The 1906 Dredging Law That May Be Holding Back The U.S. Economy

from operating in the United States. The United States doesn't have a whole lot of high power dredging equipment. And I found that really wild, and so I jokingly said, hey, I was going to make that my whole identity, and only half jokingly said, now we have to do an episode on the Foreign Drudging Act of nineteen sex. I mean, I don't think any of those should be jokes anymore. I mean, I'm into it. Let's start. And this is not a joke to you at all. No, I stuff

absolutely so. I have a personal interest in the health of the US dredging industry. Let's put it that way. Because all of my belongings are currently stuck on ever Forward, this giant container ship that ran into the mud bank in the Chesapeake Bay, it's still stuck there. There are dredgers at work. They're going to unload all the containers

and see if they can refloat it. But again, one of the things that's emerged from this entire incident is, I guess years decades of under investment in the US dredging industry, so that we actually don't have a lot of dredging capacity. And our previous guest who was talking

about this, cell Mercogliano. Again, he has a great YouTube channel if you're interested in what's going on with the ever Forward, But he was saying that the dredgers that are on the scene of the ever Forward right now can move about sixty cubic yards of mud in each you know, every time they sort of drudge the bottom, whereas other types of drudgers, international judgers, the kind that they had on scene with the Ever Given when it was stuck in the Suez Canal, those can move seventy

thousand cubic yards of material in one hour. So that gives you an insight into the different levels of drudging capacity. We're talking about the other thing, and that is just a wild divergence. That was the aspect that blew my mind. And the fact that maybe a contributing factor to the lack of drudging capacity as a law that was over a century year old, that blew my mind. But you know, as we've sort of looked into this, and we have been talking about dudging within the context of freeing the

ship and the one in the Suez last year. The other thing that is, it may be that a lot of infrastructure issues in the United States, when we talk about constrained capacity at the ports, when we talk about the fact that US ports don't necessarily have the capacity to handle easily the world's biggest ships, part of that

may have to do with dredging. Absolutely. And you know, we've been building these ships bigger and bigger, and at the same time, the poor infrastructure hasn't grown alongside it. The dredging infrastructure hasn't grown alongside it either. So it is not just a problem of particular interest to me. It's a problem that we should all be focused on. And so here is an episode dedicated to the Foreign

Dredge Act of nineteen o six, and I can't wait. Yeah, we we really do have the perfect guest for this one. So we are going to be speaking with Howard Gutman. He is the managing director of the Gutman Group consultancy and also the former US Ambassador to Belgium. We're also going to be speaking with Andrew Durant. He is a managing director at Samuel's International Associates, another consultancy. But they're going to be able to give us, you know, the

the pro repealing the Foreign Dredge Act. We're going to have to do afterward, probably like keep the Foreign Dredge Jack just out of fairness. But yeah, I'm very excited about. Okay, let's do it. Howard and Andrew, welcome to the show. Pleas for me here, So why don't we begin with the very basic stuff? What is the Foreign Dudge Act of nineteen o six and what happened in nineteen o six or earlier to make the US think that it only wants to have dredgers that are built and crewed

by Americans. And so what happened in nineteen o six actually starts with what happened in and that is that there was a huge storm that hit Galveston, Texas directly. Galveston at that time was, if I'm not mistaken, the largest city in Texas. It was a thriving port town, and the flood that ensued essentially wiped the town out, killed and it maybe e to sixteen thousand people and was an absolute catastrophe. So the town fathers decided that

what they needed to do was rebuilt. But they weren't going to rebuild at the current elevation because they knew it would just be a matter of time before another storm would hit Galveston and do the same thing all over again. So they decided they were going to raise the town by ten ft. And so in order to do that, they needed a massive drudging capacity that did not exist in the United States. They put they put

this job up forbid. There were two bidders. The winning bidder designed and built hopper drudges, which what we can talk about in a little bit about the distinction between the different kinds of drudges. But they designed and began to build hopper drudges that would be able to carry

this job out. And so as that project got started, uh in nineteen in nineteen o three, you know, for Eventually there was a concern not from the shipbuilders themselves, but from the Commissioner of Customs that hey, maybe this is somehow gonna this is going to create a problem for US. We need to put in place restrictions that say that these stretches can only be built in U

