Jacksonville Business Journal - June 1, 2007
by Tony Quesada
Comments by Mark Yonge, Managing Member, MARITIME ADVISORS
JACKSONVILLE -- A growing coalition is advocating short sea shipping, dubbed by many as an intermodal marine alternative, as a means to alleviate increasing congestion on the nation's highways and railroads.
Many bulk cargo shippers have used ships on U.S. coasts, rivers and major lakes to move commodities for years. But the idea of moving containerized cargo over water for the major part of its stateside trip is still getting its sea legs.
If several obstacles can be overcome, however, studies and data suggest short sea shipping could bolster the nation's economy and provide a major role for Jacksonville to play.
Proponents of short sea shipping as an alternative form of intermodal transportation envision scheduled coastal service -- for example, between Northeast and Southeast ports -- carrying containers and trailers that would otherwise be moved by long-haul trucks.
In 2003, about 78.2 million loads of highway and intermodal rail freight moved between points at least 500 miles apart and within 250 miles of a U.S. coastal port, according to an August 2006 study by the U.S. Maritime Administration. That traffic accounted for 15 percent of total U.S. intercity truck and intermodal rail traffic. But the nation's capacity to maintain that is getting strained.
Averting a crisis
By 2020, the amount of domestic freight carried over highways is expected to increase 73.7 percent to 18.1 billion tons compared with 10.4 billion tons in 1998, according to Federal Highway Administration data. In the past 20 years, the number of miles traveled on U.S. highways has doubled while the total highway mileage has increased 1 percent.
"Domestic growth and sustainability is a function of how much transportation capacity you have," said Mark Yonge, managing member of Maritime Transport & Logistics Advisors LLC in Fort Lauderdale and a nationally recognized expert on short sea shipping. "It's a frightening thing, and people are concerned about it."
Among the benefits of an effective short sea shipping network is that increasing capacity is largely a matter of increasing the size or number of ships in a rotation. That means unlike adding road capacity, which often makes congestion worse for months or years while construction is under way, building new ships doesn't affect the service network in use.
Yonge, who testified in February at a congressional hearing on short sea shipping, said traditional intermodal and highway capacity isn't at a crisis. But lead times for building ships, port infrastructure and short sea service networks mean the time to act is diminishing faster than many realize. Designing and building a steamship can take two to three years, while a barge can take up to a year.
"If you start late, you'll never catch up," Yonge said. One model described by Yonge involves six high-speed, roll-on/roll-off ships making 120 round trips between ports in the Northeast and Southeast. If each ship carried 200 truck trailers, such a service would take 288,000 trucks off the highway per year.
Besides reducing highway traffic, such a service could save money in road maintenance. Yonge cites data showing an 80,000-ton truck creates wear and tear on roads equal to 9,600 cars.
Jacksonville in the game
The characteristics that local leaders tout as making Jacksonville a good port to move international freight also apply to domestic freight. It has direct access to north-south and east-west interstate highways and major and short-line rail. And the Southeast is the fastest growing consumer base in the country.
"Jacksonville can play a significant role for short sea shipping," said Cole Cosgrove, general manager of ship management for Crowley Maritime Corp. and the company's representative on the Short Sea Shipping Cooperative, or SCOOP. "It has the right things."
Becoming a short sea shipping hub is attractive and economically substantial for this area, said Raul Alfonso, director of trade development and marketing container cargo for the Jacksonville Port Authority.
Getting it started, however, is a complex proposition. The kind of service many envision to be competitive would involve new terminals designed to maximize speed.
"Any port able to attract that will be a pioneer," Alfonso said.
In addition to offering a way to relieve highway and rail congestion for domestic cargo, many talk of short sea shipping as a way to avoid bottlenecks getting imported goods through congested ports to distribution networks.
"We literally need a new port of Oakland [Calif.] every year" to handle international cargo, Yonge said.
Horizon Lines Inc. President and CEO Chuck Raymond mentioned Jacksonville as a viable reliever port during a keynote address in April at the Journal of Commerce Short Sea Shipping Conference.
