The Future of Short Sea Shipping in the U.S.?

American Merchant Mariners,
Short sea shipping has been a contentious and touchy issue in the American maritime industry for the past few decades and since the debate began not much has changed other than the rise in ATB traffic from the gulf and up the coasts. I would like to open a discussion among professionals on whether or not short sea shipping has a future in the United States, what that future might be if it exists, and what (other than a miracle) it would take to get it off the ground. As a way of firing the opening volley I would like to lay down what I see as the facts, or at least some of them:

1.) Short sea shipping is not only wide-spread but also successful in several other areas of the world, but NOT in the United States
2.) The areas of the world where short sea shipping is successful do not have highly developed road-freight systems like the U.S. does (18-wheelers, etc.)
3.) Americans would have a hard time swallowing the “inconvenience” of cargo moving marginally slower up and down the coast on feeder ships than it otherwise would on 18-wheelers on the highway. Walmart would have to wait an extra 2 or 3 days for their plastic cups and bowls from Taiwan. Are the American people ready for such a challenge?
4.) The Jones Act makes vessels that would move containers, and other cargo, between American ports extremely expensive, and therefore just as unprofitable, by requiring that they be built in the U.S. where labor and regulatory costs are higher than foreign countries that build equivalent vessels.
5.) It would [B][U]cost less[/U][/B] and be [B][U]far more fuel efficient[/U][/B] to move the same amount of tractor-trailer cargo per year on feeder ships instead
6.) The American highway system is chocked by sheer volume of vehicles and that and several other aspects of the American economy and society would benefit from having that congestion removed in favor of greater traffic on America’s [I]marine[/I] highways
7.) Short sea shipping would create thousands, if not hundreds of thousands, of jobs in the Maritime Industry, especially (I hope, for my own sake) for limited-tonnage mariners (<1600-GRT) who aspire to do what the “big-boys” do, with their smaller licenses.

In order to help guide the discussion into a positive channel let me also postulate a potential opportunity for a solution:
Looking at what a company like Tropical Shipping Lines does, and considering the volume of off-shore supply vessels that there are in the gulf, and the volume of new ones being built, would it not then [I]potentially[/I] make sense to buy up old OSVs, which would more than likely be Jones-Act compliant by the way, and turn them into TSL-style container feeder ships for use in more than just the Bahamian/USVI trade? Could such an endeavor be profitable?

Will the United States ever have a fleet of 500-1600-GRT cargo ships (general cargo, container feeders, dry bulk, petro/chemical tankers, the whole nine yards)? Is so, how far off in the future would something like that be achievable?

My FINAL question, ladies and gentlemen, is the simplest of them all: which one of you wants to put up several million dollars in capitol for me to start a short-sea shipping company and get this new market off the hard and out into the shipping lanes? Anyone? Anyone? Bueller? Bueller? crickets chirping sadly…

Thank you for your time and discussion,

PaddyWest2012

a very interesting topic for discussion and I will toss this point out for consideration

Shortsea shipping as being discussed in the context of the US eastern seaboard is not the same shortsea shipping that is so prevalent in Europe where shortsea is cargo moving between nations separated by relatively short sea passages. The cargoes move in trailers with their tractors as a unit so that there is no break in the handling from the point of lading to the point to discharging. The service is mainly the form of a bridge made up of ro/pax ships. What is being discussed for the US is a coastwise service to alleviate traffic congestion on major urban areas of the NE by taking the cargo in trailers from a terminal in a place like Savannah and delivering them by ship to Newark. The problem, is that you still need a truck to deliver the trailer to the terminal in one port and another truck to take the trailer away at the destination. Suddenly we have trucks clogging up highways again in the very urban areas that they were such a problem in the first place. In the end, if you must have trucks, why not just one truck to take that trailer all the away up I-95 to Newark and deliver it straight to the consignee.

To me the only way any form of coastwise trade in trailers could ever hope to succeed is if fuel prices got so high that the cost differential to use a ship became lower that a truck but as CSX likes to say they can move one ton freight 400 miles on one gallon of fuel. Can a 20000dwt ship go 400miles on 20000gallons? Yes but certainly much slower than a train would be and with consumer goods time is money so speed counts!

