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The Marine Transportation System and the Federal Role: Measuring Performance, Targeting Improvement - Special Report 279 � � � � � � 1 Background and Introduction Waterborne carriage is by far the oldest of the major modes of long-haul transportation. People have long been fascinated by marine activity, particularly by the variety of ships and other vessels that ply the world’s rivers, lakes, and oceans. Although vessels are the most obvious and engaging element of the maritime domain, modern marine transportation is a large and diverse enterprise sustained by waterway infrastructure, waterfront facilities, support services, and interconnections with other modes of transportation. Most of the marine transportation business operates outside the public spotlight, and thus its far-reaching influence on the national and world economy is seldom appreciated or well understood.

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The Marine Transportation System and the Federal Role: Measuring Performance, Targeting Improvement - Special Report 279 � � � � � � It has become trite to say that the world is becoming “smaller” and more integrated economically, but trade figures confirm that economic globalization has been on the rise since World War II. Advances in telecommunications and aviation contribute to this trend by helping to make individuals, industries, and governments around the world better connected. Indeed, people no longer depend on slower ships for long-distance travel; jet airliners account for nearly all overseas travel. Business contacts and transactions are greatly facilitated through overnight package delivery services, telecommunications, and now Internet exchanges. Nevertheless, most of the goods traded internationally still must be physically moved. As trade routes have expanded, so have the distances over which these goods must be moved in a timely fashion. The large majority of goods traded internationally continue to be transported by water. Most of the distances traversed are on the water— but water transportation is continuously changing and becoming more efficient. And distinguishing where the land and waterborne portions of the journey begin and end is becoming more difficult and less meaningful as these segments become integrated physically and operationally. This study examines marine transportation in the broader context of its role in the freight system, which itself has become a key and increasingly integrated part of the overall production system. Marine vessels also serve passenger travel, and their use for local commuting and cruise vacations has been growing. However, their greatest utility is in freight transportation. In this capacity the marine sector has been subject to tremendous pressures to change and adapt and has demonstrated an ability to do so. Major changes in the design and capacity of merchant vessels over the course of decades are obvious to even the most casual observer. Less apparent are the changes that have taken place in how these vessels are used, the infrastructure and services that support and accompany their use, and the demands placed on this use by industry, government, and the public. The marine and broader transportation sectors have kept pace with these demands, and one can make a strong case that without their innovations and efficiencies, the fast pace of economic globalization would not have been possible in the first place.

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The Marine Transportation System and the Federal Role: Measuring Performance, Targeting Improvement - Special Report 279 � � � � � � In this chapter the major components of the marine transportation sector today, its uses, and some of the major factors influencing its development in recent decades are described. This sector is referred to as the “marine transportation system” (MTS) in this report. As freight transportation and its marine, land, and aviation components become more integrated, the term “MTS” is becoming limited and outmoded. Nevertheless, the marine sector has many distinct elements. The term “MTS” has the advantage of encompassing many of the landside elements, including connections to other modes that are not traditionally viewed as part of the maritime domain. The term is used in the report in this broader way, but with recognition that the MTS should be viewed even more broadly as an interconnected element of the larger national and international freight system. The overview of the MTS and its components in this chapter is intended to provide details and data helpful for the discussion in the remainder of the report. It also provides context for understanding the federal role in the MTS, which is the focus of this study. The overview is not intended to be comprehensive. The origins of the study, its aims, and the organization of this report are outlined at the end of the chapter. COMPONENTS OF THE MTS The components of the MTS can be described in a number of ways. One is to group them by the characteristics of the providers of the individual system components. For instance, some key components, such as navigation channels, are supplied by government, while others, such as vessel operations, are supplied by the private sector. They can also be grouped by physical or functional characteristics; for instance, as fixed infrastructure (e.g., locks, channels, terminals), support services (search and rescue, piloting, charting), and operating elements (vessel and vehicle operations). Because the MTS consists of many separate but interdependent parts, no groupings of its individual components can be completely satisfactory. The traditional division is by “waterside” and “landside” components: the former consist of the navigation aids, channels, and associated infrastructure and services, and the latter consist of port complexes, ter-

