Marine Transportation System

Posts Tagged ‘climate change’

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What Will This Congress Do?

In Congress, Infrastructure, Marine Highway, Politics, Ports, Security, Surface Transportation Policy, Water Resources on January 9, 2015 at 1:45 pm

Nearly a dime’s worth of days into the New Year, this is no time to rehash what happened in the last Congress. A new Congress—the 114th of our maturing nation—is now underway. And what a new Congress it is.

Republicans now rule Capitol Hill and veteran Senate Democrats are being reminded of how it feels to be called Minority. (Republicans have held the majority in the House and Senate more often than not in the previous 10 congresses, since 1995.) At the other end of the avenue is a president who has confronted more than his share of domestic and international crises. January is the starting gun for his latest test – working with the 114th Congress and its routinely unfriendly and uncooperative Republican membership. In that respect, so far, there is not much new about this Congress.

The leaders in the House and Senate themselves face internal and external challenges as they assume on behalf of their caucuses the collective role of governing. Politico used apt “cliff” and “landmine” metaphors for what faces Speaker Boehner (R-OH) and Majority Leader Mitch McConnell (R-KY) as they advance legislation through their own caucuses. The leaders know that the GOP is well positioned to turn around the “do-nothing Congress” label that the Republicans made possible—even intended—over recent years. (Yes, the dethroned Harry Reid hardly facilitated the legislative process in the Senate but Messrs Boehner and McConnell are faced with colleagues in the rank and file who came to Washington to stand in the way of government. Twelve Republicans found reason to vote against returning Boehner to the Speaker’s chair, as if he is didn’t well serve the cause(s) of conservative Republicans.) This go-round Democrats, with little control over committees, the bills they produce, and the floor schedule, will not be plausible scape goats for a failure to legislate. And in the Senate McConnell may be 6 votes shy of a filibuster proof majority but he has a pool of moderate Dems and an Indie who are potential “ayes,” such as we will see with the upcoming Keystone XL vote.

The success of a legislature is measured by legislative productivity. Can this Congress be productive with the Obama White House, which has vetoed exactly two bills in the past six years?

As previously noted, President Obama also will be tested. How well he will deal with the new Congress, his constitutional partner in making law? No doubt we will see more vetoes in his last two years in office but his legacy will depend more on what is accomplished than what he blocked.

In other words, they need each other. Few points will be awarded if progress is not seen in Washington. So, the question is whether the president can find within him the resolve of Bill Clinton, who famously made lemonade out of the GOP blowout of 1994, and whether the Republicans will function as if they want to be remembered as the “did-something Congress.”

All of that is background to a rundown of just some of the issues and questions that are of interest to the port/maritime industry and the larger freight sector.

The president put his previously stated policy view into surprise policy action with his late December announcement on normalizing diplomatic relations with Castro’s Cuba. Any number of ports, exporters and others were pleased by the news. There is bipartisan support among some in the House and Senate but Congress will either come down hard on the White House initiative or, rhetoric aside and with an eye on what Castro might do in the months ahead, show a willingness to reconsider the long-standing trade embargo that can only be ended by a change in law.

Last year, Congress came close to hitting the “target” of spending $1.2 billion from the Harbor Maintenance Trust Fund. The enacted water resources law (WRRDA 2014) sets ambitious, incrementally higher targets for Congress to meet with funding for channel maintenance and other work authorized to be supported by trust fund monies. Will the Republicans, as the saying goes, “put trust back in the trust fund” or continue to allow the Harbor Maintenance Tax assessment on cargo to be used as general revenue applied against the Federal budget deficit?

Last year the House and Senate produced a “sense of Congress” statement generally in support of the US-flag and Jones Act sectors. It can be interpreted as reaffirming existing maritime policy. Around the same time John McCain (R-AZ) reaffirmed his own maritime policy to undo the Jones Act in a speech to the Heritage Foundation. He and the petroleum industry actively urge changes to current law, which is to say, the end of the Jones Act. Meanwhile the Maritime Administration and the Secretary of Transportation will steer a draft National Maritime Strategy through the policy and political wringers of the White House. What will that document say about Administration policy and what if anything needs to be done to improve the US merchant marine or American ports?

