with maintenance of common goods and port planning. Italian port authorities are responsible for developing their own port infrastructure improvement projects. Port authorities raise funds by royalty rents on State used area as well as concession contracts to private operators. The private operators are responsible for commercial activities such as terminal operations and technical-nautical services. The fees garnered from the contracts go to funding infrastructure projects. The authorities also secure a great deal of funding from tax revenues collected on loaded and unloaded freight that passes through the port waterways and docks.80 Projects cannot be entirely funded through local efforts and private concession fees. Port authorities still rely on national monies as well as European Union grants and loans. It is important to note that in terms of infrastructure management and improvement, financial autonomy is still a fairly new practice throughout Europe. Even though Italy has granted financial autonomy to ports, the central government plays an important role in distributing financial resources.81 Greece Greece is in the midst of securing 6 billion Euros for infrastructure improvements to their national ports. Projects include construction and improvement of infrastructure and super-infrastructure. Traditionally Greece funds port projects through duties, charges for services rendered, rents, port corporation funds, bank loans, and state funds. The current plan estimates that half the funding will be acquired through traditional means. The other 50 percent will be secured through the European Investment Bank (EIB) loan and grant programs in conjunction with Greece s Ministry of Marine.82 In order to secure EIB funding, applicants must comply with a rather lengthy application process. Greece must submit an implementation of investment plan. The plan must be drawn up by a consultant and then reviewed by an independent third party before submission to the EIB. Greece hopes to use the EIB funds as well as state funds to attract private funding for additional port improvement. To attract additional private interest, Greece is working to improve port forecasting. A reliable forecast will provide a consistent view of Greece s marine industry. Stability and improved forecasting should attract the private sector. Initial feedback from private investors has been positive; however Greek ports have not secured any tangible outside investment to support improvement projects. Slovenia The Republic, local communities, and private entities can own Slovenian ports. Slovenian traditionally transfers infrastructure improvement responsibilities to port operators via concession contracts. Most project financing is secured through local and national funding, as well as private loans. Luka Koper, Slovenia s largest port is operated by a stated owned agency that owns 51 percent of the shares.83 The state owned agency initiates most port infrastructure initiatives. Unlike many of the other long established countries in Europe, such as Italy and Greece, Slovenia is in the planning stages of its national transport and industrial development plans. Most of the country s charters are still in draft form awaiting government approval. Two of the few completed documents are the Spatial Development Strategy (SDSS) and the Development Strategy (DSS) of the Republic of Slovenia.84 These plans 30

41 will serve as the development road map to achieve spatial integration and sustainable development. All proposed infrastructure projects must be in accordance of the SDSS and DSS objectives. Slovenia also encourages that any new or improvement project for its ports be conducted through a public private partnership. Cyprus Finally in the nation of Cyprus, the Cyprus Port Authority (CPA) supervises all ports and their infrastructure. The CPA is regulated by the Minister of Communications and Works and provides commercial, finance, and port services. Planning development and the actual infrastructure projects are mainly funded by public dollars. Only 5% of port infrastructure improvement expenditures come from the private sector.85 Cyprus like every other nation vying for public funds is looking to transfer more operations and infrastructure investment to the private sector. As Cyprus vies for funding through the European Union s (EU) Cohesion Fund, their port infrastructure plans must fit their National Strategic Reference Framework (NSRF). They must also fit the Operational Program for Development and Competitiveness. CPA s Port Master Plan is helping Cyprus align its policies to secure EU funding and private funding. The plan calls for studies for optimal use of resources and installations. It is funding feasibility studies for port expansion and the movements of dangerous goods. TEN-T & European Union Funding While most European countries are trying to attract private funding for port improvements, governments must still provide extensive financial support for projects. The EU is assisting with the creation of the TransEuropean Transport Network (TEN-T) initiative. This program is aimed at enhancing the mobility of goods and people by integrating all modes of transport to achieve sustainability.86 The main focus of funding will go to projects that connect seaports to dry ports using the most environmentally friendly possible means. The TEN-T emphasizes the use of rail and inland waterway once product is delivered to a port. The EU will use grants to award funding for projects in all modes. Grants will be awarded to those who forge public private partnerships or organize into multinational organizations.87 The EU is also providing funds for infrastructure projects through their Cohesion Fund. This fund aims at helping aid transportation infrastructure projects in member states that have a gross domestic product (GDP) that is lower than 75 percent of the EU average. The Cohesion Fund also provides funds to help strengthen competition and attractiveness through infrastructure improvements for those countries that are just above the 75 percent threshold.88 The European Regional Development Fund (ERDF) distributes another port infrastructure improvement fund that is eligible to all countries. Like the Cohesion Fund, ERDF promotes transport projects that support inter-modal port to rail or port to in-land waterway which are accepted as environmentally friendly. All members that wish to use EU funding for port projects must follow general guidelines. Deliverables of such proposals must include technical descriptions and drawings, forecast of traffic and changes in traffic pattern, as well as detailed investment plan. The EU also scrutinizes how projects will affect socio-economic conditions of the country and residents that will be immediately impacted. A favorable outcome in an environmental impact assessment is essential to secure TEN-T, Cohesion, or ERDF funding. 31