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The Marine Transportation System and the Federal Role: Measuring Performance, Targeting Improvement - Special Report 279 � � � � � � minal facilities, and connections to surface transportation modes. In some ways, such groupings are appropriate, since they coincide with major divisions of responsibility among the federal government, state and local authorities, and the private sector. The federal government has long taken the lead in providing waterside infrastructure and services by constructing, maintaining, and operating the nation’s navigation channels on both inland and coastal waters. It has left to state and local governments, as well as the private sector, responsibility for supplying and operating landside facilities. However, the waterside and landside domains are not neatly bounded. The landside components connect to, and their performance often depends on, highways, railroads, and other modes of transportation. The waterside components connect to international waters, and thus federal responsibilities intersect with those of foreign countries. In fact, most vessels engaged in foreign trade with the United States are foreign registered and are operated by foreign companies and crews. Moreover, the vessels operating in U.S. waters are almost all privately owned and operated, sometimes by entities having large landside operations, including terminals and connecting modes of transportation. The MTS background that follows is a basic overview of the system. First, the oceanborne sector is described. It consists of seaports, harbors, coastal waterways, and oceangoing vessels that accommodate mostly, though not exclusively, cargo moving very long distances overseas (internationally and between the U.S. mainland and Alaska, Hawaii, and U.S. territories). This discussion is followed by overviews of the inland river, intracoastal waterway, and Great Lakes systems. These systems accommodate mostly domestic cargo moving over long distances, including the inbound and outbound legs of international shipments. In both cases, the basic infrastructure and operating elements are sketched, including the types and characteristics of the vessels used and their main cargoes. Ocean Transportation Hundreds of natural and man-made harbors are situated along the U.S. coastline. Many of these harbors contain federally maintained channels

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The Marine Transportation System and the Federal Role: Measuring Performance, Targeting Improvement - Special Report 279 � � � � � � used regularly by vessels engaged in freight and passenger transportation. Marine terminals that consist of piers and berths where vessels are docked for loading and unloading are located on the waterfront. Marine terminals are both publicly and privately owned. Most are privately operated and designed to handle particular kinds of commodities. The terminal may be a stand-alone facility on the shoreline or part of an agglomeration of terminals and other marine service facilities (e.g., tugboat operators, fuel depots, ship repair facilities) that together make up a larger port complex. Such complexes are often owned and operated by state or local authorities, with either the terminals themselves or the land they occupy being leased to private companies. Individual terminals, whether part of a larger port complex or standing alone, are usually connected to rail sidings, roads that accommodate trucks, and pipelines. A major railhead or highway arterial may be located at the port complex or in the vicinity, and the port may serve traffic from inland and coastal waterways as well as the open oceans. The terminal itself may be the origin or destination point for the cargoes moved on the waterways, as is the case for coal shipped to the dock of a waterfront power plant or chemicals shipped from a waterfront chemical plant. This brief description of the various waterside and landside components of the oceanborne transport sector reveals how difficult it can be to characterize such a large and diverse enterprise briefly. Individual harbors, ports, and terminals differ in their physical attributes, organization, and patterns of use. Their use can be bolstered or constrained by proximity to major shipping channels, harbor channel configurations, landside capacity, local markets, and connections to the interior (Mayer 1988, 78–80). Some handle only bulk commodities, some mostly containerized cargoes, and others a wide mix of freight. Some are connected directly to mainline railroads or situated along major truck corridors; others are well connected to inland waterways or pipeline networks. Some handle mostly local traffic, while others are major cargo transfer points. The background that follows illustrates this diversity.

