U.S. mounts effort to shift cargo from highways and railroads to ships

National Shipping of America, based in San Francisco, hopes to use its 491-foot containership National Glory, to carry cargo between ports on the U.S. Gulf and East Coasts. (Courtesy National Shipping of America)

For proponents of coastal shipping, America’s reliance on land transportation has long blocked a promising opportunity: Move more freight by sea and the nation could ease highway congestion, reduce air pollution, cut fuel costs and improve safety. Now, with federal support growing in the face of a volatile energy market and a deteriorating roadway grid, the approach has gained new momentum.

Coastal shipping, also known as short sea shipping, was the way the country moved nearly all of its goods until the development of railroads in the mid-19th century and the subsequent trucking revolution of the mid-20th century. Today, only 2 percent of domestic freight moves by sea in the lower 48 states. Europe, by comparison, moves more than 40 percent of its domestic freight this way.

“With the advent of rail and the interstate highway system, we essentially turned our backs on the sea,” said U.S. Maritime Administrator Sean Connaughton.

The result has been an overburdened land transportation network, especially along coastal interstate corridors, that will require $155 billion annually in improvements, according to the American Society of Civil Engineers. Though trucks account for only 10 percent of vehicle miles traveled in the United States, the Federal Highway Administration (FHWA) attributes 40 percent of its overall costs and more than 75 percent of its pavement maintenance costs to truck traffic. The FHWA also predicts that freight tonnage on U.S. roadways will be 70 percent greater in 2020 than it was in 1998.

A significant step toward reversing the trend occurred in December 2007 when President Bush signed the Energy Independence and Security Act. The law directed the U.S. secretary of transportation to establish what is now called America’s Marine Highway Program, an initiative overseen by the Maritime Administration (MarAd) to expand use of the nation’s 25,000-mile network of inland, intracoastal and coastal waterways.

On Oct. 6, 2008, MarAd issued an interim final rule setting the framework for the program, describing how the agency will solicit proposals for the designation of marine corridors and marine projects eligible for government assistance. An appropriation of $215 million to increase coastal shipping and reduce air emissions at ports is included in the Transportation Energy Security and Climate Change Mitigation Act of 2007 (H.R. 2701), which is pending in Congress.

“We are now trying to develop marine highways as analogous to the shoreside interstate highway system,” Connaughton said. “We will take comments, make proposals and give the waterways numbers like interstates. … By handling waterways with the same jargon and giving them the same parameters as other surface transportation, we’ll now be able to compete for funds.”

Money to upgrade infrastructure has long been one of the biggest barriers to coastal shipping. Dr. Rockford Weitz, senior fellow at the Institute for Global Maritime Studies, drew a “chicken and egg” correlation: To gain the commitment of shippers and entrepreneurs, you need proper infrastructure. But to obtain the proper infrastructure, you first need entrepreneurs and others willing to invest.

“I’m cautiously optimistic that this makes so much sense that it will almost pay for itself, and it has the attractiveness of being environmentally friendly,” said Weitz, co-author of a report released in September titled “America’s Deep Blue Highway: How Coastal Shipping Could Reduce Traffic Congestion, Lower Pollution, and Bolster National Security.”

“The worst-case scenario is that we don’t do anything, the traffic continues to grow and we face gridlock, particularly in New England and California. If we continue to wait, we’ll have fewer working waterfronts and fewer opportunities to develop coastal shipping.”

The maritime institute’s report states that a typical Atlantic port could be prepared to handle “roll-on, roll-off” (RoRo) cargo with a $5 million investment. An investment of approximately $50 million would be needed to increase daily capacity at ports along the East Coast to 21,000 trailers.

“Highway congestion management projects are measured in billions of dollars,” the report states. “Coastal shipping costs a tiny fraction of that. Many ports are already equipped to handle ships for coastal use without any additional port investment.”

For ports that do need funding, MarAd is looking to state and local governments to help lead the charge. In December, Norfolk Tug Co. inaugurated container-on-barge service from Norfolk to Richmond, Va., with the help of a $2.3 million Congestion Mitigation and Air Quality grant from the Richmond Regional Planning District. MarAd estimates that the James River operation will relieve interstate highways of 2,000 truckloads of cargo each week and use about one-eighth the amount of fuel.

“The purpose of (infrastructure) funding is to help offset startup costs and see how many trucks it takes off the road,” Connaughton said. “Ideally it will be combination of local, private and federal funds. The biggest factor in most transportation planning is environmental, particularly air emissions. The more trucks you get off the road, the better that region will be.”