42 The EU, similar to its Member States has also adapted liberalizing policies and stipulations on grant money. Countries that wish to secure TEN-T money must prove that they are actively and successfully achieving Public Private Partnerships (PPPs) in infrastructure related projects. Knowing that full privatization of port infrastructure projects is rather risky and nearly impossible; PPPs have allowed private and public entities to enter into projects together by sharing risks and rewards. Lowering the risk by sharing, allows for projects to secure loans faster and start infrastructure projects sooner. The EIB and ERDF also guarantee loans to projects that are proposed as a PPP.89 Public Private Partnerships can take form by several different kinds of agreements, such as: Build-Operate, Transfer (BOT), Design, Build, Finance, Operate (BDFO), and Build, Own, Operate, Transfer (BOOT). These agreements allow stakeholders to share the risk and rewards of construction, operation, commercial, and finance. The most basic PPP agreement is a BOT. Most agreements will include, a port contracting with a private entity to design, build, operate, and maintain a port for a set period of time. At the end of the agreement the private sector hand or transfer the port back to a public entity. A risk to any PPPs is that a private company is not able to secure financing. These problems will force public entities to step in and commit long term financing to the project. However, even with this risk, European policy makers want to make PPPs a staple in port infrastructure projects. Japan Budget crisis and government fiscal tightening exercises are not only an American and European problem but also a worldwide issue. Asian countries have felt the pinch and have scaled back on port infrastructure projects. Japan s waterways and ports are all state owned. Unlike Europe, Japan has been reluctant to open their markets to private vendors to manage ports, roads, and railway infrastructure. However, with over 6.6 billion yen of outstanding debt, prior to the devastating earthquake and tsunami in March 2011, Japan s central government was under enormous pressure to contract out fixed transport assets.90 While there haven t been private port infrastructure projects to this point, Mitsubishi Corporation and Macquarie have set-up infrastructure funds and have won concession contracts to operate toll roads and rail service.91 Privatization of ports may be a long process as laws prohibit private entities from owning infrastructure assets in Japan. Government bonds and other monies provided by regional and central government mainly fund port infrastructure improvements in Japan at this time. India India is currently developing a comprehensive National Maritime Policy that will help guide maritime policy. The plan is expected to map port infrastructure projects through Meanwhile, India s government has been actively engaged in attracting private companies to help maintain India s twelve major ports. India has asked PPPs to submit 20 years plans that include an initial action plan for the first seven years. India has preferred that the private sector take the lead. India has offered 100 percent FDI for development with 100 percent income tax exemption to attract private interest.92 While private sector has been encouraged to take the lead, the Indian government is still facilitating most of the finance for port improvement projects. Involvement from the private sector has been delayed because of cumbersome bidding and approval processes by the central government.93 32

43 Conclusion There is private sector interested in helping countries finance and manage port infrastructure projects. However, most private entities prefer port operational duties rather than developing infrastructure. Central governments around the world continue to support the bulk of financial investment in port infrastructure improvement. Central governments, the European Investment Bank, World Bank, and other lending authorities will continue to bear the brunt of the costs. Lending authorities due require the submittal of comprehensive plans from ports proposing projects. These lenders seem mostly interested in plans that offer good forecast modeling and the addition of inter-modal capacity that focuses on utilizing rail and inland waterways. Funding for a port project is nearly an automatic given if the proposal includes some sort of public private partnership. Finally a proposal must have favorable environmental effects. While a comprehensive proposal plan is a good step, there needs to be a process that can measure which ports truly need the funding. Many of the port funding mechanisms throughout the world do not include key performance indicators. A uniform and quantifiable evaluation like the key performance indicators listed in the PIANC report will offer the best way of evaluating and splitting of funds in an era of budgetary constraint. 33

