Dive Brief:
- Port of Alaska officials are moving forward with one portion of their $1.9 billion modernization plan — construction of a $223 million petroleum and cement terminal — and plan on using the $60 million they have on hand to fund one year's worth of work while they look for other ways to fund the remainder, the Alaska Journal of Commerce reported.
- In February, at the time the port announced that costs for the upgrades had exploded to more than three times the original estimate, officials said they were considering raising tariffs on the petroleum, cement and other cargo brought into the Anchorage facility in order to pay for the work. When it was determined that those tariffs would have to increase by five times their current rate to support the entire port program, shippers and their customers complained that such a dramatic rise in fees would negatively impact their businesses and possibly force them to rethink their use of the Port of Alaska.
- Bids for construction of the new terminal are due by June 7, with the goal of starting construction in 2020 as long as the Anchorage Municipal Assembly approves the plan. During the first year of construction, in addition to finding a way to finance the remainder of the terminal project, port officials will also work to streamline the scope of work and reduce costs.
Dive Insight:
Port of Alaska officials are using a combination of cash on hand, a $20 million state grant and money left over from a previous defunct expansion plan to pay for the first $60 million of work, but are leaving the door open to some tariff increases — although not on the scale previously discussed.
Some portions of the Anchorage facilities have about 10 years until they are twice the age of their useful life. Other U.S. ports are in the same predicament and are scrambling to come up with the money as well. In fact, in its last two reports, "The State of Freight III" and "The State of Freight IV," the American Association of Port Authorities (AAPA) determined that U.S. ports were in need of $20 billion of infrastructure and $4 billion of security upgrades, respectively.
Just to help pay for the security work, according to the AAPA, appropriations through the Federal Emergency Management Agency’s Port Security Grant Program would have to increase by four times the current level of funding to $400 million, and grants going to ports must double in order to adequately address security concerns.