S shipyards. And so by nineteen o six, the protectionist argument that this has to be these ships have to be built in the United States had one the day, and that legislation was signed into law by Theodore Roosevelt. Can you just explain that a little bit for the What specifically was the concern was that there is this investment in domestic dredging, and the concern was that the

foreign competition to domestic dredging would undercut the market. Like what was the I'm trying to wrap my head around the perceived threat that this law addresses. So the concern was that somehow in in dredging up the sand, that they were going to put it on barges and they might take those barges somewhere else and use the sand in another port or another location in the US. So

they were stealing US sand. Was the stealing US sand became game kind of the concern, But as it evolved, what really carried the day was that we should be building these these US brudges in the United States. What is the state of the U S dredging industry now and how does it compare with the rest of the world. So we had decades of protectionism and this law in place mandating that dredgers be built in the U S

and crewed by Americans. What has been the result? So today the thirty one largest dredgers in the world are owned by two Belgian and two Dutch companies, the subsidiaries of which the U S subsidiaries of which already are

major American companies. They build all the off shore wind mills, so those same companies are allowed to work in these waters in the US waters building the offshore windmills, but they also own the thirty one largest dredgers in the world, many over forty thod cubic meters, so four times as large as any vessel that exists in the US. The US is trying to meet the dredge demand, to dredge it sports and to do coastal protection. When it has of the top fifty dredgers in the world, it has

three of them. It has number thirty two and then two others in the top fifty. The rest are by these large companies that are already American companies. They're allowed to build the off shore wind mills. They create a lot of jobs in America. They just can't alongside dig in the sand because of this nineteen oh six law, and it caused America millions or tens of millions of

dollars of jobs and billions of dollars. If you are in Savannah, you spent over a billion dollars for report deepening project that would have cost under five hundred million. And if you are in Virginia right now, you are spending it was supposed to be three d and fifty million, it's now four hundred and fifty million for a project that should cost hundreds of millions less. So what do

you actually walk us through the math here? A little bit more specifically, because we've talked on this show a number of times about the ports and pork bottlenecks and pork capacity and the issue and we talked about this in the intro, the issue of these very large ships that are getting bigger and bigger and the difficulty that they have entering U s ports, and we see at the Port of Los Angeles, but obviously otherwise when you throw out these numbers at US, explain why constrained US

dredge capacity adds so much more to the cost of port expansions and thus makes it such that our ports aren't as big, high capacity as they could be. So let's take Houston for example. Houston should be the most important port for America because producing oil and gas in Houston is cheaper than producing it in the country of Georgia,

for example. But Boston right now is getting its gas from the country of Georgia than it is from Houston because delivered the greatest country in the world cannot get its gas delivered to Boston cheaper than it can get it delivered from the country of Georgia because the port in Houston is broken. What happened was they had two lanes. At one time. Container ships would pass, tankers going in,

containers going out Andy. And I went to the port and said, you've got less than a year left before it's gonna get so narrow and so shallow that ships will no longer be able to pass over two years ago that came true. One of the ships containers coming in refused to pass a tanker coming out. The port of Houston was reduced to one wane and we said this could be dredged in a year to the capacities to allow the deepest tankers, the post Panamax tankers and

containers to go freely into Houston. That would reduce export costs more than it would make our manufacturing goods and agricultural goods going out of Houston competitive by more than competitive by fient, and it would make our oil and gas exports, let's say the Europe when you needed for the Ukraine and Russia, way cheaper. It would make us a major energy exporter. All you have to do is

dredge Houston. There's enough money right now because if you use one of the state of the art dredgers that dredge the rest of the world, the cost is less than half and the time to do it is less than a third. So this can be done right right now. And in support Director favored us doing that, the fight men to protect the the Dredge Act of nineteen o six.