44 III. Performance Indicators for Inland Waterways Port metrics indicators are simply measures of the effectiveness of the port s operation. Performance measures are important to port authorities for two reasons: Data can be used for improving port operations, and data can also provide an appropriate basis for planning future port development. To fulfill this purpose, such indicators need to be easily calculated and simple to understand. Measurements should provide insight to port management into the operation of key areas. Metrics can be used to compare performance with a target and observe the trends in performance levels.94 The indicators should be used as input for evaluation for port congestion surcharges, port tariff considerations and investment decisions. An in-depth discussion follows of port indicators developed in this study, working from those identified in the PIANC report. Those metrics that are not associated with the PIANC report are identified as Group for consideration. This section outlines the major categories of performance indicators and their importance for evaluating port performance, and presents data for the ports of Pittsburgh and Huntington as a means of evaluating those metrics. Primary data was not available in all instances, despite attempts to coordinate with staff at both ports. Secondary data was obtained from various sources to populate the data used for this analysis. Port of Pittsburgh The Pittsburgh Port District, as described in its official site, encompasses a twelve county area including Allegheny, Armstrong, Beaver, Blair, Butler, Clarion, Fayette, Greene, Indiana, Lawrence, Washington, and Westmoreland Counties, essentially all 200 miles of commercially navigable waterways in southwestern Pennsylvania. It includes the three major rivers in southwestern PA: the Allegheny, the Monongahela, and the Ohio. This waterway is made navigable by a system of seventeen locks and dams. The Port of Pittsburgh supports over 200 river terminals and barge industry service suppliers, including privately owned public river terminals, which explains why it is difficult to collect periodic data. A map is provided in Figure 1. 34

45 Figure 1. Map of the Port of Pittsburgh95 35

46 Port of Huntington The United States Environmental Protection Agency describes the port of Huntington as the largest inland port in the United States in terms of total tonnage as well as ton-miles of cargo. The Port stretches 100 miles along the Ohio River, 90 miles along the Kanawha River, and along 9 miles of the Big Sandy River. Port operations occur in major cities such as Ashland, KY; Ironton, OH; Huntington, WV; and Charleston, WV. Figure 2 represents a map of Huntington-TriState. Figure 2. Map of the Port of Huntington-TriState96 36

47 Capacity The capacity of an inland port is characterized by the physical description of the network, its operations, and the fleet that is using it. Capacity can be defined by demand-related constraints such as distribution of the fleet, moved tonnage and maximum tonnage by vessel type, average loading factors, and rates of empty returns. Other characteristics can also be considered such lock capacity and utilization, lock operations, and downtime due to weather, planned or unplanned maintenance, and other factors. It is also important to note that regardless of the capacity of the channel, capacity may be limited by outside factors, such as available vessels on the basin. The notion of inland port capacity should be approached similarly to the notion of seaport capacity, distinguished by three components: the quayside capacity (or transshipment capacity), the storage capacity, and the reception/disposal capacity. Note that the port is one solid entity in which a failure in one of the three components may affect the others. Two additional issues regarding port capacity include the performance of different equipment and the ability of the port to handle goods with the expected quality of service demanded by owners and shippers. Performance Indicators and Metrics for Measuring Capacity Average Daily Traffic The average daily traffic refers to the number of moving vessels, goods, vehicles, rail cars, and passengers through the port in a specific period of time. The following metrics fall under average daily traffic. Capacity of entire fleet (PIANC 4.2.1): Maximum number of Vessels by type served per month Capacity utilization (PIANC 4.2.2): Maximum Tons / TEUs by commodity loaded / unloaded per month Wheeled vehicle utilization (Group): Maximum number of vehicles loaded / unloaded per month Rail car utilization (Group): Maximum number of rail cars loaded / unloaded per month Total amount of passenger transport along waterway (PIANC 5.2.4): Maximum number of passengers loaded / unloaded per month Availability of Multi-Modal and Intermodal Facilities Availability of modes offering services over any distance is a crucial link connecting the port to any other destination. Inland ports should be by advanced logistics implicating at least two other transportation modes other than vessels. Railroad Access (Group): This indicator will reflect if the port is linked to a railroad network. Does the port have rail capacity? (Yes/No) Volume moved by rail / total amount of volume moved per month 37

48 Vehicle Loading Capacity (Group): This indicator will specify the volume of goods loaded by different types of vehicles from the port. Does the port have access to major highways? (Yes/No) Volume moved by truck / total amount of volume moved per month Transshipments (Group): This metric pertains to cargo unloaded from one ship and placed onboard another. The main purpose here is to enumerate intermodal systems allowing efficient transfer of cargo (or passengers) between modes. Does the port have transshipment services? (Yes/No) Volume moved by vessel (vessel to vessel) / total amount of volume moved per month Pipelines (Group): This is to verify the availability of pipeline networks linking tankers or liquid carriers with a specific pipeline system. Does the port have pipeline capacity? (Yes/No) Volume moved by vessel / total amount of volume moved per month Waterways This indicator explains how a specific port is linked to other waterway systems and provides information about the available locks and capacity. Utilization of Locks: Average Utilization of lock capacity per lockage (PIANC 1.2.2) Utilized Square meters on average per lock activation for a lock chamber or chambers per month / Total capacity in square meters of given chamber or chambers Average Waiting Time in Front of Lock (PIANC 1.2.3): This metric looks at time vessels are waiting to utilize locks due to planned and unplanned downtimes or weather conditions. Number of vessels covering the distance of 1 kilometer from a given lock and access to the chamber in time category / Number of lockages in chamber Capacity of Waterway Section (PIANC 1.4): This metric examines the volume a port s lockages can accommodate. ((Operation hours per day * 365 * availability of locks) / Average time for lockage dependent on the technical performance of the lock)) * Technical capability of a lock to handle a certain transport volume (tons) per lockage 38

