Marine Transportation System

Posts Tagged ‘congestion’

A Perspective on Port Dominoes

In Competition, Efficiency, Intermodal, Ports on October 3, 2014 at 12:52 am

A few days ago over 100 people packed a room at high up in Baltimore’s World Trade Center for a day-long forum on “port congestion” convened by the Federal Maritime Commission. It was the second of four planned public meetings–the first was in Los Angeles and the next two will occur in New Orleans and Charleston. The window views from the meeting venues will not be the only differences in what is observed at the four sessions but there are bound to be things in common, too.

The subject of congestion means different things depending on where you are. The severity of the problem also depends on when the post-Panamax ships will arrive in greater numbers to the Gulf and on the East Coast.

The Ports of Los Angeles and Long Beach qualify as Congestion Central if only as a matter of volume and a PierPass system that is working only too well. Some of what they are experiencing could be visited upon the Port of New York/New Jersey in less two years’ time when the Panama Canal gives way to the big ships and if certain problems are not fixed by that time. But that does not mean New York Harbor isn’t experiencing head-throbbing congestion today. Name the problem or snafu and the bistate port has experienced it like punches to the gut. So much so that it did not take much convincing to get terminals, truckers, shippers, labor, carriers and others in the room and agree to hold hands and embark on a waterfront version of a 12-step program.

Norfolk may have 50-feet of water to suit, first, colliers and now big box ships but it also is scrambling to have infrastructure and systems ready in a couple years. Truck and terminal-related problems prompted Norfolk’s own come-to-jesus/how-can-we-fix-this? process. Like other ports the problem is more on land than in the water. The concern isn’t about ships scraping bottom but about terminals getting stuck without a chassis or with too many ships and too little in the way of equipment, labor, trucks or gates. It helps that the Vice President brought a $15 million TIGER grant to Norfolk last week to help pay for improvements to gates and last-mile infrastructure over the next few years.

In the South Atlantic the stories and problems will sound a bit different, as they will in the Gulf. Ports there undoubtedly will paint favorable comparisons to their troubled brethren to the north in a sort of Alfred E. Newman way–“What, me congested?”–and not without reason. But there the trucking and chassis management problems may be only in early stages of development and more of the big ships (and perhaps big-ship-challenges) may be in their future. In fact they are counting on it.

A perspective on the problems facing terminals recently appeared in the Journal of Commerce. The opinion piece by John Crowley, Executive Director of the National Association of Waterfront Employers (NAWE, a client) was cited at the FMC forum by Bill Shea, CEO of Direct ChassisLink (DCLI) in its enumeration of congestion-inducing factors that are in play to one extent or another at U.S. container ports. Crowley pointed to 12 factors including the bunching of ship arrivals, larger ships and cargo discharges, local traffic congestion, terminal capacity and gate hours, truck driver decisions, labor shortages, and even severe weather such as has been seen in the Gulf and more recently from Superstorm Sandy. Most of those were mentioned by speakers at the Baltimore session this week.

Crowley’s piece speaks to the fact that the symptoms of what is being called port congestion are seen throughout much of the intermodal supply chain, which is to say, not just right there at the marine terminal. “The intermodal freight system…consists of market-based industry segments. There are pressures aimed at making each segment more operationally efficient and increasingly productive. It’s a system of nonstop competition, hypersensitive economics and narrow margins. We see it in the increasing size of container ships, the investments made in marine terminal technology and capacity,” etc. “The market determines demands on price and service levels from the modal carriers which, in turn is felt throughout the supply chain and by all modal carriers. Situated in the midst of those demands are marine terminals that strive for each modal operation – marine, rail and truck – to be roughly in sync.”

John Crowley “encourages all industry sectors to collaborate, as much as practicable and permissible under law, to arrive at solutions that will serve their mutual interests… Our operators rely on each mode to similarly commit. Solutions may not come as easily and swiftly as we all would like, but they will have to come about through adaptation in the marketplace by the principal actors in the intermodal freight system…” He calls for government policies that foster market solutions where possible. “We welcome positive and appropriate federal involvement that contributes to solutions but will resist unproductive, regulatory intrusions into terminal operations and where even well-intended government involvement will only frustrate the development of market solutions.” Find the full piece here.

