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On the Waterfront: A Changed Environment
The U.S.-Flag Merchant Marine and America's Ports
By ROBERT W. KESTELOOT
Capt. Robert W. Kesteloot, USN (Ret.), is founder and president of K Associates Ltd. of Reston, Va., a maritime firm that specializes in merchant marine and national security affairs. He also is a principal in Management & Transportation Associates of New York City and a member of the Navy League's Merchant Marine Affairs Committee. The author's last active-duty assignment with the Navy was as director of strategic sealift on the staff of the chief of naval operations.
Last year's maritime essay suggested that there is little hope for an increase in the number of U.S.-flag ships in international trade. The reasoning was that, with only 113 ships then engaged in that trade, the U.S. presence was only marginally adequate to keep the nation's maritime industry, and the various trade interests of the country, involved in the international organizations that control international trade and shipping. That number is not, however, adequate for contingency operations and/or to maintain either the country's seafarer manpower pool or the U.S. commercial shipbuilding and repair industrial base.
The good news this year is that the number has not yet changed from last year. The bad news is that it is still very likely to decline in the near future--primarily because only 47 of the 113 ships receive government assistance in the form of Maritime Security Program (MSP) payments--$2.1 million per ship, per year--that allows them to compete head-to-head with foreign-flag ships that have lower operating costs.
In all likelihood, if the number of ships receiving MSP payments does not increase, foreign-flag ships eventually will replace the 66 non-MSP U.S.-flag ships when the latter are retired.
Optimism VS. Economics
There has been renewed hope for growth in the domestic ocean trades, thanks to the preservation of the Jones Act--the cabotage legislation that restricts coastwise trade, and trade with noncontiguous states and possessions, to U.S.-owned, U.S.-crewed, and U.S.-flagged ships.
In addition, cruise ships were under construction in U.S. shipyards for the first time in more than 40 years. It also has been suggested that greater use of coastal shipping not only could reduce congestion on coastal highways such as I-95, I-10, and I-5, but also could contribute to the growth of the seafaring manpower pool essential to the Department of Defense for crewing inactive government-owned strategic sealift ships for contingency operations. The commercial manpower pool is presently inadequate both in numbers and in billet skills to fully activate these ships.
Unfortunately, the events of 11 September have adversely affected the cruise industry, which relies on air travel by passengers to get to their ports of embarkation. Like the airlines, cruise ships have seen a 20 percent decline in bookings, and sometimes more. The sudden decrease in bookings on the SS Independence in Hawaii caused the American Classic Voyages Company (AMCV) to file for Chapter 11 bankruptcy protection in mid-October.
AMCV is the parent of Project America, which was having two 1,900- passenger cruise ships for the Hawaiian trade built in the Ingalls yard of Northrop Grumman in Pascagoula, Miss. Five days after the filing, Northrop Grumman ceased all work on the ships when the Maritime Administration decided not to continue to guarantee the funding necessary for construction of the ships.
Although the combination of fearful flyers and an economic downturn temporarily slowed the cruise industry, the market remains wide open for the entry of coastal shipping of cargo. Congestion, particularly in the Northeast, is hurting productivity--to the point that the Northeast could lose its economic competitiveness. While congestion is common to nearly every large metropolitan center, nowhere is it as pronounced as in the 12-state Northeast corridor where 25 percent of the population lives. With Boston, New York, Philadelphia, Baltimore, and Washington all lined up along I-95, congestion is rampant in this region, even in good weather. Bad weather makes it worse. The Northeast is a natural target area for a return to the use of coastal shipping--both to mitigate congestion and to reduce the pollution caused by truck exhaust.
Lessons From the Past
From Colonial days until the advent of the automobile, Americans used the waters along the Atlantic Coast to overcome obstructions to travel by land. Travel between Boston and Philadelphia alone was over extremely rough roads and required ferries to cross seven formidable rivers. At the time of the Revolution, packet sloops operating on dependable schedules linked all of the major East Coast ports from Falmouth, Maine, to Savannah, Ga., carrying passengers, cargo, and news.
Reestablishment of such service with modern vessels could go far toward overcoming the Northeast congestion problem. Further, a robust coastwise trade would provide renewed life to the commercial shipyards that build and repair these ships, and the mariners required to operate the ships would increase the size of the manpower pool needed to meet strategic sealift needs.
In Japan and in the European Community, congestion has led governments to establish proactive policies to shift road traffic to other modes of travel, including trains and ships. Last September, the Commission of the European Communities (EC) released a 109-page White Paper, "European Transport Policy for 2010: Time to Decide," that closely examines this extremely complex subject and covers all modes of transport--of both people and goods--by air, highway, rail, sea, and inland rivers.