I just read an an article about the running of a Container Barge from Norfolk / Portsmouth VA up the James River to Richmond VA. There are Container Barges running in the N.E. as well. The problem is the Harbor Maintenance Tax that is charged at each Loading / Discharging Port plus the labor costs for the Longshoremen.

In my opinion, this is a really good idea that has proved to work.

Norfolk Tug is the company that’s doing the James River run. www.64express.com is the website for it.

[QUOTE=c.captain;84797]a very interesting topic for discussion and I will toss this point out for consideration

Shortsea shipping as being discussed in the context of the US eastern seaboard is not the same shortsea shipping that is so prevalent in Europe where shortsea is cargo moving between nations separated by relatively short sea passages. The cargoes move in trailers with their tractors as a unit so that there is no break in the handling from the point of lading to the point to discharging. The service is mainly the form of a bridge made up of ro/pax ships. What is being discussed for the US is a coastwise service to alleviate traffic congestion on major urban areas of the NE by taking the cargo in trailers from a terminal in a place like Savannah and delivering them by ship to Newark. The problem, is that you still need a truck to deliver the trailer to the terminal in one port and another truck to take the trailer away at the destination. Suddenly we have trucks clogging up highways again in the very urban areas that they were such a problem in the first place. In the end, if you must have trucks, why not just one truck to take that trailer all the away up I-95 to Newark and deliver it straight to the consignee.

To me the only way any form of coastwise trade in trailers could ever hope to succeed is if fuel prices got so high that the cost differential to use a ship became lower that a truck but as CSX likes to say they can move one ton freight 400 miles on one gallon of fuel. Can a 20000dwt ship go 400miles on 20000gallons? Yes but certainly much slower than a train would be and with consumer goods time is money so speed counts![/QUOTE]

This thread has my interest.
c.captain made an excellent case when he mentioned Europe and why it works so well there. I have an old shipmate who left the USA for Europe when the US Merchant Marine started its decline, he asked if I was interested, told me he has good connections and with my skills I would be hired. I was interested but there was a problem. My friend held citizenship in the USA and Denmark, plus was fluent in several European languages, where I wasn’t. He told me that would not be a problem but I decided to stay the course in the US. We make our decisions and we live with them.

When you do the numbers you recognize that it will not work unless.

The ILA cuts their labor rate in half or more.
The states restrict tractor trailers on I 95
You receive a government subsidy like what is happening in Norfolk.
CSX/NS does not drop their rates.
Walmart does not put a strict timeline on delivery time.

You have a business when you conquer the above. Far better men than I have gone bankrupt trying Coastwise Shipping but that should not hold you from trying.

C.Captain,
Thank you for contributing and intelligent response to the thread, I greatly appreciate it. Respecting what you said I’m afraid I do still have to respectfully disagree with some of it. Please don’t think that I want to pick holes in your reply for the sake of picking holes in it, I simply want to engage in a productive discussion of this immensely complex issue, not antagonize you.

Why just take containers from a place like Savannah to a place like Newark when you could take them from Savannah, Norfolk, and Newark and discharge them at every port in between from Miami, Florida to Portland, Maine? That is what I think short-sea shipping should be in the United States. I understand that there will still be a need for road and rail transportation at some level but I don’t think the congestion will be on a scale anything close to what it is now, that is if we make use of more than just a few ports along the coast. The more ports and the more feeder ships the better, but that may just be my under-informed opinion. I’ve been wrong before, I can’t lie there.

Here are some other thoughts I had since starting this thread yesterday:

Is repealing just part of the Jones Act a viable solution or is that blasphemy? I don’t want to get any death threats from ship-yard workers, I’m just spitballing here. What if we repealed just the portion of the law that requires these vessels to be built in the United States but still require them to be owned, crewed, and flagged, by the United States? Would that cause an influx of more affordable feeder-sized ships, expanding the the volume of cargo on coastal routes by making it fundamentally cheaper? Also I was hoping someone with either shoot down or support my idea of using old OSVs as feeder vessels, since that seems to work so well for TSL. Why aren’t more people doing this? I accept that the cost of conversion is somewhat prohibitive but ships are ridiculously expensive to build and maintain anyway so how prohibitive can it be? Certainly it seems like it would be less so than building new feeder vessels here.

