Marine Transportation System

Posts Tagged ‘marine highways’

Bottom Line Thoughts on the MTS

In Congress, Federal Government, Infrastructure, Marine Highway, MTS Policy, Ports on September 17, 2013 at 11:30 pm

AASHTO, the association of State DOT chiefs, issued this summer the last of its “bottom line” modal reports. This one–Waterborne Freight Transportation–is a useful addition to the studies and papers that indicate a marine transportation system in great need of policy attention. It is not that the MTS is in failing condition–certainly not that part engaged in international commerce–but “the very success of the MTS has masked serious underlying structural problems” that, if left unaddressed, “pose critical threats to the long-term health of the MTS and the nation as a whole.”

The report notes that unlike the American interstate highway system the MTS “has evolved without larger scale coordinated policy and planning.” Indeed the ports and related infrastructure and services that developed without a “master plan” make the MTS a “collection of competitors.”  Persons who follow action in the ports of Charleston and Savannah, both overseen by State port authorities and championed by their respective State legislatures, can be fascinated watching that competition in real time.

The AASHTO report, the focus of which lands principally on the MTS infrastructure, identifies areas requiring attention. Waterway maintenance needs are not being met, navigation projects often take far too long to accomplish, funding for MTS expansion needs is uncertain, national investments are not being effectively targeted to meet national needs, and responsibility for the MTS in official Washington is widely diffused.  That last item can be easily understood by looking at the “comprehensive matrix” spreadsheet on the CMTS website.

In a statement that could apply to maritime elements of the private sector as much as it most definitely does to government policy, the AASHTO report offers this bottom line thought: “Embracing business as usual will inevitably lead to significant further declines in MTS condition and performance, and to lost opportunities for our transportation system and economy.” Today, former Pennsylvania Governor Ed Rendell, the nation’s inconvenient truth teller on matters infrastructure, and National Association of Manufacturers CEO Jay Timmons used the Philadelphia port as a backdrop for a similar message that is bolstered by a survey of manufacturers. “Improving our ports, highways, and bridges is essentially an economic driver. Modernized ports and transportation systems enable American manufacturers and businesses to export their goods to countries around the world, which strengthens our economy here at home,” said Rendell.

Much of that message in Philly and the AASHTO report is centered on international commerce, understandably. Ports and their modal connectors enable U.S. exports to make it to other markets in competitive fashion. They also speed imported goods to Costco shelves and components to American assembly plants.

One had to look for it, but the AASHTO “bottom line” document also makes the suggestion, however briefly, that the MTS can play an increasingly important role stateside. With reference to the potential for Marine Highway freight transport the document notes that “with growing highway congestion, waterborne transportation becomes an even more attractive transportation alternative.” It concludes with the statement that “[w]aterborne trade and transportation will be cornerstones of the 21st century economy.”

Among the actions called for in the report is the establishment of an office of multimodal freight at USDOT, an oft-made recommendation by various stakeholders and in the reports of appointed and self-appointed commissions. Among the tasks of the office would be to create a “system map and classification of MTS facilities, analogous to the National Highway System and the National Freight Network.” Congress specified in MAP-21 that the designated NFN be highway only, a decision that reflects more the congressional committee jurisdictions and the “highway bill” tradition than it does the multimodal operating freight sector. (A recently introduced House bill, H.R. 2875, grandly named the “Waterfront of Tomorrow Act,” would amend MAP-21 to “ensure that ports and harbors are incorporated into the national freight network.”)

The recommended freight office would also be used to prepare a “long-range vision plan for the national MTS development and investment to meet national transportation and economic development objectives.” The report also calls for full utilization of Harbor Maintenance Trust Fund monies for navigation infrastructure maintenance as well as an exemption from the Harbor Maintenance Tax for “domestic Marine Highway services.”

These recommendations are pointed in a constructive direction. But there is a missing element in the report. More significantly, it also is missing from the national transportation policy discussion on Capitol Hill, in those many departments and agencies tagged on the CMTS spreadsheet, and in the White House, then and now.  What is missing is visible interest in what the national maritime policy need be. The weakest element of the multifaceted American marine transportation system, oddly enough, is marine transportation. The long, sloping trend line representing flagging support for U.S.-flag merchant shipping, an aging Jones Act coastal fleet that frustrates Marine Highway development, and a shrinking ship building sector needs to be reversed.  It’s far from being the cornerstone of the economy that it once was and perhaps still can be.  Pbea

“What’s Taking So Long?”

