Whether it’s that sharp new BMW 3-series or a basket of cheap hardware from Amazon. It got to you through a port. Operators of U.S. ports have their eye on federal infrastructure spending $19 billion of it. For what they’re hoping for, the president and CEO of the American Association of Port Authorities, Cary Davis joined  the Federal Drive with Tom Temin.

Interview Transcript:

Tom Temin All right. Ports, those are units of the critical infrastructure of the nation. Fair to say?

Cary Davis Absolutely. We’re one of the 11 categories of explicitly defined critical infrastructure, according to the federal government and the Department of Homeland Security. And as you start to dig in to their day to day mission and the things that they do, moving a lot of the food that reaches people’s stables, medicines that reach their cabinets, even pieces of warfighting and military material you realize why the government says that there are critical infrastructure.

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Tom Temin And there is money under the Inflation Reduction Act and the bipartisan infrastructure bill for ports?

Cary Davis Absolutely. We at AAPA are darn proud of having worked with policymakers and with Congress to make that a reality. It’s nothing new. The federal government has been funding port infrastructure for many decades to different degrees, and the funding has waxed and waned. But as you cited with the bipartisan infrastructure law and the Inflation Reduction Act, there was nearly $20 billion combined for port infrastructure. Some of that is traditional brick and mortar, docks, pilings, piers. Some of it is more modern or cutting edge infrastructure, including IT architecture, alternative energy infrastructure and the like. And we could dig into that if you’d like.

Tom Temin Well, it might be helpful to understand who owns and operates ports. Port authorities are regional, I guess, or multi-state often or maybe under a given state. They’re not precisely the state government, but they’re also not private.

Cary Davis Absolutely right. They are quasi public entities that are usually chartered by cities or counties or states to oversee the operations of the port. They often lease out their operations to private companies. I’m overgeneralizing there’s a few different models out there, but they often act like landlords and they lease out their operations. The overall governance structure of a Port Authority is like, you can think of it like a transit authority or a water authority, either quasi public entities chartered by the governments.

Tom Temin And by the way, just as an aside, when there were strikes by longshoremen, who has it that the longshoremen were precisely negotiating with?

Cary Davis Great question. I spend a lot of time explaining that. Sometimes I feel like I’m throwing up my hands and disclaiming responsibility. We, of course, have a role to play. But port authorities are almost never the direct employers of longshore labor. The longshore labor, they contract with the ocean carriers. Those are the large vessel operators have had Lloyd Maersk, as well as the terminal operators. And I mentioned those are some of the private companies or the lessees of the terminals who operate them on behalf of the Port Authority. So the ocean carriers and the terminal operators are the ones who directly negotiate with longshore labor.

Tom Temin Okay. And getting back to the main question. Operators in the private sector or the nonfederal sector of critical infrastructure generally have a corresponding federal agency if you’re the grid. It’s the Energy Department and so on. Who for ports is the main agency or is there a single main agency?

Cary Davis Better or worse, there is no single agency. I think the government agency that we interface with most as ports and terminals is the maritime administration within the United States Department of Transportation. This is run by one of my favorite people in government, Admiral and Phillips, who commanded destroyers on behalf of the country. So U.S. DOT is, of course, the first that comes to mind for most. But my gosh, do we deal with all sorts of departments and agencies when it comes to safety and security and what’s coming in and out, including inspecting that and taxing it? That’s the Department of Homeland Security and Customs and Border Protection, CBP. Lots of our ports are part of a military preparedness network called Strategic Ports Network that’s overseen by Department of Defense. I mentioned that a lot of alternative energy production and import-export is happening at our ports. So that’s a lot of Department of Energy. I could go on and on and on. For better or worse. We interfaced with lots of different agencies for different reasons.

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Tom Temin And units of Customs and Border Protection actually occupy space in ports.

Cary Davis Absolutely. To be honest with you, this is one of our main policy contention points with the government. To be fair, Department of Homeland Security and CBP have been, first of all, I got to say their mission is critical to the safety and security of all Americans. So we love having them with a presence at our ports, and they do heroic work day in and day out. We’re always trying to find the sweet spot, especially as a lot of infrastructure reaches the end of its useful life in and around the ports. We’re trying to make sure that CBP has the space and facilities they need. But that is a policy area that we’re constantly working with them on in terms of who funds that.

Tom Temin We’re speaking with Cary Davis. He’s president and CEO of the American Association of Port Authorities. And on that where out and replacement needs of equipment and infrastructure. This is where the 19 or $20 billion comes in from these bills. Is it grants, then that are authorized by different agencies under that bill that go to the ports authorities?

Cary Davis You’re hitting on such an exciting generational development in our industry over the last few years with these large pieces of legislation. And one of my absolute favorite stories, I don’t have favorite ports. I love them all. But one of the more interesting stories is Port Angeles Washington, which had a dock that was 100 years old. And you can imagine what docks were built like 100 years ago that just received a federal grant to rebuild the docks so that it can accommodate larger modern vessels to keep cargo and people flowing up in Angeles, Washington, which is not all that far from the large metro area of Seattle-Tacoma, incidentally. But that’s a small story, which is a microcosm of what’s happening across the entire industry. A lot of this infrastructure for shipping that was built in the post-World War two Eisenhower era is now reaching the end of its useful life. The largest programs that we have in the government are called the Port Infrastructure Program at the United States Department of Transport and the Army Corps Navigation Program. And that is, of course, as it sounds, the U.S. Army Corps of Engineers, they assist with all the dredging of the navigable channels in and out of the ports, which is a constant job because of silting. We’re blessed in America with great shipping infrastructure, whether it’s our Intracoastal Waterways or our coastal waterways or our rivers. We have great natural infrastructure, but it requires a lot of dredging and it requires a lot of landside infrastructure upkeep, too. So that’s what a lot of these recent funding is going towards.

Tom Temin It sounds as if not to be dramatic, but the condition and ability and capacity of ports is really a kind of a mixed issue for national security and also the economy.

Cary Davis Just to give you a sense, we recently looked at this. We did a study with Ernst and Young. And several former congressional economists, we chose them on purpose because we like to speak to the decision makers. So we hired some former congressional economists, former CBO economists, and we found that ports and their partners contribute $2.9 trillion in total economic impact to the U.S. economy on an annual basis. The numbers are mind boggling. Every sector, every industry is proud of what they contribute. But a very wise person once told me, you lift up the hood of the American economy and you find ports and maritime supply chain there.

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