This 113-Year-Old Law Is Hurting American Ports

COMMENTARY Trade

This 113-Year-Old Law Is Hurting American Ports

Aug 2nd, 2019 3 min read

Commentary By

Nicolas Loris @NiconomistLoris

Deputy Director, Thomas A. Roe Institute

Patricia Patnode

Summer 2019 member of the Young Leaders Program at The Heritage Foundation

The Foreign Dredge Act prevents some of the world's largest dredging companies from offering services to U.S. ports. Pete Saloutos/Getty Images

Imagine you had a leaky roof and you found a company that could fix the problem for less money and more efficiently. But the federal government said you couldn’t use them.  

That’s what’s going on with America’s ports. 

The Foreign Dredge Act of 1906 prohibits any foreign-built or chartered ships from dredging in the U.S. The result is to exclude the world’s largest dredging companies that could provide better and cheaper service for dredging projects at the behest of a few politically connected companies. 

The need to fix America’s ports is clear.    

The U.S. has the largest economy in the world, but it has subpar shipping ports. America barely ranks in the top 20 of the world’s busiest shipping ports—in no small part because of this 113-year-old law that prevents their ability to expand. 

A lack of maintenance on dredging and increasing ship depth has left U.S. harbors functioning at full channel depth and width only 35% of the time

At times, port authorities say they have asked for bids on dredging projects, but no American dredgers can respond because they are operating at full capacity. Foreign competitors have demonstrated the ability to complete projects in less time at lower costs

The port of Houston, one of America’s busiest ports, is too narrow to handle two-way traffic when large vessels are in the channel. Oil and natural gas producers favor allowing large ships to pass through the channel only one day per week to keep two-way traffic operating every other day. 

When a large container ship is in the channel, two-way traffic can be shut down for up to 10 hours. Energy companies formed the Coalition for a Fair and Open Port to prevent large ships from openly using the port, securing water lanes for their businesses instead. 

Consequently, officials at the Port of Houston allow only one ship 1,100 feet or longer per week to come in through the Houston Ship Channel to avoid collisions and maintain traffic flow. 

A new Texas law now requires a popular vote of pilot commissioners and hearings to allow ships larger than 1,100 feet to participate in two-way traffic. Limiting large container vessels hurts all of the companies and manufacturers who benefit from that shipping cargo and unnecessarily complicates shipping supply chains. 

The Houston ship channel simply isn’t big enough for everyone who depends on it. Energy companies say huge vessels create traffic jams; others say larger vessels with more capacity should be prioritized. 

To address the problem, Texas has begun to dredge the dock to accommodate larger ships. Unfortunately, because of the Foreign Dredge Act, it will take longer and cost more because cheaper foreign dredging specialists from Belgium, the Netherlands, and elsewhere are prohibited from doing the work. 

In fact, the former executive director for the Port of Houston said 10 years ago that expanding the dock could be done quicker and cheaper if they could use European dock specialists with more advanced machines. 

This week, Texas pipeline operator Enterprise has been pushing for a wider Houston port to accompany its recently proposed plan for an offshore export terminal. The wider port is needed, it says, to keep up with the market demand for Texas energy. 

The American economy would benefit from larger port channels. The ability to use large ships would lower the amount of cargo trips necessary. More competitive interstate shipping and dock dredging could better utilize waterway transport and make the U.S. shipping market competitive again. It would reduce congestion on the roadways. 

Moreover, if U.S. dredgers face competition, it will incentivize them to innovate, invest in better technologies, and lower their costs. Businesses have to compete for customers all of the time; why should U.S. dredging companies be any different? 

When policies are consumer-centric rather than protecting special interests, the result will be more choice and better products at a competitive price. 

America’s ports are anchored in the past. It’s not the fault of the actual ports but an antiquated and unnecessary law. Repealing the Foreign Dredge Act of 1906 would make them great again.

This piece originally appeared in The Daily Signal