How to Make US Ports Competitive Again

The Port of Corpus Christi loses $50 billion of oil exports a year — 1 billion barrels annually —  because the greatest country in the world cannot dredge the port. Texas passed a law forbidding more than one large container ship per week from entering the nearby Port of Houston in 2019, because Houston, too, cannot dredge its port. Ships now line up for weeks off the coast of California to load and unload cargo because America cannot make other ports deep, wide, or modern enough to handle standard cargo ships.

This situation drastically increases the cost of American exports and, with it, the U.S. balance of trade deficit. An estimated 1.6 million jobs have been lost in America because of this problem. Competitors in the Middle East and China have benefited.

A couple of years ago, Senate Majority Leader Chuck Schumer (D-N.Y.) and New York City Mayor Bill de Blasio (D) unveiled a plan to protect lower Manhattan from rising sea levels that, if left unchecked, will eventually require at least 90,000 New Yorkers to be relocated. But the U.S. Army Corps of Engineers said that the project cannot be done without overhauling federal dredging laws. Unlike the dredging fleets in countries like Belgium and the Netherlands — the world leaders in tackling these problems — the U.S. dredging fleet is old, small, and largely obsolete. America does not have nor can it build this capacity in any foreseeable future.

Similarly, Texas and Florida know their coastal communities are increasingly threatened but cannot devise a plan under existing dredging laws to secure the capacity, know-how and funding necessary to design a reasonable solution. Virginia is planning to overpay by hundreds of millions of dollars for a dredging job in Norfolk but still cannot save the Naval Base in Norfolk from eventually having to be relocated due to flooding. Efforts to restore the wetlands in Louisiana, which are supported by massive funding from BP’s oil-drilling-blowout settlement, are exorbitantly expensive and slow.    

The culprit is the Foreign Dredge Act of 1906. It precludes the 36 largest dredges in the Western world from undertaking construction projects at American ports even if the dredges are manned by American labor. Several of these dredging vessels are more than four times the size of any existing American construction dredge. Allowing these state-of-the-art dredges, crewed by unionized American labor, to compete for major American port and coastal protection projects would cut dredging costs at least in half and reduce completion times by more than two-thirds. 

Pending legislation in Congress to amend the Dredge Act of 1906 would restore American competitiveness in trade logistics, boost American energy exports, restore coastal protection efforts, and bring millions of American jobs and billions of U.S. tax savings with it. The bill provides the handful of existing of American dredgers the sole right to bid for projects so long as there are three realistic competitive bids within 125 percent of the U.S. Army Corps’ target price. Only when no such meaningful competition exists can bids be opened to American companies with European parents. Thereafter, such European parented companies can be awarded the project only if they are 15 percent below the lowest American bid.

Adding the legislation to the coming infrastructure bill would cost nothing. Indeed, the reform would return roughly $2 billion in savings to American taxpayers while rebuilding its ports, redesigning threatened coastlines, and boosting U.S. jobs. The additional dredging will lead to a notable increase in the repair and maintenance business of U.S. shipyards.

The bill, if enacted, would double the size of the Dredgermen local in the Operating Engineers union and create new opportunities for unionized maritime workers. The law would make sure such employment of Americans is maintained. In addition, the reform can be written to preserve the Jones Act of 1920, which requires that all goods transported by water between U.S. ports be carried on U.S.-flagged ships, be built in the U.S., be owned by U.S. citizens, and crewed by U.S. citizens or permanent U.S. residents.

The infrastructure legislation that Congress plans to draft starting this spring needs to include reform of the 115-year-old dredging law. It would cost nothing, increase American jobs, and improve U.S. maritime competitiveness.

Gregory Tosi, a former staffer in the U.S. Senate, is a Washington, D.C.-based attorney practicing international trade law in developing countries. He also builds personal submersibles and small boats.