So instead of doing that, the Texas legislature met and passed the law restricting contain large container ships from entering the port of Houston to one a week so they don't block the oil ships coming out. So now the greatest country in the world has a law preventing container ships from entering one of its greatest ports because they

cannot get them in. So if we just dredged Euston at half the cost in the third time, that would create and support over one point six million new American jobs by lowering the costs of exports by over fifteen percent, it would change our energy security picture. And by the way, since we know Houston is gonna flood anyway, we've seen what happens in Houston. These dredges that the state of

the art dredges. When they do a dredge project, they would do the coastal protection project that would also protect Euston. It's called the Kelike project. But there's no way that could ever be done with US dredgers, not in the next twenty or thirty years. Is the issue this law and the restrictions around who can dredge, or is the

issue under investment in that particular industry. So, you know, we do have an American dredging industry, but it seems like it hasn't actually grown that much, even though it is mandated to do all this work and doesn't necessarily have competition to do it. It's who can dredge. It's not under investment that these ships that we're talking about, they're not built in China. They're built in the Netherlands, where the cost of labor and the cost of energy

is higher. These aren't Chief ships or the like. We don't have a shipyard in the US that could build one of these dredges. We don't have the technology to know how, and we don't have the investment because there's only three companies that own basically three vessels that or even can do a port dredging. So those three get all the business. They're happy if we have to wait twenty five years for report to be done, it's still

their work. So the three company protection is m is what's swimmiting it if in fact you open the dredge law and allow these big ships to come in and join the all the marine work they're doing for off shore wind these companies work all union, they have signed

project labor agreements. The foreign companies, it would be all union of American employment with the same exact workers, but we would have coastal protection projects and poort deepning projects being done for half the cost, So we could actually have dredges available to do Houston and Corpus and Browns. Will eliminate the supply chain problem that we have that we can't get ships into our ports. We were the costs of energy and our exports, and we would still

have ships to do coastal protection. There is a plan right now, as I mentioned, According to center Schumer, ninety thousand New Yorkers have to be relocated from south of Wall Street by twenty fifty, that's twenty eight years. In the next twenty eight years, Wall Street will be flooded. There are two proposals to address that. A ten billion dollar project wall and building sevent dred acres onto Lower Manhattan. We would have Manhattan become fifteen percent larger. Both projects

are routine for the rest of the world. There have been projects adding acres, so projects that are four times larger in the rest of the world done by these dredgers. Can you imagine the value of adding fifteen percent to Lower Manhattan the value of that project, It's the money

would pays for itself. Center Schumer was told when he went to the U. S. Army Corps of Engineers, we will not have the dredging capacity nor the money to build the wall, let alone the additional acreage onto Lower Manhattan. We don't have a coastal protection policy. I so, you know, I've I've I've read about and heard about some of these ideas to add land to Manhattan, and I was like, Oh, that's fanciful. That's never gonna happen. It's just like something

that people like to think about. But hey, it is interesting that I guess it could actually happen. But be it comes back to this Act of six, the lack of dredging capacity. Now, before we move on, I want to ask one more question. You mentioned the fact that cheap oil and gas from Houston isn't making its way by ship to Boston, where they're instead important gas from the country of Georgia. I was under the impression that

that had something to do with the Jones Act. And that's like, it seems like the two laws often are associated with each other, but hey, can you sort of talk about how the two laws relate, And you also say that that one is more well known. It seems to be a little bit more controversial. You say that you could we could get value from repealing the Dredge Act without necessarily repealing the Jones Act. In fact, appealing

the Dredge Act protects the Jones Act. The companies were talking about, our construction companies, they don't own a transportation ship, so the Jones Act protects transportation of goods and people in US waters. That's a transportation issue, and that's very important in this country, and nobody is arguing to touch that in the least. We can build the ships to transport people and goods if they can get in and

out of our ports. We're not talking about touching the transportation industry, and the law currently proposed to repeal the Dredge Act would not touch the Jones Act if that law passed. What we're talking about is the construction industry. We're talking about port contractors. The issue is getting ships that are the right size into our port. Obviously, we can't get them in at being three times larger than the standard ship if they're going to get stuck in

