Mailbag - November 23, 2010
The following comments are about the recent OPED by Tony Munoz.
OPED: A New Congress for the Maritime Industry?
Forget Congress – How about a New Maritime Industry?
Thank you for your editorial piece “A New Congress for the Maritime Industry” it brought me back to John Stewart and Comedy Central’s October 30, 2010 rally in Washington DC to debate the ability to “Restore Sanity” or “Keep Fear Alive”. Your view taking the fear position as we debate the current state of the U.S. maritime industry. We believe its time to hear the “sanity” side of the story.
Alleviating the major problems of roadway congestion and pollution in the United States is not “easily solved” by utilizing the national waterway system. Those problems along with saving billions of gallons of fuel each year polluting our country is in fact very complicated. It is not the basic math you propose nor is it a “powerful analysis” for Congress. Quite frankly Congress as a whole has shown little or no interest in the maritime component of the equation. Democrat or Republican, newly elected, reelected or voted to return home and join the private sector – the politicians have shown little support for “America’s Marine Highway”.
Congress was initially requested to spark the domestic movement of freight from roadway to waterway by removing the cost of the Harbor Maintenance Tax from the calculation. A simple political task developed by a collection of what was over sixty U.S. maritime companies belonging to DOT’s Short Sea Shipping Cooperative Program. A program I chaired for the Maritime Administration when started in 2003.
After nearly six years of discussion, more than several pieces of legislation supporting the removal and a “score” indicating a minor loss of tax revenue – HMT remains in place.
It ain’t easy.
In fact it’s frustrating that our politicians do not understand the importance of developing this coastal component of transportation. We need to turn away from the government handouts and return to sanity. Short Sea Shipping must be cost effective and competitive on its own commercial basis. It will not take place as long as the U.S. build requirement for domestic vessels remains in place. The numbers don’t work and because of that fact the vessels needed for this trade won’t be built.
The score of highway facts, fuel consumption and efficiency comparisons have been documented in dozens of reports funded by public sources and distributed among the stakeholders since 2003. Millions have been spent over the past eight years in an attempt to launch this initiative. Falling from your seat upon hearing DOT’s announcement that the American Marine Highway would receive $7 million dollars in support is not comedy central. This is only a portion of the government funds that DOT has spent in its AMH quest. We should be shocked that the funding reached anywhere near seven figures in the current economic climate and understand that any corridor project initially offered some form of “subsidy” failed once the funds diminished. Subsidy in this sector is not the answer. Providing a competitive and environmentally sustainable solution is.
To discuss the development of short sea shipping and ignore renewable energy in the form of offshore wind power and solar energy is counter-productive. There is a huge maritime component needed to support both industries. New generation wind turbine installation vessels to construct wind farms envisioned for the US east coast are in short demand internationally and we have none under U.S. flag. Europe has moved to LNG as a marine fuel. Short sea RoRos, ferries and offshore supply vessels are taking advantage of this cost effective and abundant fuel. As a result small scale LNG distribution vessels needed to bunker these new ships are being designed and built. New maritime technologies that will not reach our coastline nor provide jobs for our seafarers unless specific carve out legislation is provided to allow these ships to be built abroad and maintain coastwise privileges.
We agree the solution isn’t “MIT math”; it really is a “simple business analysis”. The capital cost of the ships in these markets needs to be at a level that allows the business strategy to be profitable and sustainable. The rest of the world understands how you reach those cost levels. As does the U.S. shipping industry. Every successful U.S. flag effort – The 615 waiver program in the mid 1980’s and the current Maritime Security Program as examples – allowed foreign built tonnage to come in under U.S. register, receive certain program privileges and promote job opportunities. Short sea shipping, offshore wind and small scale LNG distribution should not be any different.
Bob Kunkel
Coastal Connect
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Dear Tony,
I read your OPED with interest over the weekend. I am surprised that you are not focusing on the real reason why we no longer have a viable merchant marine or a blue water commercial shipbuilding industry to speak of.
