Freight industry gets a boost from omnibus

Freight Right


Freight industry gets a boost from omnibus

December 23, 2020

A $900 billion stimulus package and $1.4 trillion omnibus bill were passed by Congress late Monday and signed by Donald Trump on Tuesday, affording aid to the people and extra funds to many federal agencies. 

While the main story attached to this bill is the expected $600 in stimulus money, there are some provisions that will directly affect the logistics and freight industries, including funding for two port expansion projects in Texas and authorization to spend down tax balances. 

Widening channels at ports in Texas

The port funding legislation is called the Water Resources Development Act (WRDA) and it will direct $1.68 billion toward the Harbor Maintenance Trust Fund (HMTF). 

As a part of these funds, the WRDA authorized the expansion of the Houston Ship Channel, an $885 billion project known as Project 11. The goal of this expansion is to allow for two-way traffic of next-generation-size containerships, Freight Waves reports.

Port Houston, according to chief port infrastructure officer, Rich Byrnes, is responsible for 1.35 million jobs in Texas alone, and over 3 million nationwide. As the No. 6 container port in the country, and the main port for the U.S. Gulf Coast, Port Houston is a leader in areas like energy, petrochemical, and manufacturing. 

Currently, the Houston Ship Channel is about 530 feet wide, which narrowly allows for two ships to enter, using the “Texas Chicken” Maneuver, which is where ships come from “opposing directions in the channel meet each other head-on but still safely pass each other, as hydrodynamic forces keep the vessels from touching.”

To allow for two-way passage of next-generation-size containerships, the channel will be expanded by 170 feet to 500 feet and will also be deepened to 45 feet. This $885 billion project is set to begin in 2021 and while there is no timeline yet, the Project 11 homepage states that those involved plan to expand at an “accelerated pace.”

About 200 miles south of Port Houston, $676 million will be allocated to widen the channel and increase the depth at the Port of Corpus Christi. This project, also funded by the WRDA will deepen the channel from 47 feet to 54 feet. 

Sean Strawbridge, Port of Corpus Christi CEO, told Freight Waves , that including WRDA in the latest omnibus is a support to all ports in the nation and “an improved ship channel will solidify U.S. energy exports to our allies and trading partners for decades to come.”

Tax revenue freed up for ports

In addition to the direct support to Texas ports, the WRDA also includes reforms that will allow revenue from the Harbor Maintenance Tax (HMT) to be more fairly distributed among ports. 

Christopher Connor, CEO of The American Association of Port Authorities (AAPA), calls the legislation a “historic landmark” and indicates that it will impact America’s economy, infrastructure, and competitiveness for decades. 

The legislation allows spending down the $9.3 billion balance in the Harbor Maintenance Trust Fund (HMTF), starting at $500 million in year one and an additional $100 million for the next four years, totaling $1 billion in five years. 

The revenue, which comes from a tax on import shippers based on the value of the cargo they are bringing in, will be used for projects like the ones in Texas, deepening and maintaining harbor depths for increasingly larger container ships.

The turmoil of 2020 hit ports especially hard. The omnibus, with both the direct assistance and the economic ramifications of another round of stimulus money, will hopefully make for a positive start to 2021 in the container shipping industry.

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