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44 Establish Short Overweight Corridors Any tractor is okay, No signs or placards are required, In Texas and on the West Coast, state governments have Auto liability insurance of $500,000 is required, established short overweight corridors between specific origins Usable 24 h, and certain consolidation or distribution areas that allow com- Normal speed limits apply, and plete overweight supply chains. State governments could con- Both 20-ft and 40-ft containers are okay. sider this approach for specific ports, as it would enable shippers to enjoy the full advantage of the lack of weight restrictions Los Angeles/Long Beach, California. The LA/LB heavy in marine transport. Examples of this approach include areas container corridor was created to aid in the movement of discussed in the following paragraphs. overweight 40-ft or larger ocean-going containers on des- ignated city streets in and around the Port of Los Angeles. Brownsville, Texas. In 1997, the state legislature passed The City of Los Angeles, City of Long Beach, and State of legislation that permitted overweight freight haulers from California Department of Public Works approved a measure Mexico to use two state roads to reach the Port of Brownsville. that allows permits to be granted for overweight container Under the program established by the Port of Brownsville, loads in the port area. The permits allow the gross vehicle shippers can order specialized oversize/overweight permits weight of the truck, chassis, container, and contents to be at online. The permits cover travel between Gateway Inter- 95,000 lb or 43,130 kg (with proper equipment). national Bridge or the Veterans International Bridge at Los Tomates and the Port of Brownsville for vehicles weighing no Oroville, Washington. Washington State allows large more than the Mexican Legal Weight Limit or 125,000 lb and trucks to use a stretch of roadway in the northern portion of not exceeding the allowable permittable axle load. Addition- the state that was previously not allowed. SB 6857 opened up ally, the dimensions of the load and vehicle may not exceed a 4-mi stretch of State Route 97 to large trucks. The new law 12 ft wide, 15.5 ft high, or 110 ft long. authorizes the Washington State Department of Transporta- tion (WSDOT) to designate the portion of roadway from the Chambers County, Texas. In 2005, the Texas legislature Canadian border to the city of Oroville as a heavy-haul indus- authorized haulers of ocean-going cargo containers to carry trial corridor. The bill allows overweight vehicles to travel loads up to 25% over the 80,000-lb legal weight limit on por- along the designated stretch of roadway. The heavy-haul dis- tions of two state roads (5 mi) connecting the Cedar Cross- tinction would authorize WSDOT to issue special permits to ing Business Park to a barge terminal. This location across the overweight vehicles operating in the corridor up to a gross Houston Ship Channel from the Port of Houston posed a chal- vehicle weight of 137,788 lb. Special permits would cost $100 lenge for shippers who wanted to use the maximum capacity each month, or $1,000 (including a $200 discount over the of cargo containers but were precluded by state weight limits. monthly rate) annually. To be legal, they had to divide loads and have trucks take a 20-mi detour to the port. Planning and Operations San Francisco, California. The Port of San Francisco, in Industry and Planning conjunction with the San Francisco Department of Parking and Traffic, has established an overweight corridor that con- The potential industry and planning activities related to nects all of the major cargo handling facilities and also is planning and operations are shown in Figure 15, Table 9, and accessible to the many trucking and warehousing facilities Table 10, which associate the potential actions with the obsta- situated along Third Street between the freeways and the cles they address. waterfront. It is permissible, under permit, to haul vehicles with a total weight of 93,000 lb, as opposed to the 80,000-lb Select the Market, Then the Vessel limit applicable to roadways strictly under State of California jurisdiction. This allows cargo payloads of approximately It is critical for operators to identify their markets (cus- 50,000 to 60,000 lb. The San Francisco Department of Park- tomers) first and then acquire the equipment to meet the ing and Traffic grants the truck permits per tractor at a cost need, rather than obtaining a vessel and trying to impose a set of $90, and they are valid for one year. The permits stipulate solution on the marketplace. the following authorizations: There does not appear to be a true lack of capital for ven- tures that have a first-rate business plan. The main obstacle Any style chassis is okay, appears to be that of convincing potential investors of the Permits are valid for one year, worthiness of a business proposition. It is very difficult to Only one permit is required per tractor, redeploy a vessel asset as opposed to truck or rail equipment.

