CHANGES IN TRADE COULD REVOLUTIONIZE INTERMODAL TRANSPORTATION AND EXPAND MISSISSIPPI/GULF EXPORTS

Posted on: October 6th, 2011 by Stas

BY STAS MARGARONIS

Congressional resistance to spending on infrastructure is undermining growingU.S.agricultural exports linking  theMississippi river  to Gulf ports and  hurting   new opportunities to improve intermodal freight transport with lower cost and cleaner marine shipping.

The situation is reaching a crisis level and prompted Rick Calhoun, chairman of Waterways Council, Inc to warn about the urgency for Congress to address the most important lock, dam and dredging improvements along the inland waterways. He said President Obama’s goal of  doubling exports within five years cannot be attained “without a viableMississippi River.”

The September American Association of Port Authority (AAPA) conference inSeattlefocused on growing port infrastructure concerns. There, the U.S. Army Corps of Engineers reported that many  projects to maintain port ship channels will be delayed so that of the 446 ports that requesting maintenance funding, only 154 will receive it, according to Maritime Professional.

As imports decline andU.S.agricultural exports grow, a cheaper dollar,  higher fuel prices, growing food scarcity abroad  and a soon to be widerPanama Canalare creating new opportunities for ports and intermodal transport.

These changes may include:

*Increasing export tonnages transported to Gulf coast ports viaMississippi river ports that is developing into a marine highway corridor.

*Development of more fuel-efficient and clean battery-powered trucks for cargo pick ups and deliveries at ports.

*Greater use of  tug and barge transport to handle river exports

*New, fuel-efficient ship designs to carry trucks and containers

 

Agricultural Exports Rising

ThePortofSouth Louisianaexemplifies the trend as a major hub for agricultural exports along theMississippi. The port reports major increases in agricultural  exports between the first half of  2010 and 2011:

* 61% increase in wheat exports: 712,785 tons to 1,147,537 tons.

* 29% increase in soybean exports: 7,178,122 tons to 9,244,981 tons.

* 68% increase in rice exports: 157,511 tons to 264,624 tons.

Agricultural exports are the one bright spot as the general outlook for “ trade has deteriorated compared to earlier in the summer,” Paul Bingham, a shipping economist with Wilbur Smith Associates, a transportation consultancy, told Cargonews Asia.

Bingham, says that  uneven global demand has eroded someUS export strength, but the outbound-flow outlook still appears much brighter than that of imports. The weak US dollar still has its advantages on world markets, pricing American agricultural products and raw materials competitively, he said.

ThePortofLong Beachreports that imports for the first eight months of 2011 are up 1.8% while exports are up 2.6%, according to Lee Peterson, a spokesman for thePortofLong Beach. The bad news is that imports were down by 14.2% in August 2011 compared to 2010 and exports were down 3.8% over the same period.

 

Gulf Ports May Benefit FromPanama CanalWidening

Some carrier executives and shippers say that such trends suggest that the future lies with agricultural exports driving larger volumes through the Gulf ports linked by theMississippi river. They, in turn,  will benefit from bigger ships linking the Gulf with Asia after thePanama Canalwidening is complete in 2014.

The widening of thePanama Canalis on schedule for completion in 2014, according to  Alberto Aleman Zubieta, chief executive officer for the  Panama Canal Authority. After 2014, Zubieta said vessels of 10,000 teus will be able to transit the canal,  doubling the current  cargo-carrying capacity.

Zubieta spoke to the Virginia Maritime Association shipping conference atNorfolk,Virginialast May. At theNorfolkconference, shipping executives told the AJOT that the Panama Canal widening will benefit Gulf and Atlantic coast ports at the expense of  the ports of Los AngelesandLong Beach. Companies have sought to vacate those  two ports  because of the high cost of  loading and unloading vessels, which overrides the benefits of  good rails links to the Mid-West and productivity improvements including new cranes and  cargo-handling facilities.

Congressional Anti-Spending Undermines Farm Exports & Inland Waterway Transportation

Unfortunately, Congressional opposition to federal investment in rivers and dams are undermining the export potential for farmers and increasing transportation costs.

Cornel Martin, formerly president of Waterway Council Inc. (WCI), said that about 60% of all grain shipments coming from states such asIowa,Missouri,Illinois, North andSouth Dakotaare shipped by barge down to ports such asNew OrleansandSouth Louisianafor export. American farmers have been increasing exports to meet shortfalls in other countries caused by heat, drought and floods, but now face delays and potential losses due to theU.S.spending shortfalls in the nation’s inland waterway system.