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The Marine Transportation System and the Federal Role: Measuring Performance, Targeting Improvement - Special Report 279 � � � � � � Navigation Infrastructure and Services U.S. coastal harbors consist of thousands of miles of main channels, connecting channels, and berths. Many navigational channels are made of relatively short, straight sections between 1 and 3 miles long, connected by turns and bends. Channel dimensions and dredging requirements vary from place to place. Widths can vary from 200 to more than 700 feet, and even more in turning basins. Channels deeper than 12 feet are defined by the federal government as “deep draft”; however, many oceangoing vessels need several times this depth to operate safely when loaded in confined waters. About 40 of the nation’s 70 deep-draft seaports have channel depths of 40 feet or more and are thus accessible to a variety of oceangoing vessels (USACE 2003, Table A-1). For the most part, the main navigation channels are maintained by the U.S. Army Corps of Engineers, which refers to about 300 harbor channels as “projects.” Some federally maintained channels, such as those serving the ports of Anchorage, Alaska, and Puget Sound, Washington, are located along naturally wide and deep harbors; hence, they do not require a great deal of dredging to maintain their dimensions. Other channels, such as those along portions of the Gulf Coast and in seaports at the outlets of large rivers, require frequent maintenance dredging to remove sediments. The shipping channels are marked by navigation aids that range from lighted buoys and beacons to radio navigation systems. The Coast Guard is responsible for placing, maintaining, and operating these aids, while the National Oceanic and Atmospheric Administration (NOAA) surveys and produces nautical charts of the waterways. The Coast Guard maintains nearly 50,000 aids to navigation, while NOAA is responsible for mapping and charting more than 3 million square miles of ocean floor, of which about 500,000 square miles have significant navigation activity (USCG 2000, 59; NOAA 2000, 5). NOAA also monitors currents, tides, winds, and other water and weather conditions, and supplies these data to mariners. Responsibility for waterway management, including coordinating and controlling vessel operations and scheduling on the waterways, is dis-

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The Marine Transportation System and the Federal Role: Measuring Performance, Targeting Improvement - Special Report 279 � � � � � � tributed among various entities: the Coast Guard, local pilot associations, private marine exchanges, port authorities, and individual vessel operators. In many places, harbor and port traffic is controlled through passive means, through the following of universal operating rules and with guidance provided by navigation aids. The Coast Guard establishes and enforces the traffic rules, but it seldom guides individual vessel movements in the same hands-on manner that occurs for aircraft operating in controlled airspace. In some busy ports and harbors, the Coast Guard operates vessel traffic service centers. The primary role of these centers is to monitor traffic flows and advise mariners on safe vessel movements (NRC 1996). In some ports and harbors, marine exchanges and pilot associations operate similar systems under Coast Guard authorization. The use of pilots in coastal and confined waters is compulsory for most commercial vessels, including foreign-flag vessels. Pilots are licensed by both state and federal authorities depending on the locality, the trade, and the vessels involved (NRC 1994). The maintenance dredging of the berths where vessels load and unload is generally the responsibility of port and terminal operators. The responsibilities for landside and waterside facilities intersect at this point. Seaports and Marine Terminals There are about 70 deep-draft port areas along U.S. coasts, including about 40 that handle 10 million or more tons of cargo per year (USACE 2003, Table A-1; USACE 2002a). Within these ports there are about 2,000 major terminals, mostly privately owned and operated (BTS 1999, 8). Sea terminals and their associated berths are often specialized to serve specific types of freight and passenger movements. Terminals handling bulk cargoes such as petroleum, coal, ore, and grain are frequently sited outside the boundaries of organized public port authorities. These facilities are often the origin and destination points for bulk commodities, and thus they differ from terminals often found in public ports, where shipments are transferred from one mode to another. Terminals handling containerized cargo tend to be located within larger public port complexes with significant warehousing, storage, and intermodal transportation connectivity.

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The Marine Transportation System and the Federal Role: Measuring Performance, Targeting Improvement - Special Report 279 � � � � � � Most large port complexes have a mix of terminals that handle general cargoes as well as various bulk commodities. Today, most general cargo, including manufactured goods, is moved in reusable steel containers through specialized terminals equipped with massive gantry cranes that lift the containers between the ship and the shore. Because the standardized container lends itself to such mechanized handling, container terminals require considerable capital investment by either the public port authority or the private terminal operator. They require land for storing containers that arrive or depart by truck either while they await local pickup and delivery or transfer as part of a longer-haul movement. This storage site may be adjacent to the marine terminal or at a remote location, sometimes near highway, rail, and river corridors outside the port complex. In general, the amount of container storage space required and its proximity to the marine terminal will depend on the nature of the container operations at the terminal. Containers that are passing through the terminal for longer-distance movements inland may be stacked on railroad cars or trucks almost immediately after unloading from the ship, whereas containers awaiting local pickup and delivery may require longer periods of port or off-site storage. Containerization and the attendant automation have not only led to greater efficiencies in cargo transfer but also reduced cargo theft at ports and in transit. Bulk terminals differ in their design and operating needs depending on the commodities they handle. Oil refineries, chemical plants, and utilities located on the shoreline are primary destinations for liquid bulk traffic. Refineries and chemical plants are also the origin points for petroleum products and chemicals moved by tank vessels. Likewise, waterfront grain elevators double as storage centers and as bulk terminals for the loading of oceangoing vessels. Because most bulk commodities have a relatively low value per ton, transportation makes up a larger share of their total cost than it does for high-value containerized cargo. Hence, to speed loading and unloading and to reduce the dwell time of the ocean vessels and the trains, trucks, and barges that serve them, modern dry bulk terminals have invested in large-capacity cranes, continuous-feed conveyor belts, gravity-fed load-

