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Canaveral Port Authority Short Sea Shipping

Port Probability Study

A study commissioned by the:

Canaveral Port Authority

With additional funding provided by the:

U.S. Department of Transportation, Maritime Administration

Date: March 4, 2005

Maritime Transport & Logistics Advisors, LLC

85 Hendricks Isle Ft. Lauderdale, FL 33301, U.S.A

PHONE 954-873-8716 / FAX 954-763-1291 www.maritimeadvisors.com

Results Brief

RESULTS BRIEF

Practical Approach This study was approached from a practical, businessperson’s perspective by performing research and analysis of international and domestic Short Sea Shipping; conducting industry stakeholders’ interviews; assessing Port Canaveral’s attributes; applying a collaborative consensus and the expertise of Maritime Transport & Logistics Advisors, LLC (MTLA); and culminating these resources to develop a high-level Probability Decision Tool* to determine CPA’s probability to succeed in a Short Sea Shipping initiative. Conclusions of Short Sea Shipping Probability Decision Tool (See Section 10 for details and Probability Decision Tool)

Critical decision factors and sub-categories were developed and through a collaborative consensus weighting factors were determined for CPA.

Critical decision factors and their weightings are as follows:

12%

12%

11%

11%9%

9%

8%

8%

7%

7%4%2% Demand Geographic Location

Infrastructure Capability Intermodal Connnectors

Congestion Enviromental Impact

Financing Government Funding

Cost Economic Development

Labor Transportation Culture

CPA’s current condition and future potential in relation to Short Sea Shipping were then

rated for each sub-category on a scale from Excellent to Poor resulting in:

o Present Probability Condition: Fair to Good o Future Probability Potential: Very Good

The results of this study and Probability Decision Tool provides a high level indication that Port Canaveral is well placed to provide needed Short Sea Shipping services in the Southeast region. This study has researched and analyzed international and domestic Short Sea Shipping history, events, situations and transportation policy that exist today and projections for the future.

*For this study, the Probability Decision Tool was developed at a high level using preliminary and limited data (per the Statement of Work of this project) to determine if CPA should further consider Short Sea Shipping as an initiative. As the decision process evolves, the tool can be adjusted and fine-tuned to consider additional research and criteria, interviews with shippers and logistics providers, cost-benefit analysis and specific business alternatives to further refine and decide if specific Short Sea Shipping projects should be initiated.

Maritime Transport & Logistics Advisors, LLC 3

Results Brief

Recently, the American Association of Port Authorities (AAPA), along with over 35 national transportation and business associations and ports, adopted a position that repeal of the Harbor Maintenance Tax is necessary to remove this significant disincentive to coastwise waterborne trade. This is a significant step that demonstrates the unity of the transportation industry with regard to Short Sea Shipping. The efforts of these and other groups have demonstrated that Short Sea Shipping may well have the potential to provide a sensible alternative and complement to truck and rail modes. Florida’s Strategic Intermodal System (SIS) has the potential to be an important tool and benefit for Port Canaveral and its commercial partners. The state’s new SIS transportation planning and funding program provides a timely opportunity for Port Canaveral to take an early leadership role in establishing Short Sea Shipping policy in the state. Removing trucks off the road also opens the door to possible Congestion, Mitigation and Air Quality (CMAQ) federal funding provided by FHWA to the State under the six-year highway bill (TEA-21) for projects that improve air quality. Port Canaveral is the first Florida port to commission its own Short Sea Shipping Probability study, which should be an important indication to the Florida Department of Transportation that Port Canaveral is in step with its future vision. The Port Authority of NY & NJ through its Port Inland Distribution Network (PIDN) benefited from state funding for Short Sea Shipping activities. Port Canaveral may also benefit from state funding through the SIS and CMAQ, and should consider active engagement with FDOT and the port’s commercial partners. The initiators of current Short Sea Shipping services and transportation planning are achieving success. The focus of governments and industry have the potential to lead to expanded, coordinated Short Sea Shipping services and coordinated establishment of fully integrated transportation networks. As evidenced in this study, those organizations and businesses that provide vision and leadership in addressing these important transportation issues, and that work to provide solutions to them, are establishing a foundation for the potential success of the renewed focus on waterborne transportation in the United States. Specific business opportunities still remain to be explored, and a focused marketing and business plan for Short Sea Shipping would need to be established. Should Port Canaveral decide to pursue Short Sea Shipping service, there are certain infrastructure investments that will need to be made and further examination of these investments needs to be accomplished.


Results Brief

A Port Canaveral marketing and awareness campaign to the public, the State, the Federal Government, state and federal legislators, and working with stakeholders such as the I-95 Corridor Coalition and others needs to be developed and should be part of a strategic plan. Also of importance to any port authority is its ability to positively impact regional economic development, job creation and contribution to its local constituency. Intuitively, bringing new business to the port could provide these positive effects, but further analysis of the cost and benefits associated with establishing a Short Sea Shipping service needs to be undertaken. Environmental impact is certainly an important factor in any analysis concerning increased port activity and Short Sea Shipping service potential. Although congestion relief from congested road networks in other areas of the region may be possible, the public perception of increased traffic in the Canaveral area must be considered. The environmental impact from both the potential benefit and public perspectives needs to be examined. In summary, comprehensive business, marketing, awareness and short and long term strategic plans, along with additional analysis of influencing factors to implement Short Sea Shipping services at the port, would be required in order to pursue its implementation. The Probability Decision Tool provided in this study serves as an excellent device for discussion, further analysis, examination, and decision-making in this process.


Introduction

INTRODUCTION

Short Sea Shipping as a viable means of moving goods and people has a long history, yet is a concept that has undergone a new emergence in the transportation business. Vessels have carried domestic and international commerce for thousands of years on routes that can be considered to be Short Sea Shipping services. In the United States, as in most of the world, the use of waterborne transportation has been supplanted by other modes as the advent of motorized surface transportation vehicles shifted commerce from water to land. Tremendous infrastructures to support vehicular use emerged, such as the National Highway System in the United States and extensive rail networks in developed countries. Populations have grown enormously in the last century causing increased demand on surface transportation networks, and congestion in major metropolitan areas and on highway and rail systems. Coupled with forecasts for enormous increases in global and U.S. Domestic trade, this congestion and the negative impact that it brings, has caused renewed examination of the use of the waterways as a complementary and alternative method of transportation. Huge demand on already stretched financial resources at the national, state and local levels has pressed recent study of ways in which transportation funding can be better utilized. The renewed focus on the benefits of marine transportation was born in recent years, and in the grand scheme of transportation planning is still in its infancy. The specific study of Short Sea Shipping, as part of this effort, is newer still. Started in the United States by the U.S. Maritime Administration less than two and a half years ago, the Short Sea Shipping Initiative is providing a framework to create awareness of the importance of waterborne domestic inland, intercoastal and intracoastal, and nearby international services. This awareness has caused marine operators, surface transportation providers, port authorities, terminals operators, logistics providers, shippers, consignees, national transportation associations, national governments, regional coalitions, states, and municipalities to engage in discussions and planning for Short Sea Shipping services. In fact, this study was conceived as a result of this initiative and the desire of the Canaveral Port Authority to gain additional information and analysis to consider how short sea shipping should be included in its strategic plans. This study addresses the U.S. Department of Transportation’s recent focus on the Marine Transportation System, Short Sea Shipping and a national transportation policy that involves all modes of travel; the State of Florida’s Strategic Intermodal System that seeks a unified funding approach to transportation needs within the state; and the Port Authority of New York and New Jersey’s Port Inland Distribution Network (PIDN) that is already underway. Additionally this study considers the history as well as policy of Short Sea Shipping in the EU, Canada, Mexico and the United States; interviews of key transportation sectors; new technologies; geographic considerations; operational results; new initiatives; and the professional expertise of Maritime Transport & Logistics Advisors, LLC (MTLA).


Table of Contents

Table of Contents RESULTS BRIEF……..……………………………………………………………………………………………... 3 INTRODUCTION……..……………………………………………………………………………………………....7 TABLE OF CONTENTS...….………………………………………………………………………………………. 9 EXECUTIVE SUMMARY.……………………………………………………………………………………….…13

1. INTRODUCTION TO SHORT SEA SHIPPING................................................................................................ 27

1.1 SHORT SEA SHIPPING................................................................................................................................. 27 1.2 SHORT SEA SHIPPING AROUND THE WORLD: EUROPE............................................................................... 30

1.2.1 Short Sea Shipping in the UK............................................................................................................... 30 1.2.2 Short Sea Shipping in the Rest of Europe............................................................................................. 30 1.2.3 Short Sea Shipping in Canada.............................................................................................................. 32 1.2.4 Short Sea Shipping in Mexico & the Caribbean Gulf .......................................................................... 34

2. ‘SHORT’ HISTORY ON SHORT SEA SHIPPING IN THE U.S. .................................................................... 35 2.1 SHIPPING AND SHORT SEA POLICIES IN THE UNITED STATES..................................................................... 35

2.1.1 The Merchant Marine Act of 1920 – The “Jones Act”....................................................................... 365 2.1.2 No Government Subsidies .................................................................................................................. 365 2.13 Alternative Reasons for the Lack of Feeder Vessels in The United States ......................................... 366

2.2 CURRENT POLICIES IN U.S. SHIPPING - FOCUSING ON FEEDERING ............................................................. 36 2.2.1 Recent Trends that are Influencing Policy Decisions .......................................................................... 36

2.3 WHERE ARE THE NEW U.S. DOMESTIC SHIPS?........................................................................................... 37 2.4 FUTURE...................................................................................................................................................... 40

2.4.1 What does the future hold in store?...................................................................................................... 40 3. CURRENT SHORT SEA SHIPPING ROUTES, CARGOES, AND PORTS................................................... 41

3.1 ROUTES ..................................................................................................................................................... 41 3.1.1 Domestic Short Sea Shipping Routes ................................................................................................... 41 3.1.2 International Short Sea Shipping Routes ............................................................................................. 48

3.2 CARGOES ................................................................................................................................................... 51 3.2.1 Container/Trailer ................................................................................................................................. 51

3.3 PORTS ........................................................................................................................................................ 51 4. UNITED STATES SHORT SEA SHIPPING INITIATIVES ............................................................................ 53

4.1 CURRENT SHORT SEA INITIATIVES IN VESSEL AND INFRASTRUCTURE IN THE U.S. ................................... 53 4.1.1 Port Inland Distribution Network (PIDN) ........................................................................................... 54 4.1.2 U.S. Department of Transportation: SEA-21and Complementary Programs ...................................... 55 4.1.3 Florida Department of Transportation Strategic Intermodal System .................................................. 56

4.2 FINANCING FOR SHORT SEA SHIPPING SERVICES....................................................................................... 56 4.2.1 Vessel Financing Options..................................................................................................................... 57 4.2.2 SEA-21 Proposals ................................................................................................................................ 57 4.2.3 U.S. MARAD Title XI Ship Financing Guarantee Program................................................................. 58 4.2.4 U.S. MARAD Capital Construction Fund ............................................................................................ 58

5. GROWTH AND EXPANSION OF SHORT SEA SHIPPING IN THE U.S. .................................................... 61 5.1 DOMESTIC.................................................................................................................................................. 61

5.1.1 Growth of Domestic Short Sea Shipping Services................................................................................ 61 5.1.2 Expansion of Domestic Short Sea Shipping Services ........................................................................... 61

5.2 INTERNATIONAL ........................................................................................................................................ 62


Table of Contents

5.2.1 Progress in International Short Sea Shipping...................................................................................... 62 5.2.2 International Short Sea Shipping Issues............................................................................................... 62 5.2.3 International Financial Considerations ............................................................................................... 63 5.2.4 System Capacity ................................................................................................................................... 63

6. FACTORS THAT SUPPORT OR IMPEDE SHORT SEA SHIPPING IN THE UNITED STATES ............ 65 6.1 FACTORS THAT INFLUENCE SHORT SEA SHIPPING ..................................................................................... 65

6.1.1 The Advantages and Problems of Short Sea Shipping ......................................................................... 66 6.1.2 What is necessary to Stimulate Short Sea Shipping? ........................................................................... 67

6.2 SEVERAL ACTIONS THAT ARE NECESSARY TO STIMULATE SHORT SEA SHIPPING...................................... 68 6.2.1 Integration of Short Sea Shipping into multimodal transport chains or networks ............................... 68 6.2.2 Stimulation of New Maritime Transport Technologies ........................................................................ 69 6.2.3 Removal of Administrative Barriers..................................................................................................... 69 6.2.4 Creation of Reliable Market Data on North American Short Sea Shipping......................................... 69 6.2.5 Improving the Image of Short Sea Shipping......................................................................................... 69 6.2.6 Improvement of Transparency in Ports, Related to Tariffs and State Aid............................................ 69

6.3 INTERVIEWS OF PORT AUTHORITIES, TERMINAL OPERATORS, MARINE OPERATORS AND MOTOR CARRIERS ……………………………………………………………………………………………………………70

6.3.1 Port Authority and Terminal Operator Interviews............................................................................... 70 6.3.2 Marine Operator Interviews................................................................................................................. 71 6.3.3 Motor Carrier Interviews ..................................................................................................................... 72

7. PORT CANAVERAL OVERVIEW..................................................................................................................... 75 7.1 GEOGRAPHIC LOCATION............................................................................................................................ 75

7.1.1 Proximity to Ocean Trade Lanes.......................................................................................................... 75 7.1.2 Access to Rail Corridors ...................................................................................................................... 75 7.1.3 Access to Highway Corridors .............................................................................................................. 75

7.2 TERMINAL STORAGE CAPACITY ................................................................................................................ 75 7.2.1 Capacity ............................................................................................................................................... 75

7.3 FACILITIES ................................................................................................................................................. 76 7.3.1 Berthing................................................................................................................................................ 76 7.3.2 Cargo cranes and handling equipment ................................................................................................ 76 7.3.3 Gates .................................................................................................................................................... 76 7.3.4 Outdoor Storage................................................................................................................................... 76 7.3.5 Transit Shed ......................................................................................................................................... 76 7.3.6 Warehouse............................................................................................................................................ 76 7.3.7 Intermodal Connections ....................................................................................................................... 77

7.4 CONTAINER - RO/RO SERVICE ................................................................................................................... 78 7.4.1 International......................................................................................................................................... 78 7.4.2 Break Bulk Refrigerated Service to Europe: ........................................................................................ 78 7.4.3 Domestic............................................................................................................................................... 78

8. PORT CANAVERAL SHORT SEA SHIPPING EFFORTS ............................................................................. 79 8.1 ANALYSIS OF CURRENT EFFORTS .............................................................................................................. 79

8.1.1 International......................................................................................................................................... 79 8.1.2 Domestic............................................................................................................................................... 79

8.2 FUTURE TACTICS AND STRATEGIES ........................................................................................................... 81 8.2.1 Marketing Analysis............................................................................................................................... 83 8.2.2 Carrier Interest .................................................................................................................................... 83 8.2.3 Shipper Interest .................................................................................................................................... 83 8.2.4 Motor Carrier Interest ......................................................................................................................... 84 8.2.5 Rail Interest.......................................................................................................................................... 84 8.2.6 Marketing Port Canaveral as a Short Sea Shipping Terminal Point ................................................... 84

9. POTENTIAL FOR PORT CANAVERAL’S INCLUSION IN GOVERNMENT SPONSORED OR FUNDED SHORT SEA SHIPPING PILOT PROGRAM OR DEMONSTRATION PROJECT ...................... 85


Table of Contents

9.1 U.S. GOVERNMENT.................................................................................................................................... 85 9.1.1 Marine Transportation System National Advisory Council ................................................................. 85 9.1.2 U.S. Department of Transportation...................................................................................................... 86 9.1.3 Demonstration Projects versus Start-ups............................................................................................. 86

9.2 PROSPECTS FOR CANAVERAL PORT AUTHORITY ....................................................................................... 87 10. A SHORT SEA SHIPPING TOOL............................................................................................................ 89

10.1 CRITICAL DECISION FACTOR DEVELOPMENT ............................................................................................ 89 10.2 SHORT SEA SHIPPING PROBABILITY DECISION TOOL................................................................................. 90 10.3 SHORT SEA SHIPPING PROBABILITY DECISION TOOL - OUTCOME ............................................................. 93

11. CONCLUSION ............................................................................................................................................ 95 REFERENCES........................................................................................................................................................... 99 APPENDIX A: PROBABILITY DECISION TOOL……………………………...……………………………. 101 APPENDIX B: PORT / TERMINAL OPERATOR INTERVIEW RESPONSES……………………………..105 APPENDIX C: MARINE OPERATOR INTERVIEW RESPONSES……………………………………….... 115 APPENDIX D: MOTOR CARRIER INTERVIEW RESPONSES……………………………………………. 129 APPENDIX E: MARITIME TRANSPORT & LOGISTICS ADVISORS, LLC….…………………….……..137

List of Figures FIGURE 1. SHORT SEA ROUTES IN ATLANTIC CANADA................................................................................................. 33 FIGURE 2. SHORT SEA SHIPPING NETWORKS IN THE UNITED STATES ........................................................................... 41 FIGURE 3. U.S. SHORT SEA SHIPPING DOMESTIC NETWORKS FROM MID-ATLANTIC TO NORTHEAST COAST............... 42 FIGURE 4. U.S. SHORT SEA SHIPPING DOMESTIC NETWORKS FROM MID-ATLANTIC TO SOUTHEAST COAST ............... 43 FIGURE 5. POSSIBLE SHORT SEA SHIPPING ROUTES ALONG U.S. EAST COAST AND GULF COAST ................................ 44 FIGURE 6. DEVELOPMENT OF “TRANSPORTATION ZONES” ALONG THE I-95 CORRIDOR ............................................... 45 FIGURE 7. U.S. SHORT SEA SHIPPING DOMESTIC & NAFTA NETWORKS IN THE GREAT LAKES .................................. 46 FIGURE 8. U.S. SHORT SEA SHIPPING DOMESTIC NETWORKS FROM WEST COAST ....................................................... 47 FIGURE 9. INTERNATIONAL HUB & FEEDER PORTS IN BAHAMAS & PANAMA .............................................................. 48 FIGURE 10. WEIGHTING OF CRITICAL DECISION FACTORS ........................................................................................... 91

List of Tables TABLE 1. EUROPEAN CONTAINER ROUTE TRAFFIC (IN MILLION TEUS) ....................................................................... 31 TABLE 2. COMPARING “SHORT SEA SHIPPING” IN REGIONAL MARKETS ...................................................................... 32 TABLE 3. TABLE OF ACTIVE CONTAINER SHIPS BUILT IN U.S. SHIPYARDS - 2005........................................................ 39 TABLE 4. LIST OF JONES ACT VESSELS OVER 1,000 GRT............................................................................................... 63 TABLE 5. SUCCESS AND FAILURES OF SHORT SEA SHIPPING PROJECTS IN PACT (PILOT ACTIONS ON COMBINED

TRANSPORT)........................................................................................................................................................ 66 TABLE 6. CENTRAL FLORIDA LABOR, PER CAPITA AND SALES GROWTH FORECASTS .................................................. 81 TABLE 7. CENTRAL FLORIDA NON-AGRICULTURAL LABOR FORECAST........................................................................ 82 TABLE 8. CENTRAL FLORIDA REAL PER CAPITA INCOME FORECAST............................................................................ 82 TABLE 9. CENTRAL FLORIDA REAL TAXABLE SALES FORECAST.................................................................................. 83 TABLE 10. PROBABILITY DECISION TOOL................................................................................................................... 101


Executive Summary

Executive Summary

What is Short Sea Shipping? In the simplest of terms “Short Sea Shipping is the transport of passengers or cargo by water without crossing an ocean.”

There is no uniform definition that sufficiently describes what Short Sea Shipping is. The U.S. Maritime Administration (MARAD) defines Short Sea Shipping as:

“…commercial waterborne transportation that does not transit an ocean. It is an alternative form of commercial transportation that utilizes inland and coastal waterways to move commercial freight from major domestic ports to its destination.” (MARAD 2005)

Geographical conditions in the European Union (EU), especially in the UK, cause them to be dependent on shipping for trade. The extent of the ever-increasing importance of Short Sea Shipping is that over three-quarters of the unitized cargo shipped in the UK is by, bound for, or originated from short sea. According to a report released by EuroStat, February 2005, Short Sea Shipping in the rest of Europe accounted for 63% of the entire volume of goods transported by sea in the EU-15 in the year 2003, totaling over 1.6 billion tons. The United Kingdom and Italy accounted for the largest share of cargo handled in Short Sea Shipping, totaling 342 and 302 million tons, respectively. The amount of Short Sea Shipping varied widely among the other countries. The concept of Short Sea Shipping as a viable alternative to intermodal truck and rail is now emerging in Canada. Awareness is rising rapidly and regional workshops and meetings between policymakers and industry are held throughout the country. Water service between U.S. and Mexico has been in competition with truck service using the Laredo Customs juncture and rail service for some time, but congestion and long lines at border crossings are becoming seriously problematic. Previously, frequency and reliability of both these modes had effectively cut the west coast Florida seaports out of trade with Mexico.

Simple Definition of Short Sea Shipping MARAD Definition of Short Sea Shipping ¾ of the UK unitized cargo is Short Sea 63% of goods transported in EU-15 Short Sea in 2003 Awareness of Short Sea Shipping rapidly rising in Canada U.S./Mexico border congestion is creating urgency for Short Sea Shipping


Executive Summary

‘Short’ History on Short Sea Shipping in the U.S. In the United States, the Jones Act mandates that U.S.-flag vessels (U.S.-built, owned, crewed and documented) must carry cargo between U.S. ports. The Jones Act has strong bipartisan support in Congress and is similar to the policies and laws (called "cabotage" laws) of nearly 50 foreign shipping nations that also reserve their coastwise shipping and passenger trades for their domestic fleets. The Jones Act has frequently been cited as a deterrent in the development of Short Sea Shipping in the U.S.; however, as will be seen later in this study, interviews with Marine Operators, Ports, Terminals and Motor Carriers indicate the Jones Act is far from being the only major hurdle. Today, the major hindrances to construction and operation of new U.S. flag feeder ships are:

Reluctance to invest millions of dollars on untested ideas. “Build it and they will come” is not in favor with the ship financing community. Instead, they require cargo commitments prior to financing the building of new ships.

High U.S. shipyard construction costs in comparison to foreign shipyard construction costs.

Types of Vessels that are employed in domestic Short Sea Shipping can be classified as the following: Tug and Barges (sea-going), Tug and Barges (river type), Small Ships, Tug and Barge (ITB/ATB), Liquid Bulk, Dry Bulk, Break Bulk, Intermodal (Container, Ro/Ro, LASH), and Rail-Ferry service. The construction of mega-sized containerships, more than 9,000 TEUs and growing (plans are now available for 14,000+ TEU vessels), is influencing policy decisions by ports and terminals. Ships and terminals are now really capital intensive. Not all ports have either the terminal capacity or the water depth to efficiently handle these mega-ships calling at “hub” ports, which places more and more emphasis on the need for “feeder” ports as this mega-ship trend continues. Feeder ports can be satisfied with Short Sea Shipping. Current Short Sea Shipping Routes, Cargoes, and Ports On the East Coast of the U.S., domestic Short Sea Shipping networks are primarily providing inter-coastal services to deep-sea carriers operating to U.S. territories or protectorates, such as Puerto Rico, St. Thomas and U.S. Virgin Islands. The dominant U.S. feeder operator is Columbia Coastal Transport, a tug-barge

Jones Act restricts carriage of cargo between U.S. Ports Interviews reveal Jones Act is not the major deterrent to U.S. Short Sea Shipping “Build it and they will come” not in favor with financial community U.S. built ships cost more Types of Short Sea Shipping vessels New Mega-ships are influencing policy and port planning U.S. East Coast services


Executive Summary

operator of 14 such units. From the Southern half of the U.S. East Coast to the Mexican Gulf, there are a number of barge-tug services that are connecting domestic points with other U.S. ports and a few international ports. Columbia Coastal Transport is well represented in this region. Trailer Bridge provides integrated trucking and maritime services to Puerto Rico on a twice-weekly schedule out of Jacksonville. Osprey, earlier this year began a service between Houston, New Orleans, Tampa and Miami. CG Railway offers a four-day U.S.-Mexico interline rail-ferry service that carries about 56 railcars filled with rubber, coffee, beer, petrochemicals and cotton to and from Coatzacoalcos, Mexico. The U.S. Great Lakes generally uses self-propelled ships, such as Lake Carriers, for bulk transportation. Large integrated Tug/Barge systems have recently been developed to meet lower cost demands and to overcome crewing requirements. There are large fleets of both U.S. and Canadian flag vessels serving this market. Also, there are Seaway class and non-Seaway class vessels. Non-Seaway class vessels are not suitable for Seaway passage and thus operate on the “upper lakes” and “middle-lakes” only.

The nature of shipping on the U.S. West Coast makes the use of self-propelled ships most attractive. For example, Totem Ocean Trailer Express (TOTE) provides an integrated truck marine service that links Alaska with the continental U.S. Matson Navigation has been serving the Pacific since 1882 and links the continental U.S. with Hawaii, U.S. territories and protectorates such as Guam, Micronesia and the Marshall Islands. Horizon Lines employs a Lo/Lo service with two sailings per week to Anchorage and Kodiak and a weekly, fixed-day service to Dutch Harbor. Today’s modern ports are under intense pressure to compete and maintain a high quality service in order to offer shippers and customers added value to their cargoes. The increasing importance of Short Sea Shipping and feedering is a dimension in shipping that has very little recognition and is greatly misunderstood. The central theme behind Short Sea Shipping is its ability to serve as a link in the multimodal system. The importance of trading patterns over the last decade and recent changes in the Short Sea Shipping business have brought much attention to this little known “niche”. The advantages of distribution platforms allow ports to shift their focus from ship owners to cargo owners. Short Sea Shipping allows ports to strategically consider final destination, optimal transport modes, transport type and required services. In order for

Mid- Atlantic, U.S. Gulf Short Sea Shipping U.S. Great Lakes U.S. West Coast Opportunity for ports to offer “niche” service Ports should be prepared to challenge their


Executive Summary

ports to continue to succeed, they must attract new traffic and consolidate and extend existing traffic. Short Sea Shipping is definitely an area where ports should be prepared to challenge their competitors. Current Short Sea Initiatives on Vessel and Infrastructure in the U.S. The main focus is on the U.S. Department of Transportation (USDOT), MARAD SEA-21 initiatives and various financing problems and opportunities, e.g. SEA-21, Capital Construction Fund (CCF) Extension and 12106(e) lease financing. MARAD and the Federal Highway Administration (FHWA) have developed an important set of SEA-21 proposals. These proposals include expanded MARAD Title XI and CCF Programs, which are intended to facilitate the establishment of new Coastwise services. Although the current Administration has not proposed any legislation to create SEA-21, it has been spoken about publicly by Secretary Mineta and many of his top aides at USDOT. SEA-21 has been widely addressed in the press and it is believed that USDOT is internally investigating the creation of a comprehensive program to address the needs of the marine industry with Short Sea Shipping as its central focus. The Port Authority of NY/NJ has been developing the idea of using container-carrying barges, also known as COB, to serve a 13-state area that lies within 400 miles of the Port of NY/NJ. The markets that it is targeting are ports that are between 150 to 400 miles away serving mostly international cargo. This hub-and-spoke system is designed to move containers by barge connecting the Port Authority of NY/NJ with such small or regional ports as: Albany, NY (which is an inland navigation service currently operating); New Haven and Bridgeport, CT; Quonset Point and Davisville, RI; Wilmington, DE; and the southern part of New Jersey (i.e. Camden and Salem areas). The Bridgeport Port Authority (BPA) has been leading an initiative backed with Connecticut State funding to redevelop a former shipyard into a Ro/Ro terminal serving feeder traffic. The proposed daily service would begin with a barge and one tugboat using a common equipment pool. An initial investment from the state would be $1 million the first year, and an additional $500,000 the second year. Additional capital requirements are $5.6 million the second year for improving the terminal, plus $1.2 million from the Port Authority of NY/NJ. The objective would be to take 33,000 containers off the I-95 roadway.

competitors with Short Sea Shipping capability U.S. Government incentive programs Port Authority of NY/NJ PIDN Short Sea Shipping Initiative Bridgeport Port Authority initiative


Executive Summary

Another issue that has been addressed is the elimination of the Harbor Maintenance Tax (HMT). The HMT is an Ad Valorum fee assessed on international cargo and passengers arriving at U.S. ports. In a Short Sea Shipping scenario, the same cargo may be transshipped to more than one port causing the HMT to be assessed at each port call. Domestic cargoes are also subject to the HMT. Elimination of the HMT would make Short Sea Shipping more price competitive. The American Association of Port Authorities, the Coastwise Coalition and many other influential stakeholders support the elimination of the HMT for Short Sea Shipping. Florida’s Strategic Intermodal System (SIS) was established in 2003 to provide resources to improve Florida’s strategic transportation facilities, thereby enhancing the state’s economic competitiveness. The SIS is a statewide network of high priority transportation facilities, including Port Canaveral. The SIS recognizes Florida’s role in transportation planning focused on international, interstate and interregional transportation of people and freight. Using a multimodal approach, the SIS moves to proactive planning and investment and links state investment decisions to statewide economic policies. A strong element of the SIS is Florida’s commitment to partner with the strategic facilities that enhance economic growth in the state. Growth and Expansion of Short Sea Shipping in the U.S. New Short Sea Shipping services are being introduced at an increasing pace in the U.S. and between the U.S. and its nearby trading partners. Of particular note are the mounting services provided by Osprey Line and Columbia Coastal, and the expansion of CG Railway’s innovative rail-on-ship service to Mexico by investing in reconstruction of its two vessels to double capacity and their move from Mobile to New Orleans to provide increased service bolstered by the port’s investment in new facilities for the service. From our research and interviews of carriers and ports, there is a widespread opinion that Short Sea Shipping markets clearly exist and that these services are very necessary and will expand. The timeframe for expansion is an issue that garners differing opinions, and for good reason. One opinion views Short Sea Shipping as a system that must be supported by government funding and relies on that premise for their opinion that links its expansion with outside funding. Other businesses disregard government funding

Elimination of Harbor Maintenance Tax initiative Florida’s Strategic Intermodal System (SIS) initiative Florida Commitment New Short Sea Shipping services at an increasing pace Widespread opinion that Domestic Short Sea Shipping markets clearly exist


Executive Summary

as a necessary means and believe that business opportunities will drive Short Sea Shipping. Nearly all agree however, that government initiatives, such as that at MARAD, serve business well by heightening the awareness of transportation-related problems, issues and alternatives. International Short Sea Shipping has not received as much attention from maritime stakeholders in the United States, but is very relevant. We define International Short Sea Shipping as service to Canada, Mexico, and the Caribbean Basin, as well as any service that may be seen as providing an alternative to current land-based transportation. In recognition of obstacles that may impede the easy application of Short Sea Shipping in our hemisphere, the U.S. Department of Transportation reached out to its nearby trading partners to address how to better facilitate commercial shipping between them. Port Canaveral has the possibility of alleviating land border congestion with Mexico, the second largest U.S. trading partner, through use of a Short Sea Shipping network. Ports on Mexico’s Gulf Coast (e.g., Vera Cruz) that serve markets in Mexico City and elsewhere are likely candidates for Short Sea Shipping termini. Factors that Support or Impede Short Sea Shipping in the United States Analysis of past EU Short Sea Shipping initiatives that proved as successful were based upon solid business plans that foremost considered both rail and trucking as partners and quality of service improvements. These implementation studies also indicate that carrier support initiatives attract cargo revenue. Advantages of Short Sea Shipping over other transport modes include reliability and safety. The relative effect on the environment in comparison to trucks and trains is minimal. Dependability due to road and rail congestion is not an issue as there are no traffic jams at sea. Additionally, Short Sea Shipping oftentimes involves large cost savings, thus, it satisfies the bottom line. Problems exist particularly in the areas of port infrastructure and port efficiency. Delays exist in some ports because of the lack of smooth connecting links to inland infrastructure, inefficient port operations and insufficient infrastructure. Port charges are sometimes very high and not transparent and labor regulations and practices can be restrictive.