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45 Potential Actions Obstacles Addressed Select the market, then the vessel Inadequate vessels hurt NAMH credibility Consider initial market orientation Need to match market, equipment, & need Emphasize reliabililty Shippers need reliability most (after low cost) Incorporate market conditions for success Too much reliance on single vessel High start-up costs & working capital Start small requirements NAMH seen as trucking competition Work with truckers & freight forwarders Operators need long-term commitments to cover upfront transition costs Need to right size capacity Understand terminal requirements Need competitive door to door service Figure 15. Planning and operations potential actions--universal: industry/planning. (continued on next page)

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46 Need volume & services compatible with Give domestic cargo a high priority existing infrastructure Develop waterfront industrial parks Lack of vessels & cost of new vessels Figure 15. (Continued). It was emphasized by several interviewees that it is important be served by tug-barge combinations and by ferries with truck to have long-term contracts in the early stages of business Ro/Ro capability). development. This allows the operator to weather any down- The general cargo market seems likely to be a very difficult turns in the business cycle or any unforeseen obstacles, such market in which to expand cross-border NAMH operations as natural disasters or rate wars. for a variety of reasons. The general cargo markets generally It is important to create greater cargo demand rather than involve smaller individual shipments that will need to be con- vessel supply. Stimulating vessel construction without cargo solidated for water movement and thus increase the overall time should be discouraged. involved in making a shipment. This, coupled with the effects of advance manifest rules and other security procedures, makes cross-border general cargo moves even more difficult and costly Consider Market Orientation than they are in the already competitive domestic markets. Great Lakes NAMH has its best potential for success in Several studies and interviewees suggested that it would be two areas: the bulk commodity market and short-distance prudent to start by targeting overweight and empty containers. Ro/Ro and container service. The bulk commodity market They are harder for traditional services to manage and would is excluded from this analysis, so the focus is on Ro/Ro and therefore be less subject to strong competition from other container service. However, there are no dedicated container modes. vessels currently operating NAMH service on the Great Lakes. When pursuing feeder services, it is prudent to market Thus, at least in the short run, NAMH on the Great Lakes directly to ocean carriers and not to individual customers. must focus on the short-distance Ro/Ro market (which can Ocean carriers typically arrange the service and pay for it. Table 9. Planning and operations potential actions--regional: industry/planning. Potential Actions Obstacles Addressed Understand terminal requirements Canada: some ports may need Ro/Ro infrastructure Explore operational strategies United States: need to determine if container on barge for international freight will work Table 10. Planning and operations potential actions specific to stakeholders: industry/planning. Potential Actions Obstacles Addressed Consider initial market orientation Operators: ocean carriers may or may not be good business Explore operational strategies Operators: "shoestring" budgets vulnerable to unexpected market conditions Work with truckers & freight forwarders Operators: need effective supply chain & marketing mechanisms

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47 It should be noted that efforts to establish the appropriate The availability of sufficient terminal capacity for a dedi- market orientation would be greatly aided and improved by cated domestic NAMH terminal; and the availability of baseline market data and freight flows at the Competitive handling costs at origin and destination ports. national and regional levels to understand the best markets for marine highway services. Inland COB service may emerge in "seam" markets that are a long dray from major intermodal hubs and can derive ade- quate volume from agricultural or industrial activity, especially Emphasize Reliability from ethanol and steel mini-mill projects. Operators must guarantee schedule reliability. This will almost certainly involve the use of more than one vessel in Start Small the service. Operators need to develop fleets, not bank on one vessel being sufficient. Reliability is the most important Enter a new market with the smallest vessels that meet the service factor--even more so than the actual transit time. economic requirements of the service and then grow the Even just-in-time enterprises are built on delivery windows, service by increasing ship size or number (and frequency) not actual speed of delivery. It is delivery time that counts, of vessels. not transit speed. Barges can sail over weekends when truck- ers are not active. Furthermore, there are often huge delays Work with Truckers and Freight Forwarders at rail interchange points. Because of this, barges can some- times offer faster delivery times than the other two modes. This is a critical area for further assessment. The European experience has shown that successful marine highway oper- ators consider both rail and trucking as partners. (48) The Incorporate Market Conditions need for cost-competitive services in North America would for Success into Plans indicate that the same