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The Marine Transportation System and the Federal Role: Measuring Performance, Targeting Improvement - Special Report 279 � � � � � � ers, and other high-volume cargo-handling equipment. In some cases, large bulk vessels, especially tankers, cannot access terminals because of channel constraints; hence, they may be partially unloaded (lightered) by smaller vessels in deeper waters. A large portion of U.S. crude oil imports is lightered by shuttle tankers operating from offshore locations to refinery terminals. Loading and unloading of petroleum can also occur at offshore terminals connected to landside terminals by underwater pipelines (NRC 1998). Vessel port calls are fairly concentrated, especially for the containerships. Container terminals at 15 ports account for 85 percent of all containership calls in the United States, and the port complexes in 6 areas—Long Beach–Los Angeles, New York–Newark–Elizabeth, San Francisco–Oakland, Hampton Roads, Charleston, and Seattle–Tacoma— account for about 65 percent of these calls (BTS 1999, 25). Tanker calls are likewise concentrated regionally. They are most frequent in areas with significant petrochemical industries, such as the Gulf Coast, Delaware Bay, New York Harbor, San Francisco Bay, and San Pedro Harbor (NRC 1998). The ports in southern Louisiana are the centers of dry bulk grain traffic, most of which moves down the Mississippi River for export on larger oceangoing ships. Intermodal Connections Goods transported overseas seldom make the entire journey from origin to final destination by one mode. Seaports and marine terminals are, to a large extent, nodes on the rail, highway, pipeline, and inland waterway systems. Whether they are used for transporting bulk materials or containerized cargoes, ports and marine terminals must have good access to other modes of transportation if they are to function. Containers are designed to be modular for easy interchange among modes, which allows containerized cargoes to be moved by the combination of ship, rail, and truck that best meets the needs of shippers and receivers. As noted above, marine terminals that handle bulk cargoes are typically located in places with good access to other bulk-oriented modes of transport, such as unit trains, pipelines, and barges. Bulk cargoes can be

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The Marine Transportation System and the Federal Role: Measuring Performance, Targeting Improvement - Special Report 279 � � � � � � transferred from one mode to another through the use of conveyor belts, pipelines, and other large-volume loading and unloading equipment; drayage by truck or side rail is seldom required. Moreover, the terminal itself may be the commodity’s origin or destination point, as is the case for refineries, utilities, and chemical plants. In contrast, the origins and destinations of container cargoes are seldom located at or near marine terminals. Drayage by truck over short distances between marine vessels and railroads is often required even at ports with extensive rail connections. To reduce the need for truck drayage, some ports have invested in on-dock rail lines to provide a direct feed between the long-haul rail and marine terminals. Ports also invest in road connections to the public highways, and most terminal operators have invested in technologies to improve the efficiency of cargo movements within the terminal complex. Of course, well-functioning intermodal connections at ports and marine terminals are of little value if the networks they connect to suffer from recurrent bottlenecks and limited throughput capacity. High-capacity containerships and the scale economies of container terminals have led to a concentration of containerized cargo in a small number of large ports, which results in large flows of traffic through the connecting highway and rail systems. Surface transportation corridors that are prone to congestion can have economic effects that cascade widely. Ocean Vessels Major classes of oceangoing vessels are tankers, containerships, dry bulk and general cargo freighters, and specialized ships such as the roll-on/roll-off (ro-ro) carriers used to transport motor vehicles. The largest-capacity vessels are petroleum tankers and containerships, which along with dry bulk vessels make up most of the tonnage capacity of vessels serving U.S. international trade. In addition, a large variety of smaller, specialized vessels provide unique services to many ports and terminals. U.S. ocean ports and terminals handle more than 75,000 vessel calls per year (BTS 1999, 25). About two-thirds of these calls are made by tankers, containerships, and dry bulk carriers. The remainder are made by other kinds of cargo and passenger vessels.