International Short Sea Shipping Mexico a possible Short Sea Shipping partner with Port Canaveral EU initiatives point out need for solid business plan Advantages of Short Sea Shipping Problems in Port infrastructure


Executive Summary

One of the catalysts for the growth of Short Sea Shipping is globalization. Globalization of production and the liberalization of trade and transport in the North American market have had a profound effect on intermodal transport by being more efficient and competitive. Actions are necessary to improve the quality and efficiency of Short Sea Shipping services and to improve port infrastructure and port efficiency. The most important actions are:

Integration into multimodal transport chains or networks Stimulation of new maritime transport technologies Removal of administrative barriers (documents,

procedures, custom/immigration, veterinary checks) Creation of reliable market data on North American Short

Sea Shipping Improvement of the image of Short Sea Shipping Integration of border crossing systems Automation of customs and immigration security systems Improvement of transparency in port charges, related to

tariffs and state aids The missing link that still has to be taken care of is to convince shippers and forwarders presently using road transport to abandon their reliance on road transport and give more serious consideration to alternative modes such as Short Sea Shipping as a backbone for integrated door-to-door transport.

Interviews of Port Authorities, Terminal Operators, Marine Operators and Motor Carriers

Personal one-on-one interviews were performed by Maritime Transport & Logistics Advisors’ consultants of port authorities, terminal operators, marine operators and motor carriers. Fourteen (14) Port Authorities and Terminal Operators were contacted for interviews of which ten (10) interviews were completed.

Five (5) of eight (8) have carrier customers that currently engage in Short Sea, Coastal or Ferry Service to or from their port; Two (2) did not respond.

The two areas that more respondents viewed their greatest area of growth are in Short Sea Shipping and Containers.

Public funding, including state and federal programs, are often used to fund new ventures.

The Jones Act, HMT, cost, timeliness and manageability were mentioned as obstacles that must be overcome.

Globalization a catalyst Actions necessary Change of thinking needed by shippers and forwarders Personal, confidential interviews Ports and Terminals Five currently have Short Sea Shipping Service Short Sea Shipping considered greatest area of growth Public funding used Obstacles seen


Executive Summary

All ten (10) respondents believe that Short Sea, Coastal or Ferry Service is probable and desirable for their facilities, geographical location and future.

Twenty-eight (28) Marine Operators were contacted for interviews of which nineteen (19) interviews were completed.

Twelve (12) of the nineteen (19) have Short Sea, Coastal or Ferry projects in progress.

Seventeen (17) consider these services as probable and desirable for their business, geographical location and future; Two (2) are undecided.

Eighteen (18) believe Short Sea Shipping or Ferry service will become an industry standard.

Respondents replied with a lengthy list (30 items) of key hurdles that are necessary to overcome in order to engage in Short Sea Shipping –Amazingly, the Jones Act was barely mentioned.

Fourteen (14) respondents believe there is demand for an East-Central Florida Short Sea hub/port location, such as Port Canaveral.

Eleven (11) operators replied that Port Canaveral would be of interest for a future Short Sea Shipping project of their own.

Four (4) interviews were completed that represent two (2) motor carrier companies with a combined total of 23,000 trucks and two (2) trucking associations representing 215 motor carriers.

These interviews indicate very positive growth of domestic shipping demand for the Central Florida region. The motor carrier companies indicated a two-fold problem in servicing the region. It was reported that the industry is experiencing sizeable cost problems in serving a rapidly growing one-way market.

Two (2), includes one of the associations, consider short sea, coastal or ferry services as probable and desirable for their business, geographical location and future.

Three (3) replied that: o Short Sea Shipping, Coastal or Ferry service will

complement their existing services o There is not competition between Short Sea,

Coastal and Ferry service and the trucking business o The trucking business would benefit in working

with Short Sea, Coastal and ferry services Reasons stated for the viability of Short Sea, Coastal and

Ferry services are: o Increase efficiencies

All believe Short Sea Shipping desirable Marine Operators 12 of 19 have SSS Projects in progress 18 of 19 say SSS will be industry standard Jones Act not the major hurdle as previously thought 11 of 19 interested in Port Canaveral Motor Carriers Short Sea Shipping viewed a positive factor to motor carrier future


Executive Summary

o Eliminate deadheading (driving long distances full-out and empty-back)

o Mitigate traffic congestion All four (4) are facing delays due to congestion and road

traffic, as well as a shortage of drivers. All four (4) responded that Port Canaveral would be an

ideal origin/destination port for Short Sea, Coastal or Ferry services.

Geographic Location

Port Canaveral, compared with many other ports and terminals, favors ever increasing vessel-schedule integrity demands, is ideally positioned to the international shipping channel and boasts of a reduced time of only 45 minutes for ships to travel from the channel to the berth. When compared to other Florida East Coast Ports, Port Canaveral has an overall advantage with respect to geography, land area available for Short Sea Shipping infrastructure, intermodal connectors and access to highway connectors. Port Canaveral Short Sea Shipping Efforts CPA past market research indicates that International Short Sea Shipping is not an alternative as ocean carriers have elected to bypass Port Canaveral and truck Canaveral catchment cargo to alternate ports. CPA feels this is due to the absence of critical mass of volume needed to induce service with feeder vessel calls at CPA by liner services. CPA has done market research on the short sea domestic market, discussing the potential opportunity with shippers, marine carriers, motor carriers and other port authorities. Market research completed over the last several years has indicated only a limited amount of domestic cargo opportunity. This was identified as traffic currently being shipped by road and rail to and from the CPA hinterland. This cargo could be targeted for conversion to a domestic short sea shipping service between CPA and ports such as New York, Boston, Baltimore, Norfolk, Charleston or Savannah. CPA suggests that the rapid economic growth of the Central Florida region may have increased demand to levels that could now support the establishment of a domestic short sea service. A carrier has expressed interest and support in the development of Port Canaveral as a Short Sea Shipping terminal. In order to do so,

All consider Port Canaveral ideal origin/destination Comparatively, Port Canaveral has advantage International cargoes bypassing Canaveral CPA domestic market research indicates lack of market demand Central Florida’s rapid economic growth may have improved opportunity One carrier wants exclusive to start


Executive Summary

the carrier has expressed the need for an exclusive contract or funding. Another carrier indicated that they would need some type of funding to get started. The CPA, a public authority, is unable to enter into exclusive arrangements or to provide funding to a private entity. Potential for Port Canaveral’s inclusion in Government Sponsored or Funded Short Sea Shipping Pilot Program or Demonstration Project To date, Federal public efforts have consisted of heightening the awareness of the transportation capacity issue; formation of a public/private cooperative (Short Sea Shipping Cooperative Program) to investigate relevant topics in Short Sea Shipping and to perform funding studies that seek to learn from similar services already in place; analyzing the public benefits that may be derived from increased use of water-borne transportation in the United States; and investigating the business probabilities of successful Short Sea Shipping ventures. Traditionally, federal financial support for transportation related improvements have not supported demonstration projects that would exemplify untried transportation services. The potential for CPA, along with other strong business partners, to benefit from governmental funding certainly exists. Federal funding, although heretofore absent for Short Sea Shipping, is possible through a strategic approach supported by sound business planning and a coordinated legislative agenda. The probability for federal funding increases where funding participation from other governmental and business partners is evident. The State of Florida’s Strategic Intermodal System Initiative is the best opportunity currently available to Port Canaveral for funding assistance. Florida is very progressive and aggressive in recognizing the power of concerted efforts in transportation planning. A Short Sea Shipping Decision Tool The results of this study’s findings, international and domestic research, interviews of industry stakeholders and consultants’ expertise have led to the development of a list of critical decision factors that may support or impede the initiation of a Short Sea Shipping project. The list was developed considering the industry as a whole with relevance to specific Canaveral Port Authority’s attributes considered.

Short Sea Shipping Service Federal efforts to date have been focused on awareness Normally federal support not available for Demo projects Probability for Federal Funding exist Florida’s SIS best possibility for funding assistance Results of study led to Critical Decision Factors


Executive Summary

For this study, a Probability Decision Tool was developed at a high level using preliminary and limited data (per the Statement of Work of this project) to determine if Canaveral Port Authority should further consider Short Sea Shipping as an initiative. As the decision process evolves beyond this study’s scope of work, the tool can be adjusted and perfected to consider lower-level weightings (use of a scale broader than 1 through 5), additional research and criteria, cost-benefit analysis and specific business alternatives to further refine and decide if a specific Short Sea Shipping project should be initiated. The Short Sea Shipping Decision Tool, based on the performed research, analysis, interviews and professional expertise of the MTLA consulting group, and bound by the scope of this study, resulted in CPA Present Condition and Future Potential scores of 2.53 (Fair to Good) and 3.99 (Very Good), respectively. These scores translate to a Present Condition probability of 50.6% and a Future Potential probability of 79.9%. A comparison between the current and future potential scores indicate that CPA has the potential to improve their likelihood of initiating a successful Short Sea Shipping initiative if many actions are implemented within many of the sub-categories that have been identified as critical. The results of this study and Probability Decision Tool provides a high level indication that Port Canaveral is well placed to provide needed Short Sea Shipping services in the Southeast region. This study has researched and analyzed international and domestic Short Sea Shipping history, events, situations and transportation policy that exist today and projections for the future. Recently, the American Association of Port Authorities (AAPA), along with over 35 national transportation and business associations and ports, adopted a position that repeal of the Harbor Maintenance Tax is necessary to remove this significant disincentive to coastwise waterborne trade. This is a significant step that demonstrates the unity of the transportation industry with regard to Short Sea Shipping. The efforts of these and other groups have demonstrated that Short Sea Shipping may well have the potential to provide a sensible alternative and complement to truck and rail modes. Florida’s Strategic Intermodal System (SIS) has the potential to be an important tool and benefit for Port Canaveral and its commercial partners. The state’s new SIS transportation planning and funding program provides a timely opportunity for Port

Probability Decision Tool developed at a high level Decision Tool indicates Port Canaveral Short Sea Shipping Probability Fair to Good (today) and Very Good (future) Port Canaveral well placed to be a Short Sea Shipping Port AAPA and industry focused on eliminating HMT Florida’s SIS timely opportunity for Port Canaveral


Executive Summary

Canaveral to take an early leadership role in establishing Short Sea Shipping policy in the state. Removing trucks off the road also opens the door to possible Congestion, Mitigation and Air Quality (CMAQ) federal funding provided by FHWA to the State under the six-year highway bill (TEA-21) for projects that improve air quality. Port Canaveral is the first Florida port to commission its own Short Sea Shipping Probability study, which should be an important indication to the Florida Department of Transportation that Port Canaveral is in step with its future vision. The Port Authority of NY & NJ through its Port Inland Distribution Network (PIDN) benefited from state funding for Short Sea Shipping activities. Port Canaveral may also benefit from state funding through the SIS and CMAQ, and should consider active engagement with FDOT and the port’s commercial partners. The initiators of current Short Sea Shipping services and transportation planning are achieving success. The focus of governments and industry have the potential to lead to expanded, coordinated Short Sea Shipping services and coordinated establishment of fully integrated transportation networks. As evidenced in this study, those organizations and businesses that provide vision and leadership in addressing these important transportation issues, and that work to provide solutions to them, are establishing a foundation for the potential success of the renewed focus on waterborne transportation in the United States. Specific business opportunities still remain to be explored, and a focused marketing and business plan for Short Sea Shipping would need to be established. Should Port Canaveral decide to pursue Short Sea Shipping service, there are certain infrastructure investments that will need to be made and further examination of these investments needs to be accomplished. A Port Canaveral marketing and awareness campaign to the public, the State, the Federal Government, state and federal legislators, and working with stakeholders such as the I-95 Corridor Coalition and others needs to be developed and should be part of a strategic plan.

CMAQ may also be available Port Canaveral 1st to do Probability Study Time is now to engage FDOT Initiators are finding success Focused Marketing & business plan needed Infrastructure determination needed Marketing & awareness campaign developed


Executive Summary

Also of importance to any port authority is its ability to positively impact regional economic development, job creation and contribution to its local constituency. Intuitively, bringing new business to the port could provide these positive effects, but further analysis of the cost and benefits associated with establishing a Short Sea Shipping service needs to be undertaken. Environmental impact is certainly an important factor in any analysis concerning increased port activity and Short Sea Shipping service potential. Although congestion relief from congested road networks in other areas of the region may be possible, the public perception of increased traffic in the Canaveral area must be considered. The environmental impact from both the potential benefit and public perspectives needs to be examined. In summary, comprehensive business, marketing, awareness and short and long term strategic plans, along with additional analysis of influencing factors to implement Short Sea Shipping services at the port, would be required in order to pursue its implementation. The Probability Decision Tool provided in this study serves as an excellent device for discussion, further analysis, examination, and decision-making in this process.

Regional impact & Cost & Benefits determination needed Local public perception determination needed Short & long term Strategic plans Probability Decision Tool useful today and the future


Introduction to Short Sea Shipping

1. Introduction to Short Sea Shipping

An introduction to Short Sea Shipping and models used around the world are presented.

1.1 Short Sea Shipping

What is Short Sea Shipping? This term is defined as the shipping of cargo or goods for relatively “short” distances or to nearby coastal ports. Typically, Short Sea Shipping vessels follow a coastline, cross a channel or other landlocked geography.

There is much debate and no uniform definition that sufficiently describes what Short Sea Shipping is. The U.S. Maritime Administration (MARAD) defines Short Sea Shipping as:

“…commercial waterborne transportation that does not transit an ocean. It is an alternative form of commercial transportation that utilizes inland and coastal waterways to move commercial freight from major domestic ports to its destination.” (MARAD 2005)

The definition that the European Commission uses to define Short Sea Shipping is:

“…the movement of cargo and passengers by sea between ports situated in geographical ‘Europe’ or between those ports (European) and ports situated in non-European countries having a coastline on the enclosed seas bordering Europe.” (European Commission 1999)

In this report geography is viewed as the foremost criteria to define Short Sea Shipping. This is consistent with the European Commission definition, albeit we do not limit the scope of Short Sea Shipping solely to domestic trades but rather to a geographic region, e.g. North America. Smaller local/regional ports will also be considered as part of Short Sea Shipping.

Additionally, some similarities between inland navigation and Short Sea Shipping do exist; however, it is necessary to emphasize that Short Sea Shipping considers the transport route and not the shipping method itself. A route between Houston, TX and Cristobal, Panama constitutes a short sea route, whereas, a shipment between New Orleans, LA and Memphis, TN would constitute a form of coastal shipping that is appropriately defined as inland navigation. Short Sea Shipping is in fact much more complicated than that of traditional coastal oriented shipping. For example, a year-round high frequency ferry service between U.S. and Canada or Mexico carrying truck-trailers, cars and/or passengers could be considered a Short Sea Shipping service since it effectively provides a “sea bridge” for border crossings and road transportation. Examples of Short Sea Shipping can vary widely and be extremely efficient. Yet, many shippers have a negative impression of Short Sea Shipping. They view it as slow moving vessels plying the waters in a traditional sense. Actually, Short Sea Shipping can encompass any of the following:

Intermodalism Containers or Trailers Door-to-Door Basis Floating Stock



Inter-Regional Cargo Alternatives to Road Transport Border Crossings Feedering Transshipment Hub and Spoke

Intermodalism is “used to denote movements of cargo containers interchangeably between transport modes, i.e., motor, water, and air carriers, and where the equipment is compatible within the multiple systems.” (MARAD 2005). It refers to the movement of cargo by more than one mode of transport, including but not limited to: short sea vessel, truck, rail, and inland barge. This mode of transport is most conducive for the future growth and success of Short Sea Shipping.

Containers or Trailers are the instruments of choice for transport of non-bulk or non-break-bulk dry goods. The advent of containerization has facilitated expediency, safety, reliance, and overall cost reductions. Types of services and routes for container and trailer traffic most often used in North America are: transshipments, feeder, coastwise and bridge.

Door-to-Door is the concept of carrying freight from the “door” of the factory or shipper to the “door” of the consignee or receiving factory. Door-to-door services or express traffic is a large component of international and domestic trade. Customs clearance services are handled turnkey and seamlessly on all international shipments.

Floating Stock consists of large volumes of goods that are shipped regularly over long distances within the U.S. This may be a suitable use for short sea vessels, in that, the exporter/importer has large quantities of floating stock thus reducing the need for land-based stock, e.g. petroleum and oil based products.

Inter-Regional Cargo has increased significantly with the establishment of the North American Free Trade Agreement (NAFTA), which eliminated many trade barriers. As a result, short sea vessels are serving an increased number of destinations throughout the region. Additionally, the liberalization of trade barriers under the central theme of globalization has heightened the utility of this transportation mode, particularly since many plants and suppliers have found themselves physically far from their markets. The low cost of transportation has had dramatic effects on the economic landscape. The global supply chain is continuously striving to achieve overall economies of scale where the costs are lower and the transportation faster, ultimately leading to cost savings and added value for the total supply chain.

An Alternative to Road Transport is imperative in many countries, especially in Europe and North America, due to excessive roadway traffic jams and congestion. This is primarily due to ever-growing, large and dense populations and increasing roadway cargo tonnage. Many roads and highways have more than exceeded their maximum capacity levels as a result of this ever-increasing road traffic. An initiative that has been developed to transfer transport modes from roadway to waterway is the Port Inland Distribution Network (PIDN). The PIDN is supported by the Port Authority of New York/New Jersey and focuses on the use of container barge services to serve smaller regional ports within a 400 mile radius of the Port of NY/NJ (Brooks and Frost



2004). Congestion and environmental issues have also heightened the need for alternatives. It has been estimated that over 5,000 kilometers (3,100 miles) of roadway is totally congested daily in Europe and that this road congestion is responsible for twenty percent of CO2 and NOx emissions polluting the air (Blonk 1999).

Border Crossings, international freight, immigration and customs clearance are often an integral part of Short Sea Shipping, especially in Europe and other locations where high frequency ferry services are operating as a “bridge”, an alternative means of extending the highway across the waterways. Trucks and trailers can be carried on Ro/Ro ships while their drivers can travel on the same vessel and take advantage of onboard passenger accommodations for rest and amenities for relaxation. Some routes also carry cars and walk-on/off passengers. Therefore, passenger check and security inspections, customs and immigration facilities may be required at landside operations. Border crossings involving drivers and/or passengers in North America may exist on future routes between U.S. and Canada, U.S. and Mexico and/or U.S. and Caribbean/Latin American nations. North American NAFTA’s NEXUS and FAST freight customs and driver temporary-immigration clearance IT systems are being implemented to speed up international trade shipments and eliminate border crossing delays. Adoption of these programs is essential to the future success of the Short Sea Shipping industry.

Feedering is “used for local or coastal transport (for carriage of cargo and/or containers) to and from ports not scheduled to be called by the main (ocean) vessel, directly connecting these ports to the main (ocean) vessel” (P&O/Nedlloyd 2005) and is a part of Short Sea Shipping. Collectively, the world’s short sea container market represents one of the largest and most dynamic elements of the global container shipping industry (Marcucci 1998). The growth of intra-regional links is becoming stronger, particularly due to the development of regional economic groups such as ASEAN (in Asia), the European Union (EU), NAFTA, and Mercosur. Current intra-regional trade is estimated at a total of 16.5 million TEUs per year, representing more than one-third of the world’s container trade. The UK feeder traffic is one of the most prolific short sea trade routes in the world and second largest in Europe after the Intra North Mediterranean in 1996 (MDS Transsmodal 1998).

Transshipment, “to transfer goods from one transportation line to another, or from one ship to another” (MARAD 2005), is frequently used interchangeably with the term “feedering”.

The Hub and Spoke Networks (and related feeder connections) are being fueled by the increase in vessel size and has caused ocean carriers to reduce the number of ports directly served. It shall also be noted that the trucking industry uses the same “hub” model for its terminal networks across the country. Hubs enable lines to effectively serve regional markets where volumes do not warrant direct calls. Accordingly, a good interregional container distribution system has to be supported by Short Sea Shipping. The concept of hub and spoke ports has caused shipping lines to change their operations and, in general, has affected deep-sea container transport and feedering services. It is in this context that feeder fleets have to be prepared to face the growing container volumes carried by the new larger ships in order to satisfy the regional markets. Main ports and hub ports may be compelled to establish connections with regional ports; connections which are possible only by a strong feedering or short sea fleet.



1.2 Short Sea Shipping Around the World: Europe

1.2.1 Short Sea Shipping in the UK The geographical conditions of the UK cause it to be dependent on shipping for trade. The only other alternatives are airlines and the recent opening of the channel tunnel (referred to as the chunnel). It is this latest development that has now brought the UK closer to Europe. The notion of driving or railing by a land-link to the continent of Europe is a challenge that has been met. As an island nation, the UK is served by a multitude of ports. The two ports that handle the majority of containerized cargo in the UK are Southampton and Felixstowe both of which are located in Southeast UK. The reliance on Short Sea Shipping via feeder vessels from the European continent is quite extensive into this area. Ports that are currently underutilized may yield possibilities for the future growth of Short Sea Shipping into the UK. The formation of the European Union (EU) and the liberalization of trade between the nations within the EU have led to an increase of trade and transport. The extent of the ever increasing importance of Short Sea Shipping is that over three-quarters of the unitized cargo is either shipped in the UK by, bound for, or originated from short sea (Henesey and Kerckaert 2004). Approximately 80% of the container traffic in 1996 took place in the south and east coasts of England (Henesey and Kerckaert 2004). The UK is dependent upon channel traffic in that it constituted up to 50% of the 1.135 million TEUs shipped in 1996, and of this, 718,000 TEUs or 32% was feeder traffic. Compared to 1992 figures, it amounted to an 89% increase (MDS Transsmodal 1998). Interestingly, the transshipped UK imports of container traffic have exceeded UK exports. The data obtained from Transshipment of UK Deep–Sea Trade 1976-1984 conducted by the British Ports Association and the statistics collected from the Port of Rotterdam lead to the conclusion that the UK has constantly experienced this problem. Regarding this imbalance of imports to exports, there are severe repercussions to ship lines repositioning empty containers especially when freight rates are low. This added expense would place Ro/Ro operators, who traditionally do not own or maintain container fleets at an advantage over traditional Lo/Lo operators.

1.2.2 Short Sea Shipping in the Rest of Europe In 1996, inter-European container traffic amounted to 4.13 million TEUs which represents 54% of the European total. The European Short Sea Shipping industry benefits from advances in technology that have increased the speed of service and cargo-handling efficiency. Though this sector is well established, it has not matured. Some factors that are encouraging further development are: the inclusion of new markets, e.g. the addition of 10 new member states has led to more trade and traffic; the commitment of the European Commission by funding vast sums of money for research and subsidy programs for promoting Short Sea Shipping; technological developments; liberalization of European cabotage policies; and the immense amount of ‘clusters of know-how’ that are found in various port cities and regions. The Marco Polo program funded by the European Commission which provides financial assistance for start-up services is further assisting the development of Short Sea Shipping (Brooks and Frost 2004). Several very detailed studies exist on European container trade and feeder services, such as “Containers by Sea” published by MDS Transsmodal (1998), which is partially presented in



Table 1 and “The European Container Market - Prospects to 2008” published by Ocean Shipping Consultants Ltd. (1997). The total container traffic flow between European areas in 1996 amounted to 7.48 million TEUs, of which 4.01 million TEUs (54%) were inter-European and 3.47 million TEUs (46%) were feeder trades (MDS Transsmodal, 1998). Inter-European container traffic competes with all other modes of freight transport. These include road, rail, inland waterway, Ro/Ro truck/trailer ferry, conventional shipping and air-freight. It is different than feeder traffic, which is essentially a port-to-port operation with fewer of the alternative modes.