In Marine Highway, Surface Transportation Policy on January 31, 2012 at 12:57 am

I filed a version of this with the good folks at the Connecticut Maritime Coalition whose Deep Water Port notes newsletter carries my perspectives from Washington…

A few years back the trade press started asking from their columns and story headlines why it was taking so long for marine highway progress—on the water and in government.  To some extent the questions “why” and “when” reflected skepticism and an understandable response to some of the slam-dunk rhetoric that advocates used in the first years of the last decade. The advocates’ logic was simple: Roads are congested; water is not. New highways are expensive; water is free.

Of course, it’s not that simple. (Just as the argument that Jones Act = No Marine Highway is too pat a dismissal.)

Even long-time marine highway supporter Clay Cook asked impatiently—and not without cause—in last year’s May/June Maritime Executive whether USDOT marine highway program efforts were “dead in the water?”

What is taking so long?

On the business side it doesn’t help that the economy went into the tank.  Cargo and freight volumes dropped. Capital became scarce. People and companies ducked into secure holes, stopped spending and started stuffing the mattress. Then there was the rapid rise of diesel prices only to drop just as marine efficiencies started to look attractive.

But that hardly explains it all. Modal shifts don’t happen on a dime. Yes, trucking has its challenges but driver shortages and HOS regs alone don’t steer companies to the water. Besides, intermodal rail has been doing very well and can be expected to be even more competitive in offering services to trucking.

One thing is simple: marine highway service has to make sense in economic and logistics terms to the folks who control the cargo.  Some truckers and shippers have said in public forums how water transport does make sense for their businesses. They even qualify as MH advocates. Their numbers can and will grow but more needs to be done to make the prospect for marine highway service more real and the information more available.

A few more operations on the water could make a difference. The long awaited M-580 “Green Trade Corridor” COB service between Stockton and Oakland will be up and running in a couple months. On the government side of things we also will see some steps that could make a difference.

  • In early February House Ways & Means will hold a hearing on maritime tax issues including a Harbor Maintenance Tax exemption for domestic moves of non-bulk cargo and the tonnage tax, which presently can frustrate the start of marine highway services. The chair of the subcommittee, Pat Tiberi (R-OH), is also sponsor of the exemption bill, HR 1533.
  • Related to that is the pending House Surface Transportation bill that may carry the HMT exemption legislation in a first ever “maritime title” in a surface transportation authorization bill.
  • The Navy/MARAD “dual use” project should get interesting in the coming months. Herbert Engineering’s October 28th report for MARAD, coordinated with market and operation studies, is a guide to vessel designs that could work for the commercial and, when needed, national defense markets. The strategy to replace the tired RRF with new, commercially viable ships is hinged on MH development taking off.  New incentives to help marine highway services to capitalize and get off the ground may be part of a dual use package considered within the Administration.
  • The M-580 project benefited by Federal capital grant money as have some other MH related projects.  Don’t expect marine highway program grants to be issued this or next year but USDOT is announcing a 4th round of TIGER grants (Notice of Funding Availability to be published January 31, 2012.)  Watch for MH related proposals.
  • Also, let’s not forget that the MARAD funded market/business plan studies for M-5, M-55 and M-95 corridors are to be released in the next few months.

None of the above presently qualifies as full fledged game changers but the potential is there. There is more to come on the marine highway story in 2012.  Pbea

Time for a Maritime Title

In Intermodal, Marine Highway, MTS Policy, Surface Transportation Policy, Water Resources on January 30, 2012 at 1:16 am

In a few days we will see if there is a maritime title, or section, in what is traditionally the highway bill.  What’s that, you say?  You heard right.

Back in July 2011  House Transportation & Infrastructure Committee Chairman John Mica (R-FL) let us peek at the planned contents of the surface transportation bill that finally will get its debut in committee on February 2nd.

