Still only a concept

Still only a concept

The nascent U.S. short-sea shipping industry is filled with companies that are eager and willing to begin service, if only:

-- They were not burdened by the Harbor Maintenance Tax.

-- Labor rules could be tailored to accommodate smaller vessels, or expedite handling of cargo in port.

-- The government were to support the industry financially until it gets on its feet.

-- The U.S. would waive the Jones Act to allow operators to buy suitable vessels at world-market prices.

And so on ...

Those are not rock-solid conditions, but those interested in pursuing short-sea shipping are looking to the government for direction and support, and there are things the government will and won't do. Forget waiving the Jones Act - it's politically treacherous. Labor issues, for their part, are more likely to be worked out in the private sector. In the other areas, Congress and the administration have a menu of choices.

Short-sea shipping is again on the front-burner at the Department of Transportation. Secretary Norman Y. Mineta was virtually sworn into office three years ago with "SEA-21" on his lips, and he is once again promoting the concept in public forums. But in the interim, SEA-21 took a back seat to highway-funding reauthorization. Now, with a replacement for the Transportation Equity Act for the 21st Century (TEA-21) in the hands of Congress, the DOT is again turning its attention to policies aimed at using water transportation to relieve landside congestion.

"We have a clear, strong commitment to it," said Emil Frankel, the DOT's assistant secretary for transportation policy. "Short-sea shipping is an essential element of policy for movement of intermodal freight."

What the ad-ministration ultimately proposes to advance short-sea shipping will result from dialogue between the DOT and the White House Office of Management and Budget, which must approve any policy with cost or revenue implications. Those discussions are ongoing.

While Congress waits to see what the administration proposes, knowledgeable lawmakers and shippers are considering ways to advance the short-sea agenda. "We can take away some of the disadvantages," said Carl Bentzel, senior Democratic maritime counsel for the Senate Commerce Committee. "We have to stop double-taxing the Harbor Maintenance Tax." U.S. Customs and Border Protection collects the ad-valorem tax from ships as they enter a U.S. harbor. If an international container enters a port on one ship, then gets transferred aboard another vessel to be shuttled to another port, the goods get taxed twice.

Congress also could provide tax relief in another form: tax credits for shippers who choose short-sea over landside transportation. Shippers, for example, could take a 10 or 15 percent tax credit if they choose to move their cargo by water from congested ports to locations with less traffic, Bentzel said.

"They can get a tax credit for purchasing a Prius - an electric car," he said. "It seems to me that you could use that same policy rationale to allow a shipper to get a credit for using a transportation service from congested areas." Given a choice and an incentive, shippers may be steered to short-sea, and that would be consistent with the government's policy goals, he said.

Those goals are not only economic. Bentzel said congested highways contribute to environmental degradation as well as economic inefficiency. That means that short-sea carriers and shippers may be able to tap into funds intended to help the environment. The Congestion Mitigation Air Quality Fund (CMAQ) uses a portion of the Highway Trust Fund for projects that help mitigate the effects of car and truck exhaust emissions.

"Why don't we take a look at extending some of these CMAQ provisions to cover infrastructure that would facilitate maritime transportation?" Bentzel asked. Congress could approve legislation that would allow CMAQ to be used, for example, to construct a container pier at a secondary port, or a ramp for loading trailers onto a ferry. "Why wouldn't we do something positive, to give money to facilitate the construction of equipment at smaller ports, and interchange facilities to move cargo out of big ports that are running out of room, and idling trucks that generate a lot of diesel emissions?"

While the government has ideas in the air, some members of the private sector believe it's premature to begin putting short-sea proposals before lawmakers. Before Congress starts legislating, short-sea advocates first must get their attention, said Mortimer L. Downey, a former DOT deputy secretary who is now president of PB Consult in Washington.

"Right now, legislative authorities relative to this subject are about as relevant to surface transportation as the commercial space program. They're just not in the same framework," Downey said. "There's still a long way to go. You've got to recognize it before you start improving it."

Downey said there are no laws on the books that connect the movement of goods and people on land with water transportation. In January, Downey was a member of a panel on short-sea policy at the Transportation Research Board annual meeting. He said the Maritime Administration apparently hoped to get direction. Instead they got questions: What is the goal? What do you have to measure to gauge success or failure of the policy?

Gerald Rawling, director of operational analysis for the Chicago Area Transportation Study, is another skeptic. "When the government stands up and says they have all this excess capacity, and they're available to solve the coming freight crisis, I say 'Quantify it. Give me something actionable,' and that's the end of the conversation. They don't have it."

Both industry and government must make the quantitative analysis, Rawling said. He questioned if the government is moving quickly enough to make a policy that will stand for 20 years or more. The process may be overtaken by other events. A container port in the Bahamas, for example, could conceivably provide a hub-and-spoke service to smaller, less-congested U.S. ports, eliminating the need for a Jones Act compatible coastwise service.

"Do we want a formal public policy that says this is what the United States is going to do for the next 20 years?" Rawling asked. "I'm thinking in terms of the whole issue. Will we really have freight gridlock? I think there are lots of reasons to say not universally, but certainly locally, and how do we address that? In the urban context, I don't know that the water capacity is ever likely to be part of the solution."

Downey agreed that economics will determine if short-sea shipping is a viable alternative, but the government will have to support the idea with clear policies. Any private lender that would provide capital for a short-sea venture will be aware of any policies that may promote or impede the industry, and the price tag will be in the tens, if not hundreds, of millions of dollars.

With Congress completing its work in time for summer recess and the fall elections, Downey doubted that there are enough legislative days left in the 108th Congress to put together a comprehensive short-sea initiative. Still, lawmakers could take small steps. "If there's a way to get anything that tips its hat to the short-sea concept, obviously I'd take it. If the administration is able to get something up to Congress to look at, I'd take it," Downey said. But he warned, "If they finish with TEA-21, there's not going to be much money left, and there's not much time left."