September 1, 2009

Is short-sea shipping the wave of the future?

Expanded use of "marine highways" could ease highway congestion and pollution. But not everyone's on board with the idea.

By Mark B. Solomon

Listen to supporters of plans to move long-haul freight off the highways and onto coastal, inland, and intracoastal waterways, and you come away thinking that the nation's marine network is a severely underutilized asset.

According to proponents, the 25,000 miles of navigable U.S. waterways handle just 1.4 billion tons of freight each year, equal to 2 percent of the nation's domestic shipments. Because one barge tow can accommodate 456 containers that might otherwise move by truck, shifting even a modest amount of cargo to water would be both cost-effective and environmentally friendly, backers say.

But listen to skeptics and they'll tell you that for all their environmental and infrastructure-related benefits, "marine highways" will always be a slower and less-efficient means of freight transportation than over-the-road trucks or intermodal services, especially on short to intermediate hauls. They maintain that coastal transport's snail's-pace transit times are a poor fit for many industries, that the additional cargo handling needed will actually drive up costs, and that the Jones Act, an 89-year-old law requiring that vessels used in domestic trades be U.S.-built, -registered, and -crewed, will make marine highway services uncompetitive.

The debate over the merits of marine highways—commonly known as "short-sea shipping"—may intensify as the clock ticks closer to a Sept. 30 deadline for reauthorizing funding for the nation's highway system. Rep. James L. Oberstar (D-Minn.), chairman of the House Transportation and Infrastructure Committee, has called for an integrated and holistic national transportation policy to accompany the funding. However, the reauthorization bill sponsored by Oberstar contains no language addressing the nation's coastal shipping network.

That doesn't mean the situation is, or has been, static. A December 2007 law directed the secretary of transportation to establish a program aimed at expanding the use of coastal highways to mitigate road congestion. The law also requires the creation of a "Marine Highway Advisory Board," which is just now taking shape.

The $787 billion economic stimulus plan signed into law in February gives the DOT secretary $1.5 billion in discretionary funding to make capital investments in the nation's road infrastructure. Marine highways would be eligible for funding; at this writing, the funds had not been disbursed.

The Senate Commerce Committee in early July reported out a $397 million reauthorization of maritime programs that includes language mandating new grants to promote a marine highway system. The bill, sponsored by Sen. Frank R. Lautenberg (D-N.J.), only requires a mechanism for funding. It does not allocate money to the effort.

Meanwhile, Transportation Secretary Ray LaHood has been talking up the concept. Speaking in late July before the Marine Transportation System National Advisory Council, LaHood said the country "must find ways to take better advantage of our existing waterways" to reduce its dependence on foreign oil, reduce congestion and emissions, and create an alternative to the cost of building and maintaining highway systems.

The Maritime Administration, an agency within the Department of Transportation, has teamed up with carriers, maritime labor, and academia to launch a marine highways cooperative to promote the greater use of coastal shipping. Noel P. Comeaux, an analyst in MarAd's Office of Marine Highways and Passenger Services, says the cooperative is signing up on average one new member per year. "We're still in the education process," he says.

Getting shippers on board
The marine highway concept is not new. There are an estimated 25 short-sea shipping services across the United States. These services cover traffic-congested regions like the Northeast and areas like the Pacific Northwest-Alaska trades, where highway transport may not be viable.

If marine highways are to be fully embraced, however, backers must get users of transportation services to buy into the plan. So far, that has been a struggle. "We need shippers, and we need 3PLs (third-party logistics companies)," admitted Mark Yonge, acting chair of the Marine Highways Cooperative, at a recent conference in Atlanta.

Yonge says shippers and 3PLs have yet to be convinced that a marine highway system will help them meet their customers' demanding and precise delivery targets. Peter J. Gatti, executive vice president of the industrial shipper group National Industrial Transportation League, adds that the biggest challenge in making marine highways work is the cost and time involved in transloading cargo between barges and truck or rail.

Gatti says the service will rise or fall not on its ability to ease road congestion or pollution but on its economic value. "It really comes down to the economics of the movement and the needs of the shippers," he says.

Peter V. Stone, principal in the consultancy IHS Global Insight, says marine highway services can succeed only on longer lengths of haul and if there are sufficient containers aboard each barge tow to make it cost effective. Stone estimates that at least 175 containers need to be tendered daily per barge in each direction in order for the service to be viable.

"The bottom line is how you divert traffic to a system like this," Stone says. "Not every commodity can take a chance on slower transit times, but some can."

Kevin R. Mack, vice president of Columbia Corp., a Liberty Corners, N.J.-based company that operates short-sea services in the Northeast and mid-Atlantic, says trucking rates on many corridors are so low that it would make little economic sense to consider even an inexpensive shipping alternative like barge transport. Mack urged Congress to offer tax credits to encourage shippers to divert cargo to water.

Mack adds that Columbia has in recent months held preliminary discussions with truckload giants J.B. Hunt Transport Services Inc. and Schneider National Inc. about shifting containerized shipments to waterborne transport. Mack says the companies expressed some interest, but that is as far as the talks have progressed.

About the Author

Mark B. Solomon
Senior Editor
Mark Solomon has spent 25 years in the transportation, logistics and supply chain management fields as a journalist and public relations professional. From 1989 to 1994, he worked in Washington as a reporter for the Journal of Commerce, covering the aviation and trucking industries, the Department of Transportation, Congress and the U.S. Supreme Court. Prior to that, he worked for Traffic World for seven years in a similar role. From 1994 to 2008, Mr. Solomon ran Media-Based Solutions, a public relations firm based in Atlanta. Mr. Solomon graduated in 1978 with a B.A. in journalism from The American University in Washington, D.C.

More articles by Mark B. Solomon

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