It is remarkable that 15 nations--with, among other things, different cabotage laws, speed limits, customs regulations, and customs tariffs--could produce a concise and logical policy paper. The EC White Paper analyzes four at-least-partial solutions to the problem:
(1) Shifting the balance between modes of transport;
(2) Eliminating bottlenecks;
(3) Placing users at the heart of transport policy; and
(4) Managing the effects of transport globalization.
The major thrust of the White Paper is established in the first of more than 60 measures recommended to develop an overall EC transportation policy: To shift the balance between modes of transport by 2010 by revitalizing the railways, promoting maritime and inland waterways transport, and linking up the different modes of transport. The "Motorways of the Sea" concept would play a strong role in balancing the modes of transportation.
The White Paper also puts strong emphasis on ensuring that development of transport in Europe goes hand in hand with an efficient, high-quality, and safe service for citizens.
The importance of the White Paper is that it establishes transportation policy and is not simply another "assessment" such as those that are routinely sent to Congress and then frequently ignored (e.g., the September 1999 "Assessment of the U.S. Marine Transportation System"). Unlike "vision statements," policy commitments frequently translate into action--actual progress, in other words.
Port Security Concerns
Last August, Senators Ernest Hollings (D-S.C.) and Bob Graham (D-Fla.) introduced the Port and Maritime Security Act of 2001 (S. 1214), a bill intended to strengthen security at U.S. ports. Hollings warned that lax controls at U.S. ports make them easy targets for terrorists, drug smugglers, and cargo thieves. He noted that Customs can inspect less than two percent of imported containers and speculated that, "If I were in the drug business ... I would load up 10 containers that come into the ports of America, knowing that only one ... would be inspected. Nine would go through free."
Port authorities opposed the Hollings-Graham bill, saying that it would cause more problems than it would solve. The American Association of Port Authorities (AAPA) declared that a new federal port-security law was unnecessary and would saddle the ports with unfunded port mandates. It also would add cost and delay to inbound shipments, AAPA said, and would threaten the entire concept of "just-in-time" supply-chain management.
In the aftermath of the 11 September terrorist attacks, AAPA issued a policy statement calling for the partnering of federal, state, and local governments--and private industry--to tailor programs at the local level to meet the differing needs of each port. Integral to this concept would be increased federal fund-ing for the agencies charged with port security.
Meanwhile, the Coast Guard had immediately implemented an unprecedented number of new maritime-safety and port-security measures. First, the service activated four of its six Port Security Units (PSUs) to help guard U.S. ports. Normally used for protection and security of ports in overseas areas where U.S. forces are operating, PSUs have never before been used in U.S. ports. The activated PSUs are now providing added security in the ports of Boston, New York, Los AngelesLong Beach, and Seattle.
In addition, there is increased vigilance and surveillance of all 361 U.S. ports, with particular emphasis on 94 newly established security zones.
Loy's First Step: Marine Domain Awareness
The Coast Guard also now requires all ships entering U.S. ports to provide--to the service's newly established National Vessel Movement Center in West Virginia--a "Notice of Vessel Arrival" report 96 hours before entering port.
In addition, all ships must submit cargo manifests, crew manifests--including the nationality of crew members--and, in the case of cruise ships, passenger manifests.
All "high-interest" vessels are now being met, boarded, and escorted into port--with a Coast Guard "Sea Marshall" usually on the bridge. To sustain this level of activity, 2,700 Coast Guard Reservists have been activated, and approximately 28,000 volunteer members of the Coast Guard Auxiliary are helping out in non-law-enforcement roles, thereby freeing up Coast Guard personnel for those duties.
Coast Guard Commandant Adm. James M. Loy has created something he calls, "Marine Domain Awareness," a shorthand way of describing the ability to recognize every potential threat approaching from the sea--the first step, Loy said, in preventing or thwarting future terrorist threats from the sea. He said that the 11 September attacks represented a failure in awareness. The Coast Guard itself has started to develop intelligence systems that would: (1) integrate information received from the Immigration and Naturalization Service, the Customs Service, and various other U.S. and international intelligence agencies; and (2) provide an in-depth analysis of the people and cargo on any vessel approaching a U.S. port.
The Coast Guard wants to extend "ship visibility" out to 200 miles-- and, ultimately, overseas to ports of embarkation and even further to the initial shipping sources. One of the principal conclusions reached in several recent conferences on port security is that there must be a system in place where all containers, as well as all other kinds of cargoes, are inspected prior to their loading aboard ship.