Baltimore on the bottom of the port. So what we need to is get it deeper once they're there. That will make up most of the cost. The Dredge Act can be amended, and the proposal to do so that's currently in front of the Senate would do so without

touching the Jones Act. But what happens here is the three or four companies that are the small you know, companies to five thousand people who work in dredging in the US, almost all of whom would continue to work in dredging, just on a lot larger projects with the

same project labor agreements. The owners of those companies say, oh, they're really seeking to attack the Jones Act, and they bring in all the shipping interests to protect the Dredge Act when they have nothing to do with one another. M what are the other impediments to amending or repealing the Dredge Act? I mean, I imagine environmental concerns must figure in their one way or another, and for instance,

the situation with the ever forward. I know people are starting to worry about the impact on on crabbing season, which is coming up in Maryland. And look, I've already declared my interest in higher dredging capacity because I love my couch, but I also love Maryland crab cakes. And you know, ideally I would have both. Ideally I would sit on my couch while eating crab cakes. But you know, what are the environmental concerns around dredging and how would

repealing the act affect the health of US coasts? Andy, why do you tell them about Miami? Sure? Well, so a few a few things, Tracy. The first is that, yeah, if you look at actually the modern drudges that are that are being built in in UH and European shipyards that are being used around the world, unfortunately just not in the United States, you see a couple of differences

that actually make them more environmentally friendly. The first is that the newest than most modern dredges are using l n G as opposed to marine diesels, so they're they're a manting a lot a lot less emissions as they're working. The second issue, and this was a real tragedy in Miami, is is because the dredges that we use are so called cutter drudges, but they weren't powerful enough to to chew basically through some of the rock that they needed to remove in order to create a deeper channel for

cruise ships. They had to use blastic and so in blasting that creates a lot of turbidity. That's you know, a lot of sand, a lot of debris kind of gets moved around that wound up on coral and it actually wound up bleaching and killing a lot of the coral and creating a huge environmental disaster. If you have again the new state of the art Hopper dredges, you can control much more for to a bidity. You can therefore do it without disturbing the vegetation and the coral

that's around it. And so that's why you can see, for example, that that the companies that were taught that we'd like to be able to bring into the US do very sensitive environmental projects, say along ports in Australia that are adjacent to the Great Barrier reef with with very intensive environmental monitoring done by the Australian government, by mng O S and by the companies that are doing

the work themselves. So um, the other point that I make, as long as we're on the environment, is that in a lot of cases, uh, these same dredges are actually very important if you're going to create coastal features or if you're going to try to restore wetlands, that will do a couple of things. One, it will serve as a barrier with when you have major storms that are

that are heading or population centers. But the second and more pervasive is that they will create barriers from salt water incursion, like the kind of incursion that we're seeing in Louisiana, which you know, once you get salt water into an environment, it's it's gonna it's gonna devastate the natural environment that was there. Can you talk a little bit more about the two types of dredgers and the

different technologies, because I think there's interesting. You know, our our listeners definitely are interested in the law and investment and stuff, but actually hearing the two different approaches to dredging would be really helpful. And then these new dredges or the state of the art dredges, what do they you know, what do they have? What what makes them unique?

So I would say the easiest way to look think about it is is you've got hopper dredges, which is essentially state of the art, which is used again in the rest of the world. That's that's what most people will have in their main fleet. I think of them as very large vacuum cleaners. So they're gonna they're gonna

vacuum material up that needs to be moved. They're going to store that material in the hull of the ship, and then they're gonna sail off with that material and they're either going to go to a deposit site that's off shore and the bottom of the hull is going to open up and that material is going to fall down into into the place that the coast guard has has said it should be put, or they're going to use that material and they're going to use it to

create They're going to replenish your beach, or they're gonna they're gonna build a barrier island, or they'll do something else that's called beneficially used. So those are hopper dredges. Again, if you look around at the rest of the world and see what they're using for their for their jobs, most of the most of that work is going to be done using hopper dredge. The other type, and the type that the US industry is very reliant upon, are

called counter suction dredges. Think of them as kind of big grinders that are just sort of chewing through the soil and chewing through the rock. They're they're sucking it up but they're sucking it up and putting it onto barges. So then you've got to move. Just like we're talking about with the ever forward right now, that material is going up onto barges, then those barges have to be have to be towed away, and you have to It's

just a longer, more laborious, and more expensive process. But Joe, don't get confused that this is a difference in approach and what regardless of whether it's cutters or hoppers, if there's if you don't have if you only have three dredges in your country that the world would even consider to use for a project like this, and you are

using things that are meant for small rivers. The issue is what difference would it mean for America if you wet these thirty one dredgers that are bigger than anything we have, that are more environmentally friendly than anything we have crewed by American labor, the same America who crew who cruise the construction vessels for these same companies when they build off shore wind the project labor agreements with American labor, What difference would it be whether it's cutter