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The Marine Transportation System and the Federal Role: Measuring Performance, Targeting Improvement - Special Report 279 � � � � � � Tankers Approximately 3,500 tankers operate worldwide carrying crude oil, petroleum products, chemicals, liquefied petroleum gas and liquefied natural gas, and other kinds of liquid commodities, including vegetable oils (TRB 2001; USACE 2003, 86). Tankers vary widely in size and capacity because of the range of commodities they carry, their varied uses, the economics of the markets they serve, and the depth and width constraints of the shipping channels they transit (e.g., at ports and through canals). Capacity is often measured in deadweight tonnage (dwt), which excludes the weight of the vessel itself. The smaller tankers, with capacities of 50,000 dwt or less, are generally used for shorter-haul crude oil movements, offshore lightering, and the carriage of petroleum products that usually require smaller deliveries. The world’s largest tankers are designed and used mainly to carry crude oil. The large crude oil tankers in the world fleet are generally about 300,000 dwt, but some are much larger, and a few exceed 500,000 dwt. These larger tankers are used mainly in the long-distance crude trade (e.g., from the Middle East or Africa to the United States). Since these tankers are too large to enter U.S. ports, they usually unload their cargo offshore in shuttle tankers or at offshore terminals that have pipeline connections to shore facilities (NRC 1998). A fully laden 125,000-dwt tanker requires about 50 feet of channel depth; in comparison, a fully laden 300,000-dwt tanker may require channel depths exceeding 70 feet, which is far greater than is available in most U.S. ports and harbors. Containerships Operating on regular routes and schedules, containerships are the most common cargo vessel calling on major U.S. seaports. The world fleet totals about 2,900, and fleet size has been continually rising over time as containerization has become the norm for moving general cargo in international trade (USACE 2003, 90). The capacity of containerships is usually measured in 20-foot equivalent units (TEUs), which, at one time, was the prevailing length of containers. Today, 40-foot (truck-size) containers are used as well, each equaling 2 TEUs. The TEU capacities of containerships vary. The smallest ships carry 500 to 2,000. The larger vessels can carry more than 4,000, and a few newer ones have

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The Marine Transportation System and the Federal Role: Measuring Performance, Targeting Improvement - Special Report 279 � � � � � � During the past 2 years, government and industry have taken steps to integrate security into the freight system at all its stages. Examples of such efforts are provided in Chapter 3 and include the Customs Trade Partnership Against Terrorism, which is a joint initiative between the U.S. Bureau of Customs and Border Protection and business. Participants agree to establish security programs and meet specific guidelines for securing their facilities and operations. In addition to providing a more secure environment, the program promises shippers and receivers faster processing through customs. Meanwhile, the federal Marine Transportation Security Act of 2002 mandates that port authorities, waterfront facilities, and vessels have comprehensive security plans and incident response plans developed in conjunction with the Coast Guard. This legislation seeks to ensure that security is given explicit consideration by carriers, shippers, terminal operators, and port authorities during operations and infrastructure planning. The security imperative promises to have far-reaching effects on the MTS. The full implications are not yet known, although they appear to be in the direction of prompting more institutional cooperation and modal integration. To keep the MTS functioning smoothly in support of commerce, more attention will need to be given to developing security capabilities such as shipment tracking systems that also provide efficiency benefits, and vice versa. Security considerations, like safety considerations, must be integrated into all aspects of marine operations and infrastructure development, and doing so will have similar beneficial effects. Focus on the Environment Over the last half century, American society has become increasingly aware of and concerned about the environmental and health effects of many economic activities. Numerous environmental protection laws affecting how individuals and industries view and treat the environment have been enacted at the federal, state, and local levels. The MTS has been affected by these changes as much as any other sector. Broad-based federal legislation and regulations to protect air and water quality, ecosystem functions, wildlife and their habitats, and the health and well-being of humans have