Those views were also heard by the folks in the crowded 21st floor meeting room in Baltimore.  The Port Authority of New York & New Jersey’s Rick Larrabee described one of the guiding principals in the formation of the Port Performance Task Force 10 months ago. The port’s stakeholders had to be willing to “look inside” for answers as much to look to others in the port to fix the problems. Few of those problems stand alone. A line of dominoes is not the perfect metaphor but it will do. The trucker’s dilemma, for example, is one that is felt and affected by other actors in the supply chain. The companies and drivers have something to contribute but without changes in other sectors the drayage problems will become more severe; the congestion will worsen.

Dire predictions underscored the calls for solutions.

Collective efforts formed to tackle problems in the ports of San Pedro Bay, New York Harbor and Hampton Roads and as a result there is reason for optimism. But as several people told the FMC commissioners this week, we will have a rough year or two, starting this winter, until those solutions are implemented by the principal actors in the port marketplace.

Meanwhile, the FMC will hold its forums. The commissioners and staff are taking notes and those will emerge in some form of a report. It is good for the government to be alert to what is going on at the nation’s gateways and the problems of the freight logistics system. That agency may even decide to take some action to the extent its limited jurisdiction allows. But it is up to the chassis, terminal, truck, ship, rail and distribution center operators and the beneficial cargo owners ultimately to figure out how to make things work better.   Pbea

 

What TIGER Tells Us

In Marine Highway, Surface Transportation Policy on February 23, 2010 at 12:39 pm

No, not that Tiger.

The eagerly awaited TIGER grants were announced last week.  An experiment in government.  Against their better judgment members of the House and Senate gave $1.5 billion to the Administration and left it to the discretion of USDOT program managers, modal administrators, the Secretary (and perhaps the White House, just in case) to decide what projects were worthy.  (Egads! The bureaucrats!)

The multimodal discretionary grants program—later assigned a name and acronym at USDOT—was created a year ago in the cauldron in which Congress cooked up the economic recovery package.  The context was job creation in a failing economy.  But the genius of TIGER’s tenacious sponsors—most visibly Sen. Patty Murray (D-WA)—was that it also was a good time to try something different.  Politics would always be lurking in the background (if not in the foreground) when doling out tax revenue for public works but this was not a time for the earmarking norm.

Also lurking was the thought: if this works it could set the example for a change in transportation policy.

Lisa Caruso of the National Journal asks in her transportation “experts” blog if TIGER should be replicated in the surface transportation authorization bill.  Can it serve as a model for the revised policy and programs that many of us look for in the bill?

So far the respondents (scroll thru the page) generally agree there is benefit in the approach.  What’s not to like? Livable community folks liked the selection of street car and pedestrian path projects.  Goods movement was given a strong boost with around $300 million going to rail projects.  And it was good to see that at least one of the promising marine highway initiatives was granted $30 million.  (The first of many one hopes.)  That award illustrates how TIGER–and Secretary Ray LaHood–was open to more than the usual road, transit and bike path projects.

By and large, very good projects were selected.  But the question posed by Caruso is whether TIGER represents a policy approach worth continuing.

Some of the respondents think TIGER is a good starting point but that it is important to change the underlying policy.   In particular Steve Heminger notes it is not enough to create a grants program that is mode neutral.  An improved Federal policy and program should have a clearer, focused national perspective e.g., goods movement and metropolitan mobility.  It is a view I share.

Bob Poole raises an important policy question worth debating by suggesting an underlying weakness of a multimodal approach if a highway tax is the sole source of support.

One person’s response I would be interested to see is that of Sen. Barbara Boxer (D-CA).  In January 2009 the chair of EPW, which is to produce highway and other portions of the next authorization bill, flatly opposed the multimodal discretionary grants provision in the draft Senate stimulus bill, even as Heminger and other Californians welcomed the idea of a mode-neutral program and projects judged on their merits.  Boxer and others in the transportation leadership of Capitol Hill will decide whether the TIGER approach is just a brief detour from projects as usual.   Pbea

The Grass is Greener — Pt. 2

In Efficiency, Intermodal, Marine Highway on January 19, 2010 at 10:05 pm

Envy is a perfectly serviceable starting point for developing national transportation policy. Our new high-speed rail program is an apt example. It’s a Euro-inspired, greenish gleam in a candidate’s eye made billion-dollar real by our new president and the stimulus package. While we wait for our first bullet-ride to Disney World or Albany let’s consider what the national transportation policies of other countries are accomplishing. We continue this series with another look to the north and Canada’s North American gateway strategy. This time…investment in short sea.

