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4 In the analysis of potential obstacles to NAMH, it is important to distinguish between obstacles common to all start-up business enterprises and those that uniquely disadvan- tage marine transportation in comparison to rail and truck transportation. For example, the lack of statistical data regarding trade flows is a real obstacle for the development of NAMH to marine operators. Although all transportation providers rely on data to a cer- tain extent, providers in other modes also make business decisions based upon what their competitors are doing. For marine highway operators who may be the first service to serve a particular corridor, there are no direct competitors to examine; thus, they are far more reliant on third-party data. Another often-cited obstacle is lack of familiarity on the part of the shippers. Many of the interviewees felt that this is a problem that all new businesses must overcome. Any operator that is attempting to sell a service must explain how the service is different from other alternatives and what the benefits will be to the shipper. Another such obstacle is the flow-imbalance issue (significant differences in the volume of cargo moving in one direction as opposed to the opposite direction); all modes must deal with this problem. Obstacles fall within the following categories: Service/marketing, Operating cost, Infrastructure and shoreside equipment, Government/regulatory, Operational constraints, Vessel-related, and Other. One remarkable finding is that port infrastructure issues--defined as docks, warehouses, storage areas, and cargo handling equipment--were rarely mentioned by interviewees as a serious impediment to the development of marine highway services. Conclusions To develop a potential path to success, it is helpful to determine which of the hurdles standing in the way would have the greatest positive impact if removed. The primary issue at hand is that the NAMH industry has not been cost-competitive to date. Therefore, it would make sense to address the basic economic issues (such as capital and total shipment cost) first--directly or indirectly. Only once this has been accomplished can the other iden- tified or perceived hurdles be cleared. The conclusions flowing from the research can be divided into the following two broad categories: 1. Improving the underlying economic framework, and 2. Enhancing planning and operational activities. These categories can be further divided into the following three broad subcategories: 1. Potential actions for industry and planning organizations, 2. Potential actions for the public sector (non legislative), and 3. Potential legislative actions. Economic framework conclusions tend to fall into the category of potential legislative actions because they often revolve around issues of taxation and regulation, while planning

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5 and operations issues tend to fall within the realm of non-legislative agency actions. The major conclusions included in this research are discussed in the following sections. Economic Framework Industry and Planning Crewing requirements for NAMH vessels are a major issue that can jeopardize the viabil- ity of marine highway operations in the future if not properly addressed. In addition to the oft-cited distinctions in crew size for small self-propelled cargo ships versus equivalently sized barges, the researchers identified other labor/manning issues that may become more important as NAMH is developed. For instance, a greater role for domestic marine activity will require an expanded workforce of more qualified mariners than is currently available. Several interviewees indicated that some degree of standardization on the vessel side would be necessary for the industry to emerge as a true competitor to truck and rail. There was marked disagreement over how extensive the standardization in design and construction could become; additional research into vessel design and construction strategies is needed. Public Sector (Non Legislative) There are multiple opportunities to incorporate externalities in taxing and funding by more fully assessing and considering the comparative impacts of marine highway trans- portation on air quality, carbon dioxide (CO2) reduction, roadway maintenance costs, and safety. Providing incentives directly to shippers who choose marine alternatives is a method that could prove effective. Due to high upfront capital costs, targeted assistance for the U.S. shipbuilding industry could be made under certain circumstances. With the tightened capital markets that have emerged since the global financial crisis, the provision of alternative channels for access to capital may be a consideration. Legislative On a broader scale, consideration could be given to establishing a program similar to the Transportation Infrastructure Finance and Innovation Act of 1998 (TIFIA) that would focus on marine or multimodal initiatives. At the federal level, issues that could usefully be considered early in the process of NAMH implementation include the potential elimination of the HMT for all North American non- bulk shipments and a full review and assessment of the Title XI Program to make it more conducive to NAMH. Planning and Operations For planning entities, the most consistent observation is that that preexisting market analysis should drive vessel selection and not the other way around. This strategy has some- times been difficult due to the limited supply of available vessels at a given time. It is critical that all parties involved--from shipowners to governmental authorities--work under the assumption that new services will become permanent. Most shippers have little interest in participating in experiments and will consider shifting modes only if they perceive it to be a long-term arrangement that will not require shifting again in the foreseeable future. Although it is tempting to use large vessels in order to accentuate the natural advantages of marine transportation, planners would be wise to consider starting small and ramping up

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6 capacity as demand increases. Small ships mean low operating costs and fast turn time-- both of which are essential in the early implementation of services. It is also important to understand the specific policies of all affiliated terminals and preexisting trucking compa- nies and freight forwarders. There are several other public sector (non-legislative) actions that generally could encour- age the development of marine highway activities. These include efforts to preserve working waterfronts and prevent marine encroachment that would undermine future NAMH origins, destinations, or corridors. Corridors that can safely transport hazardous cargo should be given a particular focus. At some point in the future, it would be logical to incorporate NAMH into homeland security and infrastructure protection plans and coordinate this plan with a NAMH plan- ning guide developed by MARAD. Future planning guides should be sufficiently flexible to accommodate new transportation statistics, even when the methodology for statistical col- lection changes. Although it is unlikely that there will be significant change to the Jones Act in the near future, it may be possible to harmonize regulations and cabotage legislation among North American Free Trade Agreement (NAFTA) partners to better accommodate cabotage restric- tions for shipments between partners. An adjustment to the requirement that U.S. Customs be notified of an inbound international shipment 24 h in advance would improve the prospects for U.S.-Canada marine trade. Additional standardization of customs processes at ports in the United States, Mexico, and Canada for marine highway traffic would also significantly reduce uncertainty for NAMH services.