Table 1. European Container Route Traffic (in million TEUs)

1986 1992 1996 Total European Flow 3.40 5.20 7.48 Inter European Portion 2.10

(62%)3.00

(57%)4.01

(54%) Feeder Portion 1.30

(38%)2.20

(43%)3.47

(46%) Source: MDS Transsmodal, 1998 There has been a concentration of deep-sea services in a few ports with proximities close to the largest European markets. As a consequence, feeder services have been developed; linking the hub ports with the ports not directly served by intercontinental shipping services. It is expected that the role of maritime feeder services will continue to grow. The main Short Sea Shipping regions in Europe are the following:

North Mediterranean - countries that have coastlines bordering the sea, including: Spain, France, Italy, Croatia, Serbia-Montenegro, Albania, Malta, and Greece

Atlantic - consists of the north and west coast of Spain, Portugal and the west coast of France

Channel – north coast of France, Belgium and the Netherlands

Denmark/Germany- combined as one region

Nordic – consists of Norway, Sweden and Finland

East Baltic – comprises Russia, Lithuania, Latvia, Estonia, and Poland

UK – comprises England, Scotland and Wales

Ireland – forms a Short Sea Shipping region of its own

A February 2005 report stated that Short Sea Shipping accounted for 63% of the entire volume of goods transported by sea in the EU-15 in the year 2003, totaling over 1.6 billion tons. The United Kingdom and Italy accounted for the largest share of cargo handled in Short Sea Shipping, totaling 342 and 302 million tons, respectively. The amount of Short Sea Shipping varied widely from one country to another. (EuroStat, 2005) Short Sea Shipping experienced an upturn in all the EU-15 Member States from 2002 to 2003, with the exception of the United Kingdom. The Mediterranean and the North Sea had the largest



share of Short Sea Shipping, with 30%, 491 million tons handled, and 27%, 448 million tons handled, respectively. (EuroStat, 2005) In short, Brooks and Frost (2004) suggest that Short Sea Shipping is evolving from an extension to, or supplement of, deep-sea shipping to an integrated door-to-door fully intermodal service between points in Europe. There have been some threats to Short Sea Shipping such as the building of the Chunnel linking the UK with the continent and the bridge linking Scandinavia with Europe through Denmark. In addition, the abolition of duty-free sales on ferry services has had some effect on the use of short sea vessels. However, the increasing use of cargo and freight among such ferry and short services has mitigated those adverse effects. An indication is the surprising number of deep-sea carriers investing in short sea operations, i.e. Maersk Sea-Land, P&O/Nedlloyd, Orient Overseas Container Line, and others. A comparison table is presented in Table 2 which presents some interesting information on the Short Sea Shipping systems found in the U.S., Europe and Asia.

Table 2. Comparing “Short Sea Shipping” in Regional Markets

U.S. Europe/UK Asia Road and rail infrastructure has been preeminent

Long history of inter-European freight movements on sea and river routes

Long history of freight movements on sea and river routes

Little geographic impetus for coastwise shipping

Earlier pressure due to inadequacy of road system and congestion

Hub and spoke feeder ship traffic used extensively – fallout of E/W line-haul containership services

Niche markets exist

EU backs services (including start-ups) with subsidies

Many locations have non- existent or underdeveloped road/ rail alternatives

Worsening congestion and larger vessels on E/W trades may impel development

Many sea routes have historically faced no land-based competition

Cabotage laws protect some trades

Source: The Economics of Domestic Short Sea Shipping Workshop, Transportation Research Board, Washington DC, Sept. 28, 2004.

1.2.3 Short Sea Shipping in Canada The concept of Short Sea Shipping as a viable alternative to intermodal truck and rail is now emerging in Canada. Awareness is rising rapidly and regional workshops and meetings between policymakers and industry are held throughout the country. The first national conference was held in November 2004. On July 16, 2003, Canada and the U.S. signed a Memorandum of Cooperation on Sharing Short Sea Shipping Information and Experiences to share information and encourage collaboration between their respective transportation authorities (Brooks and Frost 2004). Led by Transport Canada, a new framework is being put in place on the premises from previous transportation vision documents and marine policy. The Canadian Seaway Management Corporation is a major player in this effort on the Great Lakes (HWY H2O Project) and the Port of Halifax and other Canadian east coast ports are well positioned and gearing up for Atlantic activities.



Due to on-going port divestitures in Canada, their smaller local/regional ports may not have the opportunity to participate in the future should these ports be shut down or otherwise be rebuilt for other purposes by local developers or communities. A further problem in Canada involves the Coastal Trading Act, which under certain circumstances may be interpreted by some Canadian agencies to apply to proposed Short Sea Shipping routes such as those between U.S. and Canada. Among other issues to be resolved is the lack of bilateral agreements for Immigration, Customs, Border Control, Security and Pilotage. In addition to trying to position themselves for the continuously growing overseas international trade carried by oceanic or deep-sea vessel, major U.S. Great Lake ports such as Detroit, Chicago and Cleveland, are also beginning to look at Canadian trade possibilities as international feeder ports on the Seaway System or for domestic Short Sea Shipping services. Investigating participation in border crossing ferry service is also part of this trend. In addition, many smaller local/regional and private ports in the U.S. are beginning to evaluate Short Sea Shipping prospects including pairing with like ports in Canada and on the St. Lawrence Seaway.

Figure 1. Short Sea Routes in Atlantic Canada



1.2.4 Short Sea Shipping in Mexico & the Caribbean Gulf Water transport between U.S. and Mexico has been in competition with truck service using the Laredo Customs juncture and rail service (such as the Detroit auto train which supports the auto manufacturing plants in Mexico) for some time, but congestion and long lines at border crossings are becoming seriously problematic. To date, frequency and reliability of both these modes has effectively cut the west coast Florida seaports out of trade with Mexico. In 1996, Latin American trade with the U.S. from the Southeast totaled $160 billion dollars. However, the 2001 Latin American Trade and Transportation Study (LATT) forecasted three-fold growth and continued expansion over the next 20 years. Florida in particular is an attractive target market because of growing population and demand for textile, garments, fruits, vegetables, peanuts, rice, coffee, and other produce. The Campeche region of the Yucatan Peninsula is experiencing rapid economic development and growth. Cuba and other Eastern Caribbean Markets are also expected to grow rapidly in the future. West and East Gulf trading routes include deep-sea carriers, many of which are in global trades, such as Zim Lines, Mediterranean Shipping Lines, American President Lines, Hapag Lloyd, P&O/Nedlloyd, CMA/CGM and Maersk Sea-Land. Niche markets for North and South transports and refrigeration routes have developed in regional waters by carriers such as Crowley American Transport, Seaboard Marine and Linea Peninsular.


‘Short’ History on Short Sea Shipping in the U.S.

2. ‘Short’ History on Short Sea Shipping in the U.S.

This section will briefly review the U.S. policy as it relates to the potential use of domestic shipping vessels in the U.S. Recent activities and trends will be evaluated. Obstacles to the use of U.S. domestic vessels will be identified and prospects for the future are examined.

2.1 Shipping and Short Sea Policies in the United States

The United States is the largest trading nation in the world. With its huge coastline, one would expect to see feeder ships operating in the U.S. as they do in other parts of the world. For more than 200 years, Cabotage laws have existed in the U.S., since the earliest days of the Republic. Indeed, The Merchant Marine Act of 1920 reaffirmed earlier laws dating back to the first Congress in 1789. In 1817, the U.S. Congress passed a law which restricted waterborne commerce between states to vessels built in the U.S., owned by U.S. citizens, and crewed by U.S. citizens. This cabotage system, commonly known as the “Jones Act”, still exists today in the shipping of goods within the U.S. (Marcus 1986). 2.1.1 The Merchant Marine Act of 1920 – The “Jones Act” According to the American Maritime Congress, “the Jones Act, which mandates U.S.-flag (U.S.-built, owned, crewed and documented) carriage between U.S. ports, is vital to U.S. shipping and shipbuilding. This 1920 law supports approximately half the entire U.S.-flag merchant marine fleet and helps maintain a merchant marine and shipbuilding base.” “It has long enjoyed broad popular support as it generates jobs in all 50 states, not only in coastal states but along inland waterways and the Great Lakes. It has also had strong bipartisan support in Congress and is similar to the policies and laws (called "cabotage" laws) of nearly 50 foreign shipping nations that also reserve their coastwise shipping and passenger trades for their domestic fleets. It keeps shipping and shipbuilding assets under U.S. control, subject to all U.S. laws and standards, while providing essential services in U.S. coastal states and waters and to the economies of Alaska, Hawaii and Puerto Rico.” (American Maritime Congress 2005) “The Jones Act fleet represents an investment of $26 billion by U.S. maritime companies. The fleet includes more than 44,000 vessels (not including fishing vessels) and provides direct employment for over 124,000 American citizens, including 80,000 merchant seamen and 44,000 shipyard and other shoreside workers.” (American Maritime Congress 2005) 2.1.2 No Government Subsidies The Maritime Cabotage Task Force goes on to say, “It is important to note that notwithstanding its substantial contribution to the national economy, the domestic fleet operating under the Jones Act does not collect one cent in government subsidy, price supports, or tax exemptions. A longstanding tenet of U.S. maritime policy has been to limit subsidies of all forms to the U.S.-flag fleet that operates in international trades, where such subsidies are necessary to offset the economic advantages possessed by international carriers that result from the beneficial policies of their own countries and their ability to operate outside U.S. laws governing the workplace. One purpose of U.S. cabotage laws is to avoid the need for similar government involvement in the domestic sector by ensuring that all companies competing in U.S. domestic commerce play by



the same set of rules and regulations. The Jones Act fleet makes up 97 percent of all U.S.-flag waterborne commerce; 78 percent of U.S.-flag merchant tonnage; 38 percent of U.S. merchant tonnage in vessels larger than 1,000 grt; 87 percent of all shipboard employment opportunities, and 70 percent of projected U.S. shipbuilding opportunity.”

“Total U.S.-flag international-trade tonnage, including imports and exports, is barely 3 percent of Jones Act tonnage and, on a tonnage basis, is the rough equivalent of the Jones Act trade in food and food products alone that moves between Illinois and Louisiana each year. Due to the cabotage laws, nearly 60 percent of the waterborne commerce moving on U.S. waters in any year travels on American ships.”

MARAD actively supports the Jones Act and has gone on record in an article by the Journal of Commerce, that it would financially support the development of Short Sea Shipping or coastal shipping (Brooks and Frost 2004). The Jones Act has frequently been cited as a deterrent in the development of Short Sea Shipping in the U.S.; however, as will be seen later in this study, interviews with Marine Operators, Ports, Terminals and Motor Carriers indicate the Jones Act is far from being the major hurdle. 2.1.3 Alternative Reasons for the Lack of Feeder Vessels in the United States While the Jones Act, with its requirement for construction in the U.S. and the employment of U.S. seafarers for waterborne movement between U.S. ports, has been a factor for the U.S. not to employ a large feeder fleet, other reasons exist. The capital-intensive system envisioned was not really so capital-intensive in retrospect. Containerships were relatively cheap by the mid-1970’s. It made more sense to spend money on larger (2,000 TEU) ships rather than on U.S. feeder ships. Many ports in North America managed to develop a container terminal, hoping to become one of the few load-center ports of the future. These underutilized ports were ready to “make a deal” to maintain a direct call by a container line. Carriers were intent on filling these “huge” ships they were buying. They rarely dared to skip a port call (that could have been served by a feeder system) in fear of losing cargo to a competitor with a direct call.

2.2 Current Policies in U.S. Shipping - Focusing on feedering

As part of President Ronald Reagan’s administrations policy to reduce the role of government in commercial affairs, the provisions of the Merchant Marine Act, 1936, relating to ship construction subsidy were suspended. However in 1993 under President Clinton, this policy was reinstated (Marcus 1986). The controversial amendment to Title XI allows international companies or nationals to build ships in the U.S. with the U.S. federal government guaranteeing the loans, or guaranteeing bonds issued by shipping companies to an investing public. The fee for this guarantee on obligations incurred for construction or reconstruction of ships is fixed at a maximum of one-half of one percent per year on the outstanding principal.

2.2.1 Recent Trends that are Influencing Policy Decisions What has changed in the last two decades? It is the construction of mega-sized containerships: more than 9,000 TEUs and growing (plans are now available for 14,000+ TEU vessels- Malacca-



Max 1). The ships and the terminals are now really capital intensive. Not all ports have either the terminal capacity or the water depth to efficiently handle a mega-ship. Alliances have meant that carriers do not have to fill these ships by themselves. Double-stack trains have greatly increased the efficiency of long inland moves. Truck congestion continues to grow, and with it environmental concerns. In addition, the West Coast does not lend itself to tug-barge feeder systems due to the weather and distance between ports. On the East Coast, the Port of New York/New Jersey is roughly twice the size of its nearest East Coast competitor. NY/NJ is still the obvious hub for a feeder system due to its large market and population base. Ports such as Hampton Roads/Norfolk, Charleston, and Jacksonville also are possible hub ports for feedering and could be introduced via ports such as Port Canaveral. Recognizing the accelerating issue of both road and border congestion, the U.S. Federal Highway Administration (FHWA) is also getting involved in supporting maritime activities by sponsoring both Short Sea Shipping and Ferry Service studies for highway extension projects. Funding for these studies is made available to State Departments of Transportation (DOTs), Port Authorities, Metropolitan Planning Organizations (MPOs) and others with interest in possibly facilitating or providing this new type of service. In addition, FHWA funding is being made available for the planning and implementation of Ro/Ro and Ro/Pax services and Passenger Ferry terminal facilities. The possibility of using international flag vessels on U.S. to Canada or Mexico or Bahamas Short Sea Shipping or Ferry routes is being explored and/or already practiced by private operators in limited fashion. In certain geographies, such as Canada, the Canadian Coastal Trading Act may prevent or seriously encumber NAFTA based Short Sea Shipping activity. Failure of start-up operators trying to develop new routes is already evident in the North American market in which there was lack of interest from shippers and carriers. “The Spirit”, a high-speed ferry car and passenger service, which operated between Rochester, New York and Toronto, Ontario for only three months during 2004, is such an example. Many other routes and new ventures, which would have made perfectly good business sense, have been put-off as a result of these problems and other past limitations.

2.3 Where are the New U.S. Domestic Ships?

The first successful fully-cellular containership service in international commerce began in 1966 on the North Atlantic. By 1967, consultants such as Mckinsey and Co. and others, had already started explaining their visions of the future, which is stated below:

“The most significant change is the economies of scale that can be achieved with large container ships. Thus, cargoes large enough to fill these ships will tend to be

1 The economy of scale of mega-containerships of 18,000 TEUs has been demonstrated in a report by Wijnolst, Niko et al. (1999) Malacca-Max: The Ultimate Container Carrier, the concept of the Malacca-Max has been accepted by the shipping community, being synonymous with mega-containerships with a maximum draught of 21 m which can sail through the Strait of Malacca.



concentrated in a few ports offering regular sailing frequencies to the major trading of the world”. (Marcus 1989)

From this statement one might imagine huge containerships shuttling to one load container port on each side of the ocean. Containers would be distributed within each continent by feeder systems of ships, rail, and trucks. However, this scenario that has been realized and implemented in Europe, has not yet been accomplished to its fullest potential in the U.S. The reliance on rail, and even more so on the road modes of transport, has made the trend towards short sea or feedering a long way from reality. Certainly the containership grew in size. By 1971, the world’s largest containerships were 2,000 TEUs (twenty foot equivalent unit). The lack of new U.S. flag feeder ships in the 1960’s and 1970’s can be explained in part by such factors:

Worldwide Shipbuilding Overcapacity

Abundance of Shipbuilding Subsidies

Abundance of Container Ports

Perceived Need for Direct Service

From a worldwide perspective, there still exists some shipbuilding overcapacity, an abundance of shipbuilding subsidies from national governments (albeit a potential finance agreement to end such subsidies) and plenty of container terminals (albeit not the ideal size and crane capacity). These factors still put pressure on carriers to provide direct service rather than feeder service (although it is not unusual to provide a “substituted service” by truck to a nearby port rather than make a separate port call). Today, the major hindrances to construction and operation of new U.S. flag feeder ships are:

Reluctance to invest millions of dollars on untested ideas. “Build it and they will come” is not in favor with the ship financing community as evidenced at the recent MARAD 3rd Annual Short Sea Shipping Conference held in New York, October 2004. The ship financing community expressed their requirement to see cargo commitments prior to financing the building of new ships.

High U.S. shipyard construction costs in comparison to foreign shipyard construction costs.

In Table 3 a list of active container ships built in the U.S., by U.S. shipyards, is compiled indicating that very few container ships have been built recently in the U.S. Those that are operating are often well over 25 years old.



Table 3. Table of Active Container Ships Built in U.S. Shipyards - 2005

Year Built Original Name Original Owner GT DWT

Price ($mm) Notes

1973 Export Leader American Export Isbrandtsen 17,900 16,280 17.0 RRF 1988 as "Gopher State"

1969 Lightning American Export Isbrandtsen 17,900 16,280 13.4 RRF 1988 as "Flickertail State"

1969 Sea Witch American Export Isbrandtsen 17,900 16,280 13.4 CTL 1974, now stern of "Chemical Pioneer"

1970 Staghound American Export Isbrandtsen 17,900 16,280 13.4 RRF 1988 as "Cornhusker State"

1983 President Lincoln American President Line 40,400 32,800 90.0 Now "Mahimahi"

1983 President Monroe American President Line 40,400 32,800 90.0 Now "Mokihana"

1982 President Washington American President Line 40,400 32,800 90.0 Now "Manoa"

1973 President Jefferson American President Lines 21,500 18,500 21.9 NDRF "President Jefferson"

1974 President Johnson American President Lines 21,500 18,500 21.9 NDRF "Thompson Lykes"

1973 President Madison American President Lines 21,500 18,500 21.9 NDRF "Howell Lykes"

1973 President Pierce American President Lines 21,500 18,500 21.9 NDRF "Jean Lykes"

1979 Austral Pioneer Farrell Lines 31,430 27,340 78.3 Now "Horizon Pacific"

1980 Austral Puritan Farrell Lines 31,430 27,340 78.3 Now "Horizon Enterprise"

1973 Austral Endurance Farrell Lines 18,600 20,000 20.5 Now "Horizon Hawaii"

1973 Austral Ensign Farrell Lines 18,600 20,000 20.5 Now "Horizon Expedition"

1972 Austral Entente Farrell Lines 18,600 20,000 20.5 Now "Horizon Trader"

1972 Austral Envoy Farrell Lines 18,600 20,000 20.5 Now "Horizon Navigator"

2005 Unnamed Kvaerner Finance 32,000 29,400 Building

2005 Unnamed Kvaerner Finance 32,000 29,400 Building

1980 Kauai Matson Navigation 26,800 38,800 75.5 Active

2003 Manukai Matson Navigation 32,000 29,400 110.0 Active

1978 Maui Matson Navigation 23,800 27,000 50.7 Active

2004 Maunawili Matson Navigation 32,000 29,400 110.0 Active

1992 R. J. Pfeiffer Matson Navigation 31,573 28,555 129.6 Active

1973 Australia Bear Pacific Far East Line 23,763 26,600 25.2 Now "Horizon Consumer"

1974 New Zealand Bear Pacific Far East Line 23,763 26,600 25.2 Now "Horizon Producer"

1987 Sea-Land Anchorage Sea-Land Service 20,965 20,668 60.0 Now "Horizon Anchorage"

1987 Sea-Land Kodiak Sea-Land Service 20,965 20,668 60.0 Now "Horizon Kodiak"

1987 Sea-Land Tacoma Sea-Land Service 20,965 20,668 60.0 Now "Horizon Tacoma"

1969 American Lark U.S. Lines 18,876 20,574 12.2 Now "Horizon Crusader"

1968 American Legion U.S. Lines 18,764 22,138 12.2 Now "Horizon Challenger"

1968 American Liberty U.S. Lines 18,876 21,665 12.2 Now "Horizon Discovery" Source: MARAD



2.4 Future

2.4.1 What does the future hold in store? A few existing U.S. flag liner vessels, upon reaching the end of their mandatory 25-year Operating Differential Subsidy contracts, might be temporarily used as feeder ships. (These vessels might need the permission of the Maritime Administration if the ships were built with a Construction Differential Subsidy). There will also be more incentives to increase feeder ship services from Halifax (where mega-ships are now being partially unloaded so they can proceed into NY/NJ with reduced draft) and to Freeport, Bahamas into a major transshipment center. If cost effective, local/regional landside facilities are established, regulatory requirements adjusted, and other operating issues resolved, new Ro/Ro and/or Ro/Pax services will develop rapidly in the Great Lakes and Gulf of Mexico areas primarily due to the need for additional border crossings, redundancy, lower cost options and mid-Lake/Gulf logistic efficiencies. Trailer based Ro/Ro and/or Ro/Pax services operating along the North American East and Gulf Coast are also likely to evolve if proper service parameters and facilities can be implemented. An entire industry paradigm shift is most likely required to make domestic-only services attractive. The event of NAFTA based Short Sea Shipping and Ferry services starting up in the Great Lakes and the Mexican Gulf for example, will quickly translate into development, expansion and seamless integration of both domestic coastal and inland services due to the sudden availability of “showcase” projects; but more so, due to the introduction of new information technologies, new types of vessels, best practices, etc. It will also assist in facilitating full integration of short sea transportation into the overall intermodal system.


Current Short Sea Shipping Routes, Cargoes, and Ports

3. Current Short Sea Shipping Routes, Cargoes, and Ports

In this section a detailed analysis of possible and probable Short Sea Shipping routes, cargoes and ports (mix of international/domestic) are presented.

3.1 Routes

3.1.1 Domestic Short Sea Shipping Routes

Domestic Short Sea Shipping is defined by the Transportation Research Board (2004) to be a freight service operation carrying either containerized or trailered cargoes via coastal waters, lakes, and river systems of North and Central America, having at least one port of call in the United States, and in particular those services where the shipper has a true intermodal choice between moving units by water or using one or more land alternative (highway and/or rail) or, in some cases, air transportation. Types of Vessels that are employed in domestic Short Sea Shipping can be classified as the following: Tug and Barges (sea-going), Tug and Barges (river type), Small Ships, Tug and Barge (ITB/ATB), Liquid Bulk, Dry Bulk, Break Bulk, Intermodal (Container, Ro/Ro, LASH), and Rail-Ferry. Domestic U.S. Short Sea Shipping services are illustrated in Figure 2 and identified by different colors and types of service offered, e.g. Ro/Ro, Lo/Lo and COB (Container On Barge).

Figure 2. Short Sea Shipping Networks in the United States


Totem Ocean Trailer Express (TOTE) - Ro/Ro

Alaska Marine Lines + Northland Services - COB

Horizon Lines - Lo/Lo

Matson Navigation co. Inc. – Lo/Lo / Ro/Ro

BridgePort Feeder Service Ro/Ro barge

Foss Maritime Co. + Tidewater Barge Lines -

COB

Osprey Lines- COB

Crowley Maritime Corp. Lo/Lo / Ro/Ro

Ro/Ro Barge

Columbia Coastal Transport - COB

Tropical Shipping Lo/Lo / Ro/Ro

Horizon Lines - Lo/Lo


U.S. Short Sea Shipping Domestic Networks from Mid-Atlantic to North East Coast On the East Coast of the U.S., domestic Short Sea Shipping networks are primarily providing inter-coastal services to deep-sea carriers operating to U.S. territories or protectorates, such as Puerto Rico, St. Thomas and U.S. Virgin Islands (Brooks and Frost 2004). The dominant U.S. feeder operator is Columbia Coastal Transport, a tug-barge operator of 14 such units. The only operator with a Lo/Lo service is Horizon Lines. Horizon Lines offers a North Atlantic Express (NAX) service to San Juan, Puerto Rico from Port Elizabeth once a week. The vessels that Horizon Lines employs are the Horizon Crusader, Horizon Discovery, Horizon Producer, and the Horizon Challenger – all built between 1968 and1974. Crowley Maritime offers a weekly service to San Juan, Puerto Rico employing triple deck Ro/Ro barges between 570 and 730 feet in length with a capacity of 512 trailers and 240 autos (Brooks and Frost 2004).

Figure 3. U.S. Short Sea Shipping Domestic Networks from Mid-Atlantic to Northeast Coast

Crowley Maritime Weekly Ro/Ro bargeand

service between Pennsauken, NJ San Juan, Puerto Rico

Horizon Lines – Weekly Lo/Lo service between Elizabeth, NJ and San Juan, Puerto Rico

Bridgeport Feeder - Daily Ro/Ro barge service between Bridgeport, CT and Port of NY/NJ

Columbia Coastal Transport - Ro/Ro barge service from the following Ports: Portland (ME), Boston. Port of NY/NJ, Baltimore, Philadelphia, Richmond (VA),

U.S. Short Sea Shipping Domestic Networks from Mid-Atlantic to Southeast Coast From the Southern half of the U.S. East Coast to the Mexican Gulf, there are a number of barge-tug services that are connecting domestic points with other U.S. ports and a few international




- From the following Ports: Charleston, Savannah, Jacksonville, Port Everglades, and Miami. Connecting the above ports with Cuba and Freeport, Bahamas

ports (which will be discussed in the subsection, International Short Sea Shipping Routes). Columbia Coastal Transport is well represented in this region. Trailer Bridge provides integrated trucking and maritime services to Puerto Rico on a twice-weekly schedule out of Jacksonville. Interestingly, the transit time for freight arriving by rail to Jacksonville incurs an additional two to three days transit time to Puerto Rico than via truck, which varies between six and eight days (Trailer Bridge Inc. 2005). This service uses patented carrier vessels and containers that are 53 feet, which are 40% larger than is standard in the container shipping industry (Brooks and Frost 2004). Osprey, which leases containers to maintain its own fleet, was founded in 2000 by Rick Couch, who earlier this year began a service between Houston, New Orleans, Tampa and Miami. Osprey operates the vessel “Sea Trader” for this service. The vessel can carry 248 TEUs and up to 2,500 tons of freight. The new service is seen as a good match for Osprey’s container-on-barge service along the Gulf Intracoastal Waterway and Kirby – with more than 200 inland towing vessels as far up the Mississippi River as Memphis. A map of Short Sea Shipping services from the Mid-Atlantic to the Southeast Coast is illustrated in Figure 4.

Figure 4. U.S. Short Sea Shipping Domestic Networks from Mid-Atlantic to Southeast Coast

Columbia Coastal Transport Ro/Ro barge service

P

M

ort Everglades

iami

Jacksonville

S

C

avannah

harleston

Horizon– WeeklJacksonvTo San J

H

G

Lines y COB ille, Fl. and Houston, TX. uan, Puerto Rico

ouston

ulf Port

T–JaS

railer Bridge Inc. 2 x Weekly COB cksonville, Fl. To

an Juan, Puerto Rico

Crowley M – W

aritimeeekly COB

New Orleans

Osprey – Weekl

Lines y Lo/Lo

Tampa

Columbia Coastal Transport - Ro/Ro barge service From the following Ports: Charleston, Savannah, Jacksonville, Port Everglades, and Miami. Connecting the above ports with Cuba and Freeport, Bahamas

Charleston

Port Everglades

Miami

Jacksonville

Savannah Horizon Lines

– Weekly COB Jacksonville, Fl. & Houston, TX. to San Juan, Puerto Rico

Houston

Gulf Port

Trailer Bridge Inc. – 2 x weekly COB Jacksonville, Fl. To San Juan, Puerto Rico

Crowley Maritime – Weekly COB

New Orleans

Osprey Lines – Weekly Lo/Lo

Tampa

In addition, recent studies have been performed for the U.S. East Coast (also known as the I-95 corridor) that may impact Port Canaveral. Although, in-depth studies and route possibilities in the Southeast are yet to be explored. Several route-specific studies have been done for the New York/Boston area and new studies are underway looking at Northern U.S. to Canada East Coast routes.


Figure 5 illustrates some examples of possible routes identified by “High Speed Ferries and Coastwise Vessels: Evaluation of Parameters and Markets for Application by National Ports and Waterways Institute Louisiana State University.” Local market opportunities and demand will decide additional route options.

Figure 5. Possible Short Sea Shipping Routes along U.S. East Coast and Gulf Coast

Source: National Ports and Waterways Institute Louisiana State University

To better understand market dynamics and to possibly make coastal based Short Sea Shipping work in the future, it may be necessary to develop area transportation zones. In-depth facility surveys and route feasibility studies can be performed and using a modular approach may allow better systems integration in the future. Figure 6 illustrates such examples. Feasible routes are most likely to be identified between zones, but there may also be incidents where routes may “loop-over” one or more zones or may exist within a single zone. It is also possible more zones need to be developed and both national and international coverage are required, i.e., for integration with Canada, Mexico, Bahamas and/or Caribbean islands. Short Sea Shipping service options between or within such zones, including new service options for Port Canaveral, may include one or more of the following types of services:

Transshipments

Feeder

Coastwise

Sea-bridge



Figure 6. Development of “Transportation Zones” along the I-95 Corridor

Source: National Ports and Waterways Institute, Louisiana State University

U.S. Short Sea Shipping Domestic Networks in the Great Lakes The U.S. Great Lakes generally makes the use of self-propelled ships, such as Lake Carriers, for bulk transportation. Large integrated tug/barge systems have recently been developed to meet lower cost demands and to overcome crewing requirements. There are large fleet of both U.S. and Canadian flag vessels serving this market. There are also Seaway class and non-Seaway class vessels. Non-Seaway class vessels are not suitable for Seaway passage and thus operate on the “upper lakes” and “middle-lakes” only. The Canadian Seaway HWY H2O project for example is promoting the loading of containers and/or trailers onto Lake Carriers as well as the development and construction of new vessel types suited for the Great Lakes trade. Plans for rapid advancement of the development and use of new vessel types also include European style Ro/Ro ferries carrying both trailers and railcars.