This item caught the eye.

Government of Canada takes action to facilitate shortsea shipping

OTTAWA — The Honourable Stockwell Day, Minister of International Trade and Minister for the Asia-Pacific Gateway, today announced completion of the Southern Railway of British Columbia (SRY) rail barge ramp, a shortsea shipping project at the marine rail terminal on Annacis Island in Delta. This project was made possible by $4.6 million in federal funding under the Asia-Pacific Gateway and Corridor Initiative.  (release: January 15, 2010)

Turns out the Canadian gateway strategy isn’t just attracting international containers to ease them on down to the U.S. by rail.  The plans for the Pacific gateway include using the marine highway as an “optimizing” element for goods movement.   “Better use of our waterways through shortsea shipping can help alleviate congestion, facilitate trade, reduce greenhouse gas emissions, and increase overall transportation efficiency.”

After a call for proposals five projects were selected for the plan totaling over CN$20 million, to be matched by the private sector grantees:

  • Fraser River Shuttle;
  • Deltaport Shortsea Berth;
  • Vanterm Shortsea Berth;
  • Mountain View Apex Container Terminal; and
  • Southern Railway of B.C. Rail Barge Ramp.

These projects in the Vancouver, B.C. region “call for the development of specialized facilities such as docks, ramps, and fixed-crane infrastructure that would facilitate shortsea shipping of a variety of cargos (including containers, railcars, and break-bulk cargos) that ultimately either originate from or are destined for Asia.”  (release: September 5, 2008)

This marine highway element of the Asia-Pacific Gateway strategy is designed to increase efficiency and reduce environmental impacts of goods movement.  It is intermodal. It ties marine to rail and road.  “The Annacis Island marine rail terminal will provide industries in coastal B.C. and Vancouver Island with rail connections to four major railways: Canadian Pacific, Canadian National, Union Pacific and Burlington Northern Santa Fe.”   Obviously, an equal opportunity connector.

It may be a fair to say that the above grants planned to boost short sea shipping in Canada’s largest port region are roughly comparable to the marine highway grants program recently authorized by the U.S. Congress. The Canadian grants support pieces of a strategic plan; the U.S. grants will support projects that meet certain market and public benefit criteria and are in designated “corridors.”   The Canadian grants support capital requirements, which the U.S. version is likely to do.   On the other hand, the above grants go to projects of companies, such as terminal operators.  While most marine highway projects in the U.S. are assumed to be private sector initiatives the grants likely would go to sponsoring public agencies.

……

One googling leads to another.  I’ll close with a video from The Sustainable Region TV program of Vancouver, a place known for its clear skies (and a looming Olympics).    Pbea

California Trailblazing to a Miami Tunnel

In Intermodal, Ports, Surface Transportation Policy on November 17, 2009 at 11:04 pm

When earth was turned in 1997 for the Alameda Corridor project in the San Pedro Bay port region more than one kind of ground breaking was occurring.  The Port of Miami is a beneficiary.

In freight transportation policy circles the Alameda Corridor project one day may be legend.  The ports of Los Angeles and Long Beach were the gaping end of a freight funnel that emptied import boxes onto the exit rails and streets.  In essence the solution was to eliminate grade crossings by building a blow-grade rail way out of town.  A big project with a $2.4B price tag.  A key to the financing was Federal credit assistance.  The project and two others in California were the first to benefit by this innovation.  A paper on the FHWA website tells the story.

Due to Federal budgetary constraints, however, the grant was not deemed to be a fiscally or politically viable option. An alternative form of Federal support for this project was needed, and by 1997 the answer was clear: Federal credit enhancement in the form of a junior-lien loan to ACTA.

The fiscal year 1997 Omnibus Consolidated Appropriations Act (Public Law 104-208) provided $58.7 million for DOT to cover the capital reserve charges associated with making a direct loan of up to $400 million to ACTA for the Alameda Corridor Project. This represents an actual budgetary cost of 14.7 percent of the face value of credit assistance. The legislation also provided that the loan be repaid within 30 years from the date of project completion and that the interest rate on the loan not exceed the 30-year Treasury rate.