should be true on this continent as well. Policy makers and NAMH entrepreneurs should concen- Operators should target large trucking companies with broad trate on the following opportunities: geographic scope, who have tractors in both origin and dis- charge ports. The bottom line is that NAMH must work with Routes where NAMH can help to overcome traffic or border truckers to develop door-to-door services. congestion (enabling it to be highly competitive with ground transportation in terms of both cost and transit time); Understand Terminal Requirements Routes where there is no adequate rail alternative or where interline transfers would be required (one major shipper When considering where expanded NAMH operations stated that rail infrastructure is poor in the Deep South but may have the highest probability of success, it is important to shippers tend to be fairly distant from the ports); look at several factors, including the following: International routes that are not subject to either Canadian or Mexican cabotage legislation or U.S. Jones Act restrictions, Modal access--Potential NAMH ports/terminals must which could alleviate severe congestion and which (in the have effective, efficient access to other modal networks case of Canada) would not be restricted by the closure of (highway and rail). This is critically important because the St. Lawrence Seaway; trucks and/or rail will be used to make the final door- For coastwise NAMH operations, freight movements that to-door delivery of products moved by NAMH. There must have origins and destinations relatively close to coastal ports; be efficient access to the interstate system and either Class I Traffic corridors with enough density to enable relatively rail mainlines or short-line railroads that provide efficient large vessels that provide scale economies in terms of oper- interchange services. ating and capital cost to be deployed with high enough ser- Berth availability--As discussed earlier, NAMH operations vice frequency to be competitive with trucking and/or rail calling at some major deepwater seaports often do not receive (cargoes must be of sufficient volume to provide breakeven a high priority for berthing, particularly in comparison to levels to start and, ideally, contracts should be for long-term large, ocean-going containerships. Ports that can regularly periods rather than "spot cargo"); offer berths may be better able to attract NAMH traffic. Heavy and/or hazardous shipments currently moving over Efficient operations--Potential NAMH ports/terminals the road, such as chemicals; must have the ability to load and offload ships and barges Close proximity of terminals to major cargo origins and quickly and efficiently. For international (Lo/Lo) move- destinations; ments, cranes are usually required. Ro/Ro movements, more

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48 common for domestic shipments, often do not require as Public Sector (Non Legislative) much cargo handling infrastructure. The potential public sector (non-legislative) actions related to planning and operations are shown in Figure 16 and Other factors to consider include: Table 11, which associate the potential actions with the obstacles they address. Unobstructed water access with navigation and depth along- side of at least 9 ft for inland operations and 15 ft for coastal, Availability of a dedicated waterfront terminal with suffi- Encourage Hazardous Materials to be Carried cient acreage and independent gate, Offshore and Away from Population Centers Availability of adjacent area to provide off-terminal park- Each day, 800,000 shipments of hazardous materials occur ing for truck lines, within the United States. Moving potentially dangerous car- Proximity to large distribution centers and truck termi- goes offshore would not only help alleviate landside congestion nals, and but would also spur coastal shipping operations. Removing Proximity to major intermodal yards. the transportation of hazardous materials through some of the nation's most crowded urban centers would make sense Give Domestic Cargo a High Priority from a safety and security perspective. If the policy is struc- tured correctly, this is an opportunity to work with railroads. Public-sector transportation planning organizations should Although handling hazardous cargoes can be a profitable concentrate their NAMH shipping initiatives on domestic enterprise for railroads, in many cases the risk of sending cargo, which tends to be Ro/Ro cargo. Many international hazardous shipments through rapidly urbanizing areas is shippers (that tend to use ocean containers on Lo/Lo vessels) making the long-term benefit/cost ratios of these operations are not interested in NAMH operations, customs require- less appealing. In examining projections of urban develop- ments for international shipments can introduce delay, and ment for the next two decades, it seems highly likely that there are issues with managing the positioning of containers, some of these hazardous shipments now handled by railroads making NAMH a less attractive option in comparison to will need to shift either to newly constructed extra-urban other modes. rail routes or to alternative modes. Miscellaneous Operational Strategies Develop a Comprehensive National Several other strategies might prove productive: Freight Transportation Strategy This vision would be national, and perhaps even conti- Offer operator-provided incentives such as extended free nental, in scope. It would approach the system from an inter- storage time for cargo beyond what is ordinarily provided. modal perspective, appreciating how road, rail, and water Try to eliminate "touches" where possible. When dealing transportation