Figure 7. U.S. Short Sea Shipping Domestic & NAFTA Networks in the Great Lakes

Manitowoc-Ludington Lake Michigan Carferry RoPax & Trucks

Milwaukee-Muskegon Lake Express RoPax HSF

Port Stanley-Fairport Harbor Short Sea Lines RoPax Ice Class

Hamilton-Osewgo Seaway Maine Transport RoRo

Erie-Port DoverTBA RoPax HSF

Erie-NanticokeSeaway Maine Transport RoRo

Toronto-RochesterCATS RoPax HSF

Operational

Out-of-Service

Proposed

Port Stanley-ClevelandWagenborg RoPax

U.S. Short Sea Shipping Domestic Networks on the West Coast The nature of shipping on the U.S. West Coast makes the use of self-propelled ships more attractive. For example, Totem Ocean Trailer Express (TOTE) provides an integrated truck marine service that links Alaska with the continental U.S. via the ports of Tacoma and Anchorage (approximately 1,450 nautical miles, with a transit time of approximately 66 hours, from port to port). The vessel service is three times a week, except for the winter months, when it is reduced to two sailings per week. Matson Navigation has been serving the Pacific since 1882 and links the continental U.S. with Hawaii, U.S. territories and protectorates such as Guam, Micronesia and the Marshall Islands. Matson Navigation, a subsidiary of Alexander & Baldwin, employs Ro/Ro ships as well as some of the most recent container tonnage, the Manukai and the Maunawili – both delivered in 2003. For the Hawaiian Islands, Matson employs a feeder service that connects Portland, OR, Seattle, WA, and Oakland with the port of Los Angeles acting as its hub. Horizon Lines employs a Lo/Lo service with two sailings per week to Anchorage and Kodiak and a weekly, fixed-day service to Dutch Harbor. An extensive truck and barge service connects Anchorage, Dutch Harbor and Kodiak with surrounding points including Akutan, Bristol Bay, the Pribilof Islands, King Cove, Sand Point, the Kenai Peninsula, Prudhoe Bay, Eagle River, Fairbanks and Palmer. COB (container on barge) operators on the West Coast include Foss Maritime and Tidewater Barge which provide barge towing services from the Columbia-Snake



River System to Alaska with additional services along the California coast. Alaska Marine Lines, a division of Lynden Industries, offers a twice-weekly service between Seattle and Southeast Alaska with towed Ro/Ro barges. Northland Services Marine Transportation has a weekly service from Seattle to Alaska and a bi-weekly service to Hawaii via its Aloha Cargo Transport unit, which is another active player on the West Coast. The services offered from the West Coast U.S. are illustrated in Figure 8.

Figure 8. U.S. Short Sea Shipping Domestic Networks from West Coast

3.1.2

Totem Ocean Trailer Express (TOTE) – 3x weekly Ro/Ro Service from Tacoma to Alaska

Foss Maritime Lines + Tidewater Barge Co. COB services to Alaska and Hawaii from U.S.

Alaska Marine Lines + Northland Services COB services to Alaska from U.S.

Horizon Lines – 2 x weekly Lo/Lo from Tacoma to Alaska – 3 x weekly Lo/Lo from Oakland & Los Angeles to Hawaii – Weekly to Guam, Spain

Matson Navigation Lo/Lo & Ro/Ro between Hawaii from U.S. Lo/Lo services to Guam and Marshall Isl. from Oakland and Hawaii



3.1.3 International Short Sea Shipping Routes For the purpose of this study, discussion on International Short Sea Shipping shall be restricted to near-by foreign feeder ports, such as Freeport and Panama, as well as other foreign ports that are considered to have geographic locations that enable alternative modes of transport (truck, rail, Short Sea Shipping) to the U.S.

Figure 9. International Hub & Feeder Ports in Bahamas & Panama

Freeport Container Port (FCP) is situated on Grand Bahama Island, one of the largest islands in The Commonwealth of the Bahamas. The Port, endowed with one of the deepest natural harbors in the region, is only 65 miles off the East Coast of Florida, U.S. and sits at the center of a 230 square mile free-trade-zone. Freeport Container Port is strategically located to serve as a major world container transshipment hub between the Eastern Gulf Coasts of the United States, the Gulf of Mexico, the Caribbean, South America, and trade lanes to European, Mediterranean, Far Eastern and Australasian destinations. It offers a cost effective, flexible solution for the regional transshipment requirements of shipping lines, combining state-of-the art terminal facilities with significant expansion potential.



Panama has its four new container ports representing a total investment of over $4.5 U.S. billion. The ports, combined with the trans-isthmian railroad, were projected to move two million cargo containers by 2003. Currently, the main ports are:

In the Atlantic Coast: 1. Manzanillo International Terminal (Stevedoring Services of America); 2. Colon Container Terminal (Evergreen International Corporation); 3. Colon Port Terminal (Hutchinson Port Holdings); 4. Colon 2000 (Cruise Ship Terminal) In the Pacific side: 1. Panama Port Terminal S.A (Hutchinson Port Holdings) Mexico MARAD recently reported on a new Mexico to U.S. Short Sea SCG Railway recently announced moving its operations to the PoWharf in eastern New Orleans. The 60-acre site on the Mississipformer public bulk terminal, which has been vacant since 1994. CG Railway offers a four-day U.S. to Mexico interline rail-ferry service that carries about 56 railcars filled with rubber, coffee, beer, petrochemicals and cotton to and from Coatzacoalcos, Mexico. Since CG Railway launched in March 2000, the two-vessel rail ferry has operated out of Mobile, Ala., where the port custom-built a $3.6 million terminal and rail spur for its tenant. The service has operated at near-capacity for more than a

Service between the ports of Mobile, Alabama (moving toMexico

Two self propelled vessels, each with 60 railcars Service speed of 12-14 knots Three day water transit between ports Intermodal capabilities Intermodal dry / reefer capabilities Sailing frequency four (4) days Seamless interchange with United States and Mexican

railroads Single invoice and EDI capabilities New entry and exit border points

Maritime Transport & Logistics Advisors, LLC

Manzanillo InternationalTerminal, Panama

hipping Venture: rt of New Orleans’ Elaine Street pi River Gulf outlet is the port’s

year:

New Orleans) and Coatzacoalcos,

49


Competitive rates with flexibility to quote door-to-door, port-to-port or other customer preferences

Primary service area in the U.S. will be east of the Mississippi River Primary service area in Mexico is the Mexico City region plus all points south

Michael Hokana, MARAD Office of Ports and Domestic Shipping, further emphasizes the potentials in Mexico by stating, "One of the biggest stories in my opinion is the Brownsville, Texas to Houston short sea route, which is part of a system that may reduce congestion at the ports of Los Angeles and Long Beach. This particular project is being spearheaded by Hutchinson Wampoa, one of the world's largest port developers, who is putting $1.2 billion in Ensenada, Mexico to deepen and expand that port. A major U.S. rail company-Kansas City Southern-just bought a northern Mexico rail line from there over to Brownsville. The water leg is distributing it to Houston, where you can then go by rail to anywhere in the nation." Previous analyses have estimated that shippers would save $400 per container if it moved to Brownsville from Asia rather than through Los Angeles-Long Beach. Transit time would also be reduced. (Sowinski 2005) Crowley Maritime Corporation is the leading ocean cargo carrier between the United States and Puerto Rico, the Caribbean, Bahamas, Mexico, Central America, Dominican Republic, Haiti and Cuba. Services include regularly scheduled liner operations for cargo shipped in containers and/or trailers; rolling stock such as cars, trucks, buses and construction equipment; and break-bulk, heavy lift and over-dimensional items via Crowley’s extensive fleet of specialty equipment and vessels. Linea Peninsular began its ocean-shipping service between Port Bienville, Mississippi and Progreso, Yucatán, Mexico in February 1984. Linea Peninsular provides four round-trip voyages each week, enabling 416 voyages a year. Linea Peninsular’s Port Bienville depot is within minutes of the Interstate highway system and directly on a railway spur. Their location offers customers tremendous advantages over major-city ports and contributes directly to their industry-leading door-to-door statistics. Of particular interest is that Port Bienville is exempt from the U.S. Harbor Maintenance Tax (HMT). Linea Peninsular’s Port Bienville Terminal



3.2 Cargoes

3.2.1 Container/Trailer Among the possible service options for consideration is a Short Sea Shipping barge service operating a daily route from Savannah or Jacksonville to Port Canaveral. This service may be feasible if low cost and high frequency can be obtained, for example, by loading full Ocean Containers (“OCs”) directly from deep-sea vessels to Short Sea Shipping barges and “de-stuffing” OCs to trailers on cross-docks at Port Canaveral. The benefit to shippers and consumers should be found in long-term cost savings. In addition, the drawback for Short Sea Shipping marine carriers may be the possible cost of “empty-box” return trips. Reduction of truck mileage will result in less CO2 and NOx air pollution, which is a benefit to society. It should be noted that motor carriers will perform the transport business either with or without the Short Sea Shipping service, but adjust price according to cost.

3.3 Ports

Today’s modern ports are under intense pressure to compete and maintain a high quality service in order to offer shippers and customers added value to their cargoes. The increasing importance of Short Sea Shipping and feedering is a dimension in shipping that has very little recognition and is greatly misunderstood. The central theme behind Short Sea Shipping is its ability to serve as a link in the multimodal system. One example of Short Sea Shipping is in facilitating and offering a door-to-door integrated service. The importance of trading patterns over the last decade and recent changes in the Short Sea Shipping business have brought much attention to this little known “niche”. The advantages of a complete transport chain in combination with distribution platforms are as follows:

Short delivery time Continuity of goods flow Immediate response to conditions and market trends

Short Sea Shipping allows ports to strategically consider final destination, optimal transport modes, transport type and required services. The above advantages enable ports to shift their focus from ship owners to cargo owners. In order for ports to continue to succeed, they must attract new traffic and consolidate and extend existing traffic. Short Sea Shipping is definitely an area where ports should be prepared to challenge their competitors.


United States Short Sea Shipping Initiatives

4. United States Short Sea Shipping Initiatives

The purpose of this section is to present a brief description of current U.S. short sea initiatives.

4.1 Current Short Sea Initiatives in Vessel and Infrastructure in the U.S.

”Short Sea Shipping” is used interchangeably to describe ferry services, such as those found in New York and other metropolitan areas, and to describe voyages that encompass thousands of miles, e.g. the services from domestic U.S. to Alaska and Hawaii. The main focus is on the U.S. Department of Transportation (DOT), MARAD SEA-21 initiatives and various financing problems and opportunities, e.g. SEA-21, Capital Construction Fund (CCF) Extension and 12106(e) lease financing. Both MARAD and the DOT perceive Short Sea Shipping principally to be a freight-based form of water transport. DOT, MARAD and the Federal Highway Administration (FHWA) have developed an important set of SEA-21 proposals. These proposals include expanded MARAD Title XI and CCF Programs, which are intended to facilitate the establishment of new Coastwise services. Short Sea Shipping should be a part of an integrated national freight transportation system, seeking to integrate water transport with and supplement existing interstate highway and rail transportation facilities. One problem that can be alleviated is the number of 53-foot units that can be removed from I-95 by using high-speed Class 3 services that can be implemented between appropriate ‘port-pairs’. An example is as follows. A mid-lake Erie ferry service between Port Stanley, Ontario and Fairport Harbor (a short two-hour ride) would provide much needed redundancy and capacity relief to the Ambassador Bridge and Peace Bridge border crossings and could carry as much as 40% of the 2,573 trucks originating and terminating in Ohio and Ontario daily using only two modern Ice Class Ro/Pax vessels operating year-round on a high frequency schedule. It would also provide more direct links to customers providing cost savings to shippers’, enable better efficiencies for motor carriers’ and reduce airborne CO2 and NOx emissions which today are the single largest source of pollutants in the Great Lakes. In a report by the Transportation Research Board (2004), the classification of Short Sea Shipping vessel-types was defined. Some of the vessel-types are:

Class 1 - Ferry vessel based services, for passenger and passenger/vehicle traffic serving metropolitan areas or offshore locations

Class 2 - Barge based short or intermediate range services, mostly for 20 and 40 foot international trade container boxes and some 53 foot domestic trailers

Class 3 - Container and Ro/Ro vessel based long haul services, with Ro/Ro services for 53 foot domestic trailers, or trailers and cabs, and sometimes passengers

New Ro/Ro and/or Ro/Pax ferry vessels intended for operation on International (NAFTA) border crossing routes in North America currently fall outside many of the previously mentioned funding programs (with the exception of private industry sources, i.e., Caterpillar or internal marine



carrier operating funds) and are left entirely for private enterprise to develop on their own. Customized congressional, state or provincial funding assistance may be developed on a project-by-project basis through a “ferry ship fund” or as a “strategic highway or road extension project.” This lack of funding is also identified as a problem for the development of landside operations.

4.1.1 Port Inland Distribution Network (PIDN) The concept of the PIDN can be traced to such European Ports as Rotterdam, with whom the Port Authority of New York/New Jersey has had many meetings and much collaboration with. The PIDN program aims to lower inland distribution costs; reduce truck trips (vehicle miles traveled or VMT); improve air quality; save energy through reduced truck fuel use; increase port throughput capacity and spur economic development at feeder ports and hinterlands by providing new port platforms for value-added warehousing and distribution opportunities. The Port Authority of NY/NJ has been developing the idea of using container-carrying barges, also known in the industry as COB to serve a 13-state area that lies within 400 miles of the Port of NY/NJ. They are targeting ports that are between 150 and 400 miles away serving mostly international cargo. The Port Authority of NY/NJ envisions itself as a ‘hub-port’ serving regional feeder ports by enabling trucks to use waterways via COB in place of roadways. The potential federal sources for capital and operating are the Congestion Mitigation Air Quality Improvement Program (CMAQ) and the Transportation Infrastructure Finance and Innovation Act (TIFIA). This hub-and-spoke system is designed to move containers by barge connecting the Port Authority of NY/NJ with such small or regional ports as: Albany, NY (which is an inland navigation service); New Haven and Bridgeport, CT; Quonset Point and Davisville, RI; Wilmington, DE; and the southern part of New Jersey (i.e., Camden and Salem areas). These inland terminals are located at or near centers of marine customer service and distribution activities (cluster points), which represents 82% of the container market found within a 50-mile radius of these points.

Connecticut (Bridgeport) Barge Service The Bridgeport Port Authority (BPA) has been leading an initiative backed by Connecticut state funding to redevelop a former shipyard into a Ro/Ro terminal serving feeder traffic. A feasibility study conducted by the Office of Intermodal Planning along with the Connecticut DOT in 2001, recommended Bridgeport as a good choice for developing a ‘two-way’ service with the Port Authority of NY/NJ (Connecticut Department of Transportation 2001). In their report, the capital costs for a new container feeder barge service would vary from $4.6 million to $18.0 million, depending on the equipment and infrastructure requirements. For a Ro/Ro type of barge operation, an additional capital investment would be required at either the Port of NY/NJ facilities, or in a modified or new barge (Connecticut Department of Transportation 2001). Operating costs would vary from $873 to $1,370 per container. The proposed daily service would begin with a barge and a tugboat sharing a common equipment pool. In a presentation by Marty Toyen of Seaworthy Systems, he proposed that an initial investment from the state be $1 million the first year and an additional $500,000 the second year (Toyen 2004). Additional capital requirements would be $5.6 million in the second year for terminal improvements, plus $1.2 million from the Port Authority of NY/NJ. The objective would be to take 33,000 containers off the I-95 roadway.



4.1.2 U.S. Department of Transportation: SEA-21and Complementary Programs U.S. Department of Transportation (USDOT) Secretary Norman Mineta, while serving in the U.S. Congress representing his home district of San Jose, California was instrumental in structuring and championing two pieces of legislation for the transportation industry. Known as TEA-21 for the surface transportation industry and AIR-21 for the aviation industry, these models are the framework for federal funding for the respective modes, truck and air. In May 2000, Secretary Mineta, at a meeting of his Marine Transportation System National Advisory Council (MTSNAC), asked the group to come up with recommendations for a similar programmatic and legislative proposal to address issues in the marine industry. At the MTSNAC meeting, Secretary Mineta held up a blank sheet of paper and asked his Council to fill that page with its thoughts and recommendations, considering not only the needed elements, but also the political feasibility of achieving its recommendations. He asked them to create “SEA-21.” Although the current Administration has not proposed any legislation to create SEA-21, it has been spoken about publicly by Secretary Mineta and many of his top aides at USDOT. SEA-21 has been widely addressed in the press and it is believed that USDOT is internally investigating the creation of a comprehensive program to address the needs of the marine industry with Short Sea Shipping as its central focus. In extensive deliberations over several years, MTSNAC recognized great needs for the Marine Transportation System (MTS) to cope with the much analyzed impending increase in trade to and from the United States. MTSNAC supported the continued efforts of the USDOT in achieving increased funding to support the improvement and expansion of intermodal connectors through the surface transportation authorization process. The USDOT studied the condition of these connectors at U.S. ports and found over two hundred instances where intermodal connectors were either non-existent or in need of improvement. Current legislation includes funding for expansion of intermodal highway connectors through the Federal Highway Administration (FHWA), an agency of the USDOT. Another federal program, jointly administered by FHWA and the Federal Transit Administration, is the Congestion Mitigation and Air Quality Improvement Program (CMAQ), which provides funding for surface transportation and other related projects that contribute to air quality improvements and reduced congestion. The TEA-21 CMAQ program (1998-2003) provided over $8.1 billion dollars in funds to State DOTs, MPOs, and transit agencies to invest in projects that reduce criteria air pollutants from transportation-related sources. Heretofore, this program was overwhelmingly utilized to aid the surface transportation industry although some marine stakeholders have successfully taken advantage of CMAQ. An objective of SEA-21 could be to apportion a set amount from this program for marine projects. Seeing an urgent need for funding for vessel construction in the United States to support both international trade and Short Sea Shipping, the MTSNAC also recommended inclusion of funding of the U.S. Maritime Administration’s Title XI vessel mortgage guarantee program that provides federal loan guarantees for vessels constructed in the United States. Unfortunately, the current Administration has not included Title XI funding in its recent budget requests. The program has been funded, however, due to efforts of Congressional proponents of the marine industry.



Another issue that has been addressed at MTSNAC and within USDOT is elimination of the Harbor Maintenance Tax (HMT). The HMT is an Ad Valorum fee on cargoes and passengers using U.S. ports that is levied only on imports. Collection of the HMT on domestic freight is a disincentive to the operation of Short Sea Shipping services. HMT is assessed on international cargo arriving at U.S. ports. In the Short Sea shipping scenario, these same cargoes that may be transshipped to another U.S. port are again assessed the HMT. Elimination of the HMT, especially where it is a double tax in the transshipment case, would make Short Sea Shipping more price competitive and serve to facilitate creation and expansion of such services. The American Association of Port Authorities, the Coastwise Coalition and many other influential stakeholders support the elimination of the HMT for Short Sea Shipping. SEA-21 is truly a pallet upon which industry can paint its picture. The needs of the MTS are well recognized and support for the Short Sea Shipping initiative at USDOT is widespread. Suggestions for ways to support the expansion of Short Sea Shipping are many. MTSNAC and other organizations are discussing and investigating programs that include loan guarantees for Short Sea Shipping infrastructure development; working capital loan guarantees for Short Sea Shipping Start-up operations, federal grants or matching grants for creation of Short Sea Shipping services with known public benefits such as congestion mitigation or air quality improvement; and Title XI loan guarantees specifically for vessels engaged in Short Sea Shipping trades.

4.1.3 Florida Department of Transportation Strategic Intermodal System Florida’s Strategic Intermodal System (SIS) was established in 2003 to provide resources to improve Florida’s strategic transportation facilities, thereby enhancing the state’s economic competitiveness. The SIS is a statewide network of high priority transportation facilities, including Port Canaveral. On January 20, 2005 Florida released its SIS Strategic Plan that provides a framework and policy guidance for implementation of its plan to revitalize the state’s transportation system. The SIS recognizes Florida’s role in transportation planning focused on international, interstate and interregional transportation of people and freight. Using a multimodal approach, the SIS moves to proactive planning and investment and links state investment decisions to statewide economic policies. The SIS Strategic Plan outlines the decision making process, including criteria and designation of eligible facilities, a preliminary transportation needs assessment, a prioritization process for funding, and a financing strategy. By the year 2010, Florida plans to fully implement this multimodal planning process. A strong element of the SIS is Florida’s commitment to partner with the strategic facilities that enhance economic growth in the state. The state will continue to seek input and jointly plan for a coordinated multimodal system with its commercial stakeholders.

4.2 Financing for Short Sea Shipping Services

In attempting to finance either Class 1 & 2 ferry and barge based services, operators often use publicly owned existing terminal facilities, or new facilities financed by state and federal authorities, without difficulty (Transportation Research Board 2004). The ferry vessels may be public authority or private sector owned. The barge units are generally private sector owned. Vessel costs are such that they can be easily financed by established private sector operators. New private sector operators may finance debt with engine manufacturers or established banking



connections (Transportation Research Board 2004). Finding the equity necessary for vessel ownership is often a more difficult problem.

4.2.1 Vessel Financing Options Class 3 Ro/Ro and container vessel-based long haul services most frequently use publicly owned existing terminal facilities, or new facilities financed by state and federal authorities (Transportation Research Board 2004). The vessels have been and are likely to remain private sector owned. Vessel costs are such that private sector vessels for established operators will generally require federal financing assistance. New operators will require federal financing assistance. For Class 1 & 2 vessels, in the absence of Title XI, engine manufacture financing may be the practical financing solution. Engine manufacturer Caterpillar offers a good example (Transportation Research Board 2004).

Loan terms up to 10 and 12 years

Principal amortization up to 15 years

Loan amounts up to 80% of vessel costs

Financing during the construction period

Competitive interest rates, either fixed or variable

Flexible repayment plans

Caterpillar’s per vessel guideline limits are $80 million. Of course, it may take more than one vessel to establish a viable service. At Caterpillar, the maximum exposure per customer has been approximately $125 million. Caterpillar would probably be willing to participate in an attractive larger project if it were presented. For Class 3 vessels costing $100 million or more, or where several $100 million vessels may be needed to establish a viable service, federal assistance such as that provided by MARAD’s Title XI Program will probably be required (Transportation Research Board 2004).

4.2.2 SEA-21 Proposals What can the federal government, MARAD, Federal Highway Administration (FHWA) and DOT, do to assist in establishing such new Class 3 services? This appears to have been the principal focus of the ongoing SEA-21 studies. Will DOT/MARAD propose any or all of?

Domestic Harbor Maintenance Tax repeal

Revitalized Title XI debt financing guarantees

MARAD Capital Construction Fund (CCF) extension to domestic coastwise services

A “TIFIA” (Transportation Infrastructure Finance & Innovation Act) program for terminals in the $20 million to $60 range million



4.2.3 U.S. MARAD Title XI Ship Financing Guarantee Program The Capital Construction Fund (CCF) Program extension is the most important and most controversial of these four proposals, and the most in need of maritime industry support. The CCF Program was viewed as the most important part of the Merchant Marine Act of 1970. “It is believed that these provisions will do more than anything else in the bill to help the ship operating, and therefore the shipbuilding industry, to build ships in United States shipyards which are so urgently needed to modernize our United States merchant marine.” (S. Rep. No. 91-1080, at 43, 1970) Principally there are two uses for the CCF Program, either accumulating equity or reducing lease financing costs. In accumulating equity, the CCF Program can be used by an operator to accelerate the accumulation of equity necessary for the purchase of vessels for fleet expansion. In reducing lease financing costs, the CCF Program can be used by an operator to reduce lease hire charges where lease financing is used for the acquisition of vessels for fleet expansion. The CCF Program states “Any citizen of the United States owning or leasing one or more eligible vessels may enter into an agreement with the Secretary under, and as provided in, this section to establish a capital construction fund with respect to any or all such vessels.” (Section 607(a), Merchant Marine Act, 1936, as amended) The CCF Program allows a taxpayer (who enters into a contract with MARAD) to shelter income from current taxation in exchange for the taxpayer’s commitment to purchase or construct a new U.S. flag vessel or vessels at some future date. It may be useful to think of the Program as providing the taxpayer with the use of a “super” accelerated depreciation, or perhaps as a sort of U.S. flag vessel owner 401(k) account. Additionally, the CCF Program allows a U.S. operator to set aside earnings from its vessel operations free of tax in order to accumulate the capital required for planned new vessel construction. According to Transportation Research Board (2004), there is more than $1.9 billion already deposited in taxpayer CCF Program accounts set aside for shipbuilding. If the CCF Program were extended to domestic Coastwise services, some portion of this $1.9 billion would become available to provide equity for vessel purchases and lease financing for Short Sea Shipping projects. These CCF projects could be for the existing CCF Program fund holder, or for another Coastwise qualified owner or operator that is not a current CCF Program participant.

4.2.4 U.S. MARAD Capital Construction Fund In May 2003, the Shipbuilders Council of America (SCA) sponsored the introduction of H.R. 2190, legislation to authorize the extension of the CCF to domestic Coastwise services (Transportation Research Board 2004). The H.R. 2190 legislation was carefully drafted to entirely exclude all inland waterway services. However, H.R.2190 was immediately attacked by the American Waterways Operators (AWO), the inland waterways operators’ trade association. AWO, whose inland waterways services were expressly excluded, objected to CCF Program availability for Coastwise services arguing that it would result in massive Coastwise vessel overbuilding (Transportation Research Board 2004).



Other maritime sector trade associations also opposed the SCA initiative, apparently believing that it might somehow provide an advantage to competitors. Another important source of lease financing equity is available under 46 U.S.C. 12106(e) and (f). Section 12106 was enacted to allow Coastwise operators to access non-citizen leasing equity sources in addition to Section 2 citizen sources such as GE Credit and Boeing Capital (Transportation Research Board 2004). Ownership of Coastwise qualified vessels by non-citizen lessors is allowed if the vessel is demise chartered to a Section 2 citizen for a period of three years or more. U.S. Coastwise operators can now lease vessels from German K/G and other non-citizen leasing company owners.


Growth and Expansion of Short Sea Shipping in the U.S.

5. Growth and Expansion of Short Sea Shipping in the U.S.

This section addresses the status of Short Sea Shipping in the U.S.; a timeframe for its growth and expansion; and likely scenarios for water routes.

As we have seen, Short Sea Shipping is certainly not a new concept. The use of the waterways for moving freight and people has existed for millennia and continues to provide an efficient, cost-effective, environmentally-friendly, safe and secure method of transportation. Business people and governments throughout the world are recognizing that the waterways are an available, underutilized asset and are moving to capture the benefits that can be derived from increased reliance on the waterways as a mode of transportation. As road congestion increases at ports and the cities that grew around them, there is an increasing emphasis on investigating alternatives and creating integrated transportation systems that derive benefits from all of the modes. Competition among modes is not the desired alternative, nor is it the desired end state. Rather, examination of complete, fully integrated transportation networks is the order of the day. As congestion increases and the expense of building new roads and highways is skyrocketing, transportation planners have again turned to the waterways as an alternative and complementary source of transportation. A few examples where these queries are being explored include the Port of New York and New Jersey’s Port Inland Distribution Network, the establishment of funded research by the I-95 Corridor Coalition, the establishment of the Short Sea Shipping Initiative at the U.S. Department of Transportation, the founding of the State of Florida’s Strategic Intermodal System, and the West Coast Corridor Coalition.

5.1 Domestic

5.1.1 Growth of Domestic Short Sea Shipping Services New Short Sea Shipping services are being introduced at an increasing pace in the U.S. and between the U.S. and its nearby trading partners. Of particular note are the mounting services provided by Osprey Line and Columbia Coastal, and the expansion of CG Railway’s innovative rail-on-ship service to Mexico by investing in reconstruction of its two vessels to double capacity and their move from Mobile to New Orleans to provide increased service bolstered by the port’s investment in new facilities for the service.

5.1.2 Expansion of Domestic Short Sea Shipping Services As we have gathered from our research and interviews of carriers and ports, there is a widespread opinion that Short Sea Shipping markets clearly exist and that these services are very necessary and will expand. The timeframe for expansion is an issue that garners differing opinions, and for good reason. Some view Short Sea Shipping as a system that must be supported by government funding and rely on that premise for their opinion that links its expansion with outside funding. Other businesses disregard government funding as a necessary means and believe that business opportunities will drive Short Sea Shipping. Nearly all agree, however, that government initiatives, such as that at MARAD, serve business well by heightening the awareness of transportation related problems, issues and alternatives.