Mitchell Smith, operations manager for thePortofSouth Louisiana, located  inLaPlace,Louisiana, says  thePortofSouth Louisianaaccounts for 54% of allU.S.grain shipments and handles 290 million tons of import and export cargo. The port also handles 20% ofU.S.refinery processing and is a major export center for coal. The problem the port faces is inadequate funding by Congress to support dredging of theMississippi riverand its tributaries, undermining the ability to handle larger vessels.

WCI, which represents farmers, tug and barge companies and other river interests, is concerned that  chronic U.S. shortfalls in funding dams, locks and dredging projects may result in several critical projects being shut down in 2012. The result could be to shift millions of tons of freight onto already congested highways and increase shipping costs transporting freight by truck as opposed to more fuel-efficient tugs and barges. The result would also increase pollution.

The American Society of Civil Engineers in its “2009 Report Card” onU.S.infrastructure investments noted:

“The average tow barge can carry the equivalent of 870 tractor trailers loads. Of the 257 locks still in use on the nation’s inland waterways, 30 were built in the 1800s and another 92 are more than 60 years old. The average age of all federally owned and operated locks is nearly 60 years, well past their planned designed life of 50 years.”

Martin says theUnited Statesideally needs to invest $18 billion to modernize the inland waterway system, but must, at least, invest $7.6 billion over the next 20 years to upgrade and replace the most important facilities. Otherwise a huge flow of new trucking will create new congestion on the nation’s highways along river corridors.  His organization has proposed a 30% to 45% increase in the diesel fuel tax paid by tug and barge companies operating on the rivers to fund part of that $7.6 billion, but that proposal has been rejected by the Obama Administration and is struggling to gain support in a Congress insistent on cutting spending and avoiding any tax increases. He also cited insufficient funding for dredging of the lower Mississippi river ship channel is now a growing problem for the Lower Mississippi  betweenNew OrleansandBaton Rouge,Louisiana.

The reason is the failure to invest $20 million, according to  Ken Wells, founder of the Big River Coalition, an association of farmers and tug and barge operators. Wells says an annual $20 million spending shortfall in the  US Army Corps of Engineers (USACE ) fund for dredging of theMississippiis causing a recurring dredging problem. Recent vessel restrictions imposed along theMississippireflect a long-term failure to adequately invest in keeping the river free from silting. Wells says that without a dramatic increase in federal spending, commerce along theMississippi riverwill face growing disruptions: “Cuts for the sake of cuts by Congress do not make sense.”

Mitchell Smith at  thePortofSouth Louisianasays the long-term problem is: “Washingtondoes not have a grasp that without adequate funding for dredging we are restricting the amount of vessel traffic on theMississippithat impacts grain, coal and other bulk shippers in 31 states and this slows exports and causes losses in sales.”

Smith says that in January a temporary reduction in the Mississippi ship channel to 44 feet  a loss of twelve inches of depth in the river, was caused by failing to provide adequate federal funds for dredging. This caused a potential increase in cost to shippers of about $600,000 per ship as additional vessels, port costs and delays had to be factored in.

Port Practices & Longshore Manning Hinder Moving Freight Off Roads and Onto Ships and Barges

One logistics executive said  concerns with moving more containers off trucks and on to ships and tug barges is that port rules and longshore manning impose discriminatory costs upon waterborne transportation:

“Even though fuel costs were high in 2011, the transportation of containers off fuel- guzzling trucks and on to cheaper barges or vessel is not happening at U.S. ports because the added handling of containers at port of discharge and final destination makes  waterborne moves more costly.”

The executive cited the following issues:

A container going by barge may still have to pay a higher port handling charge-known as the throughput rate at two ports just as if the container was being  moved in and out of stacks,  placed on a chassis and moved out of the port gate by truck for delivery by road.

  • The container going by water may also be charged a higher rate being moved by a crane because the same longshore manning rate applies for a vessel carrying 10,000 containers as it is does for a vessel that carries 500 containers. If no savings in manning are allowed as in some  union contracts. Terminal operators add on to these costs to protect their revenue, which  places the barge at a disadvantage. An ocean-going  vessel can efficiently use the entire period of labor purchased whereas a barge may be forced to pay the full shift cost  for far fewer moves, resulting in a cost per unit higher than a ship.
  • As federal and state clean air subsidies dry up there is less opportunity  to use innovative cargo-handling programs such as clean truck programs that replaced older fuel-guzzling and polluting trucks.

