Coming into focus

Coming into focus

John Ficker, president of the National Industrial Transportation League, was sitting in a traffic jam on a Houston freeway during a recent telephone interview. "As I'm talking to you, there's a big semi coming up behind me, so I love the idea of short-sea shipping," he said.

Shipping companies, motor carriers, truck drivers, port and terminal operators and even federal and state government officials all agree: Short-sea shipping in theory makes a lot of sense. What they don't agree on is how to get a national system of vessels into operation on a schedule of service from port to port that is regular enough and fast enough to alleviate the looming crisis of traffic congestion on the nation's highways and railroads.

Ficker and drivers in other metropolitan areas know that situation all too well. "It's only going to get worse," Ficker said, alluding to a forecast by the American Association of State Highway and Transportation Officials that freight carried on the nation's highways will double by 2020.

Indeed, that prediction may be the only thing that critics and supporters of a short-sea network agree on. With U.S. ocean container trade possibly doubling by 2014, the intermodal highway and rail connectors that carry products to and from deep-water ports probably won't be able to handle the traffic growth. Equally serious is the congestion on interstate highways, such as I-95, the main truck artery up and down the East Coast, which is already slowing delivery of time-critical freight.

Enter short-sea shipping, the Maritime Administration's latest darling - the concept of using intermodal vessels to transport containers or trailers within and between U.S. coasts. With the push from Marad and its parent, the Department of Transportation, the big question being asked is whether short-sea shipping can be a solution to the capacity and congestion crunch.

Some transportation interests believe the U.S. already has the elements of a short-sea shipping network in place and that all it needs to do is expand it. Others say the government needs to fund a prototype to demonstrate how cost-effective and efficient short-sea shipping can be. Still others argue that the government should simply get out of the way and eliminate legal and regulatory barriers to the expansion of the existing intercoastal shipping network.

Behind the disagreements over how to establish a national short-sea shipping policy lie two fundamental changes in the container shipping market that are making the development of a tri-coastal, short-sea shipping system inevitable, argues John Vickerman, a principal in Trans-Systems Corp. a San Francisco transportation consulting firm.

First, he said the current phase-in of 8,000-TEU container ships on the Pacific and larger ships on the Atlantic, as well, could lead to the establishment of a hub-and-spoke network at the major deep-water ports. Containers would be transshipped to smaller coastal vessels for delivery to smaller, shallower ports along the East, West and Gulf ports, he said.

Second, he said, the adoption of new technologies that can halve the time it takes to transfer containers to and from intermodal connections can also speed the transshipment of cargoes to and from short-sea vessels, to the point where they can become competitive in terms of cost and speed with truck delivery.

But Ficker cautioned that there are a lot of barriers in the way of getting a short-sea system going. "What about the Jones Act? What about labor? Will it let short-sea shipping happen? Will short-sea shipping provide sufficient frequency of delivery?"

Above all, Ficker does not want to see the government throw money at establishing a short-sea system before these hurdles can be overcome. "I would like to see a fiscally responsible approach to short-sea shipping," he said. "I've told (Maritime Administrator) Bill Schubert that first we need to figure out what kinds of products and commodities would be suitable to transport by short sea. We need a stepped approach to setting up a system, so it will be an evolution, not a revolution."

Ficker was referring to Schubert's effort to develop a short-sea shipping policy as part of the Department of Transportation's new SEA-21 maritime policy. The policy, which has not been released to the public, will include an emphasis on developing and coordinating a short-sea shipping system that would operate in conjunction with other elements of the nation's intermodal system.

"There needs to be a maritime transport system where all the elements of the system would complement each other, so there has to be some kind of government coordination," said Gay Mayfield, president of Peeples Industries, a Savannah, Ga.-based terminal operator and logistics company. Mayfield's company has designed what he calls a "blue-water" highway system that could save as much as 15 percent in mileage over truck routes by putting cargo on short-sea vessels running between ports in the Southeast and the Northeast.

Others don't want to see the government involved in short-sea shipping at all. "I think short-sea shipping is an exercise by Marad and the Department of Transportation to try to stay relevant," said Rick Couch, president of Osprey Lines. "SEA-21 is all about trying to get money.

"All I can say to them is just get out of my way," he exclaimed. "Just remove the stupid provision in the Harbor Maintenance Tax that targets oceangoing shipment but also hits coastal shippers like me, who are trying to compete with trucks and railroads."

The tax, which is levied on the value of cargoes entering the nation's ports to fund the maintenance dredging that keeps those ports open, also hits the kind of shallow-draft barges and tugs that Osprey operates along the Gulf Coast and up the Mississippi and other inland waterways.

Osprey Lines already operates the kind of short-sea shipping service that is being discussed, Couch said. Osprey's tugs tow fleets of barges loaded with marine containers full of cargo such as chemicals, synthetic resins, flour and rice, steel and steel coil on routes up the Mississippi, Ohio and Illinois rivers and to Gulf ports. "We are building scheduled services to the ports along the rivers and the Gulf," he said. Right now we go as far as Corpus Christi on a regular basis and to Pascagoula. We cover Beaumont, Mobile and Houston, and we're looking to expand."

Couch is also irate about the build-America provision of the Jones Act, which requires that all vessels operating between U.S. ports be U.S.-built, -manned and -owned. "I can't even buy my key assets because the Jones Act creates a crazy compensation package for U.S. shipyards that allows them to build ships at three or four times the price of the same ship on world markets," he said.

"If they would let me buy my vessels in world markets, I'd buy plenty, and I wouldn't buy them on the cheap in China," Couch said. "I would buy them in Europe, and I'd be glad to pay a tariff on ships from Europe that might be as high as 40 percent, but not the 400 to 500 percent mark-up I'd have to pay on U.S.-built vessels. Plus there's nothing to buy here, because they don't make the kind of vessels I need."

Couch said he would say to Marad, "Just make one tough decision on the build-America provision and do it. Or waive the tax for five years and let us build short-sea shipping. Otherwise, I can promise you we'll find a way around the build-America provision of the Jones Act." _