DOT Reports on Gains & Barriers to Marine Cargo Highway Initiative

(In October 2008, the Maritime Administration (MARAD) issued an interim final rule establishing the America's Marine Highway Program¹, under which the Secretary of Transportation could identify and designate short sea transportation corridors and projects to expand domestic water transportation services for cargo and passengers, reduce greenhouse gas emissions, and mitigate landside congestion. In April 2010, MARAD published a final rule, which adopted the interim final with a few changes, including the establishment of eligibility criteria necessary to apply for designation as a Marine Highway Project and ways for DOT to identify and recommend solutions to impediments to expanded use of marine highways. See ITT’s Online Archives or 04/15/10 news, 10041548, for BP summary.)

MARAD Lists Accomplishments in Promoting the Marine Highway System

The report provides an overview of DOT's accomplishments in promoting and coordinating the development of the Marine Highway system, which include the following:

U.S.-Canada-Mexico short sea services. In April 2006, the U.S., Canada, and Mexico signed a Trilateral Agreement to cooperate in the development of Marine Highway systems in North America. A January 2011 meeting of the principals focused on efforts to develop short sea services and remove impediments to such services so that they can relieve heavily congested border crossings between the three countries.

EPA's SmartWay. MARAD is supporting EPA's SmartWay Transport Partnership Program, a collaboration between EPA and the nation‘s freight sector to improve energy efficiency, reduce GHG and air pollutant emissions, and improve energy security. Additionally, EPA‘s National Clean Diesel Campaign is working through its Clean Ports USA initiative to reduce harmful diesel emissions from ports by retrofitting, replacing, repowering, or refueling older diesel engines in port equipment and vessels.

Updated website. MARAD has reconfigured its website to contain up-to-date news and bulletins on the Marine Highway program and new services, a complete inventory of existing Marine Highway services that shippers, operators, transportation officials, workers, and the public can utilize immediately, and a library of available studies, reports and plans related to the Marine Highway.

Emissions calculator. State and local transportation planners are current required to invest certain funds in ways that reduce surface congestion and improve air quality. MARAD is promoting sound environmental practices through the Marine Highway Benefits Calculator, which is a tool that helps state and local transportation planners accurately determine the environmental benefits of diverting freight to the Marine highway system.

Impediments to the Expansion of the Marine Highway System

The report also discusses impediments to the greater commercial use of water transportation and expansion of Marine Highway services, which include the following:

High costs of specialized equipment. The initial acquisition cost of port facility and cargo handling equipment can be a significant barrier to market entry for Marine Highway Services, as port facilities may need to make certain modifications (such as wharf rehabilitation, berth improvements, paving, fencing, and staging area development) and acquire additional shoreside equipment (such as specialized cranes, forklifts, hostlers, tractors, and top pick forklifts) for the program operations. The report states that government assistance to reduce such costs may be needed.

RO/RO, LO/LO cargo operations. According to the report, an especially critical component of Marine Highway operating costs is the loading and unloading of vessels at ports. The report notes that special adaptations may be needed at the nation‘s largest ports as existing docks at ports that handle large international containerships may not be compatible with roll-on/roll-off (RO/RO) vessels. In lift-on/lift-off (LO/LO) operations, the cost of handling containers is partially dependent on high container volumes to allow for more efficient crane equipment and operations. The report notes that in many ports, efforts to reduce air pollution attributable to cargo handling operations will also affect the types and costs of cranes and other equipment.

Ship design variability. The variability of ship characteristics within the U.S. fleet creates inefficiency when transporting and transferring cargoes within an intermodal system. The report states that standardization of vessel designs would facilitate the ability of service providers, ports, and shippers to plan, implement, or utilize the Marine Highway. The report states that standardized vessels intended to transport containers and trailers as an alternative to land-based carriers should be designed to minimize vessel operating costs and maximize the speed and efficiency of cargo loading, storage, and unloading operations.

Market perception. Traditional perceptions of slow domestic maritime services that do not operate on fixed schedules have contributed to a general reluctance of shippers and freight forwarders to make use of water transportation for domestic container and trailer freight movements. The report highlights the importance of establishing reliable transportation services, suitable to just-in-time supply chains, as a means of overcoming shipper reluctance to try Marine Highway services.

Industry Offers Suggestions on How to Encourage Use of Marine Highways

The report identifies a range of potential legislation and regulatory actions that industry stakeholders have suggested to MARAD as short-term incentives to encourage the use of Marine Highways for freight traffic. Industry suggestions include:

• a waiver of the Harbor Maintenance Tax for some non-bulk freight;
• equal Customs notification requirements for waterborne container shipments from Canada via the Great Lakes Saint Lawrence Seaway System relative to land-based shipments of the same containers;
• implementation of shipper tax credits linked to the value of public benefits associated with the decision to select water transportation;
• implementation of investment tax credits and accelerated depreciation for vessel and port equipment purchases;
• continued Congressional appropriations for matching capital grants such as those provided through the Marine Highway Grants program and, more broadly, the Transportation Investment Generating Economic Recovery (TIGER) and TIGER II Discretionary Grants programs (some of which benefited port-related projects);
• modification of MARAD's Title XI loan guarantee program to help introduce more environmentally sustainable vessels into the U.S. fleet; and
• establishment of a Marine Highway infrastructure-oriented program similar to the Transportation Infrastructure Finance and Innovation Act (TIFIA) program that could help to fund port and terminal intermodal infrastructure.

¹The Energy Independence and Security Act of 2007 directed the Secretary of Transportation to establish a short sea transportation program and designate short sea transportation projects to address the transportation challenges of growing surface congestion, aging infrastructure, and system repair and expansion.

In August 2010, MARAD identified and officially designated 18 all-water routes as Marine Highway Corridors, Connectors, and Crossings and selected 8 Marine Highway Projects to operate on these corridors. See ITT’s Online Archives or 08/12/10 news, 10081215, for BP summary.

(See ITT's Online Archives or 09/23/10 news, 10092309, for BP summary of DOT granting funds to support the Marine Highway Initiative.

See ITT's Online Archives or 04/08/10 news, 10040805, for BP summary of DOT announcing the Marine Highway Initiative for cargo.)

Report is available here.