or hopper to the to what we could achieve in America, we could fix the supply chain by opening up these

ports that are long awaiting each of the projects. If I were in Virginia and I just waste wasting two hundred million dollars of my taxpayer money because the same union people could be doing the same exact job for two hundred million less in the same waters by the company that's already building my offshore wind project anyway, So it's the same labor in the same orders, it's just a different and who owns the company and I that's cost me two hundred million more, I'd be upset or

or the est it is doing really more ivy upset um. And so the question is whether it's cutter or it's hopper. We need more capacity. We have endless projects, and we have projects for that will keep all of the US register in existence now busy. It's just we can we can get to these other projects. We can do coastal

protection in Virginia. When they are done with that project of dredging the port, they will still have to relocate the naval base in Norfolk because they did not have the capacity nor the money to come up with the project that would deepen the port in Virginia and save the naval base from flooding. Right now, the policy is where boots the naval base and Norfolk floods, so they

are going to still have to move it. That project could be done in a way, presumably we have to have be designed in a way that the naval base wouldn't have to be relocated because we would be able to do coastal protection when we did our our poor drection. I still don't quite understand, you know. So I take the point that by far the most advanced judges that we have available are made and owned by companies in Belgium or in the Netherlands. But I don't understand why

the US can't compete on this. And I guess you know, clearly the Netherlands has a long history of building canals and dredging and a lot of expertise in this kind of thing, and so does Belgium. But why can't the US catch up with its domestic industry. What's the sort of the issue there are the roadblock? That's a great question, and I think I think the answer really kind of comes back to what do you see your market as? Right? So the US dredging market right now, maybe it's a

billion dollars. Maybe with with coastal protection becoming more urgent, and you know, even beach replenishment becoming a much more are of kind of an every year thing if you're going to save your tourist season in North Carolina. The markets may be more than a billion, but it's not a huge market. And in fact, the global drudging market

is probably about twenty billion dollars. So if you're only looking at the US market and you're saying it's a billion dollars a year um, then you make investment decisions based on a billion dollar market. If, on the other hand, you're saying we are we the the European dredging companies look at it and say, this is a global market. We can work in any country in the world except

for the United States. Right now, while plenty of countries have various restrictions on maritime shipping that are akin to address the Jones Act, no country in the world, except for China, which has its own massive dredging fleet, has any restrictions at all on allowing foreign dredgers to come in and clean up their harbors deep in them. Modern uners them allow that economy to be more competitive. The US is the only one that has that kind of restriction.

So for for the European companies, they look at a world market and say, okay, it's about a twenty billion dollar a year market, it's going to be growing. We're going to invest to be able to compete and win projects all around the world. And in fact, that's what they're doing. And that's why between these four European dredging companies that want to be allowed to work in the US, if you look at global open bid dredging projects, they're going to be winning of all the projects year after year.

They compete a lot with each other. It's a very competitive global market. That's what they're looking at. They're looking at it as a world market and so their rights

eising their investment and right sizing their fleet. Whereas here in the US, and you really have to ask, you know, you have to go back thirty years to basically try to figure out why did the US industry stop investing in its streateging industry and why do we have not only ships that are really very small, but also ships that are really very old as well, So why have we underinvested? I think The answer is because they're looking at a protected market. They're saying it's one billion dollars.

They're saying of the U. S. Army Corps dredging bids are are single bid contracts or so therefore, of all the jobs, it's either nobody else bids or one other company bids. So it's a very small market. There are only really three companies that compete for projects here in the US, and so you know, for them, maybe it's not this isn't such a big deal. They can continue to kind of plug along with with what they have built a new drudge every four or five years or so.