That summary, aptly named A New Direction, included a description of maritime transportation provisions, which would have as much symbolic as substantive significance for those of us working the water.  Including a few marine transportation provisions in the once-in-a-decade highway and transit legislation could prove to be a foot-in-the-door for more of the same when the next big surface bill comes along.  (Some of us impertinently suggest that marine transportation in fact is a surface mode…the wet one.)

But one can argue that the foot has been in the door for quite some time.  The passenger-oriented Ferry Boat Discretionary Program has been the lone marine transportation element in surface transportation policy and program since 1991 and the landmark ISTEA. Interestingly, the ferry program is managed by the Federal Highway Administration–a fact that some folks in the Maritime Administration probably still have difficulty acknowledging–because that is where the money is.

John Mica has for years talked about having a transportation “vision” that is intermodal, multimodal and makes greater use of the maritime.  The Chairman’s intentions revealed last year with regard to a maritime title included three basic objectives:

  • Ensure full use of the Harbor Maintenance Trust Fund resources; only 60 percent of annual revenues are appropriated for channel maintenance.
  • Encourage  more maritime related activity including “short-sea shipping” by exempting cargo from the Harbor Maintenance Tax when moving between US ports.
  • Improve Corps of Engineer civil works project delivery.

This week the committee will meet to produce the bill.  There may be a maritime title with some placeholders to be added later.  Here’s what we see in our crystal ball:

  • The Corps project piece is not expected to be in the bill.  Such typical WRDA subject matter may be held back more as a matter of legislative strategy than anything.
  • Jurisdiction over the particular legislative remedy for the HMTF issue–contained in HR 104–is shared with the House Rules Committee where there is opposition to the so-called RAMP approach.  Appropriators are fighting it as well.  If RAMP isn’t included in the bill it won’t be for lack of trying by many stakeholders in the port navigation sector who have encouraged over 150 legislators to co-sponsor.
  • Maybe the topic that has the best chance of getting in the new maritime title is the HMT exemption for non-bulk cargo. But because the subject is within the jurisdiction of the Ways and Means Committee Mica’s transportation panel is expected to defer to the tax committee on bill language (likely to look like HR 1533).  So keep an eye on the Ways and Means hearing to occur this Wednesday. The HMT and HMTF issues will be heard and when that committee later meets to take up the transportation bill’s tax-related provisions we may find the HMT provision added.  (The subject of the vessel tonnage tax also is to be brought up at the Wednesday hearing.)

It looks like a maritime title will have, at best, a couple provisions. But if by the time the surface transportation measure goes to the House floor its 1000 or so pages include a maritime title–maybe only a wet highway provision to go with the dry highway ones–we should take a minute to savor a small provision and an encouraging direction for transportation policy.  Pbea

Make Time for Maritime Policy

In Federal Government, Marine Highway, MTS Policy on July 2, 2011 at 11:37 pm

The piece below appears in the June 2011 edition of the Eno Transportation Foundation newsletter, EnoBrief.  I appreciated the invitation to pen something on a maritime theme and decided to continue on the topic of American maritime policy, which is in need of attention.  Comments are welcome.  Pbea

“Now, what about our national maritime policy?” posed Norman Mineta in 2007, no longer Transportation Secretary, before answering himself. “Frankly, it is comparatively meager and unfocused.”

In his remarks to an industry finance audience he drew comparisons to the other modes that are more completely housed at USDOT, underpinned by substantial programs and funding, and enjoy large, strong and active stakeholder bases.

The former cabinet officer and present day Eno Board member’s prescriptions to address the sector’s ailments included things that might explain his waiting to address this “comparatively meager” sector only after he was out of office.

He said his recommendations can be accomplished “by overcoming the inevitable opposition – not only from without but from within.” He continued, “Within the maritime industry there are many agreements of mutual mediocrity.  People…will not want to see it changed.  The ground is shifting under their feet and they imperil needed financial investment and the innovation and the efficiencies it brings.”

He also mentioned some difficult issues that “need to be addressed within the industry” but “they are not reasons to oppose raising the importance of maritime issues on the national agenda.”