In 2015 Congress will have to tackle surface transportation policy and funding. Will it include real money to renew freight corridors and build new infrastructure to support modern, intermodal commerce? Will Congress bite the bullet and find the money to pay it or, for that matter, to save the failing Highway Trust Fund? Past refusal by Congress to tackle this issue has depressed road and transit funding and been a principal expression of austerity economics—advocated by most Republicans, but abetted by many Democrats who also have avoided new revenue proposals—during a time when the country was climbing its way out of The Great Recession. Should this Congress produce a transportation bill that only perpetuates an inadequate level of funding and papers over the structural deficiencies of Highway Trust Fund financing it will not make for a convincing accomplishment.

The issues that may arise in the new Congress are many. Committees are establishing their work plans for the year ahead. What will the Republican majority serve up in the way of budget cuts and appropriations? Will a uniform ballast water policy finally become law? Will the TWIC reader rule that seems to assume container terminals to be at a lesser risk be implemented without alteration? How will Title XI vessel financing fare and will marine highway policy wither from inattention? Will Congress see a Federal role in helping ports, cities and businesses plan for rising sea levels and assist in improving waterfront infrastructure for the coming decades? Will the Coast Guard prepare helpful guidance and rules on cybersecurity and will the industry actively engage in developing it? Will Federal policy foster clean fuel initiatives for the freight modes and encourage off-shore wind energy development? How will the committees answer shipper complaints about railroads? Will a Republican Congress and a White House Democrat come to terms on tax reform, infrastructure funding, and trade policy?

At bottom, how well do the legislators of the new Congress—both Republicans and Democrats—understand, and how will they respond to, these and other issues of relevance to the port/maritime sector?  Pbea

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Europe is Breaking the Egg

In Efficiency, Energy/Environ, Infrastructure, MTS Policy, Ports on October 5, 2014 at 11:16 pm

Before we get to John Graykowski’s “Europe is Breaking the Egg” I would like to pose my own chicken-and-the-egg question as one might ask it here in Wonkington, D.C. Which comes first: the policy or the strategy? One might also ponder how good is a forward looking strategy when the policy is of the past century. The Maritime Administration is preparing a “National Maritime Strategy.” It is a principal objective of Administrator Chip Jaenichen and probably has been encouraged by congressional supporters of the U.S. flag industry who, like most of us, have not liked seeing the merchant fleet decline but who, unlike us, are in a position to redefine U.S. maritime policy. The piece below begs the question whether a new national maritime strategy would benefit by first fixing the national maritime policy that for the most part has been in place while the United States lost its prominent role in world shipping. Certainly it would make it easier on Mr. Jaenichen and the Secretary of Transportation to have an updated national policy framework as a basis for new strategies to get to where we need to be. John Graykowski’s article first appeared in Pacific Maritime Magazine on September 1, 2014. You can find it here. He poses the policy question in the context of a growing American supply of natural gas and the multiple benefits to be realized by fostering a bunker switch to LNG. This is the third in his series for MTS Matters on the subject of developing LNG distribution infrastructure to advance the adoption of LNG as a marine fuel. It also is a recurring theme in these pages.  Pbea

We may soon be able to retire the tiresome “chicken and egg” cliché to describe LNG development, since there has been movement in the last year in Europe and the United States that indicates the circle may be breaking; but it’s too soon to tell whether the movement is temporary or permanent. What is apparent, however, it that Europe has moved forward in a more focused and strategic way, to create LNG infrastructure and markets, which is yielding results. By 2016, permanent LNG bunkering facilities will be in operation in Rotterdam and Antwerp – both among the largest ports in the world – thereby signaling that the supply uncertainties have been resolved. It bears asking, therefore, how Europe has done this, and whether we should consider similar measures here if the goal is to expand LNG as a marine and transportation fuel throughout the United States.

In 2008, Norway effectively made LNG the preferred fuel choice for marine operators through a combination of regulatory mandates relating to Nitrogen Oxide (NOx) and financial incentives covering up to 80 percent of the capital cost of the LNG-related components. Following these actions, the number of Norwegian vessels using LNG as a primary fuel went from 3 to 12 vessels in five years, with more than 50 vessels of various types now under construction along with the supporting LNG infrastructure. Concurrent with this, Norway is addressing the regulatory and operational issues, and is now seen as a leader in marine LNG development.

The European Union (EU) is also pursuing a comprehensive effort to increase LNG as a marine fuel with the goal of developing LNG infrastructure in every major seaport by 2020, and every inland terminal by 2025; a total of 139 ports across Europe. This goal coincides with estimates that by 2020, 1,700 dual fuel vessels will be built or converted worldwide, with many of these operating in, or calling on, the EU.