Smart and Reasonable
Another frequent recommendation is that the United States must insist on the possession of a universal biometric based identification "smart card" for all transportation personnel not only in the United States itself but also for all personnel involved in international transportation who enter the country. This would include all crew members of ships and aircraft entering U.S. seaports and airports, and commercial truck drivers entering from Canada and Mexico.
This recommendation is opposed by members of the American Civil Liberties Union, but there is strong support elsewhere. Those in favor of a universal ID smart card take the position that this is the cost of doing business in the United States. After the events of 11 September, the ID proponents say, it is not unreasonable to insist on knowing and verifying the true identity of every individual who enters the country.
To those who say there must be some incentives for U.S. trading partners to want to cooperate to improve America's maritime security, the answer is that there are, in fact, several incentives. First of all, foreign producers want to do business with the United States, the largest trading nation in the history of the world. In 1999, the latest full year for which data is available, U.S. foreign oceanborne trade was 1.1 billion metric tons, valued at over $670 billion dollars. For shippers, in exchange for their cooperation, there could be "fast track" processing of their cargo.
U.S. companies are concerned that the increased security measures might mean the end of just-in-time inventory dependability, and that the resulting loss of control would impact supply-chain management, thus driving up the cost of goods manufactured in the United States.
There are, though, several ways to avert such problems: (1) by increasing the in-transit visibility of goods and improving tamper-proof cargo seals; (2) by ensuring that the location and status of all cargo is known at all times; (3) by terminating the practice of dropping trailers at unfenced and unguarded freight yards in the middle of the night.
In short, the age-old seaman's motto, "Eternal vigilance is the price of safety," has come home to the waterfront.
Increasing Port Productivity
Most U.S. container ports are already operating at maximum capacity. Yet every forecast says that cargo volumes will at least double, or perhaps triple, in the next 10 to 20 years. The largest U.S. port complex, Los AngelesLong Beach, covers approximately 1,900 acres. A recent study found that, to accommodate the projected cargo volume using current procedures, another 5,000 acres would be needed by 2010, and 9,400 acres by 2020. That space simply does not exist.
The ports of New Jersey and New York face a similar problem: They are already at full capacity with little or no room to expand. Current "dwell time"--i.e., the length of time that a container sits in the yard until it is moved out the gate to its ultimate destination--averages eight to ten days. On both coasts, "grounded" operations are the rule rather than the exception. The containers used for both import and export are lifted off the ship or the incoming chassis and are then "grounded" and stacked. The final move out the gate or onto a ship usually requires, therefore, that several containers be moved in order to reach the particular container that is scheduled to move. This problem is further exacerbated by the imbalance in trade, which leaves many more "empties" occupying space than are needed to carry exports. If dwell times could be cut in half--i.e., to four or five days--the increases in terminal capacity would be enormous.
There are several ways to achieve such increases. One way is to decrease the free time that shippers and receivers have before demurrage fees set in. Most terminals allow between five and seven days free. But most terminals accept cargo two and three weeks in advance of a scheduled sailing, which suggests that demurrage rates are too low to serve as a deterrent.
The use of off-terminal storage for empty containers and excess chassis would be another improvement. Perhaps the two biggest gains in productivity could be realized, though, through expanded gate hours and the implementation of electronic information technology (IT) systems that would permit major increases in the number of trucks that could be processed per gate lane per hour.
In certain ports in Asia and Europe, where waterfront space is scarcer than in the United States, this is already the norm--one terminal in Hong Kong is reported to handle 10,000 gate moves a day. In contrast, the busiest U.S. terminals handle only about 3,000 gate moves a day. At the height of the summer surge of Christmas goods, Long Beach reported a high of 3,500 gate moves.
Larger and Faster Ships
Perhaps a more daunting fact about the cargo increases projected over the next 30 years is that that cargo will be carried in fewer but much larger ships. As ship operators strive to reduce the so-called "slot cost" of shipping a single container, they are paying more attention to the proven concept of "economy of scale." In international trade, those economies can be achieved by using larger ships, operating at higher speeds. To illustrate: only 10 years ago, ships carrying 2,000 20-foot-equivalents (TEUs) of containers were considered large. Today, 4,000+ TEU ships are becoming the norm, with a few "megaships" of 6,000 TEU or more also in the international trade.