Inspired by the success of leveraging non-Federal investment for large infrastructure project, particularly private financing, Congress in 1998 fashioned a fully articulated TIFIA program.  It was adjusted in SAFETEA-LU with a lowered threshold to make more projects eligible.

Nearly $7 billion in projects in 13 states have benefited since TIFIA was created by Congress.  The Port of Miami’s rail freight tunnel had an uncertain future but with the October announcement the financing is in place and a $607 million construction project soon will be underway.  Not bad.   Pbea

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HMT on the Marine Highway: Once is Too Much

In Marine Highway, Surface Transportation Policy on October 18, 2009 at 11:09 pm

The Harbor Maintenance Tax (HMT) discourages new customers for the marine highway.  It may not be the only number in the logistics calculus but it tops most to-fix lists.  Why?

Vessel operators, maritime labor, ports, and others agree that the HMT is most in need of a policy fix.  But the diversity of perspective sometimes means the prescriptions for a fix will vary…as will the way of explaining the issue.

If you ask someone to explain the HMT issue the response may be:  “It’s a double tax on cargo.”   I have heard  that  lone, simple statement made many times including by an  industry witness at a committee hearing.  It is how others are coming to know the issue.  A key Member of Congress recently explained the issue that same way.  Double taxation,  period.

The double hit of the ad valorem tax is a valid reason.  Imported cargo pays on entering a U.S. port, and then, when transshipped by coastal service to another American port, pays again.  But that explanation leaves out an equally important reason for Congress to approve legislation such as the Cummings bill in the House (H.R. 638) or the Lautenberg bill in the Senate (S. 551).

The single hit of the HMT on domestic cargo–much of which moves in trailers–is the other principal reason.   Domestic freight represents the greater percentage of goods moving on the roads today…far more than international boxes.   When the Port Authority of  New York & New Jersey studied trucking in that congested metro region less than 5 percent of the trucks on the road were carrying containers to or from the port.  This is hardly surprising.

So whether the cargo is riding in a 53′ trailer, or is a vehicle itself, that is the freight we need to attract to the marine highway.  Unlike the imports the domestic freight would pay only once.  That also is too much.

If the marine highway is to fulfill our expectation to enhance the surface transportation system and mitigate the interstate burden the J.B. Hunts, the FedExs and other companies should participate in blue and brown water services.

Exempting both international and domestic non-bulk cargo moving in the American domestic trade, and among Great Lakes ports, is the objective. It is a low-cost way to remove a disincentive for the use of efficient marine transportation and signal  a policy change to the logistics industry where the business decisions are made.

That says it all.    Pbea

A Tale for a New Age

In Green Transportation, Surface Transportation Policy on October 8, 2009 at 5:18 pm

“My jolly body shall a story tell
And I will clink for you so merry a bell
That it shall waken all this company;
But it shall not be of philosophy,
Nor yet of physics, nor quaint terms of law;
There is but little latin in my maw.”
(from The Sailor’s Prologue by Chaucer)

Give the sailor a new story to tell.

For all of the new thinking that is going in transportation circles the maritime sector would appear to be an industry that lingers in the past.  We know that some companies are plotting real innovation.   The use of renewable energy, more efficient vessel designs, and replicating nationally the Alaska Marine Highway trailer trade.   We know that there are inherent efficiencies to hail and some companies would build on that.

But in the absence of an organized effort to tell how the industry and its skilled labor force is trending into a new age –and have virtues of particular relevance today–the outward appearance amounts to a familiar, 20th-century one.

Not so with the railroad industry.  The once Iron Horse now has the look of a low emission, high performance thoroughbred.  The appearance is a calculated one that to some degree is also deserved.  When new equipment is brought on line with green power plants there is no question about it.

“I have to say, the folks there have really turned out something cutting-edge. The NS 999 cranks out 1500 horsepower relying solely on rechargeable batteries. And, it releases no diesel exhaust emissions. None.”

Those aren’t words from some Norfolk Southern executive.  They’re from the USDOT Secretary’s blog.    The Class Ones have a story to tell and they’ve been telling it.  Good for them if the Transportation Secretary wants to join in.  (And why not?  The President likes to tout the new Detroit from the podium.)

What’s the maritime story?  One that will turn heads in Congress…that will prompt a sustainability-conscious president to urge more use of and investment in marine highways?  One that says our waterways are the nation’s past and future?