Eventually you have to retire the old dredges so that the capacity doesn't really change. But that's why, in my opinion, they haven't kept up. And now that they're thirty or forty years behind, and they don't have any experience in bidding for international projects anywhere outside the United States, you know, it's very tough for them to suddenly say that they're

going to catch up. And Joe and Tracy to think, now, well, why doesn't Blackrock or Blackstone or Apollo just started investing in forty thou cubic meter ships UM we build a dredge every three or four years, there is not to qualify under the Dredge Act. It has to be built in the US. There is not a shipyard that could

repair right now a forty six thousand cubic metership. When, if, if, and when the Dredge Act is finally amended to let these ships in, these Belgian means who have invested a ton in the US series will start investing into these shipyards so they can do little construction work needed to allow these shipyards to repair these ships, which would be part of what we would which would happen if the legislation opened, So the boom to the U. S shipyards

would be massive from opening the dredging market. The repair and maintenance work would produce far more work than the new dredgers and the ancillary vessel work, the tugs, the barges that you need to surround you would be a boon for U. S shipyards. That's what's happened with the US windmill industry. The one ship that actually puts the monopy the foundation and the monopyle on the foundation to build the windmill that we don't have the capacity to do.

It's being done by the Europeans, but now the ship orders have increased to do all the ancillary services. One of the American dredge companies is building a new ship to drop rocks at windmill sites where the windmills themselves are built by these European companies. Dominion is building a five million dollars ship that will put the install the turbines on monopause, the last step in it. Because we

now have a windmill industry. The windmill itself will be built by one of these four Belgian companies, but the last step the turbine installation. So just in the last two years, the U s shipbuilding industry has had a boom from the ancillary vessels needed to support the offshore wind industry, which is anchored by the same four companies. The same exact thing would happen if you repealed the Foreign Tredge Act and had them do the main work

with the ancillary American vessels. But I'm curious, from the perspective of either repealing or amending the nineteen o six Act and your experience, how much is the difficulty domestic opposition from the existing US dredging industry, which I think you mentioned is about five thousand employees, so it's not huge.

How much is opposition versus how much is indifference because it doesn't look like much gets done these days in d C regardless, and so how much should The challenge is just most people in d C probably do not have that much appetite given everything else that's going on to address. It's opposition because they make two arguments that this is going to repeal the Jones Act. We've already addressed that it has nothing to do with the transportation sector.

It's the construction sector. And they threaten the unions that these companies will come in, they'll do they'll do the Port of Houston and corpus them, they'll leave, and then you'll be without us the American dredging companies. But in fact we now know that there will be offstra windmill projects at least through so these companies have become big

US subsidiaries with US offices, US labor agreements. Of the five thousand people you said are in the industry, almost all continue to work on the same exact projects of the Virginia. At the end of the Virginia project were open bid and that last seventy million were bid for thirty million, not seventy million, for example, and we save forty million in Virginia, the same people would do the job.

It's the same labor agreement, the same unions. It would just be on the vessel that was much more efficient for it, and we could take that and use the savings to design how to save the Port of Norfolk. So it's purely it appears to be truly the domestic because if there was indifference, a project that will save ninety thousand New Yorkers from having to relocate by building seven ftent more to Manhattan, that is of interest to the unions, It is of interest to every real estate developer.

Can you imagine if Manhattan had fifteen percent more real estate to to have commerce on what that would be Just the World Trade Center rebuilding was a massive boom for the construction unions and for New York. Think about that at of New Manhattan, what that would be valued. That project is eminently doable. There are eight projects in the world bigger than that project that have already been done in less than three years UM. So that project

is doable. But there's not a chance that could be done in the next forty years with the dredging capacity of the dredging technology that currently exists. Uh, and therefore, without changing the Foreign Dredge Act, can I just ask on the Jones Act my understanding, And you know, I fully admit my understanding is only just developing right now,

so it's probably not worth much. But my understanding is that hopper judges do have to be Jones Act compliance since they end up transporting you know, sound and mud from their dredging activities, which then falls under the Jones Act. So here's you, well, yes and no. So the proposals to amend the Dredge Act simply say, for purposes of this Act, the movement of sand in the construction project is not transportation. Sure, if you wanted to ship new bags of sand from New York to Savannah and put

it on a barge and ship him, that's transportation. This is construction. It's like saying when a kid plays in a sandbox, he's engaging in transportation. Digging is not transportation. So it's this easy to fix. You just have to on the legislation that amends the Dredge Act, you just have to say, for purpose of any other legislation named with the Jones Act. If sand happens to move because

you dig it's in construction, that's not considered transportation. So when we're talking about construction, sand moving because you're digging it in construction, if you just say that's not transportation, that's construction, that leads to Jones Act perfectly in place while amending the Dredge Act. How much you know. Another thing you're talking about wind, But another big energy story in the United States is ellen Gy and in particular