By 2020, the United Arab Shipping Corporation (USAC) dual fuel container vessels will be operating between the Far East and Europe. This activity will spawn additional interest and movement in Europe and among its global trading partners leading to a rapid transition from diesel to LNG as a major transportation fuel.

The EU is employing a “carrot and stick” approach combining financial support for the conversion and construction of vessels and infrastructure with increased regulation. Projects such as the Trans-European Network for Transport (Ten-T) and the Rhine-Main-Danube initiatives have produced significant results. $139 million has already been allocated to 7 Ten-T projects to support vessel conversion and LNG infrastructure development, with more funding promised. Support of up to 50 percent of project costs is available for vessel conversion, construction and infrastructure, and just recently the first inland dual fuel barge was delivered and will shortly begin operations.

The EU adopted an approach that combines: (1) clear and defined goals that LNG will displace traditional marine fuels; (2) increased environmental regulations; (3) financial incentives to spur the initial transition; and (4) coordination among ports, governments; regulatory agencies and stakeholders to create uniform regulatory structures. Given the intrinsic advantages of LNG, there is recognition that the market would likely drive toward greater adoption of LNG without assistance. However, many vessel owners and gas suppliers are reluctant to be the first to make the investments in LNG vessels and infrastructure regardless of the advantages. The EU has determined that these measures are necessary in order to reduce perceived risks, accelerate market decisions, and attain the stated goals for LNG deployment.

In contrast, the United States does not have a national policy to support LNG as a marine and transportation fuel. Instead, our LNG market is developing project-by-project, driven by first-adopters such as Harvey Gulf, Tote, Matson, and Crowley with no federal support or strategy; despite the tremendous benefits LNG offers to the country. While we have seen some movement in disparate locations, there is not so much as a policy statement that commits this country to the development of LNG as a transportation fuel; and there are certainly no programs to support the construction of vessels and infrastructure to make this possible nor to address regulatory uncertainties and enhance public acceptance of LNG.

The challenges and obstacles that exist here are no different from those in Europe, and LNG is new to everyone. It appears, however, that the EU has tackled this question in a more coherent, direct, and proactive way that is rapidly producing results. To be sure, there are major differences between the US and the EU in terms of governmental structures and processes. The EU can promulgate Europe-wide regulations and implement promotional programs, and has a history of doing so. Here, that role would be shared between Congress and the Executive Branch, and that is yet another challenge given the continuing dysfunction between both branches of government.

A policy declaring that LNG as a transportation fuel is in the national interest, and committing to the support, promotion and encouragement of its development would have several immediate effects:

  • It would be a clear signal to all potential stakeholders that LNG is “real” and has the backing of Congress and Administration;
  • It would put federal agencies on notice – and could require them– to collaborate with industry on practical and uniform regulation, reduced delays and greater certainty; and
  • It could include limited and temporary financial incentives such as loan guarantees or tax incentives to accelerate LNG conversion, because early adopters should be encouraged in order to build a sustaining market that benefits the entire country.

Federal resources are constrained, but without a national commitment, LNG may not gain the critical mass and momentum to create a long-term viable market. Regulatory direction is important, and does not involve direct costs, but if combined with properly structured and managed loan guarantees or tax incentives they would have a greater likelihood of jump-starting this industry at low risk and large benefit to the whole nation in emissions reductions, energy independence, economic activity in shipyards and elsewhere. The promise of LNG is so great it deserves this sort of recognition, attention, and effort. Clearly the EU sees it that way, and we should as well and the risk if we don’t address it in this way is diminished potential for LNG to transform this country and the lost opportunity to lead the world in LNG development and utilization.   John Graykowski

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An Opportunity, Not Just An Optimist’s Musing

In Green Transportation, Marine Highway, Surface Transportation Policy on July 6, 2010 at 11:22 pm

I couldn’t pass up this tease question in an emailed promotion for a conference (in Marseille, if anyone has a spare ticket on the QM2 to offer a humble blogger).

Is Climate Change a challenge or an excellent incentive to facilitate the renaissance of the shipping and maritime industries?

Okay, I’ll bite.  My answer is yes.  It’s a challenge and it presents a generational opportunity that the maritime sector can’t afford to pass up.

Can climate change actions revitalize the shipping and maritime industries?  (Another question posed by the conference organizers.)   That not only is a timely question but it is the right question along with some others:

Will the American maritime sector will take proper advantage of the persistent national environmental and energy imperatives?  Will the U.S. industry only tinker around the edges of design and technology?  Or will it aggressively leverage global climate policy concerns to transform marine transport and services into  a new market opportunity?  Moreover, will the industry actually try to engage the interest of the US government in such a major transformation?

