North American Marine Highways (2010)

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

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

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