Ellergy exports. In particular, they're Llergy exports to Europe to theoretically allow Germany and other countries to wean themselves off of Russian natural gas. To what degree is lack of dredging capacity a contributor to lack of export capacity for ellen Gy? Joe? You know, as you know, there are a couple of things, and I think for Ellergy, one of the bigger concerns right now is just how many Ellergy character carriers exist that are not under long term

contract that could mobilize to carry that supply chain. That huge difference in supply chain. And you also get into export terminals. If we go back to Houston right for example, again, you know what's what's happened in Baltimore right now is obviously we should see not just as a tragedy for Tracy's and belongings, we should also see that as a real cautionary tale. Okay, because if that happens in Houston, where again, as we mentioned, you know you had can

you imagine we're the greatest country in the world. Texas takes pride. Everything is bigger in Texas. And what are they doing in Texas two years ago? They're they're essentially saying, here's how we're going to divide up a shrinking pie in the port of Houston because we can't we can't deepen and expand the shipping chain helm to allow modern container ships and and modern tankers right L and G tankers, oil tankers to pass each other safely in the shipping channel.

So the fact that we have to do that, right that we have to pass the law that regulates how much of this this resource can be used when the rest of the world. By the way, while we're trying to get to fifty feet as as we've discussed container ships, tanker ships, everything is getting bigger because the economics support being bigger as opposed to being smaller. Other ports are getting down to sixty five feet, they're getting down to

seventy ft. I mean, we're trying to get to fifty ft and it's a herculean task and Houston is probably gonna be you know, Houston's gonna be years before they can get there. Meanwhile, the rest of the world is moving forward. So so I think it does have an impact and how we're going to supply Europe going forward to help it meet its energy needs. But I don't

think it is that's not the leading issue. I think that's you know, that's about the Corpus, the project and Corpus that's even deeper than the fifty well in in Corpus, what what they wanted to do is to build a loading facility for the largest crude carriers. The largest crude carriers in the world require a hundred feet of draft. The only way you're ever going to get down to a hundred feet in the US is if you have if you allow these these European dredging companies to come

in and work on projects. There's absolutely no way that we can use all of the resources that we have to deal with to get that one large crude carrier bill. Because keep in mind, because the US industry is so small, anytime there's a major storm and a poor gets blocked in by by silts, right that's washed down safe from the Mississippi. This happens in the Port of New Orleans

all the time. They will have to that the Army Corps has the right to call the U S. Dredgers away from so called capital dredging right where you're actually trying to deepen afford to get it down to fifty. They will say, we have an emergency. We have what they call showing, So we have sholing that's taken place that's reducing the clearance in New Orleans. So we're calling you off the project in Savannah. You've now got a sail over to New Orleans. You've got to deal with

this urgent problem. And then if there's time before we get into turtle season, then you can go back to Savannah and you can get back to that project. But if if if the timing doesn't work out, then that's another year that's lost. So that's that's that's the situation that we're dealing with, that we have such limited resources

that we can't do aintenance dredging. We can't respond to natural huge disasters like Hurricane Harvey, which was a huge disaster, not only certainly for the people of Houston and of Texas, also brought a lot of debris and a lot of material into the Port of Houston. We just don't have the capacity to deal with natural disasters. At the same time, we tried to do capital dredging to improve and modernize our ports. Van it was bid. It was supposed to

be a seven hundred million dollar project. Was the lowest did the Europeans that said they would do it for guaranteed four million because of the difference in their capacity. But it was supposed to be seven hundred million, and

the project came in and over a billion one. Some of the dredges have been called off to go do shoaling elsewhere, and by the time they come back costs sir rup, so we end up spending I believe it was a billion one for a project that should have been four hundred million and took three times as long Savannah got done. But taking all that time and money,

that prevents us using those resources elsewhere. There is plenty to keep The major American dredging companies busy and to greatly increase the labor that's working for them, and continues under the same exact project labor agreements, the same unions, under the same project labor agreements doing the rest of the dredging on ships that are built, you know, meant to do these kinds of projects while our shipyards boom

