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Kudos In Order For Recognizing The Importance Of State Harbors

posted in: Weekly Commentary 0
By Lowell L. Kalapa
(Released on 12/28/08)

After years of berating leaders in both the public and private sector, the state has finally adopted a six-year plan to upgrade the port facilities of the state. The timing for this project just might prove to be ideal.

Although many may not know or talk about it, the state harbor system is the lifeline for our community as nearly everything we need or consume comes over the docks. That point was no more obvious than in the days when dockworkers regularly went on strike. For those readers who lived through those challenging times, we all still have memories of empty store shelves with rice and toilet paper being the most scarce commodities. The economic devastation echoed throughout the state as supplies of all sorts of materials went wanting. Construction came to a standstill while the arrival of visitors slowed to a trickle as no one wanted to visit a destination that did not have the comforts of home.

While Hawaii has enjoyed nearly 40 years of labor peace on the docks, the facilities that service Hawaii’s lifeline have had little in the way of improvements and modernization. Now a recent study (The Impact of Hawaii’s Harbors on the Local Economy) has pointed out the importance of upgrading Hawaii’s port facilities and measured the economic consequences that doing nothing to modernize the state’s harbor facilities would have. The study estimated that if harbor facilities are not upgraded, the loss in real gross domestic product of the state in 2007 dollars would amount to more than $50 billion by the year 2030. This is such a great risk when it is estimated that the upgrading would cost under $1 billion.

When one realizes that Hawaii is a speck of land in the middle of the Pacific Ocean separated by miles and miles of water and that each of the counties are similarly separated by this water, it becomes obvious that the state’s harbors are critical to our existence, if not survival. As harbor facilities deteriorate or fail to achieve efficiencies, the cost of everything coming over the docks will rise in cost.

On the other hand, some may argue that the state cannot afford such a huge expenditure especially in these hard economic times. To put this in perspective, one has to realize that the less efficient the movement over the state’s docks is, the higher the price we will pay for those commodities.

Similarly, the largest source of revenue for the harbor special fund is wharfage fees that are charged to shippers based on tonnage and size of the ship, who in a sense rent dock space where they park their vessels when they come into a state harbor. The second is from the rental of space on the docks such as warehouses or container yards where a shipper may store the shipping containers brought into or being shipped outside the state.

Thus, either choice – to do nothing or to make the necessary upgrades – will cost the consumer something, but the do nothing choice has greater implications for the future of the state’s economy than to upgrade the state harbor system. But as a result of recent efforts to help stimulate the nation’s economy, there may be an opportunity to avoid some of the costs of the harbor system upgrade.

The president-elect is recommending that billions of dollars be invested in public infrastructure as a means of creating jobs. These aren’t the make work jobs of the Depression era but infrastructure needs that have been long neglected like the upgrade of Hawaii’s harbors. Given the importance of the harbor system to the nation’s only island state, it should not be that difficult to believe that this particular project is worthy of some of the stimulus package the president-elect is proposing.

If Hawaii is able to secure a part of the stimulus package for the harbor system, it would alleviate the need to raise wharfage fees and rents substantially, thereby avoiding a dramatic increase in the cost of goods imported into Hawaii and goods made for export, keeping Hawaii made products more competitive. While a proposal has been made to upgrade the harbor system, leaders also need to have a vision for the future that might consider even more expansion for this vital lifeline for Hawaii. Being smack dab in the middle of the Pacific Ocean, could Hawaii, in fact, be a perfect sight for transshipment of goods between the Far East and the Americas?

As consumer demand recovers around the world, demand for goods will rebound and as we have seen over the past few years, the globalization of the economy will mean greater trade opportunities throughout the world. Hawaii could be at the center of that trade if it has the capacity to handle the trade of goods. Efficient handling of the transshipment of those goods could put the spotlight on Hawaii.

Lowell L. Kalapa is the president of the Tax Foundation of Hawaii. Mr. Kalapa’s commentary is printed each week in the Maui News, West Hawaii Today, Garden Isle News, and the HawaiiReporter.com.

 

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