Secretary Mineta thought there was reason to issue an urgent call.  “Compared to the resources and focus that we have devoted to surface transportation and aviation, I believe we must quickly and dramatically increase our attention, our funding, and our national purpose with respect to maritime issues.  To fail is to become a second rate economic power with a decrease in our quality of life here at home and a reduced ability to effect change in international affairs.

“Simply put:  the United States must develop a comprehensive maritime policy and implement it through a thoroughly reorganized federal structure.” He said the public sector “must work with industry stakeholders to educate American citizens and their decision makers regarding U.S. reliance on a strong national maritime system.”

Four years later his concerns about maritime policy still deserve consideration.  And while Secretary Mineta’s remarks did not dwell on the issue of “ships and crews” the vessel aspect of present policy also warrants attention, especially if marine transportation is to play a role in addressing some of our nation’s transportation challenges.

The declining American flag presence in foreign commerce is being examined by the House Transportation & Infrastructure Committee, which prompted USDOT to commence a study, soon to be completed, to quantify the competitive disadvantage of American shipping.  Facing a competitor that flies flags of convenience, builds ships in China and Korea, and hires low wage crews the American operators will always find it tough to capture market share.

So let’s drill down to examine the protected American market. Not surprisingly, much of the Jones Act trade is carried in dry and liquid bulk vessels that lend themselves to commodities like grain and petroleum.  As for container shipping, the Jones Act fleet has only 26 vessels in service with a total carrying capacity of 56,631 TEU.  Most of those are in the Alaska, Hawaii and Puerto Rico trades. Sixty-eight percent of American container vessels (including barges) are at least 26 years old with 41 percent exceeding 30 years. (One can’t resist noting that a major program at the Maritime Administration is managing the disposal of U.S.-flag vessels.)

Meanwhile the capacity of U.S. commercial shipyards to build container and roll-on/roll-off ships is rapidly diminishing.  The Aker Philadelphia Shipyard is surviving for the moment on an emergency injection of State funds to build to ships on spec.  Aker, General Dynamics’s NASSCO Shipyard (CA) and Bay Shipbuilding (WI) announced layoffs last year. All 5,000 jobs at Northrup Grumman’s Avondale facility (LA)—a defense shipyard that could convert to commercial construction—are slated to end in 2011.

Why talk about U.S. container and ro/ro ship capacity?  Secretary Mineta, his successors at USDOT, and others have suggested that marine highway development is not only needed but inevitable for goods movement here.  The reasons include the mode’s inherent efficiency, its intermodal capabilities, public benefits to be derived from shifting part of the growing freight burden from land routes, and the extensive use of short sea and waterway service in other developed nations. Congress acknowledged as much by enacting the “short sea transportation” provisions of the Energy Independence and Security Act of 2007.

But to realize any of the above benefits—not to mention the renewal of a shrinking industry—these are needed: 1) a modern Jones Act fleet capable of meeting tough emissions standards effective in 2012, 2) cost-competitive commercial shipyard capacity to build the fleet, 3) vessel financing, 4) sufficient trained seamen and officers, and, let’s add, 5) a clear signal that Washington does not want America to lose its capacity to move goods on the water.

This telling is absent a call for or against Jones Act strictures. There are arguments for the status quo and for alteration.  But, as Secretary Mineta might say, the existence of the Jones Act in a world where cabotage requirements are commonplace is not reason “to oppose raising the importance of maritime issues on the national agenda” and reversing a decline in the American maritime sector.

“Now, what about our national maritime policy?”  

HMT Exemption: Just What the Dock Is Ordering

In Infrastructure, Intermodal, Marine Highway on April 25, 2011 at 11:24 pm

It is good to see that some U.S. House Members reintroduced legislation to waive the Harbor Maintenance Tax for cargo so as to remove a disincentive for use of American Marine Highways.

It is also good to see that the bill’s sponsor is Rep. Patrick Tiberi (tea-berry), the chairman of the Select Revenue Measures Subcommittee of the House Ways & Means Committee, the panel with jurisdiction.   The bill’s original co-sponsors are Steve LaTourette who, like Tiberi, is a Republican from Ohio, and Democrat Brian Higgins of Buffalo, New York.