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The Marine Transportation System and the Federal Role: Measuring Performance, Targeting Improvement - Special Report 279 � � � � � � prompted many changes in marine transportation demand, operations, and infrastructure. A number of statutory and regulatory requirements have focused specifically on marine transportation. Examples are federal requirements for the safe disposal of the material dredged from navigation ways, regulations on air emissions from ship engines, and the treatment of ballast water to prevent the spread of harmful and invasive species. Some of the effects of changing environmental demands and concerns on the MTS are obvious. For instance, concern over the effects of locks, dams, dredging, and other channel training structures on river ecosystems, as well as the effects of barge operations themselves, has affected federal investment and management decisions on the inland waterways. The potential for ecosystem and floodplain disturbances caused by extending the locks on the Upper Mississippi River and Illinois Waterway (to reduce barge traffic delays), for instance, has caused the federal government to spend more than 10 years studying the consequences of such development and seeking alternatives that will minimize adverse environmental effects (NRC 2001). The expense of disposing of dredged materials containing contaminants and the protections afforded marine life from dredging activity have increased the time required for and raised the cost of dredging, presumably limiting the scale and number of dredging projects. Legislation to reduce the incidence and severity of marine oil spills has prompted changes in the tanker business; for instance, by requiring the conversion of the fleet to double-hull vessels (NRC 1996; NRC 1998; TRB 2001). These are only a few examples of how environmental concerns have become important factors in the direction and development of the MTS, both in this country and abroad. The effects of these and many other environmental policies and protections have been large and were mostly unanticipated 30 to 40 years ago. They demonstrate the difficulty of predicting the future of this dynamic and highly interconnected system. PREPARING FOR FUTURE DEVELOPMENTS The marine transportation system has undergone dramatic change in recent decades. The rate and magnitude of change have at times taxed the

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The Marine Transportation System and the Federal Role: Measuring Performance, Targeting Improvement - Special Report 279 � � � � � � ability of the public sector to provide the basic infrastructure and services essential to the system’s functioning. Public ports, in particular, have been transformed in both their degree and range of use. For some ports, the changes have led to sharp increases in traffic and user demands for new facilities, space, and intermodal connections. For others, trends have gone in the opposite direction, as users have shifted to new locations. Nearly all ports have found it difficult to predict demands as little as 5 to 10 years into the future, which complicates the planning of costly and long-lived port infrastructure. The federal government, like the management of public ports, must make investment and program decisions that will have long-lasting effects on the MTS while having only limited understanding of future demands on the system. Federal agencies have important roles in nearly all aspects of the MTS. These roles are essential in facilitating commerce, ensuring marine safety and environmental protection, and meeting the imperative of national security. With so many functions, some dating back to the nation’s founding, the federal government is presented with a considerable challenge in coordinating them all and making them complementary and consistent with national priorities. MTS Task Force By the 1990s, the marked changes in the marine transportation sector, some of which were highlighted above, magnified shortcomings in coordination and consistency of federal marine transportation programs and activities. In 1998, Congress called on the Secretary of Transportation to convene a task force to “assess the adequacy of the nation’s marine transportation system to operate in a safe, efficient, secure, and environmentally sound manner.”3 The task force was charged with examining the 3 Public Law 105-383, Nov. 13, 1998, 112 Stat. 3411. An impetus for the congressional request was a 1996 study by the International Association of Independent Tanker Owners (INTERTANKO) on port and terminal safety (INTERTANKO 1996; INTERTANKO 2002). That study urged more systematic thinking on how to improve the productivity, safety, and environmental compatibility of tanker and other maritime operations through greater coordination of public- and private-sector responsibilities.

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The Marine Transportation System and the Federal Role: Measuring Performance, Targeting Improvement - Special Report 279 � � � � � � capability of the MTS to accommodate projected increases in foreign and domestic marine traffic over the next two decades. To aid in this assessment, the task force held seven regional listening sessions intended to reach out to government and industry users, owners, and operators of the system. These sessions were followed by a national conference. The product of these efforts was a 1999 report to Congress that describes the MTS’s components, functions, and uses; the role of the public and private sectors in supplying marine transportation infrastructure and support services; and various challenges that lie ahead for the system—from competing land uses near waterways to changing patterns of trade and heightened concern over maritime security (DOT 1999). The task force concluded that the system’s “ability to handle the emerging needs of tomorrow will be severely challenged.” It recommended that similar outreach to MTS users be undertaken on a regular basis so that the various federal and other government agencies involved in the MTS can better recognize emerging needs and address them sooner. To aid in doing so, the task force urged Congress to create a national council composed of nonfederal members to advise on MTS matters, and it urged the creation of regional harbor committees to identify and address local concerns. It also urged the establishment of an interagency committee to be charged with improving the coordination and consistency of federal agency programs, regulations, and policies pertaining to the MTS. In response to the task force’s recommendations, 18 federal agencies with responsibility for marine activities established the Interagency Committee for the Marine Transportation System (ICMTS) through a Memorandum of Understanding effective April 2000. Meanwhile, the U.S. Department of Transportation created the MTS National Advisory Council (MTSNAC), with members drawn from transportation firms, state and local agencies, industry associations, port authorities, labor unions, academia, shippers, and environmental organizations, to regularly advise the federal ICMTS on maritime transportation issues.