A maritime industry lobbying effort is in the works.  A collective “fly-in” (Washington lobbying lingo) by labor, business and ports is being organized for spring 2010.  What will be the message?  That the industry produces many great paying jobs?  That the maritime sector is important to the economy and our national security?  All factually correct and important to say.  But it’s an old–in some ways ho-hum–story.

It isn’t message enough when the government is tackling climate, energy, congestion and freight transportation issues, and will be setting policies and programs to last the next 5 years and more.  And it isn’t relevant enough when businesses, including customers of freight services, are developing strategies to bypass congestion, reduce fuel costs and carbon footprints, and earn EPA SmartWay credentials.

We are approaching fast the convergence of government policy and business imperatives.

It is no wonder that the railroads are projecting themselves–successfully so–as worthy of a hearty handshake from Al Gore.  Will the maritime sector also be ready and relevant?  Will the policy makers know why it makes sense to use marine transportation in this new age?  There’s only one way they will know.

Give the sailor a new and true story to tell.    Pbea

Will Ports Be Ready? (Part 1)

In Infrastructure, Ports on September 13, 2009 at 10:15 pm

Will U.S. ports, especially those on the Atlantic and the Gulf coasts, be ready to operate in the changing domestic and international commercial environment? With major shifts on the way the ports that adequately prepare will be the ones to maintain and gain market share. Cargo flow volumes will shift in a big way.  This is the first of a three-part observation by our new contributor Thomas H. Wakeman III, Eng.Sc.D.

Panama Canal
The one approaching shift that escapes no port’s attention is the Panama Canal.  The Panama Canal Authority is investing $5.3 billion to widen and expand the canal’s capacity to service the current generation of 8000+ TEU container ships.  When the new locks open in 2014, a new era will begin.  It could change global trading patterns just as the initial canal opening did in 1914.

As much as 25 percent of today’s West Coast cargo base could be transferred to East and Gulf Coast ports as global trade picks up again.  There will only be one chance to gain control of the initial surge.  It will be the deepest East and Gulf Coast ports with corresponding intermodal connections and warehousing capacity that will capture this shift in market share.

Economies of Scale/Scope
Achieving economies of scale and scope will determine the mega-players.  It started with increasing ship size first among the bulk carriers and then emerged with the container carriers in the latter part of last century to secure economies of scale.  Because margins are razor thin only ports and their supporting infrastructure systems (whether as import or export corridors) with sufficient capacity and efficiency effectively will compete and perform in the global marketplace among the major “port poles”, forming as collaborative networks in Asia, India, and Europe to achieve economies of scope.

These port poles, which combine the infrastructure and business services of more than one port into a mega-region logistics platform, have the ability to be agile, cost-effective and resilient when shocks occur.  They are seen as reliable routes by shippers – giving them agile and flexible networks.

Infrastructure
Time and reliability are the watch words for global business.  As goods flow across the world’s oceans, through our ports, and connect to domestic corridors, they face time delays in route and uncertainty about ultimate delivery schedules because of infrastructure capacity constraints.  Freight must flow seamlessly or there is a time, cost and reliability penalty.

India plans to increase infrastructure spending to 9% of GDP (an estimated $500 billion) by 2014, up from the current 4%, on roads, ports and airports.  In China, according to the Asian Development Bank, the figure is close to 10% GDP for 2008-2009.

The US has been living on its past construction accomplishments.  According to the Congressional Budget Office, between 1984 and 2004, the U.S. capital investments (including federal, state, and local) averaged less than 1.2% GDP.  Our growth of demand and lack of investment was unsustainable.  Without the recession, we would have been overwhelmed by traffic, much less prepared for what is going to be demanded in the next decade.   Our infrastructure systems can not deliver what business is going to require for maintaining global competitiveness without significant investments.

Next: Environmental Concerns

T. H. Wakeman

Our Turn to Pay the Freight

In Infrastructure, Surface Transportation Policy on September 9, 2009 at 5:21 pm
PBS "Blueprint America" Documentary:  "Keep on Trucking?"

PBS "Blueprint America" Documentary: "Keep on Trucking?"