The executive says one solution may be to nationally impose an anti-pollution/anti-truck congestion fee. This would be assessed against cargo entering and leaving all U.S. ports which could be shipped on more eco-friendly waterborne transportation when it is available on either  inland or coastal vessels: “The system would have to be uniformly imposed so that all ports and all less efficient truck moves would be impacted. It would also need to be imposed through the Great Lakes and the inland waterways such as theMississippi.”

The executive says that any such system that drives discretionary cargo to leave one port in favor of another to avoid a penalty would move the other ports to backslide in favor of keeping cargo revenue; “A better solution is to work together to develop cost effective cabotage cargo-handling procedures  that would make short sea shipping or barge shipping practical and cost effective.”

LA/LB Ports Eliminating Older Trucks and Reducing Daytime Trucking

Fees have been successful in reducing congestion on highways and eliminating older less fuel-efficient and polluting trucks at the Ports of Los Angeles andLong Beach. according to Lee Peterson, thePortofLong Beachspokesman:

“There are currently about 10,850 trucks that are 2007 compliant and registered at the ports ofLong BeachandLos Angeles.  Of these about 9,300 have called at the POLB (PortofLong Beach)  since July 1st of this year.  Also, we have seen about 200 older trucks (retrofits and 2004-2006) that will be banned at the end of this year….So about 98 percent of trucks coming in since July 1 have been 2007 or newer.”

Peterson says that fees imposed by the ports on older trucks were avoided by many companies  “who decided to step up and  buy  new fleets of  trucks that did not pollute.”

At the same time, fees imposed to discourage shippers from delivering cargoes during the day through the  PierPASS  program  are a success: “The long-term trend has been more truck trips going to the night. (If they go during the day, they pay a fee of $60 per TEU.) For the two ports (LA/LB) it’s about 55 percent of the trucks that go to night gates and 45 percent use daytime gates.”

The result is a reduction of 55% in the 10,000 trucks transiting freeways during the day less damage and repair  to roads, less noise  and less pollution for residents.

TheLos AngelesandLong Beachports, in cooperation with state and federal agencies, success in eliminating  polluting trucks has also helped develop  hydrogen-powered battery  trucks that are more fuel-efficient than conventional diesel trucks.

LA/LB Ports SupportBatteryPowered Drayage Truck

A collaboration between the Ports ofLos Angeles/Long Beachhelped finance the first in a series of zero emission hydrogen fuel cell electric trucks built by Vision Motor Corp, based inEl Segundo,California.

The development of a fuel cell electric truck could be a major breakthrough in developing new fuel-efficient and zero emission trucks for harbor and other trucking.

The first Vision truck was delivered to Total Transportation Services, Inc. It is picking up and delivering containers to and from the Ports of Long Beach andLos Angelesfor the next six months as a test of the truck’s capabilities. A second truck is being delivered for testing by California Cartage Co., another local trucking firm, which will use the vehicle within its yard in the LA/LB Harbor area.

Rudy Tapia, vice-president for Business Development at Vision says “the new truck has a  40% less fuel cost per mile compared to a conventional diesel truck,  has a range of 200 miles and has  a 540 horsepower electric motor.”

Lee Peterson at  thePortofLong Beachsays theLong BeachandLos Angelesports helped fund the initial stage of development: “The cost is approximately $1 million for the project that is producing two trucks. The ports ofLong BeachandLos Angeleseach contributed $212,500 from their Clean Air Action Plan Technology Advancement Program, and Vision is funding the rest.”

This $413,000 contribution comes from funding set aside for new technology projects such as the Vision electric trucks by the Ports of Long Beach andLos Angeles.

Tapia said that one truck currently costs about $270,000 to build, but receives $140,000 in tax credits and grants. This includes $40,000 in mostly federal tax credits and a $60,0000 cash grant fromCalifornia’s  Proposition 1B Goods Movement program  that is administered by the South Coast Air Quality Management District. So the cost to buyers is $130,000 which compares with a new diesel truck at around $120,000.

The investment in battery-powered trucks,  waterway investments,  plus the ending of discriminatory work against shipping cargoes by water needs to be complemented by renewed investment in modern fuel-efficient ships built in theUnited States.

New Coastal Ship Designs Can Reduce  U.S.Fuel Consumption & Pollution

Mark Yonge, managing member with Ft. Lauderdale-based Intermodal Marine Lines, is developing a new roll on roll off vessel to carry  up to 285  fifty-three foot truck trailers betweenJacksonvilleand Philadelphiain two days, a service that will be competitive with rail and truck service. Ships operating betweenU.S.ports must be built in theUnited States, according to the Jones Act, so this represents a business opportunity forU.S.shipyards.