can fit together to move freight and passengers with feeder services, look into direct ship-to-barge trans- more efficiently. fers to eliminate the port in the process. A national freight policy could be established in the United Focus on Ro/Ro initially. Less landside infrastructure and States and Canada, with funding and incentives properly equipment are required, and operations are simpler. aligned with the goals of the policy. As suggested earlier, marine transportation might be thought of in much the same Intensify Research into Vessel Design way as railroads. Note that there are only a handful of Class 1 and Construction Strategies railroads. Although there may be a larger number of NAMH operators, the truly profitable routes will be relatively few. Eliminate high-speed vessel design from research programs. As part of the national freight policy, mechanisms could The types of vessels that are capable of high speeds experience be established for planning and funding multi-jurisdictional strong degradation in speed and efficiency with large cargo projects. Highway and rail planning has provided some good loads. The routes that are being proposed such as New York models that could be transferred to the marine mode. to Florida would never work with high-speed vessels because One component of a national freight transportation strat- one could never operate a ship like that in winter weather. The egy might be to require states to build their own freight trans- literature suggests that investments in vessel capacity and cargo portation plans and tie the level of surface transportation handling equipment may yield better returns and better level funding to the existence (or lack thereof ) of such a plan. A of service than investments in ship propulsion. (49) Govern- national strategy would provide a foundation and a unify- ment could sponsor more research into what could be stan- ing framework for the various state strategies. For example, dardized across a range of marine highway vessels. a legislative proposal for the new surface transportation bill

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49 Potential Actions Obstacles Addressed Need to capitalize on environmental & safety Move hazardous materials offshore advantages Communities are pushing back against freight expansion Preserve working waterfronts Need sufficient acreage to accommodate new services Improve federal collection of data Need better definition of market Inland destinations present prohibitive dray Develop waterfront industrial parks costs Unequal treatment across ports creates Standardize customs processes at ports confusion and delay Lack of knowledge of market & operational Develop NAMH planning guide requirements Need comprehensive national investment Develop national freight strategy strategy Incorporate into Homeland Security plans Need additional funding sources Figure 16. Planning and operations potential actions--universal: government/non legislative. (continued on next page)

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50 Lack of qualified vessels in N. Am. and Harmonize NAFTA cabotage laws restrictions on international movements Apply the "railroad model" Lack of federal leadership Website to match shippers & carriers Market facilitation Figure 16. (Continued). has been drafted that calls for a national freight and mobil- Marine traffic is more redundant and resilient. Marine assets ity policy and requires states to develop a state freight trans- can be redeployed relatively quickly and can call at a wide vari- portation policy. ety of ports and terminals, even when highways, rail lines, and bridges are out of service. Furthermore, the vessels and ware- house facilities involved in marine freight transportation could Preserve Working Waterfronts provide support to the Department of Homeland Security in Industrial ports are in short supply, and will become more the event of an emergency. important as traffic congestion increases on America's inter- state highways and rail networks. Once a working waterfront Improve Federal Collection is lost to housing or retail shops it is nearly impossible to bring of Transportation Statistics it back. Ports are an undervalued, but vital, national resource. Foresight is required to prevent their gentrification so that Accurate analyses and effective decisions require accurate they will be ready to serve America's revitalized marine trans- and organized data. Shipment data collected and disseminated portation system. by government could be restructured for easier and more meaningful access. It is especially important to provide better origin and destination data. Incorporate America's Marine Highways Program into Homeland Security and Infrastructure Protection Plans Harmonize Regulations and Cabotage Legislation among NAFTA Partners Security could be a plus for marine transportation. It is much more difficult to disrupt marine trade than it is to dis- There is a need for expanded, and more substantive, coop- rupt highway or rail traffic. To disrupt the latter two, one eration between NAFTA partners sufficient to achieve tangible would only need to blow up a bridge or a segment of rail. progress in moving toward a harmonized marine transporta- Table 11. Planning and operations potential actions--regional: government/non legislative. Potential Actions Obstacles Addressed Preserve working waterfronts US West Coast: lack of affordable waterfront property Develop waterfront industrial parks US West Coast: lack of affordable waterfront property Standardize customs processes at ports US: unequal treatment across ports Work out 24-h rule accommodation Great Lakes: difficult to comply with 24-h rule

