Investments in waterside infrastructure are major strides for the shipping and harbor industries.
The United States is geographically endowed with some of the best natural harbors in the world, giving America a historical advantage in dredging and port construction. However, as of 2020, geographic good fortune alone will do little to meet the demand of American consumers. Improving and expanding American ports requires immense capital expenditure, which today is commonly accrued through public-private partnerships (P3s).
With the combination of public and private funds, P3s combine the expertise of the private sector with the risk mitigation of the public sector. This allows governments, both local and national, to inject the economy with stimulus funding while mitigating the tax burden. Ports offer a promising example of how P3s can work, especially in recent years.
According to the Global Maritime Hub, recent investment in ports has correlated with the development of neo-Panamax mega-ships, ever larger shipping barges which have boosted market demand for dredging ports to accommodate larger vessels. In the Port of Baltimore, for example, a $116.4 million P3 between the Maryland Port Administration and Ports America Chesapeake showed considerable promise after breaking the record of moves for a single ship, which was previously held for 314 years.
Other states that have seen promising returns from P3 agreements include Georgia, Florida, California and Texas. However, with the COVID-19 pandemic and its threats to the global supply chain, the market was predicted to withhold much-needed P3 investment into America's ports owing to the deceleration of global trade.
It was in these conditions that the Biden administration worked to introduce the American Jobs Plan to inject nearly $2.6 trillion into a flurry of new infrastructure projects. Waterside infrastructure was no exception, with $17 billion allocated to improve ports and waterways.
While the plan is expected to increase the national deficit by a net $900 billion, it is assessed not only as being deficit-neutral over 15 years but also as a welcome change of pace to observers of the American shipping and harbor industries. A central focus of the Biden administration has been on P3s as a means of bringing much-needed investment into new infrastructure.
Concerns regarding the national debt have been the primary challenge for President Biden’s ambitious infrastructure package. Thus, an emphasis on P3s has been not only a major contributing factor for bipartisan support in the Senate but also, more importantly, for mitigating slipping confidence from the market in the Biden economy.
Americans have demanded action on infrastructure development for some time, but simultaneously, increasing the tax burden beyond a certain point will likely incur the wrath of the public. Through P3s, the Biden administration can invest in infrastructure without demanding more from the taxpayer than they would otherwise.
Acknowledgment: The opinions expressed in this article are those of the individual author, whose information can be found next. Martin Clake is a graduate of American University. He received his Bachelor of Arts in Political Science.
Sources:
Coker, Matt. “America's Expanding Ports: Ports Investing to Improve Their Market Share.” Global Trade Magazine, The Authority For US Companies Doing Business Globally., 10 Nov. 2020, https://www.globaltrademag.com/americas-expanding-ports-ports-investing-to-improve-their-market-share/.
“What's in President Biden's American Jobs Plan?” Committee for a Responsible Federal Budget, https://www.crfb.org/blogs/whats-president-bidens-american-jobs-plan.
“America's Ports: Global Maritime Hub.” Global Maritime Hub | Shipping, Trade and Ports Market Analysis, 12 Dec. 2018, https://globalmaritimehub.com/americas-ports-critical-components-of-americas-economic-prosperity.html.