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7 CHAPTER 1 Background As the economic and geographic character of the United The important factors behind an increased interest in water- States changes, so too must the transportation system. Yet, borne shipments in Europe and other parts of the world are while changes in land utilization and economic production also found in the United States--congested roads, high fuel have been rapidly unfolding over the last two decades, the pace prices, tolls, road taxes, hours-of-service limitations on truck of transportation evolution has been slow and often reactive. drivers, driver shortages, safety concerns, and environmental In some cases, hesitation to embrace radical shifts in direction concerns. Available land near the coasts and other navigable based upon existing trends has been prudent. For example, it waterways is expensive, environmentally sensitive, and in does not appear that expansions to the intermodal system can short supply--factors that have significantly stymied the abil- be predicated on sustained and uninterrupted growth, or on ity of the transportation network in these areas to expand to exceptionally high energy costs. meet growing demand. Yet, proximity to water may turn out The most essential driver of freight activity in a consumer- to be an important transportation asset serving coastal pop- oriented economy is population growth, which will continue ulations in the future because of the overwhelming efficiency at a relatively constant rate. The inherent logic behind making advantages that can be gained utilizing marine transport. In better use of marine highways derives from where the growth fact, the process of removing trucks from the road cannot is occurring. Coastal counties possess some of the most eco- be viewed only as a transportation issue--it must also include nomically productive and strategically vital industries in the industrial location, market incentives, and long-term urban country. The counties of the coastal United States have a planning strategies. population density that is four times that of the country as It is with this basic understanding that the U.S. Maritime a whole, yet they are served by a freight transportation system Administration (MARAD) launched its Short Sea Shipping that was developed for a far less densely populated country. (SSS) Initiative, which has now evolved into the North Amer- Although significant regional distinctions are seen around the ican Marine Highways (NAMH) Initiative. The basic premise United States in passenger transportation based on popula- of this initiative is that with sufficient modernization of marine tion density, no such distinction currently exists for freight. infrastructure, new freight corridors could be established that The United States does have a multimodal system; however, would serve the needs of populations near the coasts or other until now, distance--not density--has been the principal navigable bodies of water. These marine highways could theo- determinant of modal choice. retically provide a low-cost and energy-efficient alternative for The case for a "mass freight transportation system" as well moving cargo and would greatly expand the total transporta- as a "mass transit system" is made even more compelling tion capacity of the United States. The enthusiasm for NAMH, when the population is experiencing rapid growth. The however, has been tempered in recent years by the failure National Oceanic and Atmospheric Administration (NOAA) of some start-up initiatives and the fact that, despite record estimates that in 2003, approximately 153 million people energy prices, the promise of NAMH does not appear to have (53% of the nation's population) lived in the 673 coastal been fully embraced by the freight community. counties, an increase of 33 million people since 1980. This is The development of a marine highway system as a major expected to increase by more than 12 million people by 2015. component of the freight transport profile in the United States Coastal counties average 300 persons per square mile with a would clearly mark a dramatic and deliberate shift. Exten- density that grew by 28% between 1980 and 2003 (2). This sive research on international and domestic SSS by the Texas surge in population has been reflected by sharply increased Transportation Institute (TTI) has shown that the potential use of coastal highway infrastructure. long-term economic benefits of SSS are significant, yet so are

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8 the transition costs. The findings from TTI's research are pre- have a marine highway alternative. Finally, there is border sented in this report; they include (but are not limited to) congestion with Canada and Mexico, the United States' North issues such as the development of adequate market data, American Free Trade Agreement (NAFTA) partners, that is upgrading of dockside equipment for certain types of cargoes, driven not only by the absolute volumes of traffic but also by the need to educate logistics managers and overcome their border security processes. resistance to change, the need to set aside adequate waterfront There are two broad markets for NAMH services: inter- land and protect it from encroachment, and the need to view national feeder cargo and domestic cargo. International freight transportation as a system rather than developing feeder cargo consists of shipments that arrive at a North plans on a mode-by-mode basis. American port from overseas and then