Fo’c’sle, you paint a pretty dark picture of the future of short sea shipping. Under those circumstances I don’t think there is anything that could be done and this whole thing would be all for nought, so I’m hoping that that’s not the case. Still you make an interesting point, what can we do? The problems seem insurmountable. Based on what I’ve read I don’t think MARAD’s ideas are the solution to the problem either… Private industry has to step up to the plate, but who will lead the charge?

Harbor Maintenance Tax. Nuf said.

Since we are spitballing here what about all the proposed NAFTA super highways and corridors? Have you taken into consideration all the zig zagging routes across North America connecting major cities? Isn’t the whole set up supposed to be tariff and fuel tax free in the interest of getting goods to consumers cheaply in the name of free trade? The teamsters are up in arms because Mexican and Canadian drivers will be running our roads with impunity. The whole thing makes me nervous because I see it as path to making us more like Europe. With the way the Fed is busting out our currency this would set us up for the Amero/Pan American dollar. There is no reason to run containers up the coast anyways, the oil companies will lobby against it. They won’t be selling as much diesel. As stated before delivery times will be off a day or two. That won’t work in the me me me instant gratification society we live in now.

What should happen and what will happen are diffferent. The Harbor Maintenance Tax and timely delivery to market are the biggest
obstacles. Don’t forget the power of the trucking lobby, ie Teamsters.

As I understand it, most of the cost of moving a container of freight by water is the handling by longshoremen. I think two things would have to happen before short sea shipping in the USA becomes cheaper and feasible on any significant scale. First, the subsidies for trucking will have to decrease (i.e, fuel tax, tolls, etc. must increase). Second, longshore costs must decrease significantly.

I do not understand how the longshoremen have been able to maintain their grossly inflated gang sizes, low productivity, and absurdly high salaries for so long. I think that is what killed short sea shipping in the US.

[QUOTE=tugsailor;84900]I do not understand how the longshoremen have been able to maintain their grossly inflated gang sizes, low productivity, and absurdly high salaries for so long…[/QUOTE]

Are you positive about all this, tugs? Just asking, I’ve been away from it all for 12 years now.

[QUOTE=tugsailor;84900] I think that is what killed short sea shipping in the US.[/QUOTE]

I think it’s more of what c.captain delineated.

[QUOTE=tugsailor;84900]

I do not understand how the longshoremen have been able to maintain their grossly inflated gang sizes, low productivity, and absurdly high salaries for so long. I think that is what killed short sea shipping in the US.[/QUOTE]

Longshoreman have very high productivity - I’ve not seen inflated gang sizes.

This is from an article about the longshoreman’s union.

They are the very model of adaptive, forward-looking unions. And as wages fall in virtually every other industry where productivity is soaring, they make the case why a mechanizing, high-tech economy in particular needs unions: Without them, American workers will grow more and more productive and get nothing out of it.

The full article - “They Work Hard for their Money” is here

K.C.

[QUOTE=Sweat-n-Grease;84903]Are you positive about all this, tugs? Just asking, I’ve been away from it all for 12 years now.

I think it’s more of what c.captain delineated.[/QUOTE]

Have you ever watched a 17 man gang of longshoremen go through the motions of lashing containers and bulk freight on a barge? In most ports (except Seattle, Anchorage, and Dutch Harbor) they don’t have a clue. It seems like most of their effort goes into slowing things down to trigger overtime.

I would like to see some academic do research and publish a paper breaking down the wage costs of shipping a typical container from Asia or Europe to the US. My guess is that 5% of the wage costs would be the mariners, 15% shipping company office staff, and 80% longshoremen.

Why do you think the Chinese are building a huge container port on the West Coast of Mexico with a rail connection to Houston? Could it be to bypass high cost American Longshoremen?

If John McCain (who I like and usually agree with) wants to reduce the cost of shipping for American consumers, he should leave the Jones Act alone and instead sponsor a bill to allow foreign longshoremen to work in the US at foreign wage scales! Why stop there? Better yet, we might as well have all Mexican and Filipino truck drivers and railroad workers too.
If only we could replace our ineffective Congressmen with Filipinos and Brazilians.