The latter are called "Post-Panamax" ships, meaning that their beams exceed 106 feet and their overall lengths are more than 1,000 feet, and they are therefore too large to pass through the Panama Canal. Twelve ships belonging to Maersk-Sea Land have 6,500-TEU capacities. More importantly to U.S. ports, though, they draw up to 48 feet of water when fully loaded.
Few U.S. ports can accommodate ships of that draft. A prime example is the port of New York and New Jersey, where the controlling draft is 40 feet. Current plans call for dredging the port first to 45 feet and eventually to 50 feet. Without dredging, the entire cargo distribution system of the East Coast either would change dramatically--with significant cargo going to Canada for distribution into the United States by rail--or ship size limits would result in a higher landed cost of goods destined for the New York area.
Considering that the ports of New York and New Jersey generate 229,000 jobs and that the area is a massive center of consumption, it is obvious that either scenario would have a major economic impact on the region.
Dredging in any port is expensive, and New York is no exception. Further, there are major environmental concerns because of the large amount of contaminants that have been dumped into the surrounding waters for so many years--dating back to a time when there was little concern about toxic dumping.
Dredging and Disposal
The generally accepted cost estimate to dredge the channels and berths to 50 feet is $2.8 billion, but that total does not include the cost of disposing of the contaminants embedded in the dredged material. Current disposal costs range from $4 per cubic yard--to dump dredged material at sea--to as much as $80 per cubic yard to dump dredged material on land.
Strict environmental regulations require the more expensive option for disposal of all contaminated material, which is estimated to be nearly 15 percent of the 60.5 million cubic yards of material that would have to be dredged. This brings the total cost estimate for dredging and disposal to over $3.5 billion. To put this cost in context, it should be remembered that most ports elsewhere in the world undertook such expansion and deepening decades ago.
The Port Authority of New York and New Jersey has contractual commitments to terminal operators to achieve a 50-foot depth in the Kill van Kull--i.e., the 3.5-mile channel that leads west from the Upper Bay anchorage separating Staten Island, N.Y., from Bayonne, N.J., and provides access to the Newark Bay container terminals. In addition, Ambrose Channel, the main ship channel in the Lower Bay, as well as Newark Bay itself and the terminal berths at Port Elizabeth, require dredging to 50 feet. The commitment on the part of the Port Authority is to provide 45 feet by the end of 2004 and to achieve a channel depth of 50 feet by the end of 2009.
Given the historical reluctance of the U.S. Congress to fully fund channel-deepening projects in a timely manner, there is considerable concern on the part not only of Port Authority officials but also of the terminal operators in the area. Both groups know that, for New York to maintain its status as the leading East Coast port, they must be prepared to accept larger ships with beams up to 150 feet and drafts approaching 50 feet.
This situation could become urgent in the foreseeable future. Already, Post-Panamax ships with capacities of 5,500 to 6,500 TEUs are replacing the 2,000 to 3,500 TEU ships, which are being redeployed in feeder services. Moreover, even larger ships, with capacities greater than 9,000 TEUs, are already on order or under construction. Unless remedial action is taken in short order, U.S. East Coast ports will be in danger of losing a large share of their cargo--and jobs--both to Halifax and to U.S. West Coast ports.
Getting Over the Hump
The problem, simply stated, is that if loaded mega-containerships cannot call on the port of N.Y./N.J. until 2010, there will be a significant shifting of cargo to other ports, and that cargo may never return, even if current harbor-access goals are finally achieved. This problem is not without precedent. The Dutch had similar problems for years, as did the whalers of Nantucket. Both found solutions that did not require dredging: the use of "camels," described in Falconer's Marine Dictionary as "a machine used in Holland for raising or lifting ships ... [in areas] where shallowness of the water hinders large ships from passing."
In American history books, credit is given to Peter F. Ewer as the designer and creator of "that most ingenious floating drydock known as the 'Camels,' a well-planned and successful contrivance which made possible the towing of deeply loaded whaleships over Nantucket Bar."
The earlier Dutch camels consisted of two box-like structures with a concave side that resembled the impression of a ship's hull. With camels positioned on both the port and starboard sides of a ship, cables were passed beneath the ship from one camel to the other and taken to installed capstans. Floodgates in each of the camels were then opened, causing the camels to sink lower into the water. The capstans continued to tighten, keeping the camels snug alongside the hull. The gates were closed and the pumps were manned--and, as the water was forced from the camels' hulls, they rose, lifting the ship until she could pass over the bar.