The bill is H.R. 1533, a revisiting of the Higgins bill of the last congress. Mr. Higgins, now that the Democrats are in the minority, welcomed a colleague from the majority party to be the principal sponsor.

As written the bill would exempt non-bulk cargo from the HMT when moving between two U.S. ports or between the U.S. and Canada on the Great Lakes/St. Lawrence Seaway system.  In contrast to some other versions of the bill in recent years the Seaway system is defined to include Nova Scotia.  For some that extends the HMT break a bit too far beyond the mouth of the St. Lawrence River.  Others, starting with the Great Lakes representatives whose bill it is, like the idea of having Halifax and the proposed Melford container port in the mix.

Nevertheless, advocates for marine highway development are pleased to see the first bill of this sort introduced in the 112th Congress and will work to see the measure advance in the House and the Senate.

An HMT exemption is not a guarantee of success for those who would carry cargo in domestic and Great Lakes moves.  The HMT cost to shippers is only one aspect of the cost of shipping and one factor in a decision to use marine transportation over a land route.

But removing it as a cost and administrative detail could make a difference in that decision by a beneficial cargo owner or a trucking company that might want to add the water option to its services.  And removing it would also be a further signal of a shifting policy view that see public and private benefits in encouraging use of underutilized freight system capacity. Mr. Higgins has it right:  “We want to again make waterways business-friendly, promoting the robust flow of goods and the creation of quality jobs.”

Those who agree with that sentiment would do well to encourage additional co-sponsors or the introduction of like measures to add to the call for action on the HMT.   Pbea

I’m Dreaming of a New Congress

In Federal Government, Intermodal, Marine Highway, MTS Policy, Surface Transportation Policy, Water Resources on January 4, 2011 at 12:25 am

The new two-year Congress commences on January 5th and it promises to be different in ways beyond the changed list of sworn-in men and women.

In fact I think that we could see the start of some structural changes in Washington and maybe…just maybe…something good could come out of it.  Am I betting on it?  No. Washington is too fond of the fetal position.

However this time issues of a more fundamental nature are getting attention.  Those issues have been around for a long time, long before ARRA, TARP and the big dollar spending and tax cuts necessitated by the severe drop in the economy.  And it appears that some spines were stiffened in the last election and not just on the Republican side.  There appears to be more universal acknowledgment than ever before as to:

  • Growing entitlement programs that dominate non-defense spending and with predicted revenue shortfalls.
  • A large defense budget we can’t afford to leave off the table when cutting spending.
  • A tax system in need of a significant overhaul and simplification.
  • An infrastructure policy of disinvestment that makes our transportation less efficient and dooms us to second place status in the world economy.
  • Our economic and national security in the hands of oil producing countries most of which, at best, do not share our democratic values.

There is a potential for consensus that could slowly build around putting in order the nation’s fiscal house and addressing other policy deficits.  It is possible.  (Then again I thought it was reasonable to expect the Giants to take on the New Jersey label when they made the move to the Meadowlands.)

Still, hope persists because those are serious problems that undermine our long term competitiveness.

Closer to home…there are comparatively smaller issues that are fundamental in their own way and deserve attention in the new Congress.  Wading into the policy weeds, here are some things I would like to see Congress address over the next two years:

  • A vigorous marine highway program built on the converging imperatives to reduce petroleum consumption and emissions in the transportation sector.
    • Leverage private investment dollars in new vessel construction and incentives for users of blue and brown water service.
    • Encourage State initiatives to adopt marine highways as elements in the interstate transportation system.
    • Waive the Harbor Maintenance Tax for intermodal cargo moving in the domestic trade.
  • Improving understanding of marine transportation and the contribution it makes and, even more, can make.
    • Examine what is needed to update a US maritime policy to enable the private sector to break the cycle of decline and the public sector to incorporate US flag shipping in surface transportation improvements.
    • Improve funding and human resources for the Maritime Administration, which remains a lesser modal agency in the USDOT family.
    • Renew the effort to coordinate and elevate maritime related issues among the many agencies including more buy-in by USDOT, the one department that has the most to gain.
  • Fixing Federal water resources policy, especially as regards navigation.
    • Ensure port channel maintenance funding on a par with Harbor Maintenance Tax collections.
    • Fix the too-long flawed, too-long Federal (WRDA) process of planning, funding and constructing navigation projects.
    • Distinguish between frivolous earmarking and the prosecution of fully vetted navigation projects that provide economic security in most regions of the country.

The difference between the list above and the list below is that the latter is more politically doable…if Congress and the Administration would pay it attention.   Pbea   (this entry is a revised version 1.4.11)

Shipping The T. Boone Way

In Efficiency, Energy/Environ, Green Transportation, Marine Highway on November 2, 2010 at 10:43 am

T. Boone Pickens and I have something in common.  You probably do, too.

The uber-capitalist wants to end our nation’s dependence on foreign fuel sources.  Especially those nation sources that love to take our money and use it to cut US off at the knees.

No doubt T. Boone has an uber-financial interest in domestically produced energy through wind turbines and natural gas.  But let’s give the guy great credit for hitting the road and taking what is an urgent policy campaign to folks around the nation.

Although he doesn’t mention it in his plan, I think T. Boone would give a thumbs-up to LNG fueled ships.   Here are a few notes to add to an earlier post at this address.

With IMO limits on emissions facing the sector, and a tougher emission control area (ECA) regime adopted for the US and Canada starting 2012, natural gas powered ships should be in the mix.

Heavy fuel oil is not an option for future shipping within ECAs. Alternatives have to be introduced. A DNV study concludes that LNG is the obvious alternative to satisfy future ECA requirements, particularly for the short sea shipping.  (DNV item and link to a presentation are here.)

MARINTEK  - the Norwegian Marine Technology Research Institute – does research, development and technical consulting in the maritime sector.  A 2009 presentation on the Norwegian experience with LNG fueled ships is interesting reading.

In China (of course)…

The company succeeded in fueling a tugboat weighing over 300 tons with LNG for Wuhan Ferry Company. The ship now runs on a fuel formula of 30% diesel and 70% natural gas, representing significant energy and cost savings.  The Chairman of the board & CEO of the company, Qinan Ji, said. “This achievement is a big step in the history of China’s new energy industry and will contribute to environmental protection and reduce energy consumption. The marketing of LNG-powered ships will be implemented on a full scale in the forthcoming years.“ (Marine Link, August 8, 2010)

And from the pens of college students…

DNV CEO Henrik O. Madsen, said: “I was very impressed to see what the students presented here today. At times I have found it difficult to understand why the shipping industry has not switched to LNG – given the great commercial and environmental advantages. Today, with their presentation the students have provided ship owners with a blueprint, showing us all that it is 100% realistic to overcome the challenges with regard to LNG as fuel.”  (Ship Management)

I would rather not add LNG powered ships to the long list of things on which America ranks twenty-something—or last—in the world.  And as a matter of law we can’t buy Chinese vessels to work the American coastline.  So, what say, gang, let’s build them here!

LNG is a natural for coastwise shipping, less so for trans-oceanic vessels.  American start-ups including Coastal Connect, American Feeder Lines, and Intermodal Marine Lines see a role for natural gas in powering the modern vessels planned for marine highway service.  They intend to provide prospective customers with cleaner and highly efficient transportation options.

A few months ago the natural gas industry focused their monthly Washington roundtable luncheon on LNG and the maritime sector.  It was well-attended with a few of us maritime folks also in the room to hear John Hatley of Wartsila North America.  Now there are obvious regulatory and distribution issues to be addressed.  But sitting there, surrounded by a US industry group that knows little of shipping and a lot about natural gas, I realized that comparatively smaller US maritime shipping sector could have a major lobbying partner to advance innovative US-flag shipping if we only were willing to engage.  What do you say, Mr. Pickens?  What do you say, Washington?   Pbea

We’re Just Getting Started

In Marine Highway, MTS Policy on October 8, 2010 at 10:04 am

[This first appeared in the America’s Marine Highway website and newsletter.]

Advocating for the AMH: We’re Just Getting Started

If we’ve learned anything about the developing American marine highway it is that it is developing incrementally and slowly.  A few nice-sized steps but no big leaps.

I have little doubt that the market will eventually demand greater use of the marine mode for domestic goods movement as the limits of landside capacity reach an economic tipping point and the imperative strengthens to use less fuel and produce fewer emissions. But the question to ask is whether it is wise to wait.  In 2007 Congress answered the question…sort of.

In a multi-faceted “energy independence and security” bill the energy efficiency of the marine mode was recognized. With the signing of Public Law 110-140 Washington said that it would be to the nation’s benefit to make greater use of coastwise and inland marine transportation. The U.S. Department of Transportation was handed a program outline and a few tools. It was told to return to Congress with recommendations as to any additional things that might be done to make it work. (No report as yet.) Then in 2009 Congress gave its approval to a grant program and appropriated a modest sum of $7 million.  [Note: since this writing grants were awarded.]

This year USDOT finally stepped up to implement that new policy and program. In August some projects were designated as eligible for grant funding and others were identified as “initiatives” to be encouraged.

The starting gun sounded on the American Marine Highway program…thus also signaling one of very few opportunities to improve the outlook for U.S. flag shipping.

There’s much to be done here in Washington. Federal funding is not the be-all and end-all of the marine highway program but it is crucial. Funding is how policy intent is measured in Washington. Is the $7 million the start of a serious effort or just flash-in-the-pan funding? Without an AMH budget for the Maritime Administration it will not have the program and staff resources to do much of anything in the next years. Without funding for AMH grants the Federal program will seem toothless. States and other transportation planners will ignore it. Start-ups may go only a short distance for lack of resources to secure that needed barge or crane.

Likewise, the policy provisions signed by President George W. Bush in 2007 are just a toe in the door. The next Congress should look more deeply into how marine highways can contribute to the overall transportation system and then decide what to do about it and the shipyard infrastructure needed to support it. I think there is plenty the legislature and this change-minded administration can do about it.

The next year or two will be a critical period that will decide if the new marine highway policy is to be taken seriously. Grant funding in FY 2011, commencing October 1, is unlikely, but it need not be a serious blow to the marine highway effort. For starters, we need to work to secure funding in the FY2012 budget and strengthen interest among policy makers.

Progress in the next years may continue to come in small increments along with an occasional large step. It is not easy to turn around business thinking about logistics or change attitudes in government about the role of domestic waterborne shipping but it can be done. Whether the marine highway effort in Washington falters or advances will depend on how strong and effective is the advocate crew…those of us who want to see more stars and stripes flying on the water.  Pbea

What Are We Doing?

In Efficiency, Infrastructure, Intermodal, Surface Transportation Policy on October 7, 2010 at 10:09 pm

Canada announced a waiver of its 25 percent import tariff on general cargo vessel, tankers, and ferries longer than 129 meters.  The decision will save shipowners $25 million per year over the next decade.

“This duty relief will accelerate the renewal of the Canadian marine fleet across the country and will help replace aging vessels with cleaner, safer and more efficient ships,” said the Chuck Strahl, Minister of Transport, Infrastructure and Communities.  “All the while, it will build on unprecedented investments our Government has made in Canada’s infrastructure and gateways by contributing to the upgrading of marine transportation links across the country.”  (Marine Log, October 4, emphasis added)

The announced tariff initiative should bring into the Great Lakes newer and more efficient competition for the existing commercial fleet flying the US flag.  Perhaps it will stimulate new shipping activity on the Lakes, which would be good.  Ships will move goods more efficiently to the benefit of energy savings and air quality.

If you have the feeling that our friends to the north are thinking and acting strategically, with an eye to the large American market, it is because they are…as they should.

Will Washington watch and learn?  Or will the dusty ol’ status quo continue to be good enough  for US?  In using this most recent example of Canadian initiative I refer to nothing so specific as Jones Act requirements but, broadly, to the insufficient attention and action to address the glaring need here, especially on the marine transportation system.

Much is known as to the general direction of the Obama Administration’s thinking on transportation policy—passenger rail, public transit, livable communities, sustainability, etc.—if not about detailed proposals.   But when it comes to goods movement little has been said.