49 Support to Desired Land Development (Group) This indicator identifies how well the port utilizes and plans for infrastructure land development. Is the port a part of a master development plan? (Yes/No) Do infrastructure improvements compliment port use? (Yes/No) Connectivity or Access to Global Market (Group) This indicator identifies level of international traffic. Does the port belong to an international group or shipping line? (Yes/No) Concentration of Trucks for Movement of Goods (Group) This indicator identifies how efficiently rolling stock is loaded and transited out of the port. Although this metric uses average travel time, in instances when travel times are skewed, then median or 75th percentile can be used. Average of time spent in port by vehicle per month. Passengers (Group) This indicator identifies if the port has a passenger transport capability. Does the port serve passenger vessels? (Yes/No) What type of passenger vessels does the port serve? Comments and Conclusions Possessing measurable data does not necessarily make any specific performance indicator key to the port success. Choosing the correct and appropriate indicators is crucial to evaluate the performance of a port, and therefore improve the efficiency of its services. Other indicators can be developed as needed. In such cases, it is recommended that the interdependence of underlying cause-and-effect relationships be analyzed to provide a sound basis for what to measure, how to measure, and potential targets and recommendations for performance indicators. Data Presentation and Analysis Due to difficulty in obtaining primary data for the ports of Pittsburgh and Huntington, secondary was used in this analysis, which was extracted from the US Army Corps of Engineers website where available. Pittsburgh In this study, inbound and outbound vessels data was gathered from three locks situated in the heart of the port: the first lock from the port side of Allegheny River, the first lock from the port side of Monongahela River, and the first lock from the port side of Ohio River. 39

50 , commercial light boat recreation Year 2009 other Year 2010 Figure 3. Maximum number of Vessels by type served per month; Port of Pittsburgh 18,100 29,639 3,000 15,000 13, ,400 18,000 41,800 9, ,000 1,100 9,000 1,000,000 51,400 54,500 1,500, , ,562 2,000,000 90, ,800 2,500, , ,800 3,000,000 2,979,200 2,457,006 Figure 3 represents indicates that the majority of vessels using Pittsburgh port services are recreation vessels (a maximum of 939 vessels per month in 2009, and a maximum of 979 vessels per month mo in 2010). Commercial vesselss come second than light boats. - Year 2009 Year 2010 Figure 4. Maximum Tons/TEUs by commodity loaded/unloaded per month; Port of Pittsburgh Figure 4 shows that the port of Pittsburgh Pittsburg serves mainly the coal mining industry (a maximum of 2,979,200 ton was served par month in 2009, and a maximum of 2,457,006 ton per month in 2010). 40

51 7,982 8,000 6,000 3,475 4,000 2,000 - Passengers Year 2009 Year 2010 Figure 5. Maximum number of passengers loaded/unloaded per month; Port of Pittsburgh Figure 5 shows that the port of Pittsburgh served a maximum of 3,475 passengers per month in 2009 and 7,982 passengers per month in

52 Huntington As was the case with Pittsburgh, data pertaining to the Port of Huntington was not available, and secondary data was as collected. Three are defined: Greenup lock on Ohio River, Huntington and the lock of R.C. Byrd commercial light boat recreation Year 2009 other Year 2010 Figure 6. Maximum number of Vessels by type served per month; Port of Huntington Figure 6 shows that the majority of vessels using the Port of Huntington are commercial (a maximum of 456 vessels per month in 2009 and 461 per month in 2010). Recreation vessels follow, then light boats. 71,350 87,937 28,318 35,535 30,100 26,504-6,000 1,500 21,958 17, ,000 37, ,808 1,000, , ,480 1,500, , ,301 2,000, , , ,650 2,500,000 2,849,334 3,000,000 3,010,260 3,260,628 3,500,000 - Year 2009 Year 2010 Figure 7. Maximum Tons/TEUs by commodity loaded/unloaded per month; Port of Huntington 42