The Jones Act has practically killed the domestic merchant marine industry in this country from being the strongest in the world some 60 years ago to what it is today. The Jones Act has protected the shipbuilding industry by not allowing imports of ships from abroad. Imagine if the same had applied to the automobile or aircraft industry!
It is time to amend the Jones Act to allow for import of ships from abroad. This will create 1,000s of jobs ashore and on new coastwise ships. It will reduce the number of trucks, and fatal accidents caused by trucks, in addition to reducing emission, energy consumption, highway maintenance and traffic congestions on our highways. In Europe over 40% of domestic freight moves on water, whilst in the US only about 2% makes use of our coastlines and rivers. The Jones Act had an important purpose when passed in 1920, but should be amended to allow for a new vibrant industry of short sea shipping.
Regards
Per Heidenreich
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Tony
You'll have to forgive me but I am very confused by this
sentence:
"A barge moving 400,000 tons of cargo 2,300 miles would use 9,000 gallons of fuel and a truck moving the same amount of tonnage would use about 53,000 gallons"
First there is no barge that can carry 400k tons of cargo...do you mean 4000tons? If it is 4000tons, a 2500hp tug pulling a 4000ton barge at 9kts for 2300miles would take about 12 days depending on environment so if the tug was fuel efficient and only burned 2000gallons a day the total diesel required to move those 4000tons would be 24000gallons.
I am not sure what the numbers are for moving 4000tons by tractor trailer since I am not trucking experienced, but if the 53000 is accurate then barging still remains a 50% savings over trucking.
The numbers are very subjective depending on the cargo to be carried. There is definitely no question that oil and dry bulk cargoes are carried much more economically that by road but that only makes sense when the cargoes are needed near a coast which is where the majority of our population lives and of course, almost all bulk petroleum is moved by tanker or barge. The farther the cargoes are needed inland or need to come from the hinterland (grains & coal) the more sense rail or inland barging makes.
Trucks are the worse of all options especially if the distances are long which in many cases they aren't such as between cities in the NE.
In any event, I just wanted to see what the numbers you meant to use were otherwise, thank you as always for being a friend to the US maritime industry.
warm regards
Michael Dunatov
Good Morning Cap:
It probably should have said a barge-tow....but, never-the-less, barge-tows are much more effective than trucks clogging the roadways. I remember when I first got into the industry in the way back--there were lots of unionized truckers that were well trained and the roadways were somewhat safe. Today, truckers barely need a license to go flying down the road, and it's not safe out there.
Best
Tony
Thanks for the reply Tony...it is always a pleasure to exchange emails with youself.
I did a quick calc for fuel burn for transporting 4000tons 2300miles by road and I came up with 100 55' trailers each with 40tons load. If a semi burned 3mpg then a 2300 mile trip would require 770gal diesel so that times 100 trailers yields a total fuel requirement of 77000 gallons for road transport vs. 24000gal for barge.
There is also a very big difference in man days required.
Trucking came out to 400man/day vs. 60man/days to barge but you have to take into account the handling of the containers into and out of the ports and lots of other expenses that simple point to point does not incur yet I believe you are correct that the Marine Highway idea is one which is well overdue and needs to get developed. It isn't that aren't companies who will start services but incentives are needed like eliminating the tax on container movements into and out of the ports for domestic trade.
thanks again Tony
Michael Dunatov
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Tony
A few comments:
1. The $45,585 debt figure is certainly not "personal" debt, but rather allocated federal debt. To that one might add federal unfunded liabilities, state and local government unfunded liabilities and arrive at an allocated debt figure probably around $400,000 per live citizen.
2. The fundamental problem associated with replacing truck transportation with the maritime highway is that while the macro-economics look great on paper (even though they ignore many factors such as transit time, reliability, work force employment, etc.), the micro-economics (e.g. business math) generally stink. Free enterprise has proven that to be the case.
3. I would suspect that the maritime industry could not stand another round of government tinkering. In their logic they would look at air cargo and would conclude that maritime is a more viable alternative on most routes for they do not account for the value of delivery time.
Regards
Don Yearwood
Sanborn Yearwood& Associates