Business opportunities will certainly drive any expansion of Short Sea Shipping services. Certainly, these opportunities are on the rise and government recognition and funding will only serve to increase the rapidity of the efforts. The ports, carriers, and logistics providers that consider and act on new prospects will undoubtedly be those that profit in these new and expanding markets.

5.2 International

5.2.1 Progress in International Short Sea Shipping The issues surrounding international Short Sea Shipping have not received as much attention from maritime stakeholders in the United States but are very relevant. For our purposes, we define International Short Sea Shipping as service to Canada, Mexico, and the Caribbean Basin, as well as any service that may be seen as providing an alternative to current land based transportation. Although U.S. cabotage mandates (Jones Act) do not come into play in the international arena, there are practices that need to be addressed when considering investigating international Short Sea Shipping options. In recognition of obstacles that may impede the easy application of Short Sea Shipping in our hemisphere, the U.S. Department of Transportation reached out to its nearby trading partners to address how to better facilitate commercial shipping between them. As a result, the USDOT signed a Memorandum of Cooperation (MOC) with Canada and Mexico that seeks to create a better business environment for Short Sea Shipping between these countries. This MOC seeks to address the common goals of advancing Short Sea Shipping through exchange of information and experiences, mutual support for efforts and inter-governmental policy cooperation.

5.2.2 International Short Sea Shipping Issues At the crux of the international Short Sea Shipping issues are the rationalization of business and customs practices, and equipment compatibility. Differing business practices at international Short Sea Shipping transportation destinations, especially in developing nations, can be cumbersome. The Governments of the U.S., Canada and Mexico are beginning to establish a dialogue through which a forum may be provided for the discussion of rationalization of business practices needed to facilitate trade. Certainly, on a one-on-one basis, marine transportation providers and ports have been able to work together. However, there is still a widespread view that in order to establish Short Sea Shipping transportation networks in the hemisphere, an overall understanding and rationalization of business practices must occur. Likewise, customs practices differ between nations and have been an impediment to trade in general and specifically to Short Sea Shipping. The Governments of Canada, Mexico and the United States recognize the problems that are occurring at their respective land borders due to stricter security requirements. Border congestion is an ever-increasing problem that the Governments believe could be eased by moving freight from roads to water. Trucks that move across heavily traveled bridges between the U.S. and Canada could move by water in certain instances and these possibilities are being investigated. The Detroit-Windsor Truck Ferry operation is a prime example of the judicious use of waterborne Roll-On/Roll-Off barge service. This service provides quick transportation for trucks carrying hazardous materials and other freight that would otherwise transit the overloaded Blue Water Bridge that connects the cities of



Detroit, Michigan and Windsor, Ontario. Transit time for the ferry service is twenty minutes whereas crossing of the bridge can take four hours. United States and Canada Customs are located at each ferry terminal providing expeditious on-site clearance of people and cargo. More relevant to Port Canaveral is the possibility of alleviating land border congestion with Mexico, the second largest U.S. trading partner, through use of a Short Sea Shipping network. Ports on Mexico’s Gulf Coast (e.g., Vera Cruz) that serve markets in Mexico City and elsewhere are likely candidates for a Short Sea Shipping termini. Mexican Government officials are anxious to explore how such services may be inaugurated, but will require assistance from the U.S. to develop a systematic approach to Short Sea Shipping. Mexican infrastructure may also need improvement and financial resources in Mexico are limited. Recently, coastal and port infrastructure improvements have been made through privatization of facilities in Mexico with commercial partners such as Hutchison Whampoa making large capital investments. But surface transportation improvements are still lacking and will need government financial assistance.

5.2.3 International Financial Considerations Exploration of financial assistance in public-private partnerships is an alternative as are financing mechanisms that may be available through international financial institutions. The World Bank is placing a new focus on transportation and, specifically, port infrastructure requirements in needy countries. The Inter-American Development Bank has also been instrumental in arranging funding for road and highway improvements in the Caribbean and Latin America and is another important resource. The U.S. Department of Transportation’s Trade and Development Administration is also focusing on port investment opportunities and may be helpful in cases where results would cause export of U.S. products and services to recipient countries. An examination and analysis of the method in which Short Sea Shipping coupled with necessary infrastructure improvements can increase economic growth in Latin America and the Caribbean would be an important step towards providing needed resources for the development of Short Sea Shipping with these trading partners.

5.2.4 System Capacity The current system capacity is exemplified in Table 4, a list of Jones Act Vessels over 1,000 grt for vessel types of Liner, Ro/Ro and Container, and excluding Tanker, Freight and Bulk. Table 4. List of Jones Act Vessels over 1,000 grt


Table 4. Jones Act Vessels over 1000 grt including Liners, Ro/Ro and Container (excluding tanker, freighter and bulk) Source: MARAD, Office of Ports and Domestic Shipping

COMPANY VESSEL NAME ASSET CLASS YEAR EST WHERE DESIGN TRADE SERVICE CAPACITY BUILT LIFE BUILT TYPE LANE LANE GRT DWT TEU CROWLEY MARITIME CORP BARGE JACKSONVILLE 730 X 100 TRIPLE DECK 1970 2010 USA TUG/BARGE East-Coast - Puerto Rico Puerto Rico 33,715 15,640 1,024 CROWLEY MARITIME CORP BARGE FORTALEZA 730 X 100 TRIPLE DECK 1970 2010 USA TUG/BARGE East-Coast - Puerto Rico Puerto Rico 33,715 15,640 1,024 CROWLEY MARITIME CORP BARGE PONCE 730 X 100 TRIPLE DECK 1975 2015 USA TUG/BARGE East-Coast - Puerto Rico Puerto Rico 33,715 15,640 1,024 CROWLEY MARITIME CORP BARGE SAN JUAN 730 X 100 TRIPLE DECK 1976 2016 USA TUG/BARGE East-Coast - Puerto Rico Puerto Rico 33,715 15,640 1,024 CROWLEY MARITIME CORP BARGE MIAMI 730 X 100 TRIPLE DECK 1976 2016 USA TUG/BARGE East-Coast - Puerto Rico Puerto Rico 33,715 15,640 1,024 CROWLEY MARITIME CORP EL CONQUISTADOR 580 SERIES TRIPLE DECK 1978 2018 USA TUG/BARGE East-Coast - Puerto Rico Puerto Rico 27,271 10,523 796CROWLEY MARITIME CORP EL REY 580 SERIES TRIPLE DECK 1979 2019 USA TUG/BARGE East-Coast - Puerto Rico Puerto Rico 27,271 10,523 796 CROWLEY MARITIME CORP LA PRINCESA 580 SERIES TRIPLE DECK 1979 2019 USA TUG/BARGE East-Coast - Puerto Rico Puerto Rico 27,271 10,523 796CROWLEY MARITIME CORP LA REINA 580 SERIES TRIPLE DECK 1978 2018 USA TUG/BARGE East-Coast - Puerto Rico Puerto Rico 27,271 10,523 796CSX LINES CSX CRUSADER CONTAINERSHIP 1969 2004 USA C7-S-68D East-Coast - Puerto Rico Puerto Rico 19,000 20,000 1,300 CSX LINES CSX DISCOVERY CONTAINERSHIP 1968 2003 USA C7-S-68D East-Coast - Puerto Rico Puerto Rico 18,000 22,000 2,728 CSX LINES CSX EXPEDITION CONTAINERSHIP 1973 2008 USA C8-S-85A East-Coast - Puerto Rico Puerto Rico 21,000 19,000 1,412 CSX LINES CSX HAWAII CONTAINERSHIP 1973 2008 USA C6-S-85A East-Coast - Puerto Rico Puerto Rico 21,000 19,000 1,372 INTEROCEAN UGLAND MGMT(Sea Star) EL MORRO RO/RO 1974 2009 USA PRIVATE East-Coast - Puerto Rico Puerto Rico 17,000 16,000 1,312INTEROCEAN UGLAND MGMT(Sea Star) EL YUNQUE RO/RO 1976 2011 USA PRIVATE East-Coast - Puerto Rico Puerto Rico 17,000 16,000 1,312NAVIERAS NPR INC GUAYAMA CONTAINERSHIP 1969 2004 USA C7-S-68E East-Coast - Puerto Rico Puerto Rico 19,000 20,000 1,312 NAVIERAS NPR INC HUMACAO CONTAINERSHIP 1968 2003 USA C7-S-68C East-Coast - Puerto Rico Puerto Rico 19,000 22,000 1,312 NAVIERAS NPR INC MAYAGUEZ CONTAINERSHIP 1968 2003 USA C7-S-68D East-Coast - Puerto Rico Puerto Rico 19,000 20,000 1,312 TRAILERBRIDGE JAX-SANJUAN BRIDGE 736 X 100 TRIPLE DECK 1984 2019 USA TUG/BARGE East-Coast - Puerto Rico Puerto Rico 35,086 1,000 TRAILERBRIDGE SANJUAN-JAX BRIDGE 736 X 100 TRIPLE DECK 1984 2019 USA TUG/BARGE East-Coast - Puerto Rico Puerto Rico 35,086 1,000 TRAILERBRIDGE CHICAGO BRIDGE 400 x 100 Barge 1997 2032 USA TUG/BARGE East-Coast - Puerto Rico Puerto Rico 5,860 530 TRAILERBRIDGE MEMPHIS BRIDGE 400 x 100 Barge 1998 2033 USA TUG/BARGE East-Coast - Puerto Rico Puerto Rico 5,860 530 TRAILERBRIDGE ATLANTA BRIDGE 400 x 100 Barge 1998 2033 USA TUG/BARGE East-Coast - Puerto Rico Puerto Rico 5,860 530 TRAILERBRIDGE CHARLOTTE BRIDGE 400 x 100 Barge 1998 2033 USA TUG/BARGE East-Coast - Puerto Rico Puerto Rico 5,860 530 CSX LINES CSX CHALLENGER CONTAINERSHIP 1969 2004 USA C7-S-68C Gulf-Puerto-Rico Puerto Rico 19,000 22,000 2,728 CSX LINES CSX TACOMA CONTAINERSHIP 1887 1922 USA C7-S-88A West-Coas t- Alaska Alaska 23,000 20,000 1,668 CSX LINES CSX ANCHORAGE CONTAINERSHIP 1987 2022 USA C7-S-68A West-Coas t- Alaska Alaska 20,000 20,000 1,668 CSX LINES CSX KODIAK CONTAINERSHIP 1987 2022 USA C7-S-68A West-Coas t- Alaska Alaska 23,000 20,000 1,668 TOTEM OCEAN TRAILER EXPRESS GREAT LAND RO/RO (Rebuilt 1990's) 1976 2011 USA PRIVATE West-Coas t- Alaska Alaska 17,000 16,000 820TOTEM OCEAN TRAILER EXPRESS NORTHERN LIGHTS RO/RO (Rebuilt 1990's) 1975 2010 USA PRIVATE West-Coas t- Alaska Alaska 31,000 16,000 820TOTEM OCEAN TRAILER EXPRESS WESTWARD VENTURE RO/RO (Rebuilt 1990's) 1977 2012 USA PRIVATE West-Coas t- Alaska Alaska 17,000 18,000 820CSX LINES CSX RELIANCE - NO J ACT CONTAINERSHIP 1981 2016 USA C5-S-81F West-Coast- Guam Guam 29,000 41,000 2,438 CSX LINES CSX ENTERPRISE CONTAINERSHIP 1980 2015 USA C8-S-85D West-Coast- Guam Guam 29,000 30,000 2,302 MATSON NAVIGATION COMPANY MV R.J. PFEIFFER CONTAINERSHIP 1992 2027 USA PRIVATE West-Coast- Guam Guam-Micronesia 31,000 28,000 MATSON NAVIGATION COMPANY WILSON FREIGHTER(Cont/RO-RO) 1989 2024 USA C5-S-75A West-Coast- Guam Guam-Micronesia 15,000 22,000 MATSON NAVIGATION COMPANY GRANT West-Coast- Guam Guam-Micronesia MATSON NAVIGATION COMPANY MV MANOA - NO J ACT CONTAINERSHIP 1982 2017 USA C9-S-132A West-Coast- Guam Guam-Micronesia 40,000 30,000 MATSON NAVIGATION COMPANY MV MAHIMAHI - NO J ACT CONTAINERSHIP 1983 2018 USA C9-S-132A West-Coast- Guam Guam-Micronesia 40,000 30,000 MATSON NAVIGATION COMPANY MV MOKIHANA - NO J ACT CONTAINERSHIP 1983 2018 USA C9-S-132A West-Coast- Guam Guam-Micronesia 40,000 30,000 CSX LINES CSX SPIRIT CONTAINERSHIP 1980 2015 USA C5-S-81F West-Coast- Hawaii Hawaii 29,000 21,000 1,656 CSX LINES CSX TRADER CONTAINERSHIP 1973 2008 USA C6-S-78A West-Coast- Hawaii Hawaii 28,000 31,000 2,282 CSX LINES CSX CONSUMER CONTAINERSHIP 1973 2008 USA C7-S-68A West-Coast- Hawaii Hawaii 23,000 25,000 1,488 CSX LINES CSX NAVIGATER CONTAINERSHIP 1972 2007 USA C8-S-85C West-Coast- Hawaii Hawaii 29,000 28,000 2,282 CSX LINES CSX PACIFIC CONTAINERSHIP 1979 2014 USA C8-S-85D West-Coast- Hawaii Hawaii 28,000 30,000 2,302 MATSON NAVIGATION COMPANY S.S. EWA CONTAINERSHIP 1972 2007 USA C8-S-FB1E West-Coast- Hawaii Hawaii 26,000 38,000 MATSON NAVIGATION COMPANY S.S. CHIEF GADAO CONTAINERSHIP 1971 2006 USA C8-S-F81E West-Coast- Hawaii Hawaii 26,000 37,000 MATSON NAVIGATION COMPANY S.S. KAUAI CONTAINERSHIP 1960 1995 USA PRIVATE West-Coast- Hawaii Hawaii 24,000 26,000 2,600 MATSON NAVIGATION COMPANY S.S. LIHUE CONTAINERSHIP 1971 2006 USA C8-S-F61E West-Coast- Hawaii Hawaii 25,000 38,000 MATSON NAVIGATION COMPANY S.S. LURLINE RO/RO 1973 2008 USA PRIVATE West-Coast- Hawaii Hawaii 24,000 22,000 2,100 MATSON NAVIGATION COMPANY S.S MANULANI CONTAINERSHIP 1970 2005 USA PRIVATE West-Coast- Hawaii Hawaii 23,000 27,000 5,300 MATSON NAVIGATION COMPANY S.S. MATSONIA RO/RO 1973 2008 USA PRIVATE West-Coast- Hawaii Hawaii 19,000 13,000 4,300 MATSON NAVIGATION COMPANY S.S. MAUI CONTAINERSHIP 1976 2011 USA PRIVATE West-Coast- Hawaii Hawaii 24,000 26,000 2,600 CSX LINES CSX PRODUCER CONTAINERSHIP 1974 2009 USA C8-S-88A 23,000 25,000 2,300 MATSON NAVIGATION COMPANY S.S. MANUKAI CONTAINERSHIP 1970 2005 USA PRIVATE 23,000 27,000 5,300 NAVIERAS NPR INC CAROLINA(Out of Service) CONTAINERSHIP 1971 2006 USA C3-S-69E 19,000 28,000 NAVIERAS NPR INC NUEVO SAN JUAN(OOS) CONTAINERSHIP 1970 2005 USA C7-S-68E 19,000 20,000


Factors that Support or Impede Short Sea Shipping in the United States

6. Factors that Support or Impede Short Sea Shipping in the United States

This section discusses factors that would support or may impede the initiation of Short Sea Shipping in the United States; actions necessary to stimulate Short Sea Shipping; and interview results of ports, terminals, marine operators and motor carriers.

6.1 Factors that Influence Short Sea Shipping

In accessing the factors that support or impede Short Sea Shipping, various projects and reports have been conducted by the European Union. In the White Papers of 1992 and 2002 on the future development of the common transport policy, the European Commission outlined future priorities based on the need to reconcile the demand for mobility with the requirements of the environment, in line with the principle of “sustainable mobility”. These same requirements can be applied to the U.S. United States Short Sea Shipping can contribute to the achievement of sustainable mobility because it has some important advantages in comparison with land transport. Various U.S. and EU proposals clearly indicate the need for promoting Short Sea Shipping; and thus, the shift of cargo from land modes to maritime modes. Many shippers and intermodal-forwarding specialists do not fully understand the potentials and capabilities of Short Sea Shipping as an alternative to the use of land based transportation modes, such as rail and road haulage. In a report of the European Commission financed Short Sea Shipping projects (PACT), an analysis was executed with the result findings listed in Table 5. The results of the analysis seem to indicate a solid business plan which considers both rail and trucking as partners in improving quality of service as a leading factor for Short Sea Shipping Success. These implementation studies also indicate that carrier support initiatives would attract cargo revenue.



Table 5. Success and Failures of Short Sea Shipping projects in PACT (Pilot Actions on Combined Transport)

Con

nect

w/ T

ruck

or

Rai

l

Qua

lity

of S

ervi

ce

Goo

d?

Com

mitm

ent f

rom

C

arri

ers

Bus

ines

s Mod

el

Goo

d?

Succ

essf

ul Y

ES

/ No

Sust

aina

ble

carg

o?

Neg

otia

tion

Tim

e

Inte

grat

ion

of IT

Tim

e in

Yea

rs

Typ

e of

Stu

dy

PAC

T ID

#

Inte

rest

?

Cos

t in

€

Lab

or

Pric

e

46 NO 696423 3 NO NO Implem.


18 NO 500000 2 NO Implem.


60 NO 300000 1 NO NO NO Implem.




17 YES 936600 3 YES YES Implem.

22 YES 300000 4 YES Implem.

25 YES 110000 1 YES YES Feasib.

27 YES 95350 1 YES Implem.

29 YES 75586 1 YES Feasib.

32 YES 450000 3 YES YES YES Implem.

66 YES 514479 2 Implem.

56 YES 175000 2 YES YES YES YES Implem.

67 YES 68325 2 YES YES YES YES YES YES Implem.

75 YES 700000 2 YES YES YES YES YES Implem.

44 YES 515000 2 YES YES YES YES Implem.




Total Sum 7051302

6.1.1 The Advantages and Problems of Short Sea Shipping The advantages of Short Sea Shipping in comparison with road transport are:

Lower energy consumption and better environmental performance in terms of pollution and safety

Reduction of road congestion Possibility of Mid-Lake/Gulf logistics efficiencies General availability of space capacity in Short Sea Shipping and the possibility to extend

it further with few infrastructure costs Potential contribution to the development of peripheral regions of the U.S. Positive effect on the development of other sectors such as the port sector and the

shipbuilding industry



However, there are several structural obstacles to the development of efficient Short Sea Shipping services, which are:

Regularity of services because of trade imbalances Insufficient integration with other transport modes in the transport chain; Short Sea

Shipping can have difficulty in meeting “just-in-time” requirements Vessel performance which leads to a lack of speed when compared to its competitors on

U.S. trade corridors, especially highways and roads Susceptibility to inclement weather conditions Difficulties in competitive pricing Administrative barriers because of rather complex documentation and procedures in ports

and the veterinary checks Lack of statistical data which make accurate analysis of trade flows between ports and

regions difficult; this creates problems both for commercial development and policy making

Image problems as short sea services have not been marketed very efficiently and shippers are often not aware of the full range of services available

Multi-national jurisdiction environment * Reluctance or resistance by local/regional port communities *

* Special North American identified issue(s)/problem(s) Other key parameters are; logistics, shorter route, drive time and cost savings efficiencies. There are also problems in the area of port infrastructure and port efficiency:

Delays in some ports because of the lack of smooth connecting links to inland infrastructure, inefficient port operations and the lack of suitable infrastructure

Port charges that are sometimes very high and not transparent Restrictive labor regulations and practices

6.1.2 What is necessary to Stimulate Short Sea Shipping?

In general, the following conditions have to be met to increase the competitive position of Short Sea Shipping:

Speed Reliability Quality of service Cost-efficiency

There are also problems in the area of port infrastructure and port efficiency, which include: delays in some ports because of the lack of smooth connecting links to inland infrastructure, inefficient port operations, the lack of suitable infrastructure port charges that are sometimes very high and not transparent, and restrictive labor regulations and practices. Some of the advantages of Short Sea Shipping may include its safety and reliability. The relative effect that it has on the environment versus other forms of transport, specifically trucks and trains, is minimal. Dependability is also an advantage due to road and rail congestion and the fact that there are no traffic jams at sea. Additionally, Short Sea Shipping oftentimes involves large cost savings, thus, it satisfies the “bottom line”.



One of the catalysts mentioned for the growth of Short Sea Shipping is globalization. Globalization of production and the liberalization of trade and transport in the North American market have had a profound effect on intermodal transport by being more efficient and competitive.

6.2 Several Actions that are Necessary to Stimulate Short Sea Shipping

As we have seen, Short Sea Shipping has some important disadvantages in comparison with road transport. Therefore, several actions are necessary to stimulate Short Sea Shipping. The quality and efficiency of Short Sea Shipping services must be improved especially in port infrastructure and port efficiency. The most important actions are:

Integration into multimodal transport chains or networks Stimulation of new maritime transport technologies Removal of administrative barriers (documents, procedures, custom/immigration,

veterinary checks) Creation of reliable market data on North American Short Sea Shipping Improvement of the image of Short Sea Shipping Integration of border crossing systems Automation of customs and immigration security systems Improvement of transparency in ports, related to tariffs and state aids

A very important action is also the internalization of external costs created by the various transport modes.

6.2.1 Integration of Short Sea Shipping into multimodal transport chains or networks A very important target is to improve the efficiency of Short Sea Shipping through modal integration, which is nowadays often not the case. As mentioned by Peeters, Verbeke and Declercq (1995), the possibility of integrating Short Sea Shipping into a multimodal transport chain depends largely on the ability to link Short Sea Shipping to other transport modes. Electronic Data Interchange (EDI) has the crucial task in the scheduling and linkage of different modes. The promotion of the use of Electronic Data Interchange (EDI) in Short Sea Shipping is also very important to improve the efficiency of customs and administrative procedures. EDI facilitates the flow of cargo, promoting the efficiency and reliability of Short Sea Shipping and its links to other modes. EDI can also assist in providing fast and accurate information on the cargo. It is also essential to integrate Short Sea Shipping into the U.S. interstate system in order to realize its full potential. This is not a simple matter because ports have not been effectively incorporated as nodal points in a global transport system. Also, nominations of certain links have been unacceptable, as it would have provided ports or lines an unfair competitive advantage. Peeters, De Monie and Jacobs (1997) point out the missing link that still needs to be taken care of, it is to convince shippers and forwarders presently using road transport to abandon their reliance on road transport and give more serious consideration to alternative modes such as Short Sea Shipping as a backbone for integrated door-to-door transport. U.S. private enterprises also



have to take initiatives as they are doing in the many EC pragmatic pilot projects in the field of Short Sea Shipping, where financial support can be provided. Another way to increase the integration of Short Sea Shipping in multimodal networks is the use of sea-river vessels that make it possible to give a number of industrial centers located inland direct accesses to maritime transport. Moreover, the further development of multimodal inland port terminals could enhance the combined attractiveness of inland navigation and Short Sea Shipping.

6.2.2 Stimulation of New Maritime Transport Technologies The focus of the new transport technologies should be the raising of vessel speed and the easier and quicker interchange between Short Sea Shipping and the other transport modes. Examples of new technologies are fast ships, automatic handling systems, self-loading and self-unloading vessels, etc. The acceleration of berthing and unberthing operations is another element that can lead to timesaving. Use of modern Ro/Ro and Ro/Pax vessels (as known in Europe), seamless integration of technical support systems, and best practices are also critical for stimulation and expansion of the North American Short Sea Shipping market.

6.2.3 Removal of Administrative Barriers Documentary requirements and procedures, particularly in ports, still constitute considerable obstacles to the smooth movement of cargo by maritime transport. Therefore, these should be restricted to the minimum necessary and should, as much as possible, be the same everywhere in the NAFTA and for all modes of transport. Many of the long delays in the processing of documents could be solved by the use of Internet-based EDI-applications.

6.2.4 Creation of Reliable Market Data on North American Short Sea Shipping There is a lack of statistical data on Short Sea Shipping. This makes accurate analysis of trade flows difficult and creates problems both for commercial development and policymaking. Some tasks that could be implemented are:

Inventory of the statistical needs for future Short Sea Shipping market research Development of a methodology to collect the relevant data Examination of the appropriate procedures for the presentation of the statistical data

6.2.5 Improving the Image of Short Sea Shipping Short Sea Shipping has remained a relatively “unknown” sector for many potential customers and interested parties in the U.S. Therefore, the image of Short Sea Shipping needs to be enhanced and its performance highlighted through better marketing of the services. Taking the experience of the European Union, several conferences and forums have been organized. The Roundtables are meetings where on the European level, researchers, industries and policymakers come together to improve the marketing of Short Sea Shipping services.

6.2.6 Improvement of Transparency in Ports, Related to Tariffs and State Aid Port tariffs are sometimes set artificially high. They are not always transparent. This lack of transparency could hide the granting of state aids, which may distort competition.



6.3 Interviews of Port Authorities, Terminal Operators, Marine Operators and Motor Carriers

Personal one-on-one interviews were performed by Maritime Transport & Logistics Advisors’ consultants of port authorities, terminal operators, marine operators and motor carriers. Specific questions and an accumulation of the responses by each category interviewed are provided in Appendix A (Port Authorities and Terminal Operators), Appendix B (Marine Operators) and Appendix C (Motor Carriers). Each interviewee was assured that their identity would not be disclosed and that the information would be presented in a generic format only.

6.3.1 Port Authority and Terminal Operator Interviews Fourteen (14) Port Authorities and Terminal Operators were contacted for interviews of which ten (10) interviews were completed. An overview of those interviewed is as follows:

Their carrier customers primarily serve Worldwide, Latin America, Caribbean and Mexico markets.

Five (5) of eight (8) have carrier customers that currently engage in Short Sea, Coastal or Ferry Service to or from their port. Two (2) did not respond.

Feeder and coastwise are their most predominant Short Sea Shipping services using a multitude of methods, including tug & barge, container, COB, vehicular ferry, Lo/Lo, bulk and break bulk.

Their Short Sea Shipping, Coastal and Ferry Services serve all U.S. East Coast, World, Caribbean and Bahamian trade lanes.

Respondents provide a wide array of operations and service a multitude of marine operator types and vessel types.

Some port pairing exists.

Business Development The two areas that more respondents viewed their greatest area of growth to be are

in Short Sea Shipping and Containers. Respondents primarily use Return on Investment (ROI) criteria for new projects,

but some also consider public benefit, state interest, economic impact and quality of life.

Public funding, including state and federal programs, are often used to fund new ventures.

Views on Short Sea Shipping Most of those interviewed believe that Short Sea Shipping, Coastal and Ferry

Service will become an industry standard in the future. Only one responded that it will not. Transshipment containers to smaller ports, sea containers and international routes were stated as the areas most likely for this development. The Jones Act, HMT, cost, timeliness and manageability were mentioned as obstacles that must be overcome.

All ten (10) respondents believe that Short Sea, Coastal or Ferry Service is probable and desirable for their facilities, geographical location and future.



Eight (8) of nine (9) are considering adding these services to their current operations. Types of services and trade lanes vary considerably and infrastructure enhancement requirements are minimal.

The benefits perceived from Short Sea Shipping, Coastal and Ferry Service were most often stated as road congestion reduction, regional economic benefit, tonnage and passenger volume increases, and pollution reduction.

Five (5) of eight (8) have carrier customers that currently engage in Short Sea, Coastal or Ferry Service to or from their port.

Five (5) of seven (7) have Short Sea, Coastal or Ferry Service projects in progress for their organizations.

Four (4) of eight (8) have formally researched Short Sea Shipping, Coastal or Ferry Service.

Those who have conducted research on Short Sea Shipping, Coastal or Ferry Service have found the research to be helpful.

Lessons Learned from Short Sea, Coastal or Ferry Service Experiences Demand exists, but time to market is a factor. Imports prefer not to use barge service. Lack of support from shippers and terminal operators. Must convince shippers to consider other forms of transportation. Must be able to compete with railroad, cost, speed, location, logistics and storage. Cost driven; motor carriers will cut rates to protect their business.