are ultimately deliv- The general consensus of the freight community is that ered by a smaller vessel to another North American port. without active federal-level involvement, NAMH will likely Domestic cargo originates and terminates within North penetrate only in certain niche markets driven by geogra- America. These two markets tend to be handled separately and phy and energy costs. However, for NAMH to truly make with different technology. Lift-on/lift-off (Lo/Lo) serves as the an impact in lowering congestion and improving the total dominant technology for international cargo and roll-on/roll- energy and environmental performance of the freight sec- off (Ro/Ro) serves as the dominant technology for domestic tor, a national or North American strategy is clearly needed. cargoes. It is important to distinguish between the require- In a 2002 report, (3) FHWA made the following observation: ments for handling international freight and those for domes- tic freight. Table 1 illustrates those differences. Global market logistics rely heavily on the performance of A primary difference in the two types of services is that infrastructure owned and operated by the public sector. Under- feeders tend to operate from a "hub port" and their service standing the motivation of logistics decisions and their local implications is a critical point of departure for a national or multi- patterns must be based on the needs of the transoceanic liner national effort on fostering trade. Identifying freight bottlenecks, service, whereas domestic (or regional) NAMH operators "solving them," and establishing market conditions that provide tend to work on a port-to-port basis with the service patterns "free access" should be an important focus of regional, state, determined by the needs of the shipping customers. national, and international planning/policy efforts. . . . Public International feeder operations have tended to favor the investment targeted at freight movement should adopt a frame- work in which the private sector is provided incentives to choose Lo/Lo model (containerized freight) because cargo is being what is best for their business within the context of achieving transferred from ocean-going vessels and therefore sufficient public goals. volumes can be generated. For domestic containerized oper- ations, Ro/Ro (tractor-trailers) has been preferred due to the There are at least three types of congestion that the use of lower required density to justify the service and lower start- marine highways could potentially ease, and each has a differ- up capital costs. It is also important to recognize that only a ent solution. First, there is congestion in and around container very small portion of current domestic waterborne cargo is of terminals, stemming from the growth in world trade and a type and form that would be consistent with freight moving consisting primarily of international 20-ft and 40-ft shipping over the nation's highways. Presently, manufactured goods containers. Second, there is congestion on highway corridors, make up only 6.7% of the total by weight and typically con- where the shipping containers are primarily 48-ft and 53-ft sist of heavy and bulky items that would not otherwise be domestic containers or trailers moving between points that suitable to move over the road (4). There is no technical rea- Table 1. International and domestic NAMH characteristics. Characteristic International Market Domestic Market Feeder cargo (from Regional or inter-company Market Served international liner service) cargo Basis of Service Liner calls at hub port Fixed schedule Primarily Ro/Ro (may also Operations Primarily Lo/Lo (containers) include container and break- bulk) Ocean containers (typically Domestic (53-ft) containers or Equipment 40 x 8 x 8.5 ft) truck trailers Any port pair capable of Major deepwater port to Service Area handling barge traffic secondary port (or vice versa) (preferably door to door) Customer Base Mainly international Mainly domestic Shoreside cranes and Minimal, particularly if vessel Infrastructure Requirements container yards has self-sustaining ramp

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9 son why marine highways cannot serve light manufacturers significant expansion. Some of these issues can be addressed and producers of consumer-oriented goods, provided they at the local or state level, whereas others must be resolved by can serve the needs of shippers, yet the market for these ser- the federal government or private industry. vices is as yet unproven. This report contains appendices that provide detailed infor- This report assumes that the development of NAMH is mation related to research activities. Appendix A provides a desirable in terms of the social and environmental benefits it table of interviewee characteristics, Appendix B gives a table would bring. There is a significant amount of literature that of North American marine highway ventures, Appendix C lists supports this premise. Therefore, this analysis focuses on shipper requirements, Appendix D compiles potential obsta- obstacles, attempts to overcome those obstacles, and pro- cles, Appendix E outlines marine highway legislation, Appen- vides suggestions for further action. As shown in the follow- dix F describes the Quebec Province greenhouse gas program, ing chapters, there are a number of challenges that the marine Appendix G contains an annotated bibliography, and Appen- transportation system must overcome in order to achieve a dix H defines acronyms used in this report.