Marine transportation has some natural advantages.  It tends to avoid little things like 10-mile backups on the turnpike.  Its carrying capacity makes it the most efficient on a ton mile basis.  That efficiency can also mean some comparative environmental benefits, along with some less pleasing emissions.

But as we have seen those pluses are not sufficient to move UPS to adopt coastal water routes or to convince government to integrate marine highways into surface transportation policy.  Nor have various studies as to those benefits convinced shippers and other skeptics of Jones Act shipping.

After all, notwithstanding some attractive plans for new marine highway service, the industry has been slow to present concrete evidence that it has the will to leverage climate and energy policy drivers in order to bring about its own “renaissance.”  I reach once again for a convenient contrast: the railroads.

The Class Ones could see the time was ripe.   They have advertised the public benefits of  rail freight , they have  leveraged Federal support for the building of “green” locomotives, and they came up with a major bid to Congress,  anyone who would listen, for a 25 percent investment tax credit for infrastructure improvements to their systems.

I know none of this is simple stuff for the maritime sector.  And of course the economics are daunting to companies that operate on thin margins.  But does the industry–especially the US flag stakeholders–have a vision as to what it can be?   What the vessels can look like?  What cleaner fuels can be burned to make the environmental benefits of marine transport undeniable?   What visible improvements can be made to demonstrate that change is taking place to transform 20th century operations into 21st century wow!

As I have noted elsewhere in this blog, give the Sailor and the Secretary good reason to say “cutting edge” when talking about a vessel or a major advance in maritime goods movement.

We are handed an opportunity when Congress debates climate action measures and major reforms to energy policy.  Pbea

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CAFE for Ships?

In Efficiency, Environment on January 20, 2010 at 11:06 pm

The liner shipping industry, through its World Shipping Council, has proposed a regime for improving ocean-going vessel emissions worldwide.  It’s a good move.  The WSC considered what proposals were already on the table–fuel tax and emissions trading system–and offered something different and credible.

The Vessel Efficiency System (VES) takes a cue from regulatory regimes like American CAFE standards for vehicles.  Reduce fuel consumption and increase efficiency to reduce carbon emissions.

An international standard is a must for such a borderless, multinational industry.  The industry knows that at least one proposal on the table has in mind using ocean shipping as a revenue source for the broader GHG reduction strategy discussed at COP15 in December.   (Simply a tax on bunker also would not address enviro complaints that emission reduction is not directly addressed.)  WSC doesn’t want GHG tax revenues raised on ships to stray far and so proposes “that some significant portion of the funds be dedicated” to R&D ‘targeted at increasing the energy efficiency of the world’s fleet.”

Presumably the proposal will have some support among major flag nations.  Undoubtedly the proposal will be picked apart in some quarters.  But then WSC President Chris Koch and environmental VP Bryan Wood-Thomas know that.   Better to have your own proposal in the mix.  “The Committee is invited to consider the information in this document and take action as appropriate.”

Below are some excerpts from the VES proposal; the full document is here; a JoC story is here.   Pbea

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World Shipping Council – Vessel Efficiency System (VES)

  • Establish efficiency design standards or targets for new and existing vessels where calculation of an Energy Efficiency Design Index baseline is feasible,
  • Establish mandatory efficiency standards applicable to new builds, with subsequent standards established through successive tiers,
  • Establish different (less stringent) efficiency standards that apply to the existing fleet after a given year,
  • Assess charges on fuel consumption for existing vessels failing to meet the standard for existing vessels, and
  • Establish a fund populated by the revenue.

The purpose of combining vessel design efficiency with the fund concept is to:

  • Produce an enhanced environmental result;
  • Address criticisms that the other proposal to establish a fund through fees on bunker sales would be a commodity tax with limited impact on improving carbon efficiency across the world’s fleet;
  • Provide greater incentive to vessel operators to invest in efficiency improvement; and
  • Discourage the long-term operation of the most inefficient vessels.

For those ships subject to the charge…the relative cost per ton is less for those ships that miss the standard by a smaller margin.  The least efficient ships of a given class and size would pay the highest charge.

Like the Danish proposal, such a system would generate funds for an IMO administered “fund;” however, this approach would also financially reward those ships that meet the specified efficiency standards and create an incentive to improve or retire the least efficient vessels within a given class and size grouping.