6.3.2 Marine Operator Interviews Twenty-eight (28) Marine Operators were contacted for interviews of which nineteen (19) interviews were completed. An overview of those interviewed is as follows:

The Marine Operators who responded serve a vast number of markets, call on a total of over 35 ports, provide numerous marine operations and operate a wide range of vessel-types.

Twelve (12) of the nineteen (19) have Short Sea, Coastal or Ferry projects in progress, including (in order of majority): containers, intermodalism, inter-regional cargo, alternatives to road transport, trailers, border crossings, door-to-door, liquid bulk and floating stock.

Business Development Respondents use Return on Investment (ROI) and Internal Rate of Return (IRR)

criteria for new projects. ROI requirements ranged from 8% to 25% and IRR requirements from 12% to 30%. One respondent only considers market dominance as its criteria.

Twelve (12) prefer to lease ports, docks and terminals; Six (6) prefer to own and one (1) has no preference.



Views on Short Sea Shipping Twelve (12) of the nineteen (19) have Short Sea, Coastal or Ferry projects in

progress, including (in order of majority): containers, intermodalism, inter-regional cargo, alternatives to road transport, trailers, border crossings, door-to-door, liquid bulk and floating stock. Services include: coastwise, feeder, transshipment and other.

Fourteen (14) of nineteen (19) have formally researched Short Sea, Coastal or Ferry Services.

Seventeen (17) consider these services as probable and desirable for their business, geographical location and future; two (2) are undecided.

Eighteen (18) believe Short Sea Shipping or Ferry service will become an industry standard.

In order to consider new Short Sea Shipping opportunities the following applies: Need for new vessels, sales and marketing campaigns, port infrastructure

enhancements, additional personnel and enhanced terminal operations. The majority would consider private funding for these expenditures.

Respondents replied with a lengthy list (30 items) of key hurdles that are necessary to overcome in order to engage in Short Sea Shipping – See Appendix B. Amazingly, the Jones Act was barely mentioned and factors other than the Jones Act were considered major hurdles.

Sixteen (16) of the nineteen (19) stated that they would consider making landside investments to build a Short Sea Shipping service.

Most respondents: Consider union labor and/or union contracts to be advantageous or to have

a neutral affect on a Short Sea Shipping venture. View Short Sea Shipping as a complement to their existing services. Would consider a joint venture or acquisition of an existing Short Sea

Shipping carrier or Ferry operator. Replied that links to existing operations are not necessary in order to

consider a Short Sea Shipping venture. Over twenty (20) ports/markets were given as considerations for future Short Sea

Shipping or Ferry service operations.

Views on Port Canaveral Fourteen (14) respondents believe there is demand for an East-Central Florida

Short Sea hub/port location, such as Port Canaveral; three (3) do not and two (2) were undecided.

Eleven (11) operators replied that Port Canaveral would be of interest for a future Short Sea Shipping project of their own; Four (4) replied no and three (3) replied maybe.

6.3.3 Motor Carrier Interviews Twelve (12) motor carrier companies, shippers and trucking associations were contacted for interviews. Four (4) interviews were completed that represent two motor carrier companies with a combined total of 23,000 trucks and two (2) trucking associations representing 215 motor carrier companies.



An overview of those interviewed is as follows:

Those interviewed represent motor carrier services to a vast number of seaports, in addition to: drop/hook trailer, hub service, warehousing, delivery service, auto carrier, refrigeration and border crossing.

Business Development One respondent requires a ROI of 20% or more for new projects and uses private

funding for such ventures. The others did not respond or the question was not applicable.

Views on Short Sea Shipping None of the motor carriers interviewed currently have Short Sea, Coastal or Ferry

projects in progress. One (1) of four (4) has formally researched Short Sea, Coastal or Ferry services. Two (2), includes one of the associations, consider these services as probable

and desirable for their business, geographical location and future. Two (2) believe Short Sea Shipping or Ferry service will become an industry

standard in the near-term; one (1) believes it will become a viable alternative in the long-term; and one (1) believes it will not become and industry standard.

Three (3) replied that: Short Sea Shipping, Coastal or Ferry service will complement their

existing services. There is not competition between Short Sea, Coastal and Ferry service and

the trucking business. The trucking business would benefit in working with Short Sea, Coastal

and ferry services. Reasons stated for the viability of Short Sea, Coastal and Ferry services are:

Increased efficiencies. Elimination of deadheading (driving long distances full-out and empty-

back). Mitigation of traffic congestion.

All four (4) are facing delays due to congestion and road traffic, as well as a shortage of drivers.

All four (4) consider links to existing operations a necessity for them to consider a Short Sea, Coastal or Ferry service venture. One responded that they would not invest directly, that they would partner for the venture.

Union labor and/or contracts were viewed as hurdles that can be dealt with. Infrastructure and other requirements include:

Ro/Ro ramps and facilities Additional drivers Cross docks Chassis pools RTGs for Lo/Lo Yard hustlers



The following were stated as ideal origins and destinations for Short Sea, Coastal and Ferry service:

Port Canaveral due to demand in Central Florida U.S. East Coast ports New York to Florida Charleston, Los Angeles, Houston and Baltimore

Views on Port Canaveral All four (4) responded that Port Canaveral would be an ideal origin/

destination port for Short Sea, Coastal or Ferry services, with the following comments:

Cargo for Latin America Cargo only, no passengers Ocean trans-loaded into dry domestic vans Strategically attractive as either a deep-sea or Short Sea Shipping hub

location Motor carriers now deadhead 200 to 300 miles per day, resulting in

significant (approximately 40%) underutilization of trucks and drivers in the Central Florida area


Port Canaveral Overview

7. Port Canaveral Overview

This section contains an analysis of the potential of Port Canaveral as a terminal point on a Short Sea Shipping route from the standpoint of geographical location, catchment area, facilities, and the supplementing of container feeder traffic.

7.1 Geographic Location

7.1.1 Proximity to Ocean Trade Lanes The Port of Canaveral, compared with many other ports and terminals, favors ever increasing vessel-schedule integrity demands, is ideally positioned to the international shipping channel and boasts of a reduced time of only 45 minutes for ships to travel from the channel to the berth.

7.1.2 Access to Rail Corridors Port Canaveral’s terminals are located ten miles from the FEC rail yard, Florida’s North-South rail line connecting points along the East Coast of Florida. The FEC yard in Cocoa (Canaveral) presently is set up to handle rock trains from North and South Florida. Interviews with the FEC R/R determined that FEC could add cars to the rock trains to accommodate intermodal movements in/out of Port Canaveral.

7.1.3 Access to Highway Corridors The Bee Line Expressway and I-95 intersect fifteen minutes from the port. In 45 minutes a container or passenger can be in Orlando or connecting with I-4 to reach Tampa to link with I-75 north for Gainesville or Tallahassee and come into I-10 to proceed onward to Lake City, Panama City, Pensacola, Alabama or Georgia. Canaveral’s Central Florida location is uniquely positioned to benefit from Florida’s projected growth and the I-95 connection puts the port almost equally accessible to North Florida as it is to South Florida. Traveling south takes approximately two hours to West Palm Beach, three hours to Fort Lauderdale and three and a half hours to Miami. Traveling north takes approximately two hours to Jacksonville connecting with I-10 West or continuing on I-95 north to Atlanta, Charleston, Savannah and beyond. Easy highway access enables Port Canaveral to remain free of the congestion that is experienced in other major ports such as Charleston and Miami.

7.2 Terminal Storage Capacity

7.2.1 Capacity The Port of Canaveral has 5.5 acres of back-land suitable for short term container/trailer marshalling and 100 acres of undeveloped land suitable for a future container yard (CY). In addition, both Ambassador Services, Inc. and Port Canaveral Stevedores (Mid Florida Freezers) are tenants and have additional acreage for container/trailer activity.



7.3 Facilities

7.3.1 Berthing Water depth for Short Sea Shipping small to medium vessels ranges from 30’ to 37’ alongside available berths and Ro/Ro ramps. CPA’s Ro/Ro ramp dimensions are 70’ by 150’. Berth access is excellent with little or no congestion. There are no air draft limitations at Port Canaveral. Ro/Ro ramp(s) are not available at the cruise terminals limiting, but not excluding, combined passenger and cargo opportunities. To further develop cruise-ferry or fast-ferry services, ideally a floating or fixed ramp would need to be contemplated for a designated cruise terminal or the construction of a ferry passenger terminal in the vicinity of the existing Ro/Ro ramp.

7.3.2 Cargo cranes and handling equipment No shore cranes are currently operating at the Port. Port Canaveral Stevedoring offers a Liebherr unit with capability of 17 moves per hour and is committed to provide additional cranes and handling equipment upon demand. Ambassador Stevedoring, Inc. is also positioned to grow in relation to any additional business from short sea developments. Port Canaveral Stevedoring and Ambassador Stevedoring offer cargo handling equipment for terminal operating in sufficient supply for small to medium vessels that would offer liner service in the future to the Port.

7.3.3 Gates Access to the secured port area is manned by customer-friendly security personnel. A non-badged motor carrier can be processed in approximately five minutes while a badged motor carrier could move through the gate in a minute or less. The Canaveral Port Authority is installing state-of-the-art biometrics as an additional security measure.

7.3.4 Outdoor Storage The Port of Canaveral has 100 acres of land for development which all or in part can be used for outside storage. Additionally, Ambassador Services leases 20 acres and Port Canaveral Stevedores 42 acres of which a portion of each could be designated for outside storage.

7.3.5 Transit Shed A transit shed exists, however is currently under lease.

7.3.6 Warehouse The Port features nearly fourteen (14) acres of covered warehouse storage facilities, as well as, dry warehouse and temperature/humidity-controlled areas. It also provides special storage facilities for: cement and petroleum, and 120,000 square feet of general purpose foreign trade zone warehousing.



Private terminal and warehouse operators at the port include: • Mid-Florida Freezer Warehouse, Ltd. boasts the largest, privately held, vessel-side freezer/chill facility in the South with 8.6 million cubic feet. Mid Florida Freezer also operates more than 400,000 sq. ft. of dry vessel-side cargo warehouses.

• Ambassador Services, Inc. is headquartered at Port Canaveral. Ambassador Services, Inc. offers a diverse portfolio of services. Ship agency, cruise ship stevedoring, logistics, equipment fabrication, rail terminal operations, receiving and processing building products for distribution and warehouse operations, are but a sampling of their many areas of expertise.

• The Foreign Trade Zone Group, Inc. operates an expanding FTZ climate-controlled warehouse. The Foreign Trade Zone Group offers computerized inventory systems, management services, record storage and value added distribution services. CBP house broker and freight forwarders are available onsite.

•Integrated Distributions Services, Inc. is located within a few hundred yards of Port Canaveral’s docks with IDS’s climate-controlled FTZ warehouse. IDS offers general warehousing and record storage with computerized inventory systems management and pick-up and delivery services. IDS opened the first container freight station in the Port in 1999. CBP house broker services are available on site.

7.3.7 Intermodal Connections Land connections are abundant with over-the-road options via major arteries, namely the Bee Line Expressway, I-95 and the Florida Turnpike. These roadways are situated ideally close to Port Canaveral and connect a non congested juncture, located mid-state on the East Coast at close proximity to Florida’s heartland where continued large population growth is anticipated. The Florida East Coast Railway, only 10 miles from Port Canaveral’s terminals, is a future possibility for COFC and TOFC connections currently more contingent on supply and demand. Canaveral’s International airport offers the sky connection where cargo can benefit from an active Foreign Trade Zone. And, of great importance is the space connection that uniquely positions Port Canaveral as the only quadramodal facility in the world.



7.4 Container - Ro/Ro Service

7.4.1 International Great American Lines, Inc. – service to Japan

Great American Lines, Inc. is an operator of roll-on/roll-off (Ro/Ro) ships that provide ocean transport of both automobiles and palletized cargoes (refrigerated and general). Service focuses on two-way trade primarily between ports in Japan including Tokyo, Osaka and Toyohashi and Port Canaveral.

Cartainer Ocean Line, Inc. - service to Costa Rica, Guatemala, Honduras, Panama and The Bahamas

Cartainer Ocean Line Inc. provides roll on/roll off service for automobiles, trucks and buses. They offer fortnightly service from Port Canaveral to Panama, Costa Rica, Guatemala and Honduras.

KC’s Caribbean Connection - service to Haiti

7.4.2 Break Bulk Refrigerated Service to Europe: Green Reefers Seatrade U.S.A Green Reefers and Seatrade offer a joint service, providing specialized break-bulk

refrigerated service with fortnightly service from Canaveral to Flushing, Holland.

7.4.3 Domestic None


Port Canaveral Short Sea Shipping Efforts

8. Port Canaveral Short Sea Shipping Efforts

This section contains an analysis of current CPA efforts in support of the initiation of Short Sea Shipping services and recommended tactics and strategies for the future.

8.1 Analysis of Current Efforts

During the last ten years, CPA has pursued strategies of port development to enhance the utilization and revenues of the port. Included was research and investment into the establishment of Port Canaveral as an international and domestic Short Sea Shipping terminal. 8.1.1 International The development of the mega ocean terminal in Freeport, Bahamas during the mid 1990’s spurred the CPA to invest and develop the port in an attempt to attract new carriers to the port via feeder links. A small container yard was built and enhancements to the docks were made. Marketing efforts were made to attract deep-water carriers to the port as an international feeder terminal link with Freeport. The proposed feeder link through Port Canaveral attracted discussion and consideration from all of the major ship lines serving Freeport. A feeder link connecting CPA and Freeport has not been successful for the following reasons:

Maersk Sea-Land withdrew service from Freeport. CSAV withdrew service from Freeport. Mediterranean Shipping has utilized its own feeder vessels using Jacksonville and

Miami for cargo that otherwise could have been discharged or loaded via Port Canaveral.

8.1.1.1. International - Positive Factors The effort to develop the international feeder link via CPA brought focus and attention on the port by major worldwide carriers. As a result, significant relationships were established with carriers and CPA. This serves to lay the groundwork for future development as the regional economy grows. 8.1.1.2. International - Negative Factors International Short Sea Shipping has not yet succeeded as ocean carriers have elected to bypass Port Canaveral and truck Canaveral catchment cargo to alternate ports. This is due to the absence of critical mass of volume needed to induce service with feeder vessel calls at CPA by liner services. 8.1.2 Domestic Prior to this study, CPA had performed market research on the short sea domestic market, discussing the potential opportunity with shippers, carriers, motor carriers and other port authorities. Market research completed over the last several years has indicated only a limited amount of domestic cargo opportunity. This was identified as traffic currently being shipped by road and rail to and from the CPA hinterland. This cargo could be targeted for conversion to a



domestic short sea shipping service between CPA and ports such as New York, Boston, Baltimore, Norfolk, Charleston or Savannah. Additionally, CPA studies determined that the geographic scope of a proposed domestic coastal service from CPA must exceed 300 miles one way to be competitive with truck line service. A short sea domestic service from Canaveral to Miami would not be cost competitive with truck, while service to Charleston would be competitive. Of all proposed service scenarios a domestic service from the Northeast to CPA is seen as offering the best chance of success. Through it’s discussions with potential carriers, CPA estimated the amount of ‘critical mass’ needed to successfully launch a domestic coastal service is a total of 500 truckloads in and out of the port weekly. At the time, it was determined the demand for the service was not large enough to make a new short sea domestic service viable. Interviews conducted last month by MTLA for this study indicate very positive growth of domestic shipping demand for the Central Florida region. The motor carrier companies that were interviewed indicate a two-fold problem in servicing the region. It was reported that the industry is experiencing sizeable cost problems in serving a rapidly growing one-way market. The trucking cost problem in Central Florida is influenced by the following key factors:

For every 6 trucks entering the state of Florida, 5 return empty or deadhead up to 300 miles to obtain return loads north.

Smaller motor carrier companies have been forced to raise prices from $1.90 per mile to $2.40 per mile on shipments to Central Florida to cover costs due to a largely one-way trade.

Larger motor carrier companies with national contracts with large retailers have great difficulty or are unable to raise their prices due to reduced demand for their services to Central Florida.

Truck driver shortages. Hours of service regulations for truck drivers have added further cost. Continued high prices of diesel fuel. Worsening of highway and port congestion.

8.1.2.1. Domestic - Positive Factors

The rapid economic growth of the Central Florida region may have increased demand to levels that could now support the establishment of a short sea domestic service.

The region is currently experiencing rapid growth and resulting economic benefit.

Central Florida is one of the nations fastest growing areas in the country. Orlando is ranked 1st and Tampa is ranked 5th in rankings for Top 10 Annual Growth Areas nationally.

It is the view of CPA that no further investment is necessary to establish a domestic

coastal service from Port Canaveral. A container yard and other enhancements have already been completed and are ready to go.



8.1.2.2. Domestic - Negative Factors The lack of a domestic water carrier ready to step in to establish a service and take a

risk without guarantees or exclusivity granted by CPA. Scarce availability of Jones Act vessels offering a combination of speed and cost

efficiency to make the service viable.

8.2 Future Tactics and Strategies

8.2.1 Market Analysis The Port Canaveral catchment area is defined as the 9 county area of Central Florida surrounding Port Canaveral. Its economy is driven by agriculture, tourism and service based businesses. There are significant volumes of agriculture being shipped from Central Florida to other domestic destinations. A large quantity of citrus is exported to Europe and Asia. However, most if not all of this cargo are now containerized and carriers have elected to truck these containers to the ports of Charleston or Savannah. Central Florida is one of the nation’s fastest growing areas in the country. Orlando is ranked 1st and Tampa is ranked 5th in rankings for Top 10 Annual Growth Areas nationally. Compared to the rest of the state, Central Florida is forecast to show slightly above average growth rates in Labor, Per Capita Income and Sales. Population and housing growth is forecast to be strong, although slightly behind the southwest and northeast coasts of Florida as the retired population in these areas increases. (University of Florida 2002)

Table 6. Central Florida Labor, Per Capita and Sales Growth Forecasts

Central Total 2005 to 2015 Growth Forecasts Florida Florida Non-Agricultural Labor Market 26.0% 25.6% Real per Capital Income 26.0% 25.6% Real Taxable Sales 47.9% 45.5% Total Housing Stock 18.4% 18.9% Permanent Residents 15.1% 15.7%

Source: University of Florida 2002

Central Florida’s labor force is expected to continue its increase as the state’s labor pool shifts from rural to more urbanized areas. The largest percentage of labor growth in this area will come from tourism and retirement services.



Table 7. Central Florida Non-Agricultural Labor Forecast

Forecast Non-Agricultural LaborCentral Florida

2,8003,000

3,2003,4003,600

3,8004,000

2005 2010 2015

Year

(tho

usan

ds o

f job

s)


The forecasted rise in employment will drive up per capita income and real taxable sales as portrayed in Tables 8 and 9.

Table 8. Central Florida Real per Capita Income Forecast

Forecast Real per Capita IncomeCentral Florida

$0$5,000

$10,000$15,000$20,000$25,000$30,000$35,000

2005 2010 2015

Year

1997

Dol

lars




Table 9. Central Florida Real Taxable Sales Forecast

Forecast Real Taxable SalesCentral Florida

-

50,000

100,000

150,000

200,000

2005 2010 2015

Year

(mill

ions

in 1

997

Dol

lars

)


8.2.2 Carrier Interest A carrier has expressed interest and support in the development of Port Canaveral as a Short Sea Shipping terminal. In order to do so, the carrier has expressed the need for an exclusive contract or funding. Another carrier indicated that they would need some type of funding to get started. The CPA, a public authority, is unable to enter into exclusive arrangement or to provide funding to a private entity. In discussions with carriers and through research efforts, CPA believes that the minimum ‘critical mass’ of 500 units one way weekly would be required to establish a financially viable Short Sea Shipping service. Adding the customer perspective, a twice-weekly service may be needed to compete with the convenience of truck and rail services.

8.2.3 Shipper Interest The CPA has profiled the key shippers in the 9 county area of Central Florida. The area has a few manufacturers that export, including 5 companies that each export in excess of 100 containers per month. Central Florida area export shippers including Walt Disney, Tropicana, Hawaiian Tropic, and Brunswick Sea Ray Boats have expressed interest in the establishment of Short Sea Shipping connections through Port Canaveral. They have indicated that they care little about how their cargo moves unless it can reduce their cost or provide faster, reliable deliveries. The Central Florida region has recently added significant private distribution centers for major retailers within the last year. These include:

Lowe’s Distribution Center Osceola County, opened October 2004 Wal-Mart Distribution Center St. Lucie County, opened June 2004



8.2.4 Motor Carrier Interest In interviews conducted over the last several years by CPA officials, motor carriers have expressed an interest in the concept of domestic Short Sea Shipping as a means to reduce operating costs. One large trucking line indicated it could provide an average of 150 trucks per day for a service from Charleston or Savannah to CPA. Indications are that other trucking lines would also produce additional volumes in support of the service, in an effort to reduce costs.

8.2.5 Rail Interest Short Sea Shipping is not really in the focus of either of the states two major railroads FEC and CSX. The FEC would likely be interested in a Northeast to Jacksonville coastal service to feed their Jacksonville ramp with service to Miami. The CSX has closed their ramp in Orlando.

8.2.6 Marketing Port Canaveral as a Short Sea Shipping Terminal Point Port Canaveral provides a terminal facility that is ready for use and ideally situated to handle a domestic short sea shipping service. Some of the port’s advantages include:

Uncongested highway connectors linking the port with Central Florida Free from port congestion Ample raw land on which to build and establish services Deep water capable of handling all types of vessels Situated right on Atlantic Ocean, without a long voyage out to sea Labor Flexibility, union or non-union Close geographical proximity to Caribbean and Central America


Potential for Port Canaveral’s inclusion in Government Sponsored or Funded Short Sea Shipping Pilot Program or Demonstration Project

9. Potential for Port Canaveral’s inclusion in Government Sponsored or Funded Short Sea Shipping Pilot Program or Demonstration Project

This section addresses the potential for Port Canaveral to be included in a U.S. government sponsored or funded pilot program or demonstration project for Short Sea Shipping.

9.1 U.S. Government

Federal efforts on Short Sea Shipping have centered on a “Short Sea Shipping Initiative” started at the U.S. Maritime Administration in 2002. These efforts have focused on the prospects of providing public benefits such as congestion relief, environmental remediation and alleviating transportation capacity problems that exist and that are foreseen in the future. The impending doubling of trade with the United States in the next 15 to 20 years will only serve to tax an already overburdened transportation system. The Short Sea Shipping Initiative is investigating ways in which this “capacity crunch” can be eased by the inclusion of a marine network that will complement existing and expanded truck and rail services. To date, these public efforts have consisted of heightening the awareness of the transportation capacity issue; formation of a public/private cooperative (Short Sea Shipping Cooperative Program) to investigate relevant topics in Short Sea Shipping and to perform funding studies that seek to learn from similar services already in place; analyzing the public benefits that may be derived from increased use of water-borne transportation in the United States; and investigating the business probabilities of successful Short Sea Shipping ventures. 9.1.1 Marine Transportation System National Advisory Council MARAD’s efforts have been complemented by the work of the Marine Transportation System National Advisory Council (MTSNAC). MTSNAC was formed in 1999 by charter with the U.S. Department of Transportation as a 30 member, non-federal advisory body to the Secretary of Transportation. Among other things, MTSNAC has reported to the Secretary that Short Sea Shipping is a viable option for addressing the U.S. transportation system’s capacity shortfalls and for improving the overall transportation system. In May 2001, Secretary Norman Mineta challenged MTSNAC to investigate the possibilities of formulating a ‘SEA-21” agenda similar to TEA-21 for the surface transportation industry and AIR-21 for the aviation industry. MTSNAC’s response to the Secretary has indicated that a central element of such a SEA-21 agenda and possible federal support legislation should be a Short Sea Shipping assistance program. MTSNAC suggested that increased use of existing authority under Title XI of the Merchant Marine Act that provides mortgage guarantees for the construction of vessels in U.S. shipyards should be directed at construction and reconstruction of vessels for use in a Short Sea Shipping network. Additionally, MTSNAC recognized that, due to large capital investments needed to start any type of new marine service, consideration should be given to financial support for those start-ups, as well as for infrastructure improvements that may be necessary to enable Short Sea Shipping services in the United States.



9.1.2 U.S. Department of Transportation It has been reported in the press, and alluded to by senior officials at the Department of Transportation, that a SEA-21 program is part of their overall transportation improvement agenda. Elements of legislative proposals that may evolve from this effort at improved transportation planning include those discussed by the MTSNAC. In addition, viable support programs could focus on financial support for carriers and ports interested in expanding or initiating new Short Sea Shipping services.

9.1.3 Demonstration Projects versus Start-ups Traditionally, federal financial support for transportation related improvements have not supported demonstration projects that would exemplify untried transportation services. However, in the past, there have been financial aid programs to support the cost disparity between international U.S. and foreign marine services such as the Operating-Differential Subsidy Program that provided direct financial aid to U.S.-flag ocean carriers involved in international trade, and Construction-Differential Subsidy Program to offset the higher cost of building vessels in the United States. The current Maritime Security Program (MSP) pays a stipend to U.S.-flag ocean carriers in recognition of the cost disparities involved in operating their vessels with higher paid crews. Recognizing that oil importation is an important strategic element for sustaining the U.S. economy, the MSP also provides for a construction offset for a limited number of new tank ship construction in U.S. shipyards. Clearly, Short Sea Shipping is ripe for federal support. Many of the same economic and defense arguments that have been used to substantiate support for the international trades can certainly be made for supporting domestic services. In addition, the public benefits that may be derived from Short Sea Shipping are strong arguments for federal support. In the current federal fiscal environment it is difficult at best for the Administration to introduce new funding programs of any type. However, the Department of Transportation continues to address a SEA-21 framework that incorporates such programs and seeks to respond to the capacity shortfall. Building or improving intermodal connectors is on the agenda as part of surface transportation reauthorization as an important first step in this process. Recently, the American Association of Port Authorities has joined others maritime stakeholders in supporting elimination of the Harbor Maintenance Tax for Short Sea Shipping services – an important incentive to reducing costs associated with such services. Providing working capital assistance to new Short Sea Shipping services through grants or guaranteed loans to carriers and ports is certainly a viable option for federal support. By incentivizing “start-ups”, the government can demonstrate not only support for the concept, but also its recognition that these services are essential. The Port Authority of New York and New Jersey’s Port Inland Distribution Network (PIDN) is a prime example of how similar programs can work, having provided start-up state-funded financial support for services from Port Newark to Albany, NY and Bridgeport, Connecticut.



9.2 Prospects for Canaveral Port Authority

The Canaveral Port Authority has an opportunity to take a leadership position in bringing similar funding in support of Short Sea Shipping services to an already robust port in the Southeastern United States. The State of Florida’s Strategic Intermodal System Initiative is already exploring improvements to its own transportation networks. Florida is very progressive and aggressive in recognizing the power of concerted efforts in transportation planning. The establishment of the Florida Ports Council is clearly recognition of the strength that comes from organization and coordination of statewide efforts. The timing is certainly right to bring together strong state and federal partners to address and support Short Sea Shipping. Efforts to bring federal funding to CPA would require a coordinated business, political and financial plan. Development of a strategy to coordinate efforts with the federal, state and local governments while including potential business partners is essential. Several federal agencies have interests in transportation planning from their respective viewpoints. Although the U.S. Department of Transportation is attempting to take a coordinated approach to transportation planning, funding streams and the interest groups that support them are diverse. CPA would need to build a unique plan to demonstrate the manner in which government efforts can be coordinated to best support the initiation of Short Sea Shipping services utilizing Port Canaveral as a terminus. Funding from any governmental source only follows establishment and substantiation of a strong business plan. The investigation of market opportunities and business partners that are prepared to act in consort with CPA is basic to seeking any federal or other government financial assistance. Establishing strong connections in local, state, regional and national political bodies is another vital element to success. For U.S. Domestic markets, a network of regional coalitions must be sought. Short Sea Shipping can only work effectively if there is another terminus or several termini that can be established to sustain a transportation network, supported by marine carriers and land transportation providers. The same holds true for international markets where bilateral political and/or business opportunities need to be investigated. The potential for CPA, along with other strong business partners, to benefit from governmental funding certainly exists. Federal funding, although heretofore absent for Short Sea Shipping, is possible through a strategic approach supported by sound business planning and a coordinated legislative agenda. The probability for federal funding increases where funding participation from other governmental and business partners is evident. Commitment on the part of the intended beneficiaries is absolutely vital, as demonstrated by the PIDN on the local, state and multi-state levels. The success of the PIDN also demonstrates that those efforts can produce results.


A Short Sea Shipping Decision Tool

10. A Short Sea Shipping Tool

In this section a Short Sea Shipping Probability Decision Tool is developed.