[QUOTE=tugsailor;84910]

I would like to see some academic do research and publish a paper breaking down the wage costs of shipping a typical container from Asia or Europe to the US. My guess is that 5% of the wage costs would be the mariners, 15% shipping company office staff, and 80% longshoremen.
[/QUOTE]

Of course the portion of the labor cost for the longshoreman per TEU is higher. A crew of 15 to 20 on a ship can move 8000 TEU or more thousands of miles but each container has to be picked up or loaded, lashed or moved by truck one at a time. The fuel and capital costs are proportionally higher on the sea leg while the ratio of labor cost per TEU will be higher in the port.

K.C.

I forget the actual number but for some reason $200.00 per move per container. This fee adds up when moving them from Ship to Dock then Dock to Barge and then Barge to Dock.

From my days in N.Y. Harbor I remember seeing Longshoreman in Brooklyn showing up at the hall and being told that they were not needed that day, but if they hung around they still got their FULL days pay for hanging around the Hall for a couple of hours. Not sure if this is still happening but I would not be surprised.

Rail lines from and to LA/Long Beach are inadequate. Have been for over a decade.

Here’s a simple scorecard on who would want and who would not want to see “shortsea shipping” start in the US

Pro
>port terminal operators
>a few ship owners
>MarAd (really only pretending to give a shit)
>the maritime & longshore unions
>a few shipbuilders

Con
>all the trucking companies
>all the railroads
>the Teamsters
>all railroad workers unions

Doesn’t give a shit
>the Congress
>the Administration (except MarAd as noted above)
>all the cargo shippers

NOW, WHO HAS THE BIGGER DOG IN THIS FIGHT?

I guess the one positive thing we’ve overlooked is that the coastwise oil trade is at least some version of a short-sea shipping system, and it appears to be booming. I have a particular interest in the ATBs zipping around both coasts. They, and the loophole they fit into, are really quite fascinating. The article below is 2 years old now but the information in it is still pretty relevant. It’s about what’s been going on in the ATB market lately, and I have to say things look pretty good. These new-builds are amazing! Kudos to Crowley and OSG for their gargantuan achievements with ATBs in the last 10 years.

http://www.workboat.com/newsdetail.aspx?id=4294999176

You have several issues, new and old to deal with. With the widening of the Panama Canal, larger ships from Asia will be able to transit straight to the east coast making that transit even more economical. With a new port on the west coast of Mexico, bypassing draconian laws (environmental/taxes/fees/etc) in California (which equals huge money) and with rail lines straight into the heartland, TIME and money is saved. Mexican coal trains are already transiting through Colorado and Wyoming, often with a Union Pacific engine attached. With trucks running on an already well established highway system (not saying anything about how they are being maintained), I can have a trailer delivered from San Francisco to Kansas City, Mo (once it leaves the terminal) in under 2 days. If needed, I can stop that truck at several terminals along the way (say SF-Reno=SLC-Denver-Salina, KS-KC) taking off/adding to cargo to deliver in a different direction. As c.captain said, it is very difficult to compete with the railroads for many reasons. Their infrastructure is fully in place. With more modern technology they are using even less fuel and pulling lighter r.r. cars. A train can pull roughly 100 cars. I can piggyback 2 53’ trailers per, giving me 200 trailers I can drop anywhere in the country. And I’ve only gone through the original port facility. More savings and less TIME. I understand the ITBs pulling fuel as pipelines can only handle so much. Now I;m not sure by a stretch, but isn’t it much more economical to run a tug/barge or ITB set up than a small ship, and/or just easier to get into/ out of smaller port facilities? I know on Matsons ITB Moku Pahu, the pay and crew is less than any of their other ships. I know there are other tangents you can take along all that I’ve noted. Unless you can find yourself in a niche market, short sea shipping isn’t going to come along anytime soon. I’ve made several trips on APLs China run and have seen these ships everywhere. It is economical to them for many reasons. Wages, cost of ships (these things are cookie cutter through the years), operating costs, lack of tighter regulations and most important of all, they don’t have the infrastructure that we have in the US. I often thought of how something like this could work along just the coasts, serving smaller, more remote locales in the 48, and quite frankly you can’t compete efficiently with what has been put in place for over the past 131 years (golden spike was 1881).
Sorry for the rambling.