January 29, 2023
Sunday

The numerous problems facing our Alaska Marine Highway System (AMHS) are on the verge of causing this entire transportation system for Southeast Alaska to collapse. The primary reasons for this imminent collapse are budgetary, management and planning mistakes that have been tolerated and even promoted by state government for many years. The subject of this critique is to provide an overview of the problems of the Alaska Highway System in general but more specifically the extreme difficulties resulting from the elimination of regular service to the port of Prince Rupert, BC in particular. Let’s look at some historical facts to get perspective on these issues.

First, the Marine Highway System was created with a stated mission to “provide safe, reliable and efficient transportation of people, goods, and vehicles among Alaska communities, Canada, and the “lower 48” while providing opportunities to develop and maintain reasonable standards of living and high quality of life, including social, educational and health needs”, according to its annual published reports. AMHS is failing miserably in this mission because the system has been neglected, mismanaged and underfunded for years. As I have said publicly several times, it is being beaten to death.

The AMHS did not originally depend on oil income or revenue from the Alaska Permanent Fund to function. It was created long before there was any oil income or Perm Fund money. It was started with a bond backed by the State of Alaska and paid for with income taxes paid by the residents of the state and corporations doing business in the state. It had a solid, predictable source of funding outside of the political football of the Perm Fund or oil/gas revenue.

AMHS was founded in 1959 with an $18 million bond issued by the State of Alaska to forward fund the system start-up. By 1963 AMHS had operational ferries and routes. The first port of call to the mainland was Prince Rupert, British Columbia with several other ports of call on the Inside Passage, connecting coastal communities. At that time, the stated goal was to promote transportation and development in the affected communities, eventually including tourism as well.

Prince Rupert was the primary port for access to the mainland from 1963 to 1967, at which time the primary mainland port moved to Seattle. In 1989 that was moved to Bellingham, Washington from Seattle, with a 20-year lease for AMHS boats to dock in Bellingham. Prince Rupert was retained as a port of call but it was no longer the primary port for access to the mainland. This was, in my opinion, a mistake. Locals preferred the Prince Rupert port for their trips to the mainland, because it was cheaper, faster and a scenic drive after docking in Prince Rupert, for those going further. That is still true today.

It is 90 nautical miles/7 hours from Ketchikan to Prince Rupert, BC and 595 nautical miles/40 hours from Ketchikan to Bellingham, Washington, making fuel costs 6 ½ times more expensive (650%) for the Bellingham route than the Prince Rupert route. According to the 2019 Annual Report published by AMHS, fuel/oil costs represents 52% of all operating expenses in the latest available data (2014 data).

Bellingham passenger volume has declined sharply since 2013. Since then, passengers disembarking in Bellingham has declined every year, ending with a decline of 19% in 2019. This is in spite of continuation of Bellingham port calls 3-4 times per month from Ketchikan and back up the scenic beauty of the Inside Passage. By comparison, passengers disembarking in Prince Rupert is down sharply as well, but that is a direct result of a reduction in port calls to Prince Rupert from 146 in 2010 to only 55 in 2019, which is 91 fewer port calls over 9 years, a 62 % decline in trips to Prince Rupert.

According to the annual AMHS report, annual total Southeast passenger volume has declined, every year since 2014 after the current governor took office, by 37%. This is as a direct result of the veto power of the governor and the budgets he offered, with less funding, fewer boats, boats in unplanned lay-up for repairs resulting from lack of needed maintenance and fewer sailings to specific ports of call, most notably to/from Prince Rupert. The declines each year since 2014 are staggering and real.

However, according to the data reported in annual fiscal reports prepared by AMHS staff, the route to/from Bellingham is being maintained at near normal numbers of port calls because that sailing produces the most revenue to the ferry system. That may be true, but that is gross revenue being touted, not net revenue. The difference between gross and net revenue is profit and fuel costs are a major part of the equation.

The Bellingham route is 595 miles one-way or 1,190 miles round trip, while the Prince Rupert route is 90 miles one-way or 180 miles round trip, and uses far less fuel/oil, which is 52% of the cost of each trip. Keeping the Bellingham sailing to its near full capacity and eliminating the Prince Rupert sailings, to none at all is a false savings. As of this writing, there are zero (o) sailings to Prince Rupert scheduled. Zero.

The Prince Rupert run can get passengers, especially local residents of Southeast, to the mainland at very little expense, and if these people prefer that route anyway (most do), it is preferable to give the citizens of Southeast Alaska what they want and do it at a much higher profit margin.

All of the boats in the AMHS run on diesel at this time, so they have pretty similar fuel costs per mile. Comparing the Bellingham fuel costs of 3,570 miles per month (3 trips per month) or 4,7650 miles per month (4 trips per month) to 4 trips per month to Prince Rupert at 720 miles per month highlights the enormous difference in operating costs between the 2 routes.

The cost savings on this one line item should be a priority in the effort to keep the operating cost of the ferry system down, but it is not a priority. For reasons beyond public knowledge, at least that I can dig up with the available data, continuation of the sailings to Bellingham remains a priority rather than the far less expensive trip to the mainland via Prince Rupert.