10.1 Critical Decision Factor Development

The results of this study’s findings, international and domestic research, interviews of industry stakeholders and consultants’ expertise have led to the development of a list of critical decision factors that may support or impede the initiation of a Short Sea Shipping project. The list was developed considering the industry as a whole with relevance to specific Canaveral Port Authority’s attributes considered. The list is as follows with a brief explanation as to the significance of the factor: Critical Decision Factors

Congestion – major concern of the U.S. that Short Sea Shipping can alleviate; specific support includes I-95 corridor congestion concerns, projected growth in Central Florida and existing congestion in surrounding regional metropolitan areas

Cost – cost involved to initiate any new project must be considered Demand – a “must have” for any project Economic Development – Local & Regional – Port Authorities have a

responsibility to provide economic development within their local and regional area

Environmental Impact – must be considered by Port Authorities prior to initiating any new ventures

Financing – necessary for any new venture Geographic Location – a major contributing factor to any Short Sea Shipping

venture Government Funding Programs – can be recommended by Port Authorities as a

funding source for potential “partners”, i.e. Marine Operators Infrastructure Capability – must have the appropriate infrastructure, services and

capabilities in order to provide a seamless and successful Short Sea Shipping operation

Integration of Transport Modes - a system must be in place that seamlessly processes, stores and reports necessary information

Intermodal Connectors – must have all of the “links” in place to receive and deliver cargo and passengers

Labor – necessary to have adequate and available labor resources for a successful operation

Public Support – Port Authorities have a responsibility to their community Service Cost – ability to provide competitive pricing Transportation Culture – other transportation stakeholders have to support the

initiative



Sub-categories of each of the Critical Decision Factors were also identified as follows: Critical Decision Factors with sub-categories:

Congestion – level of area congestion; proximity to congested metropolitan areas; alternative to congested ports

Cost – infrastructure investment; marketing / lobbying Demand – shipper / consignee; marine operators; motor carriers; port partners Economic Development – Local & Regional – impact on region; job creation Environmental Impact – mitigation of existing regional impact; local impact due

to increased activity Financing – port ability to finance infrastructure needs Geographic Location – proximity to trade lanes; proximity to distribution

networks; proximity to major markets; proximity to regional catchment areas Government Funding Programs – federal; state Infrastructure Capability – existing infrastructure; available capacity; depth of

water; warehousing; cargo handling equipment; barge service; cargo ship service; container capability; Ro/Ro capability; Ro/Pax capability

Integration of Transport Modes – IT systems integration Intermodal Connectors – highway; rail Labor – union; non-union Public Support – political, state; residents; businesses Service Cost – port cost structure Transportation Culture – industry level of acceptance

The importance of these factors and their sub-categories have been discussed, reviewed and analyzed throughout this study and specifics related to Port Canaveral can be found in Sections 7, 8 and 9. This study also revealed significant findings through the interviews of Port Authorities, Terminal Operators, Marine Operators and Motor Carriers which summaries and conclusions can be located in Section 6.3 and Appendices B, C and D.

10.2 Short Sea Shipping Probability Decision Tool

This study further proceeds in developing a method to analyze each of the above Critical Decision Factors and to develop a Probability Decision Tool that will assist the Canaveral Port Authority in their decision to consider proceeding with further research that may lead to the initiation of a Short Sea Shipping project. See Appendix A: Probability Decision Tool (Tab 8). After the determination of the Critical Decision Factors and their sub-categories, the next step taken was to weight the importance of each Critical Decision Factor in relation to one another and their contributing factor to the support of initiating a Short Sea Shipping initiative. Whereas all of the factors are important, some of the factors are imperative, while others may not be quite as critical. The weighting levels were determined by utilizing the research, analysis, interviews, professional expertise and collaborative consensus of MTLA. The following weightings were determined:



Figure 10. Weighting of Critical Decision Factors

Infrastructure Capability

11%

Intermodal Connnectors11%

Congestion9%

Enviromental Impact9%

Financing8%

Government Funding8%

Cost7%

Economic Development7%

Labor4%

Geographic Location12%

Demand12%

Transportation Culture2% Demand

Geographic LocationInfrastructure CapabilityIntermodal ConnnectorsCongestionEnviromental ImpactFinancingGovernment FundingCostEconomic DevelopmentLaborTransportation Culture

Once each Critical Decision Factor was weighted, weightings were also determined for each sub-category within the decision factor. The “Sub-Category Weight” can be viewed in the Canaveral Port Authority Short Sea Shipping Probability Decision Tool, Appendix A, Tab 8, at the end of this report. “TBDs” were used in cases where enough information was not available to make a determination. The factors were not eliminated from the Decision Tool so that the user does not loose sight of the importance of these items for future assessments. An overall “Probability Factor” was then calculated for each sub-category for the entire analysis. The Probability Factor was calculated by multiplying the “Sub-Category Weight” for each sub-category within the Decision Factor by its Critical Decision Factor Weight.



To further develop the Probability Decision Tool and process, the study evaluated Canaveral Port Authority’s “Present Condition” and “Future Potential” for each sub-category based on the findings from our research, interviews, analysis and expertise. Present condition and future potential scores were assigned as follows:

5 – Excellent 4 – Very Good 3 – Good 2 – Fair 1 – Poor

A comments column is included in the Probability Decision Tool providing a brief explanation for each sub-category’ score. In addition, a column was included ranking the overall importance of each sub-category in relation to the overall analysis as “High”, “Medium” or “Low” to assist the user to quickly review the Probability Decision Tool and understand the importance of the item without having to assess all of the factors in the Probability Factor column. To conclude the Probability Decision Tool (Appendix A, Tab 8) analysis, “Present Probability” and “Future Probability” factors were calculated by multiplying each decision item sub-category’s probability factor by its present condition and future potential score. The Present Probability and Future Probability factors were then summarized to determine overall Weighted Average Present Condition and Future Potential scores. The weighted average was then divided by 5 (total possible score) to calculate Current Condition and Future Potential Probabilities. In review, the process of the Probability Decision Tool is as follows:

1. Identify critical decision factors 2. Identify sub-categories for each critical decision factor 3. Weight the importance of each critical decision factor 4. Weight the importance of each sub-category within the critical decision factor

o Steps three and four were performed as individual steps in order to better assess the weighting of each sub-category. It would have been too arbitrary to try to weight the importance of all forty sub-categories against one another.

5. Calculate probability factors for each sub-category 6. Score CPA’s present condition and future potential 7. Calculate present probability and future probability for each sub-category 8. Calculate a weighted average score for CPA’s overall present probability and future

probability 9. Calculate Probability of Success for CPA’s current conditions and potential future

For this study, the Probability Decision Tool was developed at a high level using preliminary and limited data (per the Statement of Work of this project) to determine if Canaveral Port Authority should further consider Short Sea Shipping as an initiative. As the decision process evolves beyond this study’s scope of work, the tool can be adjusted and perfected to consider lower-level weightings (use of a scale broader than 1 through 5), additional research and criteria, interviews of shippers and logistics providers, cost-benefit analysis and specific business alternatives to further refine and decide if a specific Short Sea Shipping project should be initiated.



10.3 Short Sea Shipping Probability Decision Tool - Outcome

The Short Sea Shipping Probability Decision Tool resulted in scores of:

• CPA Present Condition 2.53 (Fair to Good)

• Future Potential 3.99 (Very Good) These scores translate to a:

• Present Condition probability 50.6% • Future Potential probability 79.9%.

A comparison between the current and future potential scores indicate that CPA has the potential to improve their likelihood of initiating a successful Short Sea Shipping initiative if many actions are implemented within many of the sub-categories that have been identified as critical.


Conclusion

11. Conclusion

In this section a summary of the Port Canaveral Short Sea Shipping study and its findings are presented and future work described.

Among other things, this study has addressed the U.S. Department of Transportation’s recent focus on the Marine Transportation System, Short Sea Shipping and a national transportation policy that involves all modes of travel; the State of Florida’s Strategic Intermodal System that seeks a unified funding approach to transportation needs within the state; and the Port Authority of New York and New Jersey’s Port Inland Distribution Network (PIDN) that is already underway and that plans for an integrated transportation system involving marine, rail and road services in a coordinated structure to address congestion and logistics concerns at the huge port complex and within a multi-state area. In addition, and of particular note, is the new emphasis on Short Sea Shipping by the I-95 Corridor Coalition, an association of East Coast transportation agencies (including Florida Department of Transportation) funded through the Federal highway program authorization acts. In the last decade, the Coalition's previous concentration on highway transportation issues progressed to include all modes of transport. Just last year, the Coalition applied its resources to inaugurate a study of Short Sea Shipping through a project entitled “Developing Short Sea and Coastal Shipping Options for the I-95 Corridor Region”. This report, due to be completed later this year, is designed to provide an enhanced understanding of the market for domestic Short Sea Shipping services in the I-95 corridor region. The American Association of Port Authorities, along with over 35 national transportation and business associations and ports, recently adopted a position that repeal of the Harbor Maintenance Tax (http://www.aapa-ports.org/govrelations/hmt_repeal_paper.htm) is necessary to remove this “significant disincentive to coastwise waterborne trade, which could help alleviate surface transportation congestion in the future.” The efforts of these and other groups have demonstrated not only concerted interest and resource dedication to the study and implementation of a U.S. Short Sea Shipping network, but have definitively increased the perception that Short Sea Shipping may well have the potential to provide a sensible alternative and complement to the truck and rail modes. At the state level, Florida’s Strategic Intermodal System (SIS) is already in place and the Florida Department of Transportation (FDOT) is anxious to receive proposals that would improve the transportation system in the state. The SIS has the potential to be an important tool for Port Canaveral and its commercial partners to participate in, and benefit from, the state’s new transportation planning and funding program. Port Canaveral has already been designated by the SIS as one of Florida’s seven deepwater seaport facilities and, as such, has a unique and timely opportunity for establishment of intermodal facilities in a Short Sea Shipping network. The emergence of the SIS and recent adoption of the SIS Strategic Plan provide a timely opportunity for Port Canaveral to take an early leadership role in establishing Short Sea Shipping policy in the state. Port Canaveral is the first Florida port to commission its own Short Sea


Conclusion

Shipping study which should be an important indication to the Florida Department of Transportation that Port Canaveral is in step with its future vision. The Port Authority of NY/NJ through its PIDN benefited from state funding for Short Sea Shipping activities. Port Canaveral may also benefit from state funding through the SIS and should consider active engagement with FDOT and the port’s commercial partners. Systemically, Port Canaveral has the potential to benefit itself, but may also be instrumental in bringing FDOT SIS funding to its potential Short Sea Shipping partners. The Canaveral Port Authority is well placed to provide needed Short Sea Shipping services in the Southeast region. The decision to move forward with the efforts that are necessary to further explore this potential will be based on a number of important factors which have been analyzed and outlined in the previously discussed Decision Tool. Demand for Short Sea Shipping services centered at Port Canaveral is relatively the most important factor to be considered. Port Canaveral has definite potential to benefit from this demand. From the business demand standpoint, transportation user and provider interest have been found to be positive. The majority of marine operators, motor carriers and port partners that were interviewed expressed affirmative inclination to the ability and utilization of Port Canaveral as a Short Sea Shipping base. Naturally, specific business opportunities still remain to be explored, and a focused marketing and business plan for Short Sea Shipping would need to be established. Concerning the very important elements of geographic location and ability to ease congestion, Port Canaveral is well placed to take advantage of major trade lanes and major markets. Growing consumer demand in the region and the increasing congestion in other metropolitan areas and along I-95, and shortfalls in capacity at other Florida ports are important factors influencing Port Canaveral’s potential to serve as a Short Sea Shipping terminus. We believe these potentials to be very good considering, on the one hand, the ability of marine operators to easily call at Port Canaveral on existing or future Short Sea Shipping routes, and on the other hand, the ability of a Short Sea Shipping network based at Port Canaveral to have a positive effect on congestion along regional transportation corridors and in already congested metropolitan areas and ports. Port Canaveral’s infrastructure capabilities to service surface and waterborne transportation providers in a Short Sea Shipping network is also very important to potential future success. Considering the present infrastructure and capacity capabilities at Port Canaveral, improvement of Port Canaveral’s physical infrastructure to provide specific capabilities suited to container handling and other Short Sea Shipping requirements will be necessary. Additional warehousing, cargo staging, Ro/Ro accommodation and container-handling capability are needed. Naturally, an examination from a cost/benefit perspective would facilitate a decision as to the desire to establish Port Canaveral Short Sea Shipping services. Another important factor in determining Port Canaveral’s potential to succeed in establishing Short Sea Shipping services is intermodal connectivity. Port Canaveral has good highway access and connections that stand to attract transportation providers and favor Port Canaveral as a Short Sea Shipping terminus. Connectivity to rail is also an important consideration and although the port lacks on-dock rail, FEC Railroad indicated receptiveness to considering improvement of its rail services to Port Canaveral in a Short Sea Shipping service.


Conclusion

The cost to the Canaveral Port Authority to further investigate Short Sea Shipping markets and business opportunities and providing the investment necessary for infrastructure development are additional factors. As mentioned above, should Port Canaveral decide to pursue Short Sea Shipping service, there are certain infrastructure investments that will need to be made. Although further examination of these investments needs to be accomplished, a first step must be the investment in a strategic marketing and awareness campaign. Focusing such an effort on Port Canaveral’s potential business partners, the Florida Department of Transportation, the U.S. Department of Transportation and other political decision makers would serve to establish potential for the success of Short Sea Shipping services and the possibilities of funding support. Port Canaveral has many advantages that can be illustrated, and providing an overview of the business and public benefit prospects of Short Sea Shipping based at the port would serve to focus business and political stakeholders on Port Canaveral. The potential to benefit from Government funding programs is also an important factor. Although the Federal government is exploring the public benefits of Short Sea Shipping, the current national fiscal environment suggests that budgeting for a major transportation sector improvement program for Short Sea Shipping may be difficult in the short term. As the U.S. Department of Transportation moves to systemic analysis of freight transportation requirements and resource allocation, the prospects in the longer term increase. Local and state financial support for Short Sea Shipping would help to impel inclusion of the Federal government as a partner in any consideration of Port Canaveral as a Short Sea Shipping leader. More important in the short term is concentration on the abovementioned Florida Strategic Intermodal System. The SIS has already been enacted and the state is encouraging participation, ideas and solid planning on the part of its strategic intermodal facilities, including Port Canaveral. Discussions with FDOT have been very positive and the potential for financial support for Port Canaveral and its commercial partners in a Short Sea Shipping venture shows promise. The Canaveral Port Authority has excellent ability to provide necessary financing to support its infrastructure needs. Coupled with a cost-benefit analysis, a strong business plan and potential for outside funding, this financing ability can only improve. Environmental impact is certainly an important factor in any analysis concerning increased port activity and Short Sea Shipping service potential. Congestion relief may be possible from congested road networks in other areas of the region, but the public perception of increased traffic in the Canaveral area will also need to be considered. The environmental impact from both the potential benefit and impact perspectives needs to be examined. Also of importance to any port authority is its ability to positively impact regional economic development, job creation and contribution to its local constituency. Intuitively, bringing new business to the port could provide these positive effects, but further analysis of the costs and benefits associated with establishing a Short Sea Shipping service needs to be undertaken. Labor availability at Port Canaveral is important to a lesser degree, although we have found that the labor force could provide a strong operational and political advantage to the port in any plan to establish Short Sea Shipping services.


Conclusion

Transportation culture, or industry’s level of acceptance of Short Sea Shipping, although not vitally important, is steadily improving. Interviews of motor carriers, marine operators and railroads demonstrated this increasing acceptance and inclination to make the cultural and operational changes necessary to its success. Factors including the port’s service costs and its ability to integrate transportation modes are also important to the discussion of establishing Short Sea Shipping services and require further exploration. Overall, Port Canaveral has very good potential to serve as a Short Sea Shipping service provider. Comprehensive business, marketing and awareness plans and strategies, along with additional analysis of influencing factors to implement Short Sea Shipping services at the port, would be required in order to pursue its implementation. The decision tool provided in this study should serve as an excellent device for discussion, further analysis and examination, and decision-making in this process.


References

References

American Maritime Congress (2005). (Is an educational and research group representing U.S.-flag vessel operating companies in the international and domestic trades that have collective bargaining agreements with the Marine Engineers' Beneficial Association.) "Jones Act", http://www.us-flag.org/jonesact.html

Blonk, W. (1999). Introduction to Shaping the Pan-European Supply Chains of the Future (March 11, 1999). Shaping the Pan-European Supply Chains of the Future, Brussels, Belgium, Price Waterhouse Coopers.

Brooks, M. and J. D. Frost (2004). "Short sea shipping: a Canadian perspective." Maritime Policy & Management 31(4): 393-407.

Connecticut Department of Transportation (2001). Container Barge Feeder Service Study: Bridgeport, New Haven, New London, Norwich. Conn., Office of Intermodal Planning: 1-80.

European Commission (1999). The Development of Short Sea Shipping in Europe: A Dynamic Alternative in a Sustainable Transport Chain (COM (1999) 317 final). Brussels, Belgium, European Commission.

EuroStat (2005). Statistics In Focus: Transport - Short Sea Shipping 2000-2003. By Georges Xenellis, February 2005.

Henesey, L. and K. Kerckaert (2004). Prospects for Short Sea Shipping. Short Sea Shipping Conference: building a U.S. waterborne intermodal system, Hilton Head, SC., U.S., Journal of Commerce.

MARAD (2003). Short Sea Shipping Initiative, http://www.MARAD.do.gov/Programs/shortseashipping.html (Washington, D.C.: U.S. Department of Transportation).

MARAD (2005). Glossary of Shipping Terms, http://www.marad.dot.gov/publications/glossary/A.html (Washington, D.C.: U.S. Department of Transportation).

MARAD (2005). Short Sea Shipping Brochure, http://www.marad.dot.gov/Programs/sssbroc.htm (Washington, D.C.: U.S. Department of Transportation).

Marcucci, N. (1998). Prospects for Load Centering Revitalizing Hub and Spoke Feeder Fleets for Effective Inter-Regional Container Distribution. Conference on Regional Development, April 28, 1998, Old Dominion University, Norfolk, Va.

Marcus, H.S. (1986), Trends in US liner shipping past, present and future, Research for Tomorrow’s Transport Requirements: Proceedings World Conference in Transportation Res., Vancouver, p. 813-827.

Marcus, H.S. (1989), Interrelationship between strategy and technology in the international liner market, Marine Policy Reports 1, p. 207-215. Maritime Cabotage Task Force (2004). Metropolitan Planning Organization - An Economic Framework for Domestic Short Sea Shipping (September 28, 2004), SNAME Panel O-36 & Transportation Research Board/Marine Board, http://www.mctf.com/

MDS Transsmodal (1998). The European Container Freight Market: Containers by Sea (fourth edition). Chester, UK.


References

P&O/Nedlloyd (2005). A-Z of Shipping Terms, http://www.ponl.com/topic/home_page/language_en/about_us/useful_information/a-z_of_shipping_terms/A.html.

Peeters, De Monie and Jacobs (1997). Managing the European Shortsea Shipping into intermodal transport chains. In (eds. Peeters and Wergeland) European Shortsea Shipping. Delft University Press, Delft, the Netherlands, pp.17-28.

Peeters, Verbeke and Declercq (1995) The Future of European Policies for Shortsea Shipping, In (eds.Wijnolst, Peeters and Liebman) European Shortsea Shipping. Lloyds of London press, London pp. 453-475.

Psaratis, H. N. (1995). Introduction to the Third Conference of the European Short Sea Shipping. The Third conference of the European Short Sea, Bergen, Norway, Delft University Press.

Short Sea Shipping Bureau. "Short Sea Shipping", www.Shortsea.nl Sowinski, Laura L. (2005). The Near-Term Outlook For Short Sea Shipping, February 1, 2005,

World Trade Magazine. Stopford, M. (1997). Maritime Economics. London, UK, Routledge. Toyen, M. (2004). The Barge Feeder Service for the Port of Bridge Port. Workshop: Economics

of Domestic Short Sea Shipping. Trailer Bridge Inc. (2005). http://www.trailerbridge.com/shippinginfo/shipping.asp. Transportation Research Board (2004). Transportation Research Board of the National

Academies, www.trb.org. University of Florida (2002). Florida Long-term Economic Forecast 2002. Bureau of Economic

and Business Research, Warrington College of Business Administration, University of Florida, David G. Lenze, August 2002.

Wijnolst, N., A. Sjöbris, C. Peeters. (eds.) (1994) Multimodal Short Sea Transport – Coastal Superhighway Delft University Press, Delft, pp.5-7.


Canaveral Port Authority Short Sea Shipping Probability Decision Tool(Based on MTLA Findings)

Decision Factors Importance Sub- category Weight

Probability Factor

Present Condition

Present Probability

Future Potential

Future Probability

Comments

Congestion

Level of area congestion High 0.25 0.0225 5 0.1125 3 0.0675 Diversion of traffic to Port Canaveral will increase local terminal and highway congestion

Proximity to congested metropolitan areas

High 0.30 0.027 5 0.135 5 0.135 Congested metropolitan areas are a resource to cargo volume

Alternative to congested ports High 0.45 0.0405 2 0.081 5 0.2025 North and South Florida ports are presently at or near capacity, and are congested. Connecting highways are also at capacity.

1.00 0.09Cost

Infrastructure investment High 0.50 0.035 1 0.035 5 0.175 Expanded infrastructure will be requiredMarketing / Lobbying High 0.50 0.035 2 0.07 4 0.14 Market research, lobbying effort required

1.00 0.07Demand

Shipper / Consignee High 0.30 0.036 1 0.036 3 0.108 Driven by projected Central Florida economic growthMarine Operators High 0.30 0.036 1 0.036 4 0.144 Majority of interviewees expressed interestMotor Carriers High 0.30 0.036 1 0.036 3 0.108 Based on industry interviews and projected shortages of trucking capacity, driver

shortages, and highway / terminal congestionPort Partners Medium 0.10 0.012 1 0.012 3 0.036 Example: NY / NJ PIDN project and others in progress

1.00 0.12Economic Development – Local & Regional

Impact on region High 0.50 0.035 1 0.035 5 0.175 Primary concern for Port AuthorityJob creation High 0.50 0.035 1 0.035 5 0.175 Primary concern for Port Authority

1.00 0.07Environmental Impact

Mitigation of existing regional impact

Low 0.10 0.009 5 0.045 5 0.045 Improves regional environmental concerns

Local impact due to increased activity

High 0.90 0.081 3 0.243 2 0.162 Increased port & highway activity will increase environmental impact concerns

1.00 0.09Financing

Port ability to finance infrastructure needs

High 1.00 0.08 5 0.4 5 0.4 Port has excellent resources

1.00 0.08Geographic Location

Proximity to trade lanes High 0.30 0.036 5 0.18 5 0.18 Major consideration for marine operatorsProximity to distribution networks High 0.20 0.024 2 0.048 3 0.072 Driven by projected Central Florida economic growth

Proximity to major markets High 0.30 0.036 4 0.144 4 0.144 Ability to ease congestion on North / South corridorProximity to regional catchment areas

High 0.20 0.024 1 0.024 3 0.072 Major consideration for motor carriers

1.00 0.12Government Funding Programs

Federal Low 0.20 0.016 1 0.016 2 0.032 Based on Federal funding constraints and lack of political awareness

Maritime Transport Logistics Advisors, LLC Present Condition / Future Potential: 5 - Excellent; 4 - Very Good; 3 - Good; 2 - Fair; 1 - Poor 3/3/2005

Appendix A: Canaveral Port Authority Short Sea Shipping Probability Decision Tool (Based on MTLA Findings)

Placeholder 2


Canaveral Port Authority Short Sea Shipping Probability Decision Tool(Based on MTLA Findings)

State Medium 0.80 0.064 1 0.064 4 0.256 New FDOT SIS program1.00 0.08

Infrastructure CapabilityExisting infrastructure High 0.15 0.0165 2 0.033 4 0.066 Ports ability to respond and provide required infrastructureAvailable capacity High 0.10 0.011 2 0.022 4 0.044 Port has available land area for expansion; Most Florida ports do notDepth of water Medium 0.10 0.011 5 0.055 5 0.055 Short Sea Shipping vessels are not expected to require deeper draft than CPAWarehousing Low 0.05 0.0055 2 0.011 3 0.0165 Motor carriers may require trans-loading and LTL facilitiesCargo handling equipment High 0.15 0.0165 1 0.0165 4 0.066 Additional cargo handling equipment will be necessaryBarge service High 0.10 0.011 2 0.022 4 0.044 Additional load/discharge Lo/Lo capability will be neededCargo ship service High 0.10 0.011 2 0.022 4 0.044 Additional cranes and shore equipment neededContainer capability High 0.10 0.011 1 0.011 4 0.044 Shore based container crane or mobile cranes neededRo/Ro capability High 0.10 0.011 2 0.022 4 0.044 Present facility may not be adequate for future Ro/Ro volumeRo/Pax capability Low 0.05 0.0055 2 0.011 4 0.022 Present facility not able to handle Pax & Ro/Ro simultaneously

1.00 0.11Integration of Transport Modes

IT systems integration High TBD TBD TBD Major factor port must provide for seamless integration

Intermodal ConnectorsHighway High 0.75 0.0825 3 0.2475 4 0.33 Improvement with construction of new bridgeRail Medium 0.25 0.0275 1 0.0275 4 0.11 Based on FEC Railroad receptiveness to activating intermodal operations

1.00 0.11Labor

Union Low 0.50 0.02 5 0.1 5 0.1 Unions viewed as a political advantage; Not viewed as an operational issueNon-union Low 0.50 0.02 5 0.1 5 0.1 Not an issue

1.00 0.04Public Support

Political, State High TBD TBD TBDResidents High TBD TBD TBDBusinesses High TBD TBD TBD

Service CostPort cost structure High TBD TBD TBD

Transportation CultureIndustry level of acceptance High 1.00 0.02 2 0.04 4 0.08 Interviews of motor carriers, R/R & marine operators revealed positive acceptance

1.00 0.02Weighted Average (on a Scale from 5 to 1)

2.53 3.99

Probability of Success 1.00 50.6% 79.9%

Maritime Transport Logistics Advisors, LLC Present Condition / Future Potential: 5 - Excellent; 4 - Very Good; 3 - Good; 2 - Fair; 1 - Poor 3/3/2005

Appendix A: Canaveral Port Authority Short Sea Shipping Probability Decision Tool (Based on MTLA Findings)

Placeholder 4


Appendix B: Port /Terminal Operator Interview Responses (10 Respondents)

Question: What do you consider to be the markets your carrier customers serve?

Market Responses Worldwide 6 Latin America 6 Caribbean 5 Mexico 4 Bahamas 2 U.S. East Coast, N Atlantic 2 Bermuda 1 U.S. South Coast, Gulf 1 Canada East Coast 1

Question: What type of Short Sea Shipping services do you provide?

Type of Service

Coastw ise, 6

Feeder, 5

Bridge, 1

Other, 1

None of the above, 1



Question: What type of operations are provided at your port/terminal?

Type of Operations Responses Containers 7 Intermodalism 7 Alternatives to Road Transport 6 Trailers 5 Inter-Regional Cargo 5 Door-to-door basis 4 Boarder Crossing 3 Floating Stock 1 Vehicular Ferry 1 None of the Above 0

Question: What other types of marine operators do you service?

Other Types of Operators Responses Containers 8 General Cargo 8 Oceanic/Deep-Sea 7 Break Bulk 7 Liquid Bulk 6 Automobile Carrier 6 Reefer/Refrigeration 6 Dry Bulk 5 Military 4 Cruise 2 Project Cargo 1 Aggregates 1



Question: Which of the following ports do you pair with, if any?

Ports Paired With Responses None 4 Houston, TX 2 Halifax 1 NY 1 Portland, ME 1 Ft Lauderdale, FL 1 Brownsville 1 New Orleans, LA 1 NY / NJ 1 Pensacola, FL 1

Question: Does your port/terminal handle any of these types of vessels?

Type of Vessel Handled Responses Break Bulk 8 Lo/Lo 7 Ro/Ro 7 Tug & Barge (River Type) 6 Tug & Barge (ITB/ATB) 6 Container 6 Liquid Bulk 4 Dry Bulk 4 Intermodal (Container, Ro/Ro, LASH) 4 Tug & Barge (Tow) 3 Small Ships 3 Ro/Pax 2



Question: What benefits do you perceive Coastal, Short Sea Shipping or Ferry Service would bring to your port authority and/or terminals and the overall region?

