They gathered last week in Washington, far from their homes on the left coast. . .
They are responsible for over 70% of the Asian wares that come to the U.S. market. . .
"They" are the port directors of Seattle, Tacoma, Portland, Oakland, Los Angeles, and Long Beach… and what brought them together on Capitol Hill for the first time ever may surprise you.
You see, goods coming from across the ocean are taking far too long to move across America, so American port operators are pushing for major rail improvements to keep their international edge.
U.S. Shippers Try to Weather the Perfect Storm
Shipping rates around the world have fallen hard alongside the global economy.
Take a glance at this chart of the Claymore/Delta Global Shipping ETF (NYSE:SEA), which has swung as high as $26 and as low as $7 per share in the past year (it now sits just above $12).
While this ETF is comprised of companies like Tsakos Energy Navigation (NYSE:TNP), not port operators, you can see seafaring tankers and freight carriers have been hit twice as hard as the S&P by international economic weakness.
Credit is harder to come by, transocean orders are down, and competition is up. . .
It’s a perfect storm that threatens the livelihood of key import hubs, and what’s coming from the seas is only part of the problem.
Tim Farrell, executive director of the Port of Tacoma, says, "West Coast ports generate more jobs than the Big Three automakers." Farrell and his five peers are swinging that weight around in D.C. to ensure billions of dollars are put into a "well-thought-out, strategic freight policy" that bolsters their competitiveness against import hubs in Mexico, Canada, the Panama Canal, and even the Suez Canal in Egypt.
Mexico already has plans in the works for a new Baja Peninsula port to service the southwestern U.S.
From there, trains could zoom freight from the Pacific into major cities like Houston more quickly than California ports are currently capable of doing.
The competition’s coming from north of the border, too. Canada has similar plans for a port 900 miles north of Vancouver at Prince Rupert, British Columbia.
So you can see, the U.S. is behind the curve even among our NAFTA partners… at least when it comes to moving goods from west to east. And importers will continue to choose the Canadian and Mexican freight options over the U.S… in terms of both time and cost.
As such, the head honchos at West Coast U.S. ports are asking for a lifeline in pending multi-billion-dollar spending plans.
Tens of Billions of New Money for Rail
Congressman Jim Oberstar is the conductor of federal transportation funding these days. The Democrat from Minnesota wants $500 billion in new highway, high-speed rail, and public transit funding for the Surface Transportation Authorization Act.
That’s on top of billions in stimulus money already allocated for infrastructure.
Oberstar balked on saying whether the fresh spending would require a gas tax increase, but the bill suggests a hike may be in the offing.
Port heads don’t mind. They convened last week to ask Oberstar and others for their chunk, and they’ll probably get it.
That’s because port operators are only the latest voices in a growing chorus calling for rail infrastructure improvements.
The fact is the U.S. railroad system — the cutting-edge way to move products and people in the mid-1800s — is being seen as a potential locomotive for economic growth and vitality again.
In Wealth Daily‘s sister publication, Green Chip Review, we’ve prepared a special report detailing how money is moving back into rail in a big way.
You can access the report free by clicking here: Getting Back on Track
Look for more on the half-trillion-dollar transportation bill to come, as we track the money from D.C. all the way to the NYSE.
Regards,
Sam Hopkins
International Editor