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The Marine Transportation System and the Federal Role: Measuring Performance, Targeting Improvement - Special Report 279 � � � � � � Call for This Study In May 2001, MTSNAC urged ICMTS to conduct a needs-based assessment of the federal and nonfederal components of the MTS.4 In particular, it requested an evaluation of (a) prerequisites for MTS to meet projected traffic demands, (b) potential impacts on other modes of transportation if disruptions or failures should occur in the marine system, and (c) future funding required to meet the system’s needs. Subsequently, the General Accounting Office (GAO), which was asked by Congress to examine more closely the federal role in funding the MTS, noted the absence of definable and measurable national goals for the MTS (GAO 2002). It urged clarification of these goals, procedures for evaluating federal program performance with regard to the goals, and an examination of alternative funding approaches commensurate with the goals (GAO 2002, 5–6). In response to the recommendations of MTSNAC and GAO, ICMTS members agreed to sponsor this study of the federal role in the MTS. The aims of the study, the approach taken, and the organization of this report are described in the following sections. STUDY CHARGE AND APPROACH Charge The federal agency sponsors of this study and their charge to the study committee (Statement of Task) are presented in the Preface. The central charge is to develop an analytic framework for federal agencies to use in identifying their capital and operating needs and coordinating their infrastructure investments and program expenditures related to the nation’s MTS. The Statement of Task does not define further what is meant by an analytic framework. However, it does imply that the study should view the many related activities of federal agencies in support of safe naviga- 4 Minutes for May 3–4, 2001, Meeting of MTSNAC, Kings Point, New York. MTSNAC Resolution 3 (www.mtsnac.org/docs/meet-min/MayAug01.doc).

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The Marine Transportation System and the Federal Role: Measuring Performance, Targeting Improvement - Special Report 279 � � � � � � tion, waterway maintenance, environmental protection, and security in an integrated manner. The sponsors asked the committee to perform the following subtasks in developing the analytic framework: Review how federal agency investments in the MTS are now made, including the degree of interagency coordination of these investment decisions and the policy issues associated with patterns of investment; Review and interpret projections for future maritime freight and passenger demand; Assess plans for MTS maintenance and expansion by industry, state and local governments, and federal agencies; Describe the likely impact on the MTS over the next two decades if federal funding remains constant; and Identify options for federal funding of the MTS and analyze the federal financial role in support of other modes and the critical factors and trade-offs that must be taken into account in considering alternative federal financing roles. Approach The sponsors asked the committee to complete the study in less than 1 year. After reviewing the Statement of Task, the committee determined that detailed reviews of individual federal programs, policy initiatives, and legislation related to the MTS would not be possible; such a diversity of reviews would require much more time and a range and depth of expertise not available to the committee. It therefore elected to focus its efforts on developing the requested analytic framework for federal decision making. Recognizing that federal policies are made in a pluralistic and political environment, the committee chose not to provide a highly mechanistic framework for planning and making decisions. Instead, it sought to develop a means by which policy makers can begin to think more comprehensively about the scope of federal involvement in the MTS