Benefits of Short Sea Shipping Responses Road congestion reduction 6 Shipper will get better & quicker 4 Tonnage increase 3 Jobs 2 Passenger volume increase 2 Regional economic benefit 2 Lower pollution 2 Open new markets 1 Highway repair reduction 1 Less need to expand highways 1 Relieve congestion at other facilities 1 Reduction in fuel use 1 Contribute to hub concept 1 Develop / assist transshipment business 1 Development of Cuban market 1 Includes Canada & South America 1

Question: If Coastal, Short Sea Shipping or Ferry Services exist at your facility, what kinds of services are they?

Existing Services Responses Container on Barge 2 Tug & Barge 1 Tug & Barge (Tow) 1 Hub 1 Container 1 Lo/Lo 1 Vehicular Ferry 1 Bulk & Break Bulk 1 Oil & Cement 1



Question: If Coastal, Short Sea Shipping or Ferry Services exist at your facility, which trade lanes do they serve?

Trade Lanes Served Responses All World Lanes 2 U.S. East Coast, South Atlantic 1 U.S. East Coast, North Atlantic 1 U.S. East Coast, Gulf 1 U.S. East Coast, Gulf - upcoming 1 Caribbean 1 Bahamas 1

Question: Do you and/or your organization consider Coastal, Short Sea Shipping or Ferry Service probable and desirable for your facilities, geographical location and future?

1. Yes – 10 (Explanations for this belief are addressed in a previous question) 2. No - 0

Question: Are you considering adding any future Coastal, Short Sea Shipping or Ferry service to your current operations? If so, what type, which trade lanes, which carriers and what intermodal requirements? Also, what infrastructure enhancements would be necessary?

1. Consider Adding to Current Operations

a. Yes – 8 b. No – 1

2. Types

Types of Additions Responses Container on Barge 2 Ro/Ro 2 Container 1 Ferry 1 Hub 1 Considering several 1



3. Trade Lanes Trade Lanes Responses U.S. East Coast, major centers 2 Trans-Gulf 1 Mexico 1 Cuba 1 Caribbean 1 Domestic first 1 Yucatan Area 1

4. Intermodal Requirements a. Railroad – one response

5. Infrastructure Enhancements Infrastructure Enhancements Responses Very few, if any needed 1 Non-traditional container terminals, i.e. truck terminals

1

Container Lo/Lo Capabilities 1 Ro/Ro Ramps 1 Dredging 1 New bulkhead 1 Barge with Ro/Ro Ramp 1

Question: What types of investment criteria, e.g. ROI, IRR, NPV and others, do you apply to new projects?

1. ROI with public purpose, state interest and community economic impact also

considered – two responses 2. ROI 8% to 11% 3. ROI 10% to 12 % 4. ROI & NPV 5. ROI & IRR 6. ROI yet equipment and special facilities are terminal operator’s responsibility, not

ports 7. Some investment necessary to draw business, but leaves primary investment

responsibility to carriers 8. No ROI, etc – Quality of life, public service & public investment of transportation

infrastructure



Question: What sources of funding have been considered or would be considered for a new venture of this type?

1. State DOT 2. 70% Public; 30% Private (does not expect revenue to ever cover entire costs) 3. Port Bond Issue 4. Internal Sources – three responses 5. State subsidy – two responses 6. Federal 7. Sunshine State Loan Program 8. None needed – Port ready

Question: Have economic impact and/or job creation numbers been determined in any studies or reviews carried out by or for your organization? If yes, what are the projections?

Economic and Job Impact Studied? Responses Yes

• 90,000 jobs and $12 billion annually • 10 jobs to start, ancillary will be

substantial

4

Study currently underway 1 Will be performing later this year 1 No 4

Question: If currently or previously engaged in Coastal, Short Sea Shipping or Ferry service, are there any lessons we can learn from your experiences?

1. Demand exists, but time to market is a factor 2. Imports prefer not to use barge service 3. Lack of support from shippers and terminal operators 4. Must convince shippers to consider other forms of transportation 5. Must be able to compete with railroad 6. Must be able to compete in cost, speed, location, landside logistics, and storage 7. Cost driven; motor carriers will cut rates to protect their business



Question: What Ro/Ro capabilities, docks, ramps and equipment do you have?

Ro/Ro Capabilities Responses Full capability 3 Stern Ramp 1 Floating Ro/Ro Ramp that can be moved anywhere

1

Bulkhead with fixed stiff-legged Derrick Crane 1 Ramp being designed 1 Yard Hustlers 1 None 1

Question: What Lo/Lo capabilities and equipment do you have?

Lo/Lo Capabilities Responses Ships' gear or hired shore cranes 2 Full container 1 Rubber tire container crane 1 Several berths with all types 1 12 Grantry cranes & 2 Supper Post Panamax 1 9 Grantry cranes 1 Large mobile crane & 3 stick cranes on trucks 1 Minimal 1 None 1

Question: What Passenger capabilities do you have?

Passenger Capabilities Responses Cruise/Ferry Terminals 6 None 3

Question: What Freight Logistics & Handling EDI software, On-line portals and other Information Technology systems do you have or use?

EDI Software Capabilities Responses None 5 Tideworks 2 EDI 1 In-house developed & Microsoft Office 1



Question: Where do you see your greatest area of growth?

Greatest Area of Growth Responses Short Sea Shipping 3 Containers 3 Coastal & Short Sea Shipping 1 Transshipment of Containers 1 Imports 1 Cruise Mega Ships 1 Bulk Aggregate & Coal 1 Tenant Occupied Port Terminal 1

Question: Do you think Coastal, Short Sea Shipping and Ferry service will become an industry standard in the future? If so, what percent of total water cargo transportation will it become in 5 years? 10 years? 20 years?

1. Yes. Transshipment containers to smaller ports will quickly become a substantial

portion of this market, while deepwater terminals will participate a little. 2. Will become a standard in 5 to 7 years if adequate funding is available. 3. Yes, it has to. Own port expects to capture 10% of incoming sea container business

and 20% in 20 years. 4. Yes. 8% in 8 years. 20% in 10 years. 5. Yes, but uncertain as to extent. 6. It will catch on, but not become a standard. Need repeal of HMT and revisions to

Jones Act. 7. Positive potential growth if emphasis is on international Short Sea Shipping (Mexico,

Caribbean and Central America). 8. International (Cuba and Bahamas) more likely than U.S. Coastal due to cost. May

also be likely in regions where it can be managed. 9. Coastal shipping has potential for expansion, considering cost and time as critical

factors. 10. No, due to Jones Act.



Port Canaveral Short Sea Questionnaire 1 2 3 4 5

Do you or any of your carrier customers currently engage in domestic and/or international Coastal, Short Sea Shipping or Ferry service to/from your port? 1=yes, 5=no

5 3

Have you formally researched Coastal, Ferry Service or Short Sea Shipping as it applies to your authority, district and/or region? 1=yes 5= no

4 4

If you have conducted research on Coastal, Ferry Service or Short Sea Shipping, how would you rate it? 1=not helpful, 2=somewhat helpful, 3=helpful, 4=more than helpful, 5=very helpful

2 1 1

What percentage of your trade is deep-sea? 1= 0%, 2=20%, 3= 40%, 4 =60%, 5= 80% or more

1 1 6

Are there any Coastal, Ferry Service or Short Sea projects in progress for your organization? 1=yes 5= no

5 2

Do any of your carriers currently engage in international Short Sea Shipping to/from your port? 1=yes, 5=no

5 3

Percentage of transshipments that your port handles? 1= 0%, 2=20%, 3= 40%, 4 =60%, 5= 80% or more

4 4


Appendix C: Marine Operator Interview Responses (19 Respondents)

Question 1: Details of interviewee – (Confidential) Question 2: Which markets do you serve?

Market Served Responses U.S. East Coast, So Atlantic 11 U.S. East Coast, Mid Atlantic 8 U.S. Gulf 8 Caribbean 8 U.S. East Coast, No Atlantic 7 Worldwide 6 Latin America 6 Mexico 5 Bahamas 3 Canada East Coast 3 Great Lakes 3 Bermuda 1 Puerto Rico 1

Question 3 & 4: Which of the following ports do you call on?

Ports Called On Responses Ports Called On Responses Jacksonville, FL 9 Los Angeles 2 Charleston 7 St. Johns, N.B. 1 Port Everglades 7 Boston 1 Tampa 6 Philadelphia 1 Mobile 6 Baltimore 1 Houston 6 Brunswick 1 New York/NJ 5 Port of Palm Beach 1 Norfolk 5 Lake Charles 1 Wilmington, N.C. 4 Baton Rouge 1 Savannah 4 Gulfport 1 Miami 4 Port Arthur 1 New Orleans 4 Oakland 1 San Juan 3 Long Beach 1 Tacoma 3 Portland, OR 1 Fernandina 2 Anchorage 1 Port Canaveral 2 Burns Harbor, IN 1 Corpus Christi 2 Detroit 1 Marquette, MI 1




Question 5: What vessel operating experience do you have? Type of Operation Responses Container 11 Ro/Ro 11 Liquid Bulk 8 Dry Bulk 8 Lo/Lo 8 Tug/Barge - ITB/ATB 7 Small Ships 7 Break Bulk 7 Intermodal 7 Tug/Barge - River Type 5 Tug Barge - Ocean Towing 4

Question 6: What types of Short Sea Shipping operations do you provide?

Type of Short Sea Operation Responses Containers 10 Intermodalism 9 Inter-regional Cargo 7 Alternatives to Road Transport 6 Trailers 5 Border Crossings 4 Door-to-door 3 Liquid Bulk 2 Floating Stock 1

Question 7: What other type of marine operations do you provide?

Type of Marine Operation Responses Military 11 Oceanic/Deep Sea 10 Containers 10 Break Bulk 9 General Cargo 7 Liquid Bulk 7 Reefer/Refrigeration 7 Dry Bulk 6 Automobile Carrier 5 Passenger 1



Question 8: Have you formally researched Coastal, Short Sea Shipping or Ferry Service as it applies to your business?

Have You Researched Short Sea Shipping?

Yes, 14

No, 5

Question 9: Do you and/or your organization consider Coastal, Short Sea Shipping or Ferry Service probable and desirable for your business, geographical coverage and future?

Do You Consider Short Sea Shipping Desirable?

Yes, 17

No, 0

Undecided, 2

Question 10: Are there any Coastal, Short Sea or Ferry projects in progress for your organization?

Any Short Sea Shipping Projects in Progress?

Yes, 12

No, 7


Question 11: If you provide a Short Sea Shipping Service, please check the type below:

Type of Short Sea Shipping Project

Other, 7

Coastw ise, 6

None, 6

Feeder, 5

Transshipment, 4

Bridge, 0

Question 12: If consideration has been given to Short Sea Shipping opportunities, what

infrastructure enhancements, vessels and organizational requirements would be necessary to invest in to realize the potential of these more niche type services?

1. Operating flexibility and reduced cost structure in the terminals 2. Use existing hopper barges, need shoreside infrastructure in land 3. New Vessels – 9 4. The OSV has to be converted to increase capacity – 2 5. Infrastructure – new stand alone non-ILA terminals 6. ATB type vessels 7. Sales/marketing – 3 8. Terminal operations – 2 9. Port infrastructure – 3 10. Exclusive access to dock – Guarantee berth on arrival 11. Automated terminal/gate “toll” system 12. Operational systems that will speed processing 13. Address Union issue for Short Sea labor agreement – shipboard & longshore 14. Available locations 15. Additional personnel – 3 16. Ro/Ro vessels 17. Acquire existing operating company 18. Build from ground up 19. Parking lot terminal




Question 13: What sources of funding have been considered or would be considered for this?

Source of Funding Considered Responses

Private funding 13 U.S. MARAD Title XI 5 Tax credits (CCF) 3 Government support 2 Internal from revenues 2 Not considered 1 ExIm Bank 1 None 1 Tax enhancements 1 Foreign Government Development Bank 1

Question 14: What sort of ROI, IRR, NPV and other investment criteria do you apply to new

projects?

Type of Investment Analysis Criteria Responses ROI Proprietary 1 IRR ? 1 IRR 30% 1 ROI 20-25% 1 IRR 20% 1 IRR 18% 1 ROI & IRR 8-15% 2 IRR 15%+ 1 ROI 12-15% 1 ROI 15% 2 IRR 12% 2 ROI 8% 1 Under Study 1 Proprietary 2 Significant market share/dominance 1



Question 15: In any studies or reviews carried out for your organization, have economic impact and/or job creation numbers been determined?

Economic / Job Impact Review?

Yes , 4

No, 15

Question 16: If yes for question 15, what are the projections?

1. Require 8% market capture – Don’t have job creations 2. NY/NJ formula – 1 Longshoreman = 4-5 ancillary jobs created 3. Under Study (2)

Question 17: Do you have the ability or interest to engage in U.S., Canada, Mexico and/or other America’s Short Sea Shipping projects?

Ability to Engage in Projects? Responses Yes 18 No 0 No plans at this point 1

If so, are there particular geographic areas or places of interest?

Areas of Interest? Responses

Yes 16

No 1



And finally, would Port Canaveral possibly be of interest to you?

Is Port Canaveral of Interest?

Yes, 11No, 4

Maybe, 3

Question 18: What do you perceive as the key hurdles that need to be overcome to engage in Short Sea Shipping?

1. Infrastructure cost (2) 2. Harbor Maintenance Tax (2) 3. Vessel manning requirements 4. Transportation data available 5. Cargo commitments – Customer support (2) 6. New construction financing 7. Available ships 8. No hurdles – already providing SSS 9. Funding (2) 10. U.S. shipbuilding capacity 11. Skepticism 12. Jones Act (3) 13. Available land area without congestion 14. Unproven market 15. Revenue levels 16. New build cost 17. ROI 18. Cost structure 19. Intermodal Marketing Companies (IMC’s) need to be involved 20. Total commitment from operating company to evaluate the market 21. Ro/Ro vessels 22. Regulations/laws requiring motor carriers to use Short Sea Shipping 23. Motor carrier buy-in 24. Economic viability 25. Understanding dry cargo business 26. Longer transit times vs. truck & rail 27. Service consistency 28. Military commitment 29. Public perception of water transportation 30. Lack of government action – waiting for highways to max out



Question 19: What equipment investments would you have to make?

1. Lo/Lo service 2. Shore-side handling gear (5) 3. Specialized terminals 4. Vessels (13) 5. Mobile ramps 6. None (2) 7. Vessel conversion 8. Container & chassis

Question 20: Would you consider making landside investments to build a Short Sea Shipping

Service? Would You Consider Landside Investment? Responses

Yes 16 No 3

If so, what kind?

1. Would prefer calling at terminals that are already operational 2. Partner with trucking and/or terminal operator (3) 3. Terminals for specific load & discharge requirement (3) 4. Terminal development (6) 5. IT development 6. Land; Warehousing; Distribution facilities 7. Parking lot type terminal

Questions 21: Is private or public port, docks and/or terminal ownership an issue to you?

Ownership Issue? Responses

Yes 9 No 10

Do you have a preference to own or lease?

Prefer to Own or Lease Responses

Yes 6 No 12 No Preference 1



Please elaborate: 1. Prefer terminal service agreement 2. Public terminals allow competitors 3. Owns major hub in U.S. Gulf 4. Easier to get project started 5. Prefer not to incur additional environmental liability 6. Less capital required

Question 22: What sort of staffing would you require?

1. None (4) 2. Some full time staffing 3. Additional operations & support personnel (5) 4. 10-15 personnel at each terminal location 5. Unknown 6. Outsourcing (2) 7. Ship side personnel 8. Ship board personnel 9. Minimal (3) 10. As needed (2)

Question 23: In pursuing Short Sea Shipping in North America, are Union Labor and/or Union

Contracts an advantage or possible limitation to your business model?

View of Unions

Advantage, 7

Limitation, 1

Neutral, 9

Not yet determined, 1

For example, if you operate deep-sea vessels or terminal operations under Union Contracts could you participate in other non-union ventures?

Non-Union Participation? Responses

Yes 14 No 4



If so, how? 1. Unions provide more flexible terms 2. Political advantage (2) 3. New short-sea contracts have brought domestic cargo back to the dock 4. Depends on costs 5. Most inland labor is non-union 6. Makes no difference if union or non-union 7. New union contracts need to allow flexibility 8. Shoreside labor unions could be a problem

Question 24: Could Short Sea Shipping complement your existing services through:

transshipments, feeders, coastwise or bridge?

Complement Existing Services? Responses

Yes 11 No 4 NA 4

If so, how?

1. Logical complement 2. Once gain credibility in short-sea, gain additional business 3. That’s the business we are in 4. Coastwise 5. Would reduce intermodal transport 6. Reduce port and road congestion

Question 25: Would you consider a joint venture or acquiring an existing Short Sea Shipping

carrier or ferry operator?

Joint Venture or Acquisition? Responses

Yes 16 No 3



Question 26: What ports and markets would you consider for Short Sea Shipping or Ferry Routes?

1. USEC to USWC 2. Anywhere if 15% ROI

possible 3. U.S. Gulf (3) 4. Any (3) 5. North East; South East

(4) 6. South Florida 7. North Florida 8. Caribbean 9. North East to Florida 10. Texas to Florida 11. New London; Northern

NJ; Norfolk to Jax; Brunswick; Port Canaveral

12. Manatee; Pensacola; Freeport, TX

13. New York to Boston 14. New York to Norfolk 15. Erie to Dover 16. I-95 Corridor 17. Mexico to U.S. Gulf (2) 18. Major ports – NY;

Houston; NOLA; Baltimore; Norfolk; LB; Seattle

19. Inland waterways 20. Great Lakes

Question 27: Are links to existing operations a necessity in order for you to consider a Short Sea

Shipping venture?

Links to Existing Operations Necessary? Responses

Yes 5 No 12 NA 2

If no, what would be the criteria for consideration?

1. If links are there then would be yes 2. Available base cargo (2) 3. Profitable rates 4. Port willing to partner or support the routes for the venture 5. Shipper commitment 6. Partner commitment 7. Depends on ROI (4) 8. Size of market (2) 9. Reasonable risk (2) 10. Anywhere market share & dominance can be achieved



Question 28: If currently engaged in Coastal Short Sea Shipping or Ferry Service, are there any lessons we can learn from your experience?

1. N/A (7) 2. MARAD to provide motivation for U.S. shipyards to build ships 3. IMC’s need to be engaged 4. New vessels provide positive impact on operating results 5. Funding (seed $) to cover start up losses 6. Look out for fickle customers 7. Many – but confidential (2) 8. Focus on cargo that is close to the port 9. Deal directly with the cargo owner; by-pass the middlemen 10. Domestic cost 11. Port charges 12. Focus on sustainable cost; Private funding sector would then view as

favorable Question 29: Do you think Coastal, Short Sea Shipping or Ferry Service will become an industry

standard in the future?

Ownership Issue? Responses

Yes 18 No 0 Depends on Government 1

If so, what percent of total water cargo transportation will it become in:

What Percent of Total Water Transportation? Low High

5 years from now 1% 5% 10 years from now 1% 10% 20 years from now 1% 15% “Could explode overnight” “Will be forced into existence within 5 years due to port infrastructure shortages”

“Will be a factor in 5 to 10 years



Question 30: Do you see demand for an East-Central Florida Short Sea Shipping hub/port location, such as Port Canaveral?

Demand for Port Canaveral?

Yes, 14

No, 3

Does not know , 2

No - “Existing operating facilities adequate” Yes – “Other ports already too congested” Yes – Very dissatisfied with poor operations in South Florida port Question 31: Who else should I/we talk to?

1. SeaStar 2. IMC’s 3. State legislatures 4. Government agencies besides MARAD 5. State DOT 6. American labor unions 7. American Trucking Association 8. Florida Trucking Association 9. Cargo Trade Associations 10. Yellow Freight 11. UPS 12. Schneider 13. Dupont 14. Walmart 15. City Mayors 16. Terminal Operators 17. Motor carriers 18. Unions 19. Teamsters 20. TrailerBridge 21. International Operators 22. Potential Investors/Bankers 23. Moving Company’s




32 Do you have a Coastal, Short Sea or Ferry Service agenda? 1=yes, 5=no 9 8 33 If you have conducted research on Coastal, Short Sea Shipping or Ferry

Service, how would you rate it? 1=not helpful, 2=somewhat helpful, 3=helpful, 4=more than helpful, 5=very helpful

4 2 4 1 3

34 What percentage of your trade is deep-sea? 1= 0%, 2=20%, 3= 40%, 4 =60%, 5= 80% or more

3 1 1 10

35 Are there any Coastal, Short Sea or Ferry Service projects in progress for your organization? 1=yes 5= no

13 4

36 Would you and/or your organization be interested in learning more about Coastal, Short Sea Shipping or Ferry Service and how it could benefit your activities, revenues and profitability? 1=yes, 5=no

13 2

37 What type of IT systems do you use to network with the Port or Terminal? 1=EDI, 3=Internet or web-hosted, 5= Both

3 7

Appendix D: Motor Carrier Interview Responses (4 Respondents – Includes 2 Trucking Cos & 2 Natl / Regional Assocs – See Sec 6.3.3)

Question: Which of the following seaports do your trucks haul cargo to and from?

Question: What other type of trucking and logistics services do you provide?

Type of Service Responses Drop/Hook Trailer 4 Hub Service 1 Warehousing 1 Delivery Service 1 Auto Carrier 1 Refrigeration 1 Border Crossing 1 Express Service 0 Messenger Service 0 Int'l Courier 0 Brokerage 0

Question: Are there currently any Coastal, Short Sea Shipping or Ferry services in

progress for your organization? If yes, what type, which trade lanes, which ports, and what intermodal requirements? Are international border crossings and/or transfer part of these operations?

Seaport Responses Charleston 3 Norfolk 2 Wilmington, NC 2 Savannah 2 Jacksonville 2 Port Canaveral 2 Port Everglades 2 Miami 2 Tampa 2 Mobile 2 None of Above 0

Short Sea Service in Progress? Responses

Yes 0 No 4



Question: Do you and/or your organization consider Coastal, Short Sea Shipping or Ferry

service probable and desirable for your business, geographical coverage and future? Why or why not?

Yes 2 Comments: Increase efficiencies, eliminate deadheading No 2 Comments: Not economically attractive based on existing

examples, i.e. Vera Cruz to Mobile, Tampa Question: Have you formally researched Coastal, Short Sea Shipping or Ferry service as it

applies to your business?

Short Sea Service Research? Responses

Yes 1 No 3

Question: Could Coastal, Short Sea Shipping or Ferry service complement your existing

services? If so, how? Yes 3 Comments: Mitigation of traffic congestion;

A de-stuff ocean container transloaded to dry van service would be attractive to us

No 1

Question: Are you considering adding any future Coastal, Short Sea Shipping or Ferry service to your current operations? If so, what type, which trade lanes, which ports, and what intermodal requirements are needed?

Yes 1 Comment: To cross Lake Erie No 3 Question: In pursuing Short Sea Shipping in North America, are Union Labor and/or Union

Contracts an advantage or possible limitation to your business model? For example, if you operate trucks under Union Contracts could you participate in other non-union ventures? If so, how?

1. Due to Jones Act limitations the union uses as a flanking strategy 2. We are not in the marine business; we would want service compatible with

and complementary to our business 3. Depends on cost 4. Not an issue with the right contracts



Question: If you are currently or were to engage in Coastal, Short Sea Shipping or Ferry service:

a) What infrastructure enhancements, equipment, and organizational requirements were/would be necessary? b) What type of port infrastructure do you think would be required for your trucks?

c) What type of staffing is required? d) What start-up method did you employ or would you prefer, i.e. build your own system, turnkey, joint venture, acquire an existing carrier, etc? Why? e) Are you or could you be competitive with other forms of shipment in regard to cost, speed and reliability? Responses on infrastructure:

1. Highway, port facilities, chassis pools 2. Ro/Ro facilities 3. Nothing required if you can recruit additional drivers.

Responses on port infrastructure for trucks:

1. Ro/Ro ramps, cross docks 2. RTG’s for Lo/Lo, ramps for Ro/Ro 3. Ramps, yard hustlers

Question: What types of investment criteria, e.g. ROI, IRR, NPV and others, do you apply to new projects? Do you know if or think a Coastal, Short Sea Shipping or Ferry service is likely to meet these criteria?

1. ROI must exceed 20% 2. Proprietary 3. No response (2)

Question: What sources of funding have been considered or would be considered for a new

venture of this type?

1. Private Funding. 2. Not Applicable/No response (3)

Question: In any studies or reviews carried out by or for your organization, have economic

impact and/or job creation numbers been determined? If so, what are the projections?

1. Yes studies have been done, results proprietary 2. No studies or no economic impact determined (3)



Question: Are links to existing operations a necessity in order for you to consider a Coastal,

Short Sea Shipping or Ferry service venture? If no, what would be the criteria?

Are Links a Necessity? Responses

Yes 4 No 0

“We would not invest directly in the venture. We would partner for the venture”

Question: What ports would be ideal origins and destinations for Coastal, Short Sea Shipping

or Ferry service? Why? With what cargo?

1. Port Canaveral due to demand in Central Florida 2. US East Coast ports 3. New York to Florida 4. Charleston, Los Angeles, Houston, Baltimore

Question: Do you think Port Canaveral would be an ideal origin/destination port for a

Coastal, Short Sea Shipping or Ferry Service?

Is Port Canaveral Ideal? Responses

Yes 4 No 0

Comments:

1. Cargo for Latin America 2. Cargo only, no passengers 3. Ocean cargo transloaded into dry domestic vans

Question: What percentage of your trucking business involves terminals/ports? 1=0%, 2=20%, 3=40%,4=60%, 5=80% or more

Percent of Terminal / Port Business? Responses

80% or more 2 40% 1

0% 1



Question: Do you think there is competition between Coastal, Ferry Service or Short Sea

Service and the trucking business?

Competition Between with Trucking? Responses

Yes 1 No 3

Question: Do you think the trucking business would benefit in working with Coastal, Ferry

Service or Short Sea Services?

Benefit from Short Sea Shipping Responses

Yes 3 No 1

Question: Which age group is the most significant that is employed by your organization?

<30 years? 31-40 years? 41-50 years? 51-60 years? 60 years+?

Most Significant Age Groups Responses

41-50 years 2 31-40 years 1

No response 1

Question: What percentage of your truck drivers are owner operators?

Percent Owner / Operators Responses

80% + 1 20% 1

No response 1

Question: Is your organization facing delays due to congestion and road traffic?

Facing Delays? Responses

Yes 4 No 0



Question: If currently engaged in Coastal, SSS or Ferry service, are there any lessons we can

learn from your experiences?

1. Cost problems of vessels 2. Just starting 3. No response (2)

Question: Do you think Coastal, Short Sea Shipping and Ferry service will become an industry standard in the future? If so, what percent of total water cargo transportation will it become in 5 years? 10 years? 20 years?

Short Sea Shipping Industry Standard? Responses

Yes 2 No 2

1. It will become an industry standard within 5 years 2. If the Jones Act vessels are available, it will become an industry standard 3. It will never become an industry standard. However, it will become a

viable alternative, “in the short term no, longer term yes”. 4. “Not in my lifetime”

Question: Is there anyone else you think I should talk too?

1. Conrad Everhard 2. Tom Malloy, IANA 3. Wal-Mart 4. Ocean Carriers




1. What percentage of your trucking business involves terminals/ports? 1= 0%, 2=20%, 3= 40%, 4 =60%, 5= 80% or more

1 1 2

2. Do you think there is competition between Coastal, Ferry Service or Short Sea Service and the trucking business? 1=yes 5= no

1 3

3. Do you think the trucking business would benefit in working with Coastal, Ferry Service or Short Sea Services? 1=yes, 5=no

3 1

4. Which age group is the most significant that is employed by your organization? 1. < 30 years, 2. 31-40 years, 3. 41-50 years 4. 51-60 years, 5. 60 years+

1 2

5. Percentage of your truck drivers that are owner-operators? 1= 0%, 2=20%, 3= 40%, 4 =60%, 5= 80% or more

1 1 1

6. Is your organization facing delays due to congestion and road traffic? 1=yes, 5=no

4


Appendix E: Maritime Transport & Logistics Advisors, LLC

Maritime Transport & Logistics Advisors, LLC Contributing Consultants

Mark Yonge, Project Leader

Raymond R. Barberesi

Richard Calcote

George Donaldson

Julie Dow

Lawrence Henesey

Kent Kristensen

Bernard List

For background information on consultants see: www.maritimeadvisors.com.


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