In addition to the new push for infrastructure, legislation has been proposed to repeal the Harbor Maintenance Tax (HMT) as it pertains to coastal shipping. The fee, which is assessed on domestic cargo moving between U.S. ports, international cargo entering the country, and cruise passenger tickets, does not apply to goods that move by truck or rail.

“The tax unfairly burdens coastal shipping because shallow draft coastal vessels do not require port dredging,” the authors state in “America’s Deep Blue Highway.” “Furthermore, the domestic movement of containers accounts for only 0.2 percent of the total HMT collected and the Harbor Maintenance Trust Fund is running a $4 billion surplus that is expected to reach $8 billion by 2011.”

The Short Sea Shipping Initiative (S. 3199) would repeal the tax on cargo transported between domestic ports and between U.S. and Canadian ports in the Great Lakes and along the St. Lawrence Seaway.

“We do believe the Harbor Maintenance Tax is an impediment, and we urge Congress to follow through (on the bill),” Connaughton said. “No other mode of transportation pays this type of tax.”

Torey Presti, president of San Francisco-based National Shipping of America, also cited the tax as an obstacle for his fledgling business, which proposes to move cargo between Freeport, Texas and Chester, Pa. The company’s ship, the 491-foot MV National Glory, is currently on charter in the Middle East until economic conditions support the U.S. route.

“The Harbor Maintenance Tax is the biggest hurdle (to coastal shipping), but they’re all big,” Presti said. “Another hurdle is the general education of the public. … The past four or five years have been a period of awareness to tell shippers that this is an option. Besides the ‘green’ angle, the fundamental factor is reducing costs. You’re asking customers to take a risk: Will you support something like this if the price is right? What I think it has to offer is exactly that, along with the benefit of improving air quality. It also offers a safer and more secure option, especially with hazardous cargo.”

The authors of “America’s Deep Blue Highway” foresee greater demand for U.S.-made vessels if coastal shipping grows, but they caution that projections of shipbuilding volume are highly dependent on uncertain estimates of freight market penetration.

“We can safely predict that a healthy coastal shipping market, bearing 10 percent of coastwise freight by ton-mileage, would require substantial new investments in RoRo, LoLo (“lift-on, lift-off”) and bulk carrier fleets,” the study states. “These new self-propelled bottoms would number in excess of 200, built over a period of years or decades, and all of these ships would have a service life of at least 30 years.”

Any vessel engaged in coastal shipping must comply with the Merchant Marine Act of 1920, better known as the Jones Act, which requires that vessels moving cargo between U.S. ports must be American-flagged, American-made and American-crewed. While critics have long cited the law as a barrier to investment in domestic marine transportation, Connaughton downplayed its role.

“We don’t believe the Jones Act is much of an impediment to coastal shipping, and there has been no discussion about changing it,” he said. “There are already thousands of ships that can handle (domestic cargo) and more will be built.”

Connaughton, Weitz and Presti stressed that coastal shipping can co-exist with the trucking industry, with each mode reinforcing the other. A 2005 study by Global Insight predicted a shortfall of more than 100,000 long-haul truckers by 2014, a gap that can be filled if truckers concentrate on more profitable short-haul trips while a greater volume of long-haul cargo moves by sea. Trucks will always handle the initial trip to the dock and the final leg to the destination for any given trailer, creating local jobs that cannot be easily outsourced and that do not require drivers to sleep away from home.

The three proponents also cited backing from organized labor to handle more domestic cargo by sea, a key factor in managing the cost and efficiency of shipping.

“I’ve seen more and more (support) from seafaring unions and shoreside unions — definitely positive thinking,” Presti said. “There’s a lot of sincerity out there to get this under way. It’s just a question of trying to get everything aligned, where ship meets freight and the cooperation of unions.”

Ultimately, success will hinge on the willingness of companies to examine the benefits of coastal shipping over how they currently ship their freight.

“Long term, shippers are really going to have to grab ahold of this when you look at the environmental impacts and congestion impacts,” Connaughton said. “They’re going to have to end up utilizing this to be successful in the future. We have to get people thinking that way.”

Rich Miller

Coastal shipping defined

The Energy Independence and Security Act of 2007 defines coastal shipping, or short sea transportation, as “the carriage by vessel of cargo that is contained in intermodal cargo containers and loaded by crane on the vessel or loaded on the vessel by means of wheeled technology; and that is loaded at a port in the United States and unloaded either at another port in the United States or at a port in Canada located in the Great Lakes Saint Lawrence Seaway System; or loaded at a port in Canada located in the Great Lakes Saint Lawrence Seaway System and unloaded at a port in the United States.”

Rich Miller

By Professional Mariner Staff