Blueprint America is the PBS infrastructure series.  The series is one of the best I have seen on the subject, not that there is much competition on TV in this category.  Keep on Trucking? has the virtue of being taped in my Garden State, where men are men and women are truck drivers who train the men.

The segment reported by Miles O’Brien covers our reliance on trucking and the 50+ year old interstate highway model.  He reports on the benefits and limitations of the rail freight system.  He covers how trucking and rail compete and cooperate (“the term of art is intermodal”).  He introduces community concerns via New Jersey’s Ironbound, which is adjacent to the Newark container terminals.  And O’Brien overlays the  fact that Congress will have to replace SAFETEA-LU and face the political conundrum of taxes, with Jim Oberstar’s (D-MN) foot on the House accelerator.

Part of the value of this particular “…Trucking?” segment, as one individual awkwardly said, is the need “to look at the network of this nation as a whole” and “how these two modes can be interfaced in the most efficient way”.   “A freight relay if you will,” Miles O’Brien added, “… trains and trucks each doing the part of the job they do most economically, then passing the baton.”

Of course that topic deserves a 24-minute segment of its own…but not one limited only to two surface modes.

Predictably marine transportation was not mentioned.  Considering the key points made in the piece the marine highway should have been included in the “network of this nation.”  The water mode applies to the ideas of intermodal operation, efficiency, congestion mitigation, and the need to think outside the 1950s highway model.  As one voice noted, “it’s about retooling the freight infrastructure so American business can compete in the global marketplace.”  Not about maintaining the primacy of road and rail, one might add.

Miles O’Brien alluded to the fact that arriving at a new policy will not be easy.  “There is no love lost in the fight over infrastructure dollars.”  Bill Graves of the American Trucking Association asserted that the public shouldn’t be “deluded” that rail is “the answer”…the Association of American Railroads‘ ad campaign notwithstanding.

O’Brien expressed no particular confidence that Congress will adopt a new model.  He spoke of an American consumer trait, taking things for granted–“plentiful, high quality goods, delivered fast and cheap”–and made possible seemingly “like magic.”  Not willing to make it easy on voter or legislator, he said “it is actually about planning ahead and making big investments.”  The generation that built the interstate system did it.  “Now it may be our turn to pay the freight.”   Pbea

Rail Shows the Way to the Water

In MTS Policy on September 3, 2009 at 8:27 am
RiverRailRoad

Closing image from a CSX commercial

This is a compelling image but not necessarily in the way intended by the folks at CSX.

For good reason I’ve heard many people credit CSX for the quality of its television commercials.  Norfolk Southern and the collective Class I industry also have put up very effective ads that have been running for a few years.   The message is exceedingly simple.  On a ton-for-ton basis rail is a fuel efficient and low carbon-footprint way to move lots of freight now traveling on the highways.

The ads are shown repeatedly in this D.C. market because this is where policy makers and influencers are.   The railroads want Congress to approve a targeted 25%  tax credit for their infrastructure investments.  They also know that new climate and energy policies could affect their bottom line.   So the industry is investing  millions to instill a favorable public image.  It is working.  Green groups are lobbying for more freight trains and fewer trucks.

As an admirer of the ad campaign I use this image in presentations about the need for marine highway policy.  The ad accomplishes two things for those of us who think that the even greater efficiency of marine transportation deserves equal attention.

First, it graphically reveals the availability of waterside capacity for the surface transportation system.  It is hidden capacity, metaphorically speaking, when early in the commercial the focus is on containers lifted from the congested roadway to the nearby train.  Then our last view is of a waterway so uncongested as to be empty of vessels.

Second, it serves as a challenge to the maritime industry, which  can top the railroad claims about fuel efficiency.   The tug and tow companies have undertaken a modest general ad campaign to carry that message.  However that AWO effort is the only one.  The present and future marine highway–including the capacity of ships to carry trucks themselves–remains a hidden asset because the larger industry isn’t telling the story.

There is no comparing the resources of the rail and barge industries.  So don’t look anytime soon for a comparable televised promotional effort by vessel operators.  Nor have I seen signs that the broader maritime sector is ready to pool resources to promote the marine highway to Washington.

If the public and the policy makers are to learn about the advantages of marine transportation and the potential for addressing some of the nation’s growing transportation challenges it will happen when the maritime sector comes together to carry that message.   The railroads can’t be counted on to place more subliminal maritime messages on TV.  Pbea

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