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The Marine Transportation System and the Federal Role: Measuring Performance, Targeting Improvement - Special Report 279 � � � � � � and the aims of this involvement. The result is a framework for marshaling information and analyses in support of decision making and for better understanding the effects of decisions. As further requested, the committee worked through the various subtasks listed above. Some of the subtasks proved more amenable to evaluation and more helpful for developing the analytic framework than others. All required interpretation by the committee concerning their meaning and their relative importance in developing a framework for decision making. The committee gave the most attention to the following: Reviewing the federal programs related to the MTS, the national interests that these programs are intended to serve, and the degree of coordination that takes place to meet and balance these interests; Reviewing forecasts of commercial demands on the MTS in the coming decades, as well as the prospects of changes in other demands on the system and the emergence of new demands (e.g., demands related to the environment, safety, and security); and Comparing the federal government’s roles and responsibilities for marine transportation with its roles and responsibilities for other modes of transportation, including the scope and locus of federal involvement, funding approaches, and means by which program priorities are determined. Two of the subtasks proved problematic as requested. First, an assessment of plans for MTS maintenance and expansion by private industry, state and local government, and federal agencies could not be conducted, at least not in a thorough and detailed way. The MTS is so large and diffuse that any meaningful evaluation of such plans would have consumed much of the time available for the study; simply gathering and interpreting these plans, from so many public- and private-sector sources, would have taken considerable time and effort. Nevertheless, the committee interviewed a number of shippers, carriers, terminal operators, and other users of the system. It also examined available government and industry

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The Marine Transportation System and the Federal Role: Measuring Performance, Targeting Improvement - Special Report 279 � � � � � � reports depicting aspects of the performance, condition, and needs of the system. Many of these reports were derived from surveys of small and non-random samples of ports, vessel operators, shippers, and others involved in the MTS. Although they provided an incomplete picture of system performance, the reports gave the committee additional insights into the current needs and condition of the MTS, as well as emerging areas of concern. Second, the committee did not seek to describe the likely impact on the MTS over the next two decades if federal funding remains constant. The federal role in the MTS is important and not likely to diminish in importance any time soon; hence, funding levels will need to be commensurate with this importance, in the committee’s view. In light of anticipated continued growth in international trade, constant levels of federal funding, in real or nominal terms, would appear to be an adverse and unlikely scenario. Rather than speculate on future levels of funding, the committee examined the more relevant question, in its opinion, of how the federal government decides to allocate resources among priority areas. The growing demands on the MTS, along with competing demands on federal resources, suggest that well-informed and well-supported allocation of federal resources will gain in importance. To develop an analytic framework for decision making, the committee reviewed the major federal programs related to the MTS and the national interests that underlie them. Four national—and federal—interests stand out: (a) ensuring marine safety, (b) protecting the marine environment, (c) facilitating commerce, and (d) providing for national security. The committee examined how decisions are made with respect to these interests across the many federal agencies having a role in the MTS. It found notable deficiencies in and opportunities to improve the information used to measure, monitor, and assess the performance of the MTS across all four of these dimensions. The emphasis of the report is on the federal role in supplying, overseeing, operating, and helping to finance the infrastructure and support services essential to the MTS. Other kinds of federal interventions, in areas such as taxation, labor law, and agricultural policy, have profound effects on the marine transportation sector, as they do on many other

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The Marine Transportation System and the Federal Role: Measuring Performance, Targeting Improvement - Special Report 279 � � � � � � industries and segments of the economy. In fact, these broader federal policies and laws may have a much larger influence on the MTS in the aggregate than do the narrower federal activities examined in this study. The committee acknowledges their importance but does not try to examine them here. REPORT ORGANIZATION In Chapter 2, major public- and private-sector forecasts of marine transportation demand for the next two decades are examined, and possible implications of changes in demand for the capacity and functioning of the MTS are assessed. The major roles and responsibilities of the federal government in providing key infrastructure and services that support the MTS are reviewed in Chapter 3. Consideration is given to the federal role in ensuring marine safety, environmental protection, the facilitation of commerce, and national security, as well as to how the federal agencies coordinate their policies and programs within and across each of these major areas of responsibility. The federal roles in aviation and highway transportation are discussed in Chapter 4, and they are compared with the federal role in marine transportation. Elements and features of the federal highway and aviation programs that appear beneficial and may be transferable to a federal marine transportation program are identified. In Chapter 5, the data and reports available for use in assessing and monitoring the performance of the MTS with respect to safety, environment, commerce, and security are reviewed. Consideration is given to how this information is being used to guide federal decisions and where improvements in information are needed. Chapter 6 offers an analytic framework for decision makers to view the components of the MTS, their uses, and the federal role in a more systematic and complete manner. It concludes with recommendations for the federal government to gather and analyze information on MTS performance in support of more informed and responsive federal decision making.

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