Another issue that is important in this analysis is that Prince Rupert as a port of call would allow the 2,000 residents of Metlakatla, Alaska access to Old Metlakatla, BC on a regular basis. This area near Prince Rupert is home for many local Metlakatla residents. It is the ancestral origins of their community and an important familial and cultural place for thousands of people. To get to Old Metlakatla, they can take their own day ferry Lituya to Ketchikan, board a ferry to Prince Rupert with their cars and drive a short distance to Old Metlakatla for family, friends, business and cultural events. Without the Prince Rupert sailing, they cannot. This is disrespectful of AMHS to prioritize the Bellingham run, which is mostly tourists over the Prince Rupert run, which is mostly local residents and the entire community of Metlakatla.

Several solutions are possible. One is to enable one of the existing mainline boats to be certified to dock in a foreign port (SOLAS), which is required to dock in Prince Rupert. I have been told that this would cost $30 -$45 million dollars, a rather wide estimate with no detail provided. Federal money is available for this purpose as a capital expense, as is federal money available for operating costs as well, but this is a one-time opportunity that will not be repeated in the near term. Allocating these dollars for the marine highway would go a long way towards getting a sick and dying AMHS back to better health.

it would be a lifesaver for Southeast communities to have certified boats that could deliver passengers, animals, business products, vehicles and goods by way of the Prince Rupert ferry vs Bellingham. This has been a very cost-efficient and popular way to ship people and goods in the past. The travel costs alone are huge, and the time factor likewise is a big item on any business or routine traveler’s plans. If a small Canadian (NOT Alaskan) mining company with zero revenue(ever) and unaudited financial statements (with a negative net worth) can get AIEDA to guarantee a loan of $100 million dollars, surely a consortium of Southeast communities could put together a plan for an inter-island ferry from Ketchikan to Prince Rupert and finance a SOLAS equipped boat to make the run once or twice per week for locals. It seems a possibility to seriously explore. As far I can tell, however, the plan is to eliminate Prince Rupert and continue the port call at Bellingham instead.

Alternately, Alaska might be able to float a bond issue like was done in the beginning, back in 1959. Or perhaps separating the AMHS from government funding via a private/public partnership in a corporate status run by a real board of directors would work better. There are probably a number of other ideas for making AMHS financially stable. I note that all of the “studies” that have been done over the years have suggested and outlined the pros and cons of many plans for reform/divestment/reorganization and separation from government as alternative ideas for saving the AMHS from collapse. Little or no action, however, has ever been taken to move forward on any of these plans. Almost any of them would be an improvement over the current plan.

In the past the Columbia was able to dock at Prince Rupert, so it may still be partially equipped. Currently, the Matanuska is certified to dock in a foreign port but it is in lay-up for asbestos removal and steel replacement, which has been reported by Katherine Keith, deputy commissioner of DOT, as so expensive that DOT “would like to pause our decision for capital investment in this project”, whatever that means. it sounds like a veiled hint at further gutting of the system to me. DOT and the office of the Governor has not been very transparent in their plans for AMHS, and to make matters worse, the funding system now in place requires that the legislature have and annual floor fight over how to best chop the ferry system budget even further.

Legislators who are not from coastal communities appear to have little interest in maintaining a marine highway and continue to opt for spending highway money on highways to the roads in the interior, not the marine highway, in spite of the fact that the marine highway is over 3,500 miles long, which is much longer and covers far more distance and a much greater area than any surface roads in Alaska.

Everyone in the state who buys vehicle fuels, whether for cars, trucks, vans, farm equipment, boats, ship or air craft; all pay fuel taxes, but ferry travelers pay again for passage on a ferry. There are no tolls to travel the roads and highways of Alaska. There are to travel the marine highway. Fairness is as much an issue when budgeting for capital and operating expenses of the marine highway, just as much if not more, than for surface roads.

Fairness is also an issue in the choice to keep the Prince Rupert port of call as a regular weekly ferry route. If needed, the cuts to the ferry routes should be to Bellingham rather than Prince Rupert. It is far less expensive for AMHS, produces a greater profit margin than Bellingham, has long been the preferred way to get to the mainland, does not maroon the entire community of Metlakatla from their ancestral home, is much cheaper for passengers and vehicles and takes only 7 hours vs the 40 hours to get to the mainland via Bellingham.

Furthermore it meets the mission of the AMHS and serves the local residents of Southeast Alaska rather than simply hauling tourists into and out of the state, most of whom are now moving towards cruise ship and air travel instead of ferry travel, mostly because ferry travel has deteriorated to the degree that the ferries are no longer reliable. No traveler likes to be stranded, as some of us locals were in the last 2 weeks and I would wager that tourists would be far less tolerant of being stranded than locals have been.

As was stated in the news story of January 19 that was broadcast statewide on KRBD Ketchikan and KTOO Juneau, shame on AMHS for the way Southeast Alaska is being treated. Leaving passengers stranded without a substitute boat to get them home is beyond the pale and shutting down the ferry to/from Prince Rupert is totally unacceptable for Southeast Alaskans.

Mary Lynne Dahl
Ketchikan Alaska

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Received January 22, 2023- Published January 29, 2023

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