Conversely, Ewer's "Camels" resembled a modern floating drydock with steam engines to power the pumps. An 1845 pen-and-ink drawing by William D. Macy, titled "Ship Christopher Mitchell in the Camels," shows a three-masted, square-rigged schooner riding high in a recognizable floating drydock. Ewer's one-piece design was a vast improvement over the Dutch version, which required the two camels to be fitted to the sides of the ship.
While Ewer is credited by Nantucket historians as the "inventor" of camels, it is clear by his choice of "Camels" as a name for his drydock that he was familiar with the Dutch concept. Interestingly, Abraham Lincoln, the only U.S. president to hold a patent (No. 6469), proposed a similar solution in 1849 as a means to combat the summertime low river water levels that hindered the passage of inland river boats.
An Interim Solution?
As an interim solution to New York's dredging problems, Seaworthy Systems Inc., of Essex, Conn., has applied for a patent for the design of what the company calls a Harbor Transporter, which makes the case for a modern application of the very old, but proven, camel concept. The Harbor Transporter is a large self-propelled floating drydock. Instead of traditional keel blocks and bilge blocks, the entire lift deck is covered with a special elastic material on which the flat bottom of a ship is gently set.
The lift dock is articulated (mechanically) in sections so that lifting loads match the ship's loaded weight distribution and deflection. This allows the dock to conform to the shape of the ship's bottom and to adjust for any hull deflection caused by loaded weights such as cargo, fuel, and water. The dock lifts only 70 percent of the ship's weight; therefore, bottom loading remains less than the design hydrostatic load for the bottom.
It is perhaps easier to understand the Harbor Transporter by thinking of it not as a floating drydock but, rather, as a semi-submersible heavy-lift transporter similar to the Blue Marlin, the Norwegian ship that carried the USS Cole home from the Persian Gulf. The Harbor Transporter is both easier to use and faster than floating drydocks. With six pumps capable of moving 125 tons of water per minute, it can deballast in an hour or two.
Moreover, it is self-propelled, with eight 5,000-horsepower thrusters, two on each corner, all of them computer-controlled to provide maximum maneuverability. In operation, the Transporter would approach a ship anchored in deep water, move below it from astern, take in lines to and from predesignated locations, and winch the ship in. Horizontally mounted tire-like fenders on hydraulic rams would center the ship between the camels (wing walls). After a gentle grounding, the ship would rise as the Transporter deballasts until it--the transporter--attains a draft of about 35 feet, after which it would be safe for the ship to proceed to its assigned berth.
To attain this interim capability in the N.Y./N.J. port complex, only the immediate pier areas, turning basin, and, possibly, the area beneath the Bayonne Bridge would require dredging--the latter because of the restrictive air draft, 151 feet, in the center of the bridge span. Here, though, a simple alternative would be to make any antennas, masts--or even stack tops that might strike the bridge--folding or retract-able, as is done on the river and canal boats in Europe. In the future, when ship sizes approach 10,000 TEUs, the trend will be toward lower navigating bridges in the forward part of the ship, simply to improve visibility.
Although a Harbor Transporter interim solution would not solve New York's long-term dredging problem, it would buy time by allowing mega-size containerships to continue to call in New York and thus prevent the loss of cargo--which could well become a permanent loss. When the necessary dredging is completed and the Harbor Transporter is no longer needed, it probably could be used in other world ports that need dredging. It also could be of use to the Navy by allowing the use of surge shipping assets, such as the large medium-speed roll-on/roll-off ships (LMSRs), when destination ports are otherwise too shallow for the LMSRs.
The Road Ahead
Like almost every other aspect of everyday American life, the complications brought about by the events of 11 September and the nation's shift to a wartime footing will significantly affect commercial shipping. Many of the early concerns over port-security legislation will prove to be valid. Just-in-time inventory control and supply-chain management will be affected by in-creased inspections, more vigilance and surveillance, and new cargo-tracking requirements.
One solution to this challenge is to improve port productivity, meaning the expeditious movement of cargo, so that any delays caused by the increased security requirements are cancelled out by efficient IT-based productivity im-provements.
Returning to the subject of international terrorism and its effect on the U.S. transportation system, it is worth emphasizing that domestic cargo movements should not be ignored. After all, it was domestic air flights that turned into murderous missiles on 11 September. It seems obvious that, when and wherever possible, hazardous cargo should be moved by water--where it would be less dangerous to highly populated areas, and to the environment.
Here, too, the quickest way to make this happen might be to expand the EC White Paper's "Motorways of the Sea" concept and to make such shipping exempt from the domestic harbor maintenance tax, which is presently a major economic inhibitor to coastwise shipping.
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