from the ancillary vessels. Can I just ask totally hypothetical question here, But if I were to call up a company like van Ord and say I want to hire your your very best dredger, your hopper dredger or whatever, and I wanted to dig out the ever forward, Let's let's pretend that they said yes. Um, I assume they would say no, mostly because I wouldn't be able to

pay them, but for other reasons too. What would happen, Like what happens if you actually end up in contravention of the six Judging Act the dredge, Yeah, the dredge, They seize the drudge, yea okay, and forfeit you forfeit the dredge unless unless they get a waiver, they're not going to work here. And Tracy, we're willing to play a good word in with you for you with the Van Nords, but I don't think your household is worth

the dredge. No, no, they probably want to keep that. Well, Howard and Andrew, that was a great recap of the H six Drudge Act, and we really appreciate you coming on to explain not to us. Thank you, thanks so much. Stay says, all right, well, Joe, are you prepared to make repealing the Drudge Act of six the center of your new identity? You know? Original I just thought it was this sort of like amusing little law, kind of

a quasi irrelevancy. But I thought they made a pretty compelling case that it's actually pretty important, and I do think it's very interesting, even setting aside dredges. This tension of how do you nurture a domestic industry? This is like actually really important beyond dredges, like and it comes up in the semiconductor conversation, So how do you nurture a domestic industry without making it so that it's uncompetitive and weak? And so you could imagine a sort of

effort to say, yeah again, semi conductors or something. You boost domestic players, but if there's sort of a market that's some competitive, they can fall behind it's a very separate question, but it does raise some really interesting things about this broader project of building up domestic industry well totally, and also the idea that Howard and Andrew they touched on this, but this idea that US dredgers view it as this sort of one note market, right, It's just

a mary that they can dredge in and that's a limited pool of money, whereas someone who's over in Belgium or the Netherlands is going to see it as this

global market. The other thing that's kind of crazy to me is just the idea in general that because a customs official was worried about foreign dredgers taking away Texans sand in the early nineteen hundreds, that more than a hundred years later, it's like how the world works, right, yeah, yeah, but it's sort of it's an interesting cause and effect, you know, even like I went on YouTube before this and I will watch some videos of like the two

different types of dredgers. But it's interesting to think about, like even something that kind of doesn't seem that high tech, like a big vacuum cleaner, it's like there is a level of know how that exists at European companies, at least so they claim. But it may be true, especially if they're calling on them for technical support that doesn't exist. So again, you know, semi conductors are one thing, but even just something like digging up sand, there's technical knowledge

and compartmentalized knowledge. If that is not a globally diffused right, Also kind of amazing that the foreign dredgers can't actually dig anything up here, but they can be consulted for their knowledge and expertise. All right, um, well here is full of them. I wouldn't I wouldn't take the call, Okay, but we do have to do another one. We have to get the domestic perspective. I mean, look, I fully declared my interest on this topic, but yes we should.

Can I just say one more thing, Tracy, I am very sorry that you don't have your coach, but I am very happy that we're getting lots of content. So I'm I'm like secretly kind of happy about you know, it's all fun in games until they start on loading the containers and my one like drops into the sea. Yeah. Alright, fingers crossed. Everyone. Shall we leave it there? Let's leave it there. This has been another episode of the all thoughts podcast. I'm Tracy Alloway. You can follow me on

Twitter at Tracy Alloway and I'm Joe Hasn't Thought. You can follow me on Twitter at the Stalwarts. Follow our producer Carmen Rodriguez on Twitter at Carmen Arman. Followed the Bloomberg Kind Of podcast Francesco Levi at Francesco Today, and check out all of our podcasts at Bloomberg under the handle at podcasts. Thanks for listening. Hey, there are All Thoughts listeners. We are very excited to let you know

that All Thoughts is nominated for a Webby Award. You know, Tracy, I'm not normally like a big awards person or get excited about that, but now that I saw that we were nominated for the Webby for Best Business Podcast, and suddenly I'm feeling very competitive and I want you really want it? Yeah? Okay, Well, on that note, listeners, if you enjoy a lots, if you like what we do, we would really appreciate it. If you take two minutes of your time and head over to vote dot Webby

Awards dot com. You can find A Thoughts in a Business Podcast category. Three years it