"Ports such as Philadelphia; Wilmington, N.C.; and Jacksonville, Fla., could fill available capacity and flow freight into the intermodal system much more efficiently," Raymond said. "Instead of allowing trade congestion to slow economic growth in the United States, short sea shipping could bring economic growth to new areas."
Short sea stop signs
One of the most significant barriers is the harbor maintenance tax, 0.125 percent of a shipment's value, which is levied against cargo each time it is handled at a U.S. port. It's a financial and bureaucratic disincentive for cargo owners, who are responsible for paying the tax, to use short sea shipping.
For the past few years, several lawmakers have sponsored similar or identical bills to exempt short sea cargo from the tax, but each bill has died in committees.
But short sea shipping advocates are optimistic this year's attempts may be more successful, pointing to hearings held Feb. 15 that brought the issue to the top of the House Transportation and Infrastructure Committee's agenda.
"It takes a long time to build awareness on Capitol Hill to get steam behind an issue," Yonge said. "That hearing was a critical happening that has given the most momentum to this so far. There's a lot [lawmakers] have to focus on, but they are realizing we are approaching a capacity crisis."
Another barrier is the cost of building ships, which -- unlike roads -- is borne by businesses.
SCOOP and the National Shipbuilding Research Program met in April in Orlando to discuss ways to build ships in the U.S. for less. People involved in the initiative said short sea shipping will likely involve a variety of vessels -- sophisticated barges, high-speed ferry-type ships, regular roll-on/roll-off ships and lift-on/lift-off container ships -- to meet various shipping needs.
Shipbuilding executives said the Maritime Administration's Title XI loan guarantee program for ship construction needs to be used.
The government should help "create new shipbuilding opportunities," said Herschel Vinyard, vice president of Atlantic Marine Holding Co., which is a member of SCOOP.
Ultimately, short sea shipping's fate lies with those who ship cargo by truck and rail. Proponents said motor carriers need to be sold on the concept, because they are likely to be its main customers. In a ferry model, for example, two small truck companies could partner so that one drives a trailer from its point of origin on to a ship and the other drives it off the ship to its destination.
Motor carriers interviewed as part of the Maritime Administration study indicated interest in how short-sea shipping may help mitigate driver shortages, rising fuel and labor costs, and increasing road and rail congestion.
Unlike with transoceanic freight that can only be moved effectively in ships, freight moving between points in the U.S. has options. And owners of that freight will choose transportation that best meets their requirements for speed, reliability and cost.
In the Maritime Administration study, motor carriers expressed varying skepticism whether coastal vessels can "deliver the necessary speed and schedule reliability for short sea shipping to be considered an alternative to current ground transport services."
An analysis in the study concluded that a typical container move between New Haven, Conn., and Port Canaveral would take 70 hours and cost $1,045 by short sea shipping, including the truck portions on each end.
That's less expensive, but slower than the alternatives: 60 hours and $1,070 by truck-to-rail-to-truck, and 54.5 hours and $1,881 by long-haul truck. Over time, however, highway congestion could erode trucking's time advantage.
"Short sea is something that will be a product of consumer education," Cosgrove said. "We have to get people to see the significance of diverting cargo from traditional intermodal to marine intermodal."
tquesada@bizjournals.com | 265-2220
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(Courtesy of Rick Eyerdam - Journal of Commerce)
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Welcoming Remarks - Stan Payne, CEO - Port Canaveral
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Roundtable #2 - Ports Are Ready: How Short-Sea Shipping Fits Into Ports' and Operators Plans
Moderator: Lauren Brand, Director of Marketing & Trade Development, Port Canaveral
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Roundtable #4 - Expanding the Short Sea Shipping Market
Moderator/Speaker: Mark Yonge, Managing Member, Maritime Transport & Logistics Advisors, LLC
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To download the speaker presentations visit:
http://www.joc.com/conferences/sss/speakers.asp
Florida Shipper April 2005 Feature Article
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