Merging Roads for Modes?

Merging Roads for Modes?

For shippers and trucking companies, the road doesn’t have to end at the water’s edge. As truck capacity tightens, marine highway operators are considering whether motor carriers may be partners rather than competitors.

They hope trucking companies “reserving” capacity for their most profitable freight are willing to shift some less attractive shipments from highways to waterways in ways that make economic sense for the trucker, marine operator and shipper.

The key is not to look at marine highways as a means of “getting trucks off the road,” but as part of a strategy for managing domestic transportation capacity, speakers at The Journal of Commerce North American Marine Highways and Logistics Conference said last month.

The view comes as today’s fractured marine highways industry, built around dozens of disparate projects and potential services, is searching for ways to tap into the expected need for increased freight capacity and emulate the success of intermodal rail.

Advocates believe a steep reduction in truck capacity during the recession and predictions that trucks and drivers will remain in short supply for some time could give some short-sea services impetus.

The idea is that when truckers reject cargo that doesn’t provide a satisfactory margin, freight could find its way to the water as well as intermodal rail, perhaps through a motor carrier, freight broker or third-party logistics provider.

That idea has marine highway backers looking for the multimodal equivalent of Johnny Bryan Hunt, whose pact with Atchison, Topeka and Santa Fe Railway in 1989 transformed J.B. Hunt Transport Services and the intermodal industry.

“Trucks aren’t going to be your obstacle,” Curtis Whalen, executive director of the Intermodal Motor Carriers Conference of the American Trucking Associations, said at the JOC event. “I don’t view the marine highways as being a particularly big competitor to trucks, but as more of a competitor with long-haul rail. Hopefully, we’ll be able to work together on some projects and maximize the movement of freight.”

He advised marine highway operators to “go blue” and focus on developing deep-water coastal routes.

Whalen’s remarks suggest a shift away from skepticism about “short-sea shipping” by some truckers and marine highway advocates alike.

Marine highways have long been touted as a means of reducing the number of trucks in use, cutting highway congestion and carbon emissions. But the higher handling costs and limitations of start-up water-based services haven’t appealed to shippers, especially when less expensive trucking options were readily available.

“Whether we want to admit it or not, there is a shortage of capacity in the U.S. today, and it’s getting worse,” said Sonney Jones, division director of transportation at Dal-Tile/Mohawk Industries, a $5.3 billion flooring manufacturer. Since the recession, tight capacity has been pushing up truckload transportation costs and affecting less-than-truckload and intermodal pricing as well.

Trucking companies are spending more to recruit drivers and paying more to keep them. Equipment prices — from Class 8 tractors to truck tires — are rising, and smaller trucking businesses are finding it difficult to get financing from their lenders.

“As the effects of the recession fade away, we’re going to have a capacity problem, and I think that spells opportunity for marine highways,” Jones said.

“I would think if the marine highway segment of the service is good, the trucking companies would certainly embrace it as a means of not having to provide resources that are increasingly difficult to provide — drivers and equipment,” he said.

Marine highway advocates are struggling with the concept of truckers as partners, and question how they could attract them to projects. First, Whalen said, stop talking about trucks as if they were targets. “These discussions often start with, ‘My project is going to remove 10,000 trucks from the highway,’ and you’re not going to do that,” he said.

“Under any scenario I understand, there are going to be more trucks on the road in 2020 than there are now,” Whalen said. “What you’re looking to do is remove some portion of that ever-increasing number of trucks” from circulation.

Shippers eventually will force the connection between the modes as they seek multimodal options to reduce the total landed cost of shipping, Jones said.

“Economics certainly drove our decision to be interested in marine highways,” he said. Dal-Tile used a trans-Gulf service offered by Seabridge Freight to move containers of Mexican-made tile from Brownsville, Texas, to Port Manatee, Fla., where they moved over the road or rail to Baltimore and Miami.

“We manage shipping based on weeks of inventory on hand,” Jones said. “If we had two weeks of inventory in Baltimore, we’d go by truck or possibly intermodal. If we had three to four weeks of inventory, we might use the marine highway or rail.”

Dal-Tile began shipping with Seabridge as diesel prices peaked in 2008. Some expected savings evaporated as prices fell, but “it never changed the scenario to the point where we thought the trans-Gulf service wasn’t a good thing.”

But Seabridge shut down in November and transportation costs into Florida spiked overnight, Jones said. He hopes a new operator will revive the barge service later this year.

Contact William B. Cassidy at wcassidy@joc.com.