The ship can be powered by clean diesel fuel as well as less polluting liquid natural gas, Yonge says.

Yonge has been working with the U.S. Navy to make the new RoRo vessel capable of carrying military cargoes including tanks.

One of the features of the vessel is locating the accommodations on the fore part of the vessel so that it has better cargo capacity, fuel efficiency and less emissions.

The vessel has a draft of 24.5 feet so that it can go to shallow draft ports and four Wartsila engines with a combined capacity of 28,000 kilowatts  and a top speed of 24 knots. The four engines will be provided by Wartsila, the European engine-maker and allow for one engine to be repaired while still operating with the other three.

A design for coastal container ships that will be operating in Asia  could be a role model forU.S.container ship builders. The U.K. vessel owner and operator, Graig Shipping, .is building a new fleet of fuel efficient container ships capable of carrying 2,000 twenty-foot containers,  using a Wartsila design that places the bridge and accommodations on the fore part of the ship as opposed to the more conventional aft part of the vessel.

The ships are designed with a 9.5 meter draft that would allow them to operate as feeder ships delivering cargo from main ports to shallow draft ports inVietnam,BangkokThailandand elsewhere.

The classification society, Det Norske Veritas (DNV), has partnered with Graig and Wartsila on the vessel design.

The first three ships are expected to be delivered in 2013 from a Chinese shipyard.

Philip Atkinson, Group Technical Director, Graig Shipping  told the AJOT that the company’s new the ‘Marlin Blue 2000 series’ is designed to enhance “fuel efficiency and reduce emissions compared with conventional container  feeder ships.”

Atkinson says that moving the accommodations forward “ results in a better balanced ship, which improves container carrying capacity by 200 teu, using the same specifications as an 1,800 teu ship and provides  25% fuel better fuel economy than a benchmark 1,700 teu vessel.”

Atkinson admits the new design has some challenges.

“(The design) raised concerns about crew comfort and specifically the issue of slamming which is more pronounced on the fore part of the ships and is reduced as the impact is distributed towards the aft part of the vessel. Supply vessels servicing oil rigs in theNorth Seahave similar fore ship configuration and so the idea is not a new one. However, because the design offered structural and performances advantages, it was decided that a reduced bow flair would lessen slamming on the fore ship and improve crew comfort.”

Atkinson said this is because the reduced bow flair reduces the forward pitching that causes the slamming impact.

Atkinson says the improvements resulting in a better balanced ship also reduce fuel consumption and improve the vessel’s cargo-carrying capacity and have additional advantages:

“P&I Clubs have ascertained that a high incidence of damage to containers occurs to containers located on the fore part of the ship.” This  problem  is reduced when the accommodations section is on the fore ship, protecting the containers from high sea states.

  • Better balance: “Locating the accommodations section on the fore ship provides better balance and reduces stern trim issues. Stern trim problems occur when the   ship is lower  in the water on the aft part and higher on the fore part of the ship.” As a result, it is  harder to see on the bridge of a  conventional container ship, with the bridge on the aft ship.
  • Safety: “A study by the Danish Board of Trade has ascertained that a high number of collisions are caused by poor visibility which is partly the result of  the bridge being on the aft part of the vessel and the line of site being obscured by rows and rows of containers ahead of you.”

The design of the ship was developed by Wartsila Ship Design, based inHamburg,Germany. Wartsila is also providing the engine which is the Wartsila 6RT-Flex 58T-D, a “highly efficient electronically controlled 2-stroke main engine.”

Wartsila’s slow speed, two stroke engine does not have a camshaft the way conventional engines do, but instead uses an electrical fuel injection system. This provides better fuel efficiency and lowers fuel consumption compared to conventional slow speed engines.

Increasingly ships are running at 16 knots, much slower than in the past with the result that fuel consumption is reduced. Atkinson says “It would be much better to build engines that don’t go much faster than 16 knots but charters want ships that can keep to their schedules and so the ships have to go as fast as 20 knots resulting in higher fuel consumption, a more expensive engine and less fuel efficiency.”

As an illustration, Graig lists the fuel consumption of its ship going at 16 knots with a draft of 9.5 meters as 27.2 tons of fuel per day compared to going at a speed of 20 knots where the fuel consumption doubles to 55.4 tons per day. Atkinson says that Graig is positioning itself to produce three progressively improved generations of fuel efficient and low emission vessels:

  • The Blue series reduces fuel consumption and emissions through a better design.
  • The Jade series will use scrubbers to reduce emissions further
  • The Green series will use dual-fuel  (diesel and natural gas) to lower emissions further.

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