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51 tion regulatory framework within the free trade area, includ- Standardize Customs Processes at Ports ing cabotage arrangements, HMT, customs processing, and so That Ports Are Treated Equally advanced notification and documentation requirements. Large ports tend to have customs service available for more Simply amending the Jones Act most likely would be hours in the day than smaller ports do--as well as weekend counterproductive. For example, if the cabotage provisions service, on occasion. This is a limiting factor for small ports in the Jones Act were unilaterally eliminated, a Canadian attempting to generate more NAMH service. If hours could interest could buy a very cheap foreign vessel, pay the 25% approach a certain level of standardization, this would remove Canadian import duty, and still "have a leg up" on U.S. customs service as a competitive factor between ports. interests. Work out 24-Hour Rule Accommodation Develop Waterfront Industrial Parks for Great Lakes Cross-border NAMH services focused on the semi-finished Due to short trip lengths and other considerations, collabo- goods market appear to have some early promise. The biggest ration between U.S. Customs and operators would be needed issue is proximity of the shippers to load points and the restruc- to develop a system and methodology that will work around turing of many of these industries (particularly in Canada). the 24-h rule in the Great Lakes region. One option that might work to help develop this market would be government involvement in the development of water- front industrial parks or sites for production, warehousing, Consider Designing a NAMH Planning Guide and distribution facilities. This would require government Interviewees felt it would be helpful to develop a NAMH to specifically place economic development and job creation planning guide that would explain all of the various cost and programs related to marine highway development and renew- service factors a start-up business should consider. Such a able energy development ahead of real estate development guide, which MARAD might undertake to develop, could sum- and speculation. marize such information for the benefit of potential entre- Land-use planning needs to be structured to encourage preneurs and investors. manufacturers and distribution centers to stay close to the waterfront. The most cost-effective services are those that are able to capture the low costs of water transit without Sponsor a Website to Match Shippers with Carriers incurring the relatively high costs of drayage, handling, and There are subscription Internet sites already in existence storage. that allow carriers and shippers to post and match require- ments. "Internet Truck Stop" charges only $35/month and it Consider Applying the "Railroad Model" is a very active site. Similar sites targeting marine freight may be of value. The way the railroad system was built in the United States could provide the foundation for an approach to build the marine highway system. The proceeds of government loans Legislative and grants of public lands furnished a large part of the work- The potential legislative actions relating to planning and ing capital of the early railroads. The federal and state gov- operations are shown in Figure 17, Figure 18, and Table 12, ernments decided to guarantee the securities issued by the which associate the potential actions with the obstacles they railroads. The federal government even went so far as to pro- address. vide preliminary surveys in some cases. Because of this aid, the railroads were able to open up great expanses of the "west- ern territory" to settlement and cultivation even before a crit- Federal Government--United States ical amount of demand had built up. Most of the country Consider Proposed Jones Act Modifications Indepen- was still unsettled and there was little prospect of profitable dently from Marine Highway Development. Serious dis- demand levels, but the government recognized that railroads cussions regarding marine highway development have often had to be built in advance of settlements in order to facilitate been sidetracked into a debate over the viability of the Jones immigration. A similar approach may be needed to develop a Act. If Congress attempts to change portions of the Jones Act, new NAMH system. Keep in mind that the new marine system the United States could inadvertently place itself in viola- may have only a few large operators in well-defined routes, tion of its GATT agreements and then there could very well similar to Class 1 railroads. be international pressure to abolish all Jones Act provisions.

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52 Potential Actions Obstacles Addressed High start-up costs Consider publicly owned & operated services Lack of available capital Difficult to take advantage of weight capacities Establish short, targeted overweight corridors for waterborne cargoes Figure 17. Planning and operations potential actions--universal: legislative. Potential Actions Obstacles Addressed US: impacts of Jones Act restrictions are uncertain Consider Jones Act independently from development of NAMH US: Jones Act debate delays needed action Encourage evaluation of NAMH alternatives to highway & rail projects States not analyzing NAMH alternatives Figure 18. Planning and operations potential actions--regional: legislative. Table 12. Planning and operations potential actions specific to stakeholders: legislative. Potential Actions Obstacles Addressed Establish framework for planning & funding Agency/Government: no practical multi-jurisdictional projects framework for multi-jurisdictional projects-- no systems approach