Officials at USDOT acknowledge having been slow to focus on the subject of freight.  Early on there was the view that the heavy volume of international cargo ramping onto US highways and rails was the sort of thing not meriting Federal attention–”making imported flip-flops even cheaper” was the oft quoted line–as if that were the sum total of goods movement pressures in the country.   The thinking since last year boiled down to the notion that the freight sector will take care of itself, as Transportation Under Secretary for Policy Roy Kienitz acknowledged last week.  The private sector nature of goods movement could lead one to that view, I suppose.

However, Roy Kienitz went on to indicate that more thought is going into the subject now.  He said that a presentation by Canada’s ministry of transportation on their gateway strategy made a strong impression on him.  The strategy is a public/private initiative.  He noted it is intended to attract more North American import/export trade through their British Columbia and Atlantic ports and thus make Canadian operations significant players deep into the American Midwest market.

In the Canadian initiative he can appreciate how government can play an important role working with the freight sector.  Hopefully USDOT also understands that the American transportation sector can lose business if we just sit and watch while others press ahead.

In fairness, a good percentage of USDOT-issued TIGER grants went to rail, marine highway and other freight related projects earlier this year.  We take that as a positive sign.  But the longer it takes official Washington to actually do something structural about America’s aging infrastructure, the capacity to handle growing freight volumes, and a listless maritime sector the more ground we lose.

The examples of strategic planning and investing abound around the world including just north of here.

What are we doing down here?    Pbea

Raising the U.S.-Flag

In Marine Highway, MTS Policy, Surface Transportation Policy on September 7, 2010 at 11:13 pm

The lead on the June 21st American Shipper story caught the eye.  The chair of the House Subcommittee on Coast Guard and Maritime Transportation “says government programs aimed at helping the U.S.-flag fleet ply foreign trades have been a failure.”

“We have frankly struggled to find the policy that would truly improve and strengthen the U.S. marine transportation system…that would ensure we continue to have a robust merchant marine,” said Chairman Elijah Cummings (D-MD) in a private session with the Federal Maritime Commission.

On July 20th Chairman Cummings held a hearing on the subject.   He repeated his concerns about the state of the American industry in international trade and told MARAD Administrator David Matsuda that something should be done.

Some of the witnesses focused their testimony on the existing U.S.-flag programs—the Maritime Security Program (MSP) and the cargo preference program.

Administrator Matsuda cited numbers that summarize the industry’s decline.  He noted that the once substantial U.S. merchant fleet “created many of the technological innovations now used by the rest of the world” then stated this depressing fact:  “However, U.S. maritime programs have not been successful in inducing or even maintaining capacity within the Nation’s domestic merchant marine. “

Chairman Cummings told Matsuda, “We…should work to formulate a meaningful U.S. maritime policy that will revitalize our merchant marine and expand the percent of U.S. trade carried in U.S. ships.”  He wanted the MARAD to return with some ideas.

Given how long it is taking USDOT to unveil long overdue surface transportation recommendations–in part due to the White House aversion to talking revenue measures–one might imagine the subcommittee chairman waiting a little while for a new administration maritime initiative.

Here’s an idea.  Suggest to Congress that the place to start revitalizing the U.S. merchant marine is here in U.S. waters.  Rather than try to formulate a new policy by which U.S.-flag shipping can be competitive in the Asian trade, we should develop an ambitious initiative for the nascent and inadequately resourced American Marine Highway program here at home.

It is good to hear Chairman Cummings raise his concerns.  Whatever can be done to invigorate the U.S.-flag sector is worth considering.  It certainly is long overdue.

I will borrow words used by former Secretary Norman Mineta in a December 2007 speech about the broader U.S. maritime sector.  “Compared to the resources and focus that we have devoted to surface transportation and aviation,” Mineta said after having left the cabinet office, “I believe we must quickly and dramatically increase our attention, our funding, and our national purpose with respect to maritime issues.”

If there is an obvious opportunity to revitalize the maritime sector–one of this country’s earliest industries–it is in the short sea market, primarily the Jones Act trade, as part of a smart energy/environment/transportation policy framework.  If there is a way to give new life to the merchant fleet and bring U.S. shipyards to produce vessels for a new, greener generation it is through an expanded domestic market and a policy that takes the maritime sector half as seriously as Washington has taken other sectors of the economy.  Many of us would settle for half.   Pbea

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