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The Marine Highway Route to Climate Action

In Green Transportation, Marine Highway, Surface Transportation Policy on October 15, 2009 at 7:26 pm

BlogActionDayCall me silly, but I give benefit of the doubt to John McCain, Barack Obama, Al Gore (yes, him, too) and the slew of scientists who have convinced leaders around the globe that the time for action to address global warming is…yesterday.   (With such heavy stakes I’m betting on the smart guys–people of science.)

Closer to home, I trust people like marine biologist Marisa Guarinello, who on Sunday told me of her recent stint in Antarctica.  She witnessed the consequences of diminishing ice habitat and the effects on native species.

I also trust my gut, paunchy thing that it is.  I never expected in my lifetime to see terra-evolution.  From my early years in grammar school I learned, as we all did, about  the  Ice Age and other such periods that lasted over the course of  tens of thousands  of years.  When I see ongoing evidence of change (the Melting Age?) occurring in my lifetime it’s a bit unnerving.

Want an example?  How about the shrinking of the Arctic?  So much so that studies and early planning are underway for Arctic shipping routes as ice is reduced to being less of an obstacle.  I understand that there is opportunity in them thar high latitude shortcuts, but that opportunity has the look of silver lining an awfully dark cloud.

The Marine Transportation System can do more than take advantage of a disturbing, ecological change to Planet Earth.   It also can contribute to the reversal of GHG factors.

In fact the future of the MTS–the prospect for growth in maritime-centered mobility–is dependent on marine transportation being relevant in the Climate Change Era (CCE).

Our friends in USDOT might agree with that assertion.  They are preparing the administration’s view as to the next surface transportation policy.  Even as the policy is in development clear themes are being voiced by Secretary Ray LaHood and his team.  Sustainability.  Livability.  Mobility.

The Secretary sees the MTS as fitting neatly in that framework of principles.  He said marine transportation, specifically the development of the American Marine Highway (AMH), as transformational for the national transportation system.

Marine transportation is highly efficient.  It moves large volumes of  things using less fuel than  the other surface modes.  It has advantages from a GHG perspective.   However it isn’t a slam dunk for “Green Mode of the Year.”  But with the right investments it can do even better in contributing to our environmental and energy security.  Fuel switching.  Operational adjustments.  New technologies.

Government and the private sector have roles to play here.  Federal policy should aggressively foster both the use and greater advances in marine transportation.  Investments in technology, new equipment and AMH services by the private sector, or its public sponsors, should be rewarded.  Research should be supported.  Transportation policies in this CCE should be unified through the integration of modal policies and some programs.

Like it or not, change is happening.  There are implications for the Marine Transportation System.  Let’s make it work both for future generations and for the industry that supports millions of jobs.   Pbea

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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

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Will Ports Be Ready? (Part 2)

In Environment, Ports on September 15, 2009 at 5:14 pm

Will U.S. ports, especially those on the Atlantic and 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.  The change in environment—at local, national and global levels—will be a constant factor not easily addressed.

Environmental Concerns
From 2002 to 2007 many ports found it necessary to have a proactive environmental policy to get community approval to operate and expand.  Most major ports experienced double digit volume increases that resulted in problems with surrounding communities over increasing road congestion, noxious air emissions, and safety concerns.  In the San Pedro Bay ports communities voiced their anger to local politicians and in short order port projects were put on hold.

With the collapse of global trade, the pressure subsided as the number of containers and trucks decreased.  However, all indications suggest that world trade will rebound and cargo volumes will double by 2040.  Community concerns and political problems will re-emerge as well.  Other environmental issues may also emerge to affect port business practices—consumption of non-renewable resources, bio-hazards, and concerns about species redistribution that may persist even with ballast water regulation.  A proactive policy may again be a necessity for certain major ports if their environmental performance is seen as problematic for their neighbors.

Green house gases (GHG) are probably going to be the biggest environmental game changer for businesses as climate change policy is put in place and businesses calculate the added expense.  The U.S. contributes 20 percent of the world’s emissions from burning fossil fuels; India contributes 4 percent.  Will there be a carbon tax or cap and trade policy established worldwide?  What will be the cost penalty for oceanborne cargo here or worldwide?  How fast will engine room and terminal equipment technology adapt?  Those questions await answers and clarification.

As climate change concerns and political acceptance addressing those concerns increase, the pressures to aggressively address GHG will be enormous.  (That is likely notwithstanding the relative environmental and energy per-ton/mile efficiency of the marine and rail elements of MTS related transportation.)  These issues will have even greater impacts on the cost of ports, particularly if dealt with retroactively.

Next: